UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2014

¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______
 
Commission file number: 000-52161
 
Jammin Java Corp.
(Exact name of registrant as specified in its charter)
 
Nevada
 
 26-4204714
(State or other jurisdiction of incorporation or organization) 
 
(IRS Employer Identification No.) 

4730 Tejon St., Denver, Colorado 80211
(Address of principal executive offices and Zip Code)

Registrant’s telephone number, including area code: (323) 556-0746
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes þ No  ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨
Accelerated filer  ¨
Non-accelerated filer    ¨
Smaller reporting company  þ
(Do not check if a smaller reporting company)
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨  No þ
 
At September 2, 2014, there were 118,673,161 shares of the issuer’s common stock outstanding.

 
 

 


Jammin Java Corp.

For the Three and Six Months Ended July 31, 2014 and 2013
 
INDEX

 
Page
PART I – FINANCIAL INFORMATION
 
     
Item 1.
Condensed Financial Statements
 
     
 
Condensed Balance Sheets as of July 31, 2014 (unaudited) and January 31, 2014
F-1
     
 
Condensed Statements of Operations (unaudited) - For the Three and Six Months Ended July 31, 2014 and 2013
F-2
     
 
Condensed Statements of Cash Flows (unaudited) - For the Six Months Ended July 31, 2014 and 2013
 F-3
     
 
Notes to Condensed Financial Statements (unaudited)
F-4
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
1
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
12
     
Item 4.
Controls and Procedures
12
     
PART II – OTHER INFORMATION
     
Item 1.
Legal Proceedings
14
     
Item 1A.
Risk Factors
14
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
14 
     
Item 3.
Defaults Upon Senior Securities
15
     
Item 4.
Mine Safety Disclosures
15
     
Item 5.
Other Information
15
     
Item 6.
Exhibits
15
     
Signatures
  16

 
 

 
 
PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements.


JAMMIN JAVA CORP.
CONDENSED BALANCE SHEETS

   
July 31,
   
January 31,
 
   
2014
   
2014
 
   
(Unaudited)
       
Assets
           
Current Assets:
           
Cash
  $ 1,147,404     $ 857,122  
Accounts receivable
    1,672,270       1,085,947  
Notes receivable - related party
    2,724       2,724  
Inventory
    45,468       354,932  
Prepaid expenses
    128,946       1,163,914  
Other current assets
    66,256       41,430  
Total Current Assets
    3,063,068       3,506,069  
                 
Property and equipment, net
    416,156       440,194  
License agreement
    632,667       657,001  
Intangible assets
    45,030       47,525  
Other assets
    23,566       15,716  
Goodwill
    88,162       88,162  
Total Assets
  $ 4,268,649     $ 4,754,667  
                 
Liabilities and Stockholders' Equity
               
Current Liabilities:
               
Accounts payable
  $ 751,400     $ 1,181,510  
Payable to Ironridge in common shares
    820,164       369,589  
Accrued expenses
    419,657       123,856  
Accrued royalty and other expenses - related party
    117,425       219,799  
Notes payable
    -       4,965  
Total Current Liabilities
    2,108,646       1,899,719  
                 
Total Liabilities
    2,108,646       1,899,719  
                 
Stockholders' Equity:
               
Common stock, $.001 par value, 5,112,861,525  shares authorized; 114,917,821 and 104,085,210  shares issued and outstanding, as of July 31, 2014 and January 31, 2014, respectively
    114,760       103,166  
Additional paid-in-capital
    20,736,366       16,514,630  
Accumulated deficit
    (18,691,123 )     (13,762,848 )
Total Stockholders' Equity
    2,160,003       2,854,948  
                 
Total Liabilities and Stockholders' Equity
  $ 4,268,649     $ 4,754,667  
 
See accompanying notes to condensed financial statements

 
F-1

 
 
JAMMIN JAVA CORP.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)

   
Three Months Ended July 31,
   
Six Months Ended July 31,
 
   
2014
   
2013
   
2014
   
2013
 
                         
Revenue:
  $ 2,078,746     $ 1,634,570     $ 4,219,783     $ 2,595,931  
Discounts and allowances
    (344 )     (29,132 )     (20,260 )     (173,444 )
Net revenue
    2,078,402       1,605,438       4,199,523       2,422,487  
                                 
Cost of sales:
                               
Cost of sales products
    1,583,243       1,133,359       3,251,619       1,451,520  
Total cost of sales
    1,583,243       1,133,359       3,251,619       1,451,520  
                                 
Gross Profit
    495,159       472,079       947,904       970,967  
                                 
Operating Expenses:
                               
Compensation and benefits
    1,047,086       411,996       2,179,234       687,153  
Selling and marketing
    887,465       37,719       1,710,238       123,932  
General and administrative
    760,046       416,946       1,540,646       868,748  
Total operating expenses
    2,694,597       866,661       5,430,118       1,679,833  
                                 
Other income (expense):
                               
Other income (expense)
    (815,963 )     (319,321 )     (445,939 )     (316,186 )
Interest expense
    315       (1,176 )     (122 )     (108,674 )
Total other income (expense)
    (815,648 )     (320,497 )     (446,061 )     (424,860 )
                                 
Net Loss
  $ (3,015,086 )   $ (715,079 )   $ (4,928,275 )   $ (1,133,726 )
                                 
Net loss per share:
                               
Basic and diluted loss per share
  $ (0.03 )   $ (0.01 )   $ (0.04 )   $ (0.01 )
                                 
Weighted average common shares outstanding - basic and diluted
    117,348,177       90,108,517       113,388,829       85,413,315  

See accompanying notes to condensed financial statements

 
F-2

 
 
JAMMIN JAVA CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Six Months Ended July 31,
 
   
2014
   
2013
 
Cash Flows From Operating Activities:
           
Net loss
  $ (4,928,275 )   $ (1,133,726 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
               
Common stock issued for services
    273,647       577,053  
Shared-based employee compensation
    1,090,094       423,132  
Depreciation
    48,818       3,752  
Amortization of license agreement
    26,829       24,333  
Amortization of debt discount and deferred financing costs
    -       43,490  
Loss on settlement of liabilities
    820,164       436,207  
Changes in:
               
Accounts receivable
    (586,323 )     (1,213,444 )
Notes receivable - related party
    -       -  
Inventory
    309,464       (2,982,303 )
Prepaid expenses and other current assets
    1,010,142       (166,850 )
Other assets - long term
    (7,850 )     (15,716 )
Accounts payable
    (430,110 )     4,792,493  
Accrued expenses
    295,801       15,097  
Accrued royalty and other expenses - related party
    (102,374 )     (2,724 )
Bank Overdraft
    -       (8,931 )
Derivative liability
    -       (120,006 )
Net cash provided by (used in) operating activities
    (2,179,973 )     671,857  
                 
Cash Flows From Investing Activities:
               
Purchases of property and equipment
    (24,780 )     (53,856 )
Investment in restricted cash
    -       65,382  
Net cash provided by (used in) investing activities
    (24,780 )     11,526  
                 
Cash Flows From Financing Activities:
               
Common stock and warrants issued for cash
    2,500,000       50,000  
Repayment of notes payable - related party
    -       (11,825 )
Advances from related parties
    -       2,371  
Repayment of promissory note, net of financing costs
    -       (350,000 )
Repayment of notes payable
    (4,965 )     36,132  
Net cash provided by (used in) financing activities
    2,495,035       (273,322 )
                 
Net change in cash
    290,282       410,061  
Cash at beginning of period
    857,122       -  
Cash at end of period
  $ 1,147,404     $ 410,061  
                 
Supplemental Cash Flow Information:
               
Cash paid for interest
  $ -     $ 54,103  
Cash paid for income taxes
  $ -     $ -  
                 
Non-Cash Transactions:
               
Financed insurance policy
  $ .     $ 12,414  
Extinguishment of debt for stock
  $ 369,589     $ (4,681,217 )
Common stock issued for the purchase of inventory
  $ -     $ 2,982,303  
Common stock issued for the prepaid expenses
  $ -     $ 75,914  

See accompanying notes to condensed financial statements

 
F-3

 
 
JAMMIN JAVA CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
July 31, 2014
(Unaudited)
 
Note 1.  Basis of Presentation
 
The accompanying unaudited interim financial statements of Jammin Java Corp. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Company’s Annual Report on Form 10-K have been omitted. The accompanying balance sheet at July 31, 2014 has been derived from the audited balance sheet at January 31, 2014 contained in such Form 10-K.
 
As used in this Quarterly Report, the terms “we,” “us,” “our,” “Jammin Java” and the “Company” mean Jammin Java Corp., unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.
 
Note 2.  Business Overview and Summary of Accounting Policies

Jammin Java, doing business as Marley Coffee, is a United States (U.S.)-based company that provides sustainably grown, ethically farmed and artisan roasted gourmet coffee through multiple U.S. and international distribution channels, using the Marley Coffee brand name. U.S. and international grocery retail channels have become the Company’s largest revenue channels, followed by online retail, office coffee services (referred to herein as OCS), food service outlets and licensing. The Company intends to continue to develop these revenue channels and achieve a leadership position in the gourmet coffee space by capitalizing on the global recognition of the Marley name through the licensing of the Marley Coffee trademarks.
 
Reclassifications. Certain prior period amounts have been reclassified to conform to the current period presentation for comparative purposes.
 
Use of Estimates in Financial Statement Preparation. The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates.
 
Fair Value. The Company has adopted a single definition of fair value, a framework for measuring fair value and expanded disclosures concerning fair value. In this valuation, the exchange price is the price in an orderly transaction between market participants to sell an asset or transfer a liability at the measurement date and fair value is a market-based measurement and not an entity-specific measurement.
 
The Company utilizes the following hierarchy in fair value measurements:
 
·
Level 1 – Inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

 
F-4

 

·
Level 2 – Inputs use other inputs that are observable, either directly or indirectly. These inputs include quoted prices for similar assets and liabilities in active markets as well as other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.

·
Level 3 – Inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability.

Cash and Cash Equivalents. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of July 31, 2014, the Company had $1,147,404 of cash and cash equivalents. Additionally, no interest income was recognized for the three and six months ended July 31, 2014, respectively. As of July 31, 2014, the Company held no auction rate securities.
 
Revenue Recognition. Revenue is derived from the sale of coffee products and is recognized on a gross basis upon shipment. All revenue is recognized when (i) persuasive evidence of an arrangement exists; (ii) the service or sale is completed; (iii) the price is fixed or determinable; and (iv) the ability to collect is reasonably assured.
 
The Company utilizes third parties for the production and fulfillment of orders placed by customers. The Company, acting as principal, takes title to the product and assumes the risks of ownership; including, the risks of loss for collection, delivery and returns.
 
Allowance for Doubtful Accounts.  The Company does not require collateral from its customers with respect to accounts receivable. The Company determines any required allowance by considering a number of factors, including the length of time accounts receivable are past due. The Company’s policy is to provide reserves for accounts receivable when they become uncollectible. Historically, the Company has experienced minimal losses from collections.  Accordingly, the Company has determined that no allowance for doubtful accounts was required at July 31, 2014.  
 
Inventories. Inventories are stated at the lower of cost or market. Cost is computed using weighted average cost, which approximates actual cost, on a first-in, first-out basis. Inventories on hand are evaluated on an on-going basis to determine if any items are obsolete or in excess of future needs. Items determined to be obsolete are reserved for. The Company provides for the possible inability to sell its inventories by providing an excess inventory reserve. As of July 31, 2014 the Company determined that no reserve was required.

Property and Equipment. Equipment is stated at cost less accumulated depreciation and amortization. Maintenance and repairs, as incurred, are charged to expense. Renewals and enhancements which extend the life or improve existing equipment are capitalized. Upon disposition or retirement of equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are three years.
 
Depreciation was $26,181 and $48,818­­ for the three and six months ending July 31, 2014, respectively.  Depreciation was $1,876 and 3,752 for the three and six months ending July 31, 2013, respectively.
 
Impairment of Long-Lived Assets. Long-lived assets consist of a license agreement and property and equipment. The license agreement is reviewed for impairment at least annually whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable (see Note 5). Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written down to their estimated fair values. Management evaluated the carrying value of long-lived assets including the license and determined that no impairment existed at July 31, 2014.

 
F-5

 

Stock-Based Compensation.   Pursuant to the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718-10, “Compensation – Stock Compensation,” which establishes accounting for equity instruments exchanged for employee service, we utilize the Black-Scholes option pricing model to estimate the fair value of employee stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measurement of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances.
 
Common stock issued for services to non-employees is valued at (i) the market value of the stock on the date of issuance or (ii) the value of the services, whichever is more clearly determinable. If the total value exceeds the par value of the stock issued, the value in excess of the par value is added to the additional paid-in-capital account. We estimate volatility of our publicly-listed common stock by considering historical stock volatility.
 
Income Taxes. The Company follows ASC 740, Income Taxes. Deferred tax assets or liabilities are recorded to reflect the future tax consequences of temporary differences between the financial reporting basis of assets and liabilities and their tax basis at each reporting period. These amounts are adjusted, as appropriate, to reflect enacted changes in tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized.

Earnings or Loss Per Common Share. Basic earnings per common share equals net earnings or loss divided by the weighted average of shares outstanding during the year. Diluted earnings per share includes the impact on dilution from all contingently issuable shares, including options, warrants and convertible securities. The common stock equivalents from contingent shares are determined by the treasury stock method. The Company incurred a net loss for the three and six months ended July 31, 2014 and 2013, respectively.
 
Recently Issued Accounting Pronouncements. Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
 
Note 3 – Going Concern and Liquidity
 
These financial statements have been prepared by management assuming that the Company will be able to continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments to the recoverability of recorded asset amounts or the amounts or classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
 
The Company incurred a net loss of $3,015,086 and $4,928,275 for the three and six months ending July 31, 2014, and has an accumulated deficit since inception of $18,691,123. The Company has a history of losses and has only recently begun to generate revenue as part of its principal operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The operations of the Company have primarily been funded by the issuance of its common stock. The Company may, in the future, need to secure additional funds through future equity sales. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company.
 
The Company’s ability to meet its obligations in the ordinary course of business is dependent upon its ability to sell its products directly to end-users and through distributors, establish profitable operations through increased sales and decreased expenses, and obtain additional funds when needed. Management intends to increase sales by increasing the Company’s product offerings, expanding its direct sales force and expanding its domestic and international distributor relationships.

 
F-6

 

There can be no assurance that the Company will be able to increase sales, reduce expenses or obtain additional financing, if necessary, at a level to meet its current obligations. As a result, the opinion the Company received from its independent registered public accounting firm on its January 31, 2014 financial statements contains an explanatory paragraph stating that there is a substantial doubt regarding the Company’s ability to continue as a going concern.
 
Note 4 – Inventories

Inventories were comprised of:

   
July 31,
   
January 31,
 
 
 
2014
   
2014
 
Finished Goods - Coffee
  $ 45,468     $ 354,932  
    $ 45,468     $ 354,932  

Note 5 - Trademark License Agreements
 
   
July 31,
2014
   
January 31,
2014
 
License Agreement
  $ 730,000     $ 730,000  
Intangible assets
    49,900       49,900  
Accumulated amortization
    (102,203 )     (75,374 )
Intangible assets, net
  $ 677,697     $ 704,526  
 
The amortization periods are fifteen years and ten years for the license agreement and intangible assets, respectively. Amortization expense consists of the following:

   
Three Months Ended July 31,
   
Six Months Ended July 31,
 
   
2014
   
2013
   
2014
   
2013
 
License Agreement
  $ (12,167 )   $ (12,166 )   $ (24,333 )   $ (24,333 )
Intangible assets
    (1,247 )     -       (2,496 )     -  
Total Intangible Amortization Expense
  $ (13,414 )   $ (12,166 )   $ (26,829 )   $ (24,333 )

Years Ending July 31,
     
2015
  $ 36,501  
2016
    49,915  
2017
    49,915  
2018
    49,915  
2019
    49,915  
Thereafter
    441,536  
Total
  $ 677,697  

 
F-7

 

Note 6 – Notes Payable

On July 19, 2012, we entered into a credit agreement with TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership (“TCA”), effective June 29, 2012 (the “Credit Agreement”). Pursuant to the Credit Agreement, TCA agreed to loan the Company up to $2 million for working capital purposes, based on the amount of eligible accounts receivable the Company provided to secure the repayment of the amounts borrowed.

On July 19, 2012, we borrowed $350,000 pursuant to the Credit Agreement, evidenced by a revolving note (the “Revolving Note”), the repayment of which was secured by a security interest in substantially all of our assets in favor of TCA, including the Trademarks. The Revolving Note accrued interest at the rate of 12% per annum (18% per annum upon a default) and was due and payable on July 18, 2013.
 
 
The Credit Agreement and Revolving Note were terminated in connection with the March 2013 Stipulation (Ironridge) Transaction #1), described in Note 9, pursuant to which Ironridge purchased the outstanding debt which we owed to TCA and also purchased $100,000 of outstanding liabilities relating to 588,235 shares of our common stock originally issued to TCA, which shares TCA returned to the Company and cancelled in May 2013. See Note 9 for further details.

Note 7 - Related Party Transactions
 
Transactions with Marley Coffee Ltd.
 
During the six months ending July 31, 2014 and 2013, the Company made purchases of $234,122 and $296,840, respectively, from Marley Coffee Ltd. ("MC") a producer of Jamaican Blue Mountain coffee that the Company purchases in the normal course of its business. The Company directs these purchases to third-party roasters for fulfillment of sales orders. The Company's Chairman, Rohan Marley, is an owner of approximately 25% of the equity of MC.

Note 8 – Stock Options

Share-based Compensation:
 
On October 14, 2012, the Board approved the 2012 Equity Compensation Plan (the “2012 Equity Compensation Plan”). The Equity Compensation Plan authorizes the issuance of a variety of awards, including options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and stock awards. The 2012 Equity Compensation Plan provides that no more than 12 million shares of the Company’s common stock may be issued pursuant to awards under the 2012 Equity Compensation Plan. On November 13, 2012 (amended October 17, 2013), the Company registered the shares of common stock issuable under the 2012 Equity Compensation Plan on a registration statement on Form S-8 filed with the Securities and Exchange Commission. Awards under the 2012 Equity Compensation Plan may be made to employees, directors and consultants of the Company. As of July 31, 2014, 5,584,716 shares of common stock had been issued and options to purchase 5,250,000 shares of common stock had been granted under the 2012 Equity Compensation Plan.

Effective September 10, 2013, the Board of Directors approved and adopted the Company’s 2013 Equity Incentive Plan (the “2013 Equity Compensation Plan”). The 2013 Equity Incentive Plan authorizes the issuance of various forms of stock-based awards, including incentive or non-qualified options, restricted stock awards, restricted units, stock appreciation rights, performance shares and other securities as described in greater detail in the 2013 Equity Incentive Plan, to the Company’s employees, officers, directors and consultants. A total of 12,000,000 shares are authorized for issuance under the 2013 Equity Incentive Plan. The 2013 Equity Compensation Plan provides that no more than 12 million shares of the Company’s common stock may be issued pursuant to awards under the 2013 Equity Compensation Plan. On October 17, 2013, the Company registered the shares of common stock issuable under the 2013 Equity Compensation Plan on a registration statement on Form S-8 filed with the Securities and Exchange Commission.  Awards under the 2013 Equity Compensation Plan may be made to employees, directors and consultants of the Company. As of July 31, 2014, options to purchase 7,860,000 shares of common stock had been issued under the 2013 Equity Compensation Plan.

 
F-8

 

During the three and six months ended July 31, 2014 the Company recognized share-based compensation expenses totaling $485,317 and $1,090,094, respectively. The remaining amount of unamortized stock option expense at July 31, 2014 was $2,756,296.
 
The intrinsic value of exercisable and outstanding options at July 31, 2014 and 2013 was $247,500 and $647,000, respectively.
 
Activity in stock options during the six month period ended July 31, 2014 and related balances outstanding as of that date are set forth below:

   
Number of
   
Weighted Average
   
Remaining Contract
 
   
Shares
   
Exercise Price
   
Term (# years)
 
Outstanding at February 1, 2014
    17,260,000     $ 0.35        
Granted
    -       -        
Exercised
    (50,000 )     (0.16 )      
Forfeited and canceled
    -       -        
Outstanding at July 31, 2014
    17,210,000     $ 0.35       3.98  
Exercisable at  July 31, 2014
    6,416,666     $ 0.30       3.54  

Note 9 – Settlement of Liabilities with Ironridge
 
Ironridge Transaction #1
 
On March 6, 2013, pursuant to an order setting forth a stipulated settlement (“Order #1” and “Stipulation #1”) issued by the Superior Court of the State of California for the County of Los Angeles – Central District (the “Court”), Ironridge Global IV, Ltd. (“Ironridge”), who had previously purchased a total of $1,017,744 in accounts payable and accrued expenses (“Claim #1”) owed by us to various parties, was issued 7,000,000 shares of our common stock (“Initial Issuance #1”) in satisfaction of such accounts payable and accrued expenses, which amount came off our balance sheet and was legally released. The accounts payable and accrued expenses represented amounts originally owed by us to various creditors in connection with trade payables, the purchase of property and equipment, prior credit agreements, and attorneys’ fees.

The shares issued in Initial Issuance #1 were subject to adjustment as provided below:

 
·
From the date of Stipulation #1 until that number of consecutive trading days following the Issuance Date required for the aggregate trading volume of the Common Stock to exceed $10,000,000 (“Calculation Period #1”), Ironridge was to retain that number of shares of Common Stock of Initial Issuance #1 (“Final Amount #1”) with an aggregate value equal to (a) $1,068,631 (105% of Claim Amount #1), plus reasonable attorney’s fees and expenses, divided by (b) 80% of the following: the closing price of the Common Stock on the trading day immediately preceding the date of entry of Order #1 (which closing price was $0.35 per share), not to exceed the arithmetic average of the individual volume weighted average prices of any five trading days during Calculation Period #1, less $0.01 per share (“Share Price #1”).

 
F-9

 

 
·
If at any time during Calculation Period #1 Initial Issuance #1 was less than any reasonable possible Final Amount #1 or a daily volume weighted average price was below 80% of the closing price on the day before Issuance Date #1, Ironridge could request that the Company reserve and issue additional shares of Common Stock (“True Up Shares”), provided that no additional shares of common stock were requested.

 
·
At the end of Calculation Period #1, if the sum of Initial Issuance #1 and any True-Up Shares did not equal the Final Amount #1, adjustments were to be made to the shares of Common Stock issued pursuant to Stipulation #1 and either additional shares were to be issued to Ironridge or Ironridge was required to return shares to the Company for cancellation.

The Stipulation #1 provided that at no time shall shares of Common Stock be issued to Ironridge and its affiliates which would result in them owning or controlling more than 9.99% of the Company’s outstanding Common Stock.  The Company also agreed pursuant to Stipulation #1 that (a) until at least one half of the total trading volume for Calculation Period #1 had traded, the Company would not, directly or indirectly, enter into or effect any split or reverse split of Common Stock; (b) until at least thirty days from the date Order #1 was approved, the Company would not, directly or indirectly, issue any securities pursuant to a Form S-8 registration statement; and (c) until at least six months from the date Order #1 was approved, the Company would not, directly or indirectly, issue or sell any free trading securities for financing purposes (except for shares issuable to TCA Global Credit Master Fund, LP).

The Calculation Period #1 was satisfied as of June 18, 2013, at which time a final adjustment was made to the number of shares owed to Ironridge.  The final number of shares owed was 5,353,512, resulting in 1,646,488 shares of the initial 7,000,000 shares issued being returned by Ironridge and cancelled by the Company in July 2013.

For the six months ending July 31, 2014 and 2013, the Company, in connection with the above transaction, recorded a loss on extinguishment of debt in the amount of $450,141 and $340,398, respectively, which equaled the difference in the fair value of the shares issued to and the obligations assumed by Ironridge.

Ironridge Transaction #2

On May 24, 2013, pursuant to an order setting forth a stipulated settlement (“Order #2” and “Stipulation #2”) issued by the Court, Ironridge, who had previously purchased a total of an additional $1,278,058 in accounts payable and accrued expenses (“Claim #2”) owed by us to various parties, was issued 5,000,000 shares of our common stock (“Initial Issuance #2”) in satisfaction of such accounts payable and accrued expenses, which amount came off our balance sheet and was legally released. The accounts payable and accrued expenses represented amounts originally owed by us to various creditors in connection with trade payables, the purchase of property and equipment, prior credit agreements, and attorneys’ fees.

The shares issued in Initial Issuance #2 are subject to adjustment as provided below:

 
·
From the date of Stipulation #2 until that number of consecutive trading days following Issuance Date #2 required for the aggregate trading volume of the Common Stock to exceed $20,000,000 (“Calculation Period #2”), Ironridge will retain that number of shares of Common Stock of the Initial Issuance #2 (“Final Amount #2”) with an aggregate value equal to (a) $1,278,058 (105% of Claim Amount #2), plus reasonable attorney’s fees and expenses, divided by (b) 80% of the following: the closing price of the Common Stock on the trading day immediately preceding the date of entry of Order #2 (which closing price was $0.32 per share), not to exceed the arithmetic average of the individual volume weighted average prices of any five trading days during Calculation Period #2, less $0.01 per share (“Share Price #2”) and (b) the positive difference, if any, between (i) $1,019,390 divided by 80% of the average of the lowest five lowest volume weighted average prices during Calculation Period #2, and (ii) $1,019,390 divided by 80% of the average of the lowest five volume weighted average prices during the period from March 4, 2013 to May 24, 2013.

 
F-10

 

 
·
If at any time during Calculation Period #2 Initial Issuance #2 is less than any reasonable possible Final Amount #2 or a daily volume weighted average price is below 80% of the closing price on the day before Issuance Date #2, Ironridge may request that the Company reserve and issue True-Up Shares as soon as possible, and in any event, within one trading day. For each day after Ironridge requests issuance that shares are not, for any reason, received into Ironridge’s account in electronic form and fully cleared for trading, Calculation Period #2 shall be extended by one trading day.

 
·
At the end of Calculation Period #2, if the sum of Initial Issuance #2 and any True-Up Shares does not equal Final Amount #2, adjustments shall be made to the shares of Common Stock issued pursuant to Stipulation #2 and either additional shares shall be issued to Ironridge or Ironridge shall return shares to the Company for cancellation.

Stipulation #2 provides that at no time shall shares of Common Stock be issued to Ironridge and its affiliates which would result in them owning or controlling more than 9.99% of the Company’s outstanding Common Stock.  The Company also agreed pursuant to Stipulation #2 that (a) until at least one half of the total trading volume for Calculation Period #2 has traded, the Company would not, directly or indirectly, enter into or effect any split or reverse split of Common Stock; (b) until at least thirty days from the date Order #2 is approved, the Company would not, directly or indirectly, issue any securities pursuant to a Form S-8 registration statement; and (c) until at least six months from the date Order #2 is approved, the Company would not, directly or indirectly, issue or sell any free trading securities for financing purposes.

The Calculation Period #2 was satisfied as of September 12, 2013, at which time a final adjustment was made to the number of shares owed to Ironridge.  The final number of shares owed was 5,406,337, resulting in 406,337 additional shares being owed to Ironridge.

No loss on extinguishment was recorded by the Company, in connection with the above transaction, for the six months ended July 31, 2014 and 2013.

Ironridge Transaction #3

On July 26, 2013, pursuant to an order setting forth a stipulated settlement (“Order #3” and “Stipulation #3”) issued by the Court, Ironridge, who had previously purchased an additional total of $2,499,372 in accounts payable and accrued expenses (“Claim #3”) owed by us to various parties, was issued 5,000,000 shares of our common stock (“Initial Issuance #3”) in satisfaction of such accounts payable and accrued expenses, which amount came off our balance sheet and was legally released. The accounts payable and accrued expenses represented amounts originally owed by us to various creditors in connection with trade payables, the purchase of property and equipment, prior credit agreements, and attorneys’ fees.

The shares issued in Initial Issuance #3 are subject to adjustment as provided below:

 
·
From the date of Stipulation #3 until that number of consecutive trading days following Issuance Date #3 required for the aggregate trading volume of the Common Stock to exceed $50,000,000 (“Calculation Period #3”), Ironridge will retain that number of shares of Common Stock of Initial Issuance #3 (“Final Amount #3”) with an aggregate value equal to (a)(i) $2,624,340 (105% of Claim Amount #3), plus reasonable attorney’s fees and expenses, (ii) divided by 80% of the following:  the closing price of the Common Stock on the trading day immediately preceding the date of entry of Order #3 (which closing price was $0.50 per share), not to exceed the arithmetic average of the individual volume weighted average prices of any five trading days during Calculation Period #3, less $0.01 per share; and (b) the sum of (i) the positive difference, if any, between (A) $1,358,299.08 divided by 80% of the average of the lowest five individual daily volume weighted average prices during Calculation Period #3, and (B) $1,358,299 divided by 80% of the average of the lowest five individual daily volume weighted average prices during the period from May 24, 2013 to the date of entry of Order #3, and (ii) the positive difference, if any, between (A) the sum of one and a half times Initial Issuance #3, and (B) the number of shares otherwise owed pursuant to the foregoing.
 
 
·
If at any time during Calculation Period #3 Initial Issuance #3 is less than any reasonable possible Final Amount #3 or a daily volume weighted average price is below 80% of the closing price on the day before Issuance Date #3, Ironridge may request that the Company reserve and issue True-Up Shares as soon as possible, and in any event, within one trading day. For each day after Ironridge requests issuance that shares are not, for any reason, received into Ironridge’s account in electronic form and fully cleared for trading, Calculation Period #3 shall be extended by one trading day.

 
·
At the end of Calculation Period #3, if the sum of Initial Issuance #3 and any True-Up Shares does not equal Final Amount #3, adjustments shall be made to the shares of Common Stock issued pursuant to Stipulation #3 and either additional shares shall be issued to Ironridge or Ironridge shall return shares to the Company for cancellation.

Stipulation #3 provides that at no time shall shares of Common Stock be issued to Ironridge and its affiliates which would result in them owning or controlling more than 9.99% of the Company’s outstanding Common Stock and with regard to at least 5% of Final Amount #3, Ironridge shall not sell any shares of Common Stock issuable in connection with such amount until at least six months after entry of Order #3.  We also agreed pursuant to Stipulation #3 that (a) until at least one half of the total trading volume for Calculation Period #3 has traded, we would not, directly or indirectly, enter into or effect any split or reverse split of our Common Stock; and (b) until at least thirty days from the date Order #3 is approved, we would not, directly or indirectly, issue any securities pursuant to a Form S-8 registration statement.  Until at least 180 days after the end of Calculation Period #3, (a) we agreed that we would not issue, sell or agree to issue or sell any securities to any person other than Ironridge or its affiliates, except for:  (A) common stock, options or warrants to employees, officers, consultants or directors pursuant to Employee Stock Ownership Plans, or (B) restricted common stock, in transactions with strategic industry, business or operating partners that provide benefits other than the investment of funds, issued at a fixed price not subject to any adjustment, reset or variable element of any kind.

Through July 31, 2014, the Company, in connection with the above transaction, recorded an estimated loss on extinguishment of debt in the amount of $1,818,810 which equaled the difference in the fair value of the shares issued and the obligations assumed by Ironridge. The Company further recorded an additional amount to current liabilities for the excess shares owed to Ironridge of $2,288,066.  This liability was reduced by the issuance of 4,524,079 common shares to Ironridge in November 2013 and an additional 3,366,316 common shares to Ironridge on March 14, 2014.  As of July 31, 2014 there was an estimated remaining liability of $820,164 for additional shares to be issued to Ironridge.  This amount will be adjusted each period until Calculation Period #3 has ended and the true-up is completed.
 
In August 2014, the Company issued Ironridge an additional 3,853,555 shares of common stock pursuant to the July 2013 Order and Stipulation.  See Ironridge Transaction #3 above.
 
Effective September 12, 2014, the Company and Ironridge agreed to a Stipulation to Modify Prior Order For Approval of Stipulation For Settlement of Claims and an Order Modifying Prior Order For Approval of Stipulation For Settlement of Claims (collectively, the “Settlement”) with the Court, pursuant to which the parties agreed to settle all outstanding obligations of the Company to issue additional shares of common stock to Ironridge in connection with further true-ups under Order #3 and Stipulation #3 in consideration for the issuance to Ironridge of 5,000,000 shares of common stock. As a result of the Settlement, no additional shares will be owed by the Company to Ironridge and the restrictions on the Company’s ability to sell and issue additional shares of common stock (as described above) in connection with Order #3 and Stipulation #3 or otherwise were terminated.

Note 10 – Commitments and Contingencies
 
The Company’s commitments and contingencies include the usual claims and obligations of a wholesaler and distributor of coffee products in the normal course of a business. The Company may be, from time to time, involved in legal proceedings incidental to the conduct of its business. The Company is not involved in any litigation or legal proceedings as of July 31, 2014, which would be deemed material.

On June 25, 2013, and effective August 1, 2013, the Company entered into a lease agreement for office space located at 4730 Tejon Street, Denver, Colorado 80211.  The office space encompasses approximately 4,800 square feet.  The lease has a term of 36 months expiring on July 31, 2016, provided that the Company has two additional three year options to renew the lease after the end of the initial term.  Rent during the first three year option period escalates at the rate of 4% per year (starting with the last monthly rental cost of the initial term of the agreement, described below), and rent during the second three year option period will be at a rental cost mutually agreed by the Company and the landlord.  Rent due under the initial term of the agreement is as follows:

 
F-11

 

 
·
$8,172 per month from August 1, 2014 to July 31, 2015;
 
·
$8,499 per month from August 1, 2015 to July 31, 2016; and
 
·
$8,839 per month from August 1, 2016 to July 31, 2017.
 
Effective August 1, 2013, in connection with the Company’s entry into the office space lease described above, the Company moved its principal place of business to Denver, Colorado.
 
Note 11 - Concentration of sales and segmented disclosure:

For the three months ended July 31, 2014, the majority of the Company’s revenue was generated from various customers – two customers (who are distributors of our products) consisted of 50% of our revenues with no other customer contributing more than 10% of our total revenues in the period.  The two customers with sales greater than 10% of revenues were: United Natural Foods Inc. (34%) and Mother Parker’s Tea and Coffee (16%).

For the six months ended July 31, 2014, the majority of the Company’s revenue was generated from various customers – two customers (who are distributors of our products) consisted of 48% of our revenues with no other customer contributing more than 10% of our total revenues in the period.  The two customers with sales greater than 10% of revenues were: United Natural Foods Inc. (25%) and Mother Parker’s Tea and Coffee (23%).
 
The Company recently added two revenue channels at the recent year ended January 31, 2014; Marley Coffee branded vending solutions and Marley Coffee branded Bike Cafes. These segments are not presently significant.

Note 12 – Subsequent Events
 
Management evaluated all subsequent events through the date that the financial statements were filed with the Securities and Exchange Commission, and concluded that no additional subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements, other than those disclosed in Note 9 above.

 
F-12

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
As used in this Quarterly Report, unless the context requires otherwise, references to “the Company,” “we,” “us,” “our,” “Jammin Java” and “Jammin Java Corp.” refer specifically to Jammin Java Corp. This information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this Quarterly Report on Form 10-Q, and the audited financial statements and notes thereto and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended January 31, 2014.
 
FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q and the documents incorporated by reference, include “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they prove incorrect or never materialize, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements. Examples of forward-looking statements include, but are not limited to any statements, predictions and expectations regarding our earnings, revenues, sales and operations, operating expenses, anticipated cash needs, capital requirements and capital expenditures, needs for additional financing, use of working capital, plans for future products, services and distribution channels, anticipated growth strategies, planned capital raises, ability to attract distributors and customers, sources of net revenue, anticipated trends and challenges in our business and the markets in which we operate, the impact of economic and industry conditions on our customers and our business, customer demand, our competitive position, the outcome of any litigation against us, critical accounting policies and the impact of recent accounting pronouncements. Additional forward-looking statements include, but are not limited to, statements pertaining to other financial items, plans, strategies or objectives of management for future operations, our financial condition or prospects, and any other statement that is not historical fact. Forward-looking statements are often identified by the use of words such as “may,” “might,” “intend,” “should,” “could,” “can,” “would,” “continue,” “expect,” “believe,” “anticipate,” “estimate,” “predict,” “potential,” “plan,” “seek” and similar expressions and variations or the negativities of these terms or other comparable terminology.
 
These forward-looking statements are based on the expectations, estimates, projections, beliefs and assumptions of our management based on information currently available to management, all of which is subject to change. Such forward-looking statements are subject to risks, uncertainties and other factors that are difficult to predict and could cause actual results to differ materially from those stated or implied by our forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified under “Risk Factors” in  Item 1A of our Form 10-K Annual Report for the year ended January 31, 2014, as filed with the Securities and Exchange Commission on May 16, 2014 (the “Annual Report”). We undertake no obligation to revise or update publicly any forward-looking statements to reflect events or circumstances after the date of such statements for any reason except as otherwise required by law.

 
1

 

The information contained in this Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this Quarterly Report, our Annual Report on Form 10-K for the year ended January 31, 2014 and in our other reports filed with the Securities and Exchange Commission (the “SEC”).

In this Form 10-Q, we may rely on and refer to information regarding the market for our products and our industry in general, which information comes from market research reports, analyst reports and other publicly available information.  Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, and we have not independently verified any of it.
 
Overview
 
Jammin Java, doing business as Marley Coffee, is a United States-based company that provides sustainably grown, ethically-farmed and artisan roasted gourmet coffee through multiple United States and international distribution channels. We intend to develop a significant share of these markets and achieve a leadership position by capitalizing on the global recognition of the “Marley” brand name. We hope to capitalize on the guidance and leadership of our Chairman, Rohan Marley, and to increase our sales through the marketing of products using the likeness of, and reflecting the personality of, Mr. Marley.   Additionally, through a licensing agreement with the family of the late reggae performer, Robert Nesta Marley, professionally known as Bob Marley (which family members include Rohan Marley, our Chairman and the son of Bob Marley), we are provided the worldwide right to use the name “Marley Coffee” and reasonably similar variations thereof.

We believe the key to our growth is a multichannel distribution and sales strategy. Since August 2011, we have been introducing a wide variety of coffee products through multiple distribution channels using the Marley Coffee brand name. The main channels of revenue for the Company are now and are expected to continue to be grocery retail, online retail, office coffee services (OCS), foodservice, green bean coffee sales and vending and automated retailing.
 
In order to market our products in these channels, we have developed a variety of coffee products in varying formats.  The Company offers an entire line of coffee in whole bean and ground form with varying sizes including 2.5 ounce (oz), 8oz, 12oz and 2 pound (lbs) sizes.  The Company also offers a “single serve” solution with its compostable Single-Serve Pods for Bunn® and other pod-based home and office brewers.  The Company recently launched its Marley Coffee RealCup; compatible cartridges, for use in most models of Keurig®'s K-Cup brewing system.

On September 13, 2012, the Company entered into a fifteen (15) year license agreement (renewable for two additional fifteen (15) year terms thereafter in the option of the Company) with an effective date of August 7, 2012 with Fifty-Six Hope Road Music Limited, a Bahamas international business company (“Fifty-Six Hope Road” and the “FSHR License Agreement”). Rohan Marley, our Chairman, owns an interest in and serves as a director of Fifty-Six Hope Road. Pursuant to the FSHR License Agreement, Fifty-Six Hope Road granted the Company a worldwide, exclusive, non-transferable license to utilize the “Marley Coffee” trademarks (the “Trademarks”) in connection with (i) the manufacturing, advertising, promotion, sale, offering for sale and distribution of coffee in all its forms and derivations, regardless of portions, sizes or packaging (the “Exclusive Licensed Products”) and (ii) coffee roasting services, coffee production services, and coffee sales, supply, distribution and support services, provided that the Company may not open retail coffee houses utilizing the Trademarks. Fifty-Six Hope Road owns and controls the intellectual property rights in and to the late reggae performer, Robert Nesta Marley, professionally known as Bob Marley, including the Trademarks. In addition, Fifty-Six Hope Road granted the Company the right to use the Trademarks on advertising and promotional materials that pertain solely to the sale of coffee cups, coffee mugs, coffee glasses, saucers, milk steamers, machines for brewing coffee, espresso and/or cappuccino, grinders, water treatment products, tea products, chocolate products, and ready-to-use (instant) coffee products (the “Non-Exclusive Licensed Products”, and together with the Exclusive Licensed Products, the “Licensed Products”). Licensed Products may be sold by the Company pursuant to the FSHR License Agreement through all channels of distribution, provided that, subject to certain exceptions, the Company cannot sell the Licensed Products by direct marketing methods (other than the Company’s website), including television, infomercials or direct mail without the prior written consent of Fifty-Six Hope Road. Additionally, FSHR has the right to approve all Licensed Products, all advertisements in connection therewith and all product designs and packaging.  The agreement also provides that FSHR shall own all rights to any domain names (including marleycoffee.com), incorporating the Trademarks.

 
2

 

In consideration for the foregoing licenses, the Company agreed to pay royalties to Fifty-Six Hope Road in an amount equal to 3% of the net sales of all Licensed Products on a quarterly basis. In addition, such royalty payments are to be deferred during the first 20 months of the term of the FSHR License Agreement, and such deferred payments shall be paid on a quarterly-basis thereafter until paid in full.  At July 31, 2014, $117,425 is accrued for such royalty fees with $150,000 having been paid during the quarter ended July 31, 2014.

On May 20, 2014, we entered into an Amended and Restated License Agreement with Mother Parkers Tea & Coffee Inc. (“Mother Parkers” and the “MP Agreement”), which amended and restated a prior license agreement entered into between the parties in October 2011.  A significant portion of the Company’s revenue comes from sales to and through Mother Parkers. As described in greater detail in the Current Report on Form 8-K filed with the Securities and Exchange Commission on April 30, 2014, the Company entered into a Subscription Agreement with Mother Parkers in April 2014, pursuant to which Mother Parkers purchased 7,333,529 units from the Company for $2.5 million, each unit consisting of one share of the Company’s common stock; and one warrant to purchase one share of common stock at $0.51135 per share for a term of three years.

Pursuant to our relationship with Mother Parkers, Mother Parkers produces Marley Coffee RealCups for us.  For direct sales of RealCups (e.g., in jurisdictions in which Mother Parkers does not have exclusive rights as described below) we purchase the RealCups from Mother Parkers and handle all aspects of selling, merchandising and marketing products to retailers. Pursuant to the MP Agreement, the Company granted Mother Parkers the exclusive right to manufacture, process, package, label, distribute and sell single serve hard capsules (which excludes single serve soft pods) (the “Product”) on behalf of the Company in Canada, the United States of America and Mexico. The rights granted under the MP Agreement are subject to certain terms and conditions of our license agreement with Fifty-Six Hope Road. Pursuant to the MP Agreement, Mother Parkers is required to, among other things, supply all ingredients and materials, labor, manufacturing equipment and other resources necessary to manufacture and package the Product, develop coffee blends set forth in specifications provided by the Company from time to time, procure coffee beans in the open market (or from the Company’s designee) at favorable prices, set prices for the Product in a manner that is competitive in the market place and deliver Product logo/brand designs to the Company for approval prior to manufacturing any such Product.  We are required to, among other things, cross-promote the Product, use Product images and marketing materials provided by Mother Parkers to promote the Product, and provide the services of Rohan Marley (our Chairman) at a minimum of five locations per year at the Company’s sole cost and expense.  There are no minimum volume or delivery requirements under the MP Agreement.  Pursuant to the MP Agreement, Mother Parkers agreed to pay us a fee of $0.06 per capsule for Talkin’ Blues products and $0.04 per capsule for all other Product sold by Mother Parkers under the terms of the agreement, which payments are due in monthly installments.

The MP Agreement has a term of five years, provided that it automatically renews thereafter for additional one year periods if not terminated by the parties, provided further that we are not able to terminate the agreement within the first 12 months of the term of the agreement and if we terminate the agreement or take any action that lessens or diminishes Mother Parkers’ exclusive rights under the agreement during months 12 through 36 of the agreement, we are required to pay Mother Parkers a fee of $600,000 and reimburse Mother Parkers for any out of pocket costs incurred by Mother Parkers for inventory and other materials that are unsalable or unusable after such termination.

 
3

 

The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited financial statements and revenues and expenses during the periods reported. Actual results could differ from those estimates. Information with respect to our critical accounting policies which we believe could have the most significant effect on our reported results and require subjective or complex judgments by management is contained in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended January 31, 2014. We believe that for the three and six months ending July 31, 2014, there have been no material changes to this information.

Recent Accounting Pronouncements

For the three and six month period ended July 31, 2014, there were no accounting standards or interpretations issued that are expected to have a material impact on our financial position, operations or cash flows.
 
In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting standard which will supersede existing revenue recognition guidance under current U.S. GAAP. The new standard is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In doing so, among other things, companies will generally need to use more judgment and make more estimates than under the current guidance. The accounting standard will be effective for the Company in the fiscal year beginning July 1, 2017. The standard may be adopted using a full retrospective or a modified retrospective (cumulative effect) method. Early adoption is not permitted. We are currently evaluating this standard and have not yet selected a transition method nor have we determined the effect of the standard on our financial statements and related disclosures.

Products and Revenue Channels

The Company’s objective is to position Marley Coffee as the premiere brand across all of the distribution channels for which we license the use of the “Marley” name and to capitalize on the likeness, philosophies and strategies of our Chairman, Rohan Marley.

Within the U.S. grocery and specialty retail segment, the Company’s products are distributed through several distributors such as UNFI, Kehe and DPI and we also distribute directly to certain customers.  We sell to retailers such as Safeway, Krogers, HEB, Wegmans, Jewel-Osco, Market Basket, Whole Foods, Winn Dixie Bi-Lo, Ahold, Hannafords, Albertsons, Shaw’s and Fairways, and Fresh and Easy. During the past year we have expanded our distributor relationships nationally in the United States. We expect our ongoing discussions with retailers will enable us to place our products in more chains throughout the year and we continue to seek to expand our product placement with grocery retailers and distributors throughout the United States and internationally. 

We create and sell a variety of coffee products for almost every coffee distribution channel.  We sell 8 ounce (oz) and 12oz ground and whole bean bagged coffee primarily to the retail grocery channel.  We sell 2lb whole bean and 2.5oz fractional packs primarily to the food service and Office Coffee Service or Breakroom industry.

In late November 2012, we launched our Marley Coffee RealCups; a single serve; compatible cartridge, for use in most models of Keurig®'s K-Cup brewing system.  The coffee single serve segment is the fastest growing sector of the coffee industry and the fastest growing part of our business.  We generate revenues in this category in two ways 1) by selling directly to retailers; and 2) through a licensing agreement with our roasters Mother Parkers (described above).  For direct sales, we handle all aspects of selling, merchandising and marketing of the products to retailers.  Through the licensing agreement Mother Parkers develops the relationships with retailers and handles everything from selling, merchandising, discounting, promoting and marketing and we receive a licensing fee per cup sold as described above.
 
 
4

 
Plan of Operations

In fiscal 2014, we established a national grocery distribution network, increased our brand awareness and strengthened our international presence.  Last year we focused on expansion and this upcoming year we are prepared to build on that platform with organic growth. Over the course of the last year, we gained distribution in over 5,000 stores in North America and have authorization in approximately 10,000 stores.  We’ve also established distribution in two of the largest chains in the country, Safeway and Kroger.

The past year was a “developmental year” in the retail grocery space for us.  Through fiscal 2015, while we will still look to gain additional distribution, we are not pursuing it at the same pace we did during the past 18 months. We have four primary strategies for the remainder of fiscal 2015:

1)  Increase our turn rate (velocity) within existing distribution while strategically looking for new stores to expand into.
2)  Focus on building brand awareness to drive that growth.
3)  Capitalize on our relationship with Mother Parkers, both from a revenue and innovations perspective.
4)  Continue building our ancillary businesses such as our international distribution and Office Coffee Service (OCS) program locally.

Throughout fiscal 2014, the Company issued shares of common stock in consideration for services rendered to its officers, directors and employees in an effort to maximize its cash on hand and improve liquidity.  In fiscal 2015, the Company plans to pay the salaries of its officers and employees in cash, provided that where possible, the Company intends to continue to use common stock in lieu of cash consideration, and has continued to pay certain of its employees in stock instead of cash during fiscal 2015.  As the Company continues to grow it will need to raise additional cash in order to maintain its growth and fund its operations.  If the Company is unable to access additional capital moving forward, it will hurt our ability to maintain growth and possibly jeopardize our ability to maintain our current operations. There can be no assurance that the Company will be able to increase sales, reduce expenses or obtain additional financing, if necessary, at a level to meet its current obligations to continue as a going concern.

RESULTS OF OPERATIONS
 
Comparison of the Three Months Ending July 31, 2014 and 2013

Sales Revenue. Sales revenues for the three months ending July 31, 2014 and 2013 were $2,078,746 and $1,634,570, respectively, which represents an increase of $444,176 or 27% from the previous period.  Sales revenue increased as a result of the Company's continued expansion into the retail grocery market and its continued growth of other business verticals.

Cost of Sales. Cost of sales for the three months ending July 31, 2014 and 2013 were $1,583,243 and $1,133,359, respectively, which represents an increase of $449,884 or 40%  from the prior period, which was mostly attributed to increased sales, especially of items with lower profit margins.

 
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Gross Profit.  We had a gross profit of $495,159 and $472,079 for the three months ending July 31, 2014 and 2013, respectively.  Gross profit as a percentage of gross sales was 24% and 29 % for the three months ending July 31, 2014 and 2013   Gross profit increased due to an increase in overall sales.  Gross profit as a percentage of sales decreased due to expansion into new markets with lower initial margins on sales.

Compensation and Benefit Expenses. Compensation and benefits for the three months ending July 31, 2014 and 2013 were $1,047,086 and $411,996, respectively which represented an increase of $635,090 or 154% from the prior period. The increase was mostly the result of more employees and contractors to help manage the growth of the Company.
 
Selling and Marketing Expenses. Selling and marketing expenses for the three months ending July 31, 2014 and 2013 were $887,465 and $37,719, respectively, which represents an increase of $849,746 or 2,252% from the prior period. The increase was principally the result of additional advertising campaigns undertaken in new markets in the current period. As the business has developed, the customer base has increased and sales have grown more organically. We anticipate, however, experiencing significant marketing expenses throughout 2015 as we will seek to expand our customer base even more and build out the Company brand.  Much of the selling and marketing that happens outside of this categorization occurred in new staffing in marketing.
 
General and Administrative Expenses.   General and administrative expenses for the three months ending July 31, 2014 and 2013 were $760,046 and $416,946, respectively, which represents an increase of $343,100 or 82% from the prior period. The increase was principally the result of overall increased expansion of the business and the need to support that expansion mostly through professional fees and payroll. General and administrative expense also increased due to increased corporate reporting expenses and increased insurance expenses.

Total Other Income (Expense).  We had other expense of $815,963 for the three months ended July 31, 2014, compared to other expense for the three months ended July 31, 2013 of $319,321, an increase of $496,642.  This increase was in connection with the Ironridge transactions in the period (described below) which caused a loss on extinguishment of debt from the issuance of shares but which are subject to true-ups after applicable calculation periods (see note 9 to the financial statements included herein).  Also included in total other expense was interest income of $315 for the three months ended July 31, 2014, compared to interest expense of $1,176 for the three months ended July 31, 2013.  Interest expense decreased due to the acquisition of our outstanding interest bearing liabilities by Ironridge and the settlement of such debt through the issuance of common stock.

Net Loss. We incurred a net loss of $3,015,086 and $715,079 for the three months ended July 31, 2014 and 2013, respectively, an increase in net loss of $2,300,007 or 322% from the prior period. The principal reason for the increase in net loss was the $1,827,936 increase in total operating expenses from the growth of the Company and its staffing needs, offset by the $23,080 increase in gross profit.

Comparison of the Six Months Ending July 31, 2014 and 2013

Sales Revenue. Sales revenues for the six months ending July 31, 2014 and 2013 were $4,219,783 and $2,595,931, respectively, which represents an increase of $1,623,852 or 63% from the previous period.  Sales revenue increased as a result of the Company's continued expansion into the retail grocery market and its continued growth of other business verticals.   

Cost of Sales. Cost of sales for the six months ending July 31, 2014 and 2013 were $3,251,619 and $1,451,520, respectively, which represents an increase of $1,800,099 or 124%, which was mostly attributed to increased sales, especially of items with lower profit margins.
 
Gross Profit.  We had a gross profit of $947,904 and $970,967 for the six months ending July 31, 2014 and 2013, respectively.  Gross profit as a percentage of gross sales was 22% and 37% for the six months ending July 31, 2014 and 2013.   Gross profit as a percentage of sales decreased due to an increase in cost to achieve market share sales.

 
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Compensation and Benefit Expenses. Compensation and benefits for the six months ending July 31, 2014 and 2013 were $2,179,234 and $687,153, respectively which represented an increase of $1,492,081 or 217% from the prior period. The increase was mostly the result of more employees and contractors engaged to help manage the growth of the Company.
 
Selling and Marketing Expenses. Selling and marketing expenses for the six months ending July 31, 2014 and 2013 were $1,710,238 and $123,932, respectively, which represents an increase of $1,586,306 or 1,280% from the prior period. The increase was principally the result of additional advertising campaigns undertaken in the new markets in the current period. As the business has developed, the customer base has increased and sales have grown more organically. We anticipate, however, experiencing significant marketing expenses throughout 2015 as we will seek to expand our customer base even more and build out the Company brand.  Much of the selling and marketing that happens outside of this categorization occurred in new staffing in marketing.
 
General and Administrative Expenses.   General and administrative expenses for the six months ending July 31, 2014 and 2013 were $1,540,646 and $868,748, respectively, which represents an increase of $671,898 or 77% from the prior period. The increase was principally the result of overall increased expansion of the business and the need to support that expansion mostly through professional fees and payroll. General and administrative expense also increased due to increased corporate reporting expenses and increased insurance expenses.

Total Other Income (Expense).  We had other expense of $445,939 for the six months ended July 31, 2014, compared to other expense for the six months ended July 31, 2013 of $316,186, an increase of $129,753.  This increase was in connection with the Ironridge transactions in the period (described below) which caused a loss on extinguishment of debt from the issuance of shares but which are subject to true-ups after applicable calculation periods (see note 9 to the financial statements included herein).  Also included in total other expense was interest expense of $122 for the six months ended July 31, 2014, compared to interest expense of $108,674 for the six months ended July 31, 2013.  Interest expense decreased due to the acquisition of our outstanding interest bearing liabilities by Ironridge and the settlement of such debt through the issuance of common stock.

Net Loss. We incurred a net loss of $4,928,275 and $1,133,726 for the six months ended July 31, 2014 and 2013, respectively, an increase in net loss of $3,794,549 or 335% from the prior period. The principal reason for the increase in net loss was the $3,750,285 increase in total operating expenses from the growth of the Company and its staffing needs.

LIQUIDITY AND CAPITAL RESOURCES
 
Since our inception, we have financed our operations primarily through the issuance of our common stock.
 
The following table presents details of our working capital and cash and cash equivalents:

               
Increase
 
 
July 31, 2014
 
January 31, 2014
   
/(Decrease)
 
Working Capital
  $ 954,422     $ 1,606,350     $ (651,928 )
Cash
  $ 1,147,404     $ 857,122     $ 290,282  

At July 31, 2014, we had total assets of $4,268,649 and total liabilities of $2,108,646. Our current sources of liquidity include our existing cash and cash equivalents and cash from operations and funds raised through the sale of common stock and warrants in private placements (as described in greater detail below). For the three months ended July 31, 2014, although we generated gross sales of $2,078,746 we had a net loss of $3,015,086.

 
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Total current assets of $3,063,068 as of July 31, 2014 included cash of $1,147,404, accounts receivable of $1,672,270, notes receivable – related party of $2,724, inventory of $45,468, prepaid expenses of $128,946, and other current assets of $66,256.

We had total assets as of July 31, 2014 of $4,268,649 which included the total current assets of $3,063,068, $416,156 of property and equipment, net, $632,667 of license agreement, representing the value of the FSHR License Agreement, $45,030 of intangible assets, $88,162 of goodwill and $23,566 of other assets.

We had total liabilities of $2,108,646 as of July 31, 2014, which were solely current liabilities and included $751,400 of accounts payable, $820,164 of payable relating to the Ironridge agreements (described above), $117,425 of accrued royalty – related party (relating to amounts accrued in connection with the FSHR License Agreement), and $419,657 of accrued expenses.

As of the filing of this report, we believe that our cash position, the funds raised through our ongoing offering, and the revenues we generate will be sufficient to meet our working capital needs for approximately the next twenty-four months based on the pace of our planned activities.

In the fourth fiscal quarter of 2014 and first two fiscal quarters of 2015, we established an annual promotional calendar for our retailers and distributors.  Promotions range from discounts at store level to in-store tastings.  To date, promotions and trial programs, especially at some of our larger accounts such as Kroger, Safeway and HEB, are increasing product velocity.  Additionally we are constantly evaluating cost effective tools to generate brand awareness and trials outside of the retail environment.  We plan to continue driving these efforts with the goal of seeing revenues from organic growth increase quarter-to-quarter through fiscal 2015.
 
We are excited about our other business lines as well. Our away from home business has been growing, especially in the Denver, Colorado area.  Its growth helps feed our grocery retail business at a minor cost.  Our international growth is picking up pace as well.  Europe is growing, as has our commitment to foster the region.  Chile and South America still remain one of the most exciting markets for us as our distributors and partners in that region have done a phenomenal job marketing and growing the brand.

Gross margins were very tight in fiscal 2014 as significant discounts and deductions were given to gain distribution and market penetration.  As these accounts mature, we expect our gross margins to return to prior levels in fiscal 2015.

The overwhelming majority of our sales are outside of the distribution of Jamaican Blue Mountain (JBM) beans and products.  Nonetheless, one of our main concerns for fiscal 2015 is a shortage in JBM.  Hurricane Sandy and coffee leaf rust has impacted the production output of JBM by about 40 percent for 2014.  Jamaica and the industry expect a slow recovery in 2015 and to be back in full production by 2016.  We are diligently working to secure more JBM as the market we created for it continues to expand.  Limited JBM supply hampered our growth in fiscal 2014.  We are currently working to address the supply issues and while we believe we will be in a far better position in Fiscal 2015 with respect to JBM availability, if we are unable to purchase a sufficient quantity of high-quality coffee beans, we may not be able to fulfill demand for our coffee, our revenue may decrease and our ability to expand our business may be negatively impacted.
 
We have not yet generated net income through the sale of our products and make no assurances that net income will be generated in the future.  We will remain flexible in the implementation of our business strategy and will revise downward our funding requirements and further reduce our selling and marketing and our general and administrative expenses to a level that is in line with our financial means but consistent with our vision.

 
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In March, May and July 2013, we affected the transactions with Ironridge, described in greater detail below, pursuant to which an aggregate of $4,795,802 in accounts payable and accrued expenses owed by us to various parties, which was purchased by Ironridge, was satisfied by the issuance of shares of our common stock, came off our balance sheet and significantly improved our liquidity.  The Ironridge transactions helped fuel our significant growth for fiscal 2014; however, we have no intentions, nor do we anticipate doing another transaction in the same format as we did with Ironridge in the foreseeable future.
 
From time to time, we may attempt to raise capital through either equity or debt offerings.  In July and August 2013, we raised $246,000 through the sale of units and in April 2014 we raised $2.5 million through the sale of units to Mother Parkers, described in greater detail below. Our capital requirements will depend on many factors, including, among other things, the rate at which our business grows, with corresponding demands for working capital and expansion capacity. We could be required, or may elect, to seek additional funding through public or private equity, debt financing or bank financing. However, a credit facility, or additional funds through public or private equity or other debt financing, may not be available on terms acceptable to us or at all, or that any such financing activity would not be dilutive to our stockholders. Without additional funds and/or increased revenues, we may not be able to expand our business as planned.

Our ability to meet our obligations in the ordinary course of business is dependent upon our ability to sell our products directly to end-users and through distributors, establish profitable operations through increased sales and decreased expenses and obtain additional funds when needed.
 
Cash Flows

   
Six months Ended
 
   
July 31 ,2014
   
July 31, 2013
 
Net cash provided by (used in) operating activities
  $ (2,179,973 )   $ 671,857  
Net cash provided by (used in) investing activities
  $ (24,780 )   $ 11,526  
Net cash provided by (used in) financing activities
  $ 2,495,035     $ (273,322 )
 
Operating Activities
 
Compared to the corresponding period in 2013, net cash used in operating activities decreased by $2,851,830 for the six months ended July 31, 2014. The decrease was primarily due to $4,928,275 of net loss, $586,323 of increase in accounts receivable and $430,110 of decrease in accounts payable, offset by $1,010,142 of decrease in prepaid expenses and other current assets, $1,090,093 of share based employee compensation and $820,164 of loss on settlement of liabilities in connection with the Ironridge transactions.
 
Investing Activities
 
Compared to the corresponding period in fiscal 2013, net cash used in investing activities increased by approximately $36,306 due primarily to restricted cash received in connection with the termination of a sweep fund account we previously maintained with one of our lenders, which transaction was subsequently cancelled.

Financing Activities
 
Compared to the corresponding period in fiscal 2013, net cash provided by financing activities increased by approximately $2,768,357 for the six months ended July 31, 2014 primarily from the $2,500,000 of common shares sold to Mother Parkers for cash in the current period (as described below).

 
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From time to time, we may attempt to raise capital through either equity or debt offerings. Our capital requirements will depend on many factors, including, among other things, the rate at which our business grows, with corresponding demands for working capital and expansion capacity. We could be required, or may elect, to seek additional funding through public or private equity, debt financing or bank financing.

Funding and Financing Agreements

Ironridge Transactions

On March 6, 2013, May 24, 2013 and July 26, 2013, pursuant to three separate orders setting forth stipulated settlements (the “Orders” and the “Stipulations”) issued by the Superior Court of the State of California for the County of Los Angeles – Central District (the “Court”), Ironridge Global IV, Ltd. (“Ironridge”), who had previously purchased a total of $1,017,744, $1,278,058 and $2,499,372, respectively, in accounts payable and accrued expenses (each, the “Claim”) owed by us to various parties, was issued shares of our common stock (each the “Initial Issuance”) in satisfaction of such accounts payable and accrued expenses, which amounts came off our balance sheet and significantly improved our liquidity. The accounts payable and accrued expenses represented amounts originally owed by us to various creditors in connection with trade payables, the purchase of property and equipment, prior credit agreements, and attorneys’ fees.  The shares issued in the Initial Issuances, totaling 7,000,000, 5,000,000 and 5,000,000 shares, respectively, are subject to adjustment based on the closing prices of our common stock during certain calculation periods (as described in greater detail in the Current Reports on Form 8-K filed with the Securities and Exchange Commission on March 8, 2013, May 15, 2013 and July 30, 2013, respectively).  In July 2013, in connection with the true up associated with the March 2013 Ironridge transaction and pursuant to the terms of the March 2013 Stipulation, Ironridge returned 1,646,488 shares of the Company’s common stock to the Company for cancellation, which shares were cancelled in July 2013. In November 2013 we issued Ironridge an additional 4,524,079 shares of common stock, representing 671,841 additional shares pursuant to a true up in connection with the May 2013 Order and Stipulation and 3,852,238 additional shares pursuant to the July 2013 Order and Stipulation. In February 2014, we issued Ironridge an additional 3,366,316 shares of common stock pursuant to the July 2013 Order and Stipulation. In August 2014, we issued Ironridge an additional 3,853,555 shares of common stock pursuant to the July 2013 Order and Stipulation. The settlement of payables for common shares has been recorded as extinguishments.  At July 31, 2014 this liability was $820,164.

Additionally, as a result of each Stipulation, we agreed that at no time shall shares of common stock be issued to Ironridge and its affiliates which would result in them owning or controlling more than 9.99% of the Company’s outstanding common stock.  We also agreed pursuant to each Stipulation that (a) until at least one half of the total trading volume for each respective calculation period has traded, we would not, directly or indirectly, enter into or effect any split or reverse split of our common stock; (b) until at least thirty days from the date each Order was approved, we would not, directly or indirectly, issue any securities pursuant to a Form S-8 registration statement; and (c) until at least six months from the date each Order was approved, we would not, directly or indirectly, issue or sell any free trading securities for financing purposes; provided that in lieu of covenant (c) above, for the July 2013 Stipulation, we instead agreed that until at least 180 days after the end of the applicable calculation period, (a) we would not issue, sell or agree to issue or sell any securities to any person other than Ironridge or its affiliates, except for: (A) common stock, options or warrants to employees, officers, consultants or directors pursuant to Employee Stock Ownership Plans, or (B) restricted common stock, in transactions with strategic industry, business or operating partners that provide benefits other than the investment of funds, issued at a fixed price not subject to any adjustment, reset or variable element of any kind.

The result of the Orders and Stipulations is that a total of $4,795,802 in accounts payable and accrued expenses owed by us to various parties, which was purchased by Ironridge was satisfied by the issuance of shares of our common stock as provided above, came off our balance sheet and significantly improved our liquidity.
 
Effective September 12, 2014, the Company and Ironridge agreed to a Stipulation to Modify Prior Order For Approval of Stipulation For Settlement of Claims and an Order Modifying Prior Order For Approval of Stipulation For Settlement of Claims (collectively, the “Settlement”) with the Court, pursuant to which the parties agreed to settle all outstanding obligations of the Company to issue additional shares of common stock to Ironridge in connection with further true-ups under the July 2013 Order and Stipulation in consideration for the issuance to Ironridge of 5,000,000 shares of common stock (which will be issued to Ironridge pursuant to an exemption from registration provided by Section 3(a)(10) of the Securities Act of 1933, as amended). As a result of the Settlement, no additional shares will be owed by the Company to Ironridge in connection with further true-ups and the restrictions on the Company’s ability to sell and issue additional shares of common stock (as described above) in connection with the July 2013 Order and Stipulation or otherwise were terminated.
 
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Private Placements

In July and August 2013, the Company undertook a private offering of units to accredited investors, each consisting of one share of common stock and ½ of one warrant to purchase one share of common stock, which units have a sales price equal to a 20% discount to the closing price of the Company’s common stock on the date of each investor’s subscription and which warrants have an exercise price equal to 150% of the closing price on the date of each investor’s subscription.  The Company sold an aggregate of 647,137 units to four accredited investors at prices between $0.35 and $0.392 per unit and raised proceeds of $246,000 from such sales.  An aggregate of 647,137 shares and warrants to purchase an aggregate of 323,570 shares of the Company’s common stock were sold in the offering, which warrants are evidenced by Common Stock Purchase Warrants, have exercise prices from between $0.66 and $0.74 per share, a term of one year, and prohibit the holders thereof from exercising such warrants to the extent such exercise would result in the beneficial ownership of more than 4.99% of the Company’s common stock, subject to the holders’ right to waive such limitation with 61 days prior written notice.

On April 24, 2014, the Company entered into a Subscription Agreement with Mother Parkers Tea & Coffee Inc. (“Mother Parkers” and the “Subscription”).  Pursuant to the Subscription, Mother Parkers purchased 7,333,529 units from the Company, each consisting of (a) one share of the Company’s common stock, $0.001 par value per share (the “Shares”); and (b) one (1) warrant to purchase one share of the Company’s common stock (the “Warrants” and collectively with the Shares, the “Units”) at a price per Unit equal to the fifty day weighted-average price per share of the Company’s common stock on the OTCQB market, for the fifty trading days ending March 7, 2014 (the date the parties first discussed the transactions contemplated by the Subscription), which was $0.3409 (the “Per Unit Price”). The total purchase price paid for the Units was $2,500,000.

Pursuant to the Subscription, we provided Mother Parkers a right of first refusal for a period of two (2) years following the Subscription, to purchase up to 10% of any securities (common stock, options or warrants exercisable for common stock) we propose to offer and sell in a public or private equity offering (the “ROFO Securities”), exercisable for 48 hours from the time we provide Mother Parkers notice of such proposed sale of ROFO Securities (subject where applicable to Mother Parkers meeting any prerequisites to participation in the offering). The right of first refusal does not apply to the issuance of (a) shares of common stock or options to employees, officers, directors or consultants of the Company in consideration for services, (b) securities exercisable or exchangeable for or convertible into shares of common stock issued and outstanding on the date of the Subscription, (c) securities issued pursuant to acquisitions or strategic transactions approved by the directors of the Company, provided that any such issuance shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital, and (d) any debt securities (other than any debt securities exchangeable for or convertible into shares of common stock). The right of first refusal is not assignable and expires upon the first to occur of two (2) years following the date of the Subscription and the date Mother Parkers enters into or takes certain bankruptcy related actions.

The Warrants have an exercise price equal to 150% of the Per Unit Price ($0.51135 per share), a term of three years and prohibit Mother Parkers from exercising such Warrants to the extent such exercise would result in the beneficial ownership of more than 9.99% of the Company’s common stock, subject to Mother Parkers’ right to waive such limitation with 61 days prior written notice.

Off-Balance Sheet Arrangements
 
As part of our on-going business, we have not participated in transactions that generate material relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPEs”), which would have been established for the purpose of facilitating off-balance sheet arrangement or other contractually narrow or limited purposes. As of July 31, 2014, we are not involved in any material unconsolidated SPEs.

 
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
 
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
 
Item 4. Controls and Procedures.
 
Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Accounting and Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on our evaluation, our Principal Executive Officer and Financial Officer concluded that our disclosure controls and procedures were not effective to ensure the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed and reported within the time periods specified in the SEC’s rules and forms.
 
Internal Control Over Financial Reporting

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
 
A material weakness is a deficiency, or combination of deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses at July 31, 2014:
 
 
(1)
lack of a functioning audit committee and lack of a majority of outside directors on the Company's Board of Directors capable to oversee the audit function;

 
(2)
inadequate segregation of duties due to limited number of personnel, which makes the reporting process susceptible to management override;

 
(3)
insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements;

 
(4)
ineffective controls over period end financial disclosure and reporting processes; and
 
 
(5)
ineffective controls over the recordation of certain revenue transactions.

 
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Management believes that the material weaknesses set forth in items (1) through (5) above did not have an effect on the Company's financial reporting during the six months ended July 31, 2014.
 
We are committed to improving our financial organization. As part of this commitment, moving forward, at such time as we are able to raise additional funding, we plan to hire additional outside accounting personnel and take action to consolidate check writing and financial controls.  Additionally, as soon as funds are available, we plan to make a determination as to whether it is in the Company’s best interest to (1) appoint one or more outside directors to our Board of Directors to be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and will increase our personnel resources; (3) hire independent third parties to provide expert advice; and (4) prepare and implement sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of GAAP and SEC disclosure requirements.
 
We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended July 31, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 
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PART II - OTHER INFORMATION
 
Item 1. Legal Proceedings.
 
From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in any legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future. 

Item 1A. Risk Factors.
 
There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended January 31, 2014, filed with the Commission on May 16, 2014, and investors are encouraged to review such risk factors prior to making an investment in the Company.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 
As described in greater detail above under “Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations” – “Liquidity and Capital Resources” – “Funding and Financing Agreements” – “Ironridge Transactions”, in March 2013, May 2013 and July 2013, we issued 7,000,000, 5,000,000 and 5,000,000 shares of common stock, respectively, to Ironridge in connection with certain transactions, which are subject to adjustment as discussed above.  In July 2013, in connection with the true up associated with the March 2013 Ironridge transaction and pursuant to the terms of the March 2013 Stipulation, Ironridge returned 1,646,488 shares of the Company’s common stock to the Company for cancellation, which shares were cancelled by the Company in July 2013.  In November 2013 we issued Ironridge an additional 4,524,079 shares of common stock, representing 671,841 additional shares pursuant to the May 2013 Order and Stipulation and 3,852,238 additional shares pursuant to the July 2013 Order and Stipulation. In February 2014, we issued Ironridge an additional 3,366,316 shares of common stock pursuant to the July 2013 Order and Stipulation. In August 2014, we issued Ironridge an additional 3,853,555 shares of common stock pursuant to the July 2013 Order and Stipulation.
 
Effective in connection with the September 12, 2014 Settlement with Ironridge described above under “Funding and Financing Agreements” – “Ironridge Transaction”, we agreed to issue Ironridge 5,000,000 shares of common stock in full and complete settlement of the July 2013 Order and Stipulation.  As a result of the Settlement no additional shares will be owed by the Company to Ironridge pursuant to such July 2013 Order and Stipulation in connection with further true-ups or otherwise.
 
The Company claims an exemption from registration provided by Section 3(a)(10) of the Securities Act of 1933, as amended (the “Act”), for the issuance of the shares of the Company’s common stock issued to Ironridge, as the issuances of securities were in exchange for bona fide outstanding claims, where the terms and conditions of such issuance were approved by a court after a hearing upon the fairness of such terms and conditions. 
 
Effective June 27, 2014, we formed an Advisory Board to provide strategic guidance, independent advice and recommendations to the Board of Directors (the “Directors”) on the organization, funding, plan of operations, proposed joint ventures and partnerships, governance, marketing and expansion of the Company and its products and services, and on such other matters as the Directors may from time to time request input and guidance on. The Advisory Board has no authority to bind the Company or the Directors on any matters and was formed only to provide the Directors non-binding guidance and advice as requested by the Directors from time to time.  Effective on the same date, the Directors appointed (1) Mr. Michael Higgins; and (2) Mr. Anthony Schiano, as the initial members of the Advisory Board. The Directors also agreed to compensate the Advisory Board members for agreeing to be appointed to the Advisory Board and for services to the Advisory Board through the issuance of shares of common stock of the Company totaling $30,000 per year (the “Yearly Fees”).  The first Yearly Fees were payable to the Advisory Board members in connection with their appointment to the Advisory Board. As such, each Advisory Board member was issued 100,000 shares of restricted common stock of the Company (the “Advisory Board Shares”), representing the total number of shares of common stock equal to the total $30,000 in Yearly Fees divided by the five day average of the closing price of the Company’s common stock on the date immediately preceding the date of the grant of such shares ($0.30 per share).  The Advisory Board Shares are subject to forfeiture and vest to the members of the Advisory Board at the rate of 1/4th of such shares (25,000 shares) per quarter, on each of September 27, 2014, December 27, 2014, March 27, 2015 and June 27, 2015 (the “Vesting Dates” and “Vesting Terms”), provided that such applicable Advisory Board member remains a member of the Advisory Board through such periods.  Any unvested shares held by an Advisory Board member upon their removal, resignation or death will be forfeited back to the Company.

 
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The issuances described above were exempt from registration pursuant to Section 4(2) and/or Rule 506 of Regulation D of the Securities Act since the foregoing issuances did not involve a public offering, the recipients took the securities for investment and not resale, we took appropriate measures to restrict transfer, and the recipients were (a) “accredited investors”; and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. None of these securities may be re-offered or resold absent either registration under the Act or the availability of an exemption from the registration requirement.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Effective in July 2014, the Company entered into a Consulting Agreement with a consultant pursuant to which the consultant agreed to provide financial due diligence and other advisory services to the Board of Directors of the Company in consideration for $15,000 per month of which 50% of such consideration will be paid in shares of common stock of the Company.  The agreement has a term of three months extendable or renewable thereafter with the mutual consent of the parties and can be terminated by either party with thirty days prior written notice.  The agreement also prohibits the consultant from soliciting employees of the Company or competing against the Company for a period of 12 months from the termination of the agreement.  The Company agreed to issue the consultant 26,786 shares of common stock for July 2014 (valued at $0.28 per share or $7,500 in aggregate) and 30,000 shares for August 2014 (valued at $0.25 per share or $7,500 in aggregate), as the 50% monthly stock consideration due under the agreement, which shares were/will be issued under the Company’s Equity Compensation Plans as previously approved by the shareholders.
 
Effective September 12, 2014, the Company and Ironridge agreed to a Stipulation to Modify Prior Order For Approval of Stipulation For Settlement of Claims and an Order Modifying Prior Order For Approval of Stipulation For Settlement of Claims (collectively, the “Settlement”) with the Court, pursuant to which the parties agreed to settle all outstanding obligations of the Company to issue additional shares of common stock to Ironridge in connection with further true-ups under the July 2013 Order and Stipulation in consideration for the issuance to Ironridge of 5,000,000 shares of common stock (which will be issued to Ironridge pursuant to an exemption from registration provided by Section 3(a)(10) of the Securities Act of 1933, as amended). As a result of the Settlement, no additional shares will be owed by the Company to Ironridge in connection with further true-ups and the restrictions on the Company’s ability to sell and issue additional shares of common stock (as described above) in connection with the July 2013 Order and Stipulation or otherwise were terminated.

Item 6. Exhibits.

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

 
15

 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
JAMMIN JAVA CORP.
   
Dated: September  15, 2014
By:  /s/ Brent Toevs
 
Brent Toevs
 
Chief Executive Officer
 
(Principal Executive Officer)

 
JAMMIN JAVA CORP.
   
Dated: September 15, 2014
By:  /s/ Anh Tran
 
Anh Tran
 
President, Secretary and Treasurer
 
(Principal Accounting and Financial Officer)


 
16

 

Exhibit Index

Exhibit
Number
 
Description
     
2.1
 
Asset Purchase Agreement with BikeCaffe Franchising Inc. (December 4, 2013)(incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K, filed with the Commission on December 10, 2013)
     
3.1
 
Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed April 1, 2014)
     
3.2
 
Amended and Restated Bylaws of Jammin Java Corp. (May 23, 2014) (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed May 30, 2014)
     
3.3
 
Articles of Merger (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed March 12, 2008) 
     
3.4
 
Articles of Merger (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed September 17, 2009)
     
4.1
 
Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form SB-2 filed August 3, 2005)
     
4.2
 
2011 Equity Compensation Plan (incorporated by reference to Exhibit 10.4 of the Company’s Form 8-K filed August 10, 2011)
     
4.3
 
Amended and Restated 2012 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 of the Company’s Form S-8/A Registration Statement filed October 17, 2013)
     
4.4
 
Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.5 of the Company’s Quarterly Report on Form 10-Q filed September 12, 2013)
     
4.5
 
2013 Equity Incentive Plan (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-8 filed October 17, 2013)
     
10.1
 
Trademark License Agreement, dated as of March 31, 2010, by and between Marley Coffee, LLC and the Company (incorporated by reference to the Company’s Annual Report on Form 10-K filed May 17, 2011)
     
10.2**
 
Supply and Toll Agreement, dated as of April 28, 2010, between Canterbury Coffee Corporation and the Company (incorporated by reference to Exhibit 10.2 of the Company’s Annual Report on Form 10-K filed May 17, 2011)
     
10.3
 
Exclusive Sales and Marketing Agreement, dated as of April 25, 2011, by and between National Coffee Service & Vending and the Company (incorporated by reference to Exhibit 10.3 of the Company’s Annual Report on Form 10-K filed May 17, 2011)
     
10.4
 
Share Issuance Agreement, dated as of December 22, 2010, between Straight Path Capital and the Company (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed January 5, 2011)
     
10.5**
 
First Amendment to Supply and Toll Agreement, dated as of May 12, 2011, by and between Canterbury Coffee Corporation and the Company (incorporated by reference to Exhibit 10.5 of the Company’s Annual Report on Form 10-K filed May 17, 2011)

 
17

 
 
10.6
 
Amendment to Trademark License Agreement, dated as of August 5, 2011, by and between Marley Coffee, LLC and the Company (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed August 10, 2011)
     
10.7
 
Consulting Agreement, dated as of August 6, 2011, by and between Shane Whittle and the Company (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed August 10, 2011)
     
10.8
 
Grant of Contractor Stock Option, dated as of August 11, 2011, from the Company to Shane Whittle(incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K/A filed August 11, 2011)
     
10.9
 
Jammin Java Corp. Equity Compensation Plan(incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed August 10, 2011)
     
10.10
 
Employment Agreement, dated as of August 5, 2011, by and between Anh Tran and the Company (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed August 10, 2011)
     
10.11
 
Employment Agreement, dated as of August 8, 2011, by and between Brent Toevs and the Company (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed August 10, 2011)
     
10.12
 
Grant of Employee Stock Option  dated as of August 5, 2011, from the Company to Anh Tran (incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed August 10, 2011)
     
10.13
 
Grant of Employee Stock Option, dated as of August 5, 2011, from the Company to Rohan Marley(incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K filed August 10, 2011)
     
10.14
 
Grant of Employee Stock Option, dated as of August 10, 2011, from the Company to Brent Toevs (incorporated by reference to Exhibit 10.9 of the Company’s Current Report on Form 8-K filed August 10, 2011)
     
10.15**
 
Roasting and Distribution Agreement, dated as of January 1, 2012, by and between the Company and Canterbury Coffee Corporation, (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed May 14, 2012)
     
10.16
 
Credit Agreement, dated as of July 19, 2012, by and between the Company and TCA Global Credit Master Fund, LP (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed August 2, 2012)
     
10.17
 
Revolving Note ($350,000) issued by the Company to TCA Global Credit Master Fund, LP (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed August 2, 2012)
     
10.18
 
Security Agreement dated July 29, 2012, by and between the Company and TCA Global Credit Master Fund, LP (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed August 2, 2012)
     
10.19
 
Investment Agreement, dated July 31, 2012, by and between the Company and Fairhills Capital Offshore, Ltd. (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed August 2, 2012)

 
18

 
 
10.20
 
Registration Rights Agreement, dated July 31, 2012, by and between the Company and Fairhills Capital Offshore, Ltd. (incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed August 2, 2012)
     
10.21
 
Securities Purchase Agreement, dated July 31, 2012, by and between the Company and Fairhills Capital Offshore, Ltd. (incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed August 2, 2012)
     
10.22
 
License Agreement with Fifty-Six Hope Road Music Limited dated September 13, 2012 (incorporated by reference to Exhibit 10.7 of the Company’s Amended Report on Form 10-Q/A, filed on October 4, 2012)
     
10.23
 
Form of Subscription Agreement (August 2013 Offering) (incorporated by reference to Exhibit 10.23 of the Company’s Quarterly Report on Form 10-Q filed September 12, 2013)
     
10.24
 
Amended and Restated Employment Agreement with Brent Toevs (August 2013) (incorporated by reference to Exhibit 10.24 of the Company’s Quarterly Report on Form 10-Q filed September 12, 2013)
     
10.25
 
Amended and Restated Employment Agreement with Anh Tran (August 2013) (incorporated by reference to Exhibit 10.25 of the Company’s Quarterly Report on Form 10-Q filed September 12, 2013)
     
10.26
 
Lease Agreement (June 2013) – 4730 Tejon Street, Denver, Colorado 80211 (incorporated by reference to Exhibit 10.26 of the Company’s Quarterly Report on Form 10-Q filed September 12, 2013)
     
10.27
 
Asset Purchase Agreement between the Company and Black Rock Beverage Services, LLC (August 2013) (incorporated by reference to Exhibit 10.27 of the Company’s Annual Report on Form 10-K filed May 16, 2014)
     
10.28
 
Form of Subscription Agreement July/August 2013 Offering (incorporated by reference to Exhibit 10.28 of the Company’s Annual Report on Form 10-K filed May 16, 2014)
     
10.29
 
Form of Common Stock Purchase Warrant Agreement July/August 2013 Offering (incorporated by reference to Exhibit 10.29 of the Company’s Annual Report on Form 10-K filed May 16, 2014)
     
10.30
 
Amended and Restated License Agreement with Mother Parkers Tea & Coffee Inc. (May 20, 2014) (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed May 30, 2014)
     
10.31
 
Form of 2013 Equity Incentive Plan Stock Option Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on August 29, 2014)
     
10.32
 
Form of Amended and Restated 2012 Equity Incentive Plan Stock Option Agreement (incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed on August 29, 2014)
     
10.33*
 
Form of Restricted Stock Grant Agreement to Advisory Board Members (June 2014)
     
14.1
 
Code of Ethical Business Conduct, adopted March 31, 2014 (incorporated by reference to Exhibit 14.1 of the Company’s Current Report on Form 8-K filed April 1, 2014)
     
21.1
 
List of Subsidiaries (incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K filed May 16, 2014)

 
19

 
 
31.1*
 
Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2*
 
Certification of the Principal Accounting and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1****
 
Certifications of the Principal Executive Officer and the Principal Accounting and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS***
 
XBRL Instance Document
     
101.SCH***
 
XBRL Taxonomy Extension Schema Document
     
101.CAL***
 
XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF***
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB***
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE***
 
XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

**   The Company has obtained confidential treatment of certain portions of this agreement which have been omitted and filed separately with the U.S. Securities and Exchange Commission.  

*** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

**** Furnished herewith.
 
 
 
20

 
 
 
 




Exhibit 10.33
 
JAMMIN JAVA CORP.

NOTICE OF RESTRICTED STOCK GRANT

Company: Jammin Java Corp.

Grantee Name: _______________________________________________

Address: _______________________________________________

You have been granted Restricted Stock subject to the terms and conditions of the attached Restricted Stock Grant Agreement, as follows:

Date of Grant: June 27, 2014

Vesting Commencement Date: June 28, 2014

Price Per Share: $0.30

Total Number of Shares Granted: 100,000

Total Value of Shares Granted: $30,000

Total Purchase Price: $0

Agreement Date: July 7, 2014, effective June 27, 2014

Vesting Schedule: The Shares are subject to forfeiture and vest to the Grantee at the rate of 1/4th of such Shares (25,000 Shares) per quarter, on each of September 27, 2014, December 27, 2014, March 27, 2015 and June 27, 2015 (the “Vesting Dates” and “Vesting Terms”) provided that in the event the Grantee resigns, is removed, or dies prior to the vesting in full of the Shares, any Shares not fully vested to the Grantee shall be forfeited and revert back to the Company.


 
Page 1 of 13

 

JAMMIN JAVA CORP.

RESTRICTED STOCK GRANT AGREEMENT

This RESTRICTED STOCK GRANT AGREEMENT (“Agreement”), dated as of the Agreement Date specified on the Notice of Restricted Stock Grant is made by and between JAMMIN JAVA CORP., a Nevada corporation (the “Company”), and the grantee named in the Notice of Restricted Stock Grant (the “Grantee,” which term as used herein shall be deemed to include any successor to Grantee by will or by the laws of descent and distribution, unless the context shall otherwise require).

BACKGROUND

The Board of Directors (the “Board”)(or an authorized Committee thereof), approved the issuance to Grantee, effective as of the date set forth above, of an award of the number of shares of Restricted Stock as is set forth in the attached Notice of Restricted Stock Grant (which is expressly incorporated herein and made a part hereof, the “Notice of Restricted Stock Grant”) at the purchase price per share of Restricted Stock (the “Purchase Price”), if any, set forth in the attached Notice of Restricted Stock Grant, upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual premises and undertakings hereinafter set forth, the parties agree as follows:

1.           Grant and Purchase of Restricted Stock.  The Company hereby grants to Grantee, and Grantee hereby accepts the Restricted Stock set forth in the Notice of Restricted Stock Grant, subject to the payment by Grantee of the total purchase price, if any, set forth in the Notice of Restricted Stock Grant.

2.           Stockholder Rights.

(a)         Voting Rights.  Until such time as all or any part of the Restricted Stock is forfeited to the Company under this Agreement, if ever, Grantee (or any successor in interest) has the rights of a stockholder, including voting rights, with respect to the Restricted Stock, however, such Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until vested pursuant to the Vesting Schedule.
 
(b)         Dividends and Other Distributions.  During the period of restriction, Grantee is entitled to all regular cash dividends or other distributions paid with respect to all shares while they are so held.  If any such dividends or distributions are paid in shares, such shares will be subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were paid.

 
Page 2 of 13

 


3.           Vesting of Restricted Stock.
 
(a)         The Restricted Stock is restricted and subject to forfeiture until vested.  The Restricted Stock which has vested and is no longer subject to forfeiture is referred to as “Vested Shares.”  All Restricted Stock which has not become Vested Shares is referred to as “Nonvested Shares.
 
(b)         Restricted Stock will vest and become nonforfeitable in accordance with the vesting schedule contained in the Notice of Restricted Stock Grant.

(c)         Any Nonvested Shares of Grantee will automatically be forfeited if Grantee’s service with the Company ceases owing to, among other things, the Grantee’s (a) death, (b) disability, or (c) retirement, unless the Board (or an authorized committee thereof) provides otherwise.
 
(d)         In the event of a change of control, the Board (or an authorized committee thereof), in its discretion, may accelerate the time at which all or any portion of Grantee’s Restricted Stock will vest.
 
(e)         Nonvested Shares may not be sold, transferred, assigned, pledged, or otherwise disposed of, directly or indirectly, whether by operation of law or otherwise.  

4.           Forfeiture of Nonvested Shares.  Except as provided herein, if Grantee's service with the Company ceases for any reason any Nonvested Shares will be automatically forfeited to the Company; provided, however, that the Board (or an authorized committee thereof) may cause any Nonvested Shares immediately to vest and become nonforfeitable in their discretion.
 
(a)         Legend.  Each certificate representing Restricted Stock granted pursuant to the Notice of Restricted Stock Grant may bear a legend substantially as follows:
 
“THESE SECURITIES ARE SUBJECT TO FORFEITURE PURSUANT TO THE TERMS OF A RESTRICTED STOCK GRANT AGREEMENT DATED JULY 7, 2014, BY AND AMONG THE HOLDER AND THE ISSUER, WHICH RESTRICTS THE RIGHT TO TRANSFER, SELL OR OTHERWISE DISPOSE OF THESE SECURITIES WHETHER VOLUNTARY, INVOLUNTARY OR BY OPERATION OF LAW AND PROVIDES THAT SUCH SHARES ARE SUBJECT TO FORFEITURE AS SET FORTH THEREIN.  A COPY OF SUCH RESTRICTED STOCK GRANT AGREEMENT IS AVAILABLE FOR REVIEW BY THE RECORD HOLDER OF THESE SECURITIES AT THE PRINCIPAL OFFICES OF THE ISSUER.”
 
 
Page 3 of 13

 
(b)         Escrow of Nonvested Shares.  The Company has the right to retain the certificates representing Nonvested Shares in the Company’s possession until such time as all restrictions applicable to such shares have been satisfied.
 
(c)         Removal of Restrictions.  The Grantee is entitled to have the legend removed from certificates representing Vested Shares.

5.           Recapitalizations, Exchanges, Mergers, Etc.  The provisions of this Agreement apply to the full extent set forth herein with respect to any and all shares of capital stock of the Company or successors of the Company which may be issued in respect of, in exchange for, or in substitution for the Restricted Stock by reason of any stock dividend, split, reverse split, combination, recapitalization, reclassification, merger, consolidation or otherwise which does not terminate this Agreement.  Except as otherwise provided herein, this Agreement is not intended to confer upon any other person except the parties hereto any rights or remedies hereunder.

6.           Grantee Representations.

Grantee represents to the Company the following:

(a)         Restrictions on Transfer.  Grantee acknowledges that the Restricted Stock to be issued to Grantee must be held indefinitely unless subsequently registered and qualified under the Securities Act of 1933, as amended (the “Securities Act”) or unless an exemption from registration and qualification is otherwise available.  In addition, Grantee understands that the certificate representing the Restricted Stock will be imprinted with a legend which prohibits the transfer of such Restricted Stock unless they are sold in a transaction in compliance with the Securities Act or are registered and qualified or such registration and qualification are not required in the opinion of counsel acceptable to the Company.
 
(b)         Relationship to the Company; Experience.  Grantee either has a preexisting business or personal relationship with the Company or any of its officers, directors or controlling persons or, by reason of Grantee’s business or financial experience or the business or financial experience of Grantee’s personal representative(s), if any, who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent, directly or indirectly, has the capacity to protect Grantee’s own interests in connection with Grantee’s acquisition of the Restricted Stock to be issued to Grantee hereunder.  Grantee and/or Grantee’s personal representative(s) have such knowledge and experience in financial, tax and business matters to enable Grantee and/or them to utilize the information made available to Grantee and/or them in connection with the acquisition of the Restricted Stock to evaluate the merits and risks of the prospective investment and to make an informed investment decision with respect thereto.
 
(c)         Grantee’s Liquidity.  In reaching the decision to invest in the Restricted Stock, Grantee has carefully evaluated Grantee’s financial resources and investment position and the risks associated with this investment, and Grantee acknowledges that
 
 
Page 4 of 13

 
Grantee is able to bear the economic risks of the investment.  Grantee (i) has adequate means of providing for Grantee’s current needs and possible personal contingencies, (ii) has no need for liquidity in Grantee’s investment, (iii) is able to bear the substantial economic risks of an investment in the Restricted Stock for an indefinite period and (iv) at the present time, can afford a complete loss of such investment.  Grantee’s commitment to investments which are not readily marketable is not disproportionate to Grantee’s net worth and Grantee’s investment in the Restricted Stock will not cause Grantee’s overall commitment to become excessive.

(d)         Access to Data.  Grantee acknowledges that during the course of this transaction and before deciding to acquire the Restricted Stock, Grantee has been provided with financial and other written information about the Company.  Grantee has been given the opportunity by the Company to obtain any information and ask questions concerning the Company, the Restricted Stock, and Grantee’s investment that Grantee felt necessary; and to the extent Grantee availed himself of that opportunity, Grantee has received satisfactory information and answers concerning the business and financial condition of the Company in response to all inquiries in respect thereof.
 
(e)         Risks.  Grantee acknowledges and understands that (i) an investment in the Company constitutes a high risk, (ii) the Restricted Stock is highly speculative, and (iii) there can be no assurance as to what investment return, if any, there may be.  Grantee is aware that the Company may issue additional securities in the future which could result in the dilution of Grantee’s ownership interest in the Company.
 
(f)         Valid Agreement.  This Agreement when executed and delivered by Grantee will constitute a valid and legally binding obligation of Grantee which is enforceable in accordance with its terms.

(g)         Residence.  The address set forth on the Notice of Restricted Stock Grant is Grantee’s current address and accurately sets forth Grantee’s place of residence.

(h)         Accredited Investor Status.  The Grantee is an “accredited investor” and has confirmed such “accredited investor” status by completing and executing the Certificate of Accredited Investor Status attached hereto as Exhibit A.
 
(i)         Tax Consequences.  Grantee has reviewed with Grantee’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement.  Grantee is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.  Grantee understands that Grantee (and not the Company) is responsible for Grantee’s own tax liability that may arise as a result of the transactions contemplated by this Agreement.  Grantee understands that Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income the difference between the purchase price for the Restricted Stock and the fair market value of the Restricted Stock as of the date any restrictions on the Restricted Stock lapse.  Grantee understands that Grantee may elect to be taxed at the time the Restricted Stock is purchased rather than
 
 
Page 5 of 13

 
when and as the restrictions lapse by filing an election under Section 83(b) of the Code with the Internal Revenue Service within 30 days from the date of purchase.  The form for making this election is attached as Exhibit B hereto.

GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY ANY ELECTION UNDER SECTION 83(b), EVEN IF GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON GRANTEE’S BEHALF.

7.           No Employment Contract Created.  The issuance of the Restricted Stock is not to be construed as granting to Grantee any right with respect to continuance of employment or any service with the Company or any of its subsidiaries.  The right of the Company or any of its subsidiaries to terminate at will Grantee's employment or terminate Grantee’s service at any time (whether by dismissal, discharge or otherwise), with or without cause, is specifically reserved, subject to any other written employment or other agreement to which the Company and Grantee may be a party.
 
8.           Tax Withholding.  The Company has the power and the right to deduct or withhold, or require Grantee to remit to the Company, an amount sufficient to satisfy Federal, state and local taxes (including the Grantee’s FICA obligation, if any) required by law to be withheld with respect to the grant and vesting of the Restricted Stock.
 
9.           Interpretation.  The Board (or an authorized committee thereof) will interpret and construe this Agreement and any action, decision, interpretation or determination made in good faith by the Board (or an authorized committee thereof) will be final and binding on the Company and Grantee.
 
10.           Notices.  All notices or other communications which are required or permitted hereunder will be in writing and sufficient if (i) personally delivered or sent by telecopy, (ii) sent by nationally-recognized overnight courier or (iii) sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
 
(a)         if to the Grantee, to the address (or telecopy number) set forth on the Notice of Grant; and

(b)         if to the Company, to its principal executive office as specified in any report filed by the Company with the Securities and Exchange Commission or to such address as the Company may have specified to the Grantee in writing, Attention: Corporate Secretary;

or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.  Any such communication will be deemed to have been given (i) when delivered, if personally delivered, or when telecopied, if telecopied, (ii) on the first Business Day (as hereinafter defined) after dispatch, if sent by nationally-recognized overnight courier and (iii) on the fifth Business Day following the date on which the piece of mail containing such communication is
 
 
Page 6 of 13

 
posted, if sent by mail.  As used herein, “Business Day” means a day that is not a Saturday, Sunday or a day on which banking institutions in the city to which the notice or communication is to be sent are not required to be open.
 
11.           Specific Performance.  Grantee expressly agrees that the Company will be irreparably damaged if the provisions of this Agreement are not specifically enforced.  Upon a breach or threatened breach of the terms, covenants and/or conditions of this Agreement by Grantee, the Company will, in addition to all other remedies, be entitled to a temporary or permanent injunction, without showing any actual damage, and/or decree for specific performance, in accordance with the provisions hereof and thereof.  The Board (or an authorized committee thereof) has the power to determine what constitutes a breach or threatened breach of this Agreement.  Any such determinations will be final and conclusive and binding upon Grantee.
 
12.           No Waiver.  No waiver of any breach or condition of this Agreement will be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.
 
13.           Grantee Undertaking.  Grantee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on Grantee pursuant to the express provisions of this Agreement.
 
14.           Modification of Rights.  The rights of Grantee are subject to modification and termination in certain events as provided in this Agreement.
 
15.           Governing Law.  This Agreement is governed by, and construed in accordance with, the laws of the State of Nevada, without giving effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
 
16.           Counterparts; Facsimile Execution.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument.  Facsimile execution and delivery of this Agreement is legal, valid and binding execution and delivery for all purposes.
 
17.           Entire Agreement.  This Agreement (including the Notice of Restricted Stock Grant), constitutes the entire agreement between the parties with respect to the subject matter hereof, and supersedes all previously written or oral negotiations, commitments, representations and agreements with respect thereto.
 
18.           Severability.  In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions
 
 
Page 7 of 13

 
of this Agreement, and this Agreement will be construed as if such invalid, illegal or unenforceable provision had never been contained herein.
 
19.           WAIVER OF JURY TRIAL.  THE GRANTEE HEREBY EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
 


[Signature Page Follows]

 

 
Page 8 of 13

 


IN WITNESS WHEREOF, the parties hereto have executed this Restricted Share Grant Agreement as of the date first written above.

JAMMIN JAVA CORP.


By:________________________________________
Name:___________________________________
Title:____________________________________


GRANTEE:


__________________________________________
Name: _______________


 
Page 9 of 13

 


SPOUSE'S CONSENT TO AGREEMENT
(Required where Grantee resides in a community property state)

I acknowledge that I have read the Agreement and that I know and understand the contents of such Agreement.  I am aware that my spouse has agreed therein to the imposition of certain forfeiture provisions and restrictions on transferability with respect to the Restricted Stock that are the subject of the Agreement, including with respect to my community interest therein, if any, on the occurrence of certain events described in the Agreement.  I hereby consent to and approve of the provisions of the Agreement, and agree that I will abide by the Agreement and bequeath any interest in the Restricted Stock which represents a community interest of mine to my spouse or to a trust subject to my spouse's control or for my spouse's benefit or the benefit of our children if I predecease my spouse.



Dated:  ____________________________________



____________________________________
Signature



____________________________________
Print Name


 
Page 10 of 13

 



Exhibit A

CERTIFICATE OF ACCREDITED INVESTOR STATUS
 
Except as may be indicated by the undersigned below, the undersigned is an “accredited investor,” as that term is defined in Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).  The undersigned has initialed the box below indicating the basis on which he is representing his status as an “accredited investor”:
 
__________  
(A) an individual who has a net worth (either individually or jointly with spouse) in excess of $1,000,000 (excluding the individual’s principal residence); or
 
__________  
(B) an individual who had an individual income (NOT including joint income with spouse) in excess of $200,000 in each of the two most recent tax years and reasonably expects individual income in excess of $200,000 during the current tax year; or
 
__________  
(C) an individual who had an income (including joint income with spouse) in excess of $300,000 in each of the two most recent tax years and reasonably expects individual income in excess of $300,000 during the current tax year.
 
Income” for this purpose is computed by adding the following items to adjusted gross income for federal income tax purposes: (a) the amount of any tax-exempt interest income received; (b) the amount of losses claimed as a limited partner in a limited partnership; (c) any deduction claimed for depletion; (d) deductions for alimony paid; (e) deductible amounts contributed to an IRA or Keogh retirement plan; and (f) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Internal Revenue Code.
 
IN WITNESS WHEREOF, the undersigned has executed this Certificate of Accredited Investor Status effective as of July__, 2014.


Signature                                                                

Printed Name_________________________



 
Page 11 of 13

 


Exhibit B
  
ELECTION UNDER SECTION 83(b)
 
OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income or alternative minimum taxable income, as the case may be, for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described below.

1.           The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

TAXPAYER:
   
SPOUSE:
   
NAME:
   
ADDRESS:
   
IDENTIFICATION NO.:
   
TAXABLE YEAR:
   
 
2.           The property with respect to which the election is made is described as follows: ____ shares (the “Shares”) of the Common Stock of Jammin Java Corp. (the “Company”).
 
3.           The date on which the property was transferred is:___________________ ,______.
  
4.           The property is subject to the following restrictions:

The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company.  These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.
 
5.           The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:  $_________________.
 
6.           The amount (if any) paid for such property is:  $_________________.

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property.  The transferee of such property is the person performing the services in connection with the transfer of said property.

 
Page 12 of 13

 
The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.
 
Dated: ______________________, _____

Taxpayer ______________________

Printed Name _____________________


The undersigned spouse of taxpayer joins in this election.
 
Dated: ______________________, _____

Spouse of Taxpayer ________________

Printed Name _____________________

 
Page 13 of 13




EXHIBIT 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brent Toevs, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q of Jammin Java Corp.;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of a Quarterly Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: September 15, 2014
By:
/s/ Brent Toevs
   
Brent Toevs
   
Chief Executive Officer
   
(Principal Executive Officer)
 
 




EXHIBIT 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Anh Tran, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q of Jammin Java Corp.;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of a Quarterly Report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: September 15, 2014
By:
 /s/ Anh Tran
   
Anh Tran
   
President, Chief Operating Officer, Secretary and Treasurer
   
(Principal Financial and Accounting Officer)
 
 




EXHIBIT 32.1
 
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND
PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
The following certifications are being furnished solely to accompany the Quarterly Report on Form 10-Q for the three months ended July 31, 2014 (the “Report”) pursuant to U.S.C. Section 1350, and pursuant to SEC Release No. 33-8238 are being “furnished” to the Securities and Exchange Commission (the “SEC”) rather than “filed” either as part of the Report or as part of the Report of as a separate disclosure statement, and are not to be incorporated by referenced into the Report or any other filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. The foregoing certifications shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of Section 18 or Section 11 and 12(a)(2) of the Securities Act of 1933, as amended.
 
Certification of the Chief Executive Officer
 
Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Jammin Java, Corp. (the “Company”) hereby certifies, to such officer’s knowledge, that:

1.
the accompanying Quarterly Report on Form 10-Q for the three months ended July 31, 2014 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: September 15, 2014
By:   /s/ Brent Toevs
 
Brent Toevs
 
Chief Executive Officer
 
(Principal Executive Officer)

Certification of the Chief Financial and Accounting Officer

Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Jammin Java, Corp. (the “Company”) hereby certifies, to such officer’s knowledge, that:

1.
the accompanying Quarterly Report on Form 10-Q for the three months ended July 31, 2014 (the “Report”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Dated: September 15, 2014
By:   /s/ Anh Tran
 
Anh Tran
 
President, Secretary and Treasurer
 
(Principal Financial and Accounting Officer)
 
 

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