Marley Coffee Chief Warns Licensing Woes Could Put Company Out Of Business

Posted On: 8/23/2016

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TAGS: office coffee service, single-cup coffee, Bob Marley family, Marley estate, Marley Coffee, Marley Coffee company trouble, Jammin Java Corp., Hope Road Merchandising, 56 Hope Road Music, Brent Toevs

DENVER -- The family of Bob Marley wants to sever ties with Marley Coffee, threatening the end for the coffee company and its struggling parent, Jammin Java Corp.

In mid-July, Denver-based Marley Coffee said it had paid $700,000 to the U.S. Securities and Exchange Commission to settle allegations announced in November 2015 that the company, led by former chief executive Shane Whittle, conducted an illegal securities offering and participated in a "pump and dump" stock scheme that harvested $78 million in illicit profits. | SEE STORY

The company also announced in July that Marley Coffee founder Rohan Marley, the reggae legend's son, had stepped down as chairman of the company. | READ MORE

Additionally, Marley Coffee revealed that the estate of Bob Marley -- operating as Hope Road Merchandising (HRM) and 56 Hope Road Music (56 HR) -- ordered Jammin Java in late June to stop using the Marley name and likeness, charging that the coffee company breached its licensing agreement by failing to make royalty payments, among other accusations.

Now, Jammin Java, claims Rohan Marley and fellow heirs of the Bob Marley estate violated their licensing agreement; it has filed a lawsuit in the U.S. District Court in central California in an attempt to block the termination of the 15-year licensing deal.

In the past five years, Marley Coffee has grown from reporting about $403,000 in revenue to more than $12.3 million. Its sells its coffee in chains like Kroger, Safeway and Target, and has been growing its single-cup presence in the office coffee service arena.

Marley Coffee chief executive Brent Toevs said the termination of the license agreement has resulted in most the company's credit freezing up. He added, however, that Marley Coffee has managed to secure limited credit with its manufacturers, which he says will allow the company to continue fulfilling orders in the near term.

"From a licensing perspective, we are continuing to do everything we can to try to work a deal with 56 HR to get back the long-term license or negotiate a buyout of the company," Toevs said "We have gone out to the market to look at potential acquirers. We have several interested parties, but it will require HRM to come to mediation, where we can work out a deal that's beneficial for our shareholders, HRM and the potential acquirer, which may not be possible."

Toevs said the company had strong prospects in the grocery business, as well as new channels prior to the cancellation of its licensing agreement. "We need to both mend and restart those conversations with retailers to get things moving again," he said.

Additionally, Marley Coffee is about to enter the busy coffee buying season, Toevs stressed, which is the critical time to keep the business going so it can either grow again or be purchased by another group.

"Not having a long-term license in place has put us in a precarious position," Toevs stressed. "That being said, we are still able to ship products and will continue to do so to the best of our ability."