Sales plummeted last year for a Hawaii company trying to compete against giant sports drink manufacturers with a beverage made from coffee fruit, but Kauai-based KonaRed Corp. cut its financial loss and is hopeful that diversifying into selling actual coffee will give it a lift.

KonaRed issued a financial report Wednesday for its operations last year in which revenue fell by roughly half to $635,503 from $1.25 million the year before. However, the company also narrowed its net loss to $3.8 million from a $4.6 million loss in the prior year.

The company said the sales decline stemmed from an unsuccessful distribution arrangement with a vendor and lower spending on advertising and marketing that was necessary because less revenue was coming in.

To help reverse falling sales, KonaRed hired the former general manager of beverage and fruit extracts company Pom Wonderful, Kyle Redfield, to be its president and chief operating officer in August, and terminated its distributor in September.

The former distributor, Florida-based Splash Beverage Group, sued KonaRed in December over the termination, but KonaRed said it believes the suit has no merit and that the break needed to be made.

“To rebuild our revenue base we chose to take back control of our brand,” the company said in the report filed with the U.S. Securities and Exchange Commission.

In February, KonaRed began selling bottles of cold brew coffee as a way to diversify and expand. The company said in a press release issued Wednesday that the three varieties — original, espresso and vanilla — are selling about four times as fast as its “superfruit” juice drinks made from coffee cherries.

“The cold brew coffee category is exceeding our expectation,” Redfield said in the statement. “We are thrilled with the early results. This product has been very well received by retailers on the West Coast and Hawaii. … 2015 was a challenging year, and we’re happy to see a more positive trajectory early into this fiscal year.”

Still, KonaRed’s initial distribution of ready-to-drink cold brew coffee is limited to about 60 retailers in San Diego and Orange County, Calif., and is expanding now to Hawaii stores as the company works to expand to other Western states and Las Vegas.

KonaRed also began selling packages of coffee beans last year to help boost revenue.

To stay in business, KonaRed needs to raise investment capital, making the 8-year-old firm still a largely development-stage company.

Since inception and through the end of last year, KonaRed has accumulated a deficit of $20.1 million. That was up from $16.3 million at the end of the prior year.

Last year KonaRed reported raising about $1 million from selling common stock and about $1.1 million by issuing debt. At the end of last year, KonaRed reported having net working capital of $182,044 compared with $635,423 at the end of the prior year.

So far this year, the company has raised about $400,000 by selling stock.

To help trim expenses, KonaRed said it would reduce cash compensation for its top two executives by 25 percent effective Feb. 1 through Jan. 1, 2017. That will make Redfield’s salary $206,250. The salary of company CEO and co-founder Shaun Roberts is now $97,500. Stock bonus plans were enhanced as an offset.

Shares of KonaRed stock closed Wednesday at 4.9 cents.

The stock has been hovering at about 5 cents for the past couple of months and has been on a long slow slide from a high of $1.24 in January 2014.