Reborn Coffee, Inc. (NASDAQ: REBN) (“Reborn”, or the “Company”), a
California-based retailer of specialty coffee
, has
reported its financial and operational results for the third
quarter ended September 30, 2022.
Key Financial and Operational Highlights
for the Third Quarter 2022
- Revenue increased 22% to $0.8
million in Q3’22 compared to $0.7 million in Q3’21.
- Revenue increased 52% in the nine
months ended September 30, 2022 to $2.4 million, up from $1.6
million during same period in 2021.
- Announced plans
to open five new Company-owned retail locations in Southern
California, which, if and when opened, will bring total count to
fourteen stores.
- On August 16,
2022, the Company completed an upsized initial public offering (the
“IPO”), selling 1,440,000 shares at $5.00 per share.
- Net proceeds
raised in IPO were $6.2 million, after deducting underwriting
discounts and commissions.
- The Company’s common stock commenced
trading on the Nasdaq Capital Market under the ticker symbol
“REBN”.
- Preparing for entry into the B2B
market with new RTD Cold Brew Beverages and Cold Brew Super Premium
ice cream.
- Presented at the LD Micro Main Event
XV Conference.
Management Commentary
“In the third quarter of 2022 we continued to
build the foundation for long-term growth with ongoing revenue
execution and location expansion,” said Jay Kim, Chief Executive
Officer of Reborn. “During the quarter we passed a crucial
milestone on our journey with the transition to a Nasdaq listed
public company and the addition of new capital to accelerate our
growth strategy. With revenue growth driven by strong customer
demand, new product innovation and effective operational execution
across our retail locations, we are highly focused on our expansion
strategy goals supported by proceeds from our recent IPO.
“We recently announced plans to open new
company-owned retail locations in Southern California in Cabazon,
Huntington Beach, Irvine and Mission Viejo. At each new location,
our focus is on creating an inviting store atmosphere which is
designed for comfort and convenience at shopping plazas and upscale
areas. We continue to believe we have sufficient cash to meet our
current pipeline of new locations without the need to raise
additional funds. Once these locations are open, we will have a
total count of fourteen locations in California.
“Looking ahead, we are highly focused on the
openings for our new locations. The Cabazon, Huntington Beach and
Irvine locations are expected to open in the fourth quarter of
2022, and the Mission Viejo location is expected to open in the
first quarter of 2023. We are also highly focused on increasing our
customer base and sales, and growing Average Unit Volumes, at our
existing stores. We are aggressively moving forward on
strategically expanding our footprint in existing and new markets
and developing our franchise opportunity. Additionally, new
innovative coffee and complementary products produced by
experienced co-packers will broaden our reach beyond our retail
locations into B2B and DTC sales. Taken together, we believe we are
well-positioned to reach our goals for sustained operational
execution and year-over-year revenue growth. I look forward to
reporting on exciting milestones in the months ahead as we strive
to create sustainable, long-term value for our shareholders,”
concluded Kim.
Anticipated Milestones
- Open up to 40
company-owned retail locations.
- Open 4 flagship
locations in the U.S., targeting cities such as San Francisco, San
Diego, Houston, and Kansas City.
- Open 4 overseas
locations outside the U.S., targeting countries such as South
Korea, Austria, and Dubai.
- Joint R&D
projects with coffee farms in locations such as Hawaii and
Colombia.
- Expand B2B
marketing to wholesale clubs and other major outlets and expand
ecommerce marketing.
- Launch new
Reborn-branded products such as cascara tea packs, red tea bag
packs, cold brew cans and super premium ice cream.
Third Quarter 2022 Financial
Results
Revenues were approximately $0.8 million for the
three-month period ended September 30, 2022, compared to
approximately $0.7 million for the comparable period in 2021,
representing an increase of 22%. Revenue increased 52% in the nine
months ending September 30, 2022 to approximately $2.4 million, up
from approximately $1.6 million for the comparable period in 2021.
The increase in sales for the periods was primarily driven by the
opening of the Laguna Woods, Riverside and San Francisco locations,
and to the continued focus on marketing efforts to grow brand
recognition.
Total operating costs and expenses for the
three-month period ended September 30, 2022, were approximately
$1.7 million compared to approximately $1.8 million for the
comparable period in 2021, representing a decrease of approximately
1%.
Net loss for the third quarter of 2022 was
approximately $0.9 million, compared to a net loss of approximately
$1.9 million for the third quarter of 2021.
Net cash used in operating activities for the
nine months ended September 30, 2022 was approximately $2.0
million, compared to approximately $2.1 million for the nine months
ended September 30, 2021.
Cash and cash equivalents totaled approximately
$4.7 million as of September 30, 2022, compared to approximately
$0.9 million as of December 31, 2021.
About Reborn Coffee
Reborn Coffee, Inc. (NASDAQ: REBN) is focused on
serving high quality, specialty-roasted coffee at retail locations,
kiosks, and cafes. Reborn is an innovative company that strives for
constant improvement in the coffee experience through exploration
of new technology and premier service, guided by traditional
brewing techniques. Reborn believes they differentiate themselves
from other coffee roasters through innovative techniques, including
sourcing, washing, roasting, and brewing their coffee beans with a
balance of precision and craft. For more information, please visit
www.reborncoffee.com.
Forward-Looking Statements
All statements in this release that are not
based on historical fact are “forward-looking statements.” While
management has based any forward-looking statements included in
this release on its current expectations, the information on which
such expectations were based may change. Forward-looking statements
involve inherent risks and uncertainties which could cause actual
results to differ materially from those in the forward-looking
statements, as a result of various factors including those risks
and uncertainties described in the Risk Factors section of our
recently filed Registration Statement on Form S-1, as amended, and
in the Management’s Discussion and Analysis of Financial Condition
and Results of Operations section of our recently filed Quarterly
Report on Form 10-Q, which can be found on the SEC’s website at
www.sec.gov. Such risks, uncertainties, and other factors include,
but are not limited to, the Company’s ability to successfully open
the additional locations described herein as planned or at all, the
Company’s ability to expand its business both within and outside of
California (including as it relates to increasing sales and growing
Average Unit Volumes at our existing stores), the degree of
customer loyalty to our stores and products, the impact of COVID-19
on consumer traffic and costs, the fluctuation of economic
conditions, competition and inflation. We urge you to consider
those risks and uncertainties in evaluating our forward-looking
statements. We caution readers not to place undue reliance upon any
such forward-looking statements, which speak only as of the date
made. The Company undertakes no obligation to update these
statements for revisions or changes after the date of this release,
except as required by law.
Contacts
Investor Relations Contact:Chris TysonExecutive
Vice PresidentMZ North AmericaREBN@mzgroup.us 949-491-8235
Company Contact:Reborn Coffee,
Inc.ir@reborncoffee.com
Unaudited Condensed Consolidated Balance
Sheets
As of |
|
September 30,2022 |
|
|
December 31, 2021 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
4,730,097 |
|
|
$ |
905,051 |
|
Accounts receivable, net of allowance for doubtful accounts of $0
and $0, respectively |
|
|
350 |
|
|
|
- |
|
Inventories, net |
|
|
102,981 |
|
|
|
88,877 |
|
Prepaid expense and other current assets |
|
|
256,192 |
|
|
|
191,838 |
|
Total current assets |
|
|
5,089,620 |
|
|
|
1,185,766 |
|
Property and equipment, net |
|
|
1,297,574 |
|
|
|
1,110,890 |
|
Operating lease right-of-use asset |
|
|
2,764,258 |
|
|
|
2,466,873 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
9,151,452 |
|
|
$ |
4,763,529 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
20,977 |
|
|
$ |
45,748 |
|
Accrued expenses and current liabilities |
|
|
254,586 |
|
|
|
124,535 |
|
Loans payable to financial institutions – current portion |
|
|
74,810 |
|
|
|
98,475 |
|
Loan payable, emergency injury disaster loan (EIDL) – current
portion |
|
|
10,861 |
|
|
|
7,957 |
|
Loan payable, payroll protection program (PPP) – current
portion |
|
|
39,267 |
|
|
|
42,345 |
|
Equipment loan payable – current portion |
|
|
1,515 |
|
|
|
15,989 |
|
Operating lease liabilities – current portion |
|
|
654,145 |
|
|
|
578,419 |
|
Total current liabilities |
|
|
1,056,161 |
|
|
|
913,468 |
|
Loans payable to financial institutions – net of current
portion |
|
|
14,172 |
|
|
|
23,228 |
|
Loan payable, emergency injury disaster loan (EIDL), net of current
portion |
|
|
489,139 |
|
|
|
492,043 |
|
Loan payable, payroll protection program (PPP), net of current
portion |
|
|
127,871 |
|
|
|
124,793 |
|
Operating lease liabilities, net of current portion |
|
|
2,261,004 |
|
|
|
2,011,702 |
|
Total liabilities |
|
|
3,948,347 |
|
|
|
3,565,234 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
|
|
|
|
Common Stock, $0.0001 par value, 40,000,000 shares authorized;
13,119,523 and 11,634,523 shares issued and outstanding at
September 30, 2022 and December 31, 2021 |
|
|
1,312 |
|
|
|
1,163 |
|
Preferred Stock, $0.0001 par value, 1,000,000 shares authorized; no
shares issued and outstanding at September 30, 2022 and December
31, 2021 |
|
|
- |
|
|
|
- |
|
Additional paid-in capital |
|
|
16,101,017 |
|
|
|
9,674,036 |
|
Accumulated deficit |
|
|
(10,899,224 |
) |
|
|
(8,476,904 |
) |
Total stockholders’ equity |
|
|
5,203,105 |
|
|
|
1,198,295 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
9,151,452 |
|
|
$ |
4,763,529 |
|
Unaudited Condensed Consolidated
Statements of Operations
|
|
Nine Months Ended September
30, |
|
|
Three Months Ended September
30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Stores |
|
$ |
2,339,284 |
|
|
$ |
1,519,969 |
|
|
$ |
827,332 |
|
|
$ |
668,184 |
|
Wholesale and online |
|
|
40,587 |
|
|
|
47,966 |
|
|
|
10,913 |
|
|
|
19,630 |
|
Total net revenues |
|
|
2,379,871 |
|
|
|
1,567,935 |
|
|
|
838,245 |
|
|
|
687,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product, food and drink costs—stores |
|
|
806,453 |
|
|
|
565,156 |
|
|
|
242,547 |
|
|
|
295,008 |
|
Cost of sales—wholesale and online |
|
|
17,777 |
|
|
|
21,011 |
|
|
|
4,780 |
|
|
|
8,599 |
|
General and administrative |
|
|
3,954,997 |
|
|
|
2,679,037 |
|
|
|
1,486,550 |
|
|
|
1,452,086 |
|
Total operating costs and expenses |
|
|
4,779,227 |
|
|
|
3,265,204 |
|
|
|
1,733,877 |
|
|
|
1,755,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(2,399,356 |
) |
|
|
(1,697,269 |
) |
|
|
(895,632 |
) |
|
|
(1,067,879 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
16,440 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
PPP grant income |
|
|
- |
|
|
|
115,000 |
|
|
|
- |
|
|
|
115,000 |
|
Interest expense |
|
|
(39,404 |
) |
|
|
(11,484 |
) |
|
|
(24,428 |
) |
|
|
(5,711 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
(982,383 |
) |
|
|
- |
|
|
|
(982,383 |
) |
Total other income (expense), net |
|
|
(22,964 |
) |
|
|
(878,867 |
) |
|
|
(24,428 |
) |
|
|
(873,094 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(2,422,320 |
) |
|
|
(2,576,136 |
) |
|
|
(920,060 |
) |
|
|
(1,940,973 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,422,320 |
) |
|
$ |
(2,576,136 |
) |
|
$ |
(920,060 |
) |
|
$ |
(1,940,973 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.20 |
) |
|
|
(0.25 |
) |
|
|
(0.08 |
) |
|
|
(0.18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
11,844,900 |
|
|
|
10,437,239 |
|
|
|
11,679,523 |
|
|
|
10,842,264 |
|
Unaudited Consolidated Statements of Cash
Flows
For the Nine Months Ended September 30, |
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(2,422,320 |
) |
|
$ |
(2,576,136 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Stock compensation |
|
|
225,000 |
|
|
|
575,000 |
|
Forgiveness of PPP loan |
|
|
- |
|
|
|
(115,000 |
) |
Operating lease |
|
|
27,643 |
|
|
|
45,620 |
|
Depreciation |
|
|
146,505 |
|
|
|
129,575 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(350 |
) |
|
|
(4,418 |
) |
Inventories |
|
|
(14,104 |
) |
|
|
(7,024 |
) |
Prepaid expense and other current assets |
|
|
(64,354 |
) |
|
|
(97,104 |
) |
Accounts payable |
|
|
(24,771 |
) |
|
|
(44,455 |
) |
Accrued expenses and current liabilities |
|
|
130,051 |
|
|
|
23,468 |
|
Net cash used in operating activities |
|
|
(1,996,700 |
) |
|
|
(2,070,474 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(333,189 |
) |
|
|
(262,673 |
) |
Reacquisition of lease and leasehold improvements |
|
|
- |
|
|
|
(150,000 |
) |
Net cash used in investing activities |
|
|
(333,189 |
) |
|
|
(412,673 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
|
|
7,200,000 |
|
|
|
2,517,763 |
|
Payment of IPO stock issuance |
|
|
(997,870 |
) |
|
|
- |
|
Proceeds from line of credit |
|
|
685,961 |
|
|
|
- |
|
Repayment of line of credit |
|
|
(685,961 |
) |
|
|
- |
|
Proceeds from loans |
|
|
238,982 |
|
|
|
1,028,026 |
|
Repayment of loans |
|
|
(271,703 |
) |
|
|
(302,004 |
) |
Repayment of equipment loan payable |
|
|
(14,474 |
) |
|
|
(14,390 |
) |
Net cash provided by financing activities |
|
|
6,154,935 |
|
|
|
3,229,395 |
|
|
|
|
|
|
|
|
|
|
Net increase in cash |
|
|
3,825,046 |
|
|
|
746,248 |
|
|
|
|
|
|
|
|
|
|
Cash at beginning of
period |
|
|
905,051 |
|
|
|
128,568 |
|
|
|
|
|
|
|
|
|
|
Cash at end of period |
|
$ |
4,730,097 |
|
|
$ |
874,816 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of non-cash financing activities: |
|
|
|
|
|
|
|
|
Issuance of common shares for repurchase of lease and leasehold
improvements |
|
$ |
- |
|
|
$ |
150,000 |
|
Converting debt to equity |
|
$ |
- |
|
|
$ |
1,032,383 |
|
Forgiveness of PPP loan |
|
$ |
- |
|
|
$ |
115,000 |
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid during the years for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
8,578 |
|
|
$ |
11,484 |
|
Income taxes |
|
$ |
- |
|
|
$ |
- |
|
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