Reborn Coffee Reports Second Quarter 2022 Financial Results

Completed $7.2 Million Upsized IPO and Commenced Trading on Nasdaq in Q3 2022

Brea, California, UNITED STATES


BREA, Calif., Oct. 04, 2022 (GLOBE NEWSWIRE) -- 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 second quarter ended June 30, 2022.

  • On August 16, 2022, the Company successfully completed its upsized initial public offering (the “IPO”), selling 1,440,000 shares at $5.00 per share.
  • Net proceeds raised in Reborn’s 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”.
  • Four new company-owned retail locations are in development in Southern California.
  • Revenue increased 63% to $0.8 million in Q2’22 compared to $0.5 million in Q2’21.

Management Commentary

“The second and third quarters of 2022 were significant milestones for our company with our transition to a public company and the addition of new capital to accelerate our growth strategy,” said Jay Kim, Chief Executive Officer of Reborn. “We believe our Nasdaq listing will help elevate the Company's public profile, expand our stockholder base, improve liquidity and enhance stockholder value. The net proceeds to Reborn from the IPO amounted to $6.2 million, which will provide us with the financial capability to achieve our goals.”

“During the second quarter we delivered strong revenue performance from strong customer demand for our high quality, specialty-roasted coffee in shopping plazas and upscale areas at our nine retail locations. As pioneers of the emerging ‘Fourth Wave’ movement, we are redefining specialty coffee as an experience that demands much more than premium quality. We are committed to constantly developing our bean processing methods, researching design concepts, reinventing new ways of drinking coffee at our locations, and growing wholesale and online operations.”

“Looking ahead, with support from the IPO capital, we will continue to execute on our rapid growth as we strategically expand our footprint in existing and new markets. We are focused on expanding our customer base at new retail stores with inviting atmospheres designed for comfort and convenience, as well as through sales of pour over packs and whole bean ground coffee bags. We have four additional company-owned retail locations in Southern California in development (which, once opened, will bring our total count to thirteen) and are developing our franchise opportunity. We expect to provide additional announcements on our new location pipeline timeline in the coming weeks.”

Stephan Kim, Chief Financial Officer of Reborn, added, “Combined with our successful IPO, we expect that current cash and cash equivalents will be sufficient to support current operations into 2023. We believe we now have sufficient cash to meet our current pipeline of new locations without the need to raise additional funds.”

“As a fully reporting public company, and from a best practices perspective, we will commence a cadence of quarterly and year-end financial results conference calls for analysts and investors. We look forward to this additional communication as we work to bring long-term value to our stockholders,” 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 Columbia.
  • 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 and cold brew cans.

Second Quarter 2022 Financial Results

Revenues were approximately $0.8 million for the three-month period ended June 30, 2022, compared to $0.5 million for the comparable period in 2021, representing an increase of 63%. The increase in sales was primarily driven by the opening of the Corona Del Mar, Laguna Woods and Santa Anita locations during 2021, and to the continued focus on marketing efforts to grow brand recognition.

Total operating costs and expenses for the three-month period ended June 30, 2022, were $1.7 million compared to $0.8 million for the comparable period in 2021, representing an increase of approximately 115%, primarily due to increases in product, food and drink costs, and general and administrative expenses. These increases were driven by opening of new locations, general inflationary pressures and the seasonal fluctuations in cost of ingredients, and expenses associated with preparing to become a public company.

Net loss for the second quarter of 2022 was $0.9 million, compared to a net loss of $0.3 million for the second quarter of 2021.

Net cash used in operating activities for the six months ended June 30, 2022 was approximately $1.2 million, compared to approximately $0.5 million for the six months ended June 30, 2021.

Cash and cash equivalents totaled $0.15 million as of June 30, 2022, which does not include net proceeds from the Company’s IPO, which was completed in August 2022.

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 and in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our recently filed 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 additional locations as planned (including in domestic and overseas markets where we have little or no operating experience), the Company’s consummation of joint R&D projects with coffee farms, consumer acceptance of the Company’s existing and new 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 Tyson

Executive Vice President
MZ North America
REBN@mzgroup.us
949-491-8235

Company Contact:
Reborn Coffee, Inc.
ir@reborncoffee.com


Reborn Coffee, Inc.
Balance Sheets (Unaudited)

As of June 30,
2022
  December 31,
2021
 
       
ASSETS      
Current assets:      
Cash and cash equivalents $149,824  $905,051 
Accounts receivable, net of allowance for doubtful accounts of $0 and $0, respectively  1,293   - 
Inventories, net  102,981   88,877 
Prepaid expense and other current assets  220,113   191,838 
Total current assets  474,211   1,185,766 
Property and equipment, net  1,181,365   1,110,890 
Operating lease right-of-use asset  2,937,437   2,466,873 
         
Total assets $4,593,013  $4,763,529 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)        
         
Current liabilities:        
Accounts payable $158  $45,748 
Accrued expenses and current liabilities  171,070   124,535 
Line of credit  594,529   - 
Loans payable to financial institutions – current portion  -   98,475 
Loans payable to shareholders  150,000   - 
Loan payable, emergency injury disaster loan (EIDL) – current portion  10,760   7,957 
Loan payable, payroll protection program (PPP) – current portion  39,169   42,345 
Equipment loan payable – current portion  6,312   15,989 
Operating lease liabilities – current portion  655,603   578,419 
Total current liabilities  1,627,601   913,468 
Loans payable to financial institutions – net of current portion  -   23,228 
Loan payable, emergency injury disaster loan (EIDL), net of current portion  489,240   492,043 
Loan payable, payroll protection program (PPP), net of current portion  127,969   124,793 
Operating lease liabilities, net of current portion  2,427,168   2,011,702 
Total liabilities  4,671,978   3,565,234 
         
Commitments and Contingencies        
         
Stockholders’ equity (deficit)        
Common Stock, $0.0001 par value, 40,000,000 shares authorized; 11,679,523 and 11,634,523 shares issued and outstanding at June 30, 2022 and December 31, 2021  1,168   1,163 
Preferred Stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2022 and December 31, 2021  -   - 
Additional paid-in capital  9,899,031   9,674,036 
Accumulated deficit  (9,979,164)  (8,476,904)
Total stockholders’ equity (deficit)  (78,965)  1,198,295 
         
Total liabilities and stockholders’ equity $4,593,013  $4,763,529 


Reborn Coffee, Inc.
Statements of Operations (Unaudited)

  Six Months Ended
June 30,
  Three Months Ended
June 30,
 
  2022  2021  2022  2021 
             
Net revenues:            
Stores $1,511.952  $851,785  $775,956  $475,824 
Wholesale and online  29,674   28,336   12,520   15,368 
Total net revenues  1,541,626   880,121   788,476   491,192 
                 
Operating costs and expenses:                
Product, food and drink costs—stores  563,906   270,148   278,952   135,452 
Cost of sales—wholesale and online  12,997   12,412   5,484   6,732 
General and administrative  2,468,447   1,226,951   1,432,432   656,310 
Total operating costs and expenses  3,045,350   1,509,511   1,716,868   798,494 
                 
Loss from operations  (1,503,724)  (629,390)  (928,392)  (307,302)
                 
Other income (expense):                
Other income  16,440   -   1,440   - 
Interest expense  (14,976)  (5,773)  (10,196)  (382)
Total other income (expense), net  1,464   (5,773)  (8,756)  (382)
                 
Loss before income taxes  (1,502,260)  (635,163)  (937,148)  (307,684)
                 
Provision for income taxes  -   -   -   - 
                 
Net loss $(1,502,260) $(635,163) $(937,148) $(307,684)
                 
Loss per share:                
Basic and diluted $(0.13)  (0.06)  (0.08)  (0.03)
                 
Weighted average number of common shares outstanding:                
Basic and diluted  11,642,550   10,282,669   11,667,545   10,380,944 


Reborn Coffee, Inc.
Statements of Cash Flows (Unaudited)

For the Six Months Ended June 30, 2022  2021 
       
Cash flows from operating activities:      
Net loss $(1,502,260) $(635,163)
Adjustments to reconcile net loss to net cash used in operating activities:        
Stock compensation  225,000   - 
Operating lease  22,086   20,559 
Depreciation  97,922   81,926 
Changes in operating assets and liabilities:        
Accounts receivable  (1,293)  (269)
Inventories  (14,104)  (7,245)
Prepaid expense and other current assets  (28,275)  (65,083)
Accounts payable  (45,590)  49,508 
Accrued expenses and current liabilities  46,535   17,415 
Net cash used in operating activities  (1,199,979)  (538,352)
         
Cash flows from investing activities:        
Purchases of property and equipment  (168,397)  (167,152)
Reacquisition of store  -   (150,000)
Net cash used in investing activities  (168,397)  (317,152)
         
Cash flows from financing activities:        
Proceeds from issuance of common stock  -   553,499 
Proceeds from line of credit  594,529   - 
Proceeds from loan payable to shareholders  150,000   533,127 
Repayment of loans  (121,703)  (210,453)
Repayment of equipment loan payable  (9,677)  (9,594)
Net cash provided by financing activities  613,149   866,579 
         
Net (decrease) increase in cash  (755,227)  11,075 
         
Cash at beginning of period  905,051   128,568 
         
Cash at end of period $149,824  $139,643 
         
Supplemental disclosures of non-cash financing activities:        
Issuance of common shares for repurchase of store $-  $150,000 
Issuance of common shares for compensation $225,000  $- 
         
Supplemental disclosure of cash flow information:        
Cash paid during the years for:        
Lease liabilities $435,635  $224,988 
Interest $367  $5,773