2022 Revenue Increased 42% to $3.2M
2022 Gross Profit Increased 49% to $2.1M
4 Locations Opened in 2022 for a Total of 11 Stores
BREA, Calif., April 11, 2023 (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 fiscal year ended December 31, 2022.
Key Financial and Operational Highlights
- Opened 4 new locations in 2022, bring the total count to 11 stores.
- Revenue increased 42% in the year ended December 31, 2022, to $3.2 million, up from $2.3 million during same period in 2021.
- Company-operated store sales increased $1.0 million, or 44.5% in the year ended December 31, 2022, compared to the same period in 2021.
- Company-operated store gross profit was $2.1 million for the year ended December 31, 2022, compared to $1.4 million for the same period in 2021. Year-over-year company-operated store gross margins improved to 65.7% from 62.7%.
- Announced plans to open new company-owned retail locations in Southern California and Korea, which, once opened, will bring its total global footprint to 14 stores.
- Launched of a new line of Super-Premium Reborn Cold Brew Ice Creams to be marketed and distributed throughout the Company's retail locations.
Management Commentary
"2022 was a transformative year for Reborn and for our business, including our successful IPO on Nasdaq, [new partnerships], and ongoing location and product expansion," said Jay Kim, Chief Executive Officer of Reborn. "Our fourth quarter was highlighted by strong revenue growth as we continued to execute our expansion strategy, driven by strong customer demand, new product innovation and effective operational execution across our retail locations.
"We recently announced plans to open new company-owned retail locations in Southern California, which, once opened, will bring our total global footprint to 14 stores. We continue to seek out differentiated and prime locations to conduct due diligence and build on our pipeline of new company-owned locations. We are aggressively moving forward on strategically expanding our footprint in existing and new markets in California, the U.S. and globally, and developing our franchise opportunity.
"We have launched a new line of Super-Premium Reborn Cold Brew Ice Creams to be marketed and distributed throughout our retail locations. Super-Premium cold brew ice cream is a natural extension of our brand, mission and innovative specialty roasted coffee, and we are incredibly excited to begin offering it to customers.
"Looking ahead, we continue to focus on increasing our customer base and sales and growing Average Unit Volumes at our existing stores. New innovative products like our Cascara and Super-Premium ice cream will help to build additional revenue, differentiate our brand, and broaden our reach beyond our retail locations into B2B and DTC sales. Internationally we are positioning Reborn for rapid expansion in new key markets and developing our franchise opportunity. Taken together, we believe we are well positioned to reach our goals for sustained operational execution and year-over-year revenue growth. We enter 2023 in a strong position and look forward to sharing our accomplishments as we strive to create value for our shareholders, customers, and employees," concluded Kim.
Anticipated Milestones
- 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 red tea bag packs and cold brew cans.
Fourth Quarter and Fiscal Year 2022 Financial Results
Revenues were approximately $0.9 million for the period ended December 31, 2022, compared to approximately $0.7 million for the comparable period in 2021, representing an increase of 37%. Revenue increased 42% in the year ending December 31, 2022, to approximately $3.2 million, up from approximately $2.3 million for the comparable period in 2021. The increase in sales for the periods was primarily driven by the opening of new locations, and to the continued focus on marketing efforts to grow brand recognition.
Company-operated store gross profit was $0.6 million for the three-month period ended December 31, 2022, compared to $0.4 million for the comparable period in 2021. Q4'22 company-operated store gross margins improved to 66.1% compared to 62.5% for the same period in 2021.
Company-operated store gross profit was $2.1 million for the year ended December 31, 2022, compared to $1.4 million for the same period in 2021. Year-over-year company-operated store gross margins improved to 65.7%.
Total operating costs and expenses for the three-month period ended December 31, 2022, were approximately $2.0 million compared to approximately $1.6 million for the comparable period in 2021, representing an increase of approximately 27%. Total operating costs and expenses for the year ending December 31, 2022, were approximately $6.8 million compared to approximately $4.8 million for the comparable period in 2021, representing an increase of approximately 40%.
Net loss for the fourth quarter of 2022 was approximately $1.1 million, compared to a net loss of approximately $0.9 million for the fourth quarter of 2021. Net loss for the year ending December 31, 2022, was approximately $3.6 million, compared to a net loss of approximately $3.4 million for the year ending December 31, 2021.
Net cash used in operating activities for the twelve months ended December 31, 2022, was approximately $3.3 million, compared to approximately $1.9 million for the twelve months ended December 31, 2021.
Cash and cash equivalents totaled approximately $3.0 million as of December 31, 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 and Management's Discussion and Analysis of Financial Condition and Results of Operations sections of our recently filed Annual Report on Form 10-K, 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 continue as a going concern as indicated in an explanatory paragraph in the Company's independent registered public accounting firm's audit report as a result of recurring net losses, among other things, 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 Tyson
Executive Vice President
MZ North America
REBN@mzgroup.us
949-491-8235
Company Contact:
Reborn Coffee, Inc.
ir@reborncoffee.com
Consolidated Balance Sheet
| December 31, | 2022 | 2021 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,019,035 | $ | 905,051 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $0 and $0, respectively | 780 | - | ||||||
| Inventories, net | 132,343 | 88,877 | ||||||
| Prepaid expense and other current assets | 477,850 | 191,838 | ||||||
| Total current assets | 3,630,008 | 1,185,766 | ||||||
| Property and equipment, net | 1,581,805 | 1,110,890 | ||||||
| Operating lease right-of-use asset | 3,010,564 | 2,466,873 | ||||||
| Other assets | 235,164 | - | ||||||
| Total assets | $ | 8,457,541 | $ | 4,763,529 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 87,809 | $ | 45,748 | ||||
| Accrued expenses and current liabilities | 233,053 | 124,535 | ||||||
| Loans payable to financial institutions | 44,664 | 98,475 | ||||||
| Current portion of loan payable, emergency injury disaster loan (EIDL) | 30,060 | 7,957 | ||||||
| Current portion of loan payable, payroll protection program (PPP) | 45,678 | 42,345 | ||||||
| Current portion of equipment loan payable | - | 15,989 | ||||||
| Current portion of operating lease liabilities | 624,892 | 578,419 | ||||||
| Total current liabilities | 1,066,156 | 913,468 | ||||||
| Loans payable to financial institutions, less current portion | 6,234 | 23,228 | ||||||
| Loan payable, emergency injury disaster loan (EIDL), less current portion | 469,940 | 492,043 | ||||||
| Loan payable, payroll protection program (PPP), less current portion | 98,697 | 124,793 | ||||||
| Operating lease liabilities, less current portion | 2,529,985 | 2,011,702 | ||||||
| Total liabilities | 4,171,012 | 3,565,234 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' equity | ||||||||
| Common Stock, $0.0001 par value, 40,000,000 shares authorized; 13,163,126 and 11,634,523 shares issued and outstanding at December 31, 2022 and 2021, respectively | 1,316 | 1,163 | ||||||
| Preferred Stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding at December 31, 2022 and 2021 | - | - | ||||||
| Additional paid-in capital | 16,317,014 | 9,674,036 | ||||||
| Accumulated deficit | (12,031,801 | ) | (8,476,904 | ) | ||||
| Total stockholders' equity | 4,286,529 | 1,198,295 | ||||||
| Total liabilities and stockholders' equity | $ | 8,457,541 | $ | 4,763,529 | ||||
Consolidated Statements of Operations
| Years Ended December 31, | 2022 | 2021 | ||||||
| Net revenues: | ||||||||
| Stores | $ | 3,184,491 | $ | 2,204,201 | ||||
| Wholesale and online | 56,032 | 75,871 | ||||||
| Total net revenues | 3,240,523 | 2,280,072 | ||||||
| Operating costs and expenses: | ||||||||
| Product, food and drink costs-stores | 1,092,573 | 821,713 | ||||||
| Cost of sales-wholesale and online | 24,542 | 33,231 | ||||||
| General and administrative | 5,663,950 | 3,988,805 | ||||||
| Total operating costs and expenses | 6,781,065 | 4,843,749 | ||||||
| Loss from operations | (3,540,542 | ) | (2,563,677 | ) | ||||
| Other income (expense): | ||||||||
| Other income | 16,440 | 7,631 | ||||||
| Paycheck protection program (PPP) loan forgiven income | - | 115,000 | ||||||
| Interest expense | (29,195 | ) | (16,172 | ) | ||||
| Loss on extinguishment of debt | - | (982,383 | ) | |||||
| Total other income (expense), net | (12,755 | ) | (875,924 | ) | ||||
| Loss before income taxes | (3,553,297 | ) | (3,439,601 | ) | ||||
| Provision for income taxes | 1,600 | 800 | ||||||
| Net loss | $ | (3,554,897 | ) | $ | (3,440,401 | ) | ||
| Loss per share: | ||||||||
| Basic and diluted | $ | (0.29 | ) | $ | (0.32 | ) | ||
| Weighted average number of common shares outstanding: | ||||||||
| Basic and diluted | 12,173,031 | 10,724,944 | ||||||
Consolidated Statements of Cash Flows
| Years Ended December 31, | 2022 | 2021 | ||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (3,554,897 | ) | $ | (3,440,401 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock compensation | 441,001 | 550,000 | ||||||
| Operating lease | 21,065 | 65,545 | ||||||
| Depreciation | 210,616 | 174,696 | ||||||
| Loss on extinguishment of debt | - | 982,383 | ||||||
| Forgiveness of Paycheck protection program (PPP) loan | - | (115,000 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (780 | ) | 3,853 | |||||
| Inventories | (43,466 | ) | (73,598 | ) | ||||
| Prepaid expense and other current assets | (521,176 | ) | (132,059 | ) | ||||
| Accounts payable | 42,062 | (27,571 | ) | |||||
| Accrued expenses and current liabilities | 108,518 | 62.332 | ||||||
| Net cash used in operating activities | (3,297,058 | ) | (1,949,820 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (681,531 | ) | (348,224 | ) | ||||
| Reacquisition of store | - | (150,000 | ) | |||||
| Net cash used in investing activities | (681,531 | ) | (498,224 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | 7,200,000 | 2,688,874 | ||||||
| Payment for offering costs | (997,870 | ) | - | |||||
| Proceeds from Line of Credit | 685,961 | - | ||||||
| Repayment of Line of Credit | (685,961 | ) | - | |||||
| Proceeds from loans | 262,215 | 1,028,027 | ||||||
| Repayments of loans | (355,783 | ) | (473,187 | ) | ||||
| Repayments of equipment loan payable | (15,989 | ) | (19,187 | ) | ||||
| Net cash provided by financing activities | 6,092,573 | 3,224,527 | ||||||
| Net increase in cash | 2,113,984 | 776,483 | ||||||
| Cash at beginning of period | 905,051 | 128,568 | ||||||
| Cash at end of period | $ | 3,019,035 | $ | 905,051 | ||||
| Supplemental disclosures of non-cash financing activities: | ||||||||
| Issuance of common shares for repurchase of lease and leasehold improvements | $ | - | $ | 150,000 | ||||
| Conversion of debt to common stock issuances | $ | - | $ | 2,014,766 | ||||
| Forgiveness of paycheck protection program (PPP) loan | $ | - | $ | 115,000 | ||||
| Issuance of common shares for service | $ | 441,000 | $ | 550,000 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the years for: | ||||||||
| Interest | $ | 8,530 | $ | 16,172 | ||||
| Income taxes | $ | 1,600 | $ | 800 | ||||
| Lease liabilities and assets | $ | 926,626 | $ | 544,873 | ||||
