Reborn Coffee Reports Fiscal Year 2022 Financial Results

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 


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