Reborn Coffee Reports Fiscal Year 2023 Financial Results
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Insights
The reported financial results of Reborn Coffee, Inc. showcase a substantial increase in revenue and gross profit, indicating a positive trend in the company's growth trajectory. The significant 84% year-over-year revenue growth and the expansion of gross profit margins, particularly in company-operated stores, suggest effective operational management and a successful strategy in scaling the business. The expansion into new markets, like Malaysia and the UAE, along with strategic partnerships, could diversify revenue streams and help mitigate risks associated with reliance on a single market.
However, despite these positive indicators, the increase in net losses and operating expenses raises concerns about the sustainability of the current growth rate. Investors should monitor the company's ability to control costs and improve net profitability as it scales. The strategic shift towards e-commerce and the launch of new products, such as the Reborn branded Organic Volcanic Tea, may enhance the company's competitive edge in the specialty coffee market and attract a broader customer base.
The financial health of Reborn Coffee, Inc. is multifaceted. On one hand, the impressive revenue growth and gross profit enhancement reflect a strong market demand and operational efficiency. On the other hand, the increasing net loss and cash burn, evidenced by the reduced cash and cash equivalents from $3.0 million to $0.7 million, could be a red flag for potential liquidity issues. The equity investments and debt-to-equity conversion improve the balance sheet in the short term, but the company must address the underlying causes of the net loss to ensure long-term financial stability.
Investors should consider the impact of new location openings and capital expenditures on future cash flows. The company's aggressive expansion strategy, while potentially rewarding, must be balanced against the risks of overextension and increased financial leverage. The management's commentary suggests a focus on building shareholder value, but this must translate into tangible financial results to support the stock price.
Reborn Coffee's foray into e-commerce, particularly through Amazon Marketplace, signifies a strategic move to capitalize on the growing online retail trend. The partnership with Hour Loop and the launch of an exclusive Valentine's Day coffee blend through TOUS les JOURS are examples of innovative marketing that can increase brand visibility and customer reach. The anticipated launch of the Reborn Mobile App services could further enhance customer engagement and loyalty.
While these initiatives are promising, it is important to evaluate the effectiveness of these e-commerce strategies in driving sales and whether they can offset the costs associated with digital marketing and distribution. The company's ability to leverage its online presence to create a seamless omnichannel experience for customers will be a key determinant in its success in the competitive specialty coffee market. The long-term impact of these e-commerce efforts on the company's financial performance will be an important aspect for stakeholders to watch.
FY 2023 Record Revenue Increased
FY 2023 Gross Profit Increased
BREA, Calif., March 28, 2024 (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, 2023.
Key Financial and Operational Highlights
- Revenue increased
109% to$1.8 million in Q4'23 from$0.9 million in Q4'22. - Revenue increased
84% to$6.0 million in FY'23 from$3.2 million in FY'22. - Ended FY'23 with 14 open locations, with one location in development.
- Company-operated store sales increased to
$5.7 million , or79% , in the year ended December 31, 2023, compared to the same period in 2022. - Company-operated store gross profit was
$4.0 million for the year ended December 31, 2023, compared to$2.1 million for the same period in 2022.
Q4 2023 and Subsequent Events
- Held grand opening of a new flagship store under the newly incorporated Reborn Coffee Malaysia, at the Exchange TRX mall in Kuala Lumpur, Malaysia.
- Strategic partnership with Sheikh Hamed, the respected owner of Abu Dhabi's Millennium Hotel, paving the way for Reborn’s dynamic entry into the vibrant UAE market, establishing its first retail location in Abu Dhabi, UAE.
- Partnered with pet fashion brand Sgt. Puppa to offer pet attire and accessories at pet social café set to open in Pasadena, CA in May 2024.
- Partnered with TOUS les JOURS, a franchise French-Asian bakery café chain, to bring an exclusive Valentine's Day coffee blend to TOUS les JOURS' Cerritos, California flagship location and through ecommerce.
- Announced a strategic partnership with Hour Loop (NASDAQ: HOUR), a leading online retailer engaged in e-commerce, to offer the Company's high-quality coffee products on Amazon through the Amazon Marketplace program.
- Expanded partnership with Hour Loop to offer new Reborn branded Organic Volcanic Tea through the Amazon Marketplace program.
- Closed a
$1.0 million private placement equity investment from accredited investor, allowing Reborn Coffee to continue expanding its footprint both in the U.S. and internationally. - Closed a
$1.0 million private placement equity investment from Chairman Farooq Arjomand to further enhance product offerings and expand market reach. - Converted
$1.0 million of outstanding debt held by the Company's Vice Chairman of the Board of Directors, Dennis Egidi, into common equity.
Management Commentary
“The fourth quarter of 2023 was highlighted by record revenue growth, improving margins, the launch of a flagship store in Kuala Lumpur, and a strengthened balance sheet to continue our global expansion,” said Jay Kim, Chief Executive Officer of Reborn. “Our company-operated record store sales were driven by operational execution across our retail locations, which also drove fourth quarter store margins up 710 basis points to
“Internationally, we announced the grand opening of a new flagship store under the newly incorporated Reborn Coffee Malaysia, at the Exchange TRX mall in Kuala Lumpur, Malaysia during the quarter. The Exchange TRX is a 17-acre integrated development set to become one of Asia's leading lifestyle hubs, including world class shopping and dining, residential homes and office spaces. Our global expansion initiatives and launch into the Southeast Asian market aligns with our brand ethos and are anticipated to significantly augment revenue streams. We also continued to make progress with our partner Sheikh Hamed, the respected owner of Abu Dhabi's Millennium Hotel, to establish our first retail location in Abu Dhabi, UAE.
“To drive additional customer engagement, we launched several new partner initiatives during the quarter and in early 2024. A strategic partnership with pet fashion brand Sgt. Puppa, a fashion and lifestyle brand for trendy pooches and their families, will add a specially curated selection of pet attire and accessories at the Reborn Pet Social Cafe launching in the second quarter. The enthusiastic response to our Reborn Pet Social Cafe announcement motivated us to elevate this concept with Sgt. Puppa's exclusive product line, aiming to significantly boost sales.
“A special distribution partnership with TOUS les JOURS, a franchise French-Asian bakery café chain, for an exclusive Valentine's Day coffee blend gave us the opportunity to introduce Reborn to customers at TOUS les JOURS' Cerritos, California flagship location. The blend was also available via our website and online ecommerce platform, highlighting our solidified presence in the ecommerce space. We continue to demonstrate remarkable growth and reach through leading online platforms, including Amazon. With an established strategic partnership with Hour Loop and direct sales through our website, we are well positioned to distribute our premium coffee products more efficiently and effectively to customers nationwide.
“Operationally during the quarter, we took the opportunity to strengthen our balance sheet in anticipation of strategic milestones in 2024. Two investments totaling
“Looking ahead into 2024, we are highly focused on our retail expansion strategy, preparing for new company-owned retail locations in Southern California and new flagships in states such as Texas, as well as global locations including South Korea, Austria, and Dubai with our partners. In partnership with a leading online retailer, we are driving e-commerce expansion to a national audience. We continue to seek new partnerships and opportunities that will increase customer engagement and broaden our service portfolio. Taken together, our strong customer demand, new product innovation and effective operational execution across our retail locations will empower us to continue our momentum and build long term shareholder value,” concluded Kim.
Anticipated Milestones
- Open 4 flagship Reborn Café locations in the U.S., targeting cities such as San Francisco, San Diego, Houston, and Kansas City.
- Open up to 20 company-owned retail locations.
- Open up to 20 Franchised locations nationwide.
- Open 10+ overseas locations outside the U.S., targeting countries such as South Korea, Malaysia, Dubai, Indonesia, Kazakhstan, India, Thailand, and the UK.
- Flagship Store in Daejeon, South Korea: Showcasing the Cutting-Edge 4th Wave Coffee Concept. Home to a State of the Art Roasting R&D Facility for innovation.
- Open First Pet Friendly Indoor Café “Reborn N Pet Social in city of Pasadena California.
- Joint R&D projects with coffee farms in locations such as Hawaii, Colombia, Ethiopia and Indonesia.
- Expand B2B marketing to wholesale clubs and other major outlets and expand ecommerce marketing with online initiatives by launching its own Amazon marketplace.
- Launch of Reborn Mobile App services.
- Launch new Reborn-branded products such red tea bag packs and cold brew cans.
Fourth Quarter and Fiscal Year 2023 Financial Results
Revenues were
Company-operated store gross profit was
Company-operated store gross profit was
Total operating costs and expenses for the three-month period ended December 31, 2023, were
Net loss for the fourth quarter of 2023 was
Net cash used in operating activities for the twelve months ended December 31, 2023, was
Cash and cash equivalents totaled
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 recent filings with the Securities and Exchange Commission ("SEC") including our Form 10-K for the year ended December 31, 2023, 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, | 2023 | 2022 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 676,448 | $ | 3,019,035 | ||||
| Accounts receivable, net of allowance for doubtful accounts of | 47,361 | 780 | ||||||
| Inventories, net | 166,281 | 132,343 | ||||||
| Prepaid expense and other current assets | 773,949 | 477,850 | ||||||
| Total current assets | 1,664,039 | 3,630,008 | ||||||
| Property and equipment, net | 2,100,146 | 1,581,805 | ||||||
| Operating lease right-of-use asset | 4,227,815 | 3,010,564 | ||||||
| Other assets | 1,008,419 | 235,164 | ||||||
| Total assets | $ | 9,000,419 | $ | 8,457,541 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 399,346 | $ | 87,809 | ||||
| Accrued expenses and current liabilities | 598,468 | 233,053 | ||||||
| Loans payable to financial institutions | 791,353 | 44,664 | ||||||
| Loan payable to other | 300,000 | - | ||||||
| Current portion of loan payable, emergency injury disaster loan (EIDL) | 30,060 | 30,060 | ||||||
| Current portion of loan payable, payroll protection program (PPP) | 45,678 | 45,678 | ||||||
| Current portion of operating lease liabilities | 847,990 | 624,892 | ||||||
| Total current liabilities | 3,012,895 | 1,066,156 | ||||||
| Loans payable to financial institutions, less current portion | 335,147 | 6,234 | ||||||
| Loan payable, emergency injury disaster loan (EIDL), less current portion | 469,940 | 469,940 | ||||||
| Loan payable, payroll protection program (PPP), less current portion | 51,595 | 98,697 | ||||||
| Operating lease liabilities, less current portion | 3,556,999 | 2,529,985 | ||||||
| Total liabilities | 7,426,576 | 4,171,012 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Common Stock, | 1,493 | 1,316 | ||||||
| Preferred Stock, | - | - | ||||||
| Additional paid-in capital | 17,601,837 | 16,317,014 | ||||||
| Accumulated deficit | (16,029,487 | ) | (12,031,801 | ) | ||||
| Total stockholders’ equity | 1,573,843 | 4,286,529 | ||||||
| Total liabilities and stockholders’ equity | $ | 9,000,419 | $ | 8,457,541 | ||||
| Consolidated Statements of Operations | ||||||||
| Years Ended December 31, | 2023 | 2022 | ||||||
| Net revenues: | ||||||||
| Stores | $ | 5,712,630 | $ | 3,184,491 | ||||
| Wholesale and online | 241,356 | 56,032 | ||||||
| Total net revenues | 5,953,986 | 3,240,523 | ||||||
| Operating costs and expenses: | ||||||||
| Product, food and drink costs—stores | 1,758,494 | 1,092,573 | ||||||
| Cost of sales—wholesale and online | 105,714 | 24,542 | ||||||
| General and administrative | 7,967,856 | 5,663,950 | ||||||
| Total operating costs and expenses | 9,832,064 | 6,781,065 | ||||||
| Loss from operations | (3,878,078 | ) | (3,540,542 | ) | ||||
| Other income (expense): | ||||||||
| Other income (expense) | (6,283 | ) | 16,440 | |||||
| Interest expense | (129,480 | ) | (29,195 | ) | ||||
| Gain on the sale of building | 16,955 | - | ||||||
| Total other income (expense), net | (118,808 | ) | (12,755 | ) | ||||
| Loss before income taxes | (3,996,886 | ) | (3,553,297 | ) | ||||
| Provision for income taxes | 800 | 1,600 | ||||||
| Net loss | $ | (3,997,686 | ) | $ | (3,554,897 | ) | ||
| Loss per share: | ||||||||
| Basic and diluted | $ | (0.30 | ) | $ | (0.29 | ) | ||
| Weighted average number of common shares outstanding: | ||||||||
| Basic and diluted | 13,230,613 | 12,173,031 | ||||||
| Consolidated Statements of Cash Flows | ||||||||
| Years Ended December 31, | 2023 | 2022 | ||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (3,997,686 | ) | $ | (3,554,897 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock compensation | 285,000 | 441,001 | ||||||
| Operating lease | 271,854 | 21,065 | ||||||
| Depreciation | 262,019 | 210,616 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (46,581 | ) | (780 | ) | ||||
| Inventories | (33,938 | ) | (43,466 | ) | ||||
| Prepaid expense and other current assets | (1,069,354 | ) | (521,176 | ) | ||||
| Accounts payable | 311,537 | 42,062 | ||||||
| Accrued expenses and current liabilities | 1,226,193 | 108,518 | ||||||
| Net cash used in operating activities | (2,790,956 | ) | (3,297,058 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | (1,019,353 | ) | (681,531 | ) | ||||
| Net cash used in investing activities | (1,019,353 | ) | (681,531 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | - | 7,200,000 | ||||||
| Payment for offering costs | - | (997,870 | ) | |||||
| Proceeds from Line of Credit | 1,000,000 | 685,961 | ||||||
| Repayment of Line of Credit | - | (685,961 | ) | |||||
| Proceeds from loans | 514,824 | 262,215 | ||||||
| Repayments of loans | (47,102 | ) | (355,783 | ) | ||||
| Repayments of equipment loan payable | - | (15,989 | ) | |||||
| Net cash provided by financing activities | 1,467,722 | 6,092,573 | ||||||
| Net (decrease) increase in cash | (2,342,587 | ) | 2,113,984 | |||||
| Cash at beginning of period | 3,019,035 | 905,051 | ||||||
| Cash at end of period | $ | 676,448 | $ | 3,019,035 | ||||
| Supplemental disclosures of non-cash financing activities: | ||||||||
| Conversion of credit line to common stock issuances | $ | 1,000,000 | $ | |||||
| Issuance of common shares for service | $ | 285,000 | $ | 441,000 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the years for: | ||||||||
| Interest | $ | 129,000 | $ | 8,500 | ||||
| Income taxes | $ | 800 | $ | 1,600 | ||||
| Lease liabilities and assets | $ | 1,240,000 | $ | 903,000 | ||||
FAQ
What was the revenue increase percentage in FY 2023 for Reborn Coffee, Inc. (REBN)?
How much was the gross profit increase in FY 2023 for Reborn Coffee, Inc. (REBN)?
How many open locations did Reborn Coffee, Inc. (REBN) have at the end of FY 2023?
What was the percentage increase in company-operated store sales for Reborn Coffee, Inc. (REBN) in FY 2023?
What was the net loss for Reborn Coffee, Inc. (REBN) in the fourth quarter of 2023?
What strategic partnership did Reborn Coffee, Inc. (REBN) announce with Hour Loop?
