Second Quarter Revenue Increased 93% to $1.5 Million
Second Quarter Gross Profit Increased 96% to $1.0 Million
BREA, Calif., Aug. 14, 2023 (GLOBE NEWSWIRE) -- Reborn Coffee, Inc. ( REBN) (âRebornâ, or the âCompanyâ), a California-based retailer of specialty coffee, has reported its financial and operational results for the second quarter ended June 30, 2023.
Key Financial and Operational Highlights
- Revenue increased 93% to $1.5 million in Q2'23 compared to $0.8 million in Q2'22.
- Ended Q2'23 with 14 open locations, with four other locations in development.
- Company-operated store sales increased $0.7 million, or 93% in the quarter ended June 30, 2023, compared to the same period in 2022.
- Company-operated store gross profit was $1.0 million for the quarter ended June 30, 2023, compared to $0.5 million for the same period in 2022. Year-over-year company-operated store gross margins improved to 65% from 64%.
Q2 2023 and Subsequent Events
- Launched a unique initiative to appeal to pet owners including a series of pet-focused events at selected Reborn locations and the launch of a flagship "Reborn Cafe N Pet Social" at the soon to be expanded Pasadena Playhouse location in the dog-friendly city of Pasadena, California.
- Secured a new $1.0 million credit facility with DRE, Inc. ("DRE") to fund working capital requirements and operating expenses.
- Appointed Bill Koschak to its newly created Advisory Board, an experienced financial executive bringing over 30 years of corporate, finance, and accounting leadership to Reborn, having spent the last 14 years as an operating or corporate CFO.
- Hosted a unique coffee tasting and marketing event in the Miami Design District during the Formula 1 Miami Grand Prix that took place May 5-7, 2023.
- Presented at investor conferences including EF Hutton Inaugural Global Conference and LD Micro Main Event Invitational XIII Conference.
Management Commentary
âThe second quarter of 2023 was marked by ongoing revenue growth, execution of our expansion strategy, and strategic marketing initiatives to build customer engagement,â said Jay Kim, Chief Executive Officer of Reborn. âIncreased company operated store sales were driven by new locations and marketing, underscored by new product innovations and effective operational execution across our retail locations. The second quarter was also focused on the exploration and launch of new U.S. and overseas locations, and ongoing joint R&D projects, B2B marketing expansion and new product launches.
âDuring the quarter we expanded on our popular Reborn Cafe concept, which is generating approximately $18 per customer on average, with plans to launch a specialty âReborn Cafe N Pet Socialâ in pet-friendly Pasadena, California. Anticipated to open in late 2023, the location will feature indoor seating and an outdoor patio for pet owners and their furry friends, providing a cozy and welcoming environment for everyone to enjoy. Snacks and water bowls will be provided for pets, along with a curated special pet supplies section. In tandem we are launching a new series of engaging events at Reborn retail locations in partnership with pet rescue and adoption organizations, and we are now allowing pets in outdoor and patio spaces at all our locations.
âWe intend to advance our retail location expansion, 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. We are actively conducting due diligence and seeking differentiated and prime locations that will serve as strategic footprints in these new markets, preparing us for additional expansion. To this end, during the quarter we hosted a unique and successful coffee tasting and marketing event in the Miami Design District during the Formula 1 Miami Grand Prix. This was the first time we staged a marketing event on the East Coast, an initiative fueled by plans to expand into this market through Miami, a gateway to an international community.
âLooking ahead, we believe our expansion strategy, driven by sustained customer demand, new product innovation and effective operational execution across our retail locations, will support continued revenue growth for Reborn in the years to come. Fueled by a recent $1 million strategic credit facility, we plan to accelerate company initiatives including expansion in new key markets in the U.S. and globally and developing our franchise opportunities. Our diligent focus on sustained operational execution is yielding ongoing year-over-year revenue growth from company operated store sales. We look forward to additional announcements in the months to come as we build revenue, growth, and shareholder value,â 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 Stage of the Art Roasting R&D Facility for innovation
- Open First Pet Friendly Indoor CafĂ© âReborn 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.
- Launch new Reborn-branded products such red tea bag packs and cold brew cans.
Second Quarter 2023 Financial Results
Revenues were $1.5 million for the second quarter of 2023, compared to $0.8 million for the comparable period in 2022, representing an increase of 93%. For the six months ended June 30, 2023, revenues were $2.6 million, compared to $1.5 million in the prior year period. The increase in sales was primarily driven by the opening of new locations and the continued focus on marketing efforts to grow brand recognition.
Company-operated store gross profit was $1.0 million for the three-months ended June 30, 2023, compared to $0.5 million for the comparable period in 2022. Q2â23 company-operated store gross margins improved to 65% compared to 64% for the same period in 2022.
Total operating costs and expenses for the three-months ended June 30, 2023, were $2.7 million compared to $1.7 million for the comparable period in 2022, representing an increase of 58%.
Net loss for the second quarter of 2023 was $1.3 million, compared to a net loss of $0.9 million for the second quarter of 2022.
Net cash used in operating activities for the six months ended June 30, 2023, was $2.3 million, compared to $1.2 million for the six months ended June 30, 2022.
Cash and cash equivalents totaled $0.3 million as of June 30, 2023, compared to $3.0 million as of December 31, 2022.
About Reborn Coffee
Reborn Coffee, Inc. ( 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, including, without limitation, statements regarding our execution and the expected benefits from our future operating results and financial position, our business strategy and plans, market growth and our objects for future operations 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 contained in this press release may be identified by the use of words such as âanticipate,â âbelieve,â âcontemplate,â âcould,â âestimate,â âexpect,â âintend,â âseek,â âmay,â âmight,â âplan,â âpotential,â âpredict,â âproject,â âtarget,â âaim,â âshould,â "willâ âwould,â or the negative of these words or other similar expressions. 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-Q for the first quarter of 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
[email protected]
949-491-8235
Company Contact:
Reborn Coffee, Inc.
[email protected]
Unaudited Condensed Consolidated Balance Sheets
As ofJune 30,2023December 31,
2022 ASSETS Current assets: Cash and cash equivalents $337,492 $3,019,035 Accounts receivable, net of allowance for doubtful accounts of $0 and $0, respectively 2,285 780 Inventories, net 124,842 132,343 Prepaid expense and other current assets 1,284,323 477,850 Total current assets 1,748,942 3,630,008 Property and equipment, net 5,864,189 1,581,805 Operating lease right-of-use asset 4,209,267 3,010,564 Other assets 235,164 235,164 Total assets$12,057,562$8,457,541 LIABILITIES AND STOCKHOLDERSâ EQUITY Current liabilities: Accounts payable $293,911 $87,809 Accrued expenses and current liabilities 389,513 233,053 Line of credit 974,027 - Loans payable to financial institutions, current portion 194,844 44,664 Loan payable, emergency injury disaster loan (EIDL), current portion 30,060 30,060 Loan payable, payroll protection program (PPP), current portion 40,447 45,678 Operating lease liabilities, current portion 840,590 624,892 Total current liabilities 2,763,392 1,066,156 Loan payable, mortgage, net of current portion 2,850,000 - Loans payable to financial institutions, net of current portion 74,918 6,234 Loan payable, emergency injury disaster loan (EIDL), net of current portion 469,940 469,940 Loan payable, payroll protection program (PPP), net of current portion 80,377 98,697 Operating lease liabilities, net of current portion 3,540,212 2,529,985 Total liabilities 9,778,839 4,171,012 Commitments and Contingencies Stockholdersâ equity Common Stock, $0.0001 par value, 40,000,000 shares authorized; 13,212,723 and 13,162,723 shares issued and outstanding at June 30, 2023 and December 31, 2022 1,321 1,316 Preferred Stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2023 and December 31, 2022 - Additional paid-in capital 16,567,009 16,317,014 Accumulated deficit (14,289,607) (12,031,801)Total stockholdersâ equity 2,278,723 4,286,529 Total liabilities and stockholdersâ equity$12,057,562$8,457,541
Unaudited Condensed Consolidated Statements of Operations
June 30,Three Months Ended
June 30, 2023202220232022 Net revenues: Stores $2,603,654 $1,511,952 $1,494,603 $775,956 Wholesale and online 37,590 29,674 24,320 12,520 Total net revenues 2,641,244 1,541,626 1,518,923 788,476 Operating costs and expenses: Product, food and drink costsâstores 882,302 563,906 518,483 278,952 Cost of salesâwholesale and online 16,464 12,997 10,652 5,484 General and administrative 3,893,849 2,468,447 2,189,198 1,432,432 Total operating costs and expenses 4,792,615 3,045,350 2,718,333 1,716,868 Loss from operations (2,151,371) (1,503,724) (1,199,410) (928,392) Other income (expense): Other income - 16,440 - 1,440 Interest expense (106,435) (14,976) (94,232) (10,196)Total other income (expense), net (106,435) 1,464 (94,232) (8,756) Loss before income taxes (2,257,806) (1,502,260) (1,293,642) (937,148) Provision for income taxes - - - - Net loss$(2,257,806)$(1,502,260)$(1,293,642)$(937,148) Loss per share: Basic and diluted $(0.17) (0.13) (0.10) (0.08) Weighted average number of common shares outstanding: Basic and diluted 13,216,270 11,642,550 13,237,580 11,667,545
Unaudited Consolidated Statements of Cash Flows
For the Six Months Ended June 30,20232022 Cash flows from operating activities: Net loss $(2,257,806) $(1,502,260)Adjustments to reconcile net loss to net cash used in operating activities: Stock compensation 250,000 225,000 Operating lease 27,222 22,086 Depreciation 135,398 97,922 Changes in operating assets and liabilities: Accounts receivable (1,505) (1,293)Inventories 7,501 (14,104)Prepaid expense and other current assets (806,473) (28,275)Accounts payable 206,102 (45,590)Accrued expenses and current liabilities 156,460 46,535 Net cash used in operating activities (2,283,101) (1,199,979) Cash flows from investing activities: Purchases of property and equipment (4,417,782) (168,397)Net cash used in investing activities (4,417,782) (168,397) Cash flows from financing activities: Proceeds from line of credit 974,027 594,529 Proceeds from loan payable to shareholders - 150,000 Proceeds from loan payable to financial institutions 218,864 - Proceeds from loan payable, mortgage 2,850,000 - Repayment of loans (23,551) (121,703)Repayment of equipment loan payable - (9,677)Net cash provided by financing activities 4,019,340 613,149 Net (decrease) increase in cash (2,681,543) (755,227) Cash at beginning of period 3,019,035 905,051 Cash at end of period $337,492 $149,824 Supplemental disclosures of non-cash financing activities: Issuance of common shares for compensation $250,000 $225,000 Supplemental disclosure of cash flow information: Cash paid during the years for: Lease liabilities $546,389 $435,635 Interest $106,435 $367
