Reborn Coffee first filed its intention to IPO on December 30, 2021. The company plans to list on the NASDAQ stock exchange under the symbol REBN.
The company has not yet disclosed the details of its IPO, such as the number of shares in the offering or the expected price per share. However, Reborn Coffee noted it plans to offer units consisting of one share of common stock and one warrant to purchase a share of common stock.
Meanwhile, its proposed target offering price comes in at $39.8m in its S-1 filing with the SEC.
EF Hutton Investments LLC is the lead underwriter on the offering.
EF Hutton, a division of Benchmark Investments, LLC, was also the sole bookrunner on these recent SPAC IPOs:
Future Tech II Acquisition Corp. (NASDAQ: FTIIU)
Genesis Unicorn Capital Corp. (NASDAQ: GENQU)
Evergreen Corporation (NASDAQ: EVGRU)
American Rebel Holdings, Inc. (NASDAQ: AREB)
Splash Beverage Group, Inc. (NYSE: SBEV)
Coffee is a hugely competitive industry, so is this a viable investment opportunity?
What is Reborn Coffee?
Reborn Coffee offers organic coffee, refreshing tea, natural spring water, pastries and athletic lifestyle gear. The reborn process starts with green bean re-conditioning technology that is performed at Reborn Roasting Works.
The company has some innovative processes in the works, such as washing green coffee beans with magnetized water in its bid to deliver an appreciation of coffee as both a science and an art.
It sells coffee beans, pour-over packs and cold-brew coffee.
The company is a high-growth operator and franchisor of retail locations and kiosks that focus on serving high-quality, specialty-roasted coffee.
Reborn Coffee is based in California and was founded in 2015 by CEO Mr. Jay Kim.
When will REBN stock go public?
There is not yet an IPO date for REBN stock, and it has to receive approval to be listed on the NASDAQ Capital Market before the offering date is confirmed.
How does REBN make money?
Reborn Coffee makes money from selling fair trade certified coffees, high-quality bean and roast coffees and house blends in a variety of flavors. It sells via an online store selling whole beans, pour over packs, sample packs, cold brew packs, gift sets and cards, mugs and merchandise. It also offers subscriptions.
The company also operates out of several café locations in California.
Financials:
For the nine months ended September 30, 2021, Reborn Coffee recorded a loss of $2.5m on revenue of $1.5m. This was a jump from the same period in 2020 when it recorded a loss of $850k on revenue of $500k.
Revenue:
Inflationary headwinds continue to pressure the company's operating costs and expenses. Product, food and drink costs soared in 2021 compared with 2020, as did labor and utility expenses.
Nine Months Ended September 30, | Nine Months Ended September 30, | |
2021 | 2020 | |
Net revenues: | ||
Stores | $1,519,969 | $485,087 |
Wholesale and online | 47,966 | 15,012 |
Total net revenues | 1,567,935 | 500,099 |
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Operating costs and expenses: | ||
Total operating costs and expenses | 3,264,404 | 1,346,076 |
Net loss | $(2,576,136) | $(850,405) |
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Weighted average number of common shares outstanding: | ||
Basic and diluted | 1,036,668,998 | 667,903,151 |
Source: FactSet financial data and analytics.
Why is REBN going public?
Reborn Coffee is going public to raise cash.
In its S-1 filing, the company states:
We require approximately $100,000 of capital to set up a kiosk and will need between $200,000 to $300,000 to set up a retail cafe to sell coffee and short-eats. We believe if we raise 100% of what we are offering, we could set up a combination of 300 kiosks and cafes.
Reborn does not make any assurance that it will successfully raise the capital or achieve its goal. However, it anticipates monthly revenue of approximately $180,000 and monthly expenses of approximately $120,000 over the next few months.
Use of Proceeds
Reborn Coffee intends to use the money raised for multiple reasons, including:
Capital Expenditures
General Corporate Purposes
Investment in Marketable Securities
Working Capital
REBN IPO Lock-up period
Directors, officers and principal shareholders have agreed to a 12-month lock-up period during which they will not sell, transfer or dispose of their shares.
Growth Potential
Reborn Coffee has growth potential through expanding its franchise, developing new products and attracting new customers.
As of September 30, 2021, Reborn had seven company-owned locations. To achieve its growth strategy, Reborn intends to open and operate several outlets at new locations.
In 2022, Reborn expects to open up to 40 company-operated retail locations. The company continues to elevate the high-end coffee experience and received first place traditional still in "America's Best Cold Brew" competition by Coffee Fest in 2017 in Portland and 2018 in Los Angeles.
Reborn Coffee asserts itself as an innovative company striving for constant improvement in the coffee experience. It is exploring new technologies and premier service offerings guided by traditional brewing techniques.
The team at Reborn Coffee believes it differentiates itself from other coffee roasters through its innovative techniques, including sourcing, washing, roasting, and brewing its coffee beans with a balance of precision and craft.
Whether that is enough to distinguish the company from its rivals and peers remains to be seen.
Risks to Investing in REBN:
There are many risks to investing in REBN stock. It is highly speculative, and investors should keep the following factors in mind.
Real estate and labor costs could continue to rise
consumer preferences for coffee could change
severe weather conditions could affect the price of coffee and other natural or man-made disasters could cause supply chain disruption
geopolitical, social or disruptive health event that prevents consumers from frequenting public places or encourage people to stay at home would affect Reborn's sales
Competitors
Saxbys Coffee, Inc (Private Equity backed company)
Baristas Coffee (OTCMKTS: BCCI)
Dutch Bros (NYSE: BROS)
Starbucks (NASDAQ: SBUX)
Caffeine Roasters (Privately owned Lithuanian Coffee Company)
Farmer Bros Co (NASDAQ: FARM)
Dunkin Donuts (Privately owned)
Peet's Coffee (Privately owned)
Independent Coffee Shops
Should you invest in Reborn Coffee?
The Reborn Coffee IPO will help the company raise funds to grow its franchise business and invest in its product offering.
Coffee is a popular commodity with a growing consumer base. However, the coffee industry supply chain has been hit hard by COVID-19, bad weather and the current rise in oil costs worsened by Russia's war in Ukraine. All this leads to higher prices for coffee, from bean to cup.
Considering Reborn Coffee aims to deliver a high-end cup of coffee, it will need to attract a wealthy clientele.
It's also up against heavy competition. We also recently covered another coffee IPO, read about Luckin Coffee here.
