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What changed in Reborn Coffee, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Reborn Coffee, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+95 added−92 removedSource: 10-K (2024-03-28) vs 10-K (2023-04-11)

Top changes in Reborn Coffee, Inc.'s 2023 10-K

95 paragraphs added · 92 removed · 69 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAs evidence of our success, we received 1st place traditional still in “America’s Best Cold Brew” competition by Coffee Fest in 2017 in Portland and 2018 in Los Angeles. As of December 31, 2022, all of our 11 locations were company-operated. Our retail locations, which opened through whole year of 2022, generated AUV of approximately $376,000.
Biggest changeWe expect to continue to develop additional retail locations. In 2023, we opened up 2 retail locations, Diamond Bar and Anaheim, California and currently are developing a location in Pasadena, California. As evidence of our success, we received 1st place traditional still in “America’s Best Cold Brew” competition by Coffee Fest in 2017 in Portland and 2018 in Los Angeles.
Jay launched Reborn Coffee with the vision to provide the best coffee using the purest ingredients. Jay is focused on the expansion of Reborn and he has surrounded himself with leaders with direct experience in beverage and retail. Stephan Kim, our Chief Financial Officer, has almost 20 years of experience in public accounting and consulting.
Jay launched Reborn Coffee with the vision to provide the best coffee using the purest ingredients. Jay is focused on the expansion of Reborn and he has surrounded himself with leaders with direct experience in beverage and retail. Stephan Kim, our Chief Financial Officer, has 20 years of experience in public accounting and consulting.
We also expect to form a training school specializing in creating passionate baristas and coffee connoisseurs, by educating its students about coffee processes and preparation methods. The efforts for the training school are underway and we expect to launch the program in 2023.
We also expect to form a training school specializing in creating passionate baristas and coffee connoisseurs, by educating its students about coffee processes and preparation methods. The efforts for the training school are underway and we expect to launch the program in 2024.
We continue to accelerate the pace of new “corporate-owned” (i.e., directly owned by Reborn) stores openings and intend to operate over 20 corporate-owned locations by year end 2023. 4 Since our founding, we have focused on delivering: ● Quality. Reborn Coffee sources the highest quality whole beans globally.
We continue to accelerate the pace of new “corporate-owned” (i.e., directly owned by Reborn) stores openings and intend to operate over 20 corporate-owned locations and 10 franchised locations by year end 2024. 4 Since our founding, we have focused on delivering: ● Quality. Reborn Coffee sources the highest quality whole beans globally.
Our retail locations generated AUV of approximately $376,000 in 2022. As we expand our retail footprint and improve customer awareness, we expect our AUV to grow. Franchise Operations In January 2021, the Company formed Reborn Coffee Franchise LLC in the State of California in order to begin franchising Reborn Coffee retail stores and kiosks.
Our retail locations generated AUV of approximately $458,000 in 2023. As we expand our retail footprint and improve customer awareness, we expect our AUV to grow. Franchise Operations In January 2021, the Company formed Reborn Coffee Franchise LLC in the State of California in order to begin franchising Reborn Coffee retail stores and kiosks.
Our brand experience has enabled strong growth and financial performance. Revenue grew from $2.3 million in the 12 months ended December 31, 2021, to $3.2 million in the 12 months ended December 31, 2022.
Our brand experience has enabled strong growth and financial performance. Revenue grew from $3.2 million in the 12 months ended December 31, 2022, to $6.0 million in the 12 months ended December 31, 2023.
Our first place position in “America’s Best Cold Brew” competition by Coffee Fest in 2017 in Portland and 2018 in Los Angeles is a testament to the way we believe we lead the “fourth wave” movement by example.
Reborn Coffee’s continuous Research and Development is essential to developing new parameters in the production of new blends. Our first place position in “America’s Best Cold Brew” competition by Coffee Fest in 2017 in Portland and 2018 in Los Angeles is a testament to the way we believe we lead the “fourth wave” movement by example.
Through both bulk sales of roasted beans and in-store kiosks, as well sales of pre-packaged products, Reborn Coffee will access customers who purchase both in volume and for those customers looking for a handcrafted beverage during their in-store shopping experience. We are exploring discussions with a variety of retailers and expect to access these additional sales channels in 2023.
Through both bulk sales of roasted beans and in-store kiosks, as well sales of pre-packaged products, Reborn Coffee will access customers who purchase both in volume and for those customers looking for a handcrafted beverage during their in-store shopping experience.
Kim and his team launched Reborn Coffee with the vision of using the finest pure ingredients and pristine water. We serve customers through our retail store locations in Southern California: Brea, La Crescenta, Glendale, Corona Del Mar, Arcadia, Laguna Woods, Riverside, Manhattan Village, Cabazon, San Francisco, and Irvine. Additionally, we expect to continue to develop additional retail locations.
Kim and his team launched Reborn Coffee with the vision of using the finest pure ingredients and pristine water. We serve customers through our retail store locations in Southern California: Brea, La Crescenta, Huntington Beach, Corona Del Mar, Arcadia, Laguna Woods, Riverside, San Francisco, Cabazon, Manhattan Beach, two locations in Irvine, Diamond Bar and Anaheim with one location in development.
Our success in innovating within the “fourth wave” coffee movement is measured by our success in B2B sales with our introduction of Reborn Coffee Pour Over Packs to hotels.
Our success in innovating within the “fourth wave” coffee movement is measured by our success in B2B sales with our introduction of Reborn Coffee Pour Over Packs to hotels. With the introduction of our Pour Over Packs to major hotels, our B2B sales increased as these companies recognized the convenience and functionality our Pour Over Packs serve to their customers.
In 2021, we generated approximately $2.3 million of revenue, $3.4 million of net loss, a net loss margin of -150.9%, and approximately -$2.4 million of Adjusted EBITDA, a non-GAAP financial measure, resulting in an Adjusted EBITDA margin, a non-GAAP financial measure, of -104.8%.
In 2023, we generated approximately $6.0 million of revenue, $4.0 million of net loss, a net loss margin of -67.1%, and approximately -$3.6 million of Adjusted EBITDA, a non-GAAP financial measure, resulting in an Adjusted EBITDA margin, a non-GAAP financial measure, of -61.0%.
Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider information on our website to be part of this Annual Report on Form 10-K. 6 Implications of Being an Emerging Growth Company We are an “emerging growth company” as defined in the JOBS Act.
Information contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider information on our website to be part of this Annual Report on Form 10-K.
The Company had granted the underwriters a 45-day option to purchase up to 216,000 additional shares (equal to 15% of the shares of common stock sold in the offering) to cover over-allotments.
Net proceeds from the IPO was approximately $6.2 million after deducting underwriting discounts and commissions and other offering expenses of approximately $998,000. The Company had granted the underwriters a 45-day option to purchase up to 216,000 additional shares (equal to 15% of the shares of common stock sold in the offering) to cover over-allotments.
Corporate Information Our principal executive offices are located at 580 N. Berry Street, Brea, CA 92821. Our telephone number is (714) 784-6369. Our website address is http://www.reborncoffee.com.
We are exploring discussions with a variety of retailers and expect to access these additional sales channels in 2023. 6 Corporate Information Our principal executive offices are located at 580 N. Berry Street, Brea, CA 92821. Our telephone number is (714) 784-6369. Our website address is http://www.reborncoffee.com.
A reconciliation of net income to EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin is provided below: Years ended December 31, 2022 2021 Total net revenue, as reported $ 3,240,523 $ 2,280,072 Loss from operations, as reported $ (3,540,542 ) $ (2,563,677 ) Operating margin -109.3 % -112.4 % Net loss, as reported $ (3,554,897 ) $ (3,440,401 ) Interest, net 29,195 16,172 Taxes 1,600 800 Depreciation and amortization 210,616 174,696 EBITDA (3,313,486 ) (3,248,733 ) Other income (16,440 ) (7,631 ) Loss on extinguishment of debt - 982,383 PPP loan forgiveness - (115,000 ) Adjusted EBITDA $ (3,329,926 ) $ (2,388,981 ) Adjusted EBITDA margin -102.8 % -104.8 % 2 The Experience, Reborn As leading pioneers of the emerging “Fourth Wave” movement, Reborn Coffee is redefining specialty coffee as an experience that demands much more than premium quality.
A reconciliation of net income to EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin is provided below: Years ended December 31, 2023 2022 Total net revenue, as reported $ 5,953,986 $ 3,240,523 Loss from operations, as reported $ (3,878,078 ) $ (3,540,542 ) Operating margin -65.1 % -109.3 % Net loss, as reported $ (3,997,686 ) $ (3,554,897 ) Interest, net 129,480 29,195 Taxes 800 1,600 Depreciation and amortization 245,064 210,616 EBITDA (3,622,342 ) (3,313,486 ) Other expense (income) 6,283 (16,440 ) Gain on the sale of a building (16,955 ) - Adjusted EBITDA $ (3,633,014 ) $ (3,329,926 ) Adjusted EBITDA margin -61.0 % -102.8 % 2 The Experience, Reborn As leading pioneers of the emerging “Fourth Wave” movement, Reborn Coffee is redefining specialty coffee as an experience that demands much more than premium quality.
Reborn Coffee Franchise continues to develop the Reborn Coffee system for the establishment and operation of Reborn Coffee stores using one or more Reborn Coffee marks. Reborn Coffee Franchise does not have any franchisee as of December 31, 2022. Reborn Coffee, Inc., Reborn Global Holdings, Inc., and Reborn Coffee Franchise, LLC will be collectively referred as the “Company”.
Reborn Coffee Franchise continues to develop the Reborn Coffee system for the establishment and operation of Reborn Coffee stores using one or more Reborn Coffee marks.
In August 2022, the Company consummated its initial public offering (the “IPO”) of 1,440,000 shares of its common stock at a public offering price of $5.00 per share, generating gross proceeds of $7,200,000. Net proceeds from the IPO was approximately $6.2 million after deducting underwriting discounts and commissions and other offering expenses of approximately $998,000.
Reborn Coffee, Inc., Reborn Global Holdings, Inc., Reborn Coffee Franchise, LLC, and Reborn Realty, LLC will be collectively referred as the “Company”. In August 2022, the Company consummated its initial public offering (the “IPO”) of 1,440,000 shares of its common stock at a public offering price of $5.00 per share, generating gross proceeds of $7,200,000.
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We currently are developing 3 additional retail locations, Huntington Beach, Pasadena and Irvine, and have identified additional 2 locations, Diamond Bar and Anaheim, for expansion. In 2023, we expect to open up to 10 company-operated retail locations.
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Reborn Coffee Franchise does not have any franchisee as of December 31, 2023. ● Reborn Realty, LLC (the “Reborn Realty”), a California limited liability corporation formed in March 2023, is an entity which acquired a real property located at 596 Apollo Street, Brea, California.
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With the introduction of our Pour Over Packs to major hotels (including one hotel company with 7 locations), our B2B sales increased as these companies recognized the convenience and functionality our Pour Over Packs serve to their customers. Reborn Coffee’s continuous Research and Development is essential to developing new parameters in the production of new blends.
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As of December 31, 2023, all of our 14 locations were company-operated. Our retail locations, which opened through whole year of 2023, generated AUV of approximately $458,000.
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For as long as we are an emerging growth company, unlike other public companies that do not meet those qualifications, we are not required to: ● provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act; ● provide more than two years of audited financial statements and related management’s discussion and analysis of financial condition and results of operations in a registration statement on Form S-1; ● comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; ● provide certain disclosure regarding executive compensation required of larger public companies or hold shareholder advisory votes on executive compensation required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act; or ● obtain shareholder approval of any golden parachute payments not previously approved.
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We will cease to be an “emerging growth company” upon the earliest of: ● the last day of the fiscal year in which we have $1.07 billion or more in annual gross revenues; ● the date on which we become a “large accelerated filer” (which means the year-end at which the total market value of our common equity securities held by non-affiliates is $700 million or more as of the last business day of our most recently completed second fiscal quarter); ● the date on which we have issued more than $1 billion of non-convertible debt securities over a three-year period; and ● the last day of the fiscal year following the fifth anniversary of our initial public offering.
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In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards, but we have irrevocably opted out of the extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for other public companies.
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For more information, please see the section of this Annual Report on Form 10-K entitled “Item 1.A. Risk Factors.”

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAdditionally, we currently are developing 3 additional retail locations, Huntington Beach, Pasadena and Irvine, and have identified additional 2 locations, Diamond Bar and Anaheim, for expansion. In 2023, we expect to open up to 10 company-operated retail locations.
Biggest changeIn 2024, we expect to open up to 20 company-operated retail locations and 10 franchise locations.
Factors that could cause fluctuations in the trading price of our common stock include the risk factors set forth in this section as well as the following: ● price and volume fluctuations in the overall stock market from time to time; ● volatility in the trading prices and trading volumes of technology stocks; ● changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; ● sales of shares of our common stock by us or our stockholders; ● failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed or significantly exceed securities analyst expectations, particularly in light of the significant portion of our revenue derived from a limited number of customers; ● announcements by us or our competitors of new products or services; ● the public’s reaction to our press releases, other public announcements, and filings with the SEC; ● rumors and market speculation involving us or other companies in our industry; ● actual or anticipated changes in our results of operations or fluctuations in our results of operations; ● actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; ● litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; 25 ● actual or perceived privacy or data security incidents; ● developments or disputes concerning our intellectual property or other proprietary rights; ● announced or completed acquisitions of businesses, applications, products, services or technologies by us or our competitors; ● new laws or regulations or new interpretations of existing laws or regulations applicable to our business; ● changes in accounting standards, policies, guidelines, interpretations or principles; ● any significant change in our management; and ● general political and economic conditions and slow or negative growth of our markets.
Factors that could cause fluctuations in the trading price of our common stock include the risk factors set forth in this section as well as the following: ● price and volume fluctuations in the overall stock market from time to time; ● volatility in the trading prices and trading volumes of technology stocks; ● changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; ● sales of shares of our common stock by us or our stockholders; ● failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; ● changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed or significantly exceed securities analyst expectations, particularly in light of the significant portion of our revenue derived from a limited number of customers; ● announcements by us or our competitors of new products or services; ● the public’s reaction to our press releases, other public announcements, and filings with the SEC; ● rumors and market speculation involving us or other companies in our industry; ● actual or anticipated changes in our results of operations or fluctuations in our results of operations; ● actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; ● litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; 26 ● actual or perceived privacy or data security incidents; ● developments or disputes concerning our intellectual property or other proprietary rights; ● announced or completed acquisitions of businesses, applications, products, services or technologies by us or our competitors; ● new laws or regulations or new interpretations of existing laws or regulations applicable to our business; ● changes in accounting standards, policies, guidelines, interpretations or principles; ● any significant change in our management; and ● general political and economic conditions and slow or negative growth of our markets.
Additionally, our amended and restated certificate of incorporation provide that any person or entity holding, owning or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. 30 Our charter documents also contain other provisions that could have an anti-takeover effect, such as: ● permitting the board of directors to establish the number of directors and fill any vacancies and newly created directorships; ● providing that directors may only be removed pursuant to the provisions of Section 141(k) of the Delaware General Corporation Law; ● prohibiting cumulative voting for directors; ● requiring super-majority voting to amend some provisions in our amended and restated bylaws; ● authorizing the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; and ● eliminating the ability of stockholders to call special meetings of stockholders.
Additionally, our amended and restated certificate of incorporation provide that any person or entity holding, owning or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. 32 Our charter documents also contain other provisions that could have an anti-takeover effect, such as: ● permitting the board of directors to establish the number of directors and fill any vacancies and newly created directorships; ● providing that directors may only be removed pursuant to the provisions of Section 141(k) of the Delaware General Corporation Law; ● prohibiting cumulative voting for directors; ● requiring super-majority voting to amend some provisions in our amended and restated bylaws; ● authorizing the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; and ● eliminating the ability of stockholders to call special meetings of stockholders.
Unless otherwise indicated, references in these risk factors to our business being harmed will include harm to our business, reputation, brand, financial condition, results of operations, and prospects. 7 Risks Related to Our Business We have incurred recurring losses and may not be profitable in the future. Our plans to maintain and increase liquidity may not be successful.
Unless otherwise indicated, references in these risk factors to our business being harmed will include harm to our business, reputation, brand, financial condition, results of operations, and prospects. Risks Related to Our Business We have incurred recurring losses and may not be profitable in the future. Our plans to maintain and increase liquidity may not be successful.
However, there are no current agreements or understandings with regard to the form, time or amount of such financing and there is no assurance that any of this financing can be obtained or that the Company can continue as a going concern. Evolving consumer preferences and tastes may adversely affect our business.
However, there are no current agreements or understandings with regard to the form, time or amount of such financing and there is no assurance that any of this financing can be obtained or that the Company can continue as a going concern. 7 Evolving consumer preferences and tastes may adversely affect our business.
Reborn Coffee, Inc. will be a holding company, and has no independent means of generating revenue or cash flow, and its ability to pay taxes, operating expenses and dividends in the future, if any, will be dependent upon the financial results and cash flows of Reborn Global and Reborn Franchise.
Reborn Coffee, Inc. will be a holding company, and has no independent means of generating revenue or cash flow, and its ability to pay taxes, operating expenses and dividends in the future, if any, will be dependent upon the financial results and cash flows of Reborn Global, Reborn Coffee Franchise, and Reborn Realty.
Further, if we are unable to obtain additional capital when required, or are unable to obtain additional capital on satisfactory terms, our ability to continue to support our business growth or to respond to business opportunities, challenges, or unforeseen circumstances would be adversely affected. 29 Our amended and restated articles of incorporation provide that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Further, if we are unable to obtain additional capital when required, or are unable to obtain additional capital on satisfactory terms, our ability to continue to support our business growth or to respond to business opportunities, challenges, or unforeseen circumstances would be adversely affected. 31 Our amended and restated articles of incorporation provide that the Court of Chancery of the State of Delaware and, to the extent enforceable, the federal district courts of the United States of America are the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our locations are geographically concentrated in California, and we could be negatively affected by conditions specific to that state. As of December 31, 2022, all of our company-operated locations were located in California. Adverse changes in demographic, unemployment, economic, regulatory or weather conditions in California have, and may continue, to harm our business.
Our locations are geographically concentrated in California, and we could be negatively affected by conditions specific to that state. As of December 31, 2023, all of our company-operated locations were located in California. Adverse changes in demographic, unemployment, economic, regulatory or weather conditions in California have, and may continue, to harm our business.
Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased costs to correct any post-implementation issues that may arise. 28 Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
Moreover, our business may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased costs to correct any post-implementation issues that may arise. 30 Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
These factors raise substantial doubt as to our ability to continue as a going concern, and our independent registered public accounting firm has included a going concern uncertainty explanatory paragraph in their report for 2022.
These factors raise substantial doubt as to our ability to continue as a going concern, and our independent registered public accounting firm has included a going concern uncertainty explanatory paragraph in their report for 2023.
You should not rely on our past results as an indicator of our future performance. 27 Our outstanding indebtedness could materially adversely affect our financial condition and our ability to operate our business, pursue our growth strategy, and react to changes in the economy or industry. As of December 31, 2022, we had $500,000 in principal amount outstanding under U.S.
You should not rely on our past results as an indicator of our future performance. 29 Our outstanding indebtedness could materially adversely affect our financial condition and our ability to operate our business, pursue our growth strategy, and react to changes in the economy or industry. As of December 31, 2023, we had $500,000 in principal amount outstanding under U.S.
In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and investments to strengthen our accounting systems.
We are also continuing to improve our internal controls over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and investments to strengthen our accounting systems.
We may be unsuccessful in opening new locations or establishing new markets, which could adversely affect our growth. As of December 31, 2022, Reborn had 11 company-owned locations. One of the key means to achieving our growth strategy will be through opening new locations and operating those locations on a profitable basis. We opened 4 new company-operated locations in 2022.
We may be unsuccessful in opening new locations or establishing new markets, which could adversely affect our growth. As of December 31, 2023, Reborn had 14 company-owned locations. One of the key means to achieving our growth strategy will be through opening new locations and operating those locations on a profitable basis. We opened 4 new company-operated locations in 2023.
At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.
At such time as our registered public accounting firm is required to formally attest to the effectiveness of our internal control over financial reporting, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating.
We have incurred recurring net losses, including net losses from operations before income taxes of $3.5 million and $2.6 million for the year ended December 31, 2022 and 2021, respectively, and we had an accumulated deficit of $12,031,801 at December 31, 2022.
We have incurred recurring net losses, including net losses from operations before income taxes of $6.0 million and $3.5 million for the year ended December 31, 2023 and 2022, respectively, and we had an accumulated deficit of $15.3 million at December 31, 2023.
Small Business Administration Loan No. 7331917406 under its Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19 pandemic, which we refer to as our EIDL Loan, $144,375 in principal outstanding under the Paycheck Protection Program Loan administered by the U.S. Small Business Administration and $50,898 in principal outstanding under our loans with Square Capital, LLC.
Small Business Administration Loan No. 7331917406 under its Economic Injury Disaster Loan assistance program in light of the impact of the COVID-19 pandemic, which we refer to as our EIDL Loan, $97,273 in principal outstanding under the Paycheck Protection Program Loan administered by the U.S.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting.
The significance of the operational and financial impact to us will depend on how long and widespread the disruptions caused by the COVID-19 pandemic, and the corresponding response to contain the virus and treat those affected by it, prove to be. 16 We do not yet know the full extent of potential delays or impacts on our business, operations or the global economy as a whole.
The significance of the operational and financial impact to us will depend on how long and widespread the disruptions caused by the COVID-19 pandemic, and the corresponding response to contain the virus and treat those affected by it, prove to be. 16 There is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the global economy will recover, either of which could seriously harm our business fully recover.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq Exchange.
In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq Exchange. As a public company, we are required to provide an annual management report on the effectiveness of our internal control over financial reporting.
The impact of these events would also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members of senior management. 26 We are an “emerging growth company,” and we intend to comply only with reduced disclosure requirements applicable to emerging growth companies.
The impact of these events would also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members of senior management. 27 Substantial blocks of our common stock may be sold into the market as a result of the Pre-Paid Advance Agreement.
Risks Related to Our Organizational Structure, this Offering and Ownership of Our Common Stock Reborn Coffee, Inc. is a holding company.
Risks Related to Our Organizational Structure and Ownership of Our Common Stock We are not in compliance with the Nasdaq continued listing requirements.
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While there have recently been vaccines developed and administered, and the spread of COVID- 19 may eventually be contained or mitigated, we cannot predict the timing of the vaccine roll-out globally or the efficacy of such vaccines, and we do not yet know how customers or our future franchise partners will operate in a post COVID-19 environment.
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If we are unable to comply with the continued listing requirements of The Nasdaq Capital Market, our common stock could be delisted, which could affect our common stock’s market price and liquidity and reduce our ability to raise capital.
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In addition, new strains and variants of the virus have caused a resurgence and an increase in reported infection rates, particularly in areas with lower vaccination rates, which may impact the general economic recovery.
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On November 1, 2024 we requested a hearing by the Nasdaq Hearings Panel (the “Panel”) of The Nasdaq Stock Market LLC to appeal delisting determinations made by the Listing Qualifications Department of Nasdaq: (i) on April 28, 2023 for failure to comply with the bid price requirement of Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), (ii) on September 5, 2023 for failure to comply with the minimum stockholders equity required for continued listing on Nasdaq, or any of the alternative requirement to Nasdaq Listing Rule 5550(b) (the “Equity Rule”), and (iii) on January 4, 2024 for failure to hold an annual meeting of stockholders for the fiscal year ended December 31, 2023 as required by Nasdaq Listing Rule 5620(a) (the “Meeting Rule”).
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There is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the global economy will recover, either of which could seriously harm our business fully recover.
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At the Panel hearing, which occurred on January 18, 2024, we, represented by members of senior management and outside counsel, advised that we intended to regain compliance with the Bid Price Rule by effecting a reverse stock split at a ratio of 1-for-8, which we have effected – our common stock has since had a closing bid price greater than $1.00 for ten consecutive trading days.
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As a result, our common stock could be less attractive to investors.
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We also informed the Panel that we intend to regain compliance with the Equity Rule by completing one or more equity financings. Finally, we informed the Panel that we intend to regain compliance with the Meeting Rule by holding an annual meeting of stockholders in the first quarter of 2024.
Removed
We are an “emerging growth company,” as defined in the JOBS Act, and for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Added
As such, we proposed to the Panel a compliance plan that included a tentative schedule to complete the reverse stock split (which has now been completed), the equity financings, and the annual meeting and requested an extension of time to fully comply with Nasdaq listing requirements so that we could demonstrate to the Panel that it should not be delisted from Nasdaq.
Removed
We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering (b) in which we have total annual gross revenue of over $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock held by non-affiliates exceeds $700 million or more as of the last business day of our most recently completed second fiscal quarter; (2) the date on which we have issued more than $1 billion of non-convertible debt securities over a three-year period; and (3) the last day of the fiscal year following the fifth anniversary of our initial public offering.
Added
On February 2, 2024, we received a letter (the “Letter”) from Nasdaq notifying us that the Panel had granted the Company’s request to continue its listing on Nasdaq until March 29, 2024, subject to certain conditions. We intend to comply with the conditions set forth by the Panel, as stated in the Letter.
Removed
We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our common stock, and our stock price may be more volatile.
Added
There can be no assurance that the Panel will afford us more time to complete the compliance plan it articulated in the hearing, or that we will be able to remain in compliance with the applicable Nasdaq listing requirements on an ongoing basis.
Removed
We are also continuing to improve our internal controls over financial reporting. For example, as we have prepared to become a public company, we have worked to improve the controls around our key accounting processes and our quarterly close process.
Added
If our common stock is delisted, it could be more difficult to buy or sell our common stock and to obtain accurate quotations, and the price of our common stock could suffer a material decline.
Removed
We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose.
Added
Delisting could also impair the liquidity of our common stock and could harm our ability to raise capital through alternative financing sources on terms acceptable to us, or at all, and may result in potential loss of confidence by investors, employees, and fewer business development opportunities. 25 Reborn Coffee, Inc. is a holding company.
Removed
As a public company, we are required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K.
Added
The price of our common stock could decline if there are substantial sales of shares of our common stock, if there is a large number of shares of our common stock available for sale, or if there is the perception that these sales could occur.
Added
On February 12, 2024, we entered into a Pre-Paid Advance Agreement (the “PPA”) with EF Hutton YA Fund, LP, a Delaware limited partnership (“YA Fund”). Pursuant to the PPA, on February 12, 2024, YA Fund advanced to us a pre-paid advance of $1,100,000 (the “Pre-Paid Advance”). The Pre-Paid Advance was purchased by YA Fund at 90% of the face amount.
Added
At the request and sole discretion of YA Fund, the Pre-Paid Advance will be correspondingly reduced upon the issuance of our common stock to YA Fund at a Purchase Price equal to the lower of: (a) 100% of the volume weighted average price (as reported during regular trading hours by Bloomberg) (the “VWAP”) of our common stock on the trading day immediately preceding the closing of the Pre-Paid Advance (the “Fixed Price”) or (b) 87% of the lowest daily VWAP of the shares during the five trading days immediately prior to each request (as applicable, the “Purchase Price”), subject to the Floor Price.
Added
Any issuances of shares of our common stock pursuant to the PPA to offset the Pre-Paid Advance will dilute the percentage ownership of stockholders and may dilute the per share projected earnings (if any) or book value of our common stock.
Added
Sales of a substantial number of shares of our common stock in the public market or other issuances of shares of our common stock, or the perception that these sales or issuances could occur, could cause the market price of our common stock to decline and may make it more difficult for you to sell your shares at a time and price that you deem appropriate.
Added
We do not have the right to control the timing and amount of the issuance of our shares of common stock to YA Fund under the PPA and, accordingly, it is not possible to predict the actual number of shares we will issue pursuant to the PPA at any one time or in total.
Added
We do not have the right to control the timing and amount of any issuances of our shares of common stock to YA Fund under the PPA. Sales of our common stock, if any, to YA Fund under the PPA will depend upon market conditions and other factors, and the discretion of YA Fund.
Added
We may ultimately decide to sell to YA Fund all, some or none of the shares of our common stock that may be available for us to sell to YA Fund pursuant to the PPA. The Pre-Paid Advance matures within one year.
Added
Because the purchase price per share to be paid by YA Fund for the shares of common stock that we may elect to sell to YA Fund under the PPA, if any, will fluctuate based on the market prices of our common stock, if any, it is not possible for us to predict, as of the date of this report and prior to any such sales, the number of shares of common stock that we will sell to YA Fund under the PPA, the purchase price per share that YA Fund will pay for shares purchased from us under the PPA, or the aggregate gross proceeds that we will receive from those purchases by YA Fund under the PPA, if any.
Added
In addition, unless we obtain stockholder approval, we will not be able to issue shares of our common stock in excess the Exchange Cap of 414,693 under the PPA (or any other transaction that is integrated with the PPA) in accordance with applicable Nasdaq rules.
Added
Depending on the market prices of our common stock in the future, this could be a significant limitation on the amount of funds we are able to raise pursuant to the PPA.
Added
Further, the resale by YA Fund of a significant amount of shares registered in this offering at any given time, or the perception that these sales may occur, could cause the market price of our common stock to decline and to be highly volatile. 28 Upon an Amortization Event under the PPA, we may be required to make payments that could cause financial hardship to the company.
Added
Pursuant to the PPA, an “Amortization Event” occurs if (1) the daily VWAP of our common stock (as reported by Bloomberg) is lower than the Floor Price for any five of seven consecutive trading days, (2) we have issued in excess of 99% of all of the shares available under the Exchange Cap, or (3) YA Fund is unable to use the initial registration statement we filed (and any one or more additional registration statements filed with the SEC that include the shares of our common stock that may be issued and sold by us to YA Fund under the PPA) for period of ten consecutive trading days.
Added
Within ten trading days of an Amortization Event, we must pay YA Fund the Cash Payment equal to $500,000, plus any accrued and unpaid interest (if any), and a 10% redemption premium. This financial obligation may cause an undue and unsustainable burden on us and cause a material adverse effect on our operations and financial condition.
Added
Small Business Administration, $165,722 in principal outstanding under our loans with Square Capital, LLC, $300,00 of short term borrowing from a private party, and $100,000 of short term borrowing from a shareholder.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our executive office is located at 580 N. Berry Street, Brea, California and our telephone number is (714) 784-6369. As of December 31, 2022, we had 11 company-owned retail locations across California, all of which are leased.
Biggest changeItem 2. Properties Our executive office is located at 580 N. Berry Street, Brea, California and our telephone number is (714) 784-6369. As of December 31, 2023, we had 14 company-owned retail locations across California, all of which are leased.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period. Item 4. Mine Safety Disclosures None. 31 PART II
Biggest changeAs a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period, depending upon the size of the loss or our income for that particular period.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Capital Market under the symbol “REBN”. Holders of Record As of April 7, 2023, there were 13,163,126 of our shares of common stock issued and outstanding held by approximately 412 stockholders of record.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Capital Market under the symbol “REBN”. Holders of Record As of March 27, 2024, there were 2,716,373 of our shares of common stock issued and outstanding held by approximately 412 stockholders of record.
Recent Sales of Unregistered Equity Securities None. Issuer Purchases of Equity Securities None. Item 6. Not applicable.
Recent Sales of Unregistered Equity Securities None. Issuer Purchases of Equity Securities None. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

27 edited+0 added−7 removed43 unchanged
Biggest changeOur cash balance as of December 31, 2022 was approximately $3.0 million. 36 Credit Facilities Loans with Square Capital In August 2022, the Company entered into loan agreements with Square Capital in the aggregate principal amount of $100,000 with loan costs of $12,215. The loan payable has a maturity date on February 2, 2024.
Biggest changeAs of December 31, 2023, the Company had total assets of approximately $9.0 million. Our cash balance as of December 31, 2023 was approximately $676,000. 39 Credit Facilities Loans with Square Capital During the fiscal year ended December 31, 2023, the Company entered into loan agreements with Square Capital.
Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” in our Registration Statement. 32 Business Reborn Coffee is focused on serving high quality, specialty-roasted coffee at retail locations, kiosks and cafes.
Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” in our Registration Statement. 35 Business Reborn Coffee is focused on serving high quality, specialty-roasted coffee at retail locations, kiosks and cafes.
Reborn aims to capture a growing portion of the market as we expand and increase consumer awareness of our brand. 33 Current Operations We have a production and distribution center at our headquarters that we use to process and roast coffee for wholesale and retail distribution.
Reborn aims to capture a growing portion of the market as we expand and increase consumer awareness of our brand. 36 Current Operations We have a production and distribution center at our headquarters that we use to process and roast coffee for wholesale and retail distribution.
Results of Operations The following tables present the summary of historical consolidated financial data for Reborn Coffee, Inc. and its subsidiaries for the periods and at the dates indicated. The summary of historical consolidated statements of income data and summary historical consolidated statements of cash flows data presented below for the years ended December 31, 2022 and 2021.
Results of Operations The following tables present the summary of historical consolidated financial data for Reborn Coffee, Inc. and its subsidiaries for the periods and at the dates indicated. The summary of historical consolidated statements of income data and summary historical consolidated statements of cash flows data presented below for the years ended December 31, 2023 and 2022.
As of December 31, 2022, the loan payable, EIDL Loan noted above is not in default. Pursuant to the SBA Loan Agreement, the Company borrowed an aggregate principal amount of the EIDL Loan of $500,000, with proceeds to be used for working capital purposes.
As of December 31, 2023, the loan payable, EIDL Loan noted above is not in default. Pursuant to the SBA Loan Agreement, the Company borrowed an aggregate principal amount of the EIDL Loan of $500,000, with proceeds to be used for working capital purposes.
The increase was mainly caused by increased occupancy expenses and labor costs with opening of new locations. 35 Liquidity and Capital Resources We have a history of operating losses and negative cash flow in operating activities.
The increase was mainly caused by increased occupancy expenses and labor costs with opening of new locations. 38 Liquidity and Capital Resources We have a history of operating losses and negative cash flow in operating activities.
These factors raise substantial doubt as to our ability to continue as a going concern, and our independent registered public accounting firm has included a going concern uncertainty explanatory paragraph in their report for 2022.
These factors raise substantial doubt as to our ability to continue as a going concern, and our independent registered public accounting firm has included a going concern uncertainty explanatory paragraph in their report for 2023.
General and Administrative Expense General and administrative expense includes store-related expense as well as the Company’s corporate headquarters’ expenses. 34 Advertising Expense Advertising expenses are expensed as incurred.
General and Administrative Expense General and administrative expense includes store-related expense as well as the Company’s corporate headquarters’ expenses. 37 Advertising Expense Advertising expenses are expensed as incurred.
Cash Flows Used in Investing Activities Net cash used in investing activities for the year ended December 31, 2022 and 2021 was $681,531 and $498,224, respectively, These expenditures in each period are primarily related to purchases of property and equipment in connection with current and future location openings and maintaining our existing locations.
Cash Flows Used in Investing Activities Net cash used in investing activities for the year ended December 31, 2023 and 2022 was $1,019,353 and $681,531, respectively, These expenditures in each period are primarily related to purchases of property and equipment in connection with current and future location openings and maintaining our existing locations.
We have incurred recurring net losses, including net losses from operations before income taxes of $3.5 million and $2.6 million for the year ended December 31, 2022 and 2021, respectively.
We have incurred recurring net losses, including net losses from operations before income taxes of $3.7 million and $3.5 million for the year ended December 31, 2023 and 2022, respectively.
As of December 31, 2022, there was a balance outstanding of $50,898. Economic Injury Disaster Loan On May 16, 2020, the Company executed the EIDL Loan from the SBA under its EIDL assistance program in light of the impact of the COVID-19 pandemic on the Company’s business.
As of December 31, 2023, there was a balance outstanding of $1,126,500. Economic Injury Disaster Loan On May 16, 2020, the Company executed the EIDL Loan from the SBA under its EIDL assistance program in light of the impact of the COVID-19 pandemic on the Company’s business.
Advertising expenses amounted to $52,688 and $82,351 for the years ended December 31, 2022 and 2021, respectively, and are recorded under general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.
Advertising expenses amounted to $71,072 and $52,688 for the years ended December 31, 2023 and 2022, respectively, and are recorded under general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.
Revenues were approximately $3.2 million for the year ended December 31, 2022, compared to $2.3 million for the year ended December 31, 2021, representing an increase of approximately $960,000, or 42.1%. 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.
Revenues were approximately $6.0 million for the year ended December 31, 2023, compared to $3.2 million for the year ended December 31, 2022, representing an increase of approximately $2,713,000, or 45.6%. 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.
The Company was granted forgiveness for the initial PPP Loan prior to December 31, 2021 and expects to be granted forgiveness on the remainder subsequently. 37 Leases Operating Leases We currently lease all company-owned retail locations. Operating leases typically contain escalating rentals over the lease term, as well as optional renewal periods.
The Company was granted forgiveness for the initial PPP Loan prior to December 31, 2021. 40 Leases Operating Leases We currently lease all company-owned retail locations. Operating leases typically contain escalating rentals over the lease term, as well as optional renewal periods.
Product, food and drink costs. Product, food and drink costs were approximately $1,093,000 for the year ended December 31, 2022 compared to $822,000 for the comparable period in 2021, representing an increase of approximately $271,000, or 33.0%. The increase in costs was partially driven by the opening of new locations and the overall increase in sales for the period.
Product, food and drink costs. Product, food and drink costs were approximately $1,758,000 for the year ended December 31, 2023 compared to $1,093,000 for the comparable period in 2022, representing an increase of approximately $666,000, or 37.9%. The increase in costs was partially driven by the opening of new locations and the overall increase in sales for the period.
Recent Accounting Pronouncements We have determined that all other issued, but not yet effective accounting pronouncements are inapplicable or insignificant to us and once adopted are not expected to have a material impact on our financial position. 38 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Recent Accounting Pronouncements We have determined that all other issued, but not yet effective accounting pronouncements are inapplicable or insignificant to us and once adopted are not expected to have a material impact on our financial position. 41
Sales taxes that are payable are recorded as accrued as other current liabilities. Retail store revenue makes up approximately 98% of the Company’s total revenue. ● Wholesale and Online Revenue Wholesale and online revenues are recognized when the products are delivered, and title passes to customers or to the wholesale distributors.
Retail store revenue makes up approximately 98% of the Company’s total revenue. ● Wholesale and Online Revenue Wholesale and online revenues are recognized when the products are delivered, and title passes to customers or to the wholesale distributors.
We used $3.3 million and $1.9 million of cash for operating activities the year ended December 31, 2022 and 2021, respectively, and we had an accumulated deficit of $12,031,801 at December 31, 2022.
We used $3.1 million and $3.3 million of cash for operating activities the year ended December 31, 2023 and 2022, respectively, and we had an accumulated deficit of $15,303,487 at December 31, 2023.
Cash Flows Provided by Financing Activities Net cash provided by financing activities during the year ended December 31, 2022 was $6.1 million, which was primarily a proceeds from the IPO, net of offering expenses of approximately $998,000.
Cash Flows Provided by Financing Activities Net cash provided by financing activities during the year ended December 31, 2023 was $1.5 million, which was primarily a proceeds from the credit line and loans. Net cash provided by financing activities during the year ended December 31, 2022 was $6.1 million, which was primarily a proceeds from the IPO.
Year Ended December 31, 2022 2021 Statement of Cash Flow Data: Net cash used in operating activities (3,297,058 ) (1,949,820 ) Net cash used in investing activities (681,531 ) (498,224 ) Net cash provided by financing activities 6,092,573 3,224,527 Cash Flows Used in Operating Activities Net cash used in operating activities during the year ended December 31, 2022 was approximately $3.3 million, which resulted from net loss of $3.5 million, non-cash charges of $441,000 for stock compensation and $210,616 for depreciation and net cash outflows of $414,842 from changes in operating assets and liabilities.
Year Ended December 31, 2023 2022 Statement of Cash Flow Data: Net cash used in operating activities (2,790,956 ) (3,297,058 ) Net cash used in investing activities (1,019,353 ) (681,531 ) Net cash provided by financing activities 1,467,722 6,092,573 Cash Flows Used in Operating Activities Net cash used in operating activities during the year ended December 31, 2023 was approximately $2.8 million, which resulted from net loss of $3.7 million, non-cash charges of $285,000 for stock compensation, $272,000 for operating lease and $262,000 for depreciation, and net cash outflows of $388,000 from changes in operating assets and liabilities.
General and administrative expenses. General and administrative expenses were approximately $5.7 million for the year ended December 31, 2022 compared to $4.0 million for the comparable period in the prior year, representing an increase of approximately $1.7 million, or 42.0%.
General and administrative expenses. General and administrative expenses were approximately $7,968,000 for the year ended December 31, 2023 compared to $5,664,000 for the comparable period in the prior year, representing an increase of approximately $2,304,000, or 28.9%.
Currently, we have the following eleven retail coffee locations: ● La Floresta Shopping Village in Brea, California; ● La Crescenta, California; ● Corona Del Mar, California; ● Home Depot Center in Laguna Woods, California; ● Manhattan Village at Manhattan Beach, California. ● Cabazon, California; ● Glendale Galleria in Glendale, California; ● Santa Anita Westfield Mall in Arcadia, California; ● Galleria at Tyler in Riverside, California; ● Stonestown Galleria in San Francisco, California; and ● Intersect in Irvine, California.
Currently, we have the following fourteen retail coffee locations: ● La Floresta Shopping Village in Brea, California; ● La Crescenta, California; ● Corona Del Mar, California; ● Home Depot Center in Laguna Woods, California; ● Manhattan Village at Manhattan Beach, California. ● Cabazon, California; ● Huntington Beach, California; ● Santa Anita Westfield Mall in Arcadia, California; ● Galleria at Tyler in Riverside, California; ● Stonestown Galleria in San Francisco, California; ● Intersect in Irvine, California; ● Dupont Drive in Irvine, California; ● Diamond Bar, California; and ● Anaheim, California Components of Our Results of Operations Revenue The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers.
Net cash used in operating activities during the year ended December 31, 2021 was approximately $1.9 million, which resulted from net loss of $3.4 million, non-cash charges of $550,000 for stock compensation, 982,383 of loss on extinguishment of debt and $174,696 for depreciation, and net cash outflows of $101,498 from changes in operating assets and liabilities.
Net cash used in operating activities during the year ended December 31, 2022 was approximately $3.3 million, which resulted from net loss of $3.5 million, non-cash charges of $441,000 for stock compensation, $21,000 for operating lease and $210,616 for depreciation, and net cash outflows of $415,000 from changes in operating assets and liabilities.
Accordingly, a provision will be recorded for the anticipated tax consequences of our reported results of operations for U.S. federal, state and foreign income taxes.
Accordingly, a provision will be recorded for the anticipated tax consequences of our reported results of operations for U.S. federal, state and foreign income taxes. Off Balance Sheet Arrangements We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations.
Accordingly, the Company recognizes revenue as follows: ● Retail Store Revenue Retail store revenues are recognized when payment is tendered at the point of sale. Retail store revenues are reported net of sales, use or other transaction taxes that are collected from customers and remitted to taxing authorities.
Retail store revenues are reported net of sales, use or other transaction taxes that are collected from customers and remitted to taxing authorities. Sales taxes that are payable are recorded as accrued as other current liabilities.
Year 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 of extinguishment of debt - (982,383 ) Total other expense (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 ) Earnings (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 Revenues.
Year 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 Paycheck protection program (PPP) loan forgiven income - - Interest expense (129,480 ) (29,195 ) Gain on the sale of building 16,955 - Total other expense (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 ) Earnings (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 Revenues.
Components of Our Results of Operations Revenue The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company’s net revenue primarily consists of revenues from its retail locations and wholesale and online store.
The Company’s net revenue primarily consists of revenues from its retail locations and wholesale and online store. Accordingly, the Company recognizes revenue as follows: ● Retail Store Revenue Retail store revenues are recognized when payment is tendered at the point of sale.
Removed
The net cash outflows from changes in operating assets and liabilities were primarily the result of increases in inventory of $43,466, prepaid and other assets of $521,176, partially offset by increase of $150,580 in accrued liabilities.
Removed
The net cash outflows from changes in operating assets and liabilities were primarily the result of increases in inventories of $73,598, prepaids and other assets of $132,059 and a decrease in accounts payable of $27,571, partially offset by increases of $127,877 in accrued liabilities.
Removed
Net cash provided by financing activities during the year ended December 31, 2021 was $3.2 million, primarily due to approximately $2.7 million received from the common stock issuance and $1.0 million from the loans, offset by approximately $492,000 of repayments of borrowings. As of December 31, 2022, the Company had total assets of approximately $8.5 million.
Removed
JOBS Act Accounting Election We are an “emerging growth company,” as defined in the JOBS Act, and may take advantage of certain exemptions from various public company reporting requirements for up to five years or until we are no longer an emerging growth company, whichever is earlier.
Removed
The JOBS Act provides that an “emerging growth company” can delay adopting new or revised accounting standards until those standards apply to private companies. We have elected to use this extended transition period under the JOBS Act.
Removed
Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. Off Balance Sheet Arrangements We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations.
Removed
We are a smaller reporting company as defined by 17 C.F.R. 229 (10)(f)(i) and are not required to provide information under this item.

Other REBN 10-K year-over-year comparisons