REBN

Reborn Coffee is a 12-location specialty coffee chain (9 California stores, 1 CA franchisee, plus Korea and Malaysia) whose top line is growing but whose economics are getting worse, not better. FY2025 revenue rose 36.5% to $8.09M, yet the net loss simultaneously nearly doubled to -$9.14M (from -$4.81M), operating margin sits at -71.6% and net margin at -112.9%. That is the opposite of the operating leverage a scaling retailer should show — every dollar of new revenue is arriving alongside more than a dollar of new loss. Five years of history confirm the pattern: revenue has climbed from $2.28M (2021) to $8.09M while the company has never earned a profit and the accumulated deficit has swelled to -$30.7M. ROE of -196.8% is a symptom of a tiny, repeatedly impaired equity base, not a franchise creating value.

The filing removes any ambiguity: the auditor has issued a going-concern uncertainty explanatory paragraph, and management states losses before tax of $8.9M in 2025 raise 'substantial doubt as to our ability to continue as a going concern.' The survival plan is entirely financing, not operations — (1) a March/April 2026 Forbearance and Amended Forbearance Agreement with convertible debenture holder Arena Investors to stave off 'immediate default risk' with repayment structured through Sept 30, 2026; (2) a $6.5M tranche-funded equity subscription (Oct 2025); and (3) an Equity Line of Credit (ELOC) for 'as-needed' equity. Against $2.59M of year-end cash and -$6.51M of operating cash burn, the company has roughly four months of runway before it is dependent on those facilities. The forbearance/convertible + ELOC structure is a classic toxic-financing setup: shares outstanding already jumped 79.8% in one year, and the ELOC plus convertible conversions point to continued, price-insensitive dilution.