Investment Thesis
Despite impressive 36.5% YoY revenue growth, Reborn Coffee faces an acute liquidity crisis with current ratio of 0.89x and only $266K cash while burning $1.8M annually in net losses. The company is unprofitable across all metrics (-35.1% net margin, -16.7% operating margin), unable to cover interest from operations, and has insufficient capital runway for operational viability.
Strengths
- Strong revenue growth of 36.5% YoY demonstrates market demand for products
- Positive free cash flow of $223.7K indicates ability to generate cash despite net losses
- Manageable leverage with 0.15x debt/equity ratio and only $500K long-term debt
Risks
- Acute liquidity crisis: current ratio of 0.89x and quick ratio of 0.87x indicate inability to cover current liabilities with liquid assets
- Severe ongoing losses: -35.1% net margin and -16.7% operating margin mean company loses money on every sale despite growth
- Critical cash position: $266.4K cash balance is insufficient for operations burning $1.8M annually—likely insufficient runway
- Negative interest coverage of -6.7x: cannot service debt obligations from operating income
Key Metrics to Watch
- Monthly cash burn rate and remaining cash runway—survival depends on this
- Operating margin progression—must approach breakeven immediately to avoid insolvency
- Current ratio and working capital trend—further deterioration would trigger default risk
Financial Metrics
Revenue
5.2M
Net Income
-1.8M
EPS (Diluted)
$-1.73
Free Cash Flow
223.7K
Total Assets
14.2M
Cash
266.4K
Profitability Ratios
Gross Margin
N/A
Operating Margin
-16.7%
Net Margin
-35.1%
ROE
-53.0%
ROA
-12.9%
FCF Margin
4.3%
Balance Sheet & Liquidity
Current Ratio
0.89x
Quick Ratio
0.87x
Debt/Equity
0.15x
Debt/Assets
75.7%
Interest Coverage
-6.74x
Long-term Debt
500.0K
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-23T07:27:28.652132 |
Data as of: 2026-03-31 |
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