Filing identity and reporting period
The supplied filing is Capax Inc.’s Form 10-K for the fiscal year ended September 30, 2017, filed November 30, 2017. It is not identified in the filing as Reborn Coffee, Inc.; investors should verify the issuer and filing match. Although the request metadata says “2017 Q4,” this is an annual report, not a quarterly filing.
Capax described itself as a development-stage shell company with nominal operations. Its plan was to establish bakery-cafés, potentially by acquisition, and later franchise them. The company reported no bakery-café operations or revenue during the year.
Financial performance and liquidity
| Metric | FY ended September 30, 2017 | FY ended September 30, 2016 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $26,230 | $825 |
| Net loss | $26,230 | $825 |
| Net loss per share, basic and diluted | $(0.00) | $(0.00) |
| Operating cash flow | $(19,387) | $(825) |
| Financing cash flow | $109,690 | $(200) |
| Cash at period-end | $90,303 | $0 |
At September 30, 2017, total current assets were $90,303, consisting of cash; current liabilities were $4,107, payable to related parties; and stockholders’ equity was $86,196. No long-term debt was shown. The related-party balance reflected expenses paid by the CEO and was reimbursed in October 2017. No cash interest was paid. Gross margin and operating margin are not meaningful because the company had no revenue.
Management reported an accumulated deficit of $27,055 and recurring losses. It estimated a monthly cash burn of approximately $6,000 and said available cash could support development-stage operations for about 14 months, excluding acquiring or opening a café. Management estimated approximately $300,000 would be needed to acquire an operating bakery-café.
Changes, outlook, and risks
- Net loss increased to $26,230 from $825, primarily reflecting higher professional and administrative expenses. Cash increased from zero following equity financing.
- Capax raised $111,000 from a May–June 2017 unregistered Class A share offering. Separately, the filing says that by its filing date it had sold 74,100 registered shares and received $11,115. The company had registered an offering of up to 15 million Class A shares.
- Management said additional capital would be required and expected to seek it through equity or debt securities. It cautioned that financing might not be available or might dilute existing holders, and that operations could be curtailed if capital proved insufficient.
- Management’s plan to acquire or build cafés, hire experienced operators, and explore foreign partnerships remained preliminary. The filing reports no binding acquisition, operating, or foreign-investment agreements and no material commitments.
- Management estimated public-company compliance costs of approximately $72,000–$240,000 annually, depending on the number of cafés. It offered no assured revenue or profitability forecast; anticipated café cash generation depended on successfully raising capital and opening locations.
- The filing identifies intense competition from larger, better-capitalized restaurant and food-service businesses. Capax had no established public trading market and warned that its securities could be illiquid.
- Management concluded disclosure controls and internal control over financial reporting were ineffective, citing limited staffing, inadequate segregation of duties, insufficient written procedures, and lack of multiple review levels. The independent auditor gave an unqualified opinion on the financial statements but did not audit internal-control effectiveness.
- Class B shares carried 10 votes per share. The CEO held all 7 million Class B shares, and the filing reported substantial voting control concentrated among the CEO and directors.
Most important facts to verify
- Confirm the filing belongs to the intended company: the document names Capax Inc., not Reborn Coffee, Inc.
- Reconcile the share counts, offering proceeds, and timing of the reported registered-share sales with the financial statements and subsequent-event disclosure.
- Verify current cash, related-party balances, subsequent financing, and the company’s actual runway against management’s estimates.
- Determine whether any bakery-café was ultimately acquired or opened, and whether the required capital and experienced operating team were secured.
- Assess the extent to which the disclosed control weaknesses, concentrated voting power, and absence of an established trading market remain relevant.