In 2021, Yerbaé saw more than $6 million in revenue, an impressive jump from $4.8 million in 2020. However, the company has notable short-term debt of $1.5 million, and it has a high burn rate of $316,805 each month. Despite its growth in revenue, Yerbae is still far from profitable.
Yerbaé’s energy drinks and seltzers are available for purchase in retailers on both coasts, including Sprouts Farmers Market, CVS, Stop N Shop, Safeway, and more. Management reports that the company’s products are also stocked on the Meta and Apple campuses. Additionally, customers seem to enjoy the drinks. The variety pack offering on Amazon averages 4.3 stars from more than 640 reviews. Yerbaé also reports product margins (how far sales have exceeded the cost of goods) at around 58%. These margins are fairly in line with average gross margins across the beverage industry, which stood at 54.9% in 2019.
Perhaps most promising about this raise is the fact that Yerbaé has signed a merger agreement with Kona Bay Technologies to be listed on the Toronto Stock Exchange. We rarely see companies that have signed agreements to merge and go public following an online funding round. Yerbaé investors will have a rare chance for relatively quick liquidity options. Kona Bay Technologies is also contributing $1 million for the $6 million initial public offering (IPO) round. If all goes to plan, Yerbaé should be public between October 15th and November 15th of 2022. There will be a period following the listing when investors can’t sell shares, which could affect liquidity for investors in the crowdfunding round that closed in 2021. The IPO opening share price is also yet to be determined. Until that price is revealed, it is unclear how much return on investment, if any, early investors will receive.
In sum, Yerbaé has strong and growing revenue numbers, but investors should still be wary of the company’s overall performance. Burn rates are high, and the company is nowhere near profitability. Potential investors should also keep in mind that the company will be going public in the near future, a rarity this early on for crowdfunded companies. It is unclear what the opening share price will be, but having a liquidity option may be a bonus for anyone looking to get in on this round.