REBN 10-K & 10-Q changes, risk factors and insider trading

We have a history of operating losses and negative cash flow in operating activities. We have incurred recurring net losses, including net losses from operations before income taxes of $4.8 $8.9 million and $4.7$4.8 million for the years ended December 31, 20242025 and 2023,2024, respectively, and we had an accumulated deficit of $21.6 $30.7 million at December 31, 2024. 2025. 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 2024. Our cash needs will depend on numerous factors, including our revenues, completion of our product development activities, customer and market acceptance of our product, and our ability to reduce and control costs.2025. We expect to devote substantial capital resources to, among other things, fund operations and continue development plans. To support our existing and planned business model, the Company executed following three points to mitigate the risk: 1) Debt Restructuring: Subsequent to December 31, 2025, in March 2026 and as amended and restated in April 2026, the Company needsentered into a Forbearance Agreement and subsequently an Amended and Restated Forbearance Agreement with its convertible debenture holders (Arena Investors), establishing a structured repayment plan through September 30, 2026 and thereby alleviating immediate default risk. Equity Financing: In October 2025, the Company entered into a Securities Subscription Agreement for aggregate proceeds of $6,500,000 to raisebe additionalfunded in multiple tranches to support near-term operations. 2) ELOC Facility: The Company has entered into an Equity Line of Credit Agreement (“ELOC Agreement”) providing flexible access to equity capital on an as-needed basis to fund ouroperations futureand operations.working capital requirements. 3) Additional Capital Raising: The Company is actively pursuing additional equity and/or debt financing to fund near-term operations and growth. While the Company has nothistorically experiencedbeen anyable difficultyto in raising raise funds through loans, and has not experienced any liquidity problemsdifficulty in settling payables in the normal course of business andor repaying loans when theydue, fallsuccessful due.completion Successful renewal of ourfuture loans, however,financing is subject to numerous risks and uncertainties. In addition, the increasingly competitive industry conditions under which we operate may negatively impacted our results of operationsuncertainties and cashcannot flows.be Additional financing is anticipated to fund the Company’s operations in near future.assured.

Reborn Coffee’sOur continued success depends on our ability to attract and retain customers. Our financial results could be adversely affected by a shift in consumer spending away from Reborn Coffee’sour beverages, lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new beverages or higher input costs), brand perception (such as the existence or expansion of our competitors), or customers reducing their demand for our current offerings as new beverages are introduced. In addition, most of our beverages contain caffeine, the health effects of which are the subject of public and regulatory scrutiny, including the suggestion of linkages to a variety of adverse health effects. There is increasing consumer awareness of health risks that are attributed to ingredients we use, particularly in the United States, including increased blood pressure and heart rate, anxiety and insomnia, as well as increased consumer litigation based on alleged adverse health impacts of consumption of various food and beverage products. A decrease in customer traffic as a result of these health concerns or negative publicity could significantly reduce the demand for Reborn Coffee’sour specialty coffee and could harm our business.

Additionally, if our competitors begin to evolve their business strategies and adopt aspects of the Reborn Coffeeour business model, our customers may be drawn to those competitors for their beverage beverage needs and our business could be harmed.

As of December 31, 2024,2025, Rebornwe had 12ten company-owned 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. In 2025,2026, we expect to open up to 20ten franchise locations.

Some of Reborn Coffee’sour retail locations open with an initial start-up period of higher than normal sales volumes and related costs, which subsequently decrease to stabilized levels. In new markets, the length of time before average sales for new locations stabilize is less predictable and can be longer as a result of our limited knowledge of these markets and consumers’ limited awareness of our brand. Our ability to operate new locations profitably and increase average location revenue and comparable location sales will depend on many factors, some of which are beyond our control, including:

As we expand, we may not be able to maintain our current average location and our business may be harmed. Although we have specific target operating and financial metrics, new locations may not meet these targets or may take longer than anticipated to do so. Any new Reborn Coffee location we open may not be profitable or achieve operating results similar to those of our existing locations, which could adversely affect our business, financial condition or results of operations.

We have experienced rapid growth and increased demand for our products. The growth and expansion of our business and products may place a significant strain on our management, operational and financial resources. As we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction which may place a significant strain on our management, sales and marketing, administrative, financial, and other resources. We may not be able to respond in a timely basis to all the changing demands that our planned expansion will impose on management and on our existing infrastructure, or be able to hire or retain the necessary management and baristas, which could harm our business. Further, if we are not able to continue to provide high quality customer service as a result of these demands, our reputation, as well as our business, including a decline in financial performance, could be harmed. If we experience a decline in financial performance, we may decrease the number of or discontinue new Reborn Coffee location openings, or we may decide to close locations that we are unable to operate in a profitable manner.

Our reputation and the quality of our Reborn Coffee brand are critical to our business and success in existing markets and will be critical to our success as we enter new markets. We believe that that we have built our reputation on the high quality of our coffee and service, our commitment to our customers and our strong employee culture, culture, and we must protect and grow the value of our brand in order for us to continue to be successful. Any incident that erodes consumer loyalty loyalty for our brand could significantly reduce its value and damage our business.

We plan to open additional company-operated Rebornlocations Coffee locations in domestic markets where we have little or no operating experience. The target consumer base of our locations varies by location, depending on a number of factors, including population density, other local coffee and convenience beverage distributors, area demographics and geography. Locations we open in new markets may take longer to reach expected sales and profit levels on a consistent basis. New markets may have competitive or regulatory conditions, consumer tastes and discretionary spending patterns that are more difficult to predict or satisfy than our existing markets. We may need to make greater investments than we originally planned in advertising and promotional promotional activity in new markets to build brand awareness. We may find it more difficult in new markets to hire, motivate and keep qualified employees who share our values. Until we attain a critical mass in a market, the locations we do open will have reduced operating leverage. As a result, these new locations may be less successful or may achieve target operating profit margins at a slower rate than existing locations did, if ever. If we do not successfully execute our plans to enter new markets, our business could be harmed.

We will receive royalties, franchise fees, contributions to our marketing development fund, and other fees from our future franchise partners. Additionally, we will sell proprietary products to our future franchise partners at a markup over our cost to produce. We have established operational standards and guidelines for our future franchise partners; however, we will have limited control over how our future franchise partners’ businesses are run, including day to day operations. Even with these operation standards and guidelines, the quality of franchised Reborn Coffee locations may be diminished by any number of factors beyond our control. Consequently, our future franchise partners may not successfully operate locations in a manner consistent consistent with our standards and requirements, such as quality, service and cleanliness, or may not hire and train qualified location managers, managers, baristas and other location personnel or may not implement marketing programs and major initiatives such as location remodels or equipment or technology upgrades, which may require financial investment. Even if such unsuccessful operations do not rise to the level of breaching the related franchise documents, they may be attributed by customers to our Reborn brand and could have a negative impact on our business.

We partner with international suppliers across the globe. This subjects us to risks associated with international trade conflicts including between the United States and China, Mexico, and other countries, particularly with respect to export and import controls and laws. President Donald J. Trump has advocated for greater restrictions on international trade in general, which could result in significantly increased tariffs on certain goods imported into the United States, particularly from China. For example, in recent years the United States government has renegotiated or terminated certain existing bilateral or multi-lateral trade agreements. It has also imposed tariffs on certain foreign goods which resulted in increased costs for goods imported into the United States. In response to these tariffs, a number of United States trading partners have imposed retaliatory tariffs on a wide range of United States products, making it more costly for companies to export products to those countries. The new presidential administration recently imposed new tariffs on imports to the United States from China, Mexico and Canada. In addition, China, Mexico and Canada have imposed retaliatory tariffs on the United States, if tariffs on additional countries were to go into effect, these countries could also impose retaliatory tariffs on the United States.

Pandemics or disease outbreaks such as the COVID-19 pandemic have impacted and are likely to continue to impact customer traffic at our Reborn Coffee locations and may make it more difficult to staff our locations and, in more severe cases, may cause a temporary inability to obtain supplies and increase commodity costs. COVID-19 was was officially declared a global pandemic by the World Health Organization in March 2020, and the virus, including the continued spread of of highly transmissible variants of the virus, has impacted all global economies, and in the United States has resulted in varying levels of restrictions and shutdowns implemented by national, state, and local authorities.

Our operations have been and we expect will be disrupted when employees were suspected of having COVID-19 or other illnesses since this required us to quarantine some or all such employees and close and disinfect our impacted locations. If a significant percentage of our workforce or the workforce of our future franchise partners are unable to work, including because of illness or travel or government restrictions, like quarantine requirements, in connection with pandemics or disease outbreaks, our operations may be negatively impacted, potentially materially adversely affecting our business, liquidity, financial condition or results of operations.

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. The ultimate impact of the COVID-19 pandemic or a similar health epidemic on our business, operations or the global economy as a whole remains highly uncertain.

While we have developed and continue to develop plans to help mitigate the potential negative impact of thehealth COVID-19 pandemic,epidemics, these efforts may not be effective, and any protracted economic economicdownturn downturnas a result of such epidemics will likely limit the effectiveness of our efforts. Accordingly, it is not possible for us to predict the duration and extent to which thisany health epidemic will affect our business at this time.

Our success depends in large part upon our ability and our future franchise partners’ ability to maintain and enhance our corporate reputation and the value and perception of our brand. Brand value is based in part on consumer perceptions on a variety of subjective qualities. To be successful in the future, particularly outside of the Southern California region of the United States where the Reborn Coffeeour brand may be less well known, we believe we must preserve, grow and leverage the value of our brand across interactions.

Business incidents, whether isolated or recurring and whether originating from us or our business partners, that erode consumer trust can significantly reduce brand value, potentially trigger boycotts of our locations or result in civil or criminal liability and can have a negative impact on our financial results. Such incidents include actual or perceived breaches of privacy, contaminated products, staff infected with communicable diseases, such as COVID-19, or other potential incidents discussed in this Risk Factors section. The impact of such incidents may be exacerbated if they receive considerable publicity, including rapidly through social or digital media (including for malicious reasons) or result in litigation. Consumer demand for our products and our brand equity could diminish significantly if we, our employees, future franchise partners or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, racially-biased, unequal or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, service and treatment of customers at Rebornour locations, or the use of customer data for general or direct marketing or other purposes. Additionally, if we fail to comply with laws and regulations, publicly take controversial positions or actions or fail to deliver a consistently positive consumer experience in each of our markets, including by failing to invest in the right balance of wages and benefits to attract and retain employees that represent the brand well or foster an inclusive and diverse environment, our brand value may be diminished.

Moreover, our success depends in large part upon our ability to maintain our corporate reputation. For example, the reputation of our Reborn brand could be damaged by claims or perceptions about about the quality or safety of our ingredients or beverages or the quality or reputation of our suppliers, distributors or future franchise partners or by claims or perceptions that we, our future franchise partners or other business partners have acted or are acting in an unethical, illegal, racially-biased or socially irresponsible manner or are not fostering an inclusive and diverse environment, regardless of whether such claims or perceptions are substantiated. Our corporate reputation could also suffer from negative publicity or consumer sentiment regarding Rebornour actionactions or inactioninactions or brand imagery, a real or perceived failure of corporate governance, or misconduct by any any officer or any employee or representative of us or a future franchise partner. Any such incidents (even if resulting from actions of a competitor or future franchise partner) could cause a decline directly or indirectly in consumer confidence in, or the perception of, of, our Reborn brand and/or our products and reduce consumer demand for our products, which would likely result in lower revenue and profits.

Our ability to implement our business plan successfully depends in part on our ability to further build brand recognition using our trademarks, service marks, proprietary products and other intellectual property, including our name and logos and the unique character and atmosphere of our Reborn locations. We rely on U.S. trademark, copyright, and trade secret laws, as well as license agreements, nondisclosure agreements, and confidentiality and other contractual provisions to protect our intellectual property. Nevertheless, our competitors may develop similar menu items and concepts, and adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and other intellectual property.

Additionally, the steps we have taken to protect our intellectual property in the United States may not be adequate. If our efforts to maintain and protect our intellectual property are inadequate, or if any third party misappropriates, dilutes or infringes on our intellectual property, the value of our brand may be harmed, which could have a material adverse effect on our business and might prevent our brands from achieving or maintaining market acceptance. Even with our own prospective franchise partners, whose activities are monitored and regulated through our eventual franchise agreements, we face risk that they may refer to or make statements about our Reborn brand that do not make proper use of our trademarks or required designations, designations, that improperly alter trademarks or branding, or that are critical of our brand or place our brand in a context that may tarnish our reputation. This may result in dilution of, or harm to, our intellectual property or the value of our brand.

Additionally, the growth of our business can make it increasingly difficult to locate and hire sufficient numbers of key employees, to maintain an effective system of internal controls for a dispersed chain and to train employees to deliver consistently high-quality hand-crafted beverages and customer experiences, which could materially harm our business and results of operations. Furthermore, due to the COVID-19 pandemic, we could experience a shortage of labor for location positions as concern over exposure to COVID-19 and other factors could decrease the pool of available qualified talent for key functions. In addition, our wages and benefits programs,programs combined with the challenging conditions due to the COVID-19 pandemic, may be insufficient to attract and retain the best talent.

RebornWe Coffee continuescontinue to be led by our Founder,Co-Chief Executive Officers, Jay Kim,Kim and Jung Jae Lim, who playsplay an important role in driving our culture, determining the strategy, and executing against that strategy across the company. If Mr. Kim’s or Mr. Lim’s services became unavailable to Rebornour CoffeeCompany for any reason, it may be difficult or challenging for us to find an adequate replacement, which could cause us to be less successful in maintaining our culture and developing and effectively executing on our company strategies.

Generally accepted accounting principles as promulgated in the United States of America (“GAAP”) isare subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC,Securities and Exchange Commission (“SEC”), and various bodies formed to promulgate and and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported reported financial results, and could affect the reporting of transactions completed before the announcement of a change.

Our business is subject to the risk of litigation by employees, customers, competitors, landlords or neighboring businesses, suppliers, future franchise partners, stockholdersshareholders or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. The outcome of litigation, particularly class action and regulatory actions, is difficult to assess or quantify. In recent years, beverage and restaurant companies have been subject to lawsuits, including class action lawsuits, alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters. A number of these lawsuits have resulted in the payment of substantial damages by the defendants. Similar lawsuits have been instituted from time to time alleging violations of various federal and state wage and hour laws regarding, among other things, employee meal deductions, overtime eligibility of assistant managers and failure to pay for all hours worked. While we have not been a party to any of these types of lawsuits in the past, there can be no assurance that we will not be named in any such lawsuit in the future or that we would not be required to pay substantial expenses and/or damages.

We have listed our common stock on the Nasdaq Capital Market. Although we have met the minimum initial listing standards set forth in the Nasdaq rules, we cannot assure you that our securities will be, or will continue to be, listed on the Nasdaq in the future. In order to continue listing our securities on Nasdaq, we must maintain certain financial, distribution and stock price levels. Generally, among other requirements, we must maintain a minimum bid price of our common stock (generally, $1.00) minimum amount in stockholders’shareholders’ equity (generally, $2,500,000) and a minimum number of holders of our securities (generally, 300 public holders).

Reborn Coffee, Inc. will beis a holding company, 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, future, if any, will be dependent upon the financial results and cash flows of Rebornits Global, Reborn Coffee Franchise, and Reborn Realty.subsidiaries.

Equity research analysts do not currently provide coverage of our common stock, and we cannot assure that any equity research analysts will adequately provide research coverage of our common stock after the listing of our common stock on the Nasdaq Stock Exchange.Nasdaq. A lack of adequate research coverage may harm the liquidity and trading price of our common stock. To the extent equity research analysts do provide research coverage of our common stock, we will not have any control over the content and opinions included in their reports. The trading price of our common stock could decline if one or more equity research analysts downgrade our stock or publish other unfavorable commentary or research. If one or more equity research analysts cease coverage of our company, or fail to regularly publish reports on us, the demand for our common stock could decrease, which in turn could cause our trading price or trading volume to decline.

As a public company listed in the United States, we will incur significant additional legal, accounting, and other expenses. In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and the Nasdaq Capital Market,Nasdaq, may increase legal and financial compliance costs and make some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, and as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. We intend to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased selling, general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If, notwithstanding our efforts, we fail to comply with new laws, regulations, and standards, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

In addition, any issuance and sale by us under the ELOC Agreement of a substantial amount of shares of common stock could cause additional substantial dilution to our stockholders.shareholders.

In addition, onOn February 6, 2025, we entered into a Securities Purchase Agreement (“Debenture Purchase Agreement”) with the purchasers named therein (the “Debenture Investors”). Under the Debenture Purchase Agreement, we agreed to issue 10% original issue discount secured convertible debentures (“Debentures”) in a principal amount of up to $10,000,000, divided into up to four separate tranches that are each subject to certain closing conditions (the “Debenture Transaction”). The conversion price per share of each Debenture, subject to adjustment as provided therein, is equal to 92.5% of the lowest daily VWAP (as defined in the Debentures) of our shares of common stock during the five trading day period ending on the trading day immediately prior to delivery or deemed delivery of the applicable Conversion Notice (as defined in the Debentures). The Debentures accrue interest at a rate of 10% per annum paid in kind, unless there is an event of default in which case the Debentures will accrue interest at a default rate.

As of the date of this AnnualReport, Report on Form 10-K, we have conducted twofour closings pursuant to the Debenture Purchase Agreement and sold Debentures in the aggregate principal amount of $1,666,666 $4,166,665 for a purchase price of $1,500,000, $3,750,000, representing an original issue discount of ten percent (10%). We also issued to the Debenture Investors 163,394 1,041,667 Debenture Warrants in connection with the closings. In addition, on March 31, 2026, we issued an additional 250,000 common stock purchase warrants to the Debenture Investor, which have an exercise price of $2.00 per share, in exchange for waiver and forbearance of certain terms under the Debentures, the details of which are set forth on Forms 8-K filed by the Company on April 6, 2026 and April 21, 2026.

To raise capital, we may sell common stock, convertible securities securities or other equity securities in one or more transactions, at prices and in a manner we determine from time to time. We may sell shares or other securities in another offering at a price per share that is less than the price per share paid by investors in this offering, and and investors purchasing shares or other securities in the future could have rights superior to existing stockholders.shareholders. The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors in this offering.

As of December 31, 2024,2025, we had $500,000 in principal amount outstanding under U.S. 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, $63,801$52,025 in principal outstanding under the Paycheck Protection Program Loan administered by the U.S. Small Business Administration, $111,300$109,247 in principal outstanding under our loans with Square Capital, LLC and $727,073LLC, $70,000 of short term borrowing from a shareholder, and $279,026 of short term borrowing from private party.parties.

We may engage in merger and acquisition activities, which would require significant management attention, disrupt our business, dilute stockholdershareholder value, and adversely affect our business, results of operations, and financial condition.

Acquisitions may disrupt our ongoing operations, divert management from their primary responsibilities, subject us to additional liabilities, increase our expenses, subject us to increased regulatory requirements, cause adverse tax consequences or unfavorable accounting treatment, expose us to claims and disputes by stockholders shareholders and third parties, and adversely impact our business, financial condition, and results of operations. We may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may have to pay cash for any such acquisition which would limit other potential uses for our cash. If we incur debt to fund any such acquisition, such debt may subject us to material restrictions in our ability to conduct our business, result in increased fixed obligations, and subject us to covenants or other restrictions that would decrease our operational flexibility and impede our ability to manage our operations. operations. If we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders’ shareholders’ ownership would be diluted.

In the future, we may raise additional capital through additional equity or debt financing to support our business growth, to respond to business opportunities, challenges or unforeseen circumstances, or for other reasons. On an ongoing basis, we are evaluating sources of financing and may raise additional capital in the future. Our ability to obtain additional capital will depend on our development efforts, business plans, investor demand, operating performance, the condition of the capital markets, and other factors. We cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may may have rights, preferences or privileges senior to the rights of existing stockholders,shareholders, and existing stockholdersshareholders may experience dilution. 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.

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,shareholders, which could limit our stockholders’shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

These choice of forum provisions may limit a stockholder’sshareholder’s ability ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees. While While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholdershareholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will will be enforced by a court in those other jurisdictions. We note that investors cannot waive compliance with the federal securities laws and and the rules and regulations thereunder.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibit a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. Any provision in our amended and restated certificate of incorporation or our amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholdersshareholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

We have never declared or paid any cash dividends on our capital stock, and we do not intend to pay any cash dividends in the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends on our capital stock will be at the discretion of our board of directors. Accordingly, stockholdersshareholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

Labor discord or disruption, geopolitical events, social unrest, war, terrorism, political instability, acts of public violence, boycotts, hostilities and social unrest and other health pandemics that lead to avoidance of public places or cause people to stay at home could harm our business. Additionally, natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce, and the global economy, and thus could harm our business. In particular, the COVID-19 pandemic, including the reactions of governments, markets, and the general public, may result in a number of adverse consequences for our business, operations, and results of operations, many of which are beyond our control. In the event of a major earthquake, hurricane or catastrophic event such as fire, power loss, telecommunications failure, cyber-attack, war or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, breaches of data security, and loss of critical data, all of which would harm our business, results of operations, and financial condition. In addition, the insurance we maintain would likely not be adequate to cover our losses resulting from disasters or other business interruptions.

Founded in 2015 by Jay Kim, our Chief Executive Officer, Mr. Kim and his team launched Reborn Coffee with the vision of using the finest pure ingredients and pristine water. We currently serve customers through our 109 retail stores and 1 franchisee located in California, 1 store in Korea, and 1 store in Malaysia.

We have the following twelveten retail coffee locations as of December 31, 2024 2025:

Retail store revenues are recognized when payment is tendered at the point of sale.sale when payment is tendered. Retail store revenues are reported net of sales, useuse, or other transaction taxes that are collected from customers and remitted to taxing authorities. Sales taxes that are payable are recorded as accrued asliabilities within other current liabilities. Retails Retail store revenue makes up represents approximately [98]%73.5% of ourthe Company’s total revenue.

Wholesale and online revenues are recognized when the products are delivered, delivered and title passes to customersthe customer or to the wholesale distributors. When customers pick up the products at our warehouse,the Company’s warehouse or the when products are delivered to the wholesale distributors, the title of the products passestransfers and revenue is recognized. recognized at that time. Wholesale and online revenues represent makeapproximately up between [4% to 6%]1.4% of ourthe Company’s total revenue.

General and administrative expensesexpense includeincludes store-related expensesexpense as well as ourthe Company’s corporate headquarters’ expenses. These include rent and utilities, payroll and benefits, and depreciation expenses.

Net Revenues – Revenues were approximately $8.1 million for the year ended December approximately31, 2025, compared to $5.9 million for the year ended December 31, 2024, comparedrepresenting to $5.5 million for the year ended December 31, 2023, representing an increase of approximately $0.4$2.1 million, or 7.6%. 36.5%. The increase in sales for the periodsperiod was primarily driven by thenew openingstream of newservice locations, income from Reborn logistics and tothe license income along with the continued focus on marketing efforts to grow brand recognition.

Product, Food and Drink Costs (stores) – Product, food and drink costs were approximately $2.1$2.4 million for the year ended December 31, 20242025 compared to $1.8$2.2 million for the comparable period in 2023,2024, representing an increase of approximately $0.3$0.2 million, or 15.7%.7.8%. The increase in costs was partiallymainly driven driven by the openingincrease of newproduct locationscosts and the overall increase in sales for the period.

General and administrativeAdministrative expensesExpenses – – General and administrative expenses were approximately $8.3$7.8 million for the year ended December 31, 20242025 compared to $8.2$6.9 million million for the comparable period in the prior year, representing an increase of approximately $0.1$0.9 million, or 1.2%.13.0%. The increase was mainly mainly caused by increased occupancy expenses and labor costs withfrom openingthe of newstore locations.

OtherProfessional Income (Expense)Fees – Other incomeProfessional orfees expensewere primarilyapproximately includes interest expense. Interest expense was $0.2$1.6 million for the year ended December 31, 20242025 compared to $0.1$0.7 million for the yearcomparable endedperiod Decemberin 31,the 2023,prior year, representing an increase of $0.1approximately million.$0.9 million, or 134.5%. The increase was primarily duerelated to increaselegal and accounting services during 2025 in high interestconnection rate forwith the moniesconvertible debts borrowedand duringother 2024.related equity activities.

To support our existing and planned business model, we need to raise additional capital to fund our future operations. We have not experienced any difficulty in raising funds through loans, loans and have not experienced any liquidity problems in settling payables in the normal course of business and repaying loans when they fall due. Successful renewal of our loans, however, is subject to numerous risks and uncertainties. In addition, the increasingly competitive industry conditions under which we operate may negatively impactedimpact on our results of operations and cash flows. Additional financing is anticipated to fund our operations in near future. However, other than the ELOC Agreement and the Arena Debenture Transaction, 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 thisthese financing can be obtained or that we can continue as a going concern.

Net cash used in investing activities for the years year ended December 31, 2024 and 2023 was $1.0 millionmillion. andThe $2.4expenditure million, respectively. These expenditures in each period areis primarily related to purchases of property and equipment in connection with current and future location openings and maintaining our existing locations.

Net cash provided by financing activities during the year ended December 31, 2024 was $4.4 million, which was primarily due to proceeds from issuances of common stock and off-set by repayments of loans payable. Net cash provided by financing activities during the year ended December 31, 20232025 was $2.7$11.9 million, which was primarily from due to proceeds from theissuance creditof linecommon stock, gain on debt settlement and loans.issuance of convertible debt.

Pursuant to the SBA Loan Agreement, we borrowed an aggregate principal amount of the EIDL Loan of $500,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning May 16, 2021 (twelve months from the date of the SBA Loan Agreement) in the amount of $731. The balance of principal and interest is payable thirty years from the date of the SBA Loan. In connection therewith,with this, we also received a $10,000 grant, which does not have to be repaid. During the year ended December 31, 2020, $10,000 was recorded in Economy injury disaster loan (EIDL) grant income in the Statements of Operations. The schedule of payments on this loan was later deferred to commence 24 months from the date of loan and we have paid the payments since May 2022.

FoundedReborn was founded in 2015 by Jay Kim, our Chief Executive Officer, Mr. Kim and his team launched Reborn Coffee with the vision of using the finest pure ingredients and pristine water. We currently serve customers through our nine retail storesstore locations in California: Brea, La Crescenta, Corona Del Mar, Laguna Woods, Manhattan Beach, Huntington Beach, Riverside, San Francisco, Irvine, Diamond Bar, Anaheim and onePasadena. franchiseeIn locatedaddition to the locations in California,the United States, we have one storeinternational in Korea, and one storelocation in Malaysia.

Reborn Coffee continues to elevate the high-end coffee experience,experience and we received 1stfirst place traditional still in “America’s Best Cold Brew” competition by Coffee Fest in 2017 in Portland and 2018 in Los Angeles.

AsWe believe that we are the leading pioneers of the emerging “Fourth Wave” movement, wemovement areand that our business is redefining specialty coffee as an experience that demands much more than premium quality. We consider ourselves leaders of the “fourth wave” coffee movement because we are constantly developing our bean processing methods, researching design concepts, and reinventing new ways of drinking coffee. For instance, the current transition from the K-Cup trend to the pour over drip concept allowed us to reinvent the way people consume coffee, by merging convenience and quality. We took the pour over drip concept and made it available and affordable to the public through our “Reborn Coffee Pour Over Packs.”packs. Our “Pour Over Packs” allow our consumers to consume our specialty coffee outdoors and on-the-go.

Our success in innovating within the “Fourth Wave” coffee movement is measured by our success in B2B sales with our introduction of ourReborn Coffee Pour Over Packs to hotels. With the introduction of our Pour Over Packs to major hotels,hotels (including one hotel company with seven locations), our B2B sales increased as these companies recognized the convenience and functionality our Pour Over Packs serve to their customers.

Centered around our core values of service, trust, and well-being, we deliver an appreciation of coffee as both a science and an art. Developing innovative processes such as washing green coffee beans with magnetized water, we challenge traditional preparation methods by focusing on the relationship between water chemistry, health, and flavor profile. Through leadingLeading research studies, testing brewing equipment, and refining roasting/brewing methods,methods to a specific, we proactively distinguish exceptional quality from good quality by starting at the foundation and paying attention to the details. Our mission places an equal emphasis on humanizing the coffee experience, delivering a fresh take on “farm-to-table” by sourcing internationally. In this way, we create opportunities to develop transparency by paying homage to origin stories and spark new conversations by building cross-cultural communities united by a passion for the finest coffee.

Through a broad product offering, weReborn provideprovides customers with a wide variety of beverages and coffee options. As a result, we believe we can capture share of any experience where customers seek to consume great beverages whether in our inviting store atmospheres which are designed for comfort, or on the go through our pour over packs, or at home with our whole bean ground coffee bags. We believe that the retail coffee market in the US is large and growing. According to IBIS, in 2025, the retail market for coffee in the United States is expected to be $74.3 billion. This is expected to grow due to a shift in consumer preferences to premium coffee, including specialized blends, espresso-based beverages, and cold brew options. WeReborn aim aims to capture a growing portion of the market as we expand and increase consumer awareness of our brand.

CurrentPlan of Operation

We have the following ten retail coffee locations as of MarchJune 31,30, 2026:

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.stores. Accordingly, the Company recognizes revenue as follows:

Retail store revenues are recognized at the point of sale when payment is tendered. Retail store revenues are reported net of sales, use, or other transaction taxes collected from customers and remitted to taxing authorities. Sales taxes payable are recorded as accrued liabilities within other current liabilities. Retail store revenue represents approximately 28.2% of the Company’s total revenue.

Wholesale and online revenues are recognized when products are delivered and title passes to the customer or to wholesale distributors. When customers pick up products at the Company’s warehouse or when products are delivered to wholesale distributors, title transfers and revenue is recognized at that time. Wholesale and online revenues represent approximately 1.5% of the Company’s total revenue.

The Company evaluates whether it controls the transportation services provided to determine whether it is acting as a principal or an agent. The Company has determined that it acts as the principal in its transportation service arrangements, as it controls pricing, manages all aspects of the shipment process, and assumes the risks associated with delivery and collection. Accordingly, service income is presented on a gross basis in the consolidated statements of operations. Service income represents approximately 65.0% of the Company’s total revenue.

The Company has entered into license agreements that allow licensees to operate and market Reborn Coffee branded stores and products under the Reborn Coffee trademarks. Under these agreements, the Company provides ongoing services, including training, marketing support, system updates, and other operational assistance. As the Company is required to provide these ongoing services, license revenue is recognized over the term of the license agreement. License agreements typically have initial terms of three years and may be renewed for additional periods. License income represents approximately 5.3% of the Company’s total revenue.

In accordance with FASB ASC Topic 360, Property, Plant, and Equipment, the Company reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company considers the carrying value of assets may not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. As of MarchJune 31,30, 2026 and December 31, 2025, the Company was not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired.

The following tabletables presentspresent selected comparative results of operations from our unaudited financial statements for the three and six months ended MarchJune 31,30, 2026 compared to three and six months ended March 31,June 30, 2025. Our financial results for these periods are not necessarily indicative of the financial results that we will achieve in future periods. Certain totals for the table below may not sum to 100% due to rounding.

Revenues. Revenues were approximately $5.2 $11.5 million for the three-monthsix-month period ended MarchJune 31,30, 2026, compared to $1.7$3.5 million for the comparable period in 2025, representing an increase of approximately $3.5$8.0 million, or 207.8%.226.9%. Revenues were approximately $6.3 million for the three-month period ended June 30, 2026, compared to $1.8 million for the comparable period in 2025, representing an increase of approximately $4.5 million, or 244.6%. The increase in sales for the period was primarily driven by the logisticsservice service revenue.income from Logistics and license income.

Product, food and drink costs. Product, food and drink costs were approximately $0.5$1.0 million for the six-month period ended June 30, 2026 compared to $1.3 million for the comparable period in the prior year, and were approximately $0.4 million for the three-month period ended MarchJune 31,30, 2026 compared to $0.9$0.4 million for the comparable period in the prior year, representing a decrease of approximately $0.4 million, or 44%. The decrease for the period was mainly driven by the low volume of stores sales.year.

Cost of service income – subcontractors. Subcontractor costs were approximately $2.6$7.2 million for the six-month period ended June 30, 2026, and were approximately $4.7 million for the three-month period ended MarchJune 31,30, 2026.

Gross profit.margin. Gross profitmargin was approximately $2.1 $3.4 million for the three-monthsix-month period ended MarchJune 31,30, 2026, compared to $0.8$2.2 million for the comparable period in 2025, representing an increase of approximately $1.3$1.2 million, or 173.5%.53.7%. Gross margin was approximately $1.3 million for the three-month period ended June 30, 2026, compared to $1.4 million for the comparable period in 2025, representing a decrease of approximately $0.2 million, or 11.4%. The increasedecrease in gross profitmargin for the period was primarily driven by increasethe in serviceoperation income.of Reborn Logistics.

We have a history of operating losses and negative cash flow in operating activities. We have incurred recurring net losses, including net losses from operations before income taxes of approximately $1.5$4.0 million and $2.1$7.5 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. We used approximately $0.4 $1.6 million and $0.2$3.2 million of cash for operating activities for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.

During April 2026, weWe conducted four closings pursuant to the Debenture Securities Purchase Agreement and sold Debentures in the aggregate principal amount of $ $4,166,665 for a purchase price of $3,750,000, representing an original issue discount of 10%. We also issued to the DebentureArena Investors a total of 1,041,667 Debenture Warrants in connection with the closings.closing.

The extent to which we rely on Arena and/or the Debenture Arena Investors as a source of funding will depend on a number of factors including, the prevailing market price of our common stock and the extent to which we are able to secure working and other capital from other sources. If obtaining sufficient funding from ELOC Agreement were to prove unavailable or prohibitively dilutive, we may need to secure another source of funding in order to satisfy our working and other capital needs. Even if we were to sell to Arena all of the shares of common stock available for sale to Arena under the ELOC Agreement and conduct the remaining closings pursuant to the Debenture Purchase Agreement, we may still need additional capital to fully implement our business, operating and development plans. Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences may be a material adverse effect on our business, operating results, financial condition and prospects.

Net cash used in operating activities during the three-month period ended March 31, 2026 was approximately $0.4$1.7 million,million whichfor resultedthe fromsix months ended June 30, 2026. This primarily reflected a net loss of $1.83$4.4 million, netpartially incomeoffset from non-controlling interest of $334,329,by non-cash charges of $292,589$0.3 million for stockstock-based compensation, $398,602$0.4 million for debt discount expense, $12,105 $0.6 million for operatingloss leaseon debt extinguishment, $0.4 million for derivative expense, and $237,549$0.2 million for depreciationdepreciation, andas well as approximately $0.6 million of net cash outflows of approximately $796,630inflows from changes in operating assets and liabilities.

On May 16, 2020, we executed an EconomyEconomic injuryInjury disasterDisaster loanLoan (the “EIDL Loan”) from the SBA under its EIDL assistance program in light of the impact of the COVID-19 pandemic on our business. As of March 31,June 30, 2026, the EIDL Loan is not in default.

Pursuant to the SBA Loan Agreement, we borrowed an aggregate principal amount of the EIDL Loan of $500,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning May 16, 2021 (12 months from the date of the SBA Loan Agreement) in the amount of $731. The balance of principal and interest is payable 30 years from the date of the SBA Loan. In connection therewith, we also received a $10,000 grant, which does not have to be repaid. During the year ended December 31, 2020, $10,000 was recorded in EIDL grant income in the Statements of Operations. The schedule of payments on this loan was later deferred to commence 24 months from the date of loan and we hashave paid all payments owed since May 2022.

In May 2020, we secured a loan under the PPP administered by the SBA in the amount of $115,000. In February 2021, we secured a second loan under this program in the amount of approximately $167,000. The interest rate of the loan is 1.00% per annum and accrues on the unpaid principal balance computed on the basis of the actual number of days elapsed in a year of 360 days. Commencing seven months after the effective date of each PPP Loan, we are required to pay the Lender equal monthly payments of principal and interest as required to fully amortize any unforgiven principal balance of the loan by the two-year anniversary of the effective date of the loan. The PPP Loan contains customary events of default relating to, among other things, payment defaults, making materially false or misleading representations to the SBA or the Lender, or breaching the terms of the PPP Loan. The occurrence of an event of default may result in the repayment of all amounts outstanding under the PPP Loan, collection of all amounts owing, or filing suit and obtaining judgment against us. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. Recent modifications to the PPP by the U.S. Treasury and Congress have extended the time period for loan forgiveness beyond the original eight-week period, making it possible for the Company to apply for forgiveness of its PPP loan. We were granted forgiveness for the initial PPP Loan prior to December 31, 2021 and expectsexpect to be granted forgiveness on the remainder subsequently.