What changed in this filing

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Item 1A. Risk Factors

2024-03-28 compared with 2023-04-11 · 174 added, 124 removed, 1450 unchanged (17% of the section changed)

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firm includes a going concern uncertainty explanatory paragraph.

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 $3.5 million and $2.6 million for the year ended December 31, 2022 and 2021, respectively, and we had an accumulated deficit

of $12,031,801 at December 31, 2022.

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 2022.

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.

We expect to devote substantial capital resources to, among other things,

fund operations and continue development plans.

In August 2022, the Company consummated the IPO of 1,440,000 shares of its common stock

at a public offering price of $5.00 per share, generating gross proceeds of $7,200,000.

Net proceeds from the IPO were approximately $6.2

million after deducting underwriting discounts and commissions and other offering expenses of approximately $998,000.

To support our existing

and planned business model, the Company needs to raise additional capital to fund our future operations.

The Company has not experienced

any difficulty in raising funds through loans, and has not experienced any liquidity problems in settling payables in the normal course

of business and repaying loans when they fall due.

We have a history of operating losses and negative cash flow in operating

We have incurred recurring net losses, including net losses from operations before income taxes of $6.0 million and $3.5 million

for the year ended December 31, 2023 and 2022, respectively, and we had an accumulated deficit of $15.3 million at December 31, 2023.

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 2023.

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.

We expect to devote substantial capital resources to, among other things, fund operations and continue development

In August 2022, the Company consummated the IPO of 1,440,000 shares of its common stock at a public offering price of $5.00 per

share, generating gross proceeds of $7,200,000.

Net proceeds from the IPO were approximately $6.2 million after deducting underwriting

discounts and commissions and other offering expenses of approximately $998,000.

To support our existing and planned business model, the

Company needs to raise additional capital to fund our future operations.

The Company has not experienced any difficulty in raising funds

through loans, and has 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 impacted our results of operations

and cash flows.

Additional debt financing is anticipated to fund the Company’s operations in near future.

However, 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 this

financing can be obtained or that the Company can continue as a going concern.

In addition, the increasingly

competitive industry conditions under which we operate may negatively impacted our results of operations and cash flows.

Additional debt

financing is anticipated to fund the Company’s operations in near future.

However, 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 this financing can be obtained or that

the Company can continue as a going concern.

Evolving consumer

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new markets, which could adversely affect our growth.

As of December 31, 2022,

Reborn had 11 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.

As of December 31, 2023, Reborn had 14 company-owned locations.

of the key means to achieving our growth strategy will be through opening new locations and operating those locations on a profitable

We opened 4 new company-operated locations in 2023.

Additionally, we currently are developing

3 additional retail locations, Huntington Beach, Pasadena and Irvine, and have identified additional 2 locations, Diamond Bar and Anaheim,

for expansion.

In 2023, we expect to open up to 10 company-operated retail locations.

In 2024, we expect to open up to 20 company-operated retail locations and 10

franchise locations.

Our ability to open new

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geographically concentrated in California, and we could be negatively affected by conditions specific to that state.

As of December 31, 2022,

all of our company-operated locations were located in California.

Adverse changes in demographic, unemployment, economic, regulatory

or weather conditions in California have, and may continue, to harm our business.

As a result of our concentration in this market, we

have been, and in the future may be, disproportionately affected by these adverse conditions compared to other chain beverage locations

with a national footprint.

As of December 31, 2023, all of our company-operated locations were

located in California.

Adverse changes in demographic, unemployment, economic, regulatory or weather conditions in California have, and

may continue, to harm our business.

As a result of our concentration in this market, we have been, and in the future may be, disproportionately

affected by these adverse conditions compared to other chain beverage locations with a national footprint.

Interruption of our

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and the corresponding response to contain the virus and treat those affected by it, prove to be.

We do not yet know the full

extent of potential delays or impacts on our business, operations or the global economy as a whole.

While there have recently been vaccines

developed and administered, and the spread of COVID- 19 may eventually be contained or mitigated, we cannot predict the timing of the

vaccine roll-out globally or the efficacy of such vaccines, and we do not yet know how customers or our future franchise partners will

operate in a post COVID-19 environment.

In addition, new strains and variants of the virus have caused a resurgence and an increase in

reported infection rates, particularly in areas with lower vaccination rates, which may impact the general economic recovery.

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.

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

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content disclosure requirements and to adapt our menu offerings to trends in drinking and consumption habits.

Risks Related to Our

Organizational Structure, this Offering and Ownership of Our Common Stock

Risks Related to Our Organizational Structure and

Ownership of Our Common Stock

We are not in compliance with the Nasdaq

continued listing requirements.

If we are unable to comply with the continued listing requirements of The Nasdaq Capital Market, our common

stock could be delisted, which could affect our common stock’s market price and liquidity and reduce our ability to raise capital.

November 1, 2024 we requested a hearing by the Nasdaq Hearings Panel (the “Panel”) of The Nasdaq Stock Market LLC to appeal

delisting determinations made by the Listing Qualifications Department of Nasdaq:

(i) on April 28, 2023 for failure to comply with the

bid price requirement of Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), (ii) on September 5, 2023 for failure to comply

with the minimum stockholders equity required for continued listing on Nasdaq, or any of the alternative requirement to Nasdaq Listing

Rule 5550(b) (the “Equity Rule”), and (iii) on January 4, 2024 for failure to hold an annual meeting of stockholders for the

fiscal year ended December 31, 2023 as required by Nasdaq Listing Rule 5620(a) (the “Meeting Rule”).

At the Panel hearing,

which occurred on January 18, 2024, we, represented by members of senior management and outside counsel, advised that we intended to regain

compliance with the Bid Price Rule by effecting a reverse stock split at a ratio of 1-for-8, which we have effected –

our common stock has since had a closing bid price greater than $1.00 for ten consecutive trading days.

We also informed the

Panel that we intend to regain compliance with the Equity Rule by completing one or more equity financings.

Finally, we informed the Panel

that we intend to regain compliance with the Meeting Rule by holding an annual meeting of stockholders in the first quarter of 2024.

such, we proposed to the Panel a compliance plan that included a tentative schedule to complete the reverse stock split (which has now

been completed), the equity financings, and the annual meeting and requested an extension of time to fully comply with Nasdaq listing

requirements so that we could demonstrate to the Panel that it should not be delisted from Nasdaq.

February 2, 2024, we received a letter (the “Letter”) from Nasdaq notifying us that the Panel had granted the Company’s

request to continue its listing on Nasdaq until March 29, 2024, subject to certain conditions.

intend to comply with the conditions set forth by the Panel, as stated in the Letter.

There can be no assurance that the Panel will afford

us more time to complete the compliance plan it articulated in the hearing, or that we will be able to remain in compliance with the applicable

Nasdaq listing requirements on an ongoing basis.

If our common stock is delisted,

it could be more difficult to buy or sell our common stock and to obtain accurate quotations, and the price of our common stock could

suffer a material decline.

Delisting could also impair the liquidity of our common stock and could harm our ability to raise capital through

alternative financing sources on terms acceptable to us, or at all, and may result in potential loss of confidence by investors, employees,

and fewer business development opportunities.

Reborn Coffee, Inc.

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Reborn Coffee, Inc.

be a holding 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, if any, will be dependent upon the financial results and cash flows of Reborn Global and Reborn Franchise.

holding 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, if any, will be dependent upon the financial results and cash flows of Reborn Global, Reborn Coffee Franchise,

and Reborn Realty.

The trading price

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board of directors, on committees of our board of directors or as members of senior management.

We are an “emerging

growth company,” and we intend to comply only with reduced disclosure requirements applicable to emerging growth companies.

a result, our common stock could be less attractive to investors.

We are an “emerging

growth company,” as defined in the JOBS Act, and for as long as we continue to be an emerging growth company, we may choose to

take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies,

including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure

obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding

a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary

of the completion of our initial public offering (b) in which we have total annual gross revenue of over $1.07 billion or (c) in which

we are deemed to be a large accelerated filer, which means the market value of our common stock held by non-affiliates exceeds $700 million

or more as of the last business day of our most recently completed second fiscal quarter;

(2) the date on which we have issued more than

$1 billion of non-convertible debt securities over a three-year period;

and (3) the last day of the fiscal year following the fifth anniversary

of our initial public offering.

We cannot predict if investors will find our common stock less attractive if we choose to rely on these

If some investors find our common stock less attractive as a result of any choices to reduce future disclosure, there may

be a less active trading market for our common stock, and our stock price may be more volatile.

Substantial blocks of our common stock may be

sold into the market as a result of the Pre-Paid Advance Agreement.

The price of our common stock

could decline if there are substantial sales of shares of our common stock, if there is a large number of shares of our common stock available

for sale, or if there is the perception that these sales could occur.

On February 12, 2024, we entered

into a Pre-Paid Advance Agreement (the “PPA”) with EF Hutton YA Fund, LP, a Delaware limited partnership (“YA Fund”).

Pursuant to the PPA, on February 12, 2024, YA Fund advanced to us a pre-paid advance of $1,100,000 (the “Pre-Paid Advance”).

The Pre-Paid Advance was purchased by YA Fund at 90% of the face amount.

At the request and sole discretion of YA Fund, the Pre-Paid Advance

will be correspondingly reduced upon the issuance of our common stock to YA Fund at a Purchase Price equal to the lower of:

the volume weighted average price (as reported during regular trading hours by Bloomberg) (the “VWAP”) of our common stock

on the trading day immediately preceding the closing of the Pre-Paid Advance (the “Fixed Price”) or (b) 87% of the lowest

daily VWAP of the shares during the five trading days immediately prior to each request (as applicable, the “Purchase Price”),

subject to the Floor Price.

Any issuances of shares of our

common stock pursuant to the PPA to offset the Pre-Paid Advance will dilute the percentage ownership of stockholders and may dilute

the per share projected earnings (if any) or book value of our common stock.

Sales of a substantial number of shares of our common stock

in the public market or other issuances of shares of our common stock, or the perception that these sales or issuances could occur, could

cause the market price of our common stock to decline and may make it more difficult for you to sell your shares at a time and price that

you deem appropriate.

We do not have the right to control the timing

and amount of the issuance of our shares of common stock to YA Fund under the PPA and, accordingly, it is not possible to predict the

actual number of shares we will issue pursuant to the PPA at any one time or in total.

We do not have the right to control

the timing and amount of any issuances of our shares of common stock to YA Fund under the PPA.

Sales of our common stock, if any, to YA

Fund under the PPA will depend upon market conditions and other factors, and the discretion of YA Fund.

We may ultimately decide to sell

to YA Fund all, some or none of the shares of our common stock that may be available for us to sell to YA Fund pursuant to the PPA.

Pre-Paid Advance matures within one year.

Because the purchase price per

share to be paid by YA Fund for the shares of common stock that we may elect to sell to YA Fund under the PPA, if any, will fluctuate

based on the market prices of our common stock, if any, it is not possible for us to predict, as of the date of this report and prior

to any such sales, the number of shares of common stock that we will sell to YA Fund under the PPA, the purchase price per share that

YA Fund will pay for shares purchased from us under the PPA, or the aggregate gross proceeds that we will receive from those purchases

by YA Fund under the PPA, if any.

In addition, unless we obtain

stockholder approval, we will not be able to issue shares of our common stock in excess the Exchange Cap of 414,693 under the PPA (or

any other transaction that is integrated with the PPA) in accordance with applicable Nasdaq rules.

Depending on the market prices of our

common stock in the future, this could be a significant limitation on the amount of funds we are able to raise pursuant to the PPA.

Further, the resale by YA Fund

of a significant amount of shares registered in this offering at any given time, or the perception that these sales may occur, could cause

the market price of our common stock to decline and to be highly volatile.

Upon an Amortization Event under the PPA, we

may be required to make payments that could cause financial hardship to the company.

Pursuant to the PPA, an “Amortization

Event” occurs if (1) the daily VWAP of our common stock (as reported by Bloomberg) is lower than the Floor Price for any five of

seven consecutive trading days, (2) we have issued in excess of 99% of all of the shares available under the Exchange Cap, or (3) YA Fund

is unable to use the initial registration statement we filed (and any one or more additional registration statements filed with the SEC

that include the shares of our common stock that may be issued and sold by us to YA Fund under the PPA) for period of ten consecutive

trading days.

Within ten trading days of an Amortization Event, we must pay YA Fund the Cash Payment equal to $500,000, plus any accrued

and unpaid interest (if any), and a 10% redemption premium.

This financial obligation may

cause an undue and unsustainable burden on us and cause a material adverse effect on our operations and financial condition.

General Risks

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to changes in the economy or industry.

As of December 31, 2022, we had $500,000 in principal amount outstanding

As of December 31, 2023,

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, $144,375 in principal outstanding under the Paycheck Protection Program

Loan administered by the U.S.

Small Business Administration and $50,898 in principal outstanding under our loans with Square Capital,

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, $97,273 in principal

outstanding under the Paycheck Protection Program Loan administered by the U.S.

Small Business Administration, $165,722 in principal outstanding

under our loans with Square Capital, LLC, $300,00 of short term borrowing from a private party, and $100,000 of short term borrowing from

a shareholder.

Our substantial debt could

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be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods

specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act, is accumulated and

communicated to our principal executive and financial officers.

We are also continuing to improve our internal controls over financial

For example, as we have prepared to become a public company, we have worked to improve the controls around our key accounting

processes and our quarterly close process.

In order to maintain and improve the effectiveness of our disclosure controls and procedures

and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources,

including accounting-related costs and investments to strengthen our accounting systems.

specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act, is accumulated and communicated

to our principal executive and financial officers.

We are also continuing to improve our internal controls over financial reporting.

order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting,

we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and investments

to strengthen our accounting systems.

Our current controls and

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costs to correct any post-implementation issues that may arise.

Further, weaknesses in our

disclosure controls and internal control over financial reporting may be discovered in the future.

Any failure to develop or maintain

effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause

us to fail to meet our reporting obligations and may result in a restatement of our consolidated financial statements for prior periods.

Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of

periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness

of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be

filed with the SEC.

Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors

to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of

our common stock.

In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq

We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act and are therefore

not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose.

public company, we are required to provide an annual management report on the effectiveness of our internal control over financial reporting

commencing with our second annual report on Form 10-K.

Further, weaknesses in our disclosure

controls and internal control over financial reporting may be discovered in the future.

Any failure to develop or maintain effective controls

or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet

our reporting obligations and may result in a restatement of our consolidated financial statements for prior periods.

Any failure to implement

and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations

and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over

financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.

disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our

reported financial and other information, which would likely have a negative effect on the trading price of our common stock.

if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq Exchange.

As a public company,

we are required to provide an annual management report on the effectiveness of our internal control over financial reporting.

Our independent registered

public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until

after we are no longer an “emerging growth company” as defined in the JOBS Act.

At such time, our independent registered

public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control

over financial reporting is documented, designed or operating.

Any failure to maintain effective disclosure controls and internal control

over financial reporting could harm our business, results of operations, and financial condition and could cause a decline in the trading

price of our common stock.

Changes in tax laws or regulations could be enacted or existing tax laws or regulations could be applied to

us or our customers in a manner that could increase the costs of our products and harm our business.

public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting.

time as our registered public accounting firm is required to formally attest to the effectiveness of our internal control over financial

reporting, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with

the level at which our internal control over financial reporting is documented, designed or operating.

Any failure to maintain effective

disclosure controls and internal control over financial reporting could harm our business, results of operations, and financial condition

and could cause a decline in the trading price of our common stock.

Changes in tax laws or regulations could be enacted or existing tax

laws or regulations could be applied to us or our customers in a manner that could increase the costs of our products and harm our business.

We may engage in merger

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business interruptions.

Unresolved Staff Comments

Our executive office is located at 580 N.

Berry Street, Brea, California

and our telephone number is (714) 784-6369.

As of December 31, 2022, we had 11 company-owned retail locations

across California, all of which are leased.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors