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Item 1A. Risk Factors

2025-03-31 compared with 2024-03-28 · 1607 added, 1573 removed, 51 unchanged (98% of the section changed)

You should consider carefully

the following risk factors, as well as the other information set forth in this report, including our consolidated financial statements

and the notes thereto.

The following discussion of risk factors includes forward-looking statements and our actual results may differ

substantially from those discussed in such forward-looking statements.

See “Cautionary Note Regarding Forward-Looking Statements.”

The disclosures of a risk should not be interpreted to imply that such risk has not already materialized.

Additional risks not currently

known to us or that we currently believe are immaterial may also impair our business, financial condition, results of operations and

The occurrence of any of the events or developments described below could materially and adversely affect our business, financial

condition, results of operations, and growth prospects.

In such an event, the market price of our common stock could decline, and you

may lose all or part of your investment.

Unless otherwise indicated, references in these risk factors to our business being harmed will

include harm to our business, reputation, brand, financial condition, results of operations, and prospects.

Risks Related to Our

We have incurred recurring losses and may not be profitable in

You should consider carefully the following

risk factors, as well as the other information set forth in this report, including our consolidated financial statements and the notes

The following discussion of risk factors includes forward-looking statements and our actual results may differ substantially

from those discussed in such forward-looking statements.

See “Cautionary Note Regarding Forward-Looking Statements.” The disclosures

of a risk should not be interpreted to imply that such risk has not already materialized.

Additional risks not currently known to us or

that we currently believe are immaterial may also impair our business, financial condition, results of operations and cash flows.

occurrence of any of the events or developments described below could materially and adversely affect our business, financial condition,

results of operations, and growth prospects.

In such an event, the market price of our common stock could decline, and you may lose all

or part of your investment.

Unless otherwise indicated, references in these risk factors to our business being harmed will include harm

to our business, reputation, brand, financial condition, results of operations, and prospects.

Risks Related to Our Business

We have incurred recurring losses and may

not be profitable in the future.

Our plans to maintain and increase liquidity may not be successful.

The report of the independent registered public accounting

firm includes a going concern uncertainty explanatory paragraph.

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.

Evolving consumer

preferences and tastes may adversely affect our business.

Reborn Coffee’s 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’s 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’s specialty coffee and could

The report of the independent registered

public accounting 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

$4.8 million and $4.7 million for the years ended December 31, 2024 and 2023, respectively, and we had an accumulated deficit of $21.6

million at December 31, 2024.

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.

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 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 financing is anticipated to fund the Company’s

operations in near future.

Evolving consumer preferences and tastes

may adversely affect our business.

Reborn Coffee’s 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’s 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’s specialty coffee and could

harm our business.

Our financial condition

and annual results of operations are subject to, and may be adversely affected by, a number of factors, many of which are also largely

outside our control and as such our results may fluctuate significantly and may not fully reflect the underlying performance of our business.

Our annual results of operations

and key metrics may vary significantly in the future as they have in the past, and period-to-period comparisons of our results of operations

and key metrics may not be meaningful.

Accordingly, the results of any one annual period should not be relied upon as an indication of

future performance.

Our annual results of operations and key metrics may fluctuate as a result of a variety of factors, many of which

are outside of our control, and as a result, may not fully reflect the underlying performance of our business.

Fluctuations in annual

results may negatively impact the value of our securities.

Factors that may cause fluctuations in our annual results of operations and

key metrics include, without limitation, those listed elsewhere in this Risk Factors section and those listed below.

Any one or more

of the factors listed below or described elsewhere in this section could harm our business:

in real estate or labor costs in certain markets;

preferences, including those described above;

weather or other natural or man-made disasters affecting a large market or several closely

located markets that may temporarily but significantly affect our business in such markets;

in our large markets, 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;

outcomes of litigation.

Our marketing programs

may not be successful, and our new menu items and advertising campaigns may not generate increased sales or profits.

We incur costs and expend

other resources in our marketing efforts on new menu items and advertising campaigns to raise brand awareness and attract and retain

These initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenue.

Additionally,

some of our competitors have greater financial resources than we do, which enable them to spend significantly more on marketing and advertising

and other initiatives than we can.

Should our competitors increase spending on marketing and advertising and other initiatives or our

marketing funds decrease for any reason, or should our advertising, promotions and new menu items be less effective than our competitors,

there could be an adverse effect on our results of operations and financial condition.

We may not be able

to compete successfully with other specialty coffee locations, including the growing number of coffee delivery options.

Intense competition

could make it more difficult to expand our business and could also have a negative impact on our operating results if customers favor

our competitors or we are forced to change our pricing and other marketing strategies.

We expect competition in

our market to continue to be intense as we compete on a variety of fronts, including convenience, taste, price, quality, service and

If our company-operated and future franchised locations cannot compete successfully with other beverage and coffee locations,

other specialty coffee locations, and the growing number of coffee delivery options in new and existing markets, we could lose customers

and our revenue could decline.

Our company-operated and future franchised locations compete with national, regional and local coffee

chains for customers, locations and qualified management and other staff.

Compared to us, some of our competitors have substantially

greater financial and other resources, have been in business longer, have greater brand recognition or are better established in the

markets where our locations are located or are planned to be located.

In some markets that we may grow into, there are already well-funded

competitors in the coffee or beverage business that may challenge our ability to grow into those regions.

Any of these competitive factors

may harm our business.

Additionally, if our competitors

begin to evolve their business strategies and adopt aspects of the Reborn Coffee business model, our customers may be drawn to those

competitors for their beverage needs and our business could be harmed.

Our growth strategy

depends in part on opening new locations in existing and new markets.

We may be unsuccessful in opening new locations or establishing

new markets, which could adversely affect our growth.

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.

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

franchise locations.

Our ability to open new

locations is dependent upon a number of factors, many of which are beyond our control, including our and our future franchise partners’

available and suitable sites;

for such sites;

acceptable agreements regarding the lease of locations;

or have available the financing required to acquire and operate a location, including construction

and opening costs, which includes access to build-to-suit leases and ground lease construction

or renovation arrangements;

to unforeseen engineering or environmental problems with leased premises;

the impact of inclement weather, natural disasters and other calamities;

train and retain the skilled management and other employees necessary to meet staffing needs;

in a timely manner and for an acceptable cost, required licenses, permits and regulatory

approvals and respond effectively to any changes in local, state or federal law and regulations

that adversely affect our and our future franchise partners’ costs or ability to open

new locations;

construction and equipment cost increases for new locations and secure the services of qualified

contractors and subcontractors in an increasingly competitive environment.

There is no guarantee that

a sufficient number of suitable sites for new locations will be available in desirable areas or on terms that are acceptable to us in

order to achieve our growth plan.

If we are unable to open new locations, or if future franchise partners do not open new locations,

or if location openings are significantly delayed, our revenue or earnings growth could be adversely affected and our business may be

As part of our longer term

growth strategy, we expect to enter into geographic markets in which we have little or no prior operating experience.

The challenges

of entering new markets include:

adapting to local regulations or restrictions that may limit our ability to open new locations, restrict

the use of certain branding or increase the cost of development;

Our financial condition and annual results

of operations are subject to, and may be adversely affected by, a number of factors, many of which are also largely outside our control

and as such our results may fluctuate significantly and may not fully reflect the underlying performance of our business.

Our annual results of operations and key metrics

may vary significantly in the future as they have in the past, and period-to-period comparisons of our results of operations and key metrics

may not be meaningful.

Accordingly, the results of any one annual period should not be relied upon as an indication of future performance.

Our annual results of operations and key metrics may fluctuate as a result of a variety of factors, many of which are outside of our control,

and as a result, may not fully reflect the underlying performance of our business.

Fluctuations in annual results may negatively impact

the value of our securities.

Factors that may cause fluctuations in our annual results of operations and key metrics include, without

limitation, those listed elsewhere in this Risk Factors section and those listed below.

Any one or more of the factors listed below or

described elsewhere in this section could harm our business:

increases in real estate or labor costs in certain markets;

consumer preferences, including those described above;

severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily but significantly affect our business in such markets;

especially in our large markets, 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;

adverse outcomes of litigation.

Our marketing programs may not be successful,

and our new menu items and advertising campaigns may not generate increased sales or profits.

We incur costs and expend other resources in our

marketing efforts on new menu items and advertising campaigns to raise brand awareness and attract and retain customers.

These initiatives

may not be successful, resulting in expenses incurred without the benefit of higher revenue.

Additionally, some of our competitors have

greater financial resources than we do, which enable them to spend significantly more on marketing and advertising and other initiatives

Should our competitors increase spending on marketing and advertising and other initiatives or our marketing funds decrease

for any reason, or should our advertising, promotions and new menu items be less effective than our competitors, there could be an adverse

effect on our results of operations and financial condition.

We may not be able to compete successfully

with other specialty coffee locations, including the growing number of coffee delivery options.

Intense competition could make it more

difficult to expand our business and could also have a negative impact on our operating results if customers favor our competitors or

we are forced to change our pricing and other marketing strategies.

We expect competition in our market to continue

to be intense as we compete on a variety of fronts, including convenience, taste, price, quality, service and location.

If our company-operated

and future franchised locations cannot compete successfully with other beverage and coffee locations, other specialty coffee locations,

and the growing number of coffee delivery options in new and existing markets, we could lose customers and our revenue could decline.

Our company-operated and future franchised locations compete with national, regional and local coffee chains for customers, locations

and qualified management and other staff.

Compared to us, some of our competitors have substantially greater financial and other resources,

have been in business longer, have greater brand recognition or are better established in the markets where our locations are located

or are planned to be located.

In some markets that we may grow into, there are already well-funded competitors in the coffee or beverage

business that may challenge our ability to grow into those regions.

Any of these competitive factors may harm our business.

Additionally, if our competitors begin to evolve

their business strategies and adopt aspects of the Reborn Coffee business model, our customers may be drawn to those competitors for their

beverage needs and our business could be harmed.

Our growth strategy depends in part on opening

new locations in existing and new markets.

We may be unsuccessful in opening new locations or establishing new markets, which could adversely

affect our growth.

As of December 31, 2024, Reborn had 12 company-owned

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, we expect to open up to 20 franchise locations.

Our ability to open new locations is dependent

upon a number of factors, many of which are beyond our control, including our and our future franchise partners’ ability to:

identify available and suitable sites;

compete for such sites;

reach acceptable agreements regarding the lease of locations;

obtain or have available the financing required to acquire and operate a location, including construction and opening costs, which includes access to build-to-suit leases and ground lease construction or renovation arrangements;

respond to unforeseen engineering or environmental problems with leased premises;

avoid the impact of inclement weather, natural disasters and other calamities;

hire, train and retain the skilled management and other employees necessary to meet staffing needs;

obtain, in a timely manner and for an acceptable cost, required licenses, permits and regulatory approvals and respond effectively to any changes in local, state or federal law and regulations that adversely affect our and our future franchise partners’ costs or ability to open new locations;

control construction and equipment cost increases for new locations and secure the services of qualified contractors and subcontractors in an increasingly competitive environment.

There is no guarantee that a sufficient number

of suitable sites for new locations will be available in desirable areas or on terms that are acceptable to us in order to achieve our

If we are unable to open new locations, or if future franchise partners do not open new locations, or if location openings

are significantly delayed, our revenue or earnings growth could be adversely affected and our business may be harmed.

As part of our longer term growth strategy, we

expect to enter into geographic markets in which we have little or no prior operating experience.

The challenges of entering new markets

adapting to local regulations or restrictions that may limit our ability to open new locations, restrict the use of certain branding

or increase the cost of development;

difficulties in hiring experienced personnel;

unfamiliarity with local

real estate markets and demographics;

unfamiliarity with local real estate markets and demographics;

consumer unfamiliarity with our brand;

and different competitive and economic conditions, consumer

tastes and discretionary spending patterns that are more difficult to predict or satisfy than in our existing markets.

Consumer recognition

of our brand has been important in the success of our locations in our existing markets, and we will need to build this recognition in

Locations we open in new markets may take longer to reach expected sales and profit levels on a consistent basis and may

have higher construction, occupancy and operating costs than existing locations, thereby affecting our overall profitability.

on our part to recognize or respond to these challenges may adversely affect the success of any new locations.

Due to brand recognition

and logistical synergies, as part of our growth strategy, we also intend to open new locations in areas where we have existing locations.

The operating results and comparable location sales could be adversely affected due to close proximity with our other locations and market

New locations, once

opened, may not be profitable or may close, and the increases in average per location revenue and comparable sales that we have experienced

in the past may not be indicative of future results.

Our results have been, and

in the future may continue to be, significantly impacted by the timing of new location openings, which is subject to a number of factors,

many of which are outside of our control, including landlord delays, associated pre-opening costs and operating inefficiencies, as well

as changes in our geographic concentration due to the opening of new locations.

We have typically incurred the most significant portion

of pre-opening expenses associated with a given location within the three months preceding the opening of the location.

Our experience

has been that labor and operating costs associated with a newly opened location for the first several months of operation are materially

greater than what can be expected after that time, both in aggregate dollars and as a percentage of sales.

Our new locations commonly

take three to five months to reach planned operating levels due to inefficiencies typically associated with new locations, including

the training of new personnel, new market learning curves, inability to hire sufficient qualified staff, and other factors.

additional costs in new markets, particularly for transportation and distribution, which may impact sales and the profitability of those

Accordingly, the volume and timing of new location openings may have a material adverse impact on our profitability.

Although we target specified

operating and financial metrics, new locations may never meet these targets or may take longer than anticipated to do so.

Any new location

we open may never become profitable or achieve operating results similar to those of our existing locations, which could adversely affect

our business, financial condition or results of operations.

Some of Reborn Coffee’s

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:

awareness and understanding of the Reborn brand;

economic conditions, which can affect location traffic, local labor costs and prices we pay

for the beverage and other supplies we use;

● consumption

patterns and beverage preferences that differ from region to region;

in consumer preferences and discretionary spending;

● difficulties

obtaining or maintaining adequate relationships with distributors or suppliers in new markets;

in prices for commodities, including coffee, and milk;

● inefficiency

in our labor costs as the staff gains experience;

● competition,

either from our competitors in the beverage industry or our own locations;

and permanent site characteristics of new locations;

in government regulation;

unanticipated increases in costs, any of which could give rise to delays or cost overruns.

If our new locations do

not perform as planned or close, our business and future prospects could be harmed.

In addition, an inability to achieve our expected

average location revenue could harm our business.

Additionally, opening new

locations in existing markets may negatively impact sales at our existing, and our future franchise partners’, locations.

target area of our locations varies by location, depending on a number of factors, including population density, other local retail and

business attractions, area demographics and geography.

As a result, the opening of a new location in or near markets in which we already

have or our future franchise partners will have locations could adversely impact sales at these existing locations while growing overall

sales in a region.

Existing locations could also make it more difficult to build our and our future franchise partners’ consumer

base for a new location in the same market.

Sales transfer between our locations may become significant in the future as we continue

to expand our operations and could affect our sales growth, which could, in turn, harm our business.

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.

Our failure to manage

our growth effectively could harm our business and operating results.

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.

We are required to manage

multiple relationships with various strategic partners, our future franchise partners, customers, and other third parties.

of further growth of our operations or in the number of our third-party relationships, our existing management systems, financial and

management controls and information systems may not be adequate to support our planned expansion and we may face challenges of integrating,

developing, training, and motivating a rapidly growing employee base in our various locations and maintaining our company culture across

multiple company-operated and future franchise locations.

Our ability to manage our growth effectively will require us to continue to

enhance our systems, procedures and controls and to locate, hire, train and retain management and staff, particularly in new markets

which may require significant capital expenditures.

Damage to our brand

or reputation and negative publicity could negatively impact our business, financial condition and results of operations.

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

We believe 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, and we must protect and grow the value of our brand in order for us to continue to be successful.

incident that erodes consumer loyalty for our brand could significantly reduce its value and damage our business.

We may, from time to time,

be faced with negative publicity, regardless of its accuracy, relating to beverage quality;

the safety, sanitation and welfare of our

customer complaints or litigation alleging illness or injury;

and different competitive and economic conditions, consumer tastes and discretionary spending patterns

that are more difficult to predict or satisfy than in our existing markets.

Consumer recognition of our brand has been important in the

success of our locations in our existing markets, and we will need to build this recognition in new markets.

Locations we open in new

markets may take longer to reach expected sales and profit levels on a consistent basis and may have higher construction, occupancy and

operating costs than existing locations, thereby affecting our overall profitability.

Any failure on our part to recognize or respond

to these challenges may adversely affect the success of any new locations.

Due to brand recognition and logistical synergies,

as part of our growth strategy, we also intend to open new locations in areas where we have existing locations.

The operating results

and comparable location sales could be adversely affected due to close proximity with our other locations and market saturation.

New locations, once opened, may not be profitable

or may close, and the increases in average per location revenue and comparable sales that we have experienced in the past may not be indicative

of future results.

Our results have been, and in the future may continue

to be, significantly impacted by the timing of new location openings, which is subject to a number of factors, many of which are outside

of our control, including landlord delays, associated pre-opening costs and operating inefficiencies, as well as changes in our geographic

concentration due to the opening of new locations.

We have typically incurred the most significant portion of pre-opening expenses associated

with a given location within the three months preceding the opening of the location.

Our experience has been that labor and operating

costs associated with a newly opened location for the first several months of operation are materially greater than what can be expected

after that time, both in aggregate dollars and as a percentage of sales.

Our new locations commonly take three to five months to reach

planned operating levels due to inefficiencies typically associated with new locations, including the training of new personnel, new market

learning curves, inability to hire sufficient qualified staff, and other factors.

We may incur additional costs in new markets, particularly

for transportation and distribution, which may impact sales and the profitability of those locations.

Accordingly, the volume and timing

of new location openings may have a material adverse impact on our profitability.

Although we target specified operating and financial

metrics, new locations may never meet these targets or may take longer than anticipated to do so.

Any new location we open may never become

profitable or achieve operating results similar to those of our existing locations, which could adversely affect our business, financial

condition or results of operations.

Some of Reborn Coffee’s retail locations

open with an initial start-up period of higher than normal sales volumes and related costs, which subsequently decrease to stabilized

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:

consumer awareness and understanding of the Reborn brand;

general economic conditions, which can affect location traffic, local labor costs and prices we pay for the beverage and other supplies we use;

consumption patterns and beverage preferences that differ from region to region;

changes in consumer preferences and discretionary spending;

difficulties obtaining or maintaining adequate relationships with distributors or suppliers in new markets;

increases in prices for commodities, including coffee, and milk;

inefficiency in our labor costs as the staff gains experience;

competition, either from our competitors in the beverage industry or our own locations;

temporary and permanent site characteristics of new locations;

changes in government regulation;

other unanticipated increases in costs, any of which could give rise to delays or cost overruns.

If our new locations do not perform as planned

or close, our business and future prospects could be harmed.

In addition, an inability to achieve our expected average location revenue

could harm our business.

Additionally, opening new locations in existing

markets may negatively impact sales at our existing, and our future franchise partners’, locations.

The consumer target area of

our locations varies by location, depending on a number of factors, including population density, other local retail and business attractions,

area demographics and geography.

As a result, the opening of a new location in or near markets in which we already have or our future

franchise partners will have locations could adversely impact sales at these existing locations while growing overall sales in a region.

Existing locations could also make it more difficult to build our and our future franchise partners’ consumer base for a new location

in the same market.

Sales transfer between our locations may become significant in the future as we continue to expand our operations

and could affect our sales growth, which could, in turn, harm our business.

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.

Our failure to manage our growth effectively

could harm our business and operating results.

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.

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

We are required to manage multiple relationships

with various strategic partners, our future franchise partners, customers, and other third parties.

In the event of further growth of

our operations or in the number of our third-party relationships, our existing management systems, financial and management controls and

information systems may not be adequate to support our planned expansion and we may face challenges of integrating, developing, training,

and motivating a rapidly growing employee base in our various locations and maintaining our company culture across multiple company-operated

and future franchise locations.

Our ability to manage our growth effectively will require us to continue to enhance our systems, procedures

and controls and to locate, hire, train and retain management and staff, particularly in new markets which may require significant capital

expenditures.

Damage to our brand or reputation and negative

publicity could negatively impact our business, financial condition and results of operations.

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.

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, 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 for our brand could significantly reduce its value and damage our business.

We may, from time to time, be faced with negative

publicity, regardless of its accuracy, relating to beverage quality;

the safety, sanitation and welfare of our locations;

customer complaints

or litigation alleging illness or injury;

health inspection scores;

integrity of our or our suppliers’

food processing, employment practices and other policies, practices and procedures;

integrity of our or our suppliers’ food processing, employment

practices and other policies, practices and procedures;

or employee relationships and welfare or other matters.

Negative publicity may adversely affect us, regardless of whether the allegations are substantiated or whether we are held to be responsible.

In addition, the negative impact of adverse publicity relating to one location may extend far beyond the location involved, to affect

some or all of our other locations, including our future franchise partner locations.

The risk of negative publicity is particularly

great with respect to our future franchise partner locations because we are limited in the manner in which we can regulate them, especially

on a real-time basis, and negative publicity from our future franchise partners’ locations may also significantly impact company-operated

A similar risk exists with respect to beverage businesses unrelated to us if customers mistakenly associate such unrelated

businesses with our operations.

Employee claims against us based on, among other things, wage and hour violations, discrimination, harassment

or wrongful termination may also create not only legal and financial liability but negative publicity that could adversely affect us

and divert our financial and management resources that would otherwise be used to benefit the future performance of our operations.

types of employee claims could also be asserted against us, on a co-employer theory, by employees of our future franchise partners.

significant increase in the number of these claims or an increase in the number of successful claims could harm our business.

Additionally, there has

been a marked increase in the use of social media platforms and similar devices, including blogs, social media websites and other forms

of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons.

The availability of information on social media platforms is virtually immediate as is its impact.

Many social media platforms immediately

publish the content their subscribers and participants can post, often without filters or checks on accuracy of the content posted.

opportunity for dissemination of information, including inaccurate information, is seemingly limitless and readily available.

concerning us may be posted on such platforms at any time.

Information posted may be adverse to our interests or may be inaccurate, each

of which may harm our performance, prospects or business.

The harm may be immediate without affording us an opportunity for redress or

Ultimately, the risks associated

with any such negative publicity or incorrect information cannot be completely eliminated or mitigated and may harm our business.

Our inability to identify,

recruit and retain qualified individuals for our locations could slow our growth and adversely impact our ability to operate.

Our success also depends

substantially on the contributions and abilities of our staff on whom we rely to give customers a superior experience and elevate our

Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified operators, all of

whom come from within our system, and staff to meet the needs of our existing locations and to staff new locations.

We aim to hire warm,

friendly, motivated, caring, self-aware and intellectually curious individuals, who are excited and committed to championship performance,

remarkable and enriching hospitality, embodying our culture and actively growing themselves and our brand.

A sufficient number of qualified

individuals to fill these positions and qualifications may be in short supply in some communities.

Competition in these communities for

qualified staff is high and will likely require us to pay higher wages and provide greater benefits, especially if there is continued

improvement in regional or national economic conditions.

We place a heavy emphasis on the qualification and training of our personnel

and spend a significant amount of time and money on training our employees.

Any inability to recruit and retain qualified individuals

may result in higher turnover and increased labor costs, and could compromise the quality of our service, all of which could adversely

affect our business.

Any such inability could also delay the planned openings of new locations and could adversely impact our existing

Any such inability to retain or recruit qualified employees, increased costs of attracting qualified employees or delays in

location openings could harm our business.

Our expansion into

new domestic markets may present increased risks, which could affect our profitability.

We plan to open additional

company-operated Reborn 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 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 are subject to

the risks associated with leasing space subject to long-term non-cancelable lease and, in the event we chose to purchase real property

in the future, owning real estate.

Our leases generally have

initial multiple-year terms with renewal options.

Location leases provide for a specified annual rent, typically at a fixed rate with

annual increases and other escalators.

Generally, our leases are “net” leases, which require us to pay all the cost of insurance,

taxes, maintenance and utilities.

Negative publicity may

adversely affect us, regardless of whether the allegations are substantiated or whether we are held to be responsible.

In addition, the

negative impact of adverse publicity relating to one location may extend far beyond the location involved, to affect some or all of our

other locations, including our future franchise partner locations.

The risk of negative publicity is particularly great with respect to

our future franchise partner locations because we are limited in the manner in which we can regulate them, especially on a real-time basis,

and negative publicity from our future franchise partners’ locations may also significantly impact company-operated locations.

similar risk exists with respect to beverage businesses unrelated to us if customers mistakenly associate such unrelated businesses with

our operations.

Employee claims against us based on, among other things, wage and hour violations, discrimination, harassment or wrongful

termination may also create not only legal and financial liability but negative publicity that could adversely affect us and divert our

financial and management resources that would otherwise be used to benefit the future performance of our operations.

These types of employee

claims could also be asserted against us, on a co-employer theory, by employees of our future franchise partners.

A significant increase

in the number of these claims or an increase in the number of successful claims could harm our business.

Additionally, there has been a marked increase

in the use of social media platforms and similar devices, including blogs, social media websites and other forms of internet-based communications

that provide individuals with access to a broad audience of consumers and other interested persons.

The availability of information on

social media platforms is virtually immediate as is its impact.

Many social media platforms immediately publish the content their subscribers

and participants can post, often without filters or checks on accuracy of the content posted.

The opportunity for dissemination of information,

including inaccurate information, is seemingly limitless and readily available.

Information concerning us may be posted on such platforms

Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects

The harm may be immediate without affording us an opportunity for redress or correction.

Ultimately, the risks associated with any such

negative publicity or incorrect information cannot be completely eliminated or mitigated and may harm our business.

Our inability to identify, recruit and retain

qualified individuals for our locations could slow our growth and adversely impact our ability to operate.

Our success also depends substantially on the

contributions and abilities of our staff on whom we rely to give customers a superior experience and elevate our brand.

Our success depends

in part upon our ability to attract, motivate and retain a sufficient number of qualified operators, all of whom come from within our

system, and staff to meet the needs of our existing locations and to staff new locations.

We aim to hire warm, friendly, motivated, caring,

self-aware and intellectually curious individuals, who are excited and committed to championship performance, remarkable and enriching

hospitality, embodying our culture and actively growing themselves and our brand.

A sufficient number of qualified individuals to fill

these positions and qualifications may be in short supply in some communities.

Competition in these communities for qualified staff is

high and will likely require us to pay higher wages and provide greater benefits, especially if there is continued improvement in regional

or national economic conditions.

We place a heavy emphasis on the qualification and training of our personnel and spend a significant

amount of time and money on training our employees.

Any inability to recruit and retain qualified individuals may result in higher turnover

and increased labor costs, and could compromise the quality of our service, all of which could adversely affect our business.

inability could also delay the planned openings of new locations and could adversely impact our existing locations.

Any such inability

to retain or recruit qualified employees, increased costs of attracting qualified employees or delays in location openings could harm

our business.

Our expansion into new domestic markets

may present increased risks, which could affect our profitability.

We plan to open additional company-operated Reborn

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

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 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

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 are subject to the risks associated with

leasing space subject to long-term non-cancelable lease and, in the event we chose to purchase real property in the future, owning real

Our leases generally have initial multiple-year

terms with renewal options.

Location leases provide for a specified annual rent, typically at a fixed rate with annual increases and other

Generally, our leases are “net” leases, which require us to pay all the cost of insurance, taxes, maintenance

and utilities.

We generally cannot terminate these leases without incurring substantial costs.

Additional sites that

we lease are likely to be subject to similar long-term non-cancelable leases.

If an existing or future location is not profitable, and

we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things,

paying the base rent for the balance of the lease term.

In addition, as each of our leases expires, we may fail to negotiate renewals,

either on commercially acceptable terms or at all, which could cause us to close locations in desirable locations.

Also, should we choose to

purchase real property for various locations in the future, we would be subject to all the risks generally associated with owning real

estate, including changes in the investment climate for real estate, demographic trends and supply or demand for the use of the locations,

which may result from competition from similar restaurants in the area as well as strict, joint and several liability for environmental

contamination at or from the property, regardless of fault.

Our operating results

and growth strategies will be closely tied to the success of our future franchise partners and we will have limited control with respect

to their operations.

Additionally, our future franchise partners’ interests may conflict or diverge with our interests in the future,

which could have a negative impact on our business.

As we grow, we will depend

on the financial success and cooperation of our future franchise partners for our success.

Our future franchise partners are independent

business operators and are not our employees, and as such we have limited control over how our prospective franchise partners will run

their businesses, and their inability to operate successfully could adversely affect our operating results.

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 with our standards and requirements, such as quality, service and cleanliness, or may not hire

and train qualified location 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.

Our future franchise partners

may not be able to secure adequate financing to open or continue operating their Reborn Coffee locations.

If they incur too much debt

or if economic or sales trends deteriorate such that they are unable to repay existing debt, our franchise partners could experience

financial distress or even bankruptcy.

If a significant number of our future franchise partners were to become financially distressed,

it could harm our operating results through reduced royalty revenue, marketing fees, and proprietary product sales and the impact on

our profitability could be greater than the percentage decrease in these revenue streams.

While we are responsible

for ensuring the success of our entire system of locations and for taking a longer term view with respect to system improvements, our

future franchise partners will have individual business strategies and objectives, which might conflict with our interests.

franchise partners may from time to time disagree with us and our strategies and objectives regarding the business or our interpretation

of our respective rights and obligations under the franchise agreement and the terms and conditions of the franchise partner relationship.

This may lead to disputes with our prospective franchise partners and we expect such disputes to occur from time to time in the future.

Such disputes may result in legal action against us.

To the extent we have such disputes, the attention, time and financial resources

of our management and our future franchise partners will be diverted from our locations, which could harm our business even if we have

a successful outcome in the dispute.

Actions or omissions by

our future franchise partners in violation of various laws may be attributed to us or result in negative publicity that affects our overall

brand image, which may decrease consumer demand for our products.

Future franchise partners may engage in online activity via social

media or activity in their personal lives that negatively impacts public perception of our future franchise partners or our operations

or our brand as a whole.

This activity may negatively affect future franchise partners’ sales and in turn impact our revenue.

In addition, various state

and federal laws govern our relationship with our future franchise partners and our potential sale of a franchise.

A future franchise

partner and/or a government agency may bring legal action against us based on the franchisee/franchisor relationships that could result

in the award of damages to a future franchise partner and/or the imposition of fines or other penalties against us.

Our locations are

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

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

supply chain of coffee or other ingredients, coffee machines and other restaurant equipment or packaging could affect our ability to

produce or deliver our products and could negatively impact our business and profitability.

Any material interruption

in our supply chain, such as material interruption of the supply of coffee, dairy, coffee machines and other restaurant equipment or

packaging for our proprietary products due to the casualty loss of any of our roasting plant, interruptions in service by our third-party

logistic service providers or common carriers that ship goods within our distribution channels, trade restrictions, such as increased

tariffs or quotas, embargoes or customs restrictions, pandemics, social or labor unrest, natural disasters or political disputes and

military conflicts that cause a material disruption in our supply chain could have a negative material impact on our business and our

profitability.

Additionally, most of our

beverage and other products are sourced from a wide variety of domestic and international business partners and we rely on these suppliers

to provide high quality products and to comply with applicable laws.

Additional sites that we lease are likely

to be subject to similar long-term non-cancelable leases.

If an existing or future location is not profitable, and we decide to close

it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base

rent for the balance of the lease term.

In addition, as each of our leases expires, we may fail to negotiate renewals, either on commercially

acceptable terms or at all, which could cause us to close locations in desirable locations.

Also, should we choose to purchase real property

for various locations in the future, we would be subject to all the risks generally associated with owning real estate, including changes

in the investment climate for real estate, demographic trends and supply or demand for the use of the locations, which may result from

competition from similar restaurants in the area as well as strict, joint and several liability for environmental contamination at or

from the property, regardless of fault.

Our operating results and growth strategies

will be closely tied to the success of our future franchise partners and we will have limited control with respect to their operations.

Additionally, our future franchise partners’ interests may conflict or diverge with our interests in the future, which could have

a negative impact on our business.

As we grow, we will depend on the financial success

and cooperation of our future franchise partners for our success.

Our future franchise partners are independent business operators and

are not our employees, and as such we have limited control over how our prospective franchise partners will run their businesses, and

their inability to operate successfully could adversely affect our operating results.

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 with our standards and requirements, such as quality, service and cleanliness, or may not hire and train qualified location

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.

Our future franchise partners may not be able

to secure adequate financing to open or continue operating their Reborn Coffee locations.

If they incur too much debt or if economic or

sales trends deteriorate such that they are unable to repay existing debt, our franchise partners could experience financial distress

or even bankruptcy.

If a significant number of our future franchise partners were to become financially distressed, it could harm our

operating results through reduced royalty revenue, marketing fees, and proprietary product sales and the impact on our profitability could

be greater than the percentage decrease in these revenue streams.

While we are responsible for ensuring the success

of our entire system of locations and for taking a longer term view with respect to system improvements, our future franchise partners

will have individual business strategies and objectives, which might conflict with our interests.

Our future franchise partners may from

time to time disagree with us and our strategies and objectives regarding the business or our interpretation of our respective rights

and obligations under the franchise agreement and the terms and conditions of the franchise partner relationship.

This may lead to disputes

with our prospective franchise partners and we expect such disputes to occur from time to time in the future.

Such disputes may result

in legal action against us.

To the extent we have such disputes, the attention, time and financial resources of our management and our

future franchise partners will be diverted from our locations, which could harm our business even if we have a successful outcome in the

Actions or omissions by our future franchise partners

in violation of various laws may be attributed to us or result in negative publicity that affects our overall brand image, which may decrease

consumer demand for our products.

Future franchise partners may engage in online activity via social media or activity in their personal

lives that negatively impacts public perception of our future franchise partners or our operations or our brand as a whole.

This activity

may negatively affect future franchise partners’ sales and in turn impact our revenue.

In addition, various state and federal laws govern

our relationship with our future franchise partners and our potential sale of a franchise.

A future franchise partner and/or a government

agency may bring legal action against us based on the franchisee/franchisor relationships that could result in the award of damages to

a future franchise partner and/or the imposition of fines or other penalties against us.

Our locations are geographically concentrated

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

As of December 31, 2024, all of our company-operated

locations in the United States 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

Interruption of our supply chain of coffee

or other ingredients, coffee machines and other restaurant equipment or packaging could affect our ability to produce or deliver our products

and could negatively impact our business and profitability.

Any material interruption in our supply chain,

such as material interruption of the supply of coffee, dairy, coffee machines and other restaurant equipment or packaging for our proprietary

products due to the casualty loss of any of our roasting plant, interruptions in service by our third-party logistic service providers

or common carriers that ship goods within our distribution channels, trade restrictions, such as increased tariffs or quotas, embargoes

or customs restrictions, pandemics, social or labor unrest, natural disasters or political disputes and military conflicts that cause

a material disruption in our supply chain could have a negative material impact on our business and our profitability.

Additionally, most of our beverage and other products

are sourced from a wide variety of domestic and international business partners and we rely on these suppliers to provide high quality

products and to comply with applicable laws.

For certain products, we may rely very few suppliers.

these vendors or failures by our suppliers to meet our standards, provide products in a timely and efficient manner, or comply with applicable

laws is beyond our control and could have a material adverse effect on the Company.

Increases in the cost

of high-quality coffee beans or other commodities or decreases in the availability of high-quality coffee beans or other commodities

could have an adverse impact on our business and financial results.

The availability and prices

of coffee beans and other commodities are subject to significant volatility.

We purchase, roast and sell high-quality whole bean coffee

beans and related coffee products.

The supply and price of

coffee we purchase can also be affected by multiple factors in the producing countries, such as weather (including the potential effects

of climate change), natural disasters, crop disease, general increase in farm inputs and costs of production, inventory levels, political

and economic conditions and the actions of certain organizations and associations that have historically attempted to influence prices

of green coffee through agreements establishing export quotas or by restricting coffee supplies.

Speculative trading in coffee commodities

can also influence coffee prices.

Because of the significance of coffee beans to our operations, combined with our ability to only partially

mitigate future price risk through purchasing practices and hedging activities, increases in the cost of high-quality coffee beans could

have a material adverse impact on our profitability.

In addition, if we are not able to purchase sufficient quantities of green coffee

beans due to any of the above factors or to a worldwide or regional shortage, we may not be able to fulfill the demand for our coffee,

which could have a material adverse impact on our profitability.

We also purchase significant

amounts of dairy products, particularly milk, and non-dairy “milks” to support the needs of our locations.

Additionally, and

although less significant to our operations than coffee, other commodities, including but not limited to tea, syrups, and packaging material,

such as plastics and corrugation, are important to our operations.

Increases in the cost of such commodities may increase the cost of

our packing materials, or lack of availability, whether due to supply shortages, delays or interruptions in processing, or otherwise,

especially in international markets, could harm our business.

If we fail to offer

high-quality customer experience, our business and reputation will suffer.

Numerous factors may impact

a customer’s experience which may in turn impact the likelihood of such customer returning.

Those factors include service, convenience,

taste, price, quality, location of our locations and brand image.

In addition to providing high quality coffee, we empower our employees

to provide an enhanced customer experience.

Our staff put customer needs first and we give them the flexibility required to build genuine,

meaningful connections that keep our customers returning for more.

As we grow, it may be difficult for us to identify, recruit, train

and manage enough people with enough skill and talent to provide this enhanced customer experience.

If we fail to maintain

adequate operational and financial resources, particularly if we continue to grow rapidly, we may be unable to execute our business plan

or maintain high levels of service and customer satisfaction.

Our continuous growth and

expansion may place significant demands on our management and our operational and financial resources and in connection therewith, our

organizational structure is becoming more complex as we scale our operational, financial, and management controls, as well as our reporting

systems and procedures.

As we continue to grow, we may face challenges of integrating, developing, training, and motivating a rapidly

growing employee base in our various locations and maintaining our company culture across multiple offices and locations.

Certain members

of our management may not have previously worked together for an extended period of time, and some do not have prior experience managing

a public company, which may affect how they manage our growth.

If we fail to manage our anticipated growth and change in a manner that

preserves the key aspects of our corporate culture, the quality of our beverages and services may suffer, which could negatively affect

our brand and reputation and harm our ability to attract users, employees, and organizations.

To manage growth in our

operations and personnel, we will need to continue to grow and improve our operational, financial, and management controls and our reporting

systems and procedures.

We will require significant capital expenditures and the allocation of valuable management resources to grow

and change in these areas.

Our expansion has placed, and our expected future growth will continue to place, a significant strain on our

management, customer experience, research and development, sales and marketing, administrative, financial, and other resources.

In addition, as we expand

our business, it is important that we continue to maintain a high level of customer service and satisfaction.

As our customer base continues

to grow, we will need to expand our customer service and other personnel, which will require more complex management and systems.

we are not able to continue to provide high levels of customer service, our reputation, as well as our business could be harmed.

We are increasingly

dependent on information technology and our ability to process data in order to operate and sell our goods and services, and if we (or

our vendors) are unable to protect against software and hardware vulnerabilities, service interruptions, data corruption, cyber-based

attacks, ransomware or security breaches, or if we fail to comply with our commitments and assurances regarding the privacy and security

of such data, our operations could be disrupted, our ability to provide our goods and services could be interrupted, our reputation may

be harmed and we may be exposed to liability and loss of customers and business.

We rely on information technology

networks and systems and data processing (some of which are managed by third-party service providers such as Square and Xero) to market,

sell and deliver our products and services, to fulfill orders, to collect, receive, store, process, generate, use, transfer, disclose,

make accessible, protect, secure, dispose of and share (“Process” or “Processing”) personal information, confidential

or proprietary information, financial information and other information, to manage a variety of business processes and activities, for

financial reporting purposes, to operate our business, to process orders, for legal and marketing purposes and to comply with regulatory,

legal and tax requirements (“Business Functions”).

These information technology networks and systems, and the Processing they

perform, may be vulnerable to data security and privacy threats (cyber and otherwise).

Moreover, the risk of unauthorized circumvention

of our security measures or those of our third parties on whom we rely on has been heightened by advances in computer and software capabilities

and the increasing sophistication of hackers who employ complex techniques, including, without limitation, “phishing” or social

engineering incidents, ransomware, extortion, account takeover attacks, denial or degradation of service attacks and malware.

breaches experienced by other companies may also be leveraged against us.

For example, credential stuffing attacks are becoming increasingly

common and sophisticated actors can mask their attacks, making them increasingly difficult to identify and prevent.

We have technology

security initiatives, such as cyber liability insurance, and disaster recovery plans in place to mitigate our risk to these vulnerabilities,

but these measures may not be adequately designed or implemented to ensure that our operations are not disrupted or that data security

breaches do not occur.

If our information technology networks and systems or data processing suffers damage, security breaches, vulnerabilities,

disruption or shutdown, and we do not effectively resolve the issues in a timely manner, they could cause a material adverse impact to,

our Business Functions and our business, reputation and financial condition.

Hackers and data thieves

are increasingly sophisticated and operate large-scale and complex automated attacks, which may remain undetected until after they occur.

Despite our efforts to protect our information technology networks and systems, Processing and information, we may not be able to anticipate

or to implement effective preventive and remedial measures against all data security and privacy threats.

Our security measures may not

be adequate to prevent or detect service interruption, system failure, data loss or theft, or other material adverse consequences.

security solution, strategy or measures can address all possible security threats.

Our applications, systems, networks, software and physical

facilities could have material vulnerabilities, be breached or personal or confidential information could be otherwise compromised due

to employee error or malfeasance, if, for example, third parties attempt to fraudulently induce our personnel or our customers to disclose

information or user names and/or passwords, or otherwise compromise the security of our networks, systems and/or physical facilities.

We cannot be certain that we will be able to address any such vulnerabilities, in whole or part, and there may be delays in developing

and deploying patches and other remedial measures to adequately address vulnerabilities, and taking such remedial steps could adversely

impact or disrupt our operations.

We expect similar issues to arise in the future as our products and services are more widely adopted,

and as we continue to expand the features and functionality of existing products and services and introduce new products and services.

An actual or perceived breach

of our security systems or those of our third-party service providers may require notification under applicable data privacy regulations

or for customer relations or publicity purposes, which could result in reputational harm, costly litigation (including class action litigation),

material contract breaches, liability, settlement costs, loss of sales, regulatory scrutiny, actions or investigations, a loss of confidence

in our business, systems and Processing, a diversion of management’s time and attention, and significant fines, penalties, assessments,

The loss of these vendors or failures

by our suppliers to meet our standards, provide products in a timely and efficient manner, or comply with applicable laws is beyond our

control and could have a material adverse effect on the Company.

Increases in the cost of high-quality coffee

beans or other commodities or decreases in the availability of high-quality coffee beans or other commodities could have an adverse impact

on our business and financial results.

The availability and prices of coffee beans and

other commodities are subject to significant volatility.

We purchase, roast and sell high-quality whole bean coffee beans and related

coffee products.

The supply and price of coffee we purchase can

also be affected by multiple factors in the producing countries, such as weather (including the potential effects of climate change),

natural disasters, crop disease, general increase in farm inputs and costs of production, inventory levels, political and economic conditions

and the actions of certain organizations and associations that have historically attempted to influence prices of green coffee through

agreements establishing export quotas or by restricting coffee supplies.

Speculative trading in coffee commodities can also influence

coffee prices.

Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future

price risk through purchasing practices and hedging activities, increases in the cost of high-quality coffee beans could have a material

adverse impact on our profitability.

In addition, if we are not able to purchase sufficient quantities of green coffee beans due to any

of the above factors or to a worldwide or regional shortage, we may not be able to fulfill the demand for our coffee, which could have

a material adverse impact on our profitability.

We also purchase significant amounts of dairy

products, particularly milk, and non-dairy “milks” to support the needs of our locations.

Additionally, and although less

significant to our operations than coffee, other commodities, including but not limited to tea, syrups, and packaging material, such as

plastics and corrugation, are important to our operations.

Increases in the cost of such commodities may increase the cost of our packing

materials, or lack of availability, whether due to supply shortages, delays or interruptions in processing, or otherwise, especially in

international markets, could harm our business.

Changes in U.S.

and international

trade policies, including the export and import controls and laws, may adversely impact our business and operating results.

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

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.

Rising political tensions could reduce trade volume,

investment, technological exchange and other economic activities between major international economies, resulting in a material adverse

effect on global economic conditions and the stability of global financial markets.

Additionally, the resulting environment of tariffs,

retaliatory trade or other practices or additional trade restrictions or barriers, if implemented on a broader range of products or raw

materials, could harm our ability to obtain necessary raw materials and product components or sell our products and services at prices

customers are willing to pay, which could have a material adverse effect on our business, prospects, results of operations, and cash flows.

Relatedly, trade policies could lead to an increasing number of competitors entering the United States, thereby creating more competition.

If we fail to offer high-quality customer

experience, our business and reputation will suffer.

Numerous factors may impact a customer’s

experience which may in turn impact the likelihood of such customer returning.

Those factors include service, convenience, taste, price,

quality, location of our locations and brand image.

In addition to providing high quality coffee, we empower our employees to provide

an enhanced customer experience.

Our staff put customer needs first and we give them the flexibility required to build genuine, meaningful

connections that keep our customers returning for more.

As we grow, it may be difficult for us to identify, recruit, train and manage

enough people with enough skill and talent to provide this enhanced customer experience.

If we fail to maintain adequate operational

and financial resources, particularly if we continue to grow rapidly, we may be unable to execute our business plan or maintain high levels

of service and customer satisfaction.

Our continuous growth and expansion may place

significant demands on our management and our operational and financial resources and in connection therewith, our organizational structure

is becoming more complex as we scale our operational, financial, and management controls, as well as our reporting systems and procedures.

As we continue to grow, we may face challenges of integrating, developing, training, and motivating a rapidly growing employee base in

our various locations and maintaining our company culture across multiple offices and locations.

Certain members of our management may

not have previously worked together for an extended period of time, and some do not have prior experience managing a public company, which

may affect how they manage our growth.

If we fail to manage our anticipated growth and change in a manner that preserves the key aspects

of our corporate culture, the quality of our beverages and services may suffer, which could negatively affect our brand and reputation

and harm our ability to attract users, employees, and organizations.

To manage growth in our operations and personnel,

we will need to continue to grow and improve our operational, financial, and management controls and our reporting systems and procedures.

We will require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas.

Our expansion has placed, and our expected future growth will continue to place, a significant strain on our management, customer experience,

research and development, sales and marketing, administrative, financial, and other resources.

In addition, as we expand our business, it is

important that we continue to maintain a high level of customer service and satisfaction.

As our customer base continues to grow, we will

need to expand our customer service and other personnel, which will require more complex management and systems.

If we are not able to

continue to provide high levels of customer service, our reputation, as well as our business could be harmed.

We are increasingly dependent on information

technology and our ability to process data in order to operate and sell our goods and services, and if we (or our vendors) are unable

to protect against software and hardware vulnerabilities, service interruptions, data corruption, cyber-based attacks, ransomware or security

breaches, or if we fail to comply with our commitments and assurances regarding the privacy and security of such data, our operations

could be disrupted, our ability to provide our goods and services could be interrupted, our reputation may be harmed and we may be exposed

to liability and loss of customers and business.

We rely on information technology networks and

systems and data processing (some of which are managed by third-party service providers such as Square and Xero) to market, sell and deliver

our products and services, to fulfill orders, to collect, receive, store, process, generate, use, transfer, disclose, make accessible,

protect, secure, dispose of and share (“Process” or “Processing”) personal information, confidential or proprietary

information, financial information and other information, to manage a variety of business processes and activities, for financial reporting

purposes, to operate our business, to process orders, for legal and marketing purposes and to comply with regulatory, legal and tax requirements

(“Business Functions”).

These information technology networks and systems, and the Processing they perform, may be vulnerable

to data security and privacy threats (cyber and otherwise).

Moreover, the risk of unauthorized circumvention of our security measures

or those of our third parties on whom we rely on has been heightened by advances in computer and software capabilities and the increasing

sophistication of hackers who employ complex techniques, including, without limitation, “phishing” or social engineering incidents,

ransomware, extortion, account takeover attacks, denial or degradation of service attacks and malware.

Further, breaches experienced by

other companies may also be leveraged against us.

For example, credential stuffing attacks are becoming increasingly common and sophisticated

actors can mask their attacks, making them increasingly difficult to identify and prevent.

We have technology security initiatives, such

as cyber liability insurance, and disaster recovery plans in place to mitigate our risk to these vulnerabilities, but these measures may

not be adequately designed or implemented to ensure that our operations are not disrupted or that data security breaches do not occur.

If our information technology networks and systems or data processing suffers damage, security breaches, vulnerabilities, disruption or

shutdown, and we do not effectively resolve the issues in a timely manner, they could cause a material adverse impact to, our Business

Functions and our business, reputation and financial condition.

Hackers and data thieves are increasingly sophisticated

and operate large-scale and complex automated attacks, which may remain undetected until after they occur.

Despite our efforts to protect

our information technology networks and systems, Processing and information, we may not be able to anticipate or to implement effective

preventive and remedial measures against all data security and privacy threats.

Our security measures may not be adequate to prevent or

detect service interruption, system failure, data loss or theft, or other material adverse consequences.

No security solution, strategy

or measures can address all possible security threats.

Our applications, systems, networks, software and physical facilities could have

material vulnerabilities, be breached or personal or confidential information could be otherwise compromised due to employee error or

malfeasance, if, for example, third parties attempt to fraudulently induce our personnel or our customers to disclose information or user

names and/or passwords, or otherwise compromise the security of our networks, systems and/or physical facilities.

We cannot be certain

that we will be able to address any such vulnerabilities, in whole or part, and there may be delays in developing and deploying patches

and other remedial measures to adequately address vulnerabilities, and taking such remedial steps could adversely impact or disrupt our

We expect similar issues to arise in the future as our products and services are more widely adopted, and as we continue to

expand the features and functionality of existing products and services and introduce new products and services.

An actual or perceived breach of our security

systems or those of our third-party service providers may require notification under applicable data privacy regulations or for customer

relations or publicity purposes, which could result in reputational harm, costly litigation (including class action litigation), material

contract breaches, liability, settlement costs, loss of sales, regulatory scrutiny, actions or investigations, a loss of confidence in

our business, systems and Processing, a diversion of management’s time and attention, and significant fines, penalties, assessments,

fees and expenses.

The costs to respond to

a security breach and/or to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address

these problems may not be successful.

The costs to respond to a security breach and/or

to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address these problems may not be

These costs include, but are not limited to, retaining the services of cybersecurity providers;

compliance costs arising out of existing and future cybersecurity, data protection and privacy laws and regulations;

and costs related

to maintaining redundant networks, data backups and other damage-mitigation measures.

We could be required to fundamentally change our

business activities and practices in response to a security breach or related regulatory actions or litigation, which could have an adverse

effect on our business.

Additionally, most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities,

and others of security breaches involving certain types of data.

Such mandatory disclosures are costly, could lead to negative publicity,

may cause our customers to lose confidence in the effectiveness of our security measures and require us to expend significant capital

and other resources to respond to and/or alleviate problems caused by the actual or perceived security breach.

We may not have adequate

insurance coverage for handling security incidents or breaches, including fines, judgments, settlements, penalties, costs, attorney fees

and other impacts that arise out of incidents or breaches.

If the impacts of a security incident or breach, or the successful assertion

of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies

(including premium increases or the imposition of large deductible or co-insurance requirements), it could harm our business.

we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or that our insurers will not

deny coverage as to all or part of any future claim or loss.

Moreover, our privacy risks are likely to increase as we continue to expand,

grow our customer base, and process, store, and transmit increasingly large amounts of personal and/or sensitive data.

Pandemics or disease

outbreaks such as the COVID-19 pandemic have had, and may continue to have, an effect on our business and results of operations.

Pandemics or disease outbreaks

such as the COVID-19 pandemic have impacted and are likely to continue to impact customer traffic at our Reborn 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

COVID-19 was officially declared a global pandemic by the World Health Organization in March 2020, and the virus, including the

continued spread 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.

Such viruses may be transmitted

through human contact and airborne delivery, and the risk of contracting viruses could continue to cause employees or customers to avoid

gathering in public places, which has had, and could further have, adverse effects on our customer traffic or the ability to adequately

staff locations.

We have been adversely affected when government authorities have imposed and continue to impose restrictions on public

gatherings, human interactions, operations of restaurants or mandatory closures, seek voluntary closures, restrict hours of operations

or impose curfews, restrict the import or export of products or if suppliers issue mass recalls of products.

Additional regulation or

requirements with respect to the compensation of our employees could also have an adverse effect on our business.

Even if such measures

are not implemented and a virus or other disease does not spread significantly within a specific area, the perceived risk of infection

or health risk in such area may adversely affect our business, liquidity, financial condition and results of operations.

compliance costs arising out

of existing and future cybersecurity, data protection and privacy laws and regulations;

and costs related to maintaining redundant networks,

data backups and other damage-mitigation measures.

We could be required to fundamentally change our business activities and practices

in response to a security breach or related regulatory actions or litigation, which could have an adverse effect on our business.

Additionally,

different jurisdictions have seen varying levels of outbreaks or resurgences in outbreaks, and corresponding differences in government

responses, which may make it difficult for us to plan or forecast an appropriate response.

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.

The COVID-19 pandemic and

mitigation measures have also had an adverse impact on global economic conditions, which have had an adverse effect on our business and

financial condition.

Our sales and operating results may be affected by uncertain or changing economic and market conditions arising

in connection with and in response to the COVID-19 pandemic, including prolonged periods of high unemployment, inflation, deflation,

prolonged weak consumer demand, a decrease in consumer discretionary spending, political instability or other changes.

The significance

of the operational and financial impact to us will depend on how long and widespread the disruptions caused by the COVID-19 pandemic,

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

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 the COVID-19 pandemic, these efforts may not be effective,

and any protracted economic downturn will likely limit the effectiveness of our efforts.

Accordingly, it is not possible for us to predict

the duration and extent to which this will affect our business at this time.

Risks Related to Our

Our success depends

substantially on the value of our brand and failure to preserve its value could have a negative impact on our financial results.

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.

most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities, and others of security breaches

involving certain types of data.

Such mandatory disclosures are costly, could lead to negative publicity, may cause our customers to lose

confidence in the effectiveness of our security measures and require us to expend significant capital and other resources to respond to

and/or alleviate problems caused by the actual or perceived security breach.

We may not have adequate insurance coverage for

handling security incidents or breaches, including fines, judgments, settlements, penalties, costs, attorney fees and other impacts that

arise out of incidents or breaches.

If the impacts of a security incident or breach, or the successful assertion of one or more large

claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases

or the imposition of large deductible or co-insurance requirements), it could harm our business.

In addition, we cannot be sure that our

existing insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to all or

part of any future claim or loss.

Moreover, our privacy risks are likely to increase as we continue to expand, grow our customer base,

and process, store, and transmit increasingly large amounts of personal and/or sensitive data.

Pandemics or disease outbreaks such as the

COVID-19 pandemic have had, and may continue to have, an effect on our business and results of operations.

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.

was officially declared a global pandemic by the World Health Organization in March 2020, and the virus, including the continued spread

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.

Such viruses may be transmitted through human

contact and airborne delivery, and the risk of contracting viruses could continue to cause employees or customers to avoid gathering in

public places, which has had, and could further have, adverse effects on our customer traffic or the ability to adequately staff locations.

We have been adversely affected when government authorities have imposed and continue to impose restrictions on public gatherings, human

interactions, operations of restaurants or mandatory closures, seek voluntary closures, restrict hours of operations or impose curfews,

restrict the import or export of products or if suppliers issue mass recalls of products.

Additional regulation or requirements with respect

to the compensation of our employees could also have an adverse effect on our business.

Even if such measures are not implemented and

a virus or other disease does not spread significantly within a specific area, the perceived risk of infection or health risk in such

area may adversely affect our business, liquidity, financial condition and results of operations.

Additionally, different jurisdictions

have seen varying levels of outbreaks or resurgences in outbreaks, and corresponding differences in government responses, which may make

it difficult for us to plan or forecast an appropriate response.

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.

The COVID-19 pandemic and mitigation measures

have also had an adverse impact on global economic conditions, which have had an adverse effect on our business and financial condition.

Our sales and operating results may be affected by uncertain or changing economic and market conditions arising in connection with and

in response to the COVID-19 pandemic, including prolonged periods of high unemployment, inflation, deflation, prolonged weak consumer

demand, a decrease in consumer discretionary spending, political instability or other changes.

The significance of the operational and

financial impact to us will depend on how long and widespread the disruptions caused by the COVID-19 pandemic, and the corresponding response

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

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 the COVID-19 pandemic, these efforts may not be effective, and any protracted

economic downturn will likely limit the effectiveness of our efforts.

Accordingly, it is not possible for us to predict the duration and

extent to which this will affect our business at this time.

Risks Related to Our Brand

Our success depends substantially on the

value of our brand and failure to preserve its value could have a negative impact on our financial results.

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 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 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

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.

To be successful in the future, particularly

outside of the Southern California region of the United States where the Reborn Coffee 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.

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

7 unchanged sentences

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 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 Reborn action or inaction or brand imagery, a real or perceived failure of corporate governance,

or misconduct by 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, our Reborn brand and/or our products and reduce consumer demand for our products, which would likely result in lower

revenue and profits.

There has been an increased

public focus, including from the United States federal and state governments, on environmental sustainability matters, including with

respect to climate change, greenhouse gases, water resources, packaging and waste, animal health and welfare, deforestation and land

We endeavor to conduct our business in a manner which reflects our priority of sustainable stewardship, including with respect to

environmental sustainability matters, and we are working to manage the risks and costs to us, our future franchise partners and our supply

chain associated with these types of environmental sustainability matters.

In addition, as the result of such heightened public focus

on environmental sustainability matters, we may face increased pressure to provide expanded disclosure, make or expand commitments, set

targets, or establish additional goals and take actions to meet such goals, in connection with such environmental sustainability matters.

These matters and our efforts to address them could expose us to market, operational, reputational and execution costs or risks.

We may not be able

to adequately protect our intellectual property, including trademarks, trade names, and service marks, which, in turn, could harm the

value of our brand and adversely affect our business.

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

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 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 Reborn action or inaction or brand imagery, a real or perceived failure of corporate governance, or misconduct by

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, our Reborn brand and/or our products and reduce consumer demand for our products, which would likely result in lower revenue and profits.

There has been an increased public focus, including

from the United States federal and state governments, on environmental sustainability matters, including with respect to climate change,

greenhouse gases, water resources, packaging and waste, animal health and welfare, deforestation and land use.

We endeavor to conduct

our business in a manner which reflects our priority of sustainable stewardship, including with respect to environmental sustainability

matters, and we are working to manage the risks and costs to us, our future franchise partners and our supply chain associated with these

types of environmental sustainability matters.

In addition, as the result of such heightened public focus on environmental sustainability

matters, we may face increased pressure to provide expanded disclosure, make or expand commitments, set targets, or establish additional

goals and take actions to meet such goals, in connection with such environmental sustainability matters.

These matters and our efforts

to address them could expose us to market, operational, reputational and execution costs or risks.

We may not be able to adequately protect

our intellectual property, including trademarks, trade names, and service marks, which, in turn, could harm the value of our brand and

adversely affect our business.

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.

The success of our business

depends on our continued ability to use our existing trademarks, trade names, and service marks to increase brand awareness and further

develop our brand as we expand into new markets.

We have registered and applied to register trademarks and service marks in the United

States and abroad.

We may not be able to adequately protect our trademarks and service marks, and our competitors and others may successfully

challenge the validity and/or enforceability of our trademarks and service marks and other intellectual property.

There can also be no

assurance that pending or future U.S.

trademark applications will be approved in a timely manner or at all, or that such registrations

will effectively protect our brand names and trademarks.

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, 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.

We may also from time to

time be required to institute litigation to enforce our trademarks, service marks and other intellectual property.

Such litigation could

result in substantial costs and diversion of resources and could negatively affect our sales, profitability and prospects regardless

of whether we can successfully enforce our rights.

Third parties may oppose

our trademark and service mark applications, or otherwise challenge our use of the trademarks and service marks.

In the event that these

or other intellectual property rights are successfully challenged, we could be forced to rebrand our products, which would result in

loss of brand recognition and would require us to devote resources to advertising and marketing new brands.

Third parties may also assert

that we infringe, misappropriate or otherwise violate their intellectual property and may sue us for intellectual property infringement.

Even if we are successful in these proceedings, we may incur substantial costs, and the time and attention of our management and other

personnel may be diverted in pursuing these proceedings.

If a court finds that we infringe a third party’s intellectual property,

we may be required to pay damages and/or be subject to an injunction.

With respect to any third party intellectual property that we use

or wish to use in our business (whether or not asserted against us in litigation), we may not be able to enter into licensing or other

arrangements with the owner of such intellectual property at a reasonable cost or on reasonable terms.

Food safety and quality

concerns may negatively impact our brand, business and profitability, our internal operational controls and standards may not always

be met and our employees may not always act professionally, responsibly and in our and our customers’ best interests.

instances or reports, whether true or not, of food and/or beverage-borne illness could reduce our sales.

Incidents or reports, whether

true or not, of food-borne or water-borne illness or other food safety issues, food contamination or tampering, employee hygiene and

cleanliness failures or improper employee conduct at our locations could lead to product liability or other claims.

Such incidents or

reports could negatively affect our brand and reputation as well as our business, revenue and profits.

Similar incidents or reports occurring

at coffee and convenience locations unrelated to us could likewise create negative publicity, which could negatively impact consumer

behavior towards us.

We cannot guarantee to customers

that our internal controls and training will be fully effective in preventing all food-borne illnesses.

New illnesses resistant to our

current precautions may develop in the future, or diseases with long incubation periods could arise, that could give rise to claims or

allegations on a retroactive basis.

One or more instances of food-borne illness in one of our company-operated or future franchised locations

could negatively affect sales at all our locations if highly publicized.

This risk exists even if it were later determined that the illness

was wrongly attributed to one of our locations.

Additionally, even if food-borne illnesses were not identified at our locations, our

sales could be adversely affected if instances of food-borne illnesses at other coffee and beverage chains were highly publicized.

If we or our future

franchise partners are unable to protect our customers’ credit and debit card data or confidential information in connection with

process the same or confidential employee information, we could be exposed to data loss, litigation, liability and reputational damage.

Our business requires the

collection, transmission and retention of large volumes of customer and employee data, including credit and debit card numbers and other

personally identifiable information, in various information technology systems that we maintain and in those maintained by third parties

with whom we contract to provide services.

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.

The success of our business depends on our continued

ability to use our existing trademarks, trade names, and service marks to increase brand awareness and further develop our brand as we

expand into new markets.

We have registered and applied to register trademarks and service marks in the United States and abroad.

not be able to adequately protect our trademarks and service marks, and our competitors and others may successfully challenge the validity

and/or enforceability of our trademarks and service marks and other intellectual property.

There can also be no assurance that pending

or future U.S.

trademark applications will be approved in a timely manner or at all, or that such registrations will effectively protect

our brand names and trademarks.

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, 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.

We may also from time to time be required to institute

litigation to enforce our trademarks, service marks and other intellectual property.

Such litigation could result in substantial costs

and diversion of resources and could negatively affect our sales, profitability and prospects regardless of whether we can successfully

enforce our rights.

Third parties may oppose our trademark and service

mark applications, or otherwise challenge our use of the trademarks and service marks.

In the event that these or other intellectual property

rights are successfully challenged, we could be forced to rebrand our products, which would result in loss of brand recognition and would

require us to devote resources to advertising and marketing new brands.

Third parties may also assert that we infringe, misappropriate

or otherwise violate their intellectual property and may sue us for intellectual property infringement.

Even if we are successful in these

proceedings, we may incur substantial costs, and the time and attention of our management and other personnel may be diverted in pursuing

these proceedings.

If a court finds that we infringe a third party’s intellectual property, we may be required to pay damages and/or

be subject to an injunction.

With respect to any third party intellectual property that we use or wish to use in our business (whether

or not asserted against us in litigation), we may not be able to enter into licensing or other arrangements with the owner of such intellectual

property at a reasonable cost or on reasonable terms.

Food safety and quality concerns may negatively

impact our brand, business and profitability, our internal operational controls and standards may not always be met and our employees

may not always act professionally, responsibly and in our and our customers’ best interests.

Any possible instances or reports,

whether true or not, of food and/or beverage-borne illness could reduce our sales.

Incidents or reports, whether true or not, of

food-borne or water-borne illness or other food safety issues, food contamination or tampering, employee hygiene and cleanliness failures

or improper employee conduct at our locations could lead to product liability or other claims.

Such incidents or reports could negatively

affect our brand and reputation as well as our business, revenue and profits.

Similar incidents or reports occurring at coffee and convenience

locations unrelated to us could likewise create negative publicity, which could negatively impact consumer behavior towards us.

We cannot guarantee to customers that our internal

controls and training will be fully effective in preventing all food-borne illnesses.

New illnesses resistant to our current precautions

may develop in the future, or diseases with long incubation periods could arise, that could give rise to claims or allegations on a retroactive

One or more instances of food-borne illness in one of our company-operated or future franchised locations could negatively affect

sales at all our locations if highly publicized.

This risk exists even if it were later determined that the illness was wrongly attributed

to one of our locations.

Additionally, even if food-borne illnesses were not identified at our locations, our sales could be adversely

affected if instances of food-borne illnesses at other coffee and beverage chains were highly publicized.

If we or our future franchise partners are

unable to protect our customers’ credit and debit card data or confidential information in connection with process the same or confidential

employee information, we could be exposed to data loss, litigation, liability and reputational damage.

Our business requires the collection, transmission

and retention of large volumes of customer and employee data, including credit and debit card numbers and other personally identifiable

information, in various information technology systems that we maintain and in those maintained by third parties with whom we contract

to provide services.

The integrity and protection of that customer and employee data is critical to us.

our customers and employees have a high expectation that we and our service providers will adequately protect their personal information.

We currently accept payments

using credit cards and debit cards and, as such, are subject to payment card association operating rules and certification requirements,

including the Payment Card Industry Data Security Standard (“PCI-DSS”), which is a security standard applicable to companies

like ours that collect, store or transmit certain data regarding credit and debit cards, holders and transactions.

We are also subject

to rules governing electronic funds transfers.

Such rules could change or be reinterpreted to make it difficult or impossible for us

If we (or a third party processing payment card transactions on our behalf) suffer a security breach affecting payment card

information, we may have to pay onerous and significant fines, penalties and assessments arising out of the major card brands’

rules and regulations, contractual indemnifications or liability contained in merchant agreements and similar contracts, and we may lose

our ability to accept payment cards for payment for our goods and services, which could materially impact our operations and financial

The information, security

and privacy requirements imposed by governmental regulation are increasingly demanding.

Our systems may not be able to satisfy these

changing requirements and customer and employee expectations or may require significant additional investments or time in order to do

Efforts to hack or breach security measures, failures of systems or software to operate as designed or intended, viruses, operator

error or inadvertent releases of data all threaten our and our service providers’ information systems and records.

the security of our information technology systems or those of our service providers could lead to an interruption in the operation of

our systems, resulting in operational inefficiencies and a loss of profits.

Additionally, a significant theft, loss or misappropriation

of, or access to, customers’ or other proprietary data or other breach of our information technology systems could result in fines,

legal claims or proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information

security laws, which could disrupt our operations, damage our reputation and expose us to claims from customers and employees, any of

which could harm our business.

Risks Related to People

Changes in the availability

of and the cost of labor could harm our business.

Our business could be harmed

by increases in labor costs, including those increases triggered by regulatory actions regarding wages, scheduling and benefits, increased

health care and workers’ compensation insurance costs, which, in a retail business such as ours, are our most significant costs.

In particular, our baristas are paid wage rates at or based on the applicable federal or state minimum wage, and increases in the applicable

minimum wage will increase labor costs.

From time to time, legislative proposals are made to increase the minimum wage at the federal

or state level.

As federal, state or other applicable minimum wage rates increase, we may be required to increase not only the wage rates

of minimum wage baristas or other employees, but also the wages paid to other hourly employees.

We may not choose to increase prices

in order to pass future increased labor costs on to customers, in which case our margins would be negatively affected.

If we do not increase

prices to cover increased labor costs, the higher prices could result in lower revenue, which may also reduce margins.

Furthermore, the successful

operation of our business depends upon our, and our future franchise partners’, ability to attract, motivate and retain a sufficient

number of qualified employees.

From time to time, there may be a shortage of qualified employees in certain of the communities in which

we operate or expand to.

Shortages may make it increasingly difficult and expensive to attract, train and retain the services of a satisfactory

number of qualified employees, which could delay the planned openings of new company-operated and future franchised locations and adversely

impact the operations and profitability of existing locations.

Furthermore, competition for qualified employees, particularly in markets

where such shortages exist, could require us to pay higher wages, which could result in higher labor costs.

Accordingly, if we and our

future franchise partners are unable to recruit and retain sufficiently qualified individuals, our business could be harmed.

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, combined with the challenging conditions

due to the COVID-19 pandemic, may be insufficient to attract and retain the best talent.

We depend on our executive

officers and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled

Further, our customers and employees

have a high expectation that we and our service providers will adequately protect their personal information.

We currently accept payments using credit cards

and debit cards and, as such, are subject to payment card association operating rules and certification requirements, including the Payment

Card Industry Data Security Standard (“PCI-DSS”), which is a security standard applicable to companies like ours that collect,

store or transmit certain data regarding credit and debit cards, holders and transactions.

We are also subject to rules governing electronic

funds transfers.

Such rules could change or be reinterpreted to make it difficult or impossible for us to comply.

If we (or a third party

processing payment card transactions on our behalf) suffer a security breach affecting payment card information, we may have to pay onerous

and significant fines, penalties and assessments arising out of the major card brands’ rules and regulations, contractual indemnifications

or liability contained in merchant agreements and similar contracts, and we may lose our ability to accept payment cards for payment for

our goods and services, which could materially impact our operations and financial performance.

The information, security and privacy requirements

imposed by governmental regulation are increasingly demanding.

Our systems may not be able to satisfy these changing requirements and

customer and employee expectations or may require significant additional investments or time in order to do so.

Efforts to hack or breach

security measures, failures of systems or software to operate as designed or intended, viruses, operator error or inadvertent releases

of data all threaten our and our service providers’ information systems and records.

A breach in the security of our information

technology systems or those of our service providers could lead to an interruption in the operation of our systems, resulting in operational

inefficiencies and a loss of profits.

Additionally, a significant theft, loss or misappropriation of, or access to, customers’ or

other proprietary data or other breach of our information technology systems could result in fines, legal claims or proceedings, including

regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, which could disrupt

our operations, damage our reputation and expose us to claims from customers and employees, any of which could harm our business.

Risks Related to People and Culture

Changes in the availability of and the cost

of labor could harm our business.

Our business could be harmed by increases in labor

costs, including those increases triggered by regulatory actions regarding wages, scheduling and benefits, increased health care and workers’

compensation insurance costs, which, in a retail business such as ours, are our most significant costs.

In particular, our baristas are

paid wage rates at or based on the applicable federal or state minimum wage, and increases in the applicable minimum wage will increase

From time to time, legislative proposals are made to increase the minimum wage at the federal or state level.

state or other applicable minimum wage rates increase, we may be required to increase not only the wage rates of minimum wage baristas

or other employees, but also the wages paid to other hourly employees.

We may not choose to increase prices in order to pass future increased

labor costs on to customers, in which case our margins would be negatively affected.

If we do not increase prices to cover increased labor

costs, the higher prices could result in lower revenue, which may also reduce margins.

Furthermore, the successful operation of our business

depends upon our, and our future franchise partners’, ability to attract, motivate and retain a sufficient number of qualified employees.

From time to time, there may be a shortage of qualified employees in certain of the communities in which we operate or expand to.

may make it increasingly difficult and expensive to attract, train and retain the services of a satisfactory number of qualified employees,

which could delay the planned openings of new company-operated and future franchised locations and adversely impact the operations and

profitability of existing locations.

Furthermore, competition for qualified employees, particularly in markets where such shortages exist,

could require us to pay higher wages, which could result in higher labor costs.

Accordingly, if we and our future franchise partners are

unable to recruit and retain sufficiently qualified individuals, our business could be harmed.

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, combined with the challenging conditions due to the COVID-19 pandemic,

may be insufficient to attract and retain the best talent.

We depend on our executive officers and

other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees

could harm our business.

Our success depends largely upon the continued

services of our executive officers and other key employees.

We rely on our leadership team in the areas of marketing, sales, customer

experience, and selling, general and administrative.

From time to time, there may be changes in our executive management team resulting

from the hiring or departure of executives, which could disrupt our business.

The loss of one or more of our executive officers or key

employees could harm our business.

Our success depends largely

upon the continued services of our executive officers and other key employees.

We rely on our leadership team in the areas of marketing,

sales, customer experience, and selling, general and administrative.

From time to time, there may be changes in our executive management

team resulting from the hiring or departure of executives, which could disrupt our business.

The loss of one or more of our executive

officers or key employees could harm our business.

Changes in our executive management team may also cause disruptions in, and harm to,

Changes in our executive management team may also cause disruptions in, and harm to, our business.

Reborn Coffee continues to be led by our Founder,

Jay Kim, who plays an important role in driving our culture, determining the strategy, and executing against that strategy across the

Kim’s services became unavailable to Reborn Coffee 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.

Our culture has contributed to our success,

and if we cannot maintain this culture as we grow, we could lose the high employee engagement fostered by our culture, which could harm

our business.

Reborn continues to be led

by our Founder, Jay Kim, who plays an important role in driving our culture, determining the strategy, and executing against that strategy

across the company.

Kim’s services became unavailable to Reborn 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.

Our culture has contributed

to our success, and if we cannot maintain this culture as we grow, we could lose the high employee engagement fostered by our culture,

which could harm our business.

At Reborn Coffee, we believe

our people-first culture is a critical component of our success and customer loyalty.

We have invested substantial time and resources

in developing pathways for our employees to create their own compelling future, which we believe has fostered the positive, people-first

culture that defines our organization and is enjoyed by our customers.

We have built out our leadership team with an expectation of protecting

this culture, an emphasis on shared values and a commitment to diversity and inclusion.

As we continue to develop the infrastructure

to support our growth, we will need to maintain our culture among a larger number of employees dispersed in various geographic regions.

Any failure to preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel,

and loss of customer loyalty.

Unionization activities

may disrupt our operations and affect our profitability.

Although none of our employees

are currently covered under collective bargaining agreements, our employees may elect to be represented by labor unions in the future.

If a significant number of our employees were to become unionized and collective bargaining agreement terms were significantly different

from our current compensation arrangements, it could adversely affect our business, financial condition or results of operations.

addition, a labor dispute involving some or all of our employees may harm our reputation, disrupt our operations and reduce our revenue,

and resolution of disputes may increase our costs.

Risks Related to Regulation

and Litigation

Changes in statutory,

regulatory, accounting, and other legal requirements, including changes in accounting principles generally accepted in the United States,

could potentially impact our operating and financial results.

We are subject to numerous

statutory, regulatory and legal requirements.

Our operating results could be negatively impacted by developments in these areas due to

the costs of compliance in addition to possible government penalties and litigation in the event of deemed noncompliance.

the regulatory environment in the area of food safety, privacy and information security, wage and hour laws, among others, could potentially

impact our operations and financial results.

GAAP is subject to interpretation

by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC, and various bodies formed

to promulgate and interpret appropriate accounting principles.

A change in these principles or interpretations could have a significant

effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.

Moreover, while we believe

that we maintain insurance customary for businesses of our size and type, there are types of losses we may incur that cannot be insured

against or that we believe are not economically reasonable to insure.

At Reborn Coffee, we believe our people-first

culture is a critical component of our success and customer loyalty.

We have invested substantial time and resources in developing pathways

for our employees to create their own compelling future, which we believe has fostered the positive, people-first culture that defines

our organization and is enjoyed by our customers.

We have built out our leadership team with an expectation of protecting this culture,

an emphasis on shared values and a commitment to diversity and inclusion.

As we continue to develop the infrastructure to support our

growth, we will need to maintain our culture among a larger number of employees dispersed in various geographic regions.

Any failure to

preserve our culture could negatively affect our future success, including our ability to retain and recruit personnel, and loss of customer

Unionization activities may disrupt our

operations and affect our profitability.

Although none of our employees are currently covered

under collective bargaining agreements, our employees may elect to be represented by labor unions in the future.

If a significant number

of our employees were to become unionized and collective bargaining agreement terms were significantly different from our current compensation

arrangements, it could adversely affect our business, financial condition or results of operations.

In addition, a labor dispute involving

some or all of our employees may harm our reputation, disrupt our operations and reduce our revenue, and resolution of disputes may increase

Risks Related to Regulation and Litigation

Changes in statutory, regulatory, accounting,

and other legal requirements, including changes in accounting principles generally accepted in the United States, could potentially impact

our operating and financial results.

We are subject to numerous statutory, regulatory

and legal requirements.

Our operating results could be negatively impacted by developments in these areas due to the costs of compliance

in addition to possible government penalties and litigation in the event of deemed noncompliance.

Changes in the regulatory environment

in the area of food safety, privacy and information security, wage and hour laws, among others, could potentially impact our operations

and financial results.

GAAP is subject to interpretation by the Financial

Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC, and various bodies formed to promulgate and

interpret appropriate accounting principles.

A change in these principles or interpretations could have a significant effect on our reported

financial results, and could affect the reporting of transactions completed before the announcement of a change.

Moreover, while we believe that we maintain insurance

customary for businesses of our size and type, there are types of losses we may incur that cannot be insured against or that we believe

are not economically reasonable to insure.

Such losses could harm our business.

Fluctuations in our

tax obligations and effective tax rate and realization of our deferred tax assets may result in volatility of our operating results and

adversely affect our financial condition.

We are subject to taxes

federal, state, and local tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing

jurisdictions.

We record tax expense based on our estimates of future payments, which may include reserves for uncertain tax positions

in multiple tax jurisdictions, and valuation allowances related to certain net deferred tax assets.

At any one time, many tax years may

be subject to audit by various taxing jurisdictions.

The results of these audits and negotiations with taxing authorities may affect

the ultimate settlement of these issues.

We expect that throughout the year there could be ongoing variability in our quarterly tax rates

as events occur and exposures are evaluated.

Our future effective tax rates could be subject to volatility or adversely affected by a

number of factors, including:

● changes in the valuation

of our deferred tax assets and liabilities;

● expected timing and

amount of the release of any tax valuation allowance;

● changes in tax laws,

regulations or interpretations thereof;

● future earnings being

lower than anticipated in jurisdictions where we have lower statutory tax rates and higher

than anticipated earnings in jurisdictions where we have higher statutory tax rates.

In addition, our effective

tax rate in a given financial statement period may be materially impacted by a variety of factors including but not limited to changes

in the mix and level of earnings, varying tax rates in the different jurisdictions in which we operate, fluctuations in the valuation

allowance or by changes to existing accounting rules or regulations.

Further, tax legislation may be enacted in the future which could

negatively impact our current or future tax structure and effective tax rates.

We may be subject to audits of our income, sales and other

transaction taxes by U.S.

Fluctuations in our tax obligations and

effective tax rate and realization of our deferred tax assets may result in volatility of our operating results and adversely affect our

financial condition.

We are subject to taxes by the U.S.

federal, state,

and local tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing jurisdictions.

tax expense based on our estimates of future payments, which may include reserves for uncertain tax positions in multiple tax jurisdictions,

and valuation allowances related to certain net deferred tax assets.

At any one time, many tax years may be subject to audit by various

taxing jurisdictions.

The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these

We expect that throughout the year there could be ongoing variability in our quarterly tax rates as events occur and exposures

are evaluated.

Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

changes in the valuation of our deferred tax assets and liabilities;

expected timing and amount of the release of any tax valuation allowance;

changes in tax laws, regulations or interpretations thereof;

future earnings being lower than anticipated in jurisdictions where we have lower statutory tax rates and higher than anticipated earnings in jurisdictions where we have higher statutory tax rates.

In addition, our effective tax rate in a given

financial statement period may be materially impacted by a variety of factors including but not limited to changes in the mix and level

of earnings, varying tax rates in the different jurisdictions in which we operate, fluctuations in the valuation allowance or by changes

to existing accounting rules or regulations.

Further, tax legislation may be enacted in the future which could negatively impact our current

or future tax structure and effective tax rates.

We may be subject to audits of our income, sales and other transaction taxes by U.S.

federal, state, and local taxing authorities.

Outcomes from these audits could have an adverse effect on our

operating results and financial condition.

We are subject to

many federal, state and local laws with which compliance is both costly and complex.

The beverage industry is

subject to extensive federal, state and local laws and regulations, including the recently enacted comprehensive health care reform legislation

discussed above, those relating to building and zoning requirements and those relating to the preparation and sale of food and beverages

or consumption.

Outcomes from these audits could have an adverse effect on our operating results and financial

We are subject to many federal, state and

local laws with which compliance is both costly and complex.

The beverage industry is subject to extensive

federal, state and local laws and regulations, including the recently enacted comprehensive health care reform legislation discussed above,

those relating to building and zoning requirements and those relating to the preparation and sale of food and beverages or consumption.

Such laws and regulations are subject to change from time to time.

The failure to comply with these laws and regulations

could adversely affect our operating results.

Typically, licenses, permits and approvals under such laws and regulations must be renewed

annually and may be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct

violates applicable regulations.

Difficulties or failure to maintain or obtain the required licenses, permits and approvals could adversely

affect our existing locations and delay or result in our decision to cancel the opening of new locations, which would adversely affect

our business.

The development and operation

of a location depends, to a significant extent, on the selection of suitable sites, which are subject to unique permitting, zoning, land

use, environmental, traffic and other regulations and requirements.

We are also subject to licensing and regulation by state and local

authorities relating to health, sanitation, safety and fire standards.

We are subject to the Fair

Labor Standards Act and various other federal, state and local laws that regulate the wages and hours of employees.

These laws commonly

apply a strict liability standard so that even inadvertent noncompliance can lead to claims, government enforcement actions and litigation.

These laws vary from state to state and are subject to frequent amendments and judicial interpretations that can require rapid adjustments

to operations.

Insurance coverage for violations of these laws is costly and sometimes is not available.

Changes to these laws can adversely

affect our business by increasing labor and compliance costs.

The failure to comply with these laws could adversely affect our business

as a result of costly litigation or government enforcement actions.

We are also subject to a

variety of other employee relations laws including FMLA and state leave laws, employment discrimination laws, predictive scheduling laws,

occupational health and safety laws and regulations and the NLRA, to name a few.

Together, these many laws and regulations present a

thicket of compliance obligations and liability risks.

As we grow, we will need to continue to increase our compliance efforts in these

areas, which may affect our results from operations.

Changes to these laws and regulations may increase these costs beyond our expectations

or predictions, which would adversely affect our business operations and financial results.

Violations of these laws could lead to costly

litigation or governmental investigation or proceedings.

We are subject to the Americans

with Disabilities Act (the “ADA”), which, among other things, requires our locations to meet federally mandated requirements

for the disabled.

The ADA prohibits discrimination in employment and public accommodations on the basis of disability.

Under the ADA,

we could be required to expend funds to modify our locations to provide service to, or make reasonable accommodations for the employment

of, disabled persons.

In addition, our employment practices are subject to the requirements of the Immigration and Naturalization Service

relating to citizenship and residency.

In addition, our future

franchise activities will be subject to laws enacted by a number of states and rules and regulations promulgated by the Federal Trade

Commission (the “FTC”).

Failure to comply with new or existing franchise laws, rules and regulations in any jurisdiction

or to obtain required government approvals could negatively affect our licensing sales and our relationships with our licensees.

The impact of current laws

and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation

relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy

issues, could increase our compliance and other costs of doing business and, therefore, have an adverse effect on our results of operations.

Failure to comply with the laws and regulatory requirements of federal, state and local authorities could result in, among other things,

revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability.

In addition, certain laws,

including the ADA, could require us to expend significant funds to make modifications to our locations if we failed to comply with applicable

Compliance with all these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations

The failure to comply with these laws and regulations could adversely

affect our operating results.

Typically, licenses, permits and approvals under such laws and regulations must be renewed annually and

may be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable

Difficulties or failure to maintain or obtain the required licenses, permits and approvals could adversely affect our existing

locations and delay or result in our decision to cancel the opening of new locations, which would adversely affect our business.

The development and operation of a location depends,

to a significant extent, on the selection of suitable sites, which are subject to unique permitting, zoning, land use, environmental,

traffic and other regulations and requirements.

We are also subject to licensing and regulation by state and local authorities relating

to health, sanitation, safety and fire standards.

We are subject to the Fair Labor Standards Act

and various other federal, state and local laws that regulate the wages and hours of employees.

These laws commonly apply a strict liability

standard so that even inadvertent noncompliance can lead to claims, government enforcement actions and litigation.

These laws vary from

state to state and are subject to frequent amendments and judicial interpretations that can require rapid adjustments to operations.

coverage for violations of these laws is costly and sometimes is not available.

Changes to these laws can adversely affect our business

by increasing labor and compliance costs.

The failure to comply with these laws could adversely affect our business as a result of costly

litigation or government enforcement actions.

We are also subject to a variety of other employee

relations laws including FMLA and state leave laws, employment discrimination laws, predictive scheduling laws, occupational health and

safety laws and regulations and the NLRA, to name a few.

Together, these many laws and regulations present a thicket of compliance obligations

and liability risks.

As we grow, we will need to continue to increase our compliance efforts in these areas, which may affect our results

from operations.

Changes to these laws and regulations may increase these costs beyond our expectations or predictions, which would adversely

affect our business operations and financial results.

Violations of these laws could lead to costly litigation or governmental investigation

or proceedings.

We (and our vendors)

are subject to stringent and changing laws, regulations, industry standards, related to data Processing, protection, privacy and security.

The actual or perceived failure by us, our customers or vendors to comply with such laws, regulations, industry standards, may harm our

business, financial condition, results of operations and prospects.

We Process personal information,

confidential information and other information necessary to provide our products and service and ensure that they are delivered effectively,

to operate our business, for legal and marketing purposes, and for other business-related purposes.

Data privacy and regulation

of privacy, information security and Processing has become a significant issue in the United States.

The legal and regulatory framework

for privacy and security issues is rapidly evolving and is expected to increase our compliance costs and exposure to liability.

are numerous federal, state, local laws, orders, codes, regulations and regulatory guidance regarding privacy, information security and

Processing (“Data Protection Laws”), the number and scope of which is changing, subject to differing applications and interpretations,

and which may be inconsistent among jurisdictions, or in conflict with other rules, laws or Data Protection Obligations (defined below).

We expect that there will continue to be new Data Protection Laws and Data Protection Obligations, and we cannot yet determine the impact

such future Data Protection Laws may have on our business.

Any significant change to Data Protection Laws and Data Protection Obligations,

including without limitation, regarding the manner in which the express or implied consent of customers for Processing is obtained, could

increase our costs and require us to modify our operations, possibly in a material manner, which we may be unable to complete and may

limit our ability to store and process customer data and operate our business.

Data Protection Laws are,

and are likely to remain, uncertain for the foreseeable future, and our actual or perceived failure to address or comply with these laws

increase our compliance and operational costs;

limit our ability to market our products or services and attract new and retain

current customers;

limit or eliminate our ability to Process;

We are subject to the Americans with Disabilities

Act (the “ADA”), which, among other things, requires our locations to meet federally mandated requirements for the disabled.

The ADA prohibits discrimination in employment and public accommodations on the basis of disability.

Under the ADA, we could be required

to expend funds to modify our locations to provide service to, or make reasonable accommodations for the employment of, disabled persons.

In addition, our employment practices are subject to the requirements of the Immigration and Naturalization Service relating to citizenship

and residency.

In addition, our future franchise activities will

be subject to laws enacted by a number of states and rules and regulations promulgated by the Federal Trade Commission (the “FTC”).

Failure to comply with new or existing franchise laws, rules and regulations in any jurisdiction or to obtain required government approvals

could negatively affect our licensing sales and our relationships with our licensees.

The impact of current laws and regulations, the

effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current

or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase

our compliance and other costs of doing business and, therefore, have an adverse effect on our results of operations.

Failure to comply

with the laws and regulatory requirements of federal, state and local authorities could result in, among other things, revocation of required

licenses, administrative enforcement actions, fines and civil and criminal liability.

In addition, certain laws, including the ADA, could

require us to expend significant funds to make modifications to our locations if we failed to comply with applicable standards.

with all these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings.

We (and our vendors) are subject to stringent

and changing laws, regulations, industry standards, related to data Processing, protection, privacy and security.

The actual or perceived

failure by us, our customers or vendors to comply with such laws, regulations, industry standards, may harm our business, financial condition,

results of operations and prospects.

We Process personal information, confidential

information and other information necessary to provide our products and service and ensure that they are delivered effectively, to operate

our business, for legal and marketing purposes, and for other business-related purposes.

Data privacy and regulation of privacy, information

security and Processing has become a significant issue in the United States.

The legal and regulatory framework for privacy and security

issues is rapidly evolving and is expected to increase our compliance costs and exposure to liability.

There are numerous federal, state,

local laws, orders, codes, regulations and regulatory guidance regarding privacy, information security and Processing (“Data Protection

Laws”), the number and scope of which is changing, subject to differing applications and interpretations, and which may be inconsistent

among jurisdictions, or in conflict with other rules, laws or Data Protection Obligations (defined below).

We expect that there will continue

to be new Data Protection Laws and Data Protection Obligations, and we cannot yet determine the impact such future Data Protection Laws

may have on our business.

Any significant change to Data Protection Laws and Data Protection Obligations, including without limitation,

regarding the manner in which the express or implied consent of customers for Processing is obtained, could increase our costs and require

us to modify our operations, possibly in a material manner, which we may be unable to complete and may limit our ability to store and

process customer data and operate our business.

Data Protection Laws are, and are likely to remain,

uncertain for the foreseeable future, and our actual or perceived failure to address or comply with these laws could:

increase our compliance

and operational costs;

limit our ability to market our products or services and attract new and retain current customers;

limit or eliminate

our ability to Process;

expose us to regulatory scrutiny, actions, investigations, fines and penalties;

result in reputational harm;

lead to a loss of customers;

to a loss of customers;

reduce the use of our products or services;

result in litigation and liability,

including class action litigation;

result in litigation and liability, including class action litigation;

cause to incur significant costs, expenses and fees (including attorney fees);

cause a material adverse

impact to business operations or financial results, and;

otherwise result in other material harm to our business (“Adverse Data

Protection Impact”).

We are or may also be subject

to the terms of our external and internal privacy and security policies, codes, representations, certifications, industry standards,

publications and frameworks (“Privacy Policies”) and contractual obligations to third parties related to privacy, information

security and Processing, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences

of non-compliance with Data Protection Laws or other obligations (“Data Protection Obligations”).

We strive to comply with

applicable Data Protection Laws, Privacy Policies and Data Protection Obligations to the extent possible, but we may at times fail to

do so, or may be perceived to have failed to do so.

Moreover, despite our efforts, we may not be successful in achieving compliance if

our employees, partners or vendors do not comply with applicable Data Protection Laws, Privacy Policies and Data Protection Obligations.

We may be subject to, and suffer an Adverse Data Protection Impact if we fail (or are perceived to have failed) to comply with applicable

Data Protection Laws, Privacy Policies and Data Protection Obligations, if our Privacy Policies are, in whole or part, found to be inaccurate,

incomplete, deceptive, unfair or misrepresentative of our actual practices.

In addition, any such failure or perceived failure could

result in public statements against us by consumer advocacy groups, the media or others, which may cause us material reputational harm.

Our actual or perceived failure to comply with Data Protection Laws, Privacy Policies and Data Protection Obligations could also subject

us to litigation, claims, proceedings, actions or investigations by governmental entities, authorities or regulators, which could result

in an Adverse Data Protection Impact, including required changes to our business practices, the diversion of resources and the attention

of management from our business, regulatory oversights and audits, discontinuance of necessary Processing or other remedies that adversely

affect our business.

In the United States, these

include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy

Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act (the “CCPA”), and other state and federal laws

relating to privacy and data security.

The CCPA, which among other things, establishes a privacy framework for covered businesses, including

an expansive definition of personal data and data privacy rights.

The CCPA provides individual privacy rights for California residents

and places increased privacy and security obligations on covered businesses processing personal data.

The CCPA requires covered businesses

to provide new disclosures to California residents and provide such individuals with ways to opt-out of certain sales of personal data.

The CCPA also provides a private right of action and statutory damages for violations, including for data breaches.

To the extent applicable

to our business and operations, the CCPA may impact our business activities by increasing our compliance costs and potential liability

with respect to personal information that we or third parties with whom we contract to provide services maintain about California residents.

The CPRA will, among other things, give California residents the ability to limit use of certain sensitive personal data, further restrict

the use of cross-contextual advertising, establish restrictions on the retention of personal data, expand the types of data breaches

subject to the CCPA’s private right of action, provide for increased penalties for CPRA violations concerning California residents

under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the law.

These Data Protection

Laws (such as the CCPA and CPRA) exemplify the vulnerability of our business to the evolving regulatory environment related to personal

Moreover, across the United

States, laws and regulations governing data privacy and security continue to develop and evolve.

For example, Virginia enacted the Consumer

Data Protection Act (“CDPA”) that may impose obligations similar to or more stringent than those we may face under other

Data Protection Laws.

Compliance with the CPRA, the CCPA, the CDPA and any newly enacted privacy and data security laws or regulations

may be challenging and cost- and time-intensive, and may require us to modify our data processing practices and policies and to incur

substantial costs and potential liability in an effort to comply with such legislation.

The Data Protection Laws, Privacy Policies and

Data Protection Obligations to which we are subject may significantly affect our business activities and many of these obligations may

contain ambiguous provisions creating uncertainty.

Compliance with the requirements imposed by such Data Protection Laws and Data Protection

Obligations may require us to revise our business practices, allocate more resources to privacy and security, and implement new technologies.

cause a material adverse impact to business operations

or financial results, and;

otherwise result in other material harm to our business (“Adverse Data Protection Impact”).

We are or may also be subject to the terms of

our external and internal privacy and security policies, codes, representations, certifications, industry standards, publications and

frameworks (“Privacy Policies”) and contractual obligations to third parties related to privacy, information security and

Processing, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences of non-compliance

with Data Protection Laws or other obligations (“Data Protection Obligations”).

We strive to comply with applicable Data Protection

Laws, Privacy Policies and Data Protection Obligations to the extent possible, but we may at times fail to do so, or may be perceived

to have failed to do so.

Moreover, despite our efforts, we may not be successful in achieving compliance if our employees, partners or

vendors do not comply with applicable Data Protection Laws, Privacy Policies and Data Protection Obligations.

We may be subject to, and

suffer an Adverse Data Protection Impact if we fail (or are perceived to have failed) to comply with applicable Data Protection Laws,

Privacy Policies and Data Protection Obligations, if our Privacy Policies are, in whole or part, found to be inaccurate, incomplete, deceptive,

unfair or misrepresentative of our actual practices.

In addition, any such failure or perceived failure could result in public statements

against us by consumer advocacy groups, the media or others, which may cause us material reputational harm.

Our actual or perceived failure

to comply with Data Protection Laws, Privacy Policies and Data Protection Obligations could also subject us to litigation, claims, proceedings,

actions or investigations by governmental entities, authorities or regulators, which could result in an Adverse Data Protection Impact,

including required changes to our business practices, the diversion of resources and the attention of management from our business, regulatory

oversights and audits, discontinuance of necessary Processing or other remedies that adversely affect our business.

In the United States, these include rules and

regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud

and Abuse Act, the California Consumer Privacy Act (the “CCPA”), and other state and federal laws relating to privacy and

data security.

The CCPA, which among other things, establishes a privacy framework for covered businesses, including an expansive definition

of personal data and data privacy rights.

The CCPA provides individual privacy rights for California residents and places increased privacy

and security obligations on covered businesses processing personal data.

The CCPA requires covered businesses to provide new disclosures

to California residents and provide such individuals with ways to opt-out of certain sales of personal data.

The CCPA also provides a

private right of action and statutory damages for violations, including for data breaches.

To the extent applicable to our business and

operations, the CCPA may impact our business activities by increasing our compliance costs and potential liability with respect to personal

information that we or third parties with whom we contract to provide services maintain about California residents.

The CPRA will, among

other things, give California residents the ability to limit use of certain sensitive personal data, further restrict the use of cross-contextual

advertising, establish restrictions on the retention of personal data, expand the types of data breaches subject to the CCPA’s private

right of action, provide for increased penalties for CPRA violations concerning California residents under the age of 16, and establish

a new California Privacy Protection Agency to implement and enforce the law.

These Data Protection Laws (such as the CCPA and CPRA) exemplify

the vulnerability of our business to the evolving regulatory environment related to personal data.

Moreover, across the United States, laws and regulations

governing data privacy and security continue to develop and evolve.

For example, Virginia enacted the Consumer Data Protection Act (“CDPA”)

that may impose obligations similar to or more stringent than those we may face under other Data Protection Laws.

Compliance with the

CPRA, the CCPA, the CDPA and any newly enacted privacy and data security laws or regulations may be challenging and cost- and time-intensive,

and may require us to modify our data processing practices and policies and to incur substantial costs and potential liability in an effort

to comply with such legislation.

The Data Protection Laws, Privacy Policies and Data Protection Obligations to which we are subject may

significantly affect our business activities and many of these obligations may contain ambiguous provisions creating uncertainty.

with the requirements imposed by such Data Protection Laws and Data Protection Obligations may require us to revise our business practices,

allocate more resources to privacy and security, and implement new technologies.

Such efforts may result in significant costs to our business.

Noncompliance could result in Adverse Data Protection Impact, including

proceedings against us by governmental and regulatory entities, collaborators, individuals or others.

We rely on a variety of

marketing techniques and practices, including email and social media marketing, online targeted advertising, and cookie-based Processing,

to sell our products and services and to attract new customers, and we, and our vendors, are subject to various current and future Data

Protection Laws and Data Protection Obligations that govern marketing and advertising practices.

Governmental authorities continue to

evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral

advertising and other purposes, such as by regulating the level of consumer notice and consent required before a company can employ cookies

or other electronic tracking tools or the use of data gathered with such tools.

Additionally, some providers of consumer devices, web

browsers and application locations have implemented, or announced plans to implement, means to make it easier for Internet users to prevent

the placement of cookies or to block other tracking technologies, require additional consents or limit the ability to track user activity,

Noncompliance could result in Adverse Data Protection Impact, including proceedings against us by governmental and regulatory entities,

collaborators, individuals or others.

We rely on a variety of marketing techniques and

practices, including email and social media marketing, online targeted advertising, and cookie-based Processing, to sell our products

and services and to attract new customers, and we, and our vendors, are subject to various current and future Data Protection Laws and

Data Protection Obligations that govern marketing and advertising practices.

Governmental authorities continue to evaluate the privacy

implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising

and other purposes, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other

electronic tracking tools or the use of data gathered with such tools.

Additionally, some providers of consumer devices, web browsers

and application locations have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the

placement of cookies or to block other tracking technologies, require additional consents or limit the ability to track user activity,

which could if widely adopted result in the use of third-party cookies and other methods of online tracking becoming significantly less

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in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability

to acquire new customers on cost-effective terms, which, in turn, could have an adverse effect on our business, financial condition,

results of operations and prospects.

We are subject to

extensive government regulations that could result in claims leading to increased costs and restrict our ability to operate future franchises.

We are subject to extensive

government regulation at the federal, state and local government levels, including by the FTC.

These include, but are not limited to,

regulations relating to the preparation and sale of beverages, zoning and building codes, franchising, land use and employee, health,

sanitation and safety matters.

We are, and our future franchise partners will be, required to obtain and maintain a wide variety of governmental

licenses, permits and approvals.

Local authorities may suspend or deny renewal of our governmental licenses if they determine that our

operations do not meet the standards for initial grant or renewal.

Difficulty or failure in obtaining them in the future could result

in delaying or canceling the opening of new locations and thus could harm our business.

Any such failure could also subject us to liability

from our future franchise partners.

Additionally, Congress has

a legislation proposal in process that could shift more liability for franchise partner employment practices onto franchisors.

PROAct would codify the Browning-Ferris decision that redefined joint employment to include a broader category of conduct by the franchisor,

thereby increasing the possibility of Reborn being held liable for our future franchise partners’ employment practices.

Beverage and restaurant

companies have been the target of class action lawsuits and other proceedings that are costly, divert management attention and, if successful,

could result in our payment of substantial damages or settlement costs.

Our business is subject

to the risk of litigation by employees, customers, competitors, landlords or neighboring businesses, suppliers, future franchise partners,

stockholders or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation.

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.

Occasionally, our customers

file complaints or lawsuits against us alleging that we are responsible for some illness or injury they suffered at or after a visit

to one of our locations, including actions seeking damages resulting from food-borne illness or accidents in our locations.

We also could

be subject to a variety of other claims from third parties arising in the ordinary course of our business, including contract claims.

Regardless of whether any

claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our operations.

In addition, they may generate negative publicity, which could reduce customer traffic and sales.

Although we maintain what we believe

to be adequate levels of insurance, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect

to these or other matters.

A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity

resulting from claims could harm our business.

New information or

attitudes regarding diet and health or adverse opinions about the health effects of consuming our menu offerings, could affect consumer

preferences and negatively impact our business, financial condition and results of operations.

Government regulation and

consumer eating habits may impact our business as a result of changes in attitudes regarding diet and health or new information regarding

the health effects of consuming our menu offerings.

These changes have resulted in, and may continue to result in, the enactment of laws

and regulations that impact the ingredients and nutritional content of our menu offerings, or laws and regulations requiring us to disclose

the nutritional content of our food offerings.

We cannot make any assurances

regarding our ability to effectively respond to changes in consumer health perceptions or our ability to successfully implement the nutrient

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

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.

to acquire new customers on cost-effective terms, which, in turn, could have an adverse effect on our business, financial condition, results

of operations and prospects.

We are subject to extensive government regulations

that could result in claims leading to increased costs and restrict our ability to operate future franchises.

We are subject to extensive government regulation

at the federal, state and local government levels, including by the FTC.

These include, but are not limited to, regulations relating to

the preparation and sale of beverages, zoning and building codes, franchising, land use and employee, health, sanitation and safety matters.

We are, and our future franchise partners will be, required to obtain and maintain a wide variety of governmental licenses, permits and

Local authorities may suspend or deny renewal of our governmental licenses if they determine that our operations do not meet

the standards for initial grant or renewal.

Difficulty or failure in obtaining them in the future could result in delaying or canceling

the opening of new locations and thus could harm our business.

Any such failure could also subject us to liability from our future franchise

Additionally, Congress has a legislation proposal

in process that could shift more liability for franchise partner employment practices onto franchisors.

The federal PROAct would codify

the Browning-Ferris decision that redefined joint employment to include a broader category of conduct by the franchisor, thereby increasing

the possibility of Reborn being held liable for our future franchise partners’ employment practices.

Beverage and restaurant companies have been

the target of class action lawsuits and other proceedings that are costly, divert management attention and, if successful, could result

in our payment of substantial damages or settlement costs.

Our business is subject to the risk of litigation

by employees, customers, competitors, landlords or neighboring businesses, suppliers, future franchise partners, stockholders 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

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.

Occasionally, our customers file complaints or

lawsuits against us alleging that we are responsible for some illness or injury they suffered at or after a visit to one of our locations,

including actions seeking damages resulting from food-borne illness or accidents in our locations.

We also could be subject to a variety

of other claims from third parties arising in the ordinary course of our business, including contract claims.

Regardless of whether any claims against us are

valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our operations.

they may generate negative publicity, which could reduce customer traffic and sales.

Although we maintain what we believe to be adequate

levels of insurance, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or

other matters.

A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity resulting from

claims could harm our business.

New information or attitudes regarding diet

and health or adverse opinions about the health effects of consuming our menu offerings, could affect consumer preferences and negatively

impact our business, financial condition and results of operations.

Government regulation and consumer eating habits

may impact our business as a result of changes in attitudes regarding diet and health or new information regarding the health effects

of consuming our menu offerings.

These changes have resulted in, and may continue to result in, the enactment of laws and regulations

that impact the ingredients and nutritional content of our menu offerings, or laws and regulations requiring us to disclose the nutritional

content of our food offerings.

We cannot make any assurances regarding our ability

to effectively respond to changes in consumer health perceptions or our ability to successfully implement the nutrient content disclosure

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

Congress, the Trump administration,

or any new administration may make substantial changes to fiscal, tax, and other federal policies that may adversely affect our business.

In 2017, the U.S.

Congress and the Trump administration

made substantial changes to U.S.

policies, which included comprehensive corporate and individual tax reform.

In addition, the Trump administration

called for significant changes to U.S.

trade, healthcare, immigration and government regulatory policy.

With the transition to the Biden

administration in early 2021, changes to U.S.

policy occurred and since the start of the Trump Administration in 2025, U.S.

policy changes

have been implemented at a rapid pace and additional changes are likely.

Changes to U.S.

policy implemented by the U.S.

Congress, the

Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S.

and global economy,

international trade relations, unemployment, immigration, healthcare, taxation, the U.S.

regulatory environment, inflation and other areas.

Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business.

Until we know

what policy changes are made, whether those policy changes are challenged and subsequently upheld by the court system and how those changes

impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or

be negatively affected by them.

Risks Related to Our Organizational Structure

and Ownership of Our Common Stock

If we are unable to satisfy the applicable

continued listing requirements of Nasdaq, our common stock could be delisted.

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’ equity (generally, $2,500,000) and a minimum number

of holders of our securities (generally, 300 public holders).

As previously disclosed, we requested a hearing

by the Nasdaq Hearings Panel (the “Panel”) of Nasdaq to appeal delisting determinations made by the Listing Qualifications

Department (the “Staff”) 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 Nasdaq that we proposed to the Panel a compliance plan that included a tentative

schedule to complete the items necessary to regain compliance with the Bid Price Rule, the Equity Rule, and the Meeting Rule, and requested

an extension of time to fully comply with Nasdaq listing requirements so that we could demonstrate to the Panel that our common stock

should not be delisted from Nasdaq.

The Panel granted our request for additional time,

which we were than able to regain compliance in the allotted time.

However, the Panel placed us on a Discretionary Panel Monitor until

May 16, 2025, which will require the Staff to issue a Delist Determination Letter in the event that we fail to maintain compliance with

any continued listing requirement (the “Panel Monitor”).

Ordinarily, Nasdaq listed companies may be provided additional time

to regain compliance with deficiencies.

However, pursuant to the Panel Monitor, we are generally not eligible for a compliance period.

Therefore, if we receive a deficiency notice, we must request an appeal of such deficiency to the Panel.

Although we anticipate complying with Nasdaq’s

Listing Rules going forward, there can be no assurance that we will be able to meet continued listing requirements in the future.

In determining

whether to afford a company a cure period prior to commencing suspension or delisting procedures, Nasdaq analyzes all relevant facts including

any past deficiencies, and thus our prior deficiencies could be used as a factor by Nasdaq in any future decision to delist our securities

from trading on its exchange.

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

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.

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

of our securities may be volatile, and you could lose all or part of your investment.

The trading price of our

securities is likely to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our

These fluctuations could cause you to lose all or part of your investment in our common stock as you might be unable to sell

your shares at or above the price you paid for your shares.

Factors that could cause fluctuations in the trading price of our common

stock include the risk factors set forth in this section as well as the following:

and volume fluctuations in the overall stock market from time to time;

in the trading prices and trading volumes of technology stocks;

in operating performance and stock market valuations of other technology companies generally,

or those in our industry in particular;

of shares of our common stock by us or our stockholders;

of securities analysts to maintain coverage of us, changes in financial estimates by securities

analysts who follow our company, or our failure to meet these estimates or the expectations

of investors;

in our financial, operating or other metrics, regardless of whether we consider those metrics

as reflective of the current state or long-term prospects of our business, and how those

results compare to securities analyst expectations, including whether those results fail

to meet, exceed or significantly exceed securities analyst expectations, particularly in

light of the significant portion of our revenue derived from a limited number of customers;

● announcements

by us or our competitors of new products or services;

public’s reaction to our press releases, other public announcements, and filings with

and market speculation involving us or other companies in our industry;

or anticipated changes in our results of operations or fluctuations in our results of operations;

or anticipated developments in our business, our competitors’ businesses or the competitive

landscape generally;

involving us, our industry or both, or investigations by regulators into our operations or

those of our competitors;

or perceived privacy or data security incidents;

● developments

or disputes concerning our intellectual property or other proprietary rights;

or completed acquisitions of businesses, applications, products, services or technologies

by us or our competitors;

laws or regulations or new interpretations of existing laws or regulations applicable to

our business;

in accounting standards, policies, guidelines, interpretations or principles;

significant change in our management;

political and economic conditions and slow or negative growth of our markets.

In addition, in the past,

following periods of volatility in the overall market and in the market price of a particular company’s securities, securities

class action litigation has often been instituted against these companies.

This litigation, if instituted against us, could result in

substantial costs and a diversion of our management’s attention and resources.

Our trading price

and trading volume could decline if securities or industry analysts do not publish research about our business, or if they publish unfavorable

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.

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.

We will incur costs

and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States, which

may harm our business.

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, 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.

These rules and regulations

could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or our board committees

or as executive officers.

will 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, Reborn Coffee Franchise, and Reborn Realty.

The trading price of our securities may

be volatile, and you could lose all or part of your investment.

The trading price of our securities is likely

to be volatile and could be subject to fluctuations in response to various factors, some of which are beyond our control.

These fluctuations

could cause you to lose all or part of your investment in our common stock as you might be unable to sell your shares at or above the

price you paid for your shares.

Factors that could cause fluctuations in the trading price of our common stock include the risk factors

set forth in this section as well as the following:

price and volume fluctuations in the overall stock market from time to time;

volatility in the trading prices and trading volumes of technology stocks;

changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;

sales of shares of our common stock by us or our stockholders;

failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

changes in our financial, operating or other metrics, regardless of whether we consider those metrics as reflective of the current state or long-term prospects of our business, and how those results compare to securities analyst expectations, including whether those results fail to meet, exceed or significantly exceed securities analyst expectations, particularly in light of the significant portion of our revenue derived from a limited number of customers;

announcements by us or our competitors of new products or services;

the public’s reaction to our press releases, other public announcements, and filings with the SEC;

rumors and market speculation involving us or other companies in our industry;

actual or anticipated changes in our results of operations or fluctuations in our results of operations;

actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;

litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;

actual or perceived privacy or data security incidents;

developments or disputes concerning our intellectual property or other proprietary rights;

announced or completed acquisitions of businesses, applications, products, services or technologies by us or our competitors;

new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

changes in accounting standards, policies, guidelines, interpretations or principles;

any significant change in our management;

general political and economic conditions and slow or negative growth of our markets.

In addition, in the past, following periods of

volatility in the overall market and in the market price of a particular company’s securities, securities class action litigation

has often been instituted against these companies.

This litigation, if instituted against us, could result in substantial costs and a

diversion of our management’s attention and resources.

Our trading price and trading volume could

decline if securities or industry analysts do not publish research about our business, or if they publish unfavorable research.

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.

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.

We will incur costs and demands upon management

as a result of complying with the laws and regulations affecting public companies in the United States, which may harm our business.

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, 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.

These rules and regulations could also make it

more difficult for us to attract and retain qualified persons to serve on our board of directors or our board committees or as executive

Our management and other personnel will devote a substantial amount of time to these compliance initiatives.

As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results.

We will need to hire more employees in the future to comply with these requirements, which will increase our costs and expenses.

Our management team and

other personnel devote a substantial amount of time to new compliance initiatives and we may not successfully or efficiently manage our

transition to a public company.

To comply with the requirements of being a public company, including the Sarbanes-Oxley Act, we will

need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit

staff, which would require us to incur additional expenses and harm our results of operations.

Failure to comply with these

rules might also make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance,

and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar

The impact of these events would also make it more difficult for us to attract and retain qualified persons to serve on our

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

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.

As a result, management’s

attention may be diverted from other business concerns, which could harm our business and operating results.

We will need to hire more

employees in the future to comply with these requirements, which will increase our costs and expenses.

Our management team and other personnel devote

a substantial amount of time to new compliance initiatives and we may not successfully or efficiently manage our transition to a public

To comply with the requirements of being a public company, including the Sarbanes-Oxley Act, we will need to undertake various

actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff, which would require

us to incur additional expenses and harm our results of operations.

Failure to comply with these rules might also

make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we might be

forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

of these events would also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on

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

Due to the implementation of the Reverse

Stock Split, the liquidity of our common stock may be adversely effected.

Our common stock began trading on Nasdaq on a

Reverse Stock Split-adjusted basis beginning on January 22, 2024.

The liquidity of the shares of our common stock may be affected adversely

by any reverse stock split given the reduced number of shares of our common stock that are outstanding following the Reverse Stock Split,

especially if the market price of our common stock does not increase as a result of the Reverse Stock Split.

Following the Reverse Stock

Split, the resulting market price of our common stock may not attract new investors and may not satisfy the investing requirements of

those investors.

Although we believe that a higher market price of our common stock may help generate greater or broader investor interest,

there can be no assurance that the Reverse Stock Split resulted in a share price that will attract new investors, including institutional

In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of

those investors.

As a result, the trading liquidity of our common stock may not necessarily improve.

It is not possible to predict the actual

number of shares we will sell under the ELOC Agreement to Arena, or the actual gross proceeds resulting from those sales.

We are party to a purchase agreement (“ELOC

Agreement”) with Arena Business Solutions Global SPC II, Ltd (“Arena”) dated February 10, 2025.

Under the ELOC Agreement,

we have the right, but not the obligation, to direct Arena to purchase up to $50.0 million in shares of our common stock (the “ELOC

Shares”) upon satisfaction of certain terms and conditions contained in the ELOC Agreement, including, without limitation, an effective

registration statement filed with the SEC registering the resale of Commitment Fee Shares (as defined below) and additional shares to

be sold to Arena from time to time under the ELOC Agreement.

The term of the ELOC Agreement began on the date of execution and ends on

the earlier of (i) the first day of the month following the 36-month anniversary of the execution date, (ii) the date on which the Investor

shall have purchased the maximum amount of ELOC Shares, or (iii) the effective date of any written notice of termination delivered pursuant

to the terms of the ELOC Agreement (the “Commitment Period”).

During the Commitment Period, we may direct Arena

to purchase ELOC Shares by delivering a notice (an “Advance Notice”) to Arena.

We shall, in our sole discretion, select the

amount of ELOC Shares requested by us in each Advance Notice.

However, such amount may not exceed the Maximum Advance Amount (as defined

in the ELOC Agreement).

The purchase price to be paid by Arena for the ELOC Shares will be ninety-six percent (96%) of the VWAP (as defined

in the ELOC Agreement) of our common stock during the trading day commencing on the date of the Advance Notice, subject to adjustment

pursuant to the terms of the ELOC Agreement.

In consideration for Arena’s execution and

delivery of the ELOC Agreement, we agreed to issue to Arena, as a commitment fee:

(i) a number of shares of common stock (the “Initial

Commitment Fee Shares”) equal to 750,000 divided by the simple average of the daily VWAP of the common stock during the five trading

days immediately preceding the effectiveness of the initial registration statement (the “Initial Registration Statement”)

on which the Initial Commitment Fee Shares are registered promptly after the effectiveness of the Registration Statement and (ii) a number

of shares of common stock (“Additional Commitment Fee Shares,” and together with the Initial Commitment Fee Shares, the “Commitment

Fee Shares”) equal to 750,000 divided by the simple average of the daily VWAP of the common stock during the five trading days immediately

preceding the two month anniversary of the effectiveness of the Initial Registration Statement, promptly after such two-month anniversary.

Because the price per share of each share sold

to Arena will fluctuate during the sales period, it is not currently possible to predict the number of shares that will be sold or the

actual gross proceeds to be raised in connection with those sales.

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.

We may require additional financing to sustain

our operations and without it we may not be able to continue operations.

Subject to the terms and conditions of the ELOC

Agreement, we may, at our discretion, direct Arena to purchase up to $50.0 million of shares of our common stock under the ELOC Agreement

from time-to-time.

The purchase price per share for the shares of common stock that we may elect to sell to Arena under the ELOC Agreement

will fluctuate based on the market prices of our common stock for each purchase made pursuant to the ELOC Agreement, if any.

it is not currently possible to predict the number of shares that will be sold to Arena, the actual purchase price per share to be paid

by Arena for those shares, if any, or the actual gross proceeds to be raised in connection with those sales.

In addition, on 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.

Upon the consummation of the closing of each tranche,

we also agreed to issue common stock purchase warrants (the “Debenture Warrants”) to each Debenture Investor who participates

in such closing.

The Debenture Warrants will:

(i) provide for the purchase by the applicable Debenture Investor of a number of shares

of common stock equal to 20% of the total principal amount of the related Debenture purchased by the Debenture Investor on the applicable

closing date divided by 92.5% of the lowest daily VWAP of common stock for the five consecutive trading day period ended on the last trading

day immediately preceding such closing date and (ii) be exercisable at an exercise price equal to 92.5% of the average of the lowest daily

VWAP of the common stock over the consecutive trading days immediately preceding the delivery of the applicable Notice of Exercise (as

defined in the Debenture Warrants).

As of the date of this Annual Report on Form 10-K,

we have conducted two closings pursuant to the Debenture Purchase Agreement and sold Debentures in the aggregate principal amount of $1,666,666

for a purchase price of $1,500,000, representing an original issue discount of ten percent (10%).

We also issued to the Debenture Investors

163,394 Debenture Warrants in connection with the closings.

The extent to which we rely on Arena and/or the

Debenture 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.

Future sales and issuances of our common

stock or other securities might result in significant dilution and could cause the price of our common stock to decline.

To raise capital, we may sell common stock, convertible

securities or other equity securities in one or more transactions, at prices and in a manner we determine from time to time.

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 investors purchasing shares or other securities in the future could have rights superior to existing stockholders.

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.

We cannot predict what effect, if any, sales of

shares of our common stock in the public market or the availability of shares for sale will have on the market price of our common stock.

However, future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of outstanding

options, warrants and convertible preferred shares, or the perception that such sales may occur, could adversely affect the market price

of our common stock.

General Risks

Our quarterly and

annual results may fluctuate significantly and may not meet our expectations or those of investors or securities analysts.

Our quarterly and annual

results of operations, including the levels of our revenue, deferred revenue, working capital, and cash flows, may vary significantly

in the future, such that period-to-period comparisons of our results of operations may not be meaningful.

Our quarterly and annual financial

results may fluctuate due to a variety of factors, many of which are outside of our control and may be difficult to predict, including,

but not limited to:

level of demand for our products;

ability to grow or maintain our dollar-based net retention rate, expand usage within organizations,

and sell subscriptions;

timing and success of new features, integrations, capabilities, and enhancements by us to

our products, or by our competitors to their products, or any other changes in the competitive

landscape of our market;

ability to achieve widespread acceptance and use of our products;

in our forecasting of the demand for our products, which would lead to lower revenue, increased

costs, or both;

breaches, technical difficulties, or interruptions to our systems;

pressure as a result of competition or otherwise;

continued ability to hire high quality and experienced talent in a fiercely competitive environment;

timing of the grant or vesting of equity awards to employees, directors, or consultants;

in the values of foreign currencies relative to the U.S.

in, and continuing uncertainty in relation to, the legislative or regulatory environment;

and regulatory compliance costs in new and existing markets;

and timing of expenses related to the potential acquisition of businesses, talent, technologies,

or intellectual property, including potentially significant amortization costs and possible

● environmental

matters, such as wildfires, and health epidemics, such as the COVID-19 pandemic, influenza,

and other highly communicable diseases or viruses;

litigation judgments, other dispute-related settlement payments, or other litigation-related

economic conditions in either domestic or international markets, including geopolitical uncertainty

and instability and their effects on beverage purchases.

Any one or more of the factors

above may result in significant fluctuations in our results of operations, which may negatively impact the trading price of our common

You should not rely on our past results as an indicator of our future performance.

Our outstanding indebtedness

could materially adversely affect our financial condition and our ability to operate our business, pursue our growth strategy, and react

to changes in the economy or industry.

As of December 31, 2023,

we had $500,000 in principal amount outstanding under U.S.

Our quarterly and annual results may fluctuate

significantly and may not meet our expectations or those of investors or securities analysts.

Our quarterly and annual results of operations,

including the levels of our revenue, deferred revenue, working capital, and cash flows, may vary significantly in the future, such that

period-to-period comparisons of our results of operations may not be meaningful.

Our quarterly and annual financial results may fluctuate

due to a variety of factors, many of which are outside of our control and may be difficult to predict, including, but not limited to:

the level of demand for our products;

our ability to grow or maintain our dollar-based net retention rate, expand usage within organizations, and sell subscriptions;

the timing and success of new features, integrations, capabilities, and enhancements by us to our products, or by our competitors to their products, or any other changes in the competitive landscape of our market;

our ability to achieve widespread acceptance and use of our products;

errors in our forecasting of the demand for our products, which would lead to lower revenue, increased costs, or both;

security breaches, technical difficulties, or interruptions to our systems;

pricing pressure as a result of competition or otherwise;

the continued ability to hire high quality and experienced talent in a fiercely competitive environment;

the timing of the grant or vesting of equity awards to employees, directors, or consultants;

declines in the values of foreign currencies relative to the U.S.

changes in, and continuing uncertainty in relation to, the legislative or regulatory environment;

legal and regulatory compliance costs in new and existing markets;

costs and timing of expenses related to the potential acquisition of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and possible write-downs;

environmental matters, such as wildfires, and health epidemics, such as the COVID-19 pandemic, influenza, and other highly communicable diseases or viruses;

adverse litigation judgments, other dispute-related settlement payments, or other litigation-related costs;

general economic conditions in either domestic or international markets, including geopolitical uncertainty and instability and their effects on beverage purchases.

Any one or more of the factors above may result

in significant fluctuations in our results of operations, which may negatively impact the trading price of our common stock.

not rely on our past results as an indicator of our future performance.

Our outstanding indebtedness could materially

adversely affect our financial condition and our ability to operate our business, pursue our growth strategy, and react to changes in

the economy or industry.

As of December 31, 2024, 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, $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

have important consequences to you, including the following:

may be difficult for us to satisfy our obligations, including debt service requirements under

our outstanding debt, resulting in possible defaults on and acceleration of such indebtedness;

ability to obtain additional financing for working capital, capital expenditures, debt service

requirements or other general corporate purposes may be impaired;

substantial portion of cash flow from operations may be dedicated to the payment of principal

and interest on our debt, therefore reducing our ability to use our cash flow to fund our

operations, capital expenditures, future business opportunities, acquisitions and other general

corporate purposes;

● we are more vulnerable to economic downturns and adverse industry conditions

and our flexibility to plan for, or react to, changes in our business or industry are more limited;

ability to capitalize on business opportunities and to react to competitive pressures, as

compared to our competitors, may be compromised due to our level of debt;

ability to borrow additional funds or to refinance debt may be limited.

A failure to establish

and maintain an effective system of disclosure controls and internal control over financial reporting, could adversely affect our ability

to produce timely and accurate financial statements or comply with applicable regulations.

As a public company, we

will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of the applicable

listing standards of the Nasdaq Exchange.

We expect that the requirements of these rules and regulations will continue to increase our

legal, accounting, and financial compliance costs, make some activities more difficult, time consuming, and costly, and place significant

strain on our personnel, systems, and resources.

The Sarbanes-Oxley Act requires,

among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.

continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to

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.

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 in principal outstanding under the Paycheck

Protection Program Loan administered by the U.S.

Small Business Administration, $111,300 in principal outstanding under our loans with

Square Capital, LLC and $727,073 of short term borrowing from a private party.

Our substantial debt could have important consequences

to you, including the following:

it may be difficult for us to satisfy our obligations, including debt service requirements under our outstanding debt, resulting in possible defaults on and acceleration of such indebtedness;

our ability to obtain additional financing for working capital, capital expenditures, debt service requirements or other general corporate purposes may be impaired;

a substantial portion of cash flow from operations may be dedicated to the payment of principal and interest on our debt, therefore reducing our ability to use our cash flow to fund our operations, capital expenditures, future business opportunities, acquisitions and other general corporate purposes;

we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry are more limited;

our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our level of debt;

our ability to borrow additional funds or to refinance debt may be limited.

A failure to establish and maintain an effective

system of disclosure controls and internal control over financial reporting, could adversely affect our ability to produce timely and

accurate financial statements or comply with applicable regulations.

As a public company, we will be subject to the

reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of the applicable listing standards

We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial

compliance costs, make some activities more difficult, time consuming, and costly, and place significant strain on our personnel, systems,

and resources.

The Sarbanes-Oxley Act requires, among other things,

that we maintain effective disclosure controls and procedures and internal control over financial reporting.

We are continuing to develop

and refine our disclosure controls and other procedures that are designed to ensure that information required to 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 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

any new controls that we develop may become inadequate because of changes in conditions in our business.

In addition, changes in accounting

principles or interpretations could also challenge our internal controls and require that we establish new business processes, systems,

and controls to accommodate such changes.

We have limited experience with implementing the systems and controls that will be necessary

to operate as a public company, as well as adopting changes in accounting principles or interpretations mandated by the relevant regulatory

Additionally, if these new systems, controls or standards and the associated process changes do not give rise to the benefits

that we expect or do not operate as intended, it could adversely affect our financial reporting systems and processes, our ability to

produce timely and accurate financial reports or the effectiveness of internal control over financial reporting.

Moreover, our business

may be harmed if we experience problems with any new systems and controls that result in delays in their implementation or increased

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.

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.

Our current controls and any new controls that

we develop may become inadequate because of changes in conditions in our business.

In addition, changes in accounting principles or interpretations

could also challenge our internal controls and require that we establish new business processes, systems, and controls to accommodate

such changes.

We have limited experience with implementing the systems and controls that will be necessary to operate as a public company,

as well as adopting changes in accounting principles or interpretations mandated by the relevant regulatory bodies.

Additionally, if these

new systems, controls or standards and the associated process changes do not give rise to the benefits that we expect or do not operate

as intended, it could adversely affect our financial reporting systems and processes, our ability to produce timely and accurate financial

reports or the effectiveness of internal control over financial reporting.

Moreover, our business may be harmed if we experience problems

with any new systems and controls that result in delays in their implementation or increased 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

4 unchanged sentences

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.

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

and acquisition activities, which would require significant management attention, disrupt our business, dilute stockholder value, and

adversely affect our business, results of operations, and financial condition.

As part of our business

strategy to expand our product offerings and grow our business in response to changing technologies, customer demand, and competitive

pressures, we have in the past and may in the future make investments or acquisitions in other companies, products or technologies.

identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to complete acquisitions

on favorable terms, if at all.

These acquisitions may not ultimately strengthen our competitive position or achieve the goals of such

acquisition, and any acquisitions we complete could be viewed negatively by customers or investors.

We may encounter difficult or unforeseen

expenditures in integrating an acquisition, particularly if we cannot retain the key personnel of the acquired company.

if we fail to successfully integrate such acquisitions, or the assets, technologies or personnel associated with such acquisitions, into

our company, the business and results of operations of the combined company would be adversely affected.

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 and third parties, and adversely impact our business, financial condition, and results of operations.

may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition transaction,

including accounting charges.

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

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.

At such 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 and acquisition

activities, which would require significant management attention, disrupt our business, dilute stockholder value, and adversely affect

our business, results of operations, and financial condition.

As part of our business strategy to expand our

product offerings and grow our business in response to changing technologies, customer demand, and competitive pressures, we have in the

past and may in the future make investments or acquisitions in other companies, products or technologies.

The identification of suitable

acquisition candidates can be difficult, time-consuming, and costly, and we may not be able to complete acquisitions on favorable terms,

These acquisitions may not ultimately strengthen our competitive position or achieve the goals of such acquisition, and any

acquisitions we complete could be viewed negatively by customers or investors.

We may encounter difficult or unforeseen expenditures in

integrating an acquisition, particularly if we cannot retain the key personnel of the acquired company.

In addition, if we fail to successfully

integrate such acquisitions, or the assets, technologies or personnel associated with such acquisitions, into our company, the business

and results of operations of the combined company would be adversely affected.

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

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.

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.

If we issue a significant amount of equity securities in connection with future acquisitions,

existing stockholders’ ownership would be diluted.

We may need additional

capital, and we cannot be sure that additional financing will be available.

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 have rights, preferences or privileges senior to the rights of existing stockholders, and existing

stockholders 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, which

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

Our amended and restated

articles of incorporation provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery

of the State of Delaware is the exclusive forum for the following types of actions or proceedings under Delaware statutory or common

derivative claim or cause of action brought on our behalf;

claim or cause of action for a breach of fiduciary duty owed by any of our current or former

directors, officers or other employees to us or our stockholders;

claim or cause of action against us or any of our current or former directors, officers or

other employees arising out of or pursuant to any provision of the Delaware General Corporation

Law, our amended and restated certificate of incorporation or our amended and restated bylaws

(as each may be amended from time to time);

claim or cause of action seeking to interpret, apply, enforce or determine the validity of

our amended and restated certificate of incorporation or our amended and restated bylaws

(as each may be amended from time to time, including any right, obligation or remedy thereunder);

claim or cause of action as to which the Delaware General Corporation Law confers jurisdiction

to the Court of Chancery of the State of Delaware;

claim or cause of action against us or any of our current or former directors, officers or

other employees governed by the internal-affairs doctrine.

This provision would not

apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S.

federal courts

have exclusive jurisdiction.

In addition, our amended and restated certificate of incorporation that will be in effect prior to the closing

of this offering will provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted

by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint

asserting a cause or causes of action arising under the Securities Act, including all causes of action asserted against any defendant

to such complaint.

For the avoidance of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors,

the underwriters to any offering giving rise to such complaint, and any other professional entity whose profession gives authority to

a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.

were to find either choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or

unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

the Court of Chancery of the State of Delaware recently determined that the exclusive forum provisions of federal district courts of

the United States of America for resolving any complaint asserting a cause of action arising under the Securities Act is not enforceable.

These choice of forum provisions

may limit a stockholder’s 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 the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder

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 be enforced by a court in those other jurisdictions.

We note that investors cannot waive compliance

with the federal securities laws and the rules and regulations thereunder.

Additionally, our amended

and restated certificate of incorporation provide that any person or entity holding, owning or otherwise acquiring any interest in any

of our securities shall be deemed to have notice of and consented to these provisions.

Our charter documents also

contain other provisions that could have an anti-takeover effect, such as:

the board of directors to establish the number of directors and fill any vacancies and newly

created directorships;

that directors may only be removed pursuant to the provisions of Section 141(k) of the Delaware

General Corporation Law;

● prohibiting

cumulative voting for directors;

super-majority voting to amend some provisions in our amended and restated bylaws;

● authorizing

the issuance of “blank check” preferred stock that our board of directors could

use to implement a stockholder rights plan;

● eliminating

the ability of stockholders to call special meetings of stockholders.

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 stockholders 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 do not intend to

pay dividends for the foreseeable future.

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.

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, stockholders 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.

Catastrophic events

may disrupt our business.

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

In addition, the insurance we maintain would likely not be adequate to cover our losses resulting from disasters or other

business interruptions.

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

If we issue a significant amount of equity securities in connection with future acquisitions, existing stockholders’

ownership would be diluted.

We may need additional capital, and we cannot

be sure that additional financing will be available.

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

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 have rights, preferences or privileges senior to the rights of existing stockholders, and existing stockholders 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, which could limit our stockholders’

ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated articles of incorporation

provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is

the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:

any derivative claim or cause of action brought on our behalf;

any claim or cause of action for a breach of fiduciary duty owed by any of our current or former directors, officers or other employees to us or our stockholders;

any claim or cause of action against us or any of our current or former directors, officers or other employees arising out of or pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as each may be amended from time to time);

any claim or cause of action seeking to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws (as each may be amended from time to time, including any right, obligation or remedy thereunder);

any claim or cause of action as to which the Delaware General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware;

any claim or cause of action against us or any of our current or former directors, officers or other employees governed by the internal-affairs doctrine.

This provision would not apply to suits brought

to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S.

federal courts have exclusive jurisdiction.

In addition, our amended and restated certificate of incorporation that will be in effect prior to the closing of this offering will provide

that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district

courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause or causes of

action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint.

For the avoidance

of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering

giving rise to such complaint, and any other professional entity whose profession gives authority to a statement made by that person or

entity and who has prepared or certified any part of the documents underlying the offering.

If a court were to find either choice of forum

provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may

incur additional costs associated with resolving such action in other jurisdictions.

For example, the Court of Chancery of the State of

Delaware recently determined that the exclusive forum provisions of federal district courts of the United States of America for resolving

any complaint asserting a cause of action arising under the Securities Act is not enforceable.

These choice of forum provisions may limit a stockholder’s

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 the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder 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 be enforced by a court in those other jurisdictions.

We note that investors cannot waive compliance with the federal securities laws

and the rules and regulations thereunder.

Additionally, our amended and restated certificate

of incorporation provide that any person or entity holding, owning or otherwise acquiring any interest in any of our securities shall

be deemed to have notice of and consented to these provisions.

Our charter documents also contain other provisions

that could have an anti-takeover effect, such as:

permitting the board of directors to establish the number of directors and fill any vacancies and newly created directorships;

providing that directors may only be removed pursuant to the provisions of Section 141(k) of the Delaware General Corporation Law;

prohibiting cumulative voting for directors;

requiring super-majority voting to amend some provisions in our amended and restated bylaws;

authorizing the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;

eliminating the ability of stockholders to call special meetings of stockholders.

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 stockholders 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 do not intend to pay dividends for the

foreseeable future.

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, stockholders 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.

Catastrophic events may disrupt our business.

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.

addition, the insurance we maintain would likely not be adequate to cover our losses resulting from disasters or other business interruptions.

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