Reborn Coffee, Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2026 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-41479 REBORN COFFEE, INC. (Exact name of Registrant as specified in its charter) Delaware 47-4752305 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number) 580 N. Berry Street , Brea , CA 92821 (714) 784-6369 (Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices) N/A (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, $0.0001 par value per share REBN The Nasdaq Stock Market LLC (Nasdaq Capital Market) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No The registrant has 8,213,455 shares of common stock outstanding as of May 22, 2026. TABLE OF CONTENTS PART I FINANCIAL INFORMATION 1 Item 1 Unaudited Consolidated Financial Statements 1 Unaudited Consolidated Balance Sheets as of March 31, 2026 and December 31, 202 5 1 Unaudited Consolidated Statements of Operations for the Three Months Ended March 3 1, 2026 and 202 5 2 Unaudited Consolidated Statements of Stockholders’ Equity for the Three Months Ended M arch 3 1 , 2026 and 2025 3 Unaudited Consolidated Statements of Cash Flows for the T hree Months Ended M arch 3 1 2026 and 2025 4 Notes to Unaudited Consolidated Financial Statements 5 Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3 Quantitative and Qualitative Disclosures About Market Risk 28 Item 4 Controls and Procedures 28 PART II OTHER INFORMATION 29 Item 1 Legal Proceedings 29 Item 1A Risk Factors 29 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 29 Item 6 Exhibits 30 Signature 31 i NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) that are based on our management’s beliefs and assumptions and on information currently available to management, and which statements involve substantial risk and uncertainties. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth and trends, and objectives for future operations are forward-looking statements. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. These risks and uncertainties include, among other things, risks related to global macro-economic conditions, including the effects of inflation, rising interest rates and market volatility on the global economy; our ability to estimate the size of our total addressable market, and the development of the market for our products, which is new and evolving; our ability to effectively sustain and manage our growth and future expenses, achieve and maintain future profitability, attract new customers and maintain and expand our existing customer base; our ability to scale and update our platform to respond to customers’ needs and rapid technological change; the effects of increased competition in our market and our ability to compete effectively; our ability to expand use cases within existing customers and vertical solutions; our ability to expand our operations and increase adoption of our platform internationally; our ability to strengthen and foster our relationships with developers; our ability to expand our direct sales force, customer success team and strategic partnerships around the world; the impact of any data breaches, cyberattacks or other malicious activity on our technology systems; our ability to identify targets for and execute potential acquisitions; our ability to successfully integrate the operations of businesses we may acquire, and to realize the anticipated benefits of such acquisitions; our ability to maintain, protect and enhance our brand; the sufficiency of our cash, cash equivalents and capital resources to satisfy our liquidity needs; limitations on us due to obligations we have under our credit facility or other indebtedness; our failure or the failure of our software to comply with applicable industry standards, laws and regulations; our ability to maintain, protect and enhance our intellectual property; our ability to successfully defend litigation against us; our ability to attract large organizations as users; our ability to maintain our corporate culture; our ability to offer high-quality customer support; our ability to hire, retain and motivate qualified personnel, including executive level management; our ability to successfully manage and integrate executive management transitions; our ability to estimate the size and potential growth of our target market; uncertainties regarding the impact of general economic and market conditions, including as a result of regional and global conflicts or related government sanctions; our ability to successfully implement and maintain new and existing information technology systems, including our ERP system; and our ability to maintain proper and effective internal controls. You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and found in our Annual Report on Form 10-K filed for the year ended December 31, 2025. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law. ii PART I—FINANCIAL INFORMATION Item 1. Unaudited Consolidated Financial Statements. Reborn Coffee, Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets March 31, December 31, December 31, 2026 2025 ASSETS Current assets: Cash and cash equivalents $ 266,382 $ 2,594,716 Accounts receivable, net of allowance for doubtful accounts of $ 84,219 and $ 75,689 , respectively 1,218,784 946,996 AR from related party 663,751 728,990 Inventories, net 119,209 58,435 Prepaid expense and other current assets 665,284 550,000 Loan receivable from related party 4,889,140 2,000,000 Total current assets 7,822,550 6,879,137 Property and equipment, net 2,651,527 2,894,893 Operating lease right-of-use asset 2,159,446 2,160,871 Long-term prepayment 1,300,000 1,000,000 Other assets 217,952 246,189 Total assets $ 14,151,475 $ 13,181,090 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 650,655 $ 561,457 Accounts payable - related party 1,045,846 - Accrued expenses and current liabilities 831,201 815,245 Loan payable to shareholder 70,000 70,000 Loans payable to financial institutions, current 421,310 109,247 Loans payable to others 269,026 279,026 Loan Payable to related party 440,183 153,605 Convertible debt, net of debt discount of $ 501,596 and $ 900,198 , respectively 3,665,069 3,266,467 Derivative Liability 550,832 503,384 Loan payable, emergency injury disaster loan, current 21,327 22,452 Loan payable, payroll protection program, current 45,596 26,307 Operating lease liabilities, current 801,841 879,416 Total current liabilities 8,812,886 6,686,606 Loan payable, emergency injury disaster loan, net of current 469,940 469,940 Loan payable, payroll protection program, net of current 6,430 25,718 Operating lease liabilities, net of current 1,417,006 1,352,961 Total liabilities 10,706,261 8,535,225 Commitments and Contingencies Stockholders’ equity Common Stock, $ 0.0001 par value, 40,000,000 shares authorized; 8,213,455 and 7,850,601 shares issued and outstanding, respectively 821 785 Common stock subscription receivables - - Common stock issuable, $ 0.0001 par value, 0 and 170,000 shares issuable, respectively - 850,000 Preferred Stock, $ 0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding - - Additional paid-in capital 35,507,596 34,365,043 Accumulated deficit ( 32,531,681 ) ( 30,704,112 ) Accumulated other comprehensive income - - Non-controlling interest in subsidiary 468,478 134,149 Total stockholders’ equity 3,445,214 4,645,865 Total liabilities and stockholders’ equity $ 14,151,475 $ 13,181,090 See accompanying notes to unaudited condensed consolidated financial statements. 1 Reborn Coffee, Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Operations Three Months Ended March 31 2026 2025 Net revenues: Stores $ 1,470,026 $ 1,678,935 Wholesale and online 79,869 14,326 Service income 3,386,552 - License income 275,000 - Total net revenues 5,211,447 1,693,261 Operating costs and expenses: Product, food and drink costs - stores, wholesale and online 517,536 924,364 Cost of service income - subcontractors 2,591,308 - General and administrative 2,436,695 1,876,295 Professional fees 246,004 589,959 Stock compensation expense 292,589 - Total operating costs and expenses 6,084,132 3,390,618 Loss from operations ( 872,685 ) ( 1,697,357 ) Other income (expense): Other income (expense) ( 87,599 ) 83,882 Interest expense ( 21,683 ) ( 58,819 ) Interest expense - debt discount ( 398,602 ) ( 122,336 ) Gain on sale of property 14,777 - Derivative Expense ( 47,448 ) ( 395,807 ) Asset impairment loss ( 80,000 ) - Total other expense, net ( 620,555 ) ( 493,080 ) Loss before income taxes ( 1,493,240 ) ( 2,190,437 ) Provision for income taxes - 707 Net loss ( 1,493,240 ) ( 2,191,144 ) Net income (loss) attributable to non-controlling interest ( 334,329 ) - Net loss attributable to Reborn Coffee shareholders $ ( 1,827,569 ) $ ( 2,191,144 ) See accompanying notes to unaudited condensed consolidated financial statements. 2 Reborn Coffee, Inc. and Subsidiaries Unaudited Condensed Consolidated Stockholders’ Equity Accumulated Common Stock Additional Non- Other Total Common Stock Issuable Paid-in Accumulated controlling Comprehensive Shareholders’ Shares Amount Shares Amount Capital Deficit Interest Income Equity Balance as of December 31, 2025 7,850,601 $ 785 170,000 $ 850,000 $ 34,365,043 $ ( 30,704,112 ) $ 134,149 $ - $ 4,645,865 Stock compensation 185,771 18 - - 292,571 - - - 292,589 Common stock issued from issuable 177,083 18 ( 170,000 ) ( 850,000 ) 849,982 - - - - Net loss - - - - - ( 1,827,569 ) 334,329 - ( 1,493,240 ) Balance as of March 31, 2026 8,213,455 $ 821 - $ - $ 35,507,596 $ ( 32,531,681 ) $ 468,478 $ - 3,445,214 Accumulated Common Stock Additional Non- Other Total Common Stock Issuable Paid-in Accumulated controlling Comprehensive Shareholders’ Shares Amount Shares Amount Capital Deficit Interest Income Equity Balance as of December 31, 2024 4,274,508 $ 428 294,000 $ 1,470,000 $ 22,674,095 $ ( 21,562,872 ) $ - $ 21,091 $ 2,602,742 Foreign currency translation - - - - - - - 3,984 3,984 Net loss - - - - - ( 2,191,144 ) - - ( 2,191,144 ) Balance as of March 31, 2025 4,274,508 $ 428 294,000 $ 1,470,000 $ 22,674,095 $ ( 23,754,016 ) $ - $ 25,075 $ 415,582 See accompanying notes to unaudited condensed consolidated financial statements. 3 Reborn Coffee, Inc. and Subsidiaries Unaudited Consolidated Statements of Cash Flows 3 Months ended March 31, 2026 2025 Cash flows from operating activities: Net loss ( 1,827,569 ) ( 2,191,144 ) Non-controlling interest net income 334,329 - Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Stock compensation expense 292,589 - Interest expense - amortization of debt discount 398,602 122,336 Operating lease ( 12,105 ) ( 15,662 ) Asset impairment loss 80,000 - Gain on disposal of assets 14,777 - Depreciation 237,549 61,008 Derivative Expense 47,448 395,807 Changes in operating assets and liabilities: Accounts receivable ( 206,549 ) ( 1,982 ) Inventories ( 60,774 ) ( 33,467 ) Prepaid expense and other assets ( 87,047 ) ( 39,861 ) Accounts payable 89,198 ( 285,550 ) Accrued liabilities, net 15,956 ( 228,028 ) Accounts payable from related party 1,045,846 - Derivative liability - 2,681,149 Net cash used in operating activities 362,250 464,606 Cash flows from investing activities: Acquisition of property and equipment ( 138,554 ) - Long-term prepayment ( 300,000 ) - Proceeds from sale of assets 49,594 1,994 Loan receivables from related party ( 2,889,140 ) - Net cash provided by (used in) investing activities ( 3,278,100 ) 1,994 Cash flows from financing activities: Net proceeds from loan payable to others ( 10,000 ) ( 142,492 ) Net borrowings from related party 286,578 - Borrowings from convertible debt - 3,333,333 Adjustment of debt discount for notes payable - ( 3,264,481 ) Borrowings (repayments) from loan payable to financial institutions 312,063 237,718 Repayments on loan payable to PPP ( 1,125 ) ( 11,776 ) Net cash provided by financing activities 587,516 152,302 Net increase (decrease) in cash ( 2,328,334 ) 618,902 Cash at beginning of year 2,594,716 158,215 Cash at end of year $ 266,382 $ 777,117 Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 21,683 $ 258,950 Income taxes $ - $ 39,838 See accompanying notes to unaudited condensed consolidated financial statements. 4 REBORN COFFEE, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS Reborn Coffee, Inc. (“Reborn”) was incorporated in the State of Florida in January 2018. In July 2022, Reborn was migrated from Florida to Delaware, and filed a certificate of incorporation with the Secretary of State of the State of Delaware having the same capitalization structure as the Florida predecessor entity. Reborn has the following subsidiaries: ● Reborn Global Holdings, Inc. (“Reborn Holdings”), a California Corporation incorporated in November 2014. Reborn Holdings is engaged in the operation of wholesale distribution and retail coffee stores in California to sell a variety of coffee, tea, Reborn brand name water and other beverages along with bakery and dessert products. ● Reborn Coffee Franchise, LLC (the “Reborn Coffee Franchise”), a California limited liability company formed in December 2020, is a franchisor providing premier roaster specialty coffee to franchisees or customers. Reborn Coffee Franchise continues to develop the Reborn Coffee system for the establishment and operation of Reborn Coffee stores using one or more Reborn Coffee marks. Reborn Coffee Franchise has one franchise as of December 31, 2025. ● Reborn Realty, LLC (the “Reborn Realty”), a California limited liability company formed in March 2023, is an entity which acquired a real property located in Brea, California. ● Reborn Coffee Korea, Inc. (the “Reborn Korea”) – a Korea corporation located in Daejeon, South Korea formed in October 2023, is a wholly owned subsidiary of Reborn with one retail coffee store under the brand name of Reborn Coffee. Reborn Korea had no operations in 2025. ● Reborn Malaysia, Inc. (the “Reborn Malaysia”) – a Malaysian corporation located in Kuala Lumpur, Malaysia formed in October 2023, is majority owned subsidiary of Reborn with one retail coffee store under the brand name of Reborn Coffee. ● Reborn Logistics, Inc. (the “Reborn Logistics”) – a California corporation incorporated in September 2025. Reborn Logistics provides comprehensive freight forwarding, transportation and logistics services. Reborn holds a 51 % interest in Reborn Logistics. Reborn Coffee, Inc., Reborn Global Holdings, Inc., Reborn Coffee Franchise, LLC, Reborn Realty, LLC, Reborn Korea, Reborn Malaysia and Reborn Logistics will be collectively referred as the “Company.” Going Concern Matters The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $ 32.5 million as of March 31, 2026 and a net loss before income taxes of $1.4 million during the three months ended March 31, 2026. These matters raise substantial doubt about the Company’s ability to continue as a going concern. To support its 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 impact on our results of operations and cash flows. Additional financing is anticipated to fund the Company’s operations in near future. However, there can be no assurance that any of this financing can be obtained or that the Company can continue as a going concern. 5 Bassi of Presentation The accompanying interim unaudited condensed consolidated financial statements (“Unaudited Interim Financial Statements”) of the Company and its 100 %-owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q and Regulation S-X. Accordingly, these Unaudited Interim Financial Statements do not include all of the information and notes required by GAAP for complete financial statements. These Unaudited Interim Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2025 included in the Company’s Form 10-K. In the opinion of management, the Unaudited Interim Financial Statements included herein contain all adjustments, including normal recurring adjustments, considered necessary to present fairly the Company’s financial position, the results of operations and cash flows for the periods presented. The operating results and cash flows of the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Segment Reporting FASB ASC Topic 280, Segment Reporting, requires public companies to report financial and descriptive information about their reportable operating segments. Operating segments are identified based on the manner in which the Company’s chief operating decision maker (“CODM”) evaluates financial information, business activities, and performance results. Management has identified two reportable operating segments: (i) Reborn Coffee, which includes both wholesale and retail sales of coffee, water, and other beverages, and (ii) Reborn Logistics, which provides freight forwarding services. The Company’s CODM is its Chief Executive Officer . The CODM evaluates segment performance primarily based on revenues, income from operations, and other income (expense). Assets by segment are not reviewed by the CODM in assessing segment performance and, accordingly, are not disclosed. The following table presents a summary of operating performance by reportable segment for the periods indicated: Reborn Coffee Reborn Logistics Others / Elimination Total Revenue 1,824,895 3,386,552 5,211,447 Income (loss) from operations ( 1,562,366.00 ) 682,304 7,377 - 872,685 Other income (expenses) ( 620,555.00 ) - 620,555 Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and the accompanying notes. Such estimates include accounts receivables, accrued liabilities, income taxes, long-lived assets, and deferred tax valuation allowances. These estimates generally involve complex issues and require management to make judgments, involve analysis of historical and future trends that can require extended periods of time to resolve, and are subject to change from period to period. In all cases, actual results could differ materially from estimates. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers . The Company’s net revenue primarily consists of revenues from its retail stores and wholesale and online store. Accordingly, the Company recognizes revenue as follows: ● Retail Store Revenue Retail store revenues are recognized at the point of sale when payment is tendered. Retail store revenues are reported net of sales, use, or other transaction taxes collected from customers and remitted to taxing authorities. Sales taxes payable are recorded as accrued liabilities within other current liabilities ● Wholesale and Online Revenue Wholesale and online revenues are recognized when products are delivered and title passes to the customer or to wholesale distributors. When customers pick up products at the Company’s warehouse or when products are delivered to wholesale distributors, title transfers and revenue is recognized at that time. 6 ● Retail Store Revenue Retail store revenues are recognized at the point of sale when payment is tendered. Retail store revenues are reported net of sales, use, or other transaction taxes collected from customers and remitted to taxing authorities. Sales taxes payable are recorded as accrued liabilities within other current liabilities. Retail store revenue represents approximately 73.5 % of the Company’s total revenue. ● Wholesale and Online Revenue Wholesale and online revenues are recognized when products are delivered and title passes to the customer or to wholesale distributors. When customers pick up products at the Company’s warehouse or when products are delivered to wholesale distributors, title transfers and revenue is recognized at that time. Wholesale and online revenues represent approximately 1.4 % of the Company’s total revenue. . ● Service Income – Reborn Logistics Service income is primarily derived from Reborn Logistics’ freight forwarding and logistics services. The Company recognizes service revenue when shipment transactions are delivered. Each shipment transaction or service order generally represents a separate contract with a customer. A performance obligation is established once a customer agreement with an agreed-upon transaction price exists. The transaction price is typically fixed and is not contingent upon the occurrence or non-occurrence of future events, and payment is generally due within 45 to 60 days from the invoice date. The Company’s transportation arrangements involve organizing the movement of freight to a customer’s destination. Transportation services, including certain ancillary services such as loading and unloading, freight insurance, and customs clearance, represent a single performance obligation, as these services are not distinct in the context of the contract. This performance obligation is satisfied and revenue is recognized as control of the services transfers to the customer during the transit period, as the customer’s goods move from origin to destination. The Company evaluates whether it controls the transportation services provided to determine whether it is acting as a principal or an agent. The Company has determined that it acts as the principal in its transportation service arrangements, as it controls pricing, manages all aspects of the shipment process, and assumes the risks associated with delivery and collection. Accordingly, service income is presented on a gross basis in the consolidated statements of operations. ● License Revenue The Company has entered into license agreements that allow licensees to operate and market Reborn Coffee branded stores and products under the Reborn Coffee trademarks. Under these agreements, the Company provides ongoing services, including training, marketing support, system updates, and other operational assistance. As the Company is required to provide these ongoing services, license revenue is recognized over the term of the license agreement. License agreements typically have initial terms of three years and may be renewed for additional periods. Product, Food and Drink Costs – Stores, Wholesales and Online Product, food and drink costs – stores, wholesale and online primarily include the costs of ingredients of food and beverage sold and related supplies used in customer service. The wholesale and online sales also include costs of packaging and shipping. Cost of service income – subcontractors (Reborn Logistics) Cost of service income – subcontractors mainly represent the cost of independence contractors and third-party carriers in the performance of its freight forward and transportation services. Shipping and Handling Costs The Company incurred freight out costs, which are primarily included in the Company’s cost of sales – wholesale and online. Freight in costs, when attached to a specific purchase, are included as a component of the cost of the purchased goods and materials items and allocated to accounts in accordance with the nature of the goods. When the freight in costs are not allocable to an individual purchase or are more significant, they are recorded to a freight and shipping account within cost of sales. General and Administrative Expense General and administrative expense includes store-related expense as well as the Company’s corporate headquarters’ expenses. 7 Accounts Receivable, Net Accounts receivables are stated net of allowance for doubtful accounts. The allowance for doubtful accounts is determined primarily on the basis of past collection experience and general economic conditions. The Company determines terms and conditions for its customers based on volume transacted by the customer, customer creditworthiness and past transaction history. At March 31, 2026 and December 31, 2025, allowance for doubtful accounts were $ 84,219 and $ 75,689 , respectively. The Company does not have any off-balance sheet exposure related to its customers. Inventory Inventories consisted primarily of coffee beans, drink products, and supplies which are recorded at cost or at net realizable value. Property and Equipment, Net Property and equipment are recorded at cost, less accumulated depreciation and amortization. Maintenance and repairs are charged to expense as incurred. Depreciation and amortization are provided using both the straight-line and declining balance methods over the following estimated useful lives: Furniture and fixtures 5 - 7 Years Store construction Lesser of the lease term or the estimated useful lives of the improvements, generally 6 years Leasehold improvement Lesser of the lease term or the estimated useful lives of the improvements, generally 6 years When assets are retired or disposed of, the cost and accumulated depreciation thereon are removed, and any resulting gains or losses are included in the consolidated statements of operations. Leasehold improvements are amortized using the straight-line method over the estimated life of the asset, not to exceed the length of the lease. Repair and maintenance costs are expensed as incurred. Operating Leases The Company accounts for its leases under ASC Topic 842, Leases . The Company determine if an arrangement is or contains a lease at inception. The Company’s operating leases with a term greater than one year are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current and operating lease liabilities, net of current in the unaudited condensed consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date, based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses its incremental borrowing rate which represents an estimated rate of interest that the Company would have to pay to borrow equivalent funds on a collateralized basis at the lease commencement date. Operating lease expense is recognized on a straight-line basis over the expected lease term. Net Loss Per Share Basic net loss per share are computed by dividing net loss available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed similar to basic net loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. The Company did not have any dilutive, or potentially dilutive, shares outstanding for the three months ended March 31, 2026 and 2025. Long-lived Assets In accordance with ASC Topic 360, Property, Plant, and Equipment , the Company reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company considers the carrying value of assets may not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. As of March 31, 2026 and December 31, 2025, the Company was not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired. 8 Fair Value of Financial Instruments The Company records its financial assets and liabilities at fair value, which is defined under the applicable accounting standards as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measure date. The Company uses valuation techniques to measure fair value, maximizing the use of observable outputs and minimizing the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The financial statements do not include any financial instruments at fair value on a recurring or non-recurring basis. The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. There were no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. There have been no transfers between levels. As of March 31, 2026 and December 31, 2025, the Company believes that the carrying value of accounts receivable, accounts payable, accrued expenses, and other current assets and liabilities approximate fair value due to the short maturity of theses financial instruments. The financial statements do not include any financial instruments at fair value on a recurring or non-recurring basis. Income Taxes Income taxes are provided for the tax effects of transactions reported in the financial statements and consisted of taxes currently due and deferred taxes. Deferred taxes are recognized for the differences between the basis of assets and liabilities for financial statement and income tax purposes. The Company follows ASC Topic 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740-10-25 provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company did not recognize additional liabilities for uncertain tax positions pursuant to ASC 740 for the three months ended March 31, 2026 and 2025. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable arising from its normal business activities. The Company performs ongoing credit evaluations to its customers and establishes allowances when appropriate. The Company purchases from various vendors for its operations. For the three months ended March 31, 2026 and 2025, no purchases from any vendors accounted for a significant amount of the Company’s bean coffee purchases. Related Parties The Company follows ASC Topic 850, Related Party Disclosures , for the identification of related parties and disclosure of related party transactions. Related parties are any entities or individuals that, through employment, ownership, or other means, possess the ability to direct or cause the direction of management and policies of the Company. 9 Recent Accounting Pronouncement The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements. 3. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: March 31, December 31, 2026 2025 Furniture and equipment $ 1,409,705 $ 1,409,705 Leasehold improvement 1,020,515 1,020,515 Store 1,876,479 1,876,479 Store construction 408,356 379,356 Vehicle 45,005 103,645 Total property and equipment 4,760,060 4,789,700 Less accumulated depreciation ( 2,108,533 ) ( 1,894,807 ) Total property and equipment, net $ 2,651,527 $ 2,894,893 Depreciation expense on property and equipment amounted to approximately $ 237,549 and $ 63,330 for the three months ended March 31, 2026 and 2025, respectively. 4. LOANS PAYABLE TO FINANCIAL INSTITUTIONS Loans payable to financial institutions consisted of the following: As of March 31, 2026 December 31, 2025 Loan agreements with principal amount of $ 960,777 and repayment rate of 14.75 % to 20.0 %. The loans payable mature on various dates in 2026 $ 421,310 $ 109,247 5. LOAN PAYABLE TO OTHER Loans payable to others consisted of the following: March 31, 2026 December 31, 2025 June 2023 – Loan agreements with principal amount of $ 500,000 and repayment rate of 12.0 % per annum. The loans payable mature on various dates in 2026 $ 174,026 $ 184,026 April 2025 - Loan amount of $ 220,000 with no interest. The loans payable mature in 2026 95,000 95,000 Total loan payable to others $ 269,026 $ 279,026 10 6. LOAN PAYABLE TO SHAREHOLDER Loans payable to shareholders consisted of the following: March 31, 2026 December 31, 2025 Borrowing from shareholder, bearing no interest and due upon demand. $ 70,000 $ 70,000 Total loan payable to shareholder $ 70,000 $ 70,000 7. LOAN PAYABLE TO RELATED PARTY Loans payable to shareholders consisted of the following: March 31, 2026 December 31, 2025 Borrowing from related party bearing no interest and due upon demand. $ 440,183 $ 153,605 Total loan payable to shareholder $ 440,183 $ 153,605 8. LOAN PAYABLE, EMERGENCY INJURY DISASTER LOAN (EIDL) Loans payable, Emergency Injury Disaster Loan (EIDL) consisted of the following: March 31, 2026 December 31, 2025 May 16, 2020 ($ 150,000 ) - Loan agreement with principal amount of $150,00 with an interest rate of 3.75 % and maturity date on May 16, 2050 $ 150,000 $ 150,000 June 28, 2021 ($350,000) – Loan agreement with principal amount of $ 350,000 with an interest rate of 3.75 % and maturity date on May 18, 2050 350,000 350,000 Total long-term loan payable, emergency injury disaster loan (EIDL) 500,000 500,000 Interest payment ( 7,608 ) ( 7,608 ) Less - current portion ( 22,452 ) ( 22,452 ) Total loan payable, emergency injury disaster loan (EIDL), less current portion $ 469,940 $ 469,940 11 The following table provides future minimum payments: For the years ended December 31, Amount 2026 $ 30,060 2027 30,060 2028 30,060 2029 30,060 2030 30,060 Thereafter 349,700 Total $ 500,000 May 16, 2020 – $ 150,000 On May 16, 2020, the Company executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the U.S. Small Business Administration (“SBA”) under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. As of March 31, 2026, the loan payable, EIDL noted above is not in default. Pursuant to that certain Loan Authorization and Agreement (the “SBA Loan Agreement”), the Company borrowed an aggregate principal amount of the EIDL Loan of $ 150,000 , with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75 % per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning May 16, 2021 (12 months from the date of the SBA Loan) in the amount of $ 731 . The balance of principal and interest is payable 30 years from the date of the SBA Loan. In connection therewith, the Company also received a $ 10,000 grant, which does not have to be repaid. During the year ended December 31, 2020, $ 10,000 was recorded in Economy injury disaster loan (EIDL) grant income in the Statements of Operations. The schedule of payments on this loan was later deferred to commence 24 months from the date of loan, which was May 2022. In connection therewith, the Company executed (i) a loan for the benefit of the SBA (the “SBA Loan”), which contains customary events of default and (ii) a Security Agreement, granting the SBA a security interest in all tangible and intangible personal property of the Company, which also contains customary events of default (the “SBA Security Agreement”). June 28, 2021 – $ 350,000 On June 28, 2021, the Company executed the standard loan documents required for securing a second loan (the “Second EIDL Loan”) from the SBA under its EIDL assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. As of March 31, 2026, the loan payable, the Second EIDL noted above is not in default. Pursuant to that certain Amended Loan Authorization and Agreement (the “SBA Loan Agreement”), the Company borrowed an aggregate principal amount of the Second EIDL Loan of $ 500,000 , with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75 % per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning April 16, 2022 (24 months from the original date of the SBA Loan) in the amount of $ 2,505 . The balance of principal and interest is payable 30 years from the original date of the SBA Loan. 12 9. LOAN PAYABLE, PAYROLL PROTECTION LOAN PROGRAM (PPP) Loans payable, Payroll Protection Loan Program (PPP) consisted of the following: March 31, 2026 December 31, 2025 Loan payable from Payroll protection program (PPP) $ 52,025 $ 52,025 Less - current portion ( 26,307 ) ( 26,307 ) Total loan payable, payroll protection program (PPP), less current portion $ 25,718 $ 25,718 The Paycheck Protection Program Loan (the “PPP Loan”) is administered by the SBA. The interest rate of the loan is 1.00 % per annum and accrues on the unpaid principal balance computed on the basis of the actual number of days elapsed in a year of 360 days. Commencing seven months after the effective date of the PPP Loan, the Company is required to pay the Lender equal monthly payments of principal and interest as required to fully amortize any unforgiven principal balance of the loan by the two-year anniversary of the effective date of the PPP Loan (the “Maturity Date”). The PPP Loan contains customary events of default relating to, among other things, payment defaults, making materially false or misleading representations to the SBA or the Lender, or breaching the terms of the PPP Loan. The occurrence of an event of default may result in the repayment of all amounts outstanding under the PPP Loan, collection of all amounts owing from the Company, or filing suit and obtaining judgment against the Company. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. Recent modifications to the PPP by the U.S. Treasury and Congress have extended the time period for loan forgiveness beyond the original eight-week period, making it possible for the Company to apply for forgiveness of its PPP loan. 10. CONVERTIBLE NOTES PAYABLE NET OF DEBT DISCOUNT Convertible Notes Payable consisted of the following: March 31, December 31, 2026 2025 Tranche 1: February 10 2025 $ 555,555 555,555 Tranche 2: February 27 2025 1,111,111 1,111,111 Tranche 3: March 28 2025 1,666,666 1,666,666 Tranche 4: August 1, 2025 833,333 833,333 Total Convertible Debt 4,166,665 4,166,665 Less: Debt Discount ( 501,596 ) ( 900,198 ) Total Convertible Notes Payable $ 3,665,069 3,266,467 During the initial recognition company calculated fair value of derivative liability on convertible debt and Warrants and recorded the difference as debt discount subject to maximum of notes payable amount. Debt discount will be amortized over the term of the note. 13 Debt discount is calculated as follows: March 31, 2026 December 31, 2025 Initial calculation Original Issuance Discount $ 416,665 $ 416,665 Commitment Fees 750,000 750,000 Derivative 800,560 800,560 Total Debt Discount 1,967,225 1,967,225 Less: Amortization of Debt Discount - 1465629 ( 1,067,027 ) Total Debt Discount $ 501,596 $ 900,198 On February 6, 2025, the Company entered into a Securities Purchase Agreement (“Securities Purchase Agreement”) with the purchasers named therein (the “Arena Investors”). Under the Securities Purchase Agreement, the Company will 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 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 the Company’s 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, the Company issued common stock purchase warrants (“Warrants”) to each Arena Investor who participated in such closing. The Warrants will: (i) provide for the purchase by the applicable Arena Investor of a number of shares of common stock equal to 20 % of the total principal amount of the related Debenture purchased by the Arena 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 Warrants). The Company conducted four closings in February 2025, March 2025, and August 2025 and the Company issued to the Arena Investors Debentures in an aggregate principal amount of $ 3,750,000 . The Debentures were sold to the Arena Investors for a purchase price of $ 4,166,665 , representing an original issue discount of 10 % and professional fees. The Company also issued to the Arena Investors 1,041,667 Warrants in connection with the Debentures. The fair value of the warrant liability was determined using Monte Carlo valuation techniques and is remeasured at each reporting date, with changes in fair value recognized in the statement of operations. In December 2025, the Company entered into a Warrant Exchange and Termination Agreement (“Warrant Termination Agreement”) with Areana Investors. Under the Warrant Termination Agreement, the Company terminated and cancelled all previously issued 1,041,667 Warrants and issued 134,139 common stock shares. 14 11. DERIVATIVE LIABILITY Derivative Liability consisted of the following: March 31, December 31, 2026 2025 Initial Recognition on Convertible Debt $ 503,384 $ 596,195 Add/Less: Change during the period 47,448 ( 92,811 ) Total Derivative Liability $ 550,832 $ 503,384 The Company analyzed the conversion feature of the Debentures for derivative accounting consideration under ASC 815 Derivatives and Hedging and determined that the embedded conversion feature should be classified as a liability due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion features. ASC 815 requires that the conversion features are bifurcated and separately accounted for as an embedded derivative contained in the Company’s convertible debt. The embedded derivative is carried on the balance sheet at fair value. Any unrealized change in fair value, as determined at each measurement period, is recorded as a component of the income statement and the associated carrying amount on the balance sheet is adjusted by the change. As of March 31, 2026, the Company’s conversion features of the Debentures were treated as derivative liability and changes in the fair value were recognized in earnings. The Company estimated the fair value of conversion features of the Debentures using Monte Carlo model and the following assumptions: Schedule of Derivative liability Risk Free Interest Rate 0.00 % Expected Term 1.5 years Expected Volatility 158.08 % Expected Dividends None Expected volatility was based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent periods. The Company believes this method produced an estimate that was representative of the Company’s expectations of future volatility over the expected term of the Debentures. The Company had no reason to believe that future volatility over the expected remaining life of these warrants was likely to differ materially from historical volatility. The risk-free rate is set to 0 %, as both the end price and the minimum price grow and are discounted back at the same risk-free rate in a Geometric Brownian Motion model. The derivative liability of $ 596,195 was recognized by the Company on issuance as note payable. The derivative liability was further revalued as of March 31, 2026 at $ 550,832 and the Company recorded $ 47,448 as the changes in fair value of derivative liability for the three months ended March 31, 2026. 10. INCOME TAX Total income tax (benefit) expense consists of the following: For the Three Months March 31, 2026 2025 Current provision (benefit): Federal $ - $ - State - - Total current provision (benefit) - - Deferred provision (benefit): Federal - - State - - Total deferred provision (benefit) - - Total tax provision (benefit) $ - $ - 15 A reconciliation of the Company’s effective tax rate to the statutory federal rate for the nine months ended March 31, 2026 and 2025 is as follows: Description March 31, 2026 March 31, 2025 Statutory federal rate 21.00 % 21.00 % State income taxes net of federal income tax benefit and others 6.98 % 6.98 % Permanent differences for tax purposes and others 0.00 % 0.00 % Change in valuation allowance ( 27.98 )% ( 27.98 )% Effective tax rate 0.00 % 0.00 % The income tax benefit differs from the amount computed by applying the U.S. federal statutory tax rate of 21 % due to California state income taxes of 8.84 % and changes in the valuation allowance. Deferred income taxes reflect the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of deferred tax assets and liabilities are as follows: December 31, March 31, 2026 December 31, 2025 Deferred tax assets: Net operating loss $ 6,863,965 $ 6,863,965 Bad debt reserve 22,586 22,586 Basis difference in fixed assets 332,510 332,510 Operating lease liabilities 666,142 666,142 State taxes 7,153 7,153 Total Deferred tax assets 7,892,355 7,892,355 Deferred tax liabilities: Operating lease right-of-use asset ( 644,804 ) ( 644,804 ) Total Deferred tax liabilities ( 644,804 ) ( 644,804 ) Net deferred tax assets 7,247,551 7,247,551 Less – valuation allowance ( 7,247,551 ) ( 7,247,551 ) Total deferred tax assets, net of valuation allowance $ - $ - The Company uses the liability method of accounting for income taxes as set forth in ASC 740. Under the liability method, deferred taxes are determined based on differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. As of December 31, 2025, the Company had federal and State net operating loss carryforwards of approximately $ 25.2 million and $ 17.8 million, respectively. Under the new tax law, the Federal net operating loss arising in tax years ending after December 31, 2017, will be carried forward indefinitely. The Company has pre-tax reform federal net operating loss carryforwards in the amount of approximately $ 2.0 million as of March 31, 2026. Net operating loss carryforwards arising tax years ending after December 31, 2017, are approximately $ 23.2 million. The state net operating loss carryforwards will begin to expire in 2042. 16 As of March 31, 2026 and December 31, 2025, the Company maintained full valuation allowance for net operating loss carryforward deferred tax asset. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income are reduced. The Company files a federal income tax return and files tax returns in state and local jurisdictions. The statutes of limitations for its federal income tax returns are open for years 2022 and after, and state and local income tax returns are open for years 2021 and after. 11. COMMITMENTS AND CONTINGENCIES Operating Leases The Company has the following operating facility leases: Brea (Corporate office) – On August 12, 2024, the Company entered into an operating facility lease for its corporate office located in Brea, California with term of 36 months at $ 10,589 per month. The lease started on September 1, 2024 and expires in August 2026 . Brea – On August 16, 2024, the Company entered into an operating lease agreement for its store located at La Floresta Shopping Village in Brea, California, with a term of 60 months and an option to extend. The lease commenced in December 1, 2014 and was initially set to expire on November 30, 2029 . The monthly lease payment under the lease agreement is approximately $ 7,965 . La Crescenta - On May 2017, the Company entered into an operating facility lease for its store located in La Crescenta, California with 120 months term with option to extend. The lease started on May 2017 and expires in May 2027 . The Company entered into non-cancellable lease agreement for a coffee shop approximately 1,607 square feet located in La Crescenta, California commencing in May 2017 and expiring in April 2027 . The monthly lease payment under the lease agreement is approximately $ 6,026 . Corona Del Mar - On January 18, 2023, the Company renewed its retail store in Corona Del Mar, California. As part of that lease renewal, the Company renewed the original operating lease with 60 months term with an option to extend. The lease expires in January 2028 . The monthly lease payment under the renewed lease agreement is approximately $ 5,001 . Laguna Woods - On February 12, 2021, the Company entered into an operating facility lease for its store located at Home Depot Center in Laguna Woods, California with a term of 60 months and an option to extend. The lease has been renewed until Jan 2031. Manhattan Village - On March 1, 2022, the Company entered into an operating facility lease for its store located at Manhattan Beach, California with 60 months term with option to extend. The lease started in March 2022 and expires in February 2027 . Huntington Beach - On October 7, 2022, the Company entered into an operating facility lease for its store located at Huntington Beach, California with a 124 -month term with option to extend. The lease started in November 2021 and expires in February 2032 . Riverside - On February 4, 2021, the Company entered into an operating facility lease for its store located at Galleria at Tyler in Riverside, California with a term of 84 months and an option to extend. The lease started in April 2021 and expires in March 2028 . Reborn Logistics – On October 1, 2025, Reborn Logistics entered into a sublease agreement for its location at Buena Park, California with a term of 36 months at a $ 1,500 per month. 17 Diamond Bar – On March 20, 2023, the Company entered into an operating facility lease for its store located at Diamond Bar, California which matures on March 31, 2027 . The monthly lease payment under the lease agreement is approximately $ 5,900 . Anaheim - On March 3, 2023, the Company entered into an operating facility lease for its store located at Anaheim, California with 120 months term with option to extend. The lease started in March 2023 and expires in February 2033 . Pasadena – On December 1, 2024, the Company entered into an operating lease agreement for its store located in Pasadena, California. The lease has a term of 120 months ( 10 years), with an option to extend. The lease commenced on December 1, 2024 and is set to expire in December 2034 . Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component. In accordance with ASC 842, the components of lease expense were as follows: For the three months ended March 31, 2026 2025 Operating lease expense $ 315,516 $ 260,240 Total lease expense $ 315,516 $ 260,240 In accordance with ASC 842, other information related to leases was as follows: For the three months ended March 31, 2026 2025 Operating cash flows from operating leases $ 320,304 $ 258,950 Cash paid for amounts included in the measurement of lease liabilities $ 320,304 $ 258,950 18 In accordance with ASC 842, maturities of operating lease liabilities as of March 31, 2026 were as follows: Operating Year ending: Lease 2026 $ 787,270 2027 567,980 2028 372,677 2029 347,524 2030 244,579 Thereafter 448,952 Total undiscounted cash flows $ 2,640,007 Reconciliation of lease liabilities: Weighted-average remaining lease terms 4.4 years Weighted-average discount rate 9.9 % Present values $ 2,218,847 Lease liabilities—current 801,841 Lease liabilities—long-term 1,417,006 Lease liabilities—total $ 2,218,847 Difference between undiscounted and discounted cash flows $ 550,135 Contingencies The Company is subject to various legal proceedings from time to time as part of its business. As of March 31, 2026, the Company was not currently party to any legal proceedings or threatened legal proceedings, the adverse outcome of which, individually or in the aggregate, it believes would have a material adverse effect on its business, financial condition, and results of operations. 12. SHAREHOLDERS’ EQUITY Common Stock The Company has authorization to issue and outstanding at any one time 40,000,000 shares of common stock with a par value of $ 0.0001 per share. The holders of common stock are entitled to one vote per share and dividends declared by the Company’s Board of Directors. Preferred Stock The Company has authorization to issue and have outstanding at any one time 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share, in one or more classes or series within a class as may be determined by our board of directors, who establish, from time to time, the number of shares to be included in each class or series, fix the designation, powers, preferences and rights of the shares of each such class or series and any qualifications, limitations or restrictions thereof. Any preferred stock so issued is senior to other existing classes of common stock with respect to the payment of dividends or amounts upon liquidation or dissolution. As of March 31, 2026 and December 31, 2025, no shares of our preferred stock had been designated any rights and we had no shares of preferred stock issued and outstanding. 19 Dividend policy Dividends are paid at the discretion of the Board of Directors. There were no dividends declared for the three months ended March 31, 2026 and 2025. 13. SUBSEQUENT EVENTS The Company evaluated all events or transactions that occurred after March 31 206 up through the date the consolidated financial statements were available to be issued. Based upon the evaluation, except as disclosed below or within the footnotes, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements as of and for the period ended March 31, 2026, except as follows: On April 15, 2026, the Company and the Arena Investors entered into an Amended and Restated Forbearance Agreement (the “A&R Forbearance Agreement”), which amended and restated the Forbearance Agreement in certain respects. Pursuant to the A&R Forbearance Agreement, the Company and the Arena Investors agreed to amend and restate the plan for repayment of the Debentures in its entirety, as follows: (i) the Company agreed to, on or before April 30, 2026, make payment of $ 400,000 to the Arena Investors and $ 25,000 to counsel for the Arena Investors for the Arena Investors’ expenses incurred in connection with the A&R Forbearance Agreement; (ii) the Company agreed to, beginning on May 30, 2026, make payments of $ 400,000 to the Arena Investors on the 30th day of each calendar month toward the outstanding amounts due under the Debentures; (iii) the Company agreed to pay to the Arena Investors all remaining amounts then outstanding under the Debentures on or before September 30, 2026 (subject to prior repayment or conversion); and (iv) the Company agreed to, within three business days following receipt of funds from any sale of the Company’s securities, pay to the Arena Investors towards the amounts then outstanding under the Debentures the lesser of (x) 70 % of the cash proceeds from such sale and (y) the amount outstanding under the Debentures. On April 29, 2026, the Company entered into a Securities Purchase Agreement (the “Agreement”) with the purchasers named therein (the “Investors”), pursuant to which the Company agreed to issue and sell, in a private placement, shares of its common stock (the “Shares”) in two closings for aggregate gross proceeds of $ 21 million, subject to the terms and conditions set forth in the Securities Purchase Agreement (collectively, the “Private Placement”). The Company has agreed to issue and sell to the Investors at a first closing of the Private Placement to be held immediately following the receipt of no objections from Nasdaq on the Company’s Listing of Additional Securities Notification filed on April 29, 2026 (the “First Closing”), 1,400,000 Shares at a price per Share equal to $ 2.00 (the “Share Purchase Price”), for aggregate gross proceeds of $ 2.8 million and satisfaction of the other customary closing conditions. The First Closing has not yet occurred. The Company has also agreed to issue and sell to the Investors at a second closing of the Private Placement (the “Second Closing”), up to 9,100,000 Shares at the Share Purchase Price for gross aggregate proceeds of $ 18,200,000 . The Second Closing is expected to take place promptly following receipt of the approval by the Company’s stockholders at a meeting of stockholders or acting through written consent of all such matters as may be required by the applicable rules and regulations of the Nasdaq Capital Market or under applicable law from the stockholders of the Company with respect to the Private Placement (the “Stockholder Approvals”) and the satisfaction of other customary closing conditions. The net proceeds from the Private Placement will be used to support the Company’s principal business initiatives, including flagship store expansion in key metropolitan markets, brand development, working capital, and the continued growth of its multi-channel distribution strategy. The proceeds are also expected to support operational and supply chain capabilities designed to enhance efficiency, execution, and scalability across the Company’s expanding platform. 20 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ending December 31, 2025. As discussed in the section titled “Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ending December 31, 2025. Business Reborn Coffee, Inc. (“Reborn”) is focused on serving high quality, specialty-roasted coffee at retail locations, kiosks and cafes. We are an innovative company that strives for constant improvement in the coffee experience through exploration of new technology and premier service, guided by traditional brewing techniques. We believe Reborn differentiates itself from other coffee roasters through its innovative techniques, including sourcing, washing, roasting, and brewing our coffee beans with a balance of precision and craft. Founded in 2015 by Jay Kim, our Chief Executive Officer, Mr. Kim and his team launched Reborn Coffee with the vision of using the finest pure ingredients and pristine water. We currently serve customers through our nine retail stores and one franchisee located in California, one store in Korea, and one store in Malaysia. Reborn Coffee continues to elevate the high-end coffee experience, and we received 1st place traditional still in “America’s Best Cold Brew” competition by Coffee Fest in 2017 in Portland and 2018 in Los Angeles. The Experience, Reborn As leading pioneers of the emerging “Fourth Wave” movement, we are redefining specialty coffee as an experience that demands much more than premium quality. We consider ourselves leaders of the “fourth wave” coffee movement because we are constantly developing our bean processing methods, researching design concepts, and reinventing new ways of drinking coffee. For instance, the current transition from the K-Cup trend to the pour over drip concept allowed us to reinvent the way people consume coffee, by merging convenience and quality. We took the pour over drip concept and made it available and affordable to the public through our “Pour Over Packs.” Our “Pour Over Packs” allow our consumers to consume our specialty coffee outdoors and on-the-go. Our success in innovating within the “Fourth Wave” coffee movement is measured by our success in B2B sales with our introduction of our Pour Over Packs to hotels. With the introduction of our Pour Over Packs to major hotels, our B2B sales increased as these companies recognized the convenience and functionality our Pour Over Packs serve to their customers. Our continuous research and development is essential to developing new parameters in the production of new blends. Our first place position in “America’s Best Cold Brew” competition by Coffee Fest in 2017 in Portland and 2018 in Los Angeles is a testament to the way we believe we lead the “fourth wave” movement by example. Centered around our core values of service, trust, and well-being, we deliver an appreciation of coffee as both a science and an art. Developing innovative processes such as washing green coffee beans with magnetized water, we challenge traditional preparation methods by focusing on the relationship between water chemistry, health, and flavor profile. Through leading research studies, testing brewing equipment, and refining roasting/brewing methods, we proactively distinguish exceptional quality from good quality by starting at the foundation and paying attention to the details. Our mission places an equal emphasis on humanizing the coffee experience, delivering a fresh take on “farm-to-table” by sourcing internationally. In this way, we create opportunities to develop transparency by paying homage to origin stories and spark new conversations by building cross-cultural communities united by a passion for the finest coffee. Through a broad product offering, we provide customers with a wide variety of beverages and coffee options. As a result, we believe we can capture share of any experience where customers seek to consume great beverages whether in our inviting store atmospheres which are designed for comfort, or on the go through our pour over packs, or at home with our whole bean ground coffee bags. We believe that the retail coffee market in the US is large and growing. According to IBIS, in 2025, the retail market for coffee in the United States is expected to be $74.3 billion. This is expected to grow due to a shift in consumer preferences to premium coffee, including specialized blends, espresso-based beverages, and cold brew options. We aim to capture a growing portion of the market as we expand and increase consumer awareness of our brand. 21 Current Operation We have a production and distribution center at our headquarters that we use to process and roast coffee for wholesale and retail distribution. We have the following ten retail coffee locations as of March 31, 2026: ● La Floresta Shopping Village in Brea, California; ● La Crescenta, California; ● Corona Del Mar, California; ● Home Depot Center in Laguna Woods, California; ● Manhattan Village at Manhattan Beach, California; ● Galleria at Tyler in Riverside, California; ● Intersect in Irvine, California; ● Diamond Bar, California; ● Anaheim, California; and ● Kuala Lumpur, Malaysia Critical Accounting Policies and Significant Judgments and Estimates Revenue The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. The Company’s net revenue primarily consists of revenues from its retail locations and wholesale and online store. Accordingly, the Company recognizes revenue as follows: ● Retail Store Revenue Retail store revenues are recognized at the point of sale when payment is tendered. Retail store revenues are reported net of sales, use, or other transaction taxes collected from customers and remitted to taxing authorities. Sales taxes payable are recorded as accrued liabilities within other current liabilities. Retail store revenue represents approximately 28.2% of the Company’s total revenue. ● Wholesale and Online Revenue Wholesale and online revenues are recognized when products are delivered and title passes to the customer or to wholesale distributors. When customers pick up products at the Company’s warehouse or when products are delivered to wholesale distributors, title transfers and revenue is recognized at that time. Wholesale and online revenues represent approximately 1.5% of the Company’s total revenue. ● Service Income – Reborn Logistics Service income is primarily derived from Reborn Logistics’ freight forwarding and logistics services. The Company recognizes service revenue when shipment transactions are delivered. Each shipment transaction or service order generally represents a separate contract with a customer. A performance obligation is established once a customer agreement with an agreed-upon transaction price exists. The transaction price is typically fixed and is not contingent upon the occurrence or non-occurrence of future events, and payment is generally due within 45 to 60 days from the invoice date. The Company’s transportation arrangements involve organizing the movement of freight to a customer’s destination. Transportation services, including certain ancillary services such as loading and unloading, freight insurance, and customs clearance, represent a single performance obligation, as these services are not distinct in the context of the contract. This performance obligation is satisfied and revenue is recognized as control of the services transfers to the customer during the transit period, as the customer’s goods move from origin to destination. The Company evaluates whether it controls the transportation services provided to determine whether it is acting as a principal or an agent. The Company has determined that it acts as the principal in its transportation service arrangements, as it controls pricing, manages all aspects of the shipment process, and assumes the risks associated with delivery and collection. Accordingly, service income is presented on a gross basis in the consolidated statements of operations. Service income represents approximately 65.0% of the Company’s total revenue. 22 ● License Income The Company has entered into license agreements that allow licensees to operate and market Reborn Coffee branded stores and products under the Reborn Coffee trademarks. Under these agreements, the Company provides ongoing services, including training, marketing support, system updates, and other operational assistance. As the Company is required to provide these ongoing services, license revenue is recognized over the term of the license agreement. License agreements typically have initial terms of three years and may be renewed for additional periods. License income represents approximately 5.3% of the Company’s total revenue. ● Retail Store Revenue Retail store revenues are recognized at the point of sale when payment is tendered. Retail store revenues are reported net of sales, use, or other transaction taxes collected from customers and remitted to taxing authorities. Sales taxes payable are recorded as accrued liabilities within other current liabilities. Retail store revenue represents approximately 73.5% of the Company’s total revenue. ● Wholesale and Online Revenue Wholesale and online revenues are recognized when products are delivered and title passes to the customer or to wholesale distributors. When customers pick up products at the Company’s warehouse or when products are delivered to wholesale distributors, title transfers and revenue is recognized at that time. Wholesale and online revenues represent approximately 1.4% of the Company’s total revenue. ● Service Income – Reborn Logistics Service income is primarily derived from Reborn Logistics’ freight forwarding and logistics services. The Company recognizes service revenue when shipment transactions are delivered. Each shipment transaction or service order generally represents a separate contract with a customer. A performance obligation is established once a customer agreement with an agreed-upon transaction price exists. The transaction price is typically fixed and is not contingent upon the occurrence or non-occurrence of future events, and payment is generally due within 45 to 60 days from the invoice date. The Company’s transportation arrangements involve organizing the movement of freight to a customer’s destination. Transportation services, including certain ancillary services such as loading and unloading, freight insurance, and customs clearance, represent a single performance obligation, as these services are not distinct in the context of the contract. This performance obligation is satisfied and revenue is recognized as control of the services transfers to the customer during the transit period, as the customer’s goods move from origin to destination. The Company evaluates whether it controls the transportation services provided to determine whether it is acting as a principal or an agent. The Company has determined that it acts as the principal in its transportation service arrangements, as it controls pricing, manages all aspects of the shipment process, and assumes the risks associated with delivery and collection. Accordingly, service income is presented on a gross basis in the consolidated statements of operations. Service income represents approximately 11.5% of the Company’s total revenue. ● License Income The Company has entered into license agreements that allow licensees to operate and market Reborn Coffee branded stores and products under the Reborn Coffee trademarks. Under these agreements, the Company provides ongoing services, including training, marketing support, system updates, and other operational assistance. As the Company is required to provide these ongoing services, license revenue is recognized over the term of the license agreement. License agreements typically have initial terms of three years and may be renewed for additional periods. License income represents approximately 13.6% of the Company’s total revenue. Long-lived Assets In accordance with FASB ASC Topic 360, Property, Plant, and Equipment, the Company reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. The Company considers the carrying value of assets may not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. As of March 31, 2026 and December 31, 2025, the Company was not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired. 23 Results of Operations Three months ended March 31, 2026 compared to three months ended March 31, 2025 The following table presents selected comparative results of operations from our unaudited financial statements for the three months ended March 31, 2026 compared to three months ended March 31, 2025. Our financial results for these periods are not necessarily indicative of the financial results that we will achieve in future periods. Certain totals for the table below may not sum to 100% due to rounding. Three Months Ended March 31, 2026 2025 Changes Amount % Amount % Amount % Net revenues: Stores $ 1,470,026 28.2 % $ 1,678,935 99.2 % $ (208,909 ) -12.4 % Wholesale and online 79,869 1.5 % 14,326 0.8 % 65,543 457.5 % Service income 3,386,552 65.0 % - 0.0 % 3,386,552 100.0 % License income 275,000 5.3 % - 0.0 % 275,000 100.0 % Total net revenues 5,211,447 100.0 % 1,693,261 100.0 % 3,518,186 207.8 % Operating costs and expenses: Product, food and drink costs - stores 517,536 9.9 % 924,364 54.6 % (406,828 ) -44.0 % Cost of service income - subcontractors 2,591,308 49.7 % - 0.0 % 2,591,308 n/a General and administrative 2,436,695 46.8 % 1,876,295 110.8 % 560,400 29.9 % Professional fees 246,004 4.7 % 589,959 34.8 % (343,955 ) -58.3 % Stock compensation expense 292,589 5.6 % - 0.0 % 292,589 #DIV/0! Total operating costs and expenses 6,084,132 116.7 % 3,390,618 200.2 % 2,693,514 79.4 % Loss from operations (872,685 ) -16.7 % (1,697,357 ) -100.2 % 824,672 -48.6 % Other income (expense): Other income (expense) (87,599 ) -1.7 % 83,882 5.0 % (171,481 ) -204.4 % Interest expense including amortization of debt discount (21,683 ) -0.4 % (181,155 ) -10.7 % 159,472 -88.0 % Interest expense - debt discount (398,602 ) -7.6 % - 0.0 % (398,602 ) 100.0 % Gain on sale of property 14,777 0.3 % - 0.0 % 14,777 100.0 % Derivative Expense (47,448 ) -0.9 % (395,807 ) -23.4 % 348,359 100.0 % Asset impairment loss (80,000 ) -1.5 % - 0.0 % (80,000 ) #DIV/0! Total other expense, net (620,555 ) -11.9 % (493,080 ) -29.1 % (127,475 ) 25.9 % Loss before income taxes (1,493,240 ) -28.7 % (2,190,437 ) -129.4 % 697,197 -31.8 % Provision for income taxes - 0.0 % 707 0.0 % (707 ) -100.0 % Net loss $ (1,493,240 ) -28.7 % $ (2,191,144 ) -129.4 % $ 697,904 -31.9 % Revenues. Revenues were approximately $5.2 million for the three-month period ended March 31, 2026, compared to $1.7 million for the comparable period in 2025, representing an increase of approximately $3.5 million, or 207.8%. The increase in sales for the period was primarily driven by the logistics service revenue. Product, food and drink costs. Product, food and drink costs were approximately $0.5 million for the three-month period ended March 31, 2026 compared to $0.9 million for the comparable period in the prior year, representing a decrease of approximately $0.4 million, or 44%. The decrease for the period was mainly driven by the low volume of stores sales. Cost of service income – subcontractors. Subcontractor costs were approximately $2.6 million for the three-month period ended March 31, 2026. Gross profit. Gross profit was approximately $2.1 million for the three-month period ended March 31, 2026, compared to $0.8 million for the comparable period in 2025, representing an increase of approximately $1.3 million, or 173.5%. The increase in gross profit for the period was primarily driven by increase in service income. General and administrative expenses . General and administrative expenses were approximately $2.4 million for the three-month period ended March 31, 2026 compared to $1.9 million for the comparable period in 2025, representing an increase of approximately $0.5 million, or 29.9%. This increase in general and administrative expenses for the three-month period ended March 31, 2026 compared to the comparable period in the prior year was primarily due to increases in professional services and costs related to logistics to support growth plans, as well as costs associated with outside administrative, legal and professional fees and other general corporate expenses for a public company. 24 Liquidity and Capital Resources We have a history of operating losses and negative cash flow in operating activities. We have incurred recurring net losses, including net losses from operations before income taxes of approximately $1.5 million and $2.1 million for the three months ended March 31, 2026 and 2025, respectively. We used approximately $0.4 million and $0.2 million of cash for operating activities for the three months ended March 31, 2026 and 2025, respectively. During April 2026, we conducted four closings pursuant to the Debenture Purchase Agreement and sold Debentures in the aggregate principal amount of $ $4,166,665 for a purchase price of $3,750,000, representing an original issue discount of 10%. We also issued to the Debenture Investors 1,041,667 Debenture Warrants in connection with the closings. In addition, we entered into an ELOC Purchase Agreement with Arena whereby, we may, subject to various terms and conditions, including, without limitation that we maintain an effective registration statement covering shares issuable pursuant to the ELOC Agreement, 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. Accordingly, 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. As of the date hereof, we have not drawn down on the ELOC Purchase Agreement. 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. On April 29, 2026, the Company entered into a Securities Purchase Agreement (the “Agreement”) with the purchasers named therein (the “Investors”), pursuant to which the Company agreed to issue and sell, in a private placement, shares of its common stock (the “Shares”) in two closings for aggregate gross proceeds of $21 million, subject to the terms and conditions set forth in the Securities Purchase Agreement (collectively, the “Private Placement”). The Company has agreed to issue and sell to the Investors at a first closing of the Private Placement to be held immediately following the receipt of no objections from Nasdaq on the Company’s Listing of Additional Securities Notification filed on April 29, 2026 (the “First Closing”), 1,400,000 Shares at a price per Share equal to $2.00 (the “Share Purchase Price”), for aggregate gross proceeds of $2.8 million and satisfaction of the other customary closing conditions. The First Closing has not yet occurred. The Company has also agreed to issue and sell to the Investors at a second closing of the Private Placement (the “Second Closing”), up to 9,100,000 Shares at the Share Purchase Price for gross aggregate proceeds of $18,200,000. The Second Closing is expected to take place promptly following receipt of the approval by the Company’s stockholders at a meeting of stockholders or acting through written consent of all such matters as may be required by the applicable rules and regulations of the Nasdaq Capital Market or under applicable law from the stockholders of the Company with respect to the Private Placement (the “Stockholder Approvals”) and the satisfaction of other customary closing conditions. The net proceeds from the Private Placement will be used to support the Company’s principal business initiatives, including flagship store expansion in key metropolitan markets, brand development, working capital, and the continued growth of its multi-channel distribution strategy. The proceeds are also expected to support operational and supply chain capabilities designed to enhance efficiency, execution, and scalability across the Company’s expanding platform. 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, we need to raise additional capital to fund our future operations. We have not experienced any difficulty in raising funds through loans and have not experienced any liquidity problems in settling payables in the normal course of business and repaying loans when they fall due. Successful renewal of our loans, however, is subject to numerous risks and uncertainties. In addition, the increasingly competitive industry conditions under which we operate may negatively impact on our results of operations and cash flows. Additional financing is anticipated to fund our operations in near future. However, other than the ELOC Agreement and the Arena Debenture Transaction, there are no current agreements or understandings with regard to the form, time or amount of such financing and there is no assurance that any of these financing can be obtained or that we can continue as a going concern. 25 Three Months Ended March 31, 2026 2025 Statement of Cash Flow Data: Net cash used in operating activities 362,250 236,578 Net cash provided by (used in) investing activities (3,278,100 ) 1,994 Net cash provided by financing activities 587,516 152,302 Cash Flows Used in Operating Activities Net cash used in operating activities during the three-month period ended March 31, 2026 was approximately $0.4 million, which resulted from net loss of $1.83 million, net income from non-controlling interest of $334,329, non-cash charges of $292,589 for stock compensation, $398,602 for debt discount expense, $12,105 for operating lease and $237,549 for depreciation and net cash outflows of approximately $796,630 from changes in operating assets and liabilities. Cash Flows Provided by (Used in) Investing Activities Net cash used in investing activities during the three months ended March 31, 2026 and provided by investing activities during the three months ended March 31, 2025 was $3,278,100 and $1,994, respectively. These expenditures in 2026 is primarily related to loan receivable from related party of $2.9 million and long-term prepayment of $300,000 along with purchases of property and equipment in connection with current and future location openings and maintaining our existing locations. Cash Flows Provide by Financing Activities Net cash provided by financing activities during the three-month period ended March 31, 2026 and March 31, 2025 was $587,516 and $152,302, respectively. It is mostly derived from the proceeds from borrowing. Credit Facilities Economic Injury Disaster Loan On May 16, 2020, we executed an Economy injury disaster loan (the “EIDL Loan”) from the SBA under its EIDL assistance program in light of the impact of the COVID-19 pandemic on our business. As of March 31, 2026, the EIDL Loan is not in default. Pursuant to the SBA Loan Agreement, we borrowed an aggregate principal amount of the EIDL Loan of $500,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly beginning May 16, 2021 (12 months from the date of the SBA Loan Agreement) in the amount of $731. The balance of principal and interest is payable 30 years from the date of the SBA Loan. In connection therewith, we also received a $10,000 grant, which does not have to be repaid. During the year ended December 31, 2020, $10,000 was recorded in EIDL grant income in the Statements of Operations. The schedule of payments on this loan was later deferred to commence 24 months from the date of loan and we has paid all payments owed since May 2022. In connection therewith, we executed (i) a loan for the benefit of the SBA, which contains customary events of default and (ii) a Security Agreement, granting the SBA a security interest in all of our tangible and intangible personal property, which also contains customary events of default (the “SBA Security Agreement”). Paycheck Protection Program Loan In May 2020, we secured a loan under the PPP administered by the SBA in the amount of $115,000. In February 2021, we secured a second loan under this program in the amount of approximately $167,000. The interest rate of the loan is 1.00% per annum and accrues on the unpaid principal balance computed on the basis of the actual number of days elapsed in a year of 360 days. Commencing seven months after the effective date of each PPP Loan, we are required to pay the Lender equal monthly payments of principal and interest as required to fully amortize any unforgiven principal balance of the loan by the two-year anniversary of the effective date of the loan. The PPP Loan contains customary events of default relating to, among other things, payment defaults, making materially false or misleading representations to the SBA or the Lender, or breaching the terms of the PPP Loan. The occurrence of an event of default may result in the repayment of all amounts outstanding under the PPP Loan, collection of all amounts owing, or filing suit and obtaining judgment against us. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. Recent modifications to the PPP by the U.S. Treasury and Congress have extended the time period for loan forgiveness beyond the original eight-week period, making it possible for the Company to apply for forgiveness of its PPP loan. We were granted forgiveness for the initial PPP Loan prior to December 31, 2021 and expects to be granted forgiveness on the remainder subsequently. 26 Leases We currently lease all company-owned retail locations. Operating leases typically contain escalating rentals over the lease term, as well as optional renewal periods. Rent expense for operating leases is recorded on a straight-line basis over the lease term and begins when Reborn has the right to use the property. The difference between rent expense and cash payment is recorded as deferred rent on the accompanying consolidated balance sheets. Pre-opening rent is included in selling, general and administrative expenses on the accompanying consolidated statements of income. Tenant incentives used to fund leasehold improvements are recorded in deferred rent and amortized as reductions to rent expense over the term of the lease. Income Taxes We file income tax returns in the U.S. federal and California state jurisdictions. We also file income tax returns in South Korea and Malaysia related to our subsidiaries located in those countries. Income taxes in South Korea and Malaysia is not material. We are taxed at the prevailing U.S. corporate tax rates. We are treated as a U.S. corporation and a regarded entity for U.S. federal, state and local income taxes. Accordingly, a provision is being recorded for the anticipated tax consequences of our reported results of operations for U.S. federal, state and foreign income taxes. Off Balance Sheet Arrangements We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with GAAP. Critical Accounting Estimates and Policies The preparation of financial statements requires management to utilize estimates and make judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. These estimates are based on historical experience and on various other assumptions that management believes to be reasonable under the circumstances. The estimates are evaluated by management on an ongoing basis, and the results of these evaluations form a basis for making decisions about the carrying value of assets and liabilities that are not readily apparent from other sources. Although actual results may differ from these estimates under different assumptions or conditions, management believes that the estimates used in the preparation of our financial statements are reasonable. The critical accounting policies affecting our financial reporting are summarized in Note 2 to the financial statements included elsewhere in this Quarterly Report on Form 10-Q. Recent Accounting Pronouncements We have determined that all other issued, but not yet effective accounting pronouncements are inapplicable or insignificant to us and once adopted are not expected to have a material impact on our financial position. 27 Item 3. Quantitative and Qualitative Disclosures About Market Risk. We are a smaller reporting company as defined by 17 C.F.R. 229 (10)(f)(i) and are not required to provide information under this item. Item 4. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Our management has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of March 31, 2026. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2026, our disclosure controls and procedures were ineffective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified by Securities and Exchange Commission (“SEC”) rules and forms and (b) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding any required disclosure. Management has identified control deficiencies regarding inadequate accounting resources, the lack of segregation of duties and the need for a stronger internal control environment. Our management believes that these material weaknesses are due to the small size of our accounting staff. The small size of our accounting outsourced staff may prevent adequate controls in the future due to the cost/benefit of such remediation. To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and accounting professionals. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework. These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our financial statements may not be prevented or detected on a timely basis. In light of this material weakness, we performed additional analyses and procedures in order to conclude that our financial statements for the quarter ended March 31, 2026, included in this Quarterly Report on Form 10-Q were fairly stated in accordance with GAAP. Accordingly, management believes that despite our material weaknesses, our financial statements for the quarter ended March 31, 2026, are fairly stated, in all material respects, in accordance with GAAP. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 28 PART II—OTHER INFORMATION Item 1. Legal Proceedings. In the future, the Company may be subject to various legal proceedings from time to time as part of its business. We are currently not involved in litigation that we believe will have a materially adverse effect on our financial condition or results of operations. As of the date of this Report, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self- regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries threatened against or affecting our company, our common stock, any of our subsidiaries or of our company’s or our company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision is expected to have a material adverse effect. Item 1A. Risk Factors. As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this item. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted , modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of Regulation S-K. 29 Item 6. Exhibits. The following exhibits are included herein or incorporated herein by reference: 3.1 Certificate of Incorporation (Delaware), dated July 27, 2022 (incorporated by reference to Exhibit 3.1 to Amendment No. 5 to our Registration Statement on Form S-1 filed on August 2, 2022) 3.2 Bylaws of Registrant (Delaware) (incorporated by reference to Exhibit 3.2 to Amendment No. 5 to our Registration Statement on Form S-1 filed on August 2, 2022) 3.3 Certificate of Amendment to Certificate of Incorporation filed with the Secretary of State of the State of Delaware on January 12, 2024 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on January 16, 2024) 4.1 Specimen Common Stock Certificate (Delaware) (incorporated by reference to Exhibit 4.1 to Amendment No. 5 to our Registration Statement on Form S-1 filed on August 2, 2022) 4.2 Form of Representative’s Warrant (incorporated by reference to Exhibit 4.5 to Amendment No. 2 to our Registration Statement on Form S-1 filed on April 18, 2022) 4.3 Warrant to Purchase Common Shares issued May 20, 2024, by Reborn Coffee Inc. to EFF HUTTON YA FUND, LP (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on May 23, 2024) 4.4 Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on February 12, 2025) 4.5 Form of Forbearance Warrant with Arena Investors (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on April 6, 2026) 10.1 Forbearance Agreement with Arena Investors (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 6, 2026) 10.2 Amended and Restated Forbearance Agreement with Arena Investors dated April 15, 2026 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 21, 2026) 10.3 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 5, 2026) 31.1* Certification of Jay Kim pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1** Certification of Jay Kim pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith. ** Furnished herewith. 30 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Signature Title Date /s/ Jay Kim Chief Executive Officer and Acting Chief Financial Officer May 22, 2026 Jay Kim ( Principal Executive, Financial, and Accounting Officer ) 31