Reborn Coffee, Inc. 10-K

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION There is presently no public market for our shares of Common Stock. We anticipate applying for quoting of our Common Stock on the OTCQB upon the completion of our direct public offering we are conducting currently. However, we can provide no assurance that our shares of Common Stock will be quoted on the OTCQB or, if quoted, that a public market will materialize. Holders As of November 30, 2017, the Company had 141 shareholders of its Common Stock. UNREGISTERED SALES OF EQUITY SECURITIES The following are all issuances of securities by the registrant since its formation in February 2017, which were not registered under the Securities Act. In each of these issuances the recipient represented that he or she was acquiring the shares for investment purposes only, and not with a view towards distribution or resale except in compliance with applicable securities laws. No general solicitation or advertising was used in connection with any transaction, and the certificate evidencing the securities that were issued contained a legend restricting their transferability absent registration under the Securities Act or the availability of an applicable exemption therefrom. Unless specifically set forth below, no underwriter participated in the transaction and no commissions were paid in connection with the transactions. The shares of our common stock were issued pursuant to an exemption from registration in Section 4(a)(2) of the Securities Act of 1933. These shares of our common stock qualified for exemption under Section 4(a)(2) of the Securities Act of 1933 since the issuance of shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(a)(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. We did not undertake an offering in which we sold a high number of shares to a high number of investors. All shareholders are “sophisticated investors” and are family members, friends or business acquaintances of our officers and directors. Based on an analysis of the above factors, we believe we have met the requirements to qualify for exemption under section 4(a)(2) of the Securities Act of 1933 for this transaction. As shown on the table below, on February 21, 2017, the Company issued the following shares of Class A common stock as founders’ shares to the following officers and directors Andrew Weeraratne, Eugene Nichols, Goran Antic and Michael Laub for a total of $540 that Mr. Weeraratne paid to the Company. Name Title # of Shares Consideration ($) I. Andrew Weeraratne Chief Executive Officer, Chairman of the Board of Directors 4,000,000 $ 400.00 Eugene Nichols Director 1,000,000 $ 100.00 Groan Antic Director 200,000 $ 20.00 Michael Laub Director 200,000 $ 20.00 On February 12, 2017 the Company issued 7,000,000 shares of Class B common stock as founders’ shares to the Company’s Chief Executive Officer and Director, I. Andrew Weeraratne, for total proceeds of $700.00. On February 21, 2017 the Company issued 7,267,000 Class A common stock at par value of $0.0001 to 119 individuals, including the director above as founding shareholders for a total value of $726.70. On May 2017 through June 2017, eight investors subscribed to 3,700,000 shares or a total of $111,000 through this Regulation D offering. We closed this offering as of June 30, 2017. 3 DIVIDENDS We have never paid cash dividends on our Common Stock. Payment of dividends will be within the sole discretion of our board of directors and will depend, among other factors, upon our earnings, capital requirements and our operating and financial condition. In addition, under Florida law, we may declare and pay dividends on our Common Stock either out of our surplus, as defined in the relevant Florida statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If, however, the capital of our company, computed in accordance with the relevant Florida statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits any dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS We currently do not have any equity compensation plans. ITEM 6. SELECTED FINANCIAL DATA This item is not required for smaller reporting companies. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Annual Report. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. OVERVIEW We were incorporated on July 31, 2015 in the State of Florida under the name La Veles Inc., that mostly remained inactive and on February 8, 2017, we filed an amendment to our Articles of Incorporation to change the name of the Company to Capax Inc. Our offices are located at 7135 Collins Avenue, Suite 624, Miami Beach, FL 33141. Our fiscal year end is September 30. We are a newly formed, development stage company. Our primary business is to set up a bakery-café chain. We plan to make revenue through retails sales in our cafes and through wholesales on our bakery products. Our long-term objective is to franchise these bakery-cafes. We may also expand our operation to a few foreign nations in partnership with local investors and management in those nations and have begun discussions to do so, but so far have not made any formal agreements. We may also acquire currently operating small bakeries with an accompanying café with space to renovate according to our model. As of November 30, 2017, we had not incurred any material costs or expenses other than those associated with the formation and financing of our company. RESULTS OF OPERATIONS We have incurred recurring losses to date. Our financial statements do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities. Our net loss attributable to common shareholders for the fiscal year from October 1, 2016 to September 30, 2017 is $26,230. During the fiscal year ended September 30, 2017 we had no revenue and incurred operating expenses of $26,230. 4 Our net loss attributable to common shareholders for the fiscal year from October 1, 2015 to September 30, 2016 was $825. During the fiscal year ended September 30, 2016 we had no revenue and incurred operating expenses of $825. LIQUIDITY AND CAPITAL RESOURCES We have estimated that we will require approximately $300,000 of capital to buy a currently operating bakery-café to make net positive cash flow to apply towards maintenance of a public company. According to our research, a currently operating bakery-café that we could buy for about $300,000 could give us about $5,000 in monthly net positive cash flow. We believe we may be able to raise enough capital from this offering to buy one bakery. If such capital does not become available from the proceeds of the current offering we have or from other sources, we will be able to continue operations as a development stage company for approximately the next 14 months from available cash on hand while seeking additional sources of capital. There can be no assurance that such additional capital will be available. We believe our operational strategy which focuses on running a low overhead operation will avail us to manage our current operational activities (excluding acquiring bakery-cafes that we won’t begin until we raise capital from our current offering) for approximately 14 months. During the next 14 months or until such time that we raise enough capital to purchase one bakery cafe, we will be using our working capital to attend investors’ conferences and tradeshows, participating in road shows to meet with potential investors, traveling to meet with investors and paying professional fees needed to comply with SEC regulations. We believe our monthly burn rate to be approximately $6,000. The Company had approximately $90,303 in cash on hand as of September 30, 2017. We sold $111,000 worth of our Class A common stock in May and June of 2017. If we succeed in opening one or more bakery-cafes, we anticipate that sales at such places to generate sufficient cash flow to support our operations after the first 14 months. However, this estimate is based on our assumption of raising enough capital to either buy or build bakery-cafés. There can be no assurance that such sales levels will be achieved. Therefore, we may require additional financing through loans and other arrangements, including the sale of additional equity. There can be no assurance that such additional financing will be available, or if available, can be obtained on satisfactory terms. To the extent that any such financing involves the sale of our equity securities, the interests of our then existing shareholders, including the investors in this offering, could be substantially diluted. In the event that we do not have sufficient capital to support our operations we may have to curtail our operations. Our officers will provide daily management of our company, including administration, financial management, production, marketing and sales. We will also engage other employees and service organizations to provide services as the need arises. These may include services such as computer systems, sales, marketing, advertising, public relations, cash management, accounting and administration. We will be subject to certain costs for such compliance which private companies may not choose to make. We have identified such costs as being primarily for audits, legal services, filing expenses, financial and reporting controls and shareholder communications and estimate the cost to be approximately between $72,000 to $240,000 annually depending on the number of bakery-cafes we have. We expect to pay such costs from a combination of cash on hand, the proceeds of this offering and cash generated by revenue from our planned bakery-cafes. There can be no assurance that we will be able to successfully acquire or start up bakery-cafes, or otherwise implement any portion of our long term business strategy. We believe that we can control the operating and general and administrative expenses of our operations to be within the cash available from this offering and from the sales which we may make at any bakery-cafes we open. The Company is newly created and had no activities and as such has not generated any revenues and has incurred losses since inception resulting in an accumulated deficit of $27,055 and $825 as of September 30, 2017 and 2016, and further losses are anticipated in the development of its business. 5 Currently, we have no written or oral communication from stockholders, directors or any officers to provide us any forms of cash advances, loans or sources of liquidity to meet our working capital needs or long-term or short-term financial needs. As of September 30, 2017, our current assets were $90,303. Our current liabilities were $4,107. Stockholders’ equity was $86,196. The weighted average number of shares outstanding was 12,901,118 for the period from October 1, 2016 to September 30, 2017. As of September 30, 2016, our current assets were $0. Our current liabilities were $0. Stockholders’ equity was $0. The weighted average number of shares outstanding was 8,836,301 for the period from October 1, 2015 to September 30, 2016. Cash Flows from Operating Activities We have not generated positive cash flows from operating activities. For the year ended September 30, 2017, net cash flows used in operating activities was $19,387. For the year ended September 30, 2016, net cash flows used in operating activities was $825. Cash Flows from Investing Activities There were no investing activities for the fiscal year ended 2017 or 2016. Cash Flows from Financing Activities We have financed our operations from the issuance of equity instruments and advances from officer. For the year ended September 30, 2017, net cash flows from financing activities was $109,690, net of $2,736 paid back of related party loan. For the year ended September 30, 2016, net cash flows used in financing activities was $200. PLAN OF OPERATION AND FUNDING Below is a brief description of the activities which we have established to date: We had meetings with two bakery-cafes in Miami, Florida to acquire them, after the required audits, to use as our first models to franchise. In the event we find these two bakery-cafes hard to audit due to bad records then we may not pursue acquiring them but instead set up our new bakery-cafes in partnership with professionals in the industry. We met with a bakery owner and a master baker to buy his company and also to hire him to our Company to take charge of the operation. We also were introduced to a few expert bakers in France, had initial discussion over the phone as to them joining us and in the future plan to meet with them to hire them as consultants. However we have not gotten any commitments from any of the people we have talked with so far. We made a trip to China and met with some investors to discuss expanding our planned franchise to China. We also visited some trendy shopping centers in China that we feel are ideal places to set up the first few bakery-cafes. However we have not made any firm commitments or any agreements with the Chinese investors to move forward on these plans. Currently our Company is mostly focusing on the concept of bakery-café as a viable business strategy with good potential upside. Our objective is to find the right team of professional bakery and café operators who will operate and manage our planned chain of units for us. We plan to give them the right incentives to build one of the leading franchises in this space. However, there is no assurance that we will meet the right team and even if we met them, we could convince them to join us under mutually acceptable terms. MATERIAL COMMITMENTS As of the date of this Annual Report, we do not have any material commitments. PURCHASE OF SIGNIFICANT EQUIPMENT We plan to acquire a small operating bakery-café or set up a new bakery-café from scratch. OFF-BALANCE SHEET ARRANGEMENTS 6 As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. RELATED PARTIES A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not required for smaller reporting companies. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Financial Statements below, beginning on page F-1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.