Reborn Coffee Inc

On February 12, 2024, the Company entered into the PPA with EF Hutton. In accordance with the terms of the PPA, on February 12, 2024, EF Hutton advanced to the Company a pre-paid advance of $1,100,000 (the “Pre-Paid Advance”). The Pre-Paid Advances was purchased by EF Hutton at 90% of the face amount.

If and when requested by EF Hutton in writing (a “Purchase Notice”) while the Pre-Paid Advance is outstanding, EF Hutton may require the Company to issue and sell shares of Common Stock to EF Hutton (a “PPA Advance”) and the amounts outstanding under each Pre-Paid Advance will be correspondingly reduced upon the issuance by the Company of Common Stock to EF Hutton, at a price per share equal to the lower of: (a) 100% of the volume weighted average price (as reported during regular trading hours by Bloomberg) (the “VWAP”) of the Common Stock on the trading day immediately preceding the closing of the Pre-Paid Advance (the “Fixed Price”) or (b) 87% of the lowest daily VWAP of the shares during the five trading days immediately prior to each Purchase Notice, subject to the Floor Price. The “Floor Price” is equal to $0.46. Interest will accrue on the outstanding balance of any Pre-Paid Advance at 0%, subject to an increase to 18% upon events of default described in the PPA. The Pre-Paid Advance matures within one year.

EF Hutton will not be entitled to a PPA Advance if the issuance of shares of Common Stock (i) would result in EF Hutton (and its affiliates) beneficially owning more than 4.99% of the outstanding shares of the Company, or (ii) when combined with all other PPA Advances, would exceed the “Exchange Cap” of 414,693 shares of the Company’s common stock (representing 19.99% of the aggregate amount of Common Shares issued and outstanding as of the date of this Agreement), calculated in accordance with the rules of Nasdaq, which number is to be reduced, on a share-for-share basis, by the number shares of Common Stock issued or issuable pursuant to any transaction or series of transactions that may be aggregated with the transactions contemplated by the PPA under the applicable rules of Nasdaq (which the shares issuable to Yorkville pursuant to the SEPA are aggregated by Nasdaq for the purposes of Listing Rule 5635(d)), unless the Company obtains stockholder approval to do so.

EF Hutton has agreed that, while the Pre-Paid Advance is outstanding, neither EF Hutton nor any of its affiliates will engage in any short sales or hedging transactions with respect to the Common Stock. In addition, pursuant to the PPA, as long as the Pre-Paid Advance remains outstanding, the Company may not enter into any Variable Rate Transactions (as defined in the PPA).

The PPA provides that, within ten trading days of an Amortization Event, the Company must make a cash repayment to EF Hutton of an amount outstanding under the Pre-Paid Advance equal to $500,000, plus any accrued and unpaid interest (if any), and a 10% redemption premium. An “Amortization Event” occurs if (1) the daily VWAP of the Company’s Common Stock (as reported by Bloomberg) is lower than the Floor Price for any five of seven consecutive trading days, (2) the Company has issued in excess of 99% of all of the shares available under the Exchange Cap, or (3) EF Hutton is unable to use the Registration Statement (defined below) (and any one or more additional registration statements filed with the U.S. Securities and Exchange Commission (“SEC”) that include the shares of the Company’s Common Stock that may be issued and sold by the Company to EF Hutton under the PPA) for period of ten consecutive trading days.

The Company may, in its sole discretion, redeem an outstanding Pre-Paid Advance in cash by providing EF Hutton with advance written notice at least ten trading days prior to such prepayment if the VWAP of the Company’s common stock is, at the time of such written notice, lower than the Fixed Price. The prepayment shall include a prepayment premium equal to 10%.

The shares of Common Stock to be issued under the PPA will be issued pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-275070) (the “Registration Statement”).