Reborn Coffee, Inc.

Previous wording

Retail store revenues are recognized when payment is tendered at the point of sale. Retail store revenues are reported net of sales, use or other transaction taxes that are collected from customers and remitted to taxing authorities. Sales taxes that are payable are recorded as accrued as other current liabilities. Retail store revenue makes up approximately 99% of the Company’s total revenue.

Current wording

Retail store revenues are recognized when payment is tendered at the point of sale. Retail store revenues are reported net of sales, use or other transaction taxes that are collected from customers and remitted to taxing authorities. Sales taxes that are payable are recorded as accrued as other current liabilities. Retail store revenue made up more than 95% of the Company’s total revenue for the three months ended June 30, 2025 and 2024.

Previous wording

Wholesale and online revenues are recognized when the products are delivered, and title passes to the customers or to the wholesale distributors. When customers pick up products at the Company’s warehouse, or distributed to the wholesale distributors, the title passes, and revenue is recognized. Wholesale revenues make up approximately 1% of the Company’s total revenue.

Current wording

Wholesale and online revenues are recognized when the products are delivered, and title passes to the customers or to the wholesale distributors. When customers pick up products at the Company’s warehouse, or distributed to the wholesale distributors, the title passes, and revenue is recognized. Wholesale revenues made up less than 5% of the Company’s total revenue for the three months ended June 30, 2025 and 2024.

Previous wording

The following table presents selected comparative results of operations from our unaudited financial statements for the three months ended March 31, 2025 compared to three months ended March 31, 2024. 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.

Current wording

The following tables present selected comparative results of operations from our unaudited financial statements for the three and six months ended June 30, 2025 compared to three and six months ended June 30, 2024. 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.

Previous wording

*Revenues.*Revenues were approximately $1.7 million for the three-month period ended March 31, 2025, compared to $1.5 million for the comparable period in 2024, representing an increase of approximately $0.2 million, or 14.1%. The increase in sales for the period was primarily driven by the opening of new locations, and to the continued focus on marketing efforts to grow brand recognition.

Current wording

*Revenues.*Revenues were approximately $3.5 million for the six-month period ended June 30, 2025, compared to $2.7 million for the comparable period in 2024, representing an increase of approximately $0.8 million, or 30.9%. Revenues were approximately $1.8 million for the three-month period ended June 30, 2025, compared to $1.2 million for the comparable period in 2024, representing an increase of approximately $0.6 million, or 51.5%. The increase in sales for the period was primarily driven by the continued focus on marketing efforts to grow brand recognition.

Previous wording

Product, food and drink costs. Product, food and drink costs were approximately $0.9 million for the three-month period ended March 31, 2025 compared to $0.4 million for the comparable period in the prior year.

Current wording

Product, food and drink costs. Product, food and drink costs were approximately $1.3 million for the six-month period ended June 30, 2025 compared to $0.8 million for the comparable period in the prior year, and were approximately $0.4 million for the three-month period ended June 30, 2025 compared to $0.4 million for the comparable period in the prior year

Previous wording

Gross margin. Gross margin was approximately $1.8 million for the three-month period ended March 31, 2025, compared to $0.9 million for the comparable period in 2024, representing an increase of approximately $0.9 million, or 46.7%. The increase in gross margin for the period was primarily driven by increase in sales.

Current wording

Gross margin. Gross margin was approximately $2.1 million for the six-month period ended June 30, 2025, compared to $1.9 million for the comparable period in 2024, representing an increase of approximately $0.3 million, or 14%. Gross margin was approximately $1.4 million for the three-month period ended June 30, 2025, compared to $0.8 million for the comparable period in 2024, representing an increase of approximately $0.6 million, or 75.6%. The increase in gross margin for the period was primarily driven by increased sales and cost control efforts.

Previous wording

General and administrative expenses. General and administrative expenses were approximately $2.5 million for the three-month period ended March 31, 2025 compared to $2.0 million for the comparable period in 2024, representing an increase of approximately $0.5 million, or 23.3%.

Current wording

Operating Costs. General and administrative expenses were approximately $4.3 million for the six-month period ended June 30, 2025 compared to $3.7 million for the comparable period in 2024, representing an increase of approximately $0.5 million which is primarily due to increase in payroll expenses. General and administrative expenses were approximately $2.5 million for the six-month period ended June 30, 2025 compared to $2.0 million for the comparable period in 2024, representing an increase of approximately $0.5 million which is primarily due to increase in payroll expenses. Professional fees were $ 1.4 million for the six months ended June 30, 2025 compared to $0.6 million for the comparable period in 2024. The increase was primarily due to increase in legal and accounting professional fees for various Form S-1 filings during the six months ended June 30, 2025. Stock compensation expense was $2.7 million for the six months and three months ended June 30, 2025 and none in the comparable periods. These stock compensation expenses were primarily for stocks issued for services including various debt and equity offerings.

Previous wording

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 $2.1 million and $1.0 million for the three months ended March 31, 2025 and 2024, respectively. We used approximately $0.4 million and $1.9 million of cash for operating activities for the three months ended March 31, 2025 and 2024, respectively.

Current wording

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 $7.5 million and $2.3 million for the six months ended June 30, 2025 and 2024, respectively. We used approximately $3.2 million and $2.9 million of cash for operating activities for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

On February 6, 2025, we entered into a securities purchase agreement between us and the purchasers named therein (the “Investors”) pursuant to which we issued a 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 our 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. Each Debenture shall mature at eighteen (18) months from the date of the first closing. Upon the consummation of the closing of each tranche, we will issued common stock purchase warrants (“Warrants”) to each Investor who participated in such closing. The Warrants will: (i) provide for the purchase by the applicable Investor of a number of shares of common stock equal to 20% of the total principal amount of the related Debenture purchased by the 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). As of March 31, 2025, we conducted three closings under the securities purchase agreement, pursuant to which we sold Debentures in the aggregate principal amount of $3,333,333 and 254,470 Warrants to the Investors.

Current wording

On February 6, 2025, we entered into a securities purchase agreement between us and the purchasers named therein (the “Investors”) pursuant to which we issued a 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 our 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. Each Debenture shall mature at eighteen (18) months from the date of the first closing. Upon the consummation of the closing of each tranche, we will issued common stock purchase warrants (“Warrants”) to each Investor who participated in such closing. The Warrants will: (i) provide for the purchase by the applicable Investor of a number of shares of common stock equal to 20% of the total principal amount of the related Debenture purchased by the 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). As of June 30, 2025, we conducted three closings under the securities purchase agreement, pursuant to which we sold Debentures in the aggregate principal amount of $3,333,333 and 201,282 Warrants to the Investors. On July 31, 2025, we completed a fourth closing under the securities purchase agreement, pursuant to which we sold Debentures in the aggregate principal amount of $833,333 and 136,483 Warrants to the Investors.

Previous wording

Net cash used in operating activities during the three-month period ended March 31, 2025 was approximately $0.5 million, which resulted from net loss of $2.19 million, non-cash charges of $800,840 for Stock compensation, $122,336 for Debt Discount Expense, $ 3,076,956 for Derivative Expense, $15,662 for operating lease and $61,000 for depreciation and net cash outflows of approximately $211,954 from changes in operating assets and liabilities.

Current wording

Net cash used in operating activities during the six-month period ended June 30, 2025 was approximately $3.2 million, which resulted from net loss of $7.5 million, non-cash charges of $2.7 million for stock compensation, $0.7 million for debt discount expense, $0.2 million for settlement of debt, $0.2, million for derivative expense, and $0.1 million for depreciation and net cash inflows of approximately $17,000 from changes in operating assets and liabilities.

Previous wording

Net cash provided by investing activities during the three months ended March 31, 2025 and used in investing activities during the three months ended March 31, 2024 was $1,994 and $986,982, respectively, These expenditures in each period are primarily related to purchases of property and equipment in connection with current and future location openings and maintaining our existing locations.

Current wording

Net cash provided by investing activities during the six months ended June 30, 2025 was $0.2 million and net cash used in investing activities during the six months ended June 30, 2024 was $0.6 million. These expenditures in each period are primarily related to purchases of property and equipment in connection with current and future location openings and maintaining our existing locations.

Previous wording

Net cash provided by financing activities during the three-month period ended March 31, 2025 was $152,302, mostly derived from the proceeds from loan payables of $3.5 million, which was offset by the debt amortization of $3.2 million repayment of loans payable by $154,268.

Current wording

Net cash provided by financing activities during the six-month period ended June 30, 2025 was $2.9 million, mostly derived from the proceeds from loan payables of $2.8 million.

Previous wording

As of March 31, 2025, we had total assets of approximately $8.0 million. Our cash balance as of March 31, 2025 was approximately $777,000.

Current wording

As of June 30, 2025, we had total assets of approximately $6.4 million. Our cash balance as of June 30, 2025 was approximately $78,000.