Reborn Coffee, Inc.
For the period ended Mar 31, 2026. Filed May 22, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 22, 2026
REBN$1.21-4.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-19.
0001213900-25-112680
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-22.
0001213900-26-060633
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 64 previous paragraphs and 71 current paragraphs.
30 unchanged; 20 reworded; 19 added; 13 removed; 1 previous and 2 current paragraphs rearranged.
Tables are not compared: 7 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Current Operation
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Current report
Cost of service income – subcontractors. Subcontractor costs were approximately $2.6 million for the three-month period ended March 31, 2026.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
Income Taxes
Current report
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.
Current report
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.
Removed paragraphs (13)
Previous report
Plan of Operation
Previous report
License revenue relates to the fees earned from granting licenses to third parties to operate the Company’s branded locations. License revenue is recognized in accordance with the terms of the respective licensing agreements. The Company recognized $100,000 of licensing revenue for the nine months ended September 30, 2025. License revenue makes up approximately 2.0% of the Company’s total revenue for the nine months ended September 30, 2025.
Previous report
Three and nine months ended September 30, 2025 compared to three and nine months ended September 30, 2024
Previous report
Product, food and drink costs – stores, wholesale and online. Product, food and drink costs were approximately $647 thousand for the three-month period ended September 30, 2025 compared to $447 thousand for the comparable period in the prior year, representing an increase of approximately $200 thousand, or 44.7%.
Previous report
Gross margin. Gross margin was approximately $709 thousand for the three-month period ended September 30, 2025, compared to $812 thousand for the comparable period in 2024, representing an decrease of approximately $103 thousand, or 12.7%. The decrease in gross margin for the period was primarily driven by increase of the product costs.
Previous report
Other Income (Expenses). Other expenses were approximately $402 thousand for the three-month period ended September 30, 2025 compared to other income of approximately $6 thousand for the comparable period in 2024, representing an increase of expenses approximately $408 thousand, or 7,087.5%. This increase in other expenses compared to the comparable period in the prior year was primarily due to interest expense including amortization of debt discount.
Previous report
*Revenues.*Revenues were approximately $4.9 million for the nine-month period ended September 30, 2025, compared to $4.1 million for the comparable period in 2024, representing an increase of approximately $735 thousand, or 17.7%. The increase in sales for the period was primarily driven by license income,
Previous report
Gross margin. Gross margin was approximately $2.9 million for the nine-month period ended September 30, 2025, compared to $2.9 million for the comparable period in 2024, representing an decrease of approximately $25 thousand, or 0.9%. The decrease in gross margin for the period was primarily driven by increase of the product costs.
Previous report
General and administrative expenses. General and administrative expenses were approximately $6.5 million for the nine-month period ended September 30, 2025 compared to $5.1 million for the comparable period in 2024, representing an increase of approximately $1.4 million, or 28.1%. This increase in general and administrative expenses compared to the comparable period in the prior year was primarily due to legal and professional fees.
Previous report
Other Income (Expenses). Other expenses were approximately $1.8 million for the nine-month period ended September 30, 2025 compared to $100,000 for the comparable period in 2024, representing an increase of approximately $1.7 million, or 1,720.5%. This increase in other expenses compared to the comparable period in the prior year was primarily due to legal and professional expenses.
Previous report
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 September 30, 2025, we conducted four closings under the securities purchase agreement, pursuant to which we sold Debentures in the aggregate principal amount of $3,750,000 and 1,041,667 Warrants to the Investors.
Previous report
In addition, in October 2025 we sold 1,100,000 shares of common stock at $1.818 per share and in November 2025, we sold 2,500,000 shares of common stock at $2.00 per share. Once fully paid, we will have received an aggregate of $7,000,000 in gross proceeds for such sales.
Previous report
As of September 30, 2025, we had total assets of approximately $6.2 million. Our cash balance as of September 30, 2025 was $44,045.
Reworded paragraphs (20)
Previous wording
Founded in 2015 by Jay Kim, our Chief Executive Officer, Mr. Kim and his team launched Reborn with the vision of using the finest pure ingredients and pristine water. We currently serve customers through our retail store locations in California: Brea, La Crescenta, Corona Del Mar, Laguna Woods, Manhattan Beach, Huntington Beach, Riverside, San Francisco, Irvine, Diamond Bar, Anaheim and Pasadena. In addition to the locations in the United States, we have two international locations in South Korea and Malaysia.
Current wording
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.
Previous wording
Reborn continues to elevate the high-end coffee experience and we received first place traditional still in “America’s Best Cold Brew” competition by Coffee Fest in 2017 in Portland and 2018 in Los Angeles.
Current wording
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.
Previous wording
We believe that we are the leading pioneers of the emerging “Fourth Wave” movement and that our business is 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 Reborn Coffee Pour Over packs. Our Pour Over Packs allow our consumers to consume our specialty coffee outdoors and on-the-go.
Current wording
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.
Previous wording
Our success in innovating within the “Fourth Wave” coffee movement is measured by our success in B2B sales with our introduction of Reborn Coffee Pour Over Packs to hotels. With the introduction of our Pour Over Packs to major hotels (including one hotel company with 7 locations), our B2B sales increased as these companies recognized the convenience and functionality our Pour Over Packs serve to their customers.
Current wording
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.
Previous wording
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. Leading research studies, testing brewing equipment, and refining roasting/brewing methods to a specific, 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.
Current wording
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.
Previous wording
Through a broad product offering, Reborn provides 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. Reborn aims to capture a growing portion of the market as we expand and increase consumer awareness of our brand.
Current wording
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.
Previous wording
Currently, we have the following 12 retail coffee locations:
Current wording
We have the following ten retail coffee locations as of March 31, 2026:
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 94.5% of the Company’s total revenue for the nine months ended September 30, 2025.
Current wording
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.
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 3.5% of the Company’s total revenue for the nine months ended September 30, 2025.
Current wording
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.
Previous wording
The following table presents selected comparative results of operations from our unaudited financial statements for the three and nine months ended September 30, 2025 compared to three and nine months ended September 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.
Current wording
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.
Previous wording
*Revenues.*Revenues were approximately $1.4 million for the three-month period ended September 30, 2025, compared to $1.3 million for the comparable period in 2024, representing an increase of approximately $0.1 million, or 7.8%. The increase in sales for the period was primarily driven by the licensing revenue.
Current wording
*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.
Previous wording
Product, food and drink costs. Product, food and drink costs were approximately $2.0 million for the nine-month period ended September 30, 2025 compared to $1.2 million for the comparable period in the prior year, representing an increase of approximately $0.8 million, or 61.7%.
Current wording
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.
Previous wording
General and administrative expenses. General and administrative expenses were approximately $2.2 million for the three-month period ended September 30, 2025 compared to $1.3 million for the comparable period in 2024, representing an increase of approximately $0.8 million, or 66.0%. This increase in general and administrative expenses compared to the comparable period in the prior year was primarily due to legal and professional fees.
Current wording
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.
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 $11.0 million and $3.0 million for the nine months ended September 30, 2025 and 2024, respectively. We used approximately $4.8 million and $3.3 million of cash for operating activities for the nine months ended September 30, 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 $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.
Previous wording
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 our results of operations and cash flows. Additional debt financing is anticipated to fund our operations in the near future. However, there are no current agreements or understandings with regard to the form, time or amount of such financing and there is no assurance that any of this financing can be obtained or that we can continue as a going concern.
Current wording
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.
Previous wording
Net cash used in operating activities during the nine-month period ended September 30, 2025 was approximately $4.8 million, which resulted from net loss of $11.0 million, non-cash charges of $4.0 million for stock compensation, and net cash outflows of approximately $4.8 million from changes in operating assets and liabilities.
Current wording
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.
Previous wording
Net cash provided by investing activities during the nine months ended September 30, 2025 and used in investing activities during the nine months ended September 30, 2024 was $189,501 and $641,059, 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 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.
Previous wording
Net cash provided by financing activities during the nine-month period ended September 30, 2025 was $4.5 million, mostly derived from the proceeds from loan payables of $4.2 million, which was offset by the debt amortization of $2.9 million.
Current wording
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.
Previous wording
On May 16, 2020, we executed 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 September 30, 2025, the loan payable, EIDL Loan noted above is not in default.
Current wording
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.
Previous wording
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 (twelve months from the date of the SBA Loan Agreement) in the amount of $731. The balance of principal and interest is payable thirty 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 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 and we has paid all payments owed since May 2022.
Current wording
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.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.