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 September 30, 2025

☐ 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 5,976,322 shares of common stock outstanding as of November 19, 2025.

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	1

Item 1	Unaudited Consolidated Financial Statements	1

	Unaudited Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	1

	Unaudited Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024	2

	Unaudited Consolidated Statements of Stockholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2025 and 2024	3

	Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024	4

	Notes to Unaudited Consolidated Financial Statements	5

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4	Controls and Procedures	24

PART II	OTHER INFORMATION	25

Item 1	Legal Proceedings	25

Item 1A	Risk Factors	25

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 6	Exhibits	26

Signature		27

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,” “will,” “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 our expectations regarding the impact of the coronavirus pandemic (the “COVID-19 pandemic”), including the easing of related regulations and measures as the pandemic and its related effects begin to abate or have abated, on our business, results of operations, financial condition, and future profitability and growth; our expectations regarding the impact of the evolving COVID-19 pandemic on the businesses of our customers, partners and suppliers, and the economy, as well as the macro- and micro-effects of the pandemic and differing levels of demand for our products as our customers’ priorities, resources, financial conditions and economic outlook change; 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, 2024. 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.

PART I—FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements.

Reborn Coffee, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

	September 30,			December 31,
	2025			2024

ASSETS
Current assets:
Cash and cash equivalents	$	44,045		$	158,215
Accounts receivable, net		147,459			67,309
Inventory, net		200,662			169,615
Prepaid expenses and other current assets		274,950			467,613
Total current assets		667,116			862,752
Property and equipment, net		3,443,352			4,080,004
Operating lease right-of-use asset		1,894,592			2,653,179
Other assets		193,188			193,188
Total assets	$	6,198,248		$	7,789,123

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	895,738		$	558,444
Accrued expenses and current liabilities		535,142			774,826
Deferred revenue		70,000			-
Loans payable to financial institutions, current		132,164			111,300
Loans payable to others		449,027			427,073
Convertible debt, net of debt discount of $2,913,579		1,253,086			-
Derivative liability		3,768,692			-
Loan payable, emergency injury disaster loan, current		30,060			30,060
Loan payable, payroll protection program, current		26,307			37,494
Operating lease liabilities, current		794,492			844,177
Total current liabilities		7,954,708			2,783,374
Loan payable, emergency injury disaster loan, net of current		469,940			469,940
Loan payable, payroll protection program, net of current		25,718			26,307
Operating lease liabilities, net of current		1,169,777			1,906,760
Total liabilities		9,620,143			5,186,381

Commitments and Contingencies (Note 11)

Stockholders' equity
Common Stock, $0.0001 par value, 40,000,000 shares authorized; 5,927,830 and 4,274,508 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		594			428
Common stock issuable, $0.0001 par value, 420,000 shares issuable		1,460,000			1,470,000
Preferred Stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		-			-
Additional paid-in capital		27,589,871			22,674,095
Accumulated deficit		(32,543,761	)		(21,562,872	)
Accumulated other comprehensive income		71,401			21,091
Total stockholders' equity (deficit)		(3,421,895	)		2,602,742

Total liabilities and stockholders' equity	$	6,198,248		$	7,789,123

See accompanying notes to unaudited condensed consolidated financial statements.

Reborn Coffee, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2025			2024			2025			2024
Net revenues:
Stores	$	1,126,751		$	1,118,522		$	4,615,853		$	3,784,728
Wholesale and online		129,858			140,407			168,809			365,164
License		100,000			-			100,000			-
Total net revenues		1,356,609			1,258,929			4,884,662			4,149,892

Operating costs and expenses:
Product, food and drink costs - stores, wholesale and online		647,152			447,270			1,991,905			1,231,706
General and administrative		2,231,477			1,344,355			6,506,874			5,078,317
Professional fees		195,767			192,002			1,543,313			765,740
Stock compensation expense		1,330,124			-			3,995,609			-
Total operating costs and expenses		4,404,520			1,983,627			14,037,701			7,075,763

Loss from operations		(3,047,911	)		(724,698	)		(9,153,039	)		(2,925,871	)

Other income (expense):
Other income		6,695			13,265			171,448			49,594
Interest expense including amortization of debt discount		(566,979	)		(7,515	)		(1,417,689	)		(149,827	)
Gain on sale of property		-			-			75,000			-
Loss on debt extinguishment		-			-			(200,333	)		-
Changes in fair value of derivative liability		171,008			-			(18,693	)		-
Asset impairment loss		(12,506	)		-			(434,475	)		-
Total other expense, net		(401,782	)		5,750			(1,824,742	)		(100,233	)

Loss before income taxes		(3,449,693	)		(718,948	)		(10,977,781	)		(3,026,104	)

Provision for income taxes		-			800			3,108			800

Net loss	$	(3,449,693	)	$	(719,748	)	$	(10,980,889	)	$	(3,026,904	)

Loss per share:
Basic and diluted	$	(0.68	)	$	(0.30	)	$	(2.16	)	$	(1.40	)

Weighted average number of common shares outstanding:
Basic and diluted		5,068,011			2,420,628			5,072,807			2,165,841

See accompanying notes to unaudited condensed consolidated financial statements.

Reborn Coffee, Inc. and Subsidiaries

Unaudited Condensed Consolidated Stockholders’ Equity (Deficit)

																				Accumulated			Total
					Common Stock										Additional					Other			Shareholders'
	Common Stock				Issuable						Preferred Stock				Paid-in		Accumulated			Comprehensive			Equity
	Shares		Amount		Shares			Amount			Shares		Amount		Capital		Deficit			Income (loss)			(Deficit)

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

Net loss		-		-		-			-			-		-		-		(2,191,144	)		-			(2,191,144	)

Foreign currency translation		-		-								-		-		-		-			3,984			3,984

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

Stock compensation expense		847,436		85		-			-			-		-		2,665,400		-			-			2,665,485

Common shares issued from shares issuable		165,185		17		(64,000	)		(320,000	)		-		-		520,316		-			-			200,333

Issuances of common shares		100,000		10		-			-			-		-		99,990		-			-			100,000

Net loss		-		-		-			-			-		-		-		(5,340,052	)		-			(5,340,052	)

Foreign currency translation		-		-		-			-			-		-		-		-			53,630			53,630

Balance as of June 30, 2025		5,387,129	$	540		230,000		$	1,150,000			-	$	-	$	25,959,801	$	(29,094,068	)	$	78,705		$	(1,905,022	)

Stock compensation expense		540,701		54		-			-			-		-		1,330,070		-			-			1,330,124

Common stock issuable for amount received		-		-		250,000			610,000			-		-		-		-			-			610,000

Common shares issued from shares issuable		-		-		(60,000	)		(300,000	)		-		-		300,000		-			-			-

Net loss		-		-		-			-			-		-		-		(3,449,693	)		-			(3,449,693	)

Foreign currency translation		-		-		-			-			-		-		-		-			(7,304	)		(7,304	)

Balance as of September 30, 2025		5,927,830	$	594		420,000		$	1,460,000			-	$	-	$	27,589,871	$	(32,543,761	)	$	71,401		$	(3,421,895	)

																		Accumulated			Total
					Common Stock								Additional					Other			Shareholders'
	Common Stock				Issuable				Preferred Stock				Paid-in		Accumulated			Comprehensive			Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Income (loss)			(Deficit)

Balance as of December 31, 2023		1,866,174	$	187		-	$	-		-	$	-	$	17,603,143	$	(16,756,924	)	$	-		$	846,406

Net loss		-		-		-		-		-		-		-		(990,544	)		-			(990,544	)
Common stock issued		983,497		98		-		-		-		-		2,699,902		-			-			2,700,000
Foreign currency translation		-		-		-		-		-		-		-		-			15,484			15,484

Balance as of March 31, 2024		2,849,671	$	285		-	$	-		-	$	-	$	20,303,045	$	(17,747,468	)	$	15,484		$	2,571,346

Net loss		-		-		-		-		-		-		-		(1,316,612	)		-			(1,316,612	)
Common stock issued		385,985		39		-		-		-		-		1,299,961		-			-			1,300,000
Foreign currency translation		-		-		-		-		-		-		-		-			(12,046	)		(12,046	)

Balance as of June 30, 2024		3,235,656	$	324		-	$	-		-	$	-	$	21,603,006	$	(19,064,080	)	$	3,438		$	2,542,688

Net loss		-		-		-		-		-		-		-		(719,748	)		-			(719,748	)
Common stock issued		100,000		10		-		-		-		-		879,969		-			-			879,979
Foreign currency translation		-		-		-		-		-		-		-		-			(36,655	)		(36,655	)

Balance as of September 30, 2024		3,335,656	$	334		-	$	-		-	$	-	$	22,482,975	$	(19,783,828	)	$	(33,217	)	$	2,666,264

See accompanying notes to unaudited condensed consolidated financial statements.

Reborn Coffee, Inc. and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

	Nine Months Ended
	September 30,
	2025			2024
Cash flows from operating activities:
Net loss		(10,980,889	)		(3,026,904	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock compensation expense		3,995,609			-
Settlement of debt		200,333			-
Interest expense - amortization of debt discount		1,253,086			-
Noncash operating lease		(28,081	)		10,192
Changes in fair value of derivative liability		18,693			-
Asset impairment loss		434,475
Depreciation		215,522			184,554
Changes in operating assets and liabilities:
Increase in accounts receivable		(80,150	)		(19,871	)
Increase in inventory		(31,047	)		(66,543	)
Decrease (increase) in prepaid expense and other assets		192,663			(478,098	)
Increase (decrease) in accounts payable		184,758			(137,277	)
Increase (decrease) in accrued liabilities, net		(239,684	)		214,277
Increase in deferred revenue		70,000			-
Net cash used in operating activities		(4,794,712	)		(3,319,670	)

Cash flows from investing activities:
Acquisition of property and equipment		(85,499	)		(641,059	)
Proceeds from sale of assets		275,000			-
Net cash provided by (used in) investing activities		189,501			(641,059	)

Cash flows from financing activities:
Proceeds from issuance of common stock		100,000			4,879,979
Proceeds from common stock issuable		610,000
Net borrowings from loan payable to financial institutions		20,864			(1,029,147	)
Net borrowings on loan payable to others		21,954			186,786
Repayment of borrowings from shareholder		-			(100,000	)
Net borrowings from convertible notes payable		3,749,999			-
Repayment of loan payable, PPP		(11,776	)		(35,327	)
Net cash provided by financing activities		4,491,041			3,902,291

Net increase (decrease) in cash and cash equivalents		(114,170	)		(58,438	)

Cash and cash equivalents at beginning of period		158,215			164,301

Cash and cash equivalents at end of period	$	44,045		$	105,863

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	150,710		$	134,781

See accompanying notes to unaudited condensed consolidated financial statements.

REBORN COFEE, 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 and wholly-owned by Reborn Coffee, Inc. 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 corporation formed in December 2020 and wholly-owned by Reborn Coffee, Inc, 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 does not have any franchisee as of December 31, 2023.

	●	*Reborn Realty, LLC* (the “Reborn Realty”), a California limited liability corporation formed in March 2023 and wholly-owned by Reborn Coffee, Inc, is an entity which acquired a real property located at 596 Apollo Street, Brea, California.

	●	*Reborn Coffee Korea, Inc.* (the “Reborn Korea”) – a Korea corporation located in Daejon, South Korea formed in October 2023 and wholly-owned by Reborn Coffee, Inc, with one retail coffee store under the brand name of Reborn Coffee.

	●	*Reborn Malaysia, Inc.* (the “Reborn Malaysia”) – a Malaysian corporation located in Kuala Lumpur, Malaysia formed in October 2023, is majority owned by Reborn Coffee, Inc. (60% ownership), with one retail coffee store under the brand name of Reborn Coffee.

Reborn Coffee, Inc., Reborn Global Holdings, Inc., Reborn Coffee Franchise, LLC, Reborn Realty, LLC, Reborn Korea and Reborn Malaysia will be collectively referred to herein as the “Company”, “we,”, “us,” or “our,” unless the context clarifies otherwise.

Going Concern Matters

The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”), which contemplates the Company’s continuation as a going concern. The Company incurred a net loss of $10,980,889 during the nine months ended September 30, 2025, and has an accumulated deficit of $32,543,761 as of September 30, 2025.

Management intends to raise additional operating funds through equity and/or debt offerings. However, there can be no assurance management will be successful in its endeavors.

There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings, and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings, and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available to the Company, it may be required to curtail or cease its operations.

Due to uncertainties related to these matters, there exists substantial doubt about the ability of the Company to continue as a going concern. The accompanying interim unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

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, 2024 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

Reverse Stock Split

On January 12, 2024, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to the Company’s Certificate of Incorporation to effect a reverse stock split of its issued common stock in the ratio of 1-for-8 (the “Reverse Stock Split”). The common stock began trading on the Nasdaq Capital Market on a Reverse Stock Split-adjusted basis at the market open on Monday, January 22, 2024.

Segment Reporting

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting, requires public companies to report financial and descriptive information about their reportable operating segments. The Company’s management identifies operating segments based on how the Company’s management internally evaluate separate financial information, business activities and management responsibility. As of the reporting date, the Company has only one reportable segment, consisting of both the wholesale and retail sales of coffee, water, and other beverages. The Company’s franchisor subsidiary was not material as of and for the nine-month period ended September 30, 2025 and 2024.

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 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.

●

Wholesale and Online Revenue

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.

●

License Revenue

License revenues consist of territory license fees. The Company recognizes the fees over a term of ten years. The Company recorded revenue of $100,000 for each of the three and nine months ended September 30, 2025 and $0 for each of the prior comparable periods. The Company recorded $70,000 deferred revenue as of September 30, 2025 which represents the cash received in advance of revenue being recognized.

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.

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.

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 September 30, 2025 and December 31, 2024, allowance for doubtful accounts were zero, respectively. The Company does not have any off-balance sheet exposure related to its customers.

Inventory

Inventory consisted primarily of coffee beans, drink products, and supplies which is recorded at lower of 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 nine months ended September 30, 2025 and 2024.

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 September 30, 2025 and December 31, 2024, the Company was not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired.

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.

As of September 30, 2025 and December 31, 2024, 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 September 30, 2025 and 2024.

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 and nine months ended September 30, 2025 and 2024, 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.

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:

	September 30,			December 31,
	2025			2024

Furniture and equipment	$	1,409,705		$	1,365,937
Leasehold improvement		652,532			632,516
Store		2,529,531			2,991,571
Store construction		379,356			487,729
Vehicle		103,645			103,645

Total property and equipment		5,074,769			5,581,398
Less accumulated depreciation		(1,631,417	)		(1,501,394	)

Total property and equipment, net	$	3,443,352		$	4,080,004

Depreciation expense on property and equipment amounted to approximately $216,000 and $185,000 for the nine months ended September 30, 2025 and 2024, respectively, and $71,000 and $12,000 for the three-month periods ended September 30, 2025 and 2024, respectively.

4. LOANS PAYABLE TO FINANCIAL INSTITUTIONS

Loans payable to financial institutions consisted of the following:

As of	September 30, 2025		December 31, 2024

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 2025	$	132,164	$	111,300

5. LOAN PAYABLE TO OTHER

Loans payable to others consisted of the following:

	September 30, 2025		December 31, 2024

*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 2025	$	224,027	$	234,509
*April 2024 ($275,000)* - Loan amount of $275,000 with total payback of $365,750 with monthly payment of $9,144 until fully paid		-		63,998
*November 2024 ($140,000)* - Loan amount of $140,000 with total payback of $175,932 with monthly payment of $6,767 until fully paid		-		128,566
*April 2025 ($125,000)* – Loan amount of $125,000 with no interest and due upon demand		125,000		-

SEC Form 10-Q filed by Reborn Coffee Inc.