Financial Analysis

13. COMMITMENTS AND CONTINGENCIES Operating Leases The Company has the following operating facility leases: Brea (Corporate office) On August 12, 2024, the Company entered into an operating facility lease for its corporate office located in Brea, California with term of 36 months at $10,589 per month. The lease started on September 1, 2024 and expires in August 2026. Brea On August 16, 2024, the Company entered into an operating lease agreement for its store located at La Floresta Shopping Village in Brea, California, with a term of 60 months and an option to extend. The lease commenced in December 1, 2014 and was initially set to expire on November 30, 2029. The monthly lease payment under the lease agreement is approximately $7,965. La Crescenta - On May 2017, the Company entered into an operating facility lease for its store located in La Crescenta, California with 120 months term with option to extend. The lease started on May 2017 and expires in May 2027. The Company entered into non-cancellable lease agreement for a coffee shop approximately 1,607 square feet located in La Crescenta, California commencing in May 2017 and expiring in April 2027. The monthly lease payment under the lease agreement is approximately $6,026. Corona Del Mar - On January 18, 2023, the Company renewed its retail store in Corona Del Mar, 1California. As part of that lease renewal, the Company renewed the original operating lease with 60 months term with an option to extend. The lease expires in …

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4. LOANS PAYABLE TO FINANCIAL INSITUTIONS Loans payable to financial institutions consisted of the following: December 31, 2025 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 2026. $ 109,247 $ 111,300 Total loan payable 109,247 111,300 Less: current portion (109,247 ) (111,300 ) Total loan payable, net of current $ - $ -

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12. INCOME TAX Total income tax provision expense consists of the following: For the Years Ended December 31, 2025 2024 Current provision: Federal $ 75,217 $ - State 34,063 800 Total current provision 109,279 800 Deferred provision: Federal - - State - - Total deferred provision - - Total tax provision $ 109,279 $ 800 A reconciliation of the Companys effective tax rate to the statutory federal rate is as follows: December 31, 2025 2024 Statutory federal rate 21.00 % 21.00 % State income taxes net of federal income tax benefit and others 0.08 % 6.98 % Permanent differences for tax purposes and others (1.18 )% 0.00 % Change in valuation allowance (18.61 )% (27.98 )% Effective tax rate 1.29 % 0.00 % The income tax benefit differs from the amount computed by applying the U.S. federal statutory tax rate of 21% and California state income taxes of 0.10% due to the change in the valuation allowance. December 31, 2025 2024 Deferred tax assets: Net operating loss $ 6,863,965 $ 9,461,884 Bad debt reserve 22,586 - Basis difference in fixed assets 332,510 - Operating lease liabilities 666,142 - State taxes 7,153 - Total Deferred tax assets 7,892,355 9,461,884 Deferred tax liabilities: Operating lease right-of-use asset (644,804 ) - Total Deferred tax liabilities (644,804 ) - Net deferred tax assets 7,247,551 9,461,884 Less valuation allowance (7,247,551 ) (9,461,884 ) Total deferred tax assets, net of valuation allowance $ - $ - The Company uses the liability method of accounting for inc …

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6. LOAN PAYABLE TO SHAREHOLDER Loans payable to shareholders consisted of the following: December 31, 2025 2024 Borrowing from shareholder, bearing no interest and due upon demand $ 70,000 $ - Total loan payable 70,000 - Less: current portion (70,000 ) - Total loan payable, net of current $ - $ -

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Recent Accounting Pronouncement Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . This ASU requires public entities to disclose significant segment expenses and other segment items on both an annual and interim basis and to provide, in interim periods, all disclosures about a reportable segments profit or loss and assets that are currently required on an annual basis. In addition, the ASU requires public entities to disclose the title and position of the chief operating decision maker (CODM). The ASU does not change the manner in which operating segments are identified, aggregated, or evaluated under the quantitative thresholds for determining reportable segments. The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted, and the amendments are required to be applied retrospectively to all prior periods presented in the financial statements. The Company adopted ASU 2023-07 beginning with its Form 10-K for the year ended December 31, 2025. The adoption of this guidance did not have a material impact on the Companys consolidated financial statement disclosures. Income Statement - Expense Disaggregation Disclosures (Subtopic 220-40) I …

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16. RELATED PARTY TRANSACTIONS The Company had the following related party transactions: In June 2023, the Company entered into a facility lease agreement for corporate office located in Brea, California with DRE, Inc., a company owned by the Board of Director of the Company. The lease has 60 months term and expires in June 2029. On January 10, 2024, the Company entered into a securities subscription agreement with Farooq M. Arjomand, the Chairman of the Companys Board of Directors. Pursuant to the securities subscription agreement, the Company offered and sold to Mr. Arjomand a total of 1,666,667 shares of the Companys common stock at a purchase price of $0.60 per share, for aggregate gross proceeds of approximately $1 million. In December 2025, the Company entered into a loan agreement with a related party in the principal amount of $153,605. The loan is non-interest-bearing and due upon demand. In December 2025, the Company entered into a loan agreement with a member of its Board of Directors in the principal amount of $70,000. The loan is non-interest-bearing and due upon demand. In December 2025, Reborn Logistics entered a non-interest-bearing promissory note with its related party in the principal amount of $2 million. …

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Going Concern The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $30.7 million at December 31, 2025, and had a net loss before income taxes of $8.9 million and net cash used in operating activities of $6.5 million for the year ended December 31, 2025. These matters raise substantial doubt about the Companys ability to continue as a going concern. To support its existing and planned business model, the Company needs to raise additional capital to fund our future operations. The Company has not experienced any difficulty in raising funds through loans and has 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 the Companys operations in near future. There is no assurance that any of this financing can be obtained or that the Company can continue as a going concern. Reporting The consolidated financial statements include Reborn Cof …

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14. SHAREHOLDERS EQUITY Common Stock The Company has authorization to issue and outstanding at any one time 40,000,000 share of common stock with a par value of $0.0001 per share. The shareholders of common stock shall be entitled to one vote per share and dividends declared by the Companys Board of Directors. During 2025, the Company issued the following Common Stock shares: In March 2025, the Company issued 155,350 shares of common stock to its Board of Director in connection with the conversion of $320,000 of debt owed to the Board of Director. Of these shares, 64,000 had been previously classified as common stock issuable. These shares were issued at a price of $3.15 per share, resulting in an aggregate fair value of $489,353. As a result of the debt conversion, the Company recorded a loss on debt conversion of $169,353, which recorded in other income in the consolidated statements of operations. In June 2025, the Company issued 423,518 shares of common stock to its Board of Director for the repayment of unpaid rent for the property of $484,000. These shares were issued at a price of $2.45 per share, resulting in an aggregate fair value of $1,037,619. As a result of the debt conversion, the Company recorded a loss on debt conversion of $553,619, which recorded in other income in the consolidated statements of operations. In June 2025, the Company issued 50,000 shares of common stock to its former Board of Director at a price of $2.00 per share, resulting in an aggregate f …

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17. SUBSEQUENT EVENTS The Company evaluated all events or transactions that occurred after December 31, 2025 up through the date the consolidated financial statements were available to be issued. Based upon the evaluation, except as disclosed below or within the footnotes, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements as of and for the year ended December 31, 2025, except as follows: As previously reported, on October 20, 2025, the Company entered into a Securities Subscription Agreement (the October Agreement) with Charles Joeng (Jeong), pursuant to which the Company issued 1,192,661 shares of common stock to Jeong for an aggregate purchase price of $6,500,000 funded in multiple tranches. Section 6(a) of the Debentures with the Arena Investors provides that, at any time prior to the full repayment or full conversion of all amounts owed under the Debentures, the Company receives cash proceeds from the issuance of equity, the Company shall inform the Arena Investors, whereupon the Arena Investors shall have the right to require that the Company immediately apply up to thirty percent (30%) of the gross cash proceeds received from the applicable financing transaction to redeem a portion of the outstanding principal amount of the Debentures. On February 19, 2026, the Arena Investors sent a letter to the Company requesting that the Company pay to the Arena I …

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12. COMMITMENTS AND CONTINGENCIES Operating Leases The Company has the following operating facility leases: Brea (Corporate office) On August 12, 2024, the Company entered into an operating facility lease for its corporate office located in Brea, California with term of 36 months at $10,589 per month. The lease started on September 1, 2024 and expires in August 2026. Brea On August 16, 2024, the Company entered into an operating lease agreement for its store located at La Floresta Shopping Village in Brea, California, with a term of 60 months and an option to extend. The lease commenced on December 1, 2024 and was initially set to expire on November 30, 2029. The monthly lease payment under the lease agreement is approximately $7,965. La Crescenta - On May 2017, the Company entered into an operating facility lease for its store located in La Crescenta, California with 120 months term with option to extend. The lease started in May 2017 and expires in May 2027. The Company entered into non-cancellable lease agreement for a coffee shop approximately 1,607 square feet located in La Crescenta, California commencing in May 2017 and expiring in April 2027. The monthly lease payment under the lease agreement is approximately $6,026. Corona Del Mar - On January 18, 2023, the Company renewed its retail store in Corona Del Mar, California. As part of that lease renewal, the Company renewed the original operating lease with 60 months term with an option to extend. The lease expires in J …

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4. LOANS PAYABLE TO FINANCIAL INSTITUTIONS Loans payable to financial institutions consisted of the following: As of June 30, 2026 December 31, 2025 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 2026 $ 510,089 $ 109,247 Total loan payable 510,089 109,247 Less: current portion (510,089 ) (109,247 ) Total loan payable, net of current $ - $ -

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6. LOAN PAYABLE TO SHAREHOLDER Loans payable to shareholders consisted of the following: June 30, 2026 December 31, 2025 Borrowing from a shareholder, bearing no interest and due upon demand. $ 414,516 $ 70,000 Total loan payable to shareholder $ 414,516 $ 70,000

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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.

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting The unaudited condensed consolidated financial statements include Reborn Coffee, Inc. and its subsidiaries as of June 30, 2026 and December 31, 2025 and for the three and six months ended June 30, 2026 and 2025. Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP. The consolidated financial statements include Reborn Coffee, Inc. and its subsidiary. All intercompany accounts, transactions, and profits have been eliminated upon consolidation. Minority Interest The Company consolidates Reborn Logistics, which is majority-owned subsidiary (51% own) and presents the portion of equity and earnings attributable to the non-controlling interest separately in the unaudited condensed consolidated financial statements. As of June 30, 2026, non-controlling interest was $368,975. For the six months ended June 30, 2026, net income attributable to non-controlling interest was $234,826. Segment Reporting FASB ASC Topic 280, Segment Reporting, requires public companies to report financial and descriptive information about their reportable operating segments. Operating segments are identified based on the manner in which the Companys chief operating decision maker (CODM) evaluates financial information, business activities, and performance results. Management has identified two reportable operating segments: (i) Reborn Coffee, which includ …

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13. SHAREHOLDERS EQUITY Common Stock The Company has authorization to issue and outstanding at any one time 40,000,000 shares of common stock with a par value of $0.0001 per share. The holders of common stock are entitled to one vote per share and dividends declared by the Companys Board of Directors. Preferred Stock The Company has authorization to issue and have outstanding at any one time 1,000,000 shares of preferred stock with a par value of $0.0001 per share, in one or more classes or series within a class as may be determined by our board of directors, who establish, from time to time, the number of shares to be included in each class or series, fix the designation, powers, preferences and rights of the shares of each such class or series and any qualifications, limitations or restrictions thereof. Any preferred stock issued is senior to other existing classes of common stock with respect to the payment of dividends or amounts upon liquidation or dissolution. As of June 30, 2026 and December 31, 2025, no shares of our preferred stock had been designated any rights, and we had no shares of preferred stock issued and outstanding. Dividend policy Dividends are paid at the discretion of the Board of Directors. There were no dividends declared for the six months ended June 30, 2026 and 2025. …

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14. SUBSEQUENT EVENTS The Company evaluated all events or transactions that occurred after June 30, 2026 up through the date the consolidated financial statements were available to be issued. Based upon the evaluation, except as disclosed below or within the footnotes, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements as of and for the period ended June 30, 2026, except as follows: On July 14, 2026, the Company renewed the lease for its facility in Brea, California. The renewed lease term begins on September 1, 2026 and expires on August 31, 2027, with monthly lease payments of approximately $11,453. No adjustment to the accompanying condensed consolidated financial statements was required as a result of this event. On August 10, 2026, the Company entered into an Agricultural Import and Supply Agreement (the Import and Supply Agreement) with The Mighty Oak, Inc. (Mighty Oak), which established the general terms and conditions under which the Company will import, purchase, store, and supply agricultural products to Mighty Oak, and Mighty Oak will supply such products to major markets and retailers in the United States of America (U.S.) using its vendor codes. The specific terms for transactions, including items, quantities, prices, delivery dates, delivery locations, and payment terms, shall be determined in accepted Purchase Orders (PO). The annual supply a …

SubsequentEventsTextBlock · excerpt; the full note is in the filing