You should read the following discussion and analysis of our financial condition
and results of operations together with our condensed consolidated financial
statements and the related notes and other financial information included
elsewhere in this Quarterly Report on Form 10-Q and with our audited
consolidated financial statements included in our Prospectus on Form S-1. As
discussed in the section titled "Note Regarding Forward-Looking Statements," the
following discussion and analysis contains forward-looking statements that
involve risks and uncertainties, as well as assumptions that, if they never
materialize or prove incorrect, could cause our results to differ materially
from those expressed or implied by such forward-looking statements. Factors that
could cause or contribute to these differences include, but are not limited to,
those identified below and those discussed in the section titled "Risk Factors"
in our Prospectus filed on Form S-1 (File No: 333-261937).



Business



Reborn Coffee is focused on serving high quality, specialty-roasted coffee at
retail locations, kiosks and cafes. We are an innovative company that strives
for constant improvement in the coffee experience through exploration of new
technology and premier service, guided by traditional brewing techniques. We
believe Reborn differentiates itself from other coffee roasters through its
innovative techniques, including sourcing, washing, roasting, and brewing our
coffee beans with a balance of precision and craft.



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 retail store locations
in California: Brea, La Crescenta, Glendale, Corona Del Mar, Arcadia, Laguna
Woods, Riverside, San Francisco and Manhattan Beach, with four other locations
in development. Additionally, we expect to begin franchising in 2022 and expect
to continue to develop additional retail locations as we expand outside of
California. We estimate that the average development cost of a company-owned
retail location is approximately $150,000. Therefore, taking into account the
proceeds from this offering and within a year from its completion, we expect to
open up to 20 company-owned retail locations (using approximately $3,000,000 of
the proceeds of this offering) and 20 franchise locations (all costs and
expenses associated with a franchise store location development are borne by the
franchisees). We acknowledge that we have not yet signed any franchise
agreements and that such number of franchise locations is purely speculative.
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.



The Experience, Reborn



As leading pioneers of the emerging "Fourth Wave" movement, Reborn Coffee 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.



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.



Reborn Coffee's continuous Research and Development is essential to developing
new parameters in the production of new blends. Our 1st place position in
"America's Best Cold Brew" competition by Coffee Fest in 2017 in Portland and
2018 in Los Angeles is a testament to the way we believe we lead the "fourth
wave" movement by example.



Centered around its core values of service, trust, and well-being, Reborn Coffee
delivers 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,
Reborn Coffee proactively distinguishes 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, Reborn Coffee
creates 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.



Through a broad product offering, Reborn Coffee 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 2021, the retail market for coffee in the United States is
expected to be $46.2 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.



                                       20





Plan of Operation

We have a production and distribution center at our headquarters that we use to process and roast coffee for wholesale and retail distribution.

Currently, we have the following nine retail coffee locations, and four locations in development (i.e., Cabazon, Huntington Beach, Irvine and Mission Viejo, California):





  ? La Floresta Shopping Village in Brea, California;

  ? La Crescenta, California;




    ?   Glendale Galleria in Glendale, California;

    ?   Galleria at Tyler in Riverside, California;

    ?   Home Depot Center in Laguna Woods, California;

? Stonestown Galleria in San Francisco, California (opened in first quarter


        of 2022);

    ?   Corona Del Mar, California;

    ?   Santa Anita Westfield Mall in Arcadia, California; and

    ?   Manhattan Village at Manhattan Beach, California.




Impact of COVID-19



The COVID-19 pandemic and resulting disruptions including, without limitation,
governmental lockdown mandates and restrictions, made 2020 a challenging year
for businesses, particularly in the foodservice and restaurant industries.
Reborn Coffee took immediate action to protect the health and safety of our
employees and customers including the implementation of all operating protocols
dictated by state and local guidelines and instituting strict health and safety
practices. Fortunately, we did not experience any significant disruptions in our
supply chain operations.



Despite efforts to ensure a safe consumer experience, we did experience
repressed customer flow through periods when malls and shopping centers were
restricted or closed entirely due to governmental lockdown mandates and
restrictions. Our current retail locations are within popular shopping areas
with anticipated regular customer traffic. Such closures or limitations and
restrictions were at times mandated the government, and at other times due to
natural customer uncertainties regarding the status of COVID-19. Such
restrictions and uncertainties not only impacted anticipated revenues from
current locations, but added additional risk to us related to the opening of new
locations. Thus, the uncertainty regarding the scope and longevity of such
restrictions modified our plans as to how quickly we could enact our expansion
plans.



More specifically, COVID-19 has challenged our performance at our kiosk
locations, though our cafe locations have improved in performance. Shopping mall
restrictions and mandates during the pandemic made it difficult for our kiosks
to operate at maximum performance, as indoor restrictions of shopping malls
affected the way we had to operate business. For instance, we had to offer only
to-go/pickup operations to operate while meeting regulations. We have learned
how to move forward aggressively despite such regulations and mandates, doing
what we can to serve the coffee we are so proud to serve, whether this means
offering to-go orders only or working with delivery services.



In May 2020, the Company availed itself of a loan under the Paycheck Protection
Program (PPP) administered by the U.S. Small Business Administration (SBA) in
the amount of $115,000, and $500,000 under the SBA's Economic Injury Disaster
Loan assistance program, all of which is currently outstanding as of December
31, 2021, provided however that repayment was deferred to commence in May 2022.
In February 2021, the Company secured a second PPP loan under this program in
the amount of approximately $167,000. The Company was granted forgiveness for
the initial PPP Loan prior to December 31, 2021 and expects to be granted
forgiveness on the remainder subsequently.



                                       21






In January 2022 we announced a price increase of our whole roasted beans by 15%
on our website which we attribute to increases due to inflation in the cost of
raw green coffee beans, the cost of shipping and supplies, and nationwide
increases in labor costs-- factors that may or may not be attributable to the
pandemic and/or the governmental policies and mandates that were implemented
during and in the wake of COVID-19. As of the date hereof and in January 2022 at
the time of our price increase, inflation has not had a material effect on our
results of operations since we have been able to offset such increased costs by
increasing the price of our whole roasted beans by 15% in January 2022, through
increased sales and growth in opening 2 new company-owned retail locations,
better lease terms on such new company-owned retail locations, more efficient
purchasing practices (e.g., volume purchase discounts), productivity
improvements and greater economies of scale. Severe increases in inflation,
however, could affect the global and U.S. economies and could have a materially
adverse impact on our business, financial condition or results of operations.



We do not expect COVID-19 to affect our future operating results significantly,
as we are confident that coffee is an essential product that people rely on and
will always drink. We intend to meet all governmental business operation
regulations and improve sales by whatever means necessary, utilizing resources
such as food delivery services and to-go/pickup orders. However, the impact of
COVID-19 continues to evolve, and we cannot easily predict the future potential
impacts of the pandemic on our business or operations or on the United States or
global economy in general. This may include any recurrence of the disease,
actions taken in response to the evolving pandemic, any ongoing effects on
consumer demand and spending patterns or other impacts of the pandemic. Whether
these or other currently unanticipated consequences of the pandemic are
reasonably likely to materially affect our results of operations, cash flows or
financial condition is yet to be determined. For additional details regarding
the impact of COVID-19 on our business, see "Risk Factors-Risks Related to Our
Business-Pandemics or disease outbreaks such as the COVID-19 have had, and may
continue to have, an effect on our business and results of operations."

Components of Our Results of Operations





Revenue

The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. The Company's net revenue primarily consists of revenues from its retail locations 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. Retail store revenue makes up approximately 97% of
        the Company's total revenue.

    ?   Wholesale and Online Revenue

        Wholesale and online revenues are recognized when the products are

delivered, and title passes to 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% of the Company's


        total revenue.




    ?   Royalties and Other Fees

        Franchise revenues consist of royalty fee and other franchise fees.
        Royalty fee is based on a percentage of franchisee's weekly gross sales
        revenue at 5%. The Company recognizes the fee as the underlying sales

occur. The Company recorded revenue from royalty of $0 for the three and

six month periods ended June 30, 2022 and 2021. Other fees are earned as

incurred and the Company did not have any other fee revenue for the three


        and six month periods ended June 30, 2022 and 2021.




Cost of Sales

Cost of sales includes costs associated with generating revenue within our company-owned retail locations, and franchising operations (of which, as of the date of this prospectus, we had none).





Shipping and Handling Costs

The Company incurred freight out cost and is included in the Company's cost of sale.

General and Administrative Expense

General and administrative expense includes store-related expense as well as the Company's corporate headquarters' expenses.





Advertising Expense




Advertising expense are expensed as incurred. Advertising expenses amounted to
$20,513 and $50,160 for the six month periods ended June 30, 2022 and 2021,
respectively, and is recorded under general and administrative expenses in the
accompanying unaudited condensed consolidated statements of operations.



                                       22





Pre-opening Costs




Pre-opening costs for new stores, which are not material, consist primarily of
payroll and recruiting expense, training, marketing, rent, travel, and supplies,
and are expensed as incurred depreciated over the shorter of the useful life of
the improvement or the lease term, including renewal periods that are reasonably
assured.



Results of Operations

Three and six months ended June 30, 2022 Compared to three and six months ended June 30, 2021





The following table presents selected comparative results of operations from our
unaudited financial statements for the three and six months ended June 30, 2022
compared to three and six months ended June 30, 2021. 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.



                                                 Six Months Ended
                                                     June 30,                    Increase / (Decrease)
                                               2022            2021            Dollars          Percentage

Net revenues:
Stores                                     $  1,511,952     $   851,785     $      660,167             77.5 %
Wholesale and online                             29,674          28,336              1,338              4.7 %
Total net revenues                            1,541,626         880,121            661,505             75.2 %
Operating costs and expenses:
Product, food and drink costs-stores            563,906         270,148            293,758            108.7 %
Cost of sales-wholesale and online               12,997          12,412                585              4.7 %
General and administrative                    2,468,447       1,226,951    

     1,241,496            101.2 %
Loss from operations                         (1,503,724 )      (629,390 )         (874,334 )          138.9 %
Other income                                     16,440               -             16,440              N/A %
Interest expense                                (14,976 )        (5,773 )           (9,203 )          159.4 %
Loss before income taxes                     (1,502,260 )      (635,163 )         (867,097 )          136.5 %

Provision for income taxes                            -               -    

             -              0.0 %
Net loss                                   $ (1,502,260 )   $  (635,163 )   $     (867,097 )          136.5 %




                                               Three Months Ended
                                                    June 30,                  Increase / (Decrease)
                                              2022            2021           Dollars         Percentage
Net revenues:
Stores                                     $   775,956     $  475,824     $     300,132             63.1 %
Wholesale and online                            12,520         15,368            (2,848 )          -18.5 %
Total net revenues                             788,476        491,192           297,284             60.5 %
Operating costs and expenses:
Product, food and drink costs-stores           278,952        135,452           143,500            105.9 %
Cost of sales-wholesale and online               5,484          6,732            (1,248 )          -18.5 %
General and administrative                   1,432,432        656,310      

    776,122            118.3 %
Loss from operations                          (928,392 )     (307,302 )        (621,090 )          202.1 %
Other income                                     1,440              -             1,440              N/A %
Interest expense                               (10,196 )         (382 )          (9,814 )         2569.1 %

Loss before income taxes                      (937,148 )     (307,684 )        (629,464 )          204.6 %
Provision for income taxes                           -              -      

          -              0.0 %
Net loss                                   $  (937,148 )   $ (307,684 )   $    (629,464 )          204.6 %




                                       23





                                         Six months ended          Three months ended
                                             June 30,                   June 30,
                                         2022         2021          2022          2021

Net revenues:
Stores                                      98.1 %      96.8 %          98.4 %      96.9 %
Wholesale and online                         1.9 %       3.2 %           1.6 %       3.1 %
Total net revenues                         100.0 %     100.0 %         100.0 %     100.0 %
Operating costs and expenses:
Product, food and drink costs-stores        36.6 %      30.7 %          35.4 %      27.6 %
Cost of sales-wholesale and online           0.8 %       1.4 %           0.7 %       1.4 %
General and administrative                 160.1 %     139.4 %         181.7 %     133.6 %
Loss from operations                       -97.5 %     -71.5 %        -117.7 %     -62.6 %
Other income                                 1.1 %       0.0 %           0.2 %       0.0 %
Interest expense                            -1.0 %      -0.7 %          -1.3 %      -0.1 %
Loss before income taxes                   -97.4 %     -72.2 %        -118.9 %     -62.6 %
Provision for income taxes                   0.0 %       0.0 %           0.0 %       0.0 %
Net loss                                   -97.4 %     -72.2 %        -118.9 %     -62.6 %





Revenues. Revenues were approximately $1.5 million for the six-month period
ended June 30, 2022, compared to $880,000 for the comparable period in 2021,
representing an increase of $661,000, or 75.2%. Revenues were approximately
$788,000 million for the three-month period ended June 30, 2022, compared to
$491,000 for the comparable period in 2021, representing an increase of
$297,000, or 60.5%. The increase in sales for the periods was primarily driven
by the opening of the Corona Del Mar, Laguna Woods and Santa Anita locations
during 2021, and to the continued focus on marketing efforts to grow brand
recognition.



Product, food and drink costs. Product, food and drink costs were approximately
$564,000 for the six-month period ended June 30, 2022 compared to $270,000 for
the comparable period in 2021, representing an increase of approximately
$294,000, or 108.7%, and were approximately $279,000 for the three-month period
ended June 30, 2022 compared to $135,000 for the comparable period in the prior
year, representing an increase of $144,000 of 105.9%. The increase in costs for
the periods was partially driven by the opening of new locations and the overall
increase in sales for the period. As a percentage of revenues, product, food and
drink costs increased to 36.6% in the six-month period ended June 30, 2022
compared to 30.7% in the comparable period in 2021 and increased to 35.4% in the
three-month period ended June 30, 2022 compared to 27.6% in the comparable
period in 2021. The increase in costs as a percentage of sales was primarily
driven by general inflationary pressures and the seasonal fluctuations in cost
of ingredients. We monitor these fluctuations in product costs to analyze
whether they are considered to be representative of general economic conditions,
such as inflation, or to be related to commodity specific changes. For example,
green bean suppliers raised pricing by 15 to 20% throughout 2021, higher than
the overall rate of inflation, however it has been more stable recently and even
decreasing slightly in the second quarter of 2022.



General and administrative expenses. General and administrative expenses were
approximately $2.5 million for the six-month period ended June 30, 2022 compared
to $1.2 million for the comparable period in the prior year, representing an
increase of approximately $1.2 million, or 101.2%, and were approximately $1.4
million for the three-month period ended June 30, 2022 compared to $656,000 for
the comparable period in 2021, representing an increase of approximately
$775,000, or 118.3%. This increase in general and administrative expenses was
primarily due to the hiring of additional administrative employees, increases in
professional services and corporate-level costs to support growth plans, the
opening of new restaurants, as well as costs associated with outside
administrative, legal and professional fees and other general corporate expenses
associated with preparing to become a public company. As a percentage of sales,
general and administrative expenses increased to 160.1% in the six-month period
ended June 30, 2022 from 139.4% in the comparable period of 2021, and increased
to 181.7% for the three-month period ended June 30, 2022 from 133.6% in the
comparable period in 2021, primarily due to the increased administrative
expenditures for the reasons mentioned above.



                                       24

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