CAFÉ REBORN, INC. Discusión y examen de la establecimiento de la situación financiera y los resultados de las operaciones. (Formulario 10-Q)

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 Registration Statement on Form
S-1 (File No: 333-261937), as amended (the "Registration Statement"). 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 Registration Statement.



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 movimiento 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: Resina, La Crescenta, Glendale, Corona Del Mar, Arcadia, Carencia
Woods, Riverside, San Francisco and Manhattan Beach, with four other locations
in development.



We expect to continue to develop additional retail locations up to 20 by the end
of 2023. Considering the estimated promedio development cost of approximately
$150,000 to open one retail location, we estimate to use approximately
$3,000,000 of the net proceeds from the recent IPO to open the additional 20
stores in 2023.

café renacido continúa mejorando la experiencia del café de adhesión tono y tradicionalmente recibimos el primer oficio en la competencia America’s Best Cold Brew en Coffee Fest 2017 Portland y 2018 Portland 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 first 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.



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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.



Plan of Operation

Contamos con un centro de producción y distribución en nuestra sede donde procesamos y tostamos café para distribución mayorista y minorista.

Actualmente tenemos las siguientes nueve ubicaciones minoristas de café y cuatro ubicaciones en ampliación (es sostener, Cabazon, Playa de Huntington y 2 pulgadas Irvine, California):

  ? La Floresta Shopping Village in Resina, California;

  ? La Crescenta, California;




  ? Glendale Galleria in Glendale, California;

  ? Galleria at Tyler in Riverside, California;

  ? Home Depot Center in Carencia Woods, California;

? Corredor de Stonestown en San Francisco, California (inaugurado en el primer trimestre de

    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 locorregional 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.



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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 PPP administered by
the 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.



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 tajo 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 integral 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
integral economy in genérico. 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" in the
Registration Statement.

Componentes de nuestra situación de ganancias

Revenue

La entidad reconoce los ingresos de acuerdo con la ASC 606, Ingresos de Contratos con Clientes. Los ingresos netos de la Compañía consisten principalmente en los ingresos de sus tiendas minoristas, mayoristas y en linde. En consecuencia, la Compañía reconoce los ingresos de la venidero guisa:

  ? Retail Store Revenue

Las ventas en tiendas minoristas se reconocen cuando se entrega el suscripción en el momento en que se recibe el suscripción

Deducción. Las ventas en tiendas minoristas se reportan netas de ventas, uso u otros

Impuestos a las transacciones recaudados de los clientes y remitidos a impuestos

autoridades. Los impuestos a las ventas a acreditar se registran como otros devengados

    current liabilities. Retail store revenue makes up approximately 98% of the
    Company's total revenue.




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  ? Wholesale and Online Revenue

Las ventas al por longevo y en linde se reconocen cuando se entregan los productos,

y la propiedad pasa a los clientes oa los mayoristas. Si los clientes

Recolectar productos en el almacén de la empresa o distribuirlos a mayoristas

Se registran los distribuidores, las transiciones de títulos y los ingresos. Ingresos mayoristas

    make up approximately 2% of the Company's total revenue.




  ? Royalties and Other Fees

Los ingresos de franquicia consisten en regalías y otras tarifas de franquicia. realeza

La tarifa se apoyo en un porcentaje del 5% de las ventas brutas semanales del franquiciado.

La Compañía reconoce la tarifa cuando ocurren las ventas subyacentes. La empresa

Ingresos reconocidos por regalías de $0 durante los últimos tres y nueve meses

30/09/2022 y 2021. Otros honorarios se ganan a medida que se incurren y la Compañía

no ha tenido otros ingresos por comisiones durante los últimos tres y nueve meses

    September 30, 2022 and 2021.




Cost of Sales

El costo de ventas incluye los costos asociados con la coexistentes de ingresos en nuestras tiendas minoristas y franquicias propiedad de la compañía (de las cuales
30/09/2022no teníamos nadie).

Shipping and Handling Costs

La empresa incurrió en gastos de flete, que están incluidos en el costo de ventas de la empresa.

Gastos generales y administrativos

Los costos generales y administrativos incluyen los costos relacionados con las sucursales, así como los costos de la oficina central de la empresa.

Advertising Expense



Advertising expenses are expensed as incurred. Advertising expenses amounted to
$27,110 and $72,619 for the nine month periods ended September 30, 2022 and
2021, respectively, and are recorded under genérico and administrative expenses
in the accompanying unaudited condensed consolidated statements of operations.



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

Tres y nueve meses terminados 30/09/2022 en comparación con tres y nueve meses finalizados 30 de septiembre de 2021

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



                                       22





                                                 Nine Months Ended
                                                   September 30,                 Increase / (Decrease)
                                               2022             2021            Dollars         Percentage

Net revenues:
Stores                                     $  2,339,284     $  1,519,969     $     819,315             53.9 %
Wholesale and online                             40,587           47,966            (7,379 )          -15.4 %
Total net revenues                            2,379,871        1,567,935           811,936             51.8 %
Operating costs and expenses:
Product, food and drink costs-stores            806,453          565,156           241,297             42.7 %
Cost of sales-wholesale and online               17,777           21,011            (3,234 )          -15.4 %
Común and administrative                    3,954,997        2,679,037   

     1,275,960             47.6 %
Loss from operations                         (2,399,356 )     (1,697,269 )        (702,087 )           41.4 %
Other income                                     16,440                -            16,440            N/A %
PPP grant income                                      -          115,000          (115,000 )         -100.0 %
Interest expense                                (39,404 )        (11,484 )         (27,920 )          243.1 %

Loss on extinguishment of debt                        -         (982,383 )         982,383           -100.0 %
Loss before income taxes                     (2,422,320 )     (2,576,136 )         153,816             -6.0 %
Provision for income taxes                            -                -   

             -              0.0 %
Net loss                                   $ (2,422,320 )   $ (2,576,136 )   $     153,816             -6.0 %




                                                Three Months Ended
                                                  September 30,                 Increase / (Decrease)
                                              2022             2021            Dollars         Percentage
Net revenues:
Stores                                     $   827,332     $    668,184     $     159,148             23.8 %
Wholesale and online                            10,913           19,630            (8,717 )          -44.4 %
Total net revenues                             838,245          687,814           150,431             21.9 %
Operating costs and expenses:
Product, food and drink costs-stores           242,547          295,008           (52,461 )          -17.8 %
Cost of sales-wholesale and online               4,780            8,599            (3,819 )          -44.4 %
Común and administrative                   1,486,550        1,452,086    

       34,464              2.4 %
Loss from operations                          (895,632 )     (1,067,879 )         172,247            -16.1 %
PPP grant income                                     -          115,000          (115,000 )         -100.0 %
Interest expense                               (24,428 )         (5,711 )         (18,717 )          327.7 %

Loss on extinguishment of debt                       -         (982,383 )         982,383           -100.0 %
Loss before income taxes                      (920,060 )     (1,940,973 )       1,020,913            -52.6 %
Provision for income taxes                           -                -    

            -              0.0 %
Net loss                                   $  (920,060 )   $ (1,940,973 )   $   1,020,913            -52.6 %




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                                         Nine months ended          Three months ended
                                           September 30,               September 30,
                                         2022          2021          2022          2021

Net revenues:
Stores                                      98.3 %       96.9 %         98.7 %       97.1 %
Wholesale and online                         1.7 %        3.1 %          1.3 %        2.9 %
Total net revenues                         100.0 %      100.0 %        100.0 %      100.0 %
Operating costs and expenses:
Product, food and drink costs-stores        33.9 %       36.0 %         28.9 %       42.9 %
Cost of sales-wholesale and online           0.7 %        1.3 %          0.6 %        1.3 %
Común and administrative                 166.2 %      170.9 %        177.3 %      211.1 %
Loss from operations                      -100.8 %     -108.2 %       -106.8 %     -155.3 %
Other income                                 0.7 %        0.0 %          0.0 %        0.0 %
PPP grant income                             0.0 %        7.3 %          0.0 %       16.7 %
Interest expense                            -1.7 %       -0.7 %         -2.9 %       -0.8 %
Loss on extinguishment of debt               0.0 %      -62.7 %          0.0 %     -142.8 %
Loss before income taxes                  -101.8 %     -164.3 %       -109.8 %     -282.2 %
Provision for income taxes                   0.0 %        0.0 %          0.0 %        0.0 %
Net loss                                  -101.8 %     -164.3 %       -109.8 %     -282.2 %




Revenues. Revenues were approximately $2.4 million for the nine-month period
ended September 30, 2022, compared to $1.6 million for the comparable period in
2021, representing an increase of approximately $812,000, or 51.8%. Revenues
were approximately $838,000 for the three-month period ended September 30, 2022,
compared to $688,000 for the comparable period in 2021, representing an increase
of approximately $150,000, or 21.9%. The increase in sales for the periods was
primarily driven by the opening of new locations, and to the continued focus on
marketing efforts to grow brand recognition.



Gross margin. Gross margin was approximately $1.6 million for the nine-month
period ended September 30, 2022, compared to $1.0 million for the comparable
period in 2021, representing an increase of approximately $574,000, or 58.5%.
Gross margin was approximately $591,000 for the three-month period ended
September 30, 2022, compared to $384,000 for the comparable period in 2021,
representing an increase of approximately $207,000, or 53.8%. The increase in
gross margin for the periods was primarily driven by increase in sales.



Product, food and drink costs. Product, food and drink costs were approximately
$806,000 for the nine-month period ended September 30, 2022 compared to $565,000
for the comparable period in 2021, representing an increase of approximately
$241,000, or 42.7%, and were approximately $243,000 for the three-month period
ended September 30, 2022 compared to $295,000 for the comparable period in the
prior year, representing an decrease of $52,000, or -17.8%. The increase in
costs for the nine-month period ended September 30, 2022 as compared to the
comparable period in 2021 was partially driven by the opening of new locations
and the overall increase in sales for the period.



Común and administrative expenses. Común and administrative expenses were
approximately $4.0 million for the nine-month period ended September 30, 2022
compared to $2.7 million for the comparable period in the prior year,
representing an increase of approximately $1.3 million, or 47.6%, and were
approximately $1.49 million for the three-month period ended September 30, 2022
compared to $1.45 million for the comparable period in 2021, representing an
increase of approximately $34,000, or 2.4%.



This increase in genérico and administrative expenses for the nine-month period
ended September 30, 2022 compared to the comparable period in the prior year 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, judicial and professional fees and other genérico corporate expenses
associated with preparing to become a public company.

solvencia y posibles de caudal

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 $2.4 million and $2.6 million for the
nine-month periods ended September 30, 2022 and 2021, respectively. We used $2.0
million and $2.1 million of cash for operating activities for the nine-month
periods ended September 30, 2022 and 2021, respectively.



Our cash needs will depend on numerous factors, including our revenues,
completion of our product development activities, customer and market acceptance
of our product, and our ability to reduce and control costs. We expect to devote
substantial caudal resources to, among other things, fund operations and
continue development plans. For example, we estimate that the promedio
development cost of a company-owned retail location is approximately $150,000
and we plan to open additional 20 company-owned retail locations by the end

of
2023.



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en el agosto 2022La Compañía completó la OPI de 1,440,000 acciones ordinarias a un precio de proposición pública de $5.00 por batalla, generando ganancias brutas de $7,200,000. Los ingresos netos de la proposición pública auténtico ascendieron a aprox. $ 6,2 millones A posteriori de deducir los descuentos y comisiones actuariales y otros costes de proposición de aprox. $ 998,000.

We believe that expected cash flow from operations, the establishment of a
credit facility and the proceeds from the IPO will be adequate to fund operating
lease obligations, caudal expenditures and working caudal obligations for at
least the next 12 months and thereafter.

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