8-K: Vestand Amends $4.4M Convertible Note Payment Schedule

Vestand Inc. has amended its convertible note agreement with Open Innovation Fund, restructuring the $4.4 million investment into three tranches with specific payment dates.

Summary

• Vestand Inc. (formerly Yoshiharu Global Co.) entered into an amendment to its Convertible Note Subscription Agreement with Open Innovation Fund on August 28, 2025.
• The original agreement, dated July 29, 2025, was for a $4,400,000 convertible note investment.
• The amendment revises the payment schedule for the $4,400,000, which will now be paid in three tranches.
• The first tranche of $2,900,000 is due on or before September 11, 2025.
• The second tranche of $750,000 is due on or before September 30, 2025.
• The third tranche of $750,000 is due on or before October 15, 2025.
• The note is a secured, subordinated convertible note with a 7.0% per annum interest rate, payable semi-annually in arrears, and a 3-year maturity.
• The conversion price is $1.10 per share, adjusted from an original $4.41 per share due to a 1-for-4 stock split.
• A refixing adjustment clause allows the conversion price to be adjusted monthly to the lower of the then-effective conversion price or 90% of the 10-day average closing price, with a floor of $4.00 (equivalent to $1.00 post-split).
• The investor has an early redemption right (put option) after 12 months from the issuance date, or immediately in cases of default or Material Adverse Events.
• 100% of the proceeds must be used for the acquisition, development, or renovation of real estate located in California and deposited into a designated escrow account.
• The note is secured by a second-priority security interest in any real property acquired with the proceeds, subordinate to first-priority lenders.
• The total principal amount of indebtedness secured by the collateral property cannot exceed 60% of its acquisition price.
• Conversion is subject to a 9.99% beneficial ownership limit for the investor and a 19.99% Nasdaq rule limit, requiring shareholder approval for conversion beyond this threshold.

Sentiment

Score: 6

Explanation: The filing confirms a significant capital infusion ($4.4M) which is positive for growth, but the terms of the convertible note, particularly the refixing conversion price and subordination, introduce potential dilution and risk for existing shareholders. The strict use of proceeds also limits financial flexibility.

Positives

• Secures $4,400,000 in financing, providing capital for strategic real estate acquisition, development, or renovation in California.
• The structured tranche payments provide a clear and defined funding schedule for the company.
• The 7.0% interest rate represents a defined cost of capital for the company's investments.
• The security interest in real property provides a level of assurance for the investor, potentially facilitating the financing.

Negatives

• The convertible note is subordinated, meaning the investor's claim is secondary to other potential first-priority lenders on the collateral property.
• The refixing adjustment clause for the conversion price, with a floor of $1.00 per share (post-split), could lead to significant dilution for existing shareholders if the stock price declines.
• The company requires shareholder approval to issue more than 19.99% of its outstanding shares upon conversion, introducing a potential hurdle and uncertainty.
• The use of proceeds is strictly restricted to California real estate, limiting the company's financial flexibility for other strategic initiatives.
• The security interest is limited to the collateral property, with no other assets of the Issuer or its affiliates serving as collateral.

Risks

• Dilution Risk: The convertible note's refixing conversion price mechanism, with a floor of $1.00 per share (post-split), poses a significant risk of dilution for existing shareholders if the company's stock price declines.
• Shareholder Approval Risk: The company must obtain shareholder approval to issue conversion shares exceeding 19.99% of its outstanding shares, and failure to do so could limit the investor's ability to fully convert the note.
• Real Estate Market Risk: The strict allocation of proceeds to California real estate exposes the company to regional real estate market fluctuations, including potential downturns, increased competition, or regulatory changes.
• Subordination Risk: The note is explicitly subordinated to first-priority lenders, meaning the investor's recovery in a default scenario would be secondary, potentially impacting the company's ability to secure future senior debt.
• Liquidity Risk: The company's ability to repay the note's principal and interest is dependent on the successful execution and profitability of its real estate investments, as well as its overall financial health.
• Material Adverse Event Risk: The investor retains an early redemption right in the event of a Material Adverse Event, which could trigger an immediate demand for repayment and potentially strain the company's liquidity.

Future Outlook

The company reiterates its position to execute on its growth strategy and expand its leadership position, acknowledging that these forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially.

Management Comments

• We are positioned to execute on our growth strategy.
• We are able to expand our leadership position.

Industry Context

na

Corporate Governance

Stakeholder Impact

• Shareholders: Face potential for significant dilution due to the convertible note's refixing conversion price, especially if the stock price declines. Shareholder approval is required for full conversion beyond a certain threshold, which could introduce uncertainty.
• Creditors: The convertible note is explicitly subordinated to first-priority lenders, affecting the recovery priority of the convertible note investor in a default scenario.
• Company (Vestand Inc.): Secures capital for strategic real estate investments but with specific restrictions on the use of proceeds and potential future dilution, requiring careful management of its capital structure and real estate portfolio.

Next Steps

• Receive the first tranche payment of $2,900,000 by September 11, 2025.
• Receive the second tranche payment of $750,000 by September 30, 2025.
• Receive the third tranche payment of $750,000 by October 15, 2025.
• File a registration statement with the SEC covering the resale of the shares of Class A Common Stock issuable upon conversion of this Note by the Investor.
• Obtain requisite shareholder approval for conversion shares exceeding 19.99% of outstanding shares, with a meeting to be held no later than six months following the issuance date (by February 28, 2026).
• Utilize the proceeds for the acquisition, development, or renovation of real estate located in California.

Key Dates

Recommendation

While the $4.4 million financing provides capital for strategic real estate investments, the terms of the convertible note introduce significant dilution risk for existing shareholders due to the refixing conversion price. The subordination of the note and strict use of proceeds also present specific risks. Investors should hold to monitor the execution of the real estate strategy, the impact of potential dilution, and the outcome of the required shareholder approval for full conversion.

Keywords

Convertible Note, Financing, Real Estate, California, SEC Filing, 8-K, Vestand Inc., Yoshiharu Global Co., Open Innovation Fund, Dilution, Corporate Governance, Nasdaq Listing Rule 5635(d), Secured Debt, Tranche Payments