8-K/A: Yoshiharu Global Co. Completes Acquisition of Three Las Vegas Restaurants for $3.6 Million

Yoshiharu Global Co. has finalized the acquisition of three Las Vegas restaurant entities for $3.6 million, aiming to expand its brand and achieve profitability.

Summary

• Yoshiharu Global Co. has acquired three Las Vegas restaurant entities, Jjanga LLC, HJH LLC, and Ramen Aku LLC, for a total of $3.6 million.
• The acquisition was funded through a combination of $1.8 million in cash, a $600,000 promissory note, and a $1.2 million convertible note.
• The promissory note is to be repaid in two equal installments of $300,000 due April 12, 2025 and April 12, 2026, without interest.
• The convertible note accrues interest at 0.5% per annum and matures one year from the closing date, with the option for the seller to convert it into Class A common stock.
• The seller, Mr. Jiyuck Hwang, will serve as the Managing Director of the acquired restaurants with an annual base salary of $180,000 and a performance-based bonus.
• The acquired restaurants are expected to generate $6 million in annual revenue in 2024.
• Yoshiharu anticipates breaking even in the second half of 2024 and becoming profitable in 2025.

Sentiment

Score: 7

Explanation: The document presents a positive outlook with the acquisition and projected profitability, but there are also risks and existing financial challenges. The sentiment is cautiously optimistic.

Positives

• The acquisition is expected to significantly increase Yoshiharu's revenue, with an estimated $6 million in annual revenue from the acquired restaurants in 2024.
• The company anticipates achieving profitability in 2025, indicating a positive financial outlook.
• The seller's continued involvement as Managing Director ensures a smooth transition and leverages his expertise.
• The convertible note provides flexibility for both the company and the seller, with the potential for equity conversion.

Negatives

• The company is currently operating at a loss, with a net loss of $81,968 for the three months ended March 31, 2024.
• The company has a significant accumulated deficit of $5,363,087 as of March 31, 2024.
• The company has a substantial amount of debt, including a $600,000 promissory note and a $1.2 million convertible note, in addition to existing loan payables.

Risks

• The company's ability to achieve profitability in 2025 is dependent on the successful integration and performance of the acquired restaurants.
• The company's financial performance is subject to various risks and uncertainties, including those described in their SEC filings.
• The company's debt obligations could impact its financial flexibility and future growth.
• The company's reliance on the seller as Managing Director could pose a risk if his employment is terminated.

Future Outlook

Yoshiharu anticipates breaking even in the second half of 2024 and becoming profitable in 2025, driven by the revenue from the acquired restaurants.

Management Comments

• James Chae, Yoshiharu's President, CEO, and Chairman of the Board, stated, 'I am pleased to announce the successful acquisition of three renowned Las Vegas restaurants.'
• James Chae also mentioned, 'With $6 million in annual revenues expected in 2024 from the acquired restaurants, we eagerly anticipate leveraging the financial success seen with these stores to further expand the Yoshiharu brand into a new state.'

Industry Context

This acquisition reflects a trend of restaurant chains expanding through strategic acquisitions to increase market share and revenue. The move into Las Vegas is a significant step for Yoshiharu, indicating a desire to grow beyond its Southern California base.

Comparison to Industry Standards

• The acquisition of three restaurants for $3.6 million is within the range of similar transactions in the restaurant industry, but the specific terms, including the mix of cash, promissory note, and convertible note, are unique to this deal.
• The expectation of $6 million in annual revenue from the acquired restaurants is a significant increase for Yoshiharu, but the actual performance will need to be compared to industry benchmarks for similar restaurant types and locations.
• The goal of breaking even in the second half of 2024 and becoming profitable in 2025 is an ambitious target, and its success will depend on effective integration and management of the acquired businesses.
• Comparable companies such as The Cheesecake Factory (NASDAQ: CAKE) and Texas Roadhouse (NASDAQ: TXRH) have also grown through acquisitions, but their scale and financial resources are significantly larger than Yoshiharu's.

Management Changes

Stakeholder Impact

• Shareholders may see a positive impact from the increased revenue and potential profitability.
• Employees of the acquired restaurants will become part of the Yoshiharu team.
• Customers of the acquired restaurants will experience the Yoshiharu brand.
• Suppliers of the acquired restaurants may see changes in their contracts and relationships.

Next Steps

• The company will integrate the acquired restaurants into its operations.
• The company will file the required financial statements with the SEC.
• The company will work towards achieving its goal of breaking even in the second half of 2024 and becoming profitable in 2025.

Key Dates

Keywords

acquisition, restaurants, Las Vegas, Yoshiharu, ramen, convertible note, promissory note, profitability, revenue, expansion