S-1: Yoshiharu Global Co. Files for Resale of Up to 1.6 Million Shares

Yoshiharu Global Co. is registering for resale up to 1.6 million shares of its Class A common stock by Crom Structured Opportunities Fund I, LP, stemming from a recent equity purchase agreement and convertible note transaction.

Summary

• Yoshiharu Global Co. has filed a registration statement for the potential resale of up to 1,600,000 shares of its Class A Common Stock.
• The shares are held by Crom Structured Opportunities Fund I, LP, and arise from a recent equity purchase agreement (EPA) and a convertible promissory note.
• Up to 500,000 shares are related to the EPA, including 31,948 already issued as a commitment fee.
• Up to 1,100,000 shares may be issued upon conversion of the promissory note.
• Yoshiharu will not receive any proceeds from the resale of shares by Crom, but may receive up to $10 million from the sale of shares to Crom under the EPA and $1,000,000 from the Promissory Note.
• The company intends to use any proceeds from the Selling Stockholder that we receive under the EPA and Note for working capital, strategic and general corporate purposes.
• The last reported closing price for Yoshiharu's Class A Common Stock on Nasdaq on February 3, 2025 was $3.68 per share.

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While the company secures potential funding, the risks of dilution and market price decline weigh on the outlook.

Positives

• The company has access to potential funding of up to $10 million through the EPA with Crom.
• The company has access to potential funding of $1,000,000 through the Promissory Note with Crom.
• The company retains control over the timing and amount of any sales of its Class A Common Stock to Crom under the EPA.

Negatives

• Existing shareholders may experience substantial dilution due to the potential issuance of up to 1.6 million shares.
• The market price of Yoshiharu's Class A Common Stock could decline due to the sale of a substantial number of shares by Crom.
• The company's reliance on Crom as a source of funding depends on various factors, including the prevailing market price of its Class A Common Stock.
• The company's management has broad discretion over the use of the net proceeds from the sale of shares of Class A Common Stock to the Selling Stockholder, and you may not agree with how we use the proceeds and the proceeds may not be invested successfully.

Risks

• The actual number of shares sold under the EPA and the gross proceeds resulting from those sales are unpredictable.
• The issuance of Class A Common Stock to Crom may cause substantial dilution to existing shareholders.
• The company may require additional financing to sustain its operations.
• If the company is unable to satisfy the applicable continued listing requirements of Nasdaq, its Class A Common Stock could be delisted.
• The terms of the company's indebtedness increases the risk that it will be unable to continue as a going concern.

Future Outlook

The company intends to use any proceeds from the Selling Stockholder that we receive under the EPA and Note for working capital, strategic and general corporate purposes.

Industry Context

The announcement reflects a common financing strategy for small-cap companies seeking capital, but it also highlights the potential risks of dilution and market volatility.

Comparison to Industry Standards

• Equity lines of credit and convertible notes are frequently used by publicly traded companies, particularly smaller ones, to raise capital.
• The terms of the EPA and convertible note, including the discount to market price and the conversion price, are within the typical range for such agreements, but the specific terms should be compared to similar deals involving companies with comparable market capitalizations and risk profiles.
• Comparable companies that have used similar financing structures include [insert names of comparable companies], and their experiences can provide insights into the potential outcomes of this arrangement.

Stakeholder Impact

• Shareholders may experience dilution of their ownership.
• The company's employees and customers may be affected by the company's ability to execute its business plan.
• The company's suppliers and creditors may be affected by the company's financial condition.

Next Steps

• The company needs to ensure the registration statement becomes and remains effective.
• The company needs to manage the potential dilution to existing shareholders.
• The company needs to monitor the market price of its Class A Common Stock.
• The company needs to effectively utilize the proceeds from the EPA and Note.

Key Dates

Keywords

registration statement, resale, common stock, equity purchase agreement, convertible note, Crom Structured Opportunities Fund I, LP, Yoshiharu Global Co., EPA, financing, dilution