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

Yoshiharu Global Co. has completed the acquisition of three Las Vegas restaurants for $3.6 million, aiming for profitability by 2025.

Summary

• Yoshiharu Global Co. has acquired Jjanga LLC, HJH LLC, and Ramen Aku LLC, collectively known as the LV Entities, for a total of $3.6 million.
• The purchase consideration includes $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 on 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 to convert into Class A common stock.
• The acquisition is structured as a business combination, with Yoshiharu as the accounting acquirer.
• Pro forma combined financials show total assets of $16.85 million and a net loss of $958,173 for the three months ended March 31, 2024.
• 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 is generally positive, highlighting the strategic acquisition and future growth prospects. However, the pro forma net loss and reliance on debt temper the overall sentiment.

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 break-even in the second half of 2024 and becoming profitable in 2025.
• The seller, Mr. Jihyuck Hwang, will serve as Managing Director of the acquired restaurants, ensuring continuity and expertise.
• The convertible note provides flexibility for both the company and the seller, with the option for conversion into equity.

Negatives

• The pro forma combined financial statements show a net loss of $958,173 for the three months ended March 31, 2024.
• The company is taking on debt in the form of a promissory note and a convertible note to finance the acquisition.
• The final purchase price allocation is preliminary and may differ materially from the pro forma adjustments.
• The unaudited pro forma financial information is not necessarily indicative of future financial performance.

Risks

• The actual financial results may differ significantly from the pro forma amounts due to various factors.
• The final purchase price allocation is subject to change and could impact the operating results of the company.
• The company is relying on estimates and assumptions that may not materialize.
• There is a risk that the acquired restaurants may not perform as expected.
• The company is taking on debt to finance the acquisition, which could increase financial risk.

Future Outlook

Yoshiharu anticipates breaking even in the second half of 2024 and becoming profitable in 2025, leveraging the financial success of the acquired restaurants to expand the brand.

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.'
• He 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 price of $3.6 million for three restaurants is within the typical range for similar acquisitions in the restaurant industry, though the specific value depends on factors like location, revenue, and profitability.
• The use of a combination of cash, promissory notes, and convertible notes is a common financing strategy for acquisitions, allowing for flexibility and deferred payments.
• The projected $6 million in annual revenue for the acquired restaurants is a significant figure, suggesting a strong existing customer base and potential for growth.
• The expectation of breaking even in the second half of 2024 and becoming profitable in 2025 is an ambitious but achievable goal, depending on the integration and management of the acquired businesses.

Management Changes

Stakeholder Impact

• Shareholders can expect increased revenue and potential profitability in the future.
• Employees of the acquired restaurants will become part of the Yoshiharu team.
• Customers of the acquired restaurants will continue to receive service under the new ownership.
• Suppliers will have a new business relationship with Yoshiharu.

Next Steps

• The company will integrate the acquired restaurants into its operations.
• Yoshiharu will file the required financial statements with the SEC.
• The company will work to achieve its goal of breaking even in the second half of 2024 and becoming profitable in 2025.
• The company will continue to evaluate opportunities for further expansion.

Key Dates

Keywords

acquisition, restaurants, ramen, Japanese cuisine, Las Vegas, pro forma, convertible note, promissory note, financial statements, EBITDA