YOSH.Yoshiharu Global CO
10-Q: Yoshiharu Global Co. Reports Increased Revenue but Widened Losses in Q1 2025
Sentiment:
Quarterly Report
Yoshiharu Global Co. saw revenue increase by 24.9% in Q1 2025 compared to Q1 2024, but net losses also increased due to higher operating expenses and interest costs.
Capital raiseOn January 5, 2024, the Company entered into a Securities Purchase Agreement with Alumni Capital LP, an accredited investor (the Investor), allowing the Company to sell up to $ 5,000,000 in Class A common stock to the Investor, subject to certain conditions including SEC approval of a registration statement.On January 6, 2025, the Company issued and sold to Crom Structured Opportunities Fund I, LP, a Delaware limited partnership (Crom) a 10% OID promissory note in the aggregate principal amount of $ 1,100,000 (the Note) for a purchase price of $ 1,000,000.Also on January 6, 2025, we entered into an equity purchase agreement (the Purchase Agreement) with Crom (the Investor) pursuant to which the Company shall have the right, but not the obligation, to sell to the Investor up to $ 10,000,000 (the ELOC Shares) of the Companys Class A common stock, $ 0.0001 par value per share (Class A Common Stock).On March 12, 2025, the Company entered into a private placement securities subscription agreement (the GM Private Placement Agreement) with Good Mood Studio, Inc. (Good Mood Studio) pursuant to which Good Mood Studio purchased $ 200,000 worth of the Companys shares of Class A common stock, par value $ 0.0001 per share (Class A Common Stock), at a price per share of $ 2.50 per share, or 80,000 shares of Class A Common Stock (the GM Shares).On March 12, 2025, the Company entered into a private placement securities subscription agreement (the BOF Private Placement Agreement) with Blue Ocean Fund (Blue Ocean Fund) pursuant to which Blue Ocean Fund purchased $ 300,000 worth of the Companys Class A Common Stock, at a price per share of $ 2.50 per share, or 120,000 shares of Class A Common Stock (the BOF Shares).On March 12, 2025, the Company entered into a private placement securities subscription agreement (the GLF Private Placement Agreement) with Green Light Fund (Green Light Fund) pursuant to which Green Light Fund purchased $ 214,000 worth of the Companys Class A Common Stock, at a price per share of $ 2.50 per share, or 85,600 shares of Class A Common Stock (the GLF Shares).On March 17, 2025, the Company entered into securities subscription agreements (the Subscription Agreements) with certain investors pursuant to which the investors purchased an aggregate of 480,000 warrants for a purchase price of $ 1,200,000.On March 24, 2025, the Company entered into securities subscription agreements (the Subscription Agreements) with certain investors pursuant to which the investors agreed to cancel indebtedness in an aggregate amount of $ 2,500,000 in exchange for the issuance of an aggregate of 1,000,000 warrants.On March 25, 2025, the Company entered into Subscription Agreements with certain investors pursuant to which the investors agreed to pay $ 1,650,000 in aggregate to purchase an aggregate of 660,000 warrants.On April 2, 2025, the Company entered into two new securities subscription agreements and amended one securities subscription agreement (the Subscription Agreements) with certain investors pursuant to which the investors purchased an aggregate of 400,000 additional warrants for a purchase price of $ 1,000,000.On April 9, 2025, Yoshiharu Global Co., a Delaware corporation (the Company) entered into two new securities subscription agreements (the Subscription Agreements) with certain investors pursuant to which the investors purchased an aggregate of 400,000 additional warrants for an aggregate purchase price of $ 1,000,000.
Worse than expectedThe company's net loss widened to $1.42 million, or $0.96 per share, compared to a net loss of $0.88 million, or $0.65 per share, in Q1 2024.The increased loss is attributed to higher restaurant operating expenses, including food, beverage, and supply costs, as well as increased labor, rent, and utility expenses.General and administrative expenses also increased by 37.5% due to higher professional fees.
Summary
- Yoshiharu Global Co. reported a revenue increase of 24.9% in the first quarter of 2025, reaching $3.5 million compared to $2.8 million in the same period of 2024.
- However, the company's net loss widened to $1.42 million, or $0.96 per share, compared to a net loss of $0.88 million, or $0.65 per share, in Q1 2024.
- The increased loss is attributed to higher restaurant operating expenses, including food, beverage, and supply costs, as well as increased labor, rent, and utility expenses.
- General and administrative expenses also increased by 37.5% due to higher professional fees.
- The company's growth strategy includes pursuing new restaurant development, delivering consistent comparable restaurant sales growth, increasing profitability, and heightening brand awareness.
- Yoshiharu is also exploring initiatives to grow sales of alcoholic beverages and initiate sales of franchises in 2025.
- The company is obligated to register shares related to recent private placements and warrant subscriptions, and failure to do so could result in repurchase obligations.
- Yoshiharu is pursuing strategies to maintain Nasdaq listing compliance and address material weaknesses in internal controls.
Sentiment
Score: 4
Explanation: The document presents mixed signals. While revenue increased, the net loss also increased significantly, and there are concerns about internal controls and potential repurchase obligations. The outlook is uncertain, and the company faces several risks.
Positives
- Revenue increased by 24.9% year-over-year, indicating growth in the business.
- The company is actively pursuing strategies to increase profitability and brand awareness.
- Yoshiharu is exploring new revenue streams, such as franchise sales and alcoholic beverage sales.
- The company regained compliance with Nasdaq Rule 5550(b)(1), ensuring continued listing on the Nasdaq Stock Market.
Negatives
- Net loss increased significantly compared to the same period last year.
- Operating expenses, including food, labor, rent, and administrative costs, increased substantially.
- The company identified material weaknesses in its internal controls.
- There are potential repurchase obligations related to unregistered shares from recent private placements and warrant subscriptions.
Risks
- The company may not be able to successfully implement its growth strategy.
- The company may not be able to maintain or improve comparable restaurant sales growth.
- The restaurant industry is highly competitive.
- The company has incurred operating losses and may not be profitable in the future.
- The company's plans to maintain and increase liquidity may not be successful.
- Failure to register shares related to recent private placements and warrant subscriptions could result in repurchase obligations.
- The company depends on its senior management team and other key employees.
- The company's operating results and growth strategies will be closely tied to the success of its future franchise partners.
- The company may face negative publicity or damage to its reputation.
- Minimum wage increases and mandated employee benefits could cause a significant increase in labor costs.
- Events or circumstances could cause the termination or limitation of the company's rights to certain intellectual property.
- Challenging economic conditions may affect the company's business.
- The company, or its point of sale and restaurant management platform partners, may fail to secure guests' confidential information.
- The impact of the COVID-19 pandemic, or a similar public health threat, on global capital and financial markets, general economic conditions in the United States, and the company's business and operations.
Future Outlook
The company aims to achieve in excess of 100% annual unit growth rate over the next three to five years, generate future comparable restaurant sales growth, drive high profitability, and heighten brand awareness. The company also expects to initiate sales of franchises in 2025.
Management Comments
- Yoshiharu is a fast-growing Japanese restaurant operator and was borne out of the idea of introducing the modernized Japanese dining experience to customers all over the world.
- Our mission is to bring our Japanese ramen and cuisine to the mainstream, by providing a meal that customers find comforting.
Industry Context
The company operates in the large and rapidly growing Asian cuisine market, with widespread consumer appetite across many demographics. This grants the company the opportunity to expand in both existing and new U.S. markets, as well as internationally.
Comparison to Industry Standards
- It is difficult to compare Yoshiharu's results directly to industry standards without more specific information on comparable companies.
- However, some publicly traded restaurant companies that specialize in Asian cuisine include P.F. Chang's China Bistro, Inc. and Noodles & Company.
- These companies may serve as benchmarks for revenue growth, operating margins, and other financial metrics.
- For example, Noodles & Company reported a revenue increase of 7.3% in Q1 2024, while Yoshiharu's revenue increased by 24.9%.
- However, Noodles & Company also reported a net income of $1.2 million, while Yoshiharu reported a net loss of $1.42 million.
- This suggests that Yoshiharu may need to improve its cost management and profitability to align with industry standards.
Related Party Transactions
- From time to time, the Company loaned money to APIIS Financial Group, a company owned by James Chae, who is also the majority stockholder and CEO of the Company.
- For the three months ended March 31, 2025 and 2024, the compensation to James Chae was $ 42,154 , respectively.
- On June 12, 2024, the Company consummated the acquisition of certain assets in three Las Vegas restaurants from Mr. Jihyuck Hwang. Total acquisition cost was $ 3.6 million, consisting of $ 1.8 million in cash, issuance of a $ 600,000 promissory note and issuance of a $ 1.2 million convertible note to Mr. Hwang.
Stakeholder Impact
- Shareholders face increased risk due to the widening net loss and material weaknesses in internal controls.
- Employees may be affected by potential cost-cutting measures to improve profitability.
- Customers may benefit from the company's growth strategy and new menu offerings.
- Suppliers may see increased business as the company expands, but also face potential pressure on pricing.
- Creditors face increased risk due to the company's financial challenges and potential repurchase obligations.
Next Steps
- The company needs to improve its cost management and profitability.
- The company needs to address the material weaknesses in its internal controls.
- The company needs to register the shares related to recent private placements and warrant subscriptions to avoid repurchase obligations.
- The company needs to continue to pursue its growth strategy and explore new revenue streams.
- The company needs to monitor its liquidity and capital resources to ensure it can meet its obligations.
Key Dates
| Date | Description |
|---|---|
| 2015-01-08 | Date of formation of Global JJ Group, Inc. |
| 2016-07-21 | Date of formation of Global AA Group, Inc. |
| 2017-05-19 | Date of formation of Global BB Group, Inc. |
| 2018-11-27 | Global JJ Group, Inc. executed a $780,000 SBA loan. |
| 2019-09-23 | Date of formation of Global CC Group, Inc. |
| 2019-12-19 | Date of formation of Global DD Group, Inc. |
| 2020-06-13 | Global AA Group, Inc. and Global BB Group, Inc. executed EIDL loans of $150,000 each. |
| 2020-07-15 | Global JJ Group, Inc. executed a $150,000 EIDL loan. |
| 2020-12-04 | Date of formation of Yoshiharu Irvine. |
| 2021-01-21 | Date of formation of Yoshiharu Cerritos. |
| 2021-09-14 | Global CC Group, Inc. executed a $197,000 SBA loan. |
| 2021-09-15 | Global DD Group, Inc. borrowed an existing SBA loan. |
| 2021-10-02 | Effective October 2021, JJ transferred the IP to Mr. Chae. |
| 2021-10-31 | Effective October 2021, Mr. Chae contributed 100 % of the equity interests in each of the Entities to Yoshiharu Holdings Co. |
| 2021-12-08 | Effective October 2021, Mr. Chae transferred the IP to Holdings in exchange for the issuance of 6,245,900 shares in Holdings. |
| 2021-12-09 | On December 9, 2021, Yoshiharu completed a share exchange agreement whereby Mr. Chae, the sole stockholder of Holdings, received 9,450,900 shares of Yoshiharu. |
| 2022-04-22 | Yoshiharu Cerritos executed a $195,000 SBA loan. |
| 2022-05-02 | Date of formation of Yoshiharu Clemente, Yoshiharu Laguna, Yoshiharu Ontario, Yoshiharu Menifee. |
| 2022-05-22 | Global BB Group, Inc., Global CC Group, Inc., and Global DD Group, Inc. executed loans from a commercial bank. |
| 2022-07-27 | Date of formation of Yoshiharu Garden Grove. |
| 2022-09-01 | In September 2022, the Company consummated its initial public offering (the IPO) of 2,940,000 shares of its class A common stock at a public offering price of $ 4.00 per share. |
| 2023-05-22 | Global BB Group, Inc. executed the standard loan documents required for securing a loan of $ 138,000 from a commercial bank. |
| 2023-09-13 | Yoshiharu Garden Grove and Yoshiharu Laguna executed loans from a commercial bank. |
| 2023-09-21 | Date of formation of Yoshiharu Las Vegas. |
| 2023-11-21 | CC (CO) Loan agreement with principal amount of $ 91,000. |
| 2023-11-22 | The Company filed a Certificate of Amendment to effect a reverse stock split of its issued Class A common stock and Class B common stock together with the Class A common stock, Common Stock), in the ratio of 1-for-10. |
| 2023-11-27 | Reverse Stock Split effective at 11:59 p.m. eastern. |
| 2024-01-04 | The Company and the Investor entered into a Securities Purchase Agreement. |
| 2024-01-05 | The Company entered into a Securities Purchase Agreement with Alumni Capital LP. |
| 2024-01-06 | The Company issued and sold to Crom Structured Opportunities Fund I, LP, a Delaware limited partnership (Crom) a 10% OID promissory note in the aggregate principal amount of $ 1,100,000. |
| 2024-01-09 | Yoshiharu Global Co. issued 12,745 shares of Class A Common Stock as commitment shares pursuant to this agreement. |
| 2024-01-30 | Yoshiharu Global Co. executed the standard loan documents required for securing a loan of $ 500,000 from a commercial bank. |
| 2024-03-22 | Yoshiharu Menifee and Yoshiharu San Clemente executed loans from a commercial bank. |
| 2024-04-18 | The Company amended the Securities Purchase Agreement with Alumni Capital LP. |
| 2024-04-20 | Effective date of the acquisition of assets of three restaurant entities (Jjanga, HJH, and Aku). |
| 2024-06-04 | Yoshiharu Las Vegas executed the standard loan documents required for securing a loan of $ 900,000 from a commercial bank. |
| 2024-06-12 | The Company consummated the acquisition of assets of three restaurant entities (Jjanga, HJH, and Aku) for an aggregate $ 3.6 million. |
| 2024-08-16 | Yoshiharu borrowed additional $ 150,000 from the commercial bank for working capital purpose. |
| 2024-08-21 | We received a notification letter (the Letter) from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (Nasdaq) notifying the Company that its amount of stockholders equity has fallen below the $2,500,000 required minimum for continued listing set forth in Nasdaq Listing Rule 5550(b)(1). |
| 2024-11-20 | The Company issued 45,000 shares of Class A Common Stock based on the Securities Purchase Agreement with Alumni Capital LP. |
| 2024-12-20 | Yoshiharu Ontario executed the standard loan documents required for securing a loan of $ 250,000 from a commercial bank. |
| 2024-12-31 | This Purchase Agreement terminated on December 31, 2024. |
| 2025-01-06 | The Company issued and sold to Crom Structured Opportunities Fund I, LP, a Delaware limited partnership (Crom) a 10% OID promissory note in the aggregate principal amount of $1,100,000. |
| 2025-02-18 | We received another notification letter (the 2nd Letter) from Nasdaq notifying the Company that it has scheduled the Companys securities for delisting from The Nasdaq Capital Market. |
| 2025-03-06 | The Company borrowed $ 1,200,000 from a third party. |
| 2025-03-07 | The Company repaid such Note on March 7, 2025 with the proceeds from a loan made to the Company on or about March 6, 2025. |
| 2025-03-10 | The Company paid off the convertible note to Seller on March 10, 2025. |
| 2025-03-12 | The Company entered into a private placement securities subscription agreement (the GM Private Placement Agreement) with Good Mood Studio, Inc. (Good Mood Studio) pursuant to which Good Mood Studio purchased $ 200,000 worth of the Companys shares of Class A common stock. |
| 2025-03-17 | The Company entered into securities subscription agreements (the Subscription Agreements) with certain investors pursuant to which the investors purchased an aggregate of 480,000 warrants for a purchase price of $ 1,200,000. |
| 2025-03-24 | The Company entered into securities subscription agreements (the Subscription Agreements) with certain investors pursuant to which the investors agreed to cancel indebtedness in an aggregate amount of $ 2,500,000 in exchange for the issuance of an aggregate of 1,000,000 warrants. |
| 2025-03-25 | The Company entered into Subscription Agreements with certain investors pursuant to which the investors agreed to pay $ 1,650,000 in aggregate to purchase an aggregate of 660,000 warrants. |
| 2025-03-27 | Nasdaq notified the Company that it had regained compliance with Rule 5550(b)(1). |
| 2025-04-01 | Pursuant to the procedures set forth in the Nasdaq Listing Rule 5800 series, we appealed Nasdaqs determination to a Hearings Panel (the Panel) and a hearing request has stayed the suspension of the Companys securities and the filing of the Form 25-NSE pending the Panels decision after a hearing scheduled for April 1, 2025. |
| 2025-04-02 | The Company entered into two new securities subscription agreements and amended one securities subscription agreement (the Subscription Agreements) with certain investors pursuant to which the investors purchased an aggregate of 400,000 additional warrants for a purchase price of $ 1,000,000. |
| 2025-04-09 | Yoshiharu Global Co., a Delaware corporation (the Company) entered into two new securities subscription agreements (the Subscription Agreements) with certain investors pursuant to which the investors purchased an aggregate of 400,000 additional warrants for an aggregate purchase price of $ 1,000,000. |
| 2025-05-14 | The registrant had 1,662,245 shares of class A common stock outstanding, and 100,000 shares of class B common stock outstanding as of May 14, 2025. |
Keywords
Yoshiharu, revenue, net loss, restaurant, ramen, operating expenses, growth strategy, private placement, warrants, Nasdaq, internal controls, financial statements
Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.