DEF 14A: Yoshiharu Global Co. Seeks Stockholder Approval for Key Proposals at Upcoming Annual Meeting

Yoshiharu Global Co. is holding its annual meeting on December 19, 2024, seeking stockholder approval for director elections, auditor ratification, and significant stock issuances to raise capital.

Summary

• Yoshiharu Global Co. is holding its Annual Meeting of Stockholders on December 19, 2024, to vote on several key proposals.
• The proposals include the election of four directors, ratification of BCRG Group as the independent auditor, and approval for potential stock issuances to Alumni Capital LP and another accredited investor.
• The company is seeking approval to issue more than 19.99% of its Class A Common Stock to Alumni Capital LP under a purchase agreement, potentially raising up to $5 million.
• Additionally, they are seeking approval to issue more than 19.99% of Class A Common Stock to an accredited investor through a common stock purchase agreement and a convertible promissory note, potentially raising up to $10 million and $1.1 million respectively.
• The record date for determining stockholders eligible to vote at the meeting was November 4, 2024.
• The company has 1,255,197 shares of Class A Common Stock and 100,000 shares of Class B Common Stock outstanding, with Class B shares having ten times the voting power of Class A shares.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the company is actively seeking capital for growth, the significant dilution and governance concerns raise red flags for investors. The change of auditors and related party transactions also contribute to a negative sentiment.

Positives

• The proposed stock issuances could provide significant capital for the company's operations and strategic initiatives.
• The company has a related person transaction policy in place, administered by the Audit Committee.
• The board has determined that three of the four director nominees are independent.
• The company has an established Audit Committee and Compensation Committee, with independent members.
• The company has an Omnibus Equity Incentive Plan in place to align employee and stockholder interests.

Negatives

• The proposed stock issuances will significantly dilute existing stockholders' ownership and voting power.
• The company is a controlled company, with the CEO holding a majority of the voting power.
• The company terminated its previous auditor, BF Borgers CPA PC, due to an SEC order.
• The company has a history of borrowing money from the CEO and his affiliate.
• The company has no formal policy regarding attendance by members of the Board of Directors at the annual meeting of stockholders.

Risks

• Failure to obtain stockholder approval for the proposed stock issuances could limit the company's ability to raise capital.
• The stock issuances could lead to a decline in the stock price due to dilution and increased supply.
• The company's reliance on a single individual for control could discourage potential mergers or acquisitions.
• The company's ability to successfully implement its business plans is dependent on its ability to maximize capital raising opportunities.
• The company may need to seek alternative sources of financing if the proposals are not approved, which may not be available on advantageous terms.

Future Outlook

The company intends to use the proceeds from the proposed stock issuances for working capital, strategic initiatives, and general corporate purposes. The company is also seeking to enter into new financing agreements with an accredited investor.

Management Comments

• The Board of Directors appreciates and encourages your participation in our Annual Meeting.
• The Board of Directors has determined that the Purchase Agreement, and our ability to issue Class A Common Stock to Alumni pursuant to the Purchase Agreement, is in the best interests of our Company and our stockholders because the Purchase Agreement provides us with a reliable source of capital.
• The Board of Directors has determined that the December ELOC Agreement, and our ability to issue Class A Common Stock to the Investor pursuant to the December ELOC Agreement, is in the best interests of our Company and our stockholders because the December ELOC Agreement will provide us with a reliable source of capital.
• Our Board of Directors has determined that the December Note, and our ability to issue Class A Common Stock to the Investor pursuant to the December Note, is in the best interests of our Company and our stockholders because the December Note will provide us with capital.

Industry Context

The company's need for capital through stock issuances is not uncommon in the restaurant industry, especially for companies looking to expand or improve operations. The use of equity financing is a common strategy for growth-oriented companies.

Comparison to Industry Standards

• The company's reliance on a controlled company structure is not uncommon for founder-led businesses, but it does deviate from best practices in corporate governance.
• The proposed stock issuances are significant and could lead to substantial dilution, which is a risk that needs to be carefully considered by investors.
• The company's use of a variable rate financing structure is not uncommon, but it does introduce additional risk for investors.
• The company's compensation structure for executives is relatively straightforward, with no complex incentive plans or benefits.
• The company's decision to change auditors is not uncommon, but the circumstances surrounding the change are concerning.

Related Party Transactions

• The company has borrowed money from Mr. Chae and his affiliate APIIS Financial, Inc., with a balance of $24,176 as of December 31, 2023.
• There is a loan to Won Zo Whittier, 100% owned by James Chae, with a balance of $100,300 as of December 31, 2023.

Stakeholder Impact

• Existing stockholders will experience significant dilution of their ownership and voting power.
• The company's ability to raise capital will be enhanced if the proposals are approved.
• The company's employees may benefit from the company's growth and expansion.
• The company's customers may benefit from improved services and products.
• The company's creditors may be impacted by the company's financial performance.

Next Steps

• Stockholders are urged to vote on the proposals at the Annual Meeting on December 19, 2024.
• The company will proceed with the proposed stock issuances if stockholder approval is obtained.
• The company will enter into the December ELOC Agreement and December Note if stockholder approval is obtained.
• The company will continue to implement its business plans and seek to generate value for stockholders.

Key Dates

Keywords

stockholder meeting, proxy statement, stock issuance, capital raise, board of directors, auditor ratification, dilution, Nasdaq, Alumni Capital LP, convertible note