Yoshiharu (US:YOSH)2025-08-20 01:57markdown [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclosure](index=4&type=section&id=Forward-Looking%20Statements%20Disclosure) This section outlines forward-looking statements on future performance and growth, detailing risks that could cause actual results to vary - The report contains forward-looking statements about future operating results, financial position, business strategy, market growth, and objectives, including achieving over **100% annual unit growth** and **comparable restaurant sales growth**[11](index=11&type=chunk) - Key risks and uncertainties include challenges in implementing growth strategies (site identification, market expansion, guest attraction, personnel retention), maintaining comparable restaurant sales growth, intense industry competition, susceptibility to fluctuations due to a limited number of restaurants, past operating losses, liquidity issues, dependence on senior management, and potential negative publicity[12](index=12&type=chunk) - The company does not undertake to update any forward-looking statements after the report date, except as required by law[13](index=13&type=chunk) [PART I—FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Consolidated Financial Statements](index=5&type=section&id=Item%201.%20Unaudited%20Consolidated%20Financial%20Statements) This section presents Yoshiharu Global Co.'s unaudited consolidated financial statements, summarizing its financial position, performance, and cash flows [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20(unaudited)%20and%20December%2031%2C%202024) Consolidated Balance Sheets | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :--------------------------------- | :-------------- | :------------------ | | **ASSETS** | | | | Cash | $1,326,539 | $1,241,036 | | Total current assets | $3,059,566 | $1,464,568 | | Property and equipment, net | $4,951,703 | $5,130,229 | | Total non-current assets | $16,007,844 | $16,108,698 | | **Total assets** | **$19,067,410** | **$17,573,266** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $5,357,299 | $6,041,089 | | Total liabilities | $14,379,793 | $17,317,867 | | Total stockholders' equity | $4,687,617 | $255,399 | | **Total liabilities and stockholders' equity** | **$19,067,410** | **$17,573,266** | - Total assets increased by **$1.49 million (8.5%)** from December 31, 2024, to June 30, 2025, primarily driven by an increase in current assets, including a new loan receivable from a related party (**$1.4M**) and an investment (**$1.1M**)[17](index=17&type=chunk) - Total liabilities decreased by **$2.94 million (17.0%)** over the six-month period, largely due to a reduction in current liabilities and the repayment of convertible notes to a related party[17](index=17&type=chunk) - Stockholders' equity significantly increased by **$4.43 million (1734%)** from **$255,399** to **$4,687,617**, primarily due to additional paid-in capital from the issuance of Class A Common Stock and warrants, despite an accumulated deficit[17](index=17&type=chunk) [Unaudited Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Unaudited Consolidated Statements of Operations | Metric | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Change ($) | Change (%) | | :--------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total revenue | $7,200,729 | $6,137,005 | $1,063,724 | 17.33% | | Total restaurant operating expenses | $7,517,502 | $5,689,772 | $1,827,730 | 32.12% | | Net restaurant operating income (loss) | $(316,773) | $447,233 | $(764,006) | -170.83% | | Loss from operations | $(2,976,170) | $(1,719,264) | $(1,256,906) | 73.11% | | Net loss | $(2,628,857) | $(1,981,021) | $(647,836) | 32.70% | | Basic and diluted loss per share | $(2) | $(1.48) | $(0.52) | 35.14% | - Revenue increased by **17.33%** year-over-year, primarily due to the acquisition of three Las Vegas restaurants[174](index=174&type=chunk) - Net restaurant operating income turned into a loss, decreasing by **170.83%**, driven by a **50.44%** increase in food, beverages, and supplies costs and a **47.34%** increase in rent and utilities, outpacing revenue growth[174](index=174&type=chunk)[175](index=175&type=chunk)[177](index=177&type=chunk) - Net loss widened by **32.70%** to **$(2.63) million**, and loss per share increased to **$(2)** from **$(1.48)**, reflecting higher operating expenses and interest expenses, despite a significant increase in other income[20](index=20&type=chunk)[174](index=174&type=chunk) [Unaudited Consolidated Statements of Stockholders' Equity (Deficit)](index=8&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Unaudited Consolidated Statements of Stockholders' Equity (Deficit) | Metric | December 31, 2024 | June 30, 2025 | | :--------------------------------- | :------------------ | :-------------- | | Class A Shares Outstanding | 1,300,197 | 2,500,245 | | Class B Shares Outstanding | 100,000 | 100,000 | | Additional Paid-In Capital | $12,261,901 | $20,089,781 | | Accumulated Deficit | $(12,006,642) | $(14,652,424) | | Total Stockholders' Equity | $255,399 | $4,687,617 | - Total stockholders' equity increased significantly from **$255,399** at December 31, 2024, to **$4,687,617** at June 30, 2025, primarily driven by **$7,140,000** from the issuance of Class A Common Stock and **$4,600,000** from the issuance of warrants[22](index=22&type=chunk) - The accumulated deficit increased by **$2,645,782** during the six months ended June 30, 2025, reflecting the net losses incurred[22](index=22&type=chunk) [Unaudited Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Unaudited Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(2,628,857) | $(1,981,021) | | Net cash used in investing activities | $(2,750,079) | $(2,198,641) | | Net cash provided by financing activities | $4,597,593 | $1,309,031 | | Net (decrease) increase in cash | $85,503 | $(268,152) | | Cash – end of period | $1,326,539 | $1,194,174 | - Net cash used in operating activities increased significantly to **$(1,762,011)** in 2025 from **$621,458** in 2024, primarily due to a higher net loss and unfavorable changes in working capital, including increases in accounts receivable and other assets, and a decrease in accounts payable[24](index=24&type=chunk)[193](index=193&type=chunk) - Net cash used in investing activities increased to **$(2,750,079)** in 2025 from **$(2,198,641)** in 2024, driven by a **$1.4 million** loan provided to a related party and a **$1.1 million** investment, partially offset by the absence of a large acquisition like the LV entities in the prior year[24](index=24&type=chunk)[195](index=195&type=chunk) - Net cash provided by financing activities surged to **$4,597,593** in 2025 from **$1,309,031** in 2024, mainly due to **$6.36 million** in proceeds from the sale of common shares and warrants, significantly higher than the **$64,149** in the prior year[24](index=24&type=chunk)[196](index=196&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited consolidated financial statements, offering context and explanations for reported figures [1. Nature of Operations](index=10&type=section&id=1.%20NATURE%20OF%20OPERATIONS) This section describes Yoshiharu Global Co.'s business as a Japanese restaurant operator, its structure, and recent stock adjustments - Yoshiharu Global Co. operates Japanese ramen and other Japanese cuisine restaurants, with **15 stores** currently owned and operated, and **2 additional stores** under development as of June 30, 2025[26](index=26&type=chunk)[155](index=155&type=chunk) - The company's structure involves several wholly-owned subsidiaries, each operating ramen stores primarily in California, with a recent expansion into Las Vegas[26](index=26&type=chunk) - A **1-for-10 reverse stock split** was effected on November 27, 2023, which adjusted the number of outstanding shares without altering stockholders' percentage interests[29](index=29&type=chunk)[30](index=30&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the company's significant accounting policies, including consolidation, stock splits, asset acquisitions, and revenue recognition - The consolidated financial statements are prepared in accordance with GAAP and include Yoshiharu and its wholly-owned subsidiaries, with all intercompany accounts eliminated[33](index=33&type=chunk) - A **4-for-1 forward stock split** of Class A and Class B common stock was approved on July 18, 2025, with all share and per-share amounts retroactively adjusted[34](index=34&type=chunk) - The company acquired assets of three restaurant entities (Jjanga, HJH, and Aku) for **$3.6 million** on June 12, 2024, accounted for as an asset acquisition[35](index=35&type=chunk) - Revenue from food and beverage sales is recognized when the customer receives the food, satisfying the performance obligation[39](index=39&type=chunk) - The company operates as one reportable segment, consisting of its store operations[42](index=42&type=chunk) [3. Acquisition Under Asset Purchase](index=15&type=section&id=3.%20ACQUISITION%20UNDER%20ASSET%20PURCHASE) This section details the asset acquisition of three restaurant businesses by Yoshiharu Las Vegas for $3.6 million in June 2024 - On June 12, 2024, Yoshiharu Las Vegas (YLV), a wholly-owned subsidiary, completed an asset acquisition of three restaurant businesses (one Japanese ramen, two Izakaya style) for a total purchase price of **$3.6 million**[53](index=53&type=chunk) Acquisition Purchase Price Components | Purchase Price Component | Amount ($) | | :----------------------- | :----- | | Cash | $900,000 | | Promissory note to Seller | $600,000 | | Bank notes payables | $900,000 | | Convertible note to Seller | $1,200,000 | | **Total purchase price** | **$3,600,000** | Acquired Assets Allocation | Allocated Asset | Amount ($) | | :-------------------------- | :--------- | | Fixed assets | $1,098,070 | | Inventory and other assets | $13,985 | | Operating lease right-of-use asset, net | $1,409,288 | | Goodwill | $1,985,645 | | Intangible assets | $531,051 | | Operating lease liabilities | $(1,438,039) | | **Acquired assets, net** | **$3,600,000** | - The **$1.2 million** convertible note to the seller was repaid on March 10, 2025, using proceeds from a third-party loan, which was subsequently converted to warrants[56](index=56&type=chunk) [4. Loan Receivable from Related Party](index=15&type=section&id=4.%20LOAN%20RECEIVABLE%20FROM%20RELATED%20PARTY) This section details a $1.4 million loan provided to GKFB Corp, a related party, bearing 5% interest and maturing in April 2026 - On April 2, 2025, the Company provided a **$1,400,000** loan to GKFB Corp, a related party partially owned by the former CEO, bearing **5% interest** per annum and maturing on April 1, 2026[57](index=57&type=chunk) [5. Investment](index=15&type=section&id=5.%20INVESTMENT) This section describes a $1.1 million investment in Wealthrail, Inc. for residential real estate 'house flipping' with a 50:50 profit split - On April 25, 2025, the Company invested **$1,100,000** in Wealthrail, Inc., a company engaged in residential real estate 'house flipping'[58](index=58&type=chunk) - The investment agreement stipulates a **50:50 split** of net profit from property resales between Wealthrail and the Company, after deducting purchase, renovation, and other direct costs[59](index=59&type=chunk) - As of June 30, 2025, no real estate properties had been purchased under this investment agreement[60](index=60&type=chunk) [6. Intangible Assets](index=15&type=section&id=6.%20INTANGIBLE%20ASSETS) This section details the company's intangible assets, primarily brand and non-compete agreements, and their amortization schedule Intangible Assets, Net | Intangible Asset | June 30, 2025 ($) | December 31, 2024 ($) | | :----------------- | :-------------- | :------------------ | | Brand & non-compete | $531,051 | $531,051 | | Accumulated amortization | $(53,104) | $(39,828) | | **Total intangible assets, net** | **$477,947** | **$491,223** | - Intangible assets, primarily brand and non-compete agreements from the YLV acquisition, are amortized over **10 years**[44](index=44&type=chunk)[62](index=62&type=chunk) Estimated Future Amortization of Intangible Assets | Year Ending December 31, | Estimated Future Amortization ($) | | :----------------------- | :---------------------------- | | 2025 (remaining six months) | $26,533 | | 2026 | $53,105 | | 2027 | $53,105 | | 2028 | $53,105 | | 2029 | $53,105 | | Thereafter | $225,698 | | **Total** | **$464,671** | - Amortization expense for intangible assets was **$26,552** for the quarter ended June 30, 2025, compared to **$0** in the prior year, reflecting the recent acquisition[64](index=64&type=chunk) [7. Property and Equipment](index=17&type=section&id=7.%20PROPERTY%20AND%20EQUIPMENT) This section outlines the company's property and equipment, including leasehold improvements, furniture, and vehicles, net of depreciation Property and Equipment, Net | Asset Category | June 30, 2025 ($) | December 31, 2024 ($) | | :--------------- | :-------------- | :------------------ | | Leasehold Improvement | $5,453,739 | $5,401,651 | | Furniture and equipment | $1,861,881 | $1,808,387 | | Vehicle | $582,761 | $438,521 | | Total property and equipment | $7,898,381 | $7,648,559 | | Accumulated depreciation | $(2,946,678) | $(2,518,330) | | **Total property and equipment, net** | **$4,951,703** | **$5,130,229** | - Net property and equipment decreased by **$178,526** from December 31, 2024, to June 30, 2025, primarily due to accumulated depreciation exceeding new additions[65](index=65&type=chunk) - Total depreciation expense for the six months ended June 30, 2025, was **$478,605**[65](index=65&type=chunk) [8. Other Assets](index=17&type=section&id=8.%20OTHER%20ASSETS) This section details other assets, including security deposits, tenant improvement receivables, and a loan to Won Zo Whittier Other Assets | Other Asset Category | June 30, 2025 ($) | December 31, 2024 ($) | | :------------------- | :-------------- | :------------------ | | Security deposits | $170,892 | $182,531 | | Tenant improvement receivable | - | $300,270 | | Loan to Won Zo Whittier | $100,300 | $100,300 | | Others | $1,030,378 | $452,889 | | **Total other assets** | **$1,301,570** | **$1,035,990** | - Total other assets increased by **$265,580** from December 31, 2024, to June 30, 2025, mainly due to a significant increase in 'Others' category, while tenant improvement receivable was fully collected[66](index=66&type=chunk) [9. Line of Credit](index=17&type=section&id=9.%20LINE%20OF%20CREDIT) This section describes the company's $1 million bank line of credit, secured by a CD and bearing a 5.35% fixed interest rate - The Company has a **$1,000,000** bank line of credit, secured by a **$1,000,000** certificate of deposit, bearing a fixed interest rate of **5.35%** per annum and expiring in December 2025[67](index=67&type=chunk) - The outstanding balance on the line of credit remained **$1,000,000** as of June 30, 2025, and December 31, 2024[67](index=67&type=chunk) [10. Bank Notes Payables](index=18&type=section&id=10.%20BANK%20NOTES%20PAYABLES) This section details the company's bank notes payables, including repayments and the remaining principal and maturity schedule Bank Notes Payables | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :--------------------------------- | :-------------- | :------------------ | | Total bank notes payables | $2,587,330 | $3,113,961 | | Less - current portion | $(1,041,490) | $(1,366,350) | | **Total bank notes payables, less current portion** | **$1,545,840** | **$1,747,611** | - Total bank notes payables decreased by **$526,631** from December 31, 2024, to June 30, 2025, reflecting ongoing repayments[69](index=69&type=chunk) Bank Notes Payables Maturity Schedule | Year Ended | Amount ($) | | :----------------------- | :----- | | 2025 (remaining six months) | $1,041,490 | | 2026 | $530,450 | | 2027 | $530,450 | | 2028 | $411,896 | | 2029 | $73,044 | | Thereafter | - | | **Total** | **$2,587,330** | - The Company repaid the **$195,000** SBA loan for Yoshiharu Cerritos on March 11, 2025, using proceeds from the sale of the Cerritos store, resulting in a zero balance as of June 30, 2025[75](index=75&type=chunk) [11. Loan Payables, EIDL](index=23&type=section&id=11.%20LOAN%20PAYABLES%2C%20EIDL) This section outlines the company's Economic Injury Disaster Loan (EIDL) payables, their terms, and repayment schedule EIDL Loans Payable | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :--------------------------------- | :-------------- | :------------------ | | Total loans payables, EIDL | $409,920 | $415,414 | | Less - current portion | $(5,513) | $(10,924) | | **Total loans payables, EIDL, less current portion** | **$404,407** | **$404,490** | - Total EIDL loans payable decreased slightly from **$415,414** to **$409,920**, reflecting minimal repayments[99](index=99&type=chunk) - These loans, obtained under the SBA's Economic Injury Disaster Loan program due to COVID-19, bear a **3.75% interest rate** per annum and have a thirty-year repayment term[101](index=101&type=chunk)[105](index=105&type=chunk)[108](index=108&type=chunk) [12. Loans Payable to Financial Institutions](index=25&type=section&id=12.%20LOANS%20PAYABLE%20TO%20FINANCIAL%20INSTITUTIONS) This section details the status of loans payable to financial institutions, noting a matured loan with a zero balance - The loan payable to a financial institution, with a principal amount of **$91,000** and a repayment rate of **46.27%**, matured on November 15, 2024, and had a zero balance as of June 30, 2025[111](index=111&type=chunk) [13. Convertible Note to Related Party](index=25&type=section&id=13.%20CONVERTIBLE%20NOTE%20TO%20RELATED%20PARTY) This section describes the repayment of a $1.2 million convertible note to a related party using third-party loan proceeds - A **$1.2 million** convertible note issued to a related party on June 12, 2024, accruing **0.5% annual interest**, was repaid on March 10, 2025, using proceeds from a third-party loan[112](index=112&type=chunk) - The note allowed conversion into Class A common stock at **$5.90 per share**, with an option for the related party to receive cash if the stock price was lower at conversion[112](index=112&type=chunk) [14. Related Party Transactions](index=25&type=section&id=14.%20RELATED%20PARTY%20TRANSACTIONS) This section details transactions with related parties, including loans, compensation, and promissory notes - The 'Due to related party' balance, primarily from loans to APIIS Financial Group (owned by CEO James Chae), increased from **$732,710** at December 31, 2024, to **$1,544,897** at June 30, 2025, and is non-interest bearing and due on demand[114](index=114&type=chunk) - Related party compensation to James Chae decreased by **56.03%** to **$42,154** for the six months ended June 30, 2025, compared to **$95,879** in the prior year, following his resignation as an officer[114](index=114&type=chunk)[180](index=180&type=chunk) - The promissory note to Mr. Jihyuck Hwang (related party) from the YLV acquisition remained at **$600,000** as of June 30, 2025, while the **$1.2 million** convertible note was repaid[114](index=114&type=chunk) [15. Income Tax](index=26&type=section&id=15.%20INCOME%20TAX) This section outlines the company's income tax provisions, effective tax rate, and net operating loss carryforwards Income Tax Provision (Benefit) | Income Tax Component | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------------- | :----------------------------- | :----------------------------- | | Current provision (benefit): State | $16,925 | $21,838 | | **Total tax provision (benefit)** | **$16,925** | **$21,838** | - The Company's effective tax rate was **0.00%** for both periods due to a valuation allowance fully offsetting deferred tax assets, primarily from net operating loss carryovers[116](index=116&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk) - As of June 30, 2025, the Company had cumulative federal and state net operating loss carryforwards of approximately **$11,000,000**[121](index=121&type=chunk) [16. Commitments and Contingencies](index=27&type=section&id=16.%20COMMITMENTS%20AND%20CONTINGENCIES) This section details the company's operating lease commitments, including lease expense and future undiscounted cash flows Operating Lease Expense | Lease Expense Component | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :---------------------- | :----------------------------- | :----------------------------- | | Operating lease expense | $620,144 | $591,643 | | **Total lease expense** | **$620,144** | **$591,643** | Operating Lease Information | Lease Information | 2025 | 2024 | | :--------------------------------- | :--- | :--- | | Operating cash flows from operating leases | $641,290 | $542,277 | | Cash paid for amounts included in the measurement of lease liabilities | $641,290 | $524,277 | | Weighted-average remaining lease term—operating leases | 6.3 Years | 6.3 Years | | Weighted-average discount rate—operating leases | 7% | 7% | Operating Lease Undiscounted Cash Flows | Year Ending | Operating Lease Undiscounted Cash Flows ($) | | :----------------------- | :------------------------------------ | | 2025 (remaining six months) | $706,920 | | 2026 | $1,367,546 | | 2027 | $1,338,677 | | 2028 | $1,287,339 | | 2029 | $1,083,410 | | Thereafter | $3,134,813 | | **Total** | **$8,918,745** | [17. Stockholders' Equity](index=29&type=section&id=17.%20STOCKHOLDERS'%20EQUITY) This section details the company's authorized and outstanding stock, IPO, stock splits, and recent private placements - The Company is authorized to issue **49,000,000 shares** of Class A common stock (**$0.0001 par value**) with one vote per share, and **1,000,000 shares** of Class B common stock (**$0.0001 par value**) with ten votes per share[127](index=127&type=chunk)[148](index=148&type=chunk) - In September 2022, the Company completed its IPO, selling **2,940,000 shares** of Class A common stock at **$4.00 per share**, generating **$11.76 million** in gross proceeds[129](index=129&type=chunk) - A **1-for-10 reverse stock split** was effective November 27, 2023, and a **4-for-1 forward stock split** was approved on July 18, 2025, retroactively adjusting share and per-share amounts[132](index=132&type=chunk)[150](index=150&type=chunk)[153](index=153&type=chunk) - During March and April 2025, the Company issued significant amounts of Class A common stock and warrants through private placements, totaling over **$6.3 million**, with obligations to register these shares[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) [18. Earnings Per Share](index=32&type=section&id=18.%20EARNINGS%20PER%20SHARE) This section outlines the calculation of basic and diluted earnings per share, noting no dilutive common shares - The Company calculates basic and diluted earnings per share in accordance with FASB ASC 260[151](index=151&type=chunk) - There were no dilutive common shares for the three months ended June 30, 2025 and 2024[151](index=151&type=chunk) [19. Subsequent Events](index=32&type=section&id=19.%20SUBSEQUENT%20EVENTS) This section describes significant events after the reporting period, including a stock split, new convertible note, and corporate name change - On July 18, 2025, the Board approved a **4-for-1 forward stock split** for Class A and Class B common stock, effective July 31, 2025[153](index=153&type=chunk) - On July 29, 2025, the Company entered into a Secured Convertible Note Purchase Agreement for **$4.4 million**, maturing in three years with **7% annual interest**, convertible at **$1.10 per share** (subject to reset and a **$1.00 floor**), with proceeds restricted for real estate acquisitions[153](index=153&type=chunk) - On July 15, 2025, the Company announced its intention to change its corporate name to Vestand, Inc., reflecting a strategic transition into real estate investment and digital[153](index=153&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operations, liquidity, and capital resources [Overview of Yoshiharu](index=34&type=section&id=Overview%20of%20Yoshiharu) This section provides an overview of Yoshiharu Global Co.'s business as a Japanese restaurant operator and its growth potential - Yoshiharu Global Co. is a fast-growing Japanese restaurant operator specializing in ramen and other Japanese cuisines, with **15 operating stores** and **2 additional stores** under development as of June 30, 2025[155](index=155&type=chunk) - The company emphasizes high-quality, handcrafted ingredients, including a **12-hour slow-boiled bone broth**, and aims to provide healthy, affordable Japanese cuisine in a welcoming atmosphere[156](index=156&type=chunk)[157](index=157&type=chunk) - Yoshiharu sees significant opportunity for expansion in existing and new U.S. markets, as well as internationally, driven by widespread consumer appetite for Asian cuisine[158](index=158&type=chunk) [Our Growth Strategies](index=35&type=section&id=Our%20Growth%20Strategies) This section outlines the company's growth strategies, including new restaurant development, sales growth, profitability, and brand awareness - The company plans to pursue new corporate-owned restaurant development, aiming for over **100% annual unit growth rate** over the next three to five years, leveraging its expertise to expand in existing and new markets[159](index=159&type=chunk) - Strategies to deliver consistent comparable restaurant sales growth include increasing brand awareness, enhancing dining experience, introducing new menu offerings, restaurant renovations, and exploring alcoholic beverage sales (e.g., sake bar concept)[160](index=160&type=chunk) - To increase profitability, Yoshiharu plans to leverage increasing buying power with suppliers, optimize labor costs as restaurants mature, and grow general and administrative costs at a slower rate than sales[161](index=161&type=chunk) - Brand awareness will be heightened through targeted local marketing, increased advertising investment, and exploring new distribution channels like instant ramen noodles and small-format kiosks in grocery stores[162](index=162&type=chunk) - The company expects to initiate sales of franchises in 2025[160](index=160&type=chunk) [Components of Our Results of Operations](index=36&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section details the key components of the company's revenues and operating expenses, influencing financial performance - Revenues are primarily from food and beverage sales, directly impacted by the number of restaurants and comparable restaurant sales growth[164](index=164&type=chunk) - Key restaurant operating expenses include food, beverages and supplies (variable with sales volume and commodity costs), labor (wages, benefits, payroll taxes, influenced by minimum wage and healthcare costs), rent and utilities, delivery and service fees (charged by third-party providers), and depreciation (non-cash charges on fixed assets)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - General and administrative expenses cover corporate support functions, compensation, professional fees, and marketing, expected to grow with sales but at a slower rate[169](index=169&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, highlighting revenue growth, expense trends, and net loss Results of Operations Summary | Metric | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | Change ($) | Change (%) | | :--------------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total revenue | $7,200,729 | $6,137,005 | $1,063,724 | 17.33% | | Food, beverages and supplies | $2,269,553 | $1,508,572 | $760,981 | 50.44% | | Labor | $3,329,120 | $2,780,661 | $548,459 | 19.72% | | Rent and utilities | $1,133,500 | $769,296 | $364,204 | 47.34% | | Delivery and service fees | $306,724 | $280,916 | $25,808 | 9.19% | | Depreciation | $478,605 | $350,327 | $128,278 | 36.62% | | General and administrative | $2,531,310 | $2,012,054 | $519,256 | 25.81% | | Related party compensation | $42,154 | $95,879 | $(53,725) | -56.03% | | Advertising and marketing | $85,933 | $58,564 | $27,369 | 46.73% | | Loss from operations | $(2,976,170) | $(1,719,264) | $(1,256,906) | 73.11% | | Net loss | $(2,628,857) | $(1,981,021) | $(647,836) | 32.70% | - Revenue increased by **17.3%** to **$7.2 million**, primarily due to the acquisition of three Las Vegas restaurants[174](index=174&type=chunk) - Food, beverage, and supplies costs increased by **50.4%** to **$2.3 million**, rising to **31.5% of sales** (from 24.6%), driven by higher sales from new restaurants and inflationary pressures[175](index=175&type=chunk) - Labor expense increased by **19.7%** to **$3.33 million**, mainly due to staffing costs from new restaurants and wage inflation, remaining relatively consistent at **46.2% of revenues**[176](index=176&type=chunk) - Rent and utilities increased by **47.3%** to **$1.13 million**, rising to **15.7% of revenues** (from 12.5%), reflecting new leases and higher utility costs[177](index=177&type=chunk) - General and administrative expenses increased by **25.8%** to **$2.53 million**, primarily due to higher corporate overhead and professional fees, reaching **35.2% of revenues** (from 32.8%)[179](index=179&type=chunk) - Related party compensation decreased by **56.0%** to **$42 thousand**, due to reduced compensation paid to James Chae following his resignation as an officer[180](index=180&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity, capital resources, cash flow activities, and efforts to maintain Nasdaq compliance - The Company received a Nasdaq delisting notification in August 2024 and February 2025 due to falling below the minimum stockholders' equity requirement, but regained compliance in March 2025, leading to the cancellation of the delisting hearing[181](index=181&type=chunk)[188](index=188&type=chunk) - Primary uses of cash are operational expenditures and capital investments for new restaurants and remodels; main sources of liquidity include cash flows from operations, bank borrowings, and common share sales[182](index=182&type=chunk) - In January 2025, the Company issued a **$1.1 million** promissory note to Crom Structured Opportunities Fund I, LP, which was repaid in March 2025, and also entered into an equity purchase agreement for up to **$10 million** in Class A common stock, pending registration[184](index=184&type=chunk) - During March and April 2025, the Company raised significant capital through private placements of Class A common stock and warrants, totaling over **$6.3 million**, with obligations to register the underlying shares[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) Cash Flow Activities Summary | Cash Flow Activity | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(4,586,677) | $(373,196) | | Net cash used in investing activities | $(32,622) | $(356,642) | | Net cash provided by financing activities | $4,704,802 | $623,250 | - Net cash used in operating activities increased by **$5.1 million** year-over-year, primarily due to a higher net loss and significant unfavorable changes in working capital, including increased accounts receivable and other assets, and decreased accounts payable[193](index=193&type=chunk) - Net cash used in investing activities decreased by **$2.1 million** year-over-year, mainly due to the absence of a large acquisition in 2025, with outflows limited to routine property and equipment purchases[195](index=195&type=chunk) - Net cash provided by financing activities increased by **$3.4 million** year-over-year, driven by **$6.4 million** from the sale of common shares and warrants in 2025, and **$1.1 million** in borrowings, partially offset by **$1.6 million** in bank note repayments and **$1.2 million** in convertible note repayments[196](index=196&type=chunk)[197](index=197&type=chunk) [Contractual Obligations](index=42&type=section&id=Contractual%20Obligations) This section details the company's contractual obligations, including capital lease payments, bank notes, and EIDL loans Contractual Obligations | Obligation Type | Total ($) | 2025 (remaining six months) ($) | 2026-2027 ($) | 2028-2029 ($) | Thereafter ($) | | :------------------------------ | :---------- | :-------------------------- | :---------- | :---------- | :--------- | | Capital lease payments | $9,239,390 | $1,084,225 | $2,706,223 | $2,370,749 | $3,134,813 | | Bank note payables | $2,785,384 | $1,041,490 | $1,060,900 | $500,380 | - | | EIDL loan payables | $412,639 | $5,513 | $23,115 | $24,912 | $356,380 | | Loans payable to financial institutions | $3,332 | - | - | - | - | | **Total contractual obligations** | **$12,440,745** | **$2,131,228** | **$3,790,238** | **$2,896,041** | **$3,491,193** | [Income Taxes](index=42&type=section&id=Income%20Taxes) This section outlines the company's income tax filing jurisdictions and provisions for anticipated tax consequences - The Company is a U.S. corporation and files income tax returns in federal and California state jurisdictions, recording provisions for anticipated tax consequences[199](index=199&type=chunk) [JOBS Act Accounting Election](index=42&type=section&id=JOBS%20Act%20Accounting%20Election) This section notes the company's election as an 'emerging growth company' under the JOBS Act for accounting standards - As an 'emerging growth company' under the JOBS Act, the Company has elected to use the extended transition period for complying with new or revised accounting standards, which may result in financial statements not being comparable to other public companies[200](index=200&type=chunk) [Off Balance Sheet Arrangements](index=42&type=section&id=Off%20Balance%20Sheet%20Arrangements) This section confirms that the company did not have any material off-balance sheet arrangements as of June 30, 2025 - As of June 30, 2025, the Company did not have any material off-balance sheet arrangements[201](index=201&type=chunk) [Critical Accounting Policies](index=42&type=section&id=Critical%20Accounting%20Policies) This section highlights the critical accounting policies and estimates used in preparing the financial statements - The preparation of financial statements requires management to make estimates and judgments, which are based on historical experience and assumptions, and are evaluated on an ongoing basis[202](index=202&type=chunk) - Critical accounting policies are summarized in Note 2 to the financial statements[202](index=202&type=chunk) [Recent Accounting Pronouncements](index=42&type=section&id=Recent%20Accounting%20Pronouncements) This section states that recently issued accounting pronouncements are not expected to materially impact financial statements - The Company has reviewed recently issued, but not yet effective, accounting pronouncements and does not believe their future adoption will have a material impact on its financial statements[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Yoshiharu Global Co. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide information under this item[204](index=204&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of disclosure controls and internal control over financial reporting, noting material weaknesses and remediation efforts [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not fully effective due to material weaknesses in internal control - As of June 30, 2025, management concluded that the Company's disclosure controls and procedures were not fully effective due to material weaknesses in internal control over financial reporting[205](index=205&type=chunk)[209](index=209&type=chunk) [Material Weaknesses in Internal Control Over Financial Reporting](index=43&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20Over%20Financial%20Reporting) Material weaknesses include insufficient accounting personnel with GAAP/SEC knowledge and lack of segregation of duties - Material weaknesses identified include an insufficient number of accounting personnel with specialized knowledge of U.S. GAAP and SEC reporting requirements, and a lack of segregation of duties within finance and accounting functions[206](index=206&type=chunk) [Remediation Efforts and Progress](index=43&type=section&id=Remediation%20Efforts%20and%20Progress) Remediation efforts include hiring staff, reassigning duties, engaging consultants, and implementing enhanced review procedures - Remediation efforts during the quarter ended June 30, 2025, included hiring additional accounting staff, reassigning responsibilities to improve segregation of duties, engaging outside accounting consultants, implementing enhanced review and approval procedures, and initiating new internal control documentation and testing[207](index=207&type=chunk)[210](index=210&type=chunk) - While the remediation process is ongoing and material weaknesses are not fully eliminated, management believes these actions have enhanced financial reporting reliability and demonstrate commitment to strong corporate governance[207](index=207&type=chunk) [Changes in Internal Control Over Financial Reporting](index=43&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred, aside from ongoing remediation efforts - Except for the remediation efforts described, there were no other material changes in internal control over financial reporting during the quarter ended June 30, 2025[208](index=208&type=chunk) [PART II—OTHER INFORMATION](index=44&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently a party to any material pending legal proceedings, though it may face future legal actions - The Company and its subsidiaries are not currently a party to any material pending legal proceedings[212](index=212&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - There were no unregistered sales of equity securities and use of proceeds to report[213](index=213&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to agreements and certifications - Exhibits include an amendment to the Securities Purchase Agreement with Alumni Capital LP, certifications from James Chae and Soojae Ryan Cho under Sections 302 and 906 of the Sarbanes-Oxley Act, and various Inline XBRL documents[217](index=217&type=chunk) [Signature](index=45&type=section&id=Signature) [Report Signature](index=45&type=section&id=Report%20Signature) The report was duly signed on August 19, 2025, by Jiwon Kim, Chairman, President, CEO, and Principal Executive Officer - The report was signed on August 19, 2025, by Jiwon Kim, who holds the titles of Chairman of the Board of Directors, President, Chief Executive Officer, and Principal Executive Officer[220](index=220&type=chunk)