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BUENA PARK, Calif. - Yoshiharu Global Co. (NASDAQ: YOSH), a Southern California-based restaurant operator known for its Japanese ramen and rolls, with a market capitalization of $23.8 million and trailing twelve-month revenue of $11.65 million, has taken significant steps to improve its financial standing by converting $2.5 million of debt into equity and securing additional financing commitments totaling $1.65 million. According to InvestingPro analysis, the company’s financial health score remains weak, with current obligations exceeding liquid assets. These strategic moves are aimed at enhancing the company’s balance sheet and meeting Nasdaq’s minimum stockholders’ equity requirement for continued listing. The urgency of these measures is underscored by the company’s challenging financial metrics, including a current ratio of 0.31 and negative EBITDA of $2.65 million in the last twelve months.
The company has entered into securities subscription agreements with certain investors to issue 660,000 warrants at a purchase price of $1,650,000. Concurrently, Yoshiharu has reached agreements with various creditors to convert existing debt obligations into equity, which not only increases stockholders’ equity but also reduces the company’s total debt, principal, and interest payments, thereby lowering near-term cash needs.
As part of the debt conversion, Yoshiharu has issued 220,000 warrants each for class A and class B common stocks at an exercise price of $0.01 per warrant to cancel a $1.1 million loan from BS1Fund. Similarly, a $700,000 loan from Golden Bridge and another $700,000 loan from James Chae, President, CEO, and Chairman of the Board, have been settled in full with the issuance of 280,000 warrants each for class A common stocks at the same exercise price.
James Chae expressed optimism about the company’s financial restructuring, stating that the capital increase is viewed as a steppingstone for future growth and that these agreements improve the balance sheet and reduce cash usage, enabling Yoshiharu to execute its strategy and achieve near-term growth initiatives. The company has shown strong revenue growth of 26% year-over-year, though InvestingPro data indicates it operates with relatively weak gross profit margins of 11.8%.
Yoshiharu, established in 2016, quickly made a name for itself as a leading ramen restaurant in Southern California and has since expanded to 15 restaurants, including locations in Las Vegas.
The company’s efforts to strengthen its capital structure come ahead of a Nasdaq appeal hearing scheduled for April 1, 2025, where Yoshiharu aims to demonstrate compliance with the exchange’s listing requirements. Despite current challenges, the stock has delivered an impressive year-to-date return of 403%, though it currently appears overvalued according to InvestingPro Fair Value estimates. This news is based on a press release statement from Yoshiharu Global Co.
In other recent news, Yoshiharu Global Co. has secured $1.9 million in financing commitments to meet Nasdaq’s minimum stockholders’ equity requirement for continued listing. This move follows a delisting notice from Nasdaq due to non-compliance with the rule requiring a minimum stockholders’ equity of $2.5 million. The company plans to appeal the delisting decision, though there is no guarantee of a favorable outcome. Additionally, Yoshiharu announced the appointment of Sungjoon Chae, a renowned architect, to its Board of Directors to support its expansion plans. In a separate development, independent director Jay Kim resigned from the board without citing any disagreements, leaving a vacancy. These recent developments reflect the company’s ongoing efforts to strengthen its market position and governance. Yoshiharu continues to expand its presence with new U.S. locations and international partnerships. The company has acknowledged the risks and uncertainties associated with its forward-looking statements.
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