UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 2)
CURRENT REPORT
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Explanatory Note
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Item 1.01 Entry into a Material Definitive Agreement
On June 12, 2024, Yoshiharu Global Co. (the “Company”) executed an amended and restated asset purchase agreement (the “A&R Asset Purchase Agreement”), dated June 12, 2024, by and between the Company and Mr. Jiyuck Hwang, a restaurant operator (“Seller”) which amended and restated that certain Asset Purchase Agreement originally dated as of November 21, 2023 as described in the Company’s Form 8-K filed with the SEC on November 27, 2023. The parties executed the A&R Asset Purchase Agreement to allow for separate closings of the restaurants at the request of a lender, and for each closing to become effective as of April 20, 2024.
Pursuant to the A&R Asset Purchase Agreement, the Company will purchase all or substantially all of the assets of the following three restaurant entities owned by the Seller: Jjanga, HJH and Aku (the “Acquisition”). The Company agreed to pay the Seller $1,800,000 in cash, a promissory note in the principal amount of $600,000 (the “Promissory Note”) and a convertible note having a principal amount of $1,200,000 which shall be convertible into the Company’s Class A common stock in accordance with the terms therein (the “Convertible Note”). Additionally, the Company has entered into an employment agreement with the Seller whereby the Seller will serve as the Managing Director of each restaurant upon consummation of the Agreement (the “Employment Agreement”). The A&R Asset Purchase Agreement also contains customary representations, warranties, indemnification provisions and closing conditions including the required audit of target assets in accordance with applicable SEC regulations.
The principal sum of the Promissory Note shall be repaid by the Company to the Seller in two equal installments due November 30, 2024 and November 30, 2025. Each annual installment shall be in the amount of $300,000. The Promissory Note specifies that payments shall be made without the addition of interest. If the Company fails to make any payments as required, the Promissory Note states that the entire balance shall become immediately due and payable.
The Convertible Note states that the principal sum shall accrue interest at a rate of 0.5% per annum and specifies that the maturity date is one year from the closing date. The terms of the Convertible Note provide that upon the maturity date, the Seller has the right to convert any outstanding and unpaid portion of the Convertible Note into the Class A Common stock of the Company. If the Seller chooses to exercise this right, the conversion price will be 150% of the average of the highest and lowest prices of the Company’s stock during the five business days immediately after the closing date of the Amended Asset Agreement (the “Conversion Price Formula”). If the closing stock price on the conversion date is lower than the price produced via the Conversion Price Formula, the Seller shall have the option to choose the cash receipt of any outstanding and unpaid portion of the Convertible Note or convert any outstanding and unpaid portion of the Convertible Note into the Company’s stock using the same Conversion Price Formula. If the stock price on the conversion date is higher than the price produced by the Conversion Price Formula, the Seller shall convert any outstanding and unpaid portion of the Convertible Note into the Company’s stock. Upon choosing to convert, the Seller must provide written notice to the Company indicating the portion of the Convertible Note to be converted.
The Employment Agreement sets out Mr. Hwang’s position, duties, compensation, employment term and termination rights. Mr. Hwang will serve as Managing Director of Yoshiharu LV which will manage the new Las Vegas restaurants. He will be paid an annual base salary of $180,000 with a performance bonus schedule based on how much money in excess of the target EBITDA Yoshiharu LV achieves. Under this performance incentive program, Mr. Hwang is eligible for Restricted Stock Units worth up to $100,0000. The Employment Agreement specifies that he will be employed for an initial term of 3 years, beginning immediately after the closing date of the Amended Asset Agreement, subject to extension or early termination. The termination clause of the Employment Agreement provides that either party may terminate employment with or without cause upon 60 days written notice to the other party. If Mr. Hwang’s employment is terminated with or without cause, he is not entitled to receive a severance package.
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Item 2.01 Completion of Acquisition or Disposition of Assets
On June 12, 2024, the Company closed the Acquisition described in Item 1.01 above for an aggregate $3.6 million. The Company intends on filing the requisite financial statements required by the SEC by amendment.
The summary provided herein of the A&R Asset Purchase Agreement is qualified in its entirety by reference to the whole of such agreement, which is included as Exhibit 10.1 attached hereto and the summarizes of the Promissory Note, Convertible Note and the Employment Agreement are qualified in their entirety by reference to the whole of each instrument, which were each included as Exhibits to the Company’s Current Report on Form 8-K filed with the SEC on November 27, 2023 (and also referenced herein).
Item 9.01 Financial Statements and Exhibits
The Promissory Note, Convertible Note and Employment Agreement were previously filed with the SEC on the Company’s Current Report on Form 8-K on November 27, 2023. There were no changes to any of these agreements in the A&R Asset Purchase Agreement, except for the Seller Carry Loan Note which has been revised to correct the two repayment dates from November 30, 2024 to April 12, 2025 and from November 30, 2025 to April 12, 2026. The financial statements required by this Item 9.01(a) is included by Exhibit to this Current Report on Form 8-K. The financial statements include: (i) the combined financial statements as of and for the years ended December 31, 2023 and 2022, (ii) the unaudited combined financial statements as of and for the three months ended March 31, 2024 and 2023 and (iii) the combined pro forma financial statements as of and for the year ended December 31, 2023.
(d) Exhibits.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 26, 2024
| YOSHIHARU GLOBAL CO. | ||
| By: | /s/ James Chae | |
| Name: | James Chae | |
| Title: | Chief Executive Officer | |
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