UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule
14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |
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Filed by a party other than the Registrant |
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Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under § 240. 14a-12 |
Yoshiharu
Global Co.
(Name of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
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No fee required. |
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Fee paid previously with preliminary materials. |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
YOSHIHARU GLOBAL CO.
6940 Beach Blvd., Suite D-705
Buena Park, California 90621
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held Wednesday, November 22, 2023 at 9:00 AM (EST)
TO THE STOCKHOLDERS OF YOSHIHARU GLOBAL CO.:
Notice
is hereby given that the Annual Meeting of Stockholders (the “Annual Meeting”) of Yoshiharu Global Co. (“Yoshiharu,”
“we,” “us,” “our,” and the “Company”) will be held on Wednesday, November 22,
2023, at 9:00 AM EST, at the offices of Pryor Cashman LLP at 7 Times Square, New York, NY 10036, for the purposes of considering
and acting on the following items:
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1. |
To
elect four (4) persons to our Board of Directors, each to hold office until the 2024 annual meeting of stockholders or until
their respective successors shall have been duly elected or appointed and qualify; |
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2. |
To
ratify the appointment of BF Borgers CPA PC as our independent registered public accounting firm for the fiscal year ending December
31, 2024; |
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3. |
To
approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to effect a reverse stock split of
our Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), and Class B Common Stock, par value $0.0001
per share (“Class B Common Stock” and, together with the Class A Common Stock, “Common Stock”), each at a
ratio of not less than 1-for-2 and not more than 1-for-40 (the “Reverse Split Amendment”), such ratio to
be determined by the Board of Directors on or prior to December 31, 2023, in its sole discretion without further approval or authorization
of our stockholders; and |
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4. |
Such other related matters and business as may properly come before the Annual Meeting or any adjournments or postponements thereof. |
The enclosed Proxy Statement includes
information relating to these proposals.
Only
holders of record of our Class A Common Stock and Class B Common Stock as of the close of business on October 20, 2023 are entitled
to notice of, and to vote at, the Annual Meeting or any adjournment or postponement of the Annual Meeting. The holders of at least a
majority of our outstanding shares of voting stock entitled to vote and present in person or by proxy are required for a quorum. You
may vote electronically through the Internet or by telephone. The instructions on your proxy card describe how to use these convenient
services. Of course, if you prefer, you can vote by mail by completing your proxy card and returning it to us in the enclosed envelope.
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By Order of the Board of Directors, |
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/s/ James Chae |
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James Chae |
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President, Chief Executive Officer and Chairman |
October __, 2023
Buena Park, California
OUR BOARD OF DIRECTORS APPRECIATES
AND ENCOURAGES YOUR PARTICIPATION IN OUR ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED. ACCORDINGLY, PLEASE AUTHORIZE A PROXY TO VOTE YOUR SHARES BY INTERNET, TELEPHONE OR MAIL. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY WITHDRAW YOUR PROXY, IF YOU WISH, AND VOTE IN PERSON. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH
IN THIS PROXY STATEMENT.
YOSHIHARU GLOBAL CO.
6940 Beach Blvd., Suite D-705
Buena Park, California 90621
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held Wednesday, November 22, 2023 at 9:00 AM (EST)
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
General
This
Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors (the “Board of
Directors”) of Yoshiharu Global Co., a Delaware corporation (“Yoshiharu,” “we,” “us,”
“our,” and the “Company”), for use at the Annual Meeting of Stockholders to be held on Wednesday,
November 22, 2023, at 9:00 AM EST, at the office of Pryor Cashman LLP at 7 Times Square, New York, NY 10036, and at any
postponements or adjournments thereof (the “Annual Meeting”). This Proxy Statement, the Notice of Annual Meeting of
Stockholders and the accompanying proxy cards are being mailed to stockholders on or about October __, 2023.
Important
Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on November 22,
2023: The Proxy Statement and the Annual Report to Stockholders are available at https://ir.yoshiharuramen.com/. We encourage
you to review all of the important information contained in the proxy materials contained herein or accessed via our website before voting.
Solicitation and Voting Procedures
Solicitation. The solicitation
of proxies will be conducted by mail, and we will bear all attendant costs. These costs will include the expense of preparing and mailing
proxy materials for the Annual Meeting and reimbursements paid to brokerage firms and others for their expenses incurred in forwarding
solicitation materials regarding the Annual Meeting to beneficial owners of our shares entitled to vote at the Annual Meeting. We may
conduct further solicitation personally, telephonically, electronically or by facsimile through our officers, directors and regular employees,
none of whom would receive additional compensation for assisting with the solicitation. We do not intend, but reserve the right, to use
the services of a third party solicitation firm to assist us in soliciting proxies.
Voting. Stockholders of
record may authorize the proxies named in the enclosed proxy cards to vote their shares in the following manner:
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by mail, by marking the enclosed proxy card(s) applicable to you as the holder of shares of our Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”) and/or our Class B Common Stock, par value $0.0001 per share (“Class B Common Stock” and, together with Class A Common Stock, “Common Stock”), signing and dating it, and returning it in the postage-paid envelope provided; |
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by
telephone, by dialing the toll-free telephone number 1-800-690-6903 from within the United States or Canada and following the
instructions. Stockholders voting by telephone need not return the proxy card(s) applicable to them as the holder of shares of our
Common Stock and/or our preferred stock; and |
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through
the Internet, by accessing the World Wide Website address www.proxyvote.com. Stockholders voting by the Internet need not return
the proxy card(s) applicable to them as the holder of shares of our Common Stock. |
Revocability
of Proxies. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is
exercised in the same manner in which it was given, or by delivering to Soojae Ryan Cho, the Chief Financial Officer of Yoshiharu Global
Co., at 6940 Beach Blvd., Suite D-705, Buena Park, California 90621, a written notice of revocation or a properly executed proxy bearing
a later date, or by attending the Annual Meeting and giving notice of your intention to vote in person.
Voting Procedure. The presence
at the Annual Meeting of a majority of our outstanding shares of voting stock entitled to vote and represented either in person or by
proxy, will constitute a quorum for the transaction of business at the Annual Meeting. The close of business on October 20, 2023 has
been fixed as the record date (the “Record Date”) for determining the holders of shares of our Common Stock entitled to notice
of and to vote at the Annual Meeting. Each share of Class A Common Stock outstanding on the Record Date is entitled to one vote on all
matters and each share of Class B Common Stock is entitled to ten votes on all matters.
As
of the Record Date, there were 11,940,000 shares of Class A Common Stock outstanding, which shares were entitled to an aggregate
of 11,940,000 votes at the Annual Meeting and 1,000,000 shares of Class B Common Stock outstanding, which shares were entitled
to an aggregate of 10,000,000 votes at the Annual Meeting. Under Delaware law, stockholders will not have appraisal or similar
rights in connection with any proposal set forth in this Proxy Statement.
Votes will be tabulated by the
persons appointed by the Board of Directors to act as inspectors of election for the Annual Meeting. Shares represented by a properly
executed and delivered proxy will be voted at the Annual Meeting and, when instructions have been given by the stockholder, will be voted
in accordance with those instructions. If no instructions are given, the shares will be voted FOR Proposal Nos. 1, 2, and 3, as applicable.
Abstentions and broker non-votes
will each be counted as present for the purpose of determining whether a quorum is present at the Annual Meeting. Abstentions and broker
non-votes will have no effect on the outcome of Proposal No. 1. Abstentions will have the effect of being cast “against” Proposal
Nos. 2 and 3.
A
broker non-vote occurs when a broker submits a proxy card with respect to shares of Common Stock held in a fiduciary capacity (typically
referred to as being held in “street name”), but declines to vote on a particular matter because the broker has not received
voting instructions from the beneficial owner. If the beneficial owner does not provide voting instructions, the broker or nominee can
still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine”
matters. In the event that a broker, bank, or other agent indicates on a proxy that it does not have discretionary authority to vote
certain shares on a non-routine proposal, then those shares will be treated as broker non-votes. We believe that all proposals in this
proxy statement, other than (i) the ratification of the independent registered public accounting firm, and (ii) the approval of a reverse
stock split of our Common Stock in a ratio of not less than 1-for-2 and not more than 1-for-40, such ratio to be determined
by the Board of Directors on or prior to December 31, 2023, in its sole discretion (Proposal No. 3) are non-routine proposals; therefore,
your broker, bank or other agent will only be entitled to vote on Proposal Nos. 2 and 3 at the Annual Meeting without your instructions.
On each matter properly presented
for consideration at the Annual Meeting, holders of Class A Common Stock will be entitled to one vote for each share of Class A Common
Stock held and holders of Class B Common Stock will be entitled to ten votes for each share of Class B Common Stock. Stockholders do not
have cumulative voting rights in the election of directors.
Vote Required.
For the election of directors (Proposal
No. 1), the nominees who receive a plurality of votes from the shares present in person or by proxy and entitled to vote at the Annual
Meeting will be elected.
For
the approval of the ratification of our independent registered public accounting firm (Proposal No. 2) and the approval of a reverse
stock split of our Common Stock in a ratio of not less than 1-for-2 and not more than 1-for-40, such ratio to be determined
by the Board of Directors on or prior to December 31, 2023, in its sole discretion (Proposal No. 3), the vote of a majority of the
shares present in person or by proxy and entitled to vote on the matter at the Annual Meeting is required.
If any other matters are properly
presented for consideration at the Annual Meeting, the persons named in the enclosed proxy will have discretion to vote on those matters
in accordance with their best judgment.
Householding.
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy
statements and annual reports. This means that only one copy of this Proxy Statement or our annual report may have been sent to multiple
stockholders in your household. We will promptly deliver a separate copy of either document to you if you call or write us at the following
address or phone number: Yoshiharu Global Co., 6940 Beach Blvd., Suite D-705, Buena Park, California 90621, phone: (714) 694-2403, Attention:
Chief Financial Officer. If you want to receive separate copies of our annual report and Proxy Statement in the future, or if you are
receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee
record holder, or you may contact us at the above address and phone number.
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
General
Our Bylaws (the “Bylaws”)
provide that the Board of Directors of our Company shall consist of not less than three (3) members and not more than eleven (11) members,
as fixed by the Board of Directors. Currently, the Board of Directors consists of four (4) members.
At the Annual Meeting, four (4)
directors are to be elected to serve until the 2024 annual meeting of our stockholders or until such directors’ respective successors
are elected or appointed and qualify or until any such director’s earlier resignation or removal. The Board of Directors has nominated
each of the persons listed below for election to the Board of Directors at the Annual Meeting. Each of the director nominees is currently
a member of our Board of Directors.
Name |
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Age |
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Position |
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Director Since |
James Chae |
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60 |
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President, Chief Executive Officer and Chairman of the Board of Directors |
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2016 |
Jay Kim(1)(2) |
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61 |
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Director |
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2022 |
Harinne Kim(1)(2) |
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50 |
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Director |
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2023 |
Yusil Yeo(1) |
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44 |
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Director |
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2022 |
(1) Member of Audit Committee.
(2) Member of Compensation
Committee.
Board
Diversity Matrix (As of September 30, 2023) |
Total Number of Directors: 4 |
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Female |
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Male |
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Non-
Binary |
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Did
Not
Disclose
Gender |
Part
I: Gender Identity |
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Directors |
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2 |
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2 |
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Part II: Demographic Background |
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African American or Black |
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- |
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Alaskan Native or Native American |
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- |
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- |
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Asian |
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2 |
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2 |
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- |
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Hispanic or Latinx |
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Native Hawaiian or Pacific Islander |
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White |
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Two or More Races or Ethnicities |
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LGBTQ+ |
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- |
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- |
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Did Not Disclose Demographic Background |
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If any nominee is unable or unwilling
to serve as a director at the time of the Annual Meeting, the proxies may be voted for the balance of those nominees named and for any
substitute nominee designated by the current Board of Directors or the proxy holders to fill such vacancy or for the balance of those
nominees named without the nomination of a substitute, or the size of the Board of Directors may be reduced in accordance with our Bylaws.
Nominees
James
Chae. Mr. Chae founded Yoshiharu in 2016. Led by Mr. Chae, Yoshiharu has expanded to become a leading Japanese cuisine restaurant
chain in Southern California. The root of Mr. Chae’s business knowledge comes from over two decades leading a wide array of industries
including both the financial services and retail services segments. Mr. Chae has been a business executive for over 10 years, serving
as the President of APIIS Financial, Inc., a financial planning and wealth management firm. Prior to APIIS Financial, Inc., Mr. Chae served
as the Managing Site Partner for John Hancock from January 2002 to October 2010.
Mr. Chae immigrated from South
Korea to the United States as a teenager, and diligently worked to enroll at UCLA where he studied Economics. Prior to graduation, Mr.
Chae began his career at California Korea Bank, one of the first banks to service Koreans living in the United States. Mr. Chae rose to
the position of Loan Adjuster before venturing out on his own as an entrepreneur. While starting his own businesses, Mr. Chae often found
comfort in a warm bowl of ramen to uplift him and energize his spirit, which served as the inspiration for Yoshiharu. Mr. Chae’s
background in the financial services industry provided him access to restaurants and retailers which helped him understand the restaurant
industry and more importantly, the necessary foundations in building a successful restaurant business. Mr. Chae believed that there was
a large addressable market for ramen, and together with his experience and passion for the business, founded Yoshiharu. As the founder
and controlling stockholder of the Company, Mr. Chae possesses invaluable operational knowledge and insight making him qualified to serve
as a member of our Board of Directors.
Jay
Kim. Mr. Kim was appointed to serve as a director effective February 4, 2022. Mr. Kim serves as the Chief Executive Officer of Reborn
Coffee Inc. Prior to Reborn, Mr. Kim founded Wellspring Industry, Inc. in California in 2007 which created the yogurt distribution company
“Tutti Frutti” and bakery-café franchise “O’My Buns.” Tutti Frutti grew to approximately 700 agents
worldwide that offered self-serve frozen yogurt. Mr. Kim sold the majority ownership of Wellspring to a group of investors in 2017.
Prior
to founding Wellspring, Mr. Kim was the owner of Coffee Roasters in Riverside, California from 2002 to 2007. Mr. Kim worked as the project
manager for JES Inc., based in Brea, CA from 1997 to 2002 where he coordinated and managed environmental engineering projects. Mr. Kim
worked as a Senior Process Engineer for Allied Signal Environment Catalyst in Tulsa, Oklahoma, from 1992 to 1997 where he coordinated
and implemented projects related to plant productivity and provided leadership and direction to other engineers as required and provided
information needed for Division product quotations. He also acted as the leader in a start-up plant to be based in Mexico for Allied Signal.
From 1988 to 1992 he worked as the plant start-up engineer for Toyota Auto Body Inc.
Mr. Kim has a B.S, in Chemical
Engineering from California State University at Long Beach and followed a Chemical officer basic training at US Army Chemical School in
1988. He was commissioned 1st. LT. of the US Army in 1986 and retired from the US Army in 1988. Mr. Kim possesses extensive
experience in leading and building restaurant and franchise companies making him qualified to serve as a member of our Board of Directors
and our Audit Committee.
Harinne
Kim. Ms. Kim was appointed to serve as a director effective February 17, 2023 to fill the vacancy created by former director Helen
Lee’s resignation as of February 17, 2023. Ms. Kim is a leading financial advisor who is highly regarded in her field with over
23 years of experience having previously working with well-known financial firms such as Fidelity Investments, Vanguard and John Hancock.
Ms. Kim
has completed her education at Loyola with a specialization in Economics and Finance. Currently, she has a large list of clients which
vary from individuals to corporations.
Ms. Kim possesses extensive expertise
and experience in financial management, making her qualified to serve as a “financial expert”, a member of our Board of Directors
and our Audit Committee.
Yusil
Yeo. Ms. Yeo was appointed to serve as a director effective May 25, 2022. Ms. Yeo is currently the president of Grace Yeo & Associates,
C.P.A., Inc, a full-service accounting firm in Los Angeles, CA and has served in such capacity for the past 5 years. She has expertise
in providing comprehensive accounting services. Ms. Yeo is a member of American Institute of Certified Public Accountants and the California
Society of Certified Public Accountants. She is licensed as a Certified Public Accountant. Ms. Yeo has gained extensive accounting and
tax experience through senior accountant and management roles for a variety of companies and CPA firms located in the Los Angeles area,
including H&R Block and KNM Associates, Inc. Ms. Yeo holds a Bachelor of Science degree from the University of California, Los Angeles.
Ms. Yeo possesses extensive expertise
and experience in financial management, making her qualified to serve as a “financial expert”, a member of our Board of Directors
and our Audit Committee.
The above information is submitted
concerning the nominees for election as directors based upon information received by us from such persons.
Vote Required and Board of Directors’ Recommendation
Assuming a quorum is present, the
affirmative vote of a plurality of the votes cast at the Annual Meeting, either in person or by proxy, is required for the election of
a director. For purposes of the election of directors, abstentions and broker non-votes will have no effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” ALL OF THE NOMINEES NAMED
IN PROPOSAL NO. 1.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The
following table sets forth certain information regarding the ownership of our Common Stock as of October 20, 2023 (the “Determination
Date”) by: (i) each current director of our company and each director nominee; (ii) each of our Named Executive Officers (“NEOs”);
(iii) all current executive officers and directors of our company as a group; and (iv) all those known by us to be beneficial owners
of more than five percent (5%) of our Common Stock.
Beneficial ownership and percentage
ownership are determined in accordance with the rules of the SEC. Under these rules, beneficial ownership generally includes any shares
as to which the individual or entity has sole or shared voting power or investment power and includes any shares that an individual or
entity has the right to acquire beneficial ownership of within 60 days of the Determination Date, through the exercise of any option,
warrant or similar right (such instruments being deemed to be “presently exercisable”). In computing the number of shares
beneficially owned by a person and the percentage ownership of that person, shares of our Common Stock that could be issued upon the exercise
of presently exercisable options and warrants are considered to be outstanding. These shares, however, are not considered outstanding
as of the Determination Date when computing the percentage ownership of each other person.
To
our knowledge, except as indicated in the footnotes to the following table, and subject to state community property laws where applicable,
all beneficial owners named in the following table have sole voting and investment power with respect to all shares shown as beneficially
owned by them. Percentage of ownership is based on 11,940,000 shares of Class A Common Stock and 1,000,000 shares of Class
B Common Stock outstanding as of the Determination Date. Unless otherwise indicated, the business address of each person in the table
below is c/o Yoshiharu Global Co., at 6940 Beach Blvd., Suite D-705, Buena Park, California 90621. No shares identified below are subject
to a pledge.
Name
of Beneficial Owner | |
Number of Class A Shares Beneficially Owned(1) | |
Percent of Class A Common Stock Outstanding(2) | |
Number of Class B Shares Beneficially Owned(1) | |
Percent of Class B Common Stock Outstanding(2) | |
Percent of Total Voting Power(2)(3) |
James Chae | |
| 7,160,900 | | |
| 59.97 | % | |
| 1,000,000 | | |
| 100.00 | % | |
| 78.22 | % |
Soojae Ryan Cho | |
| 0 | | |
| * | | |
| - | | |
| - | | |
| * | |
Jay Kim | |
| 100,000 | | |
| * | | |
| - | | |
| - | | |
| * | |
Harinne Kim | |
| 25,000 | | |
| * | | |
| - | | |
| - | | |
| * | |
Yusil Yeo | |
| 10,000 | | |
| * | | |
| - | | |
| - | | |
| * | |
All Beneficial Owners as a group (5) persons | |
| 7,295,900 | | |
| 61.10 | % | |
| 1,000,000 | | |
| 100.00 | % | |
| 78.83 | % |
* |
Beneficial ownership of less than 1.0% is omitted. |
(1) |
A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days (such as through exercise of stock options or warrants). Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s spouse or children. |
(2) |
Shares of our Common Stock issuable upon the conversion of our convertible preferred stock are deemed outstanding for purposes of computing the percentage shown above. In addition, for purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of Common Stock that such person has the right to acquire within 60 days after the date of this prospectus. For purposes of computing the percentage of outstanding shares of our Common Stock held by each person or group of persons named above, any shares that such person or persons has the right to acquire within 60 days after the date of this prospectus is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. |
(3) |
Our Class B Common Stock has 10 votes per share, while our Class A Common Stock has one vote per share. |
From time to time, the number of our shares held in
the “street name” accounts of various securities dealers for the benefit of their clients or in centralized securities depositories
may exceed 5% of the total shares of our Common Stock outstanding.
Biographical Information Concerning Executive Officers
Biographical information concerning
our Chief Executive Officer, who also serves as a member of our Board of Directors, is set forth above. Biographical information concerning
our Chief Financial Officer is set forth below.
Soojae Ryan Cho is our Chief
Financial Officer. Mr. Cho was appointed to serve as Chief Financial Officer effective May 25, 2022. For the prior five years, Mr. Cho
served as a partner in S&R Accounting Professionals, LLP where he has provided various accounting, external audit, and tax services.
He has 25 years of experience in public accounting and industry experience with US and global companies. Mr. Cho began his career with
KPMG Los Angeles in 1996. After successfully completing 9 years at KPMG, Mr. Cho was recruited as a Controller and became a CFO for Prudential
Securities in South Korea, a wholly owned subsidiary of Prudential Securities USA. Mr. Cho later joined Ticket Monster (TMon), a leading
e-Commerce company as a Director of Finance managing over 40 accounting and finance team members. At TMon, Mr. Cho successfully led and
completed mergers and acquisitions at different times with Groupon USA, Living Social, and KKR (one of the largest private equity firms
in the USA), reported financial statements under US GAAP to its parent company, and worked closely with external auditors, PwC and E&Y.
He has extensive experience in audits for both private and public companies, SEC reporting and due diligence transactions including post-merger
integration services and IPO engagements. Mr. Cho offers specialized expertise in the automotive, manufacturing and distribution, technology,
and e-Commerce industries.
Director’s Qualifications
In selecting a particular candidate
to serve on our Board of Directors, we consider the needs of our Company based on particular experiences, qualifications, attributes and
skills that we believe would be advantageous for members of our Board of Directors to have and that would qualify such candidate to serve
on our Board of Directors given our business profile and the environment in which we operate. The table below sets forth such experiences,
qualifications, attributes and skills, and identifies the ones that each director nominee possess.
Attributes | |
Mr. Chae | | |
Mr. Kim | | |
Ms. Kim | | |
Ms. Yeo | |
Financial Experience | |
| X | | |
| X | | |
| X | | |
| X | |
Public Board Experience | |
| | | |
| | | |
| | | |
| | |
Industry Experience | |
| X | | |
| X | | |
| X | | |
| | |
Scientific Experience | |
| | | |
| X | | |
| | | |
| | |
Commercial Experience | |
| X | | |
| X | | |
| X | | |
| | |
Corporate Governance Experience | |
| X | | |
| X | | |
| X | | |
| X | |
Capital Markets Experience | |
| X | | |
| X | | |
| X | | |
| X | |
Management Experience | |
| X | | |
| X | | |
| X | | |
| X | |
Arrangements Regarding Director Nominations
There are no arrangements regarding
the nomination of our directors.
Family Relationships
There are no familial relationships
between any of our executive officers and directors.
Director or Officer Involvement in Certain Legal
Proceedings
Our directors and executive officers
were not involved in any legal proceedings as described in Item 401(f) of Regulation S-K in the past ten years.
Independence of the Board of Directors
The Board of Directors utilizes
NASDAQ’s standards for determining the independence of its members. In applying these standards, the Board of Directors considers
commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others, in assessing the
independence of directors, and must disclose any basis for determining that a relationship is not material. The Board of Directors has
determined that the following three (3) director nominees, namely Jay Kim, Harinne Kim and Yusil Yeo, are independent directors within
the meaning of the NASDAQ independence standards. In making these independence determinations, the Board of Directors did not exclude
from consideration as immaterial any relationship potentially compromising the independence of any of the above directors.
Meetings of the Board of Directors
To date, the Board
of Directors held six meetings during our 2023 fiscal year. To date, during our 2023 fiscal year, each member of our Board of Directors
attended more than 75% of the aggregate number of meetings of the Board of Directors that were held during the time that they served
as members of the Board of Directors. We do not have a formal policy regarding attendance by members of the Board of Directors
at the annual meeting of stockholders, but we strongly encourage all members of the Board of Directors to attend our annual meetings
and expect such attendance except in the event of extraordinary circumstances.
Committees of the Board of Directors
The Board of Directors has established
and currently maintains the following two standing committees: the Audit Committee and the Compensation Committee.
Currently, the Audit
Committee consists of Ms. Yeo (Chair), Ms. Kim and Mr. Kim, and the Compensation Committee consists of Mr. Kim (Chair) and Ms. Kim. It
is anticipated that, following the Annual Meeting, the committee members will remain the same. During the 2023 fiscal year, the Audit
Committee held one meeting and the Compensation Committee held one meeting. Each member of the Board of Directors attended
at least 75% of the meetings that were held during the periods when they served as members of such committee.
Mr. Chae controls a majority of the combined voting
power of our outstanding equity interests. As a result, we are a “controlled company” within the meaning of the corporate
governance rules of the Nasdaq Stock Market. As a controlled company, exemptions under the standards free us from the obligation to comply
with certain corporate governance requirements, including the requirements:
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that a majority of our Board of Directors consists of “independent directors,” as defined under the rules of the Nasdaq Stock Market; |
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that we have, to the extent applicable, a Nominating and Corporate Governance Committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; |
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that we have a Compensation Committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and |
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for an annual performance evaluation of the Nominating and Corporate Governance Committee and Compensation Committee. |
Since we avail ourselves
of the “controlled company” exception under the Nasdaq Stock Market rules, we do not have a Nominating and Corporate Governance
Committee. These exemptions do not modify the independence requirements for our Audit Committee, and we are in compliance with the requirements
of Rule 10A-3 of the Exchange Act and the applicable rules of the Nasdaq Stock Market.
Audit Committee. The Audit
Committee provides assistance to the Board of Directors in fulfilling its oversight responsibilities regarding the integrity of financial
statements, our compliance with applicable legal and regulatory requirements, the integrity of our financial reporting processes including
its systems of internal accounting and financial controls, the performance of our internal audit function and independent auditor and
our financial policy matters by approving the services performed by our independent accountants and reviewing their reports regarding
our accounting practices and systems of internal accounting controls. The Audit Committee also oversees the audit efforts of our independent
accountants and takes action as it deems necessary to satisfy itself that the accountants are independent of management. Mr. Kim, Ms.
Kim and Ms. Yeo meet the definition of “independent directors” for the purposes of serving on an Audit Committee under applicable
SEC and Nasdaq Stock Market rules, and we are in compliance with these independence requirements. In addition, Mr. Kim, Ms. Kim and Ms.
Yeo qualify as our “audit committee financial experts,” as such term is defined in Item 407 of Regulation S-K.
In general,
an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:
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understands generally accepted accounting principles and financial statements; |
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is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves; |
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has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements; |
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understands internal controls over financial reporting; and |
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understands audit committee functions. |
Our Board
of Directors has adopted a written charter for the Audit Committee, which is available on our corporate website at https://ir.yoshiharuramen.com/corporate-governance/governance-documents.
Compensation Committee. The
Compensation Committee oversees our overall compensation structure, policies and programs, and assesses whether our compensation structure
establishes appropriate incentives for officers and employees. The Compensation Committee reviews and approves corporate goals and objectives
relevant to compensation of our chief executive officer and other executive officers, evaluates the performance of these officers in light
of those goals and objectives, sets the compensation of these officers based on such evaluations and reviews and recommends to the Board
of Directors any employment-related agreements, any proposed severance arrangements or change in control or similar agreements with these
officers. The Compensation Committee also grants stock options and other awards under our stock plans. The Compensation Committee will
review and self-evaluate, at least annually, the performance of the Compensation Committee and its members and the adequacy of the charter
of the Compensation Committee.
Our Board of Directors has adopted
a written charter for the Compensation Committee, which is available at https://ir.yoshiharuramen.com/corporate-governance/governance-documents.
As a controlled company, we may rely upon the exemption from the requirement that we have a Compensation Committee composed entirely of
independent directors, although our Compensation Committee consists entirely of independent directors.
Selection
of Board Candidates
In selecting candidates for the
Board of Directors, the Board of Directors begins by determining whether the incumbent directors whose terms expire at the annual meeting
of stockholders desire and are qualified to continue their service on the Board of Directors. If there are positions on the Board of Directors
for which the Board of Directors will not be re-nominating an incumbent director, or if there is a vacancy on the Board of Directors,
the Board of Directors will solicit recommendations for nominees from persons whom the Board believes are likely to be familiar with qualified
candidates, including members of our Board of Directors and our senior management. The Board of Directors may also engage a search firm
to assist in the identification of qualified candidates. The Board of Directors will review and evaluate those candidates whom it believes
merit serious consideration, taking into account all available information concerning the candidate, the existing composition and mix
of talent and expertise on the Board of Directors and other factors that it deems relevant. In conducting its review and evaluation, the
Board of Directors may solicit the views of management and other members of the Board of Directors, and may conduct interviews of proposed
candidates.
The Board of Directors generally
requires that all candidates for the Board of Directors be of the highest personal and professional integrity and have demonstrated exceptional
ability and judgment. The Board of Directors will consider whether such candidate will be effective, in conjunction with the other members
of the Board of Directors, in collectively serving the long-term interests of our stockholders. In addition, the Board of Directors requires
that all candidates have no interests that materially conflict with our interests and those of our stockholders, have meaningful management,
advisory or policy making experience, have a general appreciation of the major business issues facing us and have adequate time to devote
to service on the Board of Directors.
The Board of Directors will consider
stockholder recommendations for nominees to fill director positions, provided that the Board of Directors will not entertain stockholder
nominations from stockholders who do not meet the eligibility criteria for submission of stockholder proposals under Rule 14a-8 of Regulation
14A under the Exchange Act. Stockholders may submit written recommendations for nominees to the Board of Directors, together with appropriate
biographical information and qualifications of such nominees as required by our Bylaws, to our Secretary following the same procedures
as described in “Stockholder Communications” in this Proxy Statement. In order for a nominee for directorship submitted by
a stockholder to be considered, such recommendation must be received by the Secretary by the time period set forth in our most recent
proxy statement for the submission of stockholder proposals under Rule 14a-8 of Regulation 14A under the Exchange Act. The Secretary shall
then deliver any such communications to the Chairman of the Board of Directors. The Board of Directors will evaluate stockholder recommendations
for candidates for the Board of Directors using the same criteria as for other candidates, except that the Board of Directors may consider,
as one of the factors in its evaluation of stockholder recommended candidates, the size and duration of the interest of the recommending
stockholder or stockholder group in our equity.
Board Leadership Structure and Role in Risk Oversight
The positions of
Chairman of the Board of Directors and Chief Executive Officer are presently the same person and we do not have a lead independent director.
As our Bylaws and corporate governance guidelines do not require that our Chairman and Chief Executive Officer positions be separate,
our Board of Directors believes that having positions be held by the same person is the appropriate leadership structure for us at this
time. We have determined that the leadership structure of our Board of Directors has permitted our Board of Directors to fulfill its
duties effectively and efficiently and is appropriate given the size and scope of our company and its financial condition.
Our Board of Directors and the
Audit Committee thereof is responsible for overseeing the risk management processes on behalf of our company. The Board of Directors and,
to the extent applicable, the Audit Committee, receive and review periodic reports from management, auditors, legal counsel and others,
as considered appropriate regarding our company’s assessment of risks. Where applicable, the Audit Committee reports regularly to
the full Board of Directors with respect to risk management processes. The Audit Committee and the full Board of Directors focus on the
most significant risks facing our company and our company’s general risk management strategy, and also ensure that risks undertaken
by our company are consistent with the Board of Director’s appetite for risk. While the Board of Directors oversees the risk management
of our company, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the
most effective approach for addressing the risks facing our company and that our Board of Directors leadership structure supports this
approach.
Stockholder Communications
All stockholder communications
must: (i) be addressed to our Secretary or Board of Directors at our address; (ii) be in writing in print and delivered in person or by
first class United States mail postage prepaid or by reputable overnight delivery service; (iii) be signed by the stockholder sending
the communication; (iv) indicate whether the communication is intended for the entire Board of Directors, a committee thereof, or the
independent directors; (v) if the communication relates to a stockholder proposal or director nominee, the name and address of the stockholder,
the class and number of shares held by the stockholder, a description of any agreement, arrangement or understanding with respect to the
nomination or other business between or among such stockholder or beneficial owner and any other person, including without limitation
any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of Exchange Act Schedule 13D (regardless of whether
the requirement to file a Schedule 13D is applicable to the stockholder or beneficial owner) and a description of any agreement, arrangement
or understanding (including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned
shares) that has been entered into as of the date of the stockholder’s notice by, or on behalf of, such stockholder or beneficial
owner, the effect or intent of which is to mitigate loss, manage risk or benefit from changes in the share price of any class of the Company’s
capital stock, or maintain, increase or decrease the voting power of the stockholder or beneficial owner with respect to shares of stock
of the Company; provided that we will not entertain stockholder proposals or stockholder nominations from stockholders who do not meet
the eligibility and procedural criteria for submission of stockholder proposals under Rule 14a-8 of Regulation 14A under the Exchange
Act; and (vi) if the communication relates to a director nominee being recommended by the stockholder, must include all other information
as required by our Bylaws, including without limitation, appropriate biographical information of the candidate.
Upon receipt of a stockholder communication
that is compliant with the requirements identified above, the Secretary shall promptly deliver such communication to the appropriate member(s)
of the Board of Directors or committee member(s) identified by the stockholder as the intended recipient of such communication by forwarding
the communication to either the chairman of the Board of Directors with a copy to the Chief Executive Officer, the chairman of the applicable
committee, or to each of the independent directors, as the case may be.
The Chief Executive Officer may,
in his sole discretion and acting in good faith, provide copies of any such stockholder communication to any one or more of our directors
and executive officers, except that in processing any stockholder communication addressed to the independent directors, the Chief Executive
Officer may not copy any member of management in forwarding such communications. In addition, the Chief Executive Officer may, in his
sole discretion and acting in good faith, not forward certain items if they are deemed of a commercial or frivolous nature or otherwise
inappropriate for consideration by the intended recipient and any such correspondence may be forwarded elsewhere in our company for review
and possible response.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Approval for Related Party Transactions
Our Board of Directors has adopted
a written related person transaction policy, which sets forth the policies and procedures for the review and approval or ratification
of related party transactions. This policy is administrated by our Audit Committee. These policies provide that, in determining whether
or not to recommend the initial approval or ratification of a related party transaction, the relevant facts and circumstances available
shall be considered, including, among other factors it deems appropriate, whether the interested transaction is on terms no less favorable
than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s
interest in the transaction.
Related Party Transactions
In
September 2021, Yoshiharu Holdings was formed by Mr. Chae as an S corporation for the purpose of acquiring all of the equity in each of
the seven restaurant store entities which were previously founded and wholly owned directly by Mr. Chae and all of the intellectual property
in the business held by Mr. Chae in exchange for an issuance of 9,450,900 shares to Mr. Chae, which constituted all of the issued and
outstanding equity in Yoshiharu Holdings Co. Such transfers were completed in the fourth quarter of 2021.
Yoshiharu
Global Co. was incorporated on December 9, 2021 in Delaware by Mr. Chae. On December 9, 2021, Mr. Chae contributed 100% of the equity
in Yoshiharu Holdings Co. to Yoshiharu Global Co. in exchange for the issuance by Yoshiharu Global Co. of 9,450,900 shares of Class A
Common Stock to Mr. Chae. On December 10, 2021, the Company redeemed 670,000 shares of Class A Common Stock from Mr. Chae at par ($0.0001
per share). In December 2021, the Company conducted a private placement solely to accredited investors and sold 670,000 shares of Class
A Common Stock at $2.00 per share, which the Company’s Board of Directors determined to reflect the then current fair market value
of the Company’s Class A Common Stock. On September 8, 2022, immediately prior to the Company’s initial public offering, the
Company exchanged 1,000,000 shares held by Mr. Chae into 1,000,000 shares of Class B Common Stock. Effective February 7, 2022, the Company’s
Board and stockholders unanimously approved the form of amended and restated certificate of incorporation, which clarifies the automatic
conversion of Class B Common Stock held by Mr. Chae into Class A Common Stock, among other things.
From time to time,
the Company borrowed money from Mr. Chae and his affiliate APIIS Financial, Inc., a company 100% owned and controlled by Mr. Chae. The
balance is non-interest bearing and due on demand. As of June 30, 2022, December 31, 2021 and December 31, 2020, the balance was $1,417,433,
$1,383,213 and $911,411, respectively.
From time to time,
the Company made distributions in the form of dividends to Mr. Chae as the sole stockholder of the Company. For the years ended December
31, 2021 and 2020, James Chae was distributed $696,575 and $665,194, respectively. There were no distributions for the year ended
December 31, 2022 or the six month period ended June 30, 2023.
Mr. Chae owns 100%
of our outstanding Class B Common Stock, and 59.97% of our Class A Common Stock, and 78.22% of our total voting power.
Our Class B Common Stock has 10 votes per share, while our Class A Common Stock, which is the class of stock we sold in our initial public
offering and which is the only class of stock that is publicly traded, has one vote per share.
As a result
of Mr. Chae’s 100% ownership of our Class B Common Stock, Mr. Chae is able to control all matters submitted to our stockholders
for approval even if he owns significantly less than 50% of the number of shares of our outstanding equity interests. This concentrated
control could discourage others from initiating any potential merger, takeover or other change of control transaction that other stockholders
may view as beneficial.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have appointed BF Borgers CPA
PC (“BFB”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2024. BFB
has served as our independent registered public accounting firm since 2021.
In the event that ratification
of this appointment of independent registered public accounting firm is not approved by the affirmative vote of a majority of votes cast
on the matter, then the appointment of our independent registered public accounting firm will be reconsidered by us.
Your ratification of the appointment
of BFB as our independent registered public accounting firm for the fiscal year ending December 31, 2024 does not preclude us from terminating
our engagement of BFB and retaining a new independent registered public accounting firm, if we determine that such an action would be
in our best interest.
The following table sets forth
the fees billed to us for professional services rendered by BFB for the years ended December 31, 2022 and 2021:
SERVICES
| |
31-Dec-22 | | |
31-Dec-21 | |
Audit fees | |
$ | 222,000 | | |
$ | 0 | |
Tax fees | |
| 11,000 | | |
| 11,000 | |
All other fees | |
| 33,000 | | |
| 33,000 | |
Total fees | |
$ | 266,000 | | |
$ | 44,000 | |
(1) |
Audit Fees — Audit fees consist of fees billed for the audit of our annual financial statements and the review of the interim consolidated financial statements. |
(2) |
Audit-Related Fees — These consisted principally of the aggregate fees related to audits that are not included Audit Fees. |
(3) |
Tax Fees — Tax fees consist of aggregate fees for tax compliance and tax advice, including the review and preparation of our various jurisdictions’ income tax returns. |
Pre-Approval
Policies and Procedures
The Audit Committee has the authority
to appoint or replace our independent registered public accounting firm (subject, if applicable, to stockholder ratification). The Audit
Committee is also responsible for the compensation and oversight of the work of the independent registered public accounting firm (including
resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting) for
the purpose of preparing or issuing an audit report or related work. The independent registered public accounting firm was engaged by,
and reports directly to, the Audit Committee.
The Audit Committee pre-approves
all audit services and permitted non-audit services (including the fees and terms thereof) to be performed for us by our independent registered
public accounting firm, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange
Act and Rule 2-01(c)(7)(i)(C) of Regulation S-X, provided that all such excepted services are subsequently approved prior to the completion
of the audit. We have complied with the procedures set forth above, and the Audit Committee has otherwise complied with the provisions
of its charter.
Vote Required and Board of Directors’ Recommendation
Assuming a quorum is present, the
affirmative vote of a majority of the shares present at the Annual Meeting and entitled to vote, either in person or by proxy, is required
for approval of Proposal No. 2. For purposes of the ratification of our independent registered public accounting firm, abstentions will
have the same effect as a vote against this proposal, and broker non-votes will have no effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” PROPOSAL NO. 2.
PROPOSAL NO. 3
PROPOSAL
TO approve reverse stock split of our Class A COMMON STOCK and Class B Common Stock in a ratio
of not LESS THAN 1-FOR-2 AND NOT more than 1-for-40
General Description of Corporate Action
On October 24,
2023, the Board of Directors approved the proposal to amend our Amended and Restated Certificate of Incorporation, to enable a potential
reverse split (the “Reverse Split”) of our outstanding shares of Class A Common Stock and Class B Common Stock within a ratio
of not less than 1-for-2 and not more than 1-for-40 to be selected at the discretion of our Board of Directors. Stockholder
approval of this proposal will authorize our Board of Directors, in its sole discretion, to determine whether to effect the Reverse Split
and to set the exact ratio within the range at which the Reverse Split will be effected, at any time prior December 31, 2023. Our Board
of Directors believes that approval of this proposal to effect the Reverse Split and to determine the ratio as opposed to approval of
an immediate reverse stock split at a specific ratio, and to effect such reverse stock split at any time prior to December 31, 2023,
will provide our Board of Directors with maximum flexibility to react to current market conditions and therefore to achieve the purposes
of the Reverse Split, if implemented, and to act in the best interests of our stockholders.
Effecting the Reverse Split requires
that our Amended and Restated Certificate of Incorporation be amended. If approved, the Reverse Split will be effective upon the filing
of a Certificate of Amendment to the Amended and Restated Certificate of Incorporation, in the form attached to this proxy statement as
Annex A (the “Certificate of Amendment”), with the Secretary of State of Delaware, with such filing to occur, if at
all, at the sole discretion of the Board of Directors.
Reasons for Approving the Reverse Split
The intention of the Board of Directors
in obtaining approval for the authority to effect a Reverse Split would be to increase the stock price of our Class A Common Stock sufficiently
above the $1.00 minimum bid price requirement to regain its listing on the Nasdaq Capital Market (“Nasdaq”). The Board of
Directors, in its sole discretion, can elect to abandon the Reverse Split in its entirety at any time.
One principal effect of the Reverse
Split would be to decrease the number of outstanding shares of our Class A Common Stock as described below. Except for de minimus adjustments
that may result from the treatment of fractional shares as described below, the Reverse Split will not have any dilutive effect on our
stockholders since each stockholder would hold the same percentage of our Class A Common Stock (in hand or on an as converted basis) outstanding
immediately following the Reverse Split as such stockholder held immediately prior to the Reverse Split. The relative voting and other
rights that accompany the shares would not be affected by the Reverse Split.
General Effect of the Reverse Split
The table below shows
the effect of the Reverse Split on the Class A Common Stock and Class B Common Stock issued and outstanding as of the date hereof, assuming
an exchange ratio of each of 1:2, 1:20 and 1:40, respectively, for the Reverse Split.
The columns labeled “After
Reverse Split” in the table do not reflect the adjustments that will result from the issuance of additional shares to certain holders
to round up their fractional shares. The Company cannot calculate at this time the number of whole shares that will be issued in lieu
of fractions as a result of the Reverse Split.
Shares
of Common Stock | |
Prior to Reverse Split | | |
After Reverse Split
(1 for 2) | | |
After Reverse Split
(1 for 20) | | |
After Reverse Split
(1 for 40) | |
Authorized (Class A Common Stock) | |
| 49,000,000 | | |
| 49,000,000 | | |
| 49,000,000 | | |
| 49,000,000 | |
Authorized (Class B Common Stock) | |
| 1,000,000 | | |
| 1,000,000 | | |
| 1,000,000 | | |
| 1,000,000 | |
Issued and outstanding (Class A Common Stock | |
| 11,940,000 | | |
| 5,970,000 | | |
| 597,000 | | |
| 298,500 | |
Issued and outstanding (Class B Common Stock) | |
| 1,000,000 | | |
| 500,000 | | |
| 50,000 | | |
| 25,000 | |
Reserved for future issuance (Class A Common Stock) | |
| 1,147,000 | | |
| 573,500 | | |
| 57,350 | | |
| 28,675 | |
Reserved for future issuance (Class B Common Stock) | |
| - | | |
| - | | |
| - | | |
| - | |
Available for issuance (Class A Common Stock) | |
| 35,913,000 | | |
| 42,456,500 | | |
| 48,345,650 | | |
| 48,672,825 | |
Available for issuance (Class B Common Stock) | |
| - | | |
| 500,000 | | |
| 950,000 | | |
| 975,000 | |
Please note: The proposed Reverse Split will
apply equally to the Class A Common Stock and Class B Common Stock. However, because only the Class A Common Stock trades on the market,
the discussion below relates principally to the Class A Common Stock.
Reasons for the Reverse Split; Nasdaq Requirements
for Continued Listing
The Board of Directors’ primary
objective in proposing a potential Reverse Split is to raise the per share trading price of our Class A Common Stock. Our Class A Common
Stock currently trades on Nasdaq under the symbol “YOSH.”
On June 16, 2023, we received a
deficiency notice from Nasdaq informing us that our Class A Common Stock failed to comply with the $1 minimum bid price required for continued
listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”) based upon the closing bid
price of the Class A Common Stock for the 30 consecutive business days prior to the date of the notice from Nasdaq. To regain compliance,
the minimum bid price of the Class A Common Stock was required to meet or exceed $1.00 per share for a minimum of ten consecutive trading
days at any time prior to December 13, 2023.
To regain compliance, among other
things, the bid price of our Class A Common Stock must close at or above $1.00 per share for a minimum of ten consecutive business days
at any time during the 180-day compliance period. If we again cease to comply with the minimum per share average closing price standard
of Rule 5550(a)(2) and fail to regain compliance by the end of the 180-day compliance period, or December 13, 2023, we may be eligible
for an additional 180 calendar days to regain compliance, provided that we (i) meet the continued listing requirement for market value
of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, except for Nasdaq Listing Rule 5550(a)(2),
and (ii) provide a written notice of our intention to cure this deficiency during the second compliance period, by effecting a reverse
stock split, if necessary. If we again cease to comply with the minimum per share average closing price standard of Rule 5550(a)(2) and
fail to regain compliance by the end of such additional 180-day compliance period, or if we are not granted such additional 180-day compliance
period, our Class A Common Stock will be subject to delisting by the Nasdaq. In the event that our Class A Common Stock is delisted by
Nasdaq, our Class A Common Stock would likely trade on the over-the-counter market. If our shares were to trade on the over-the-counter
market, selling our common shares could be more difficult because smaller quantities of shares would likely be bought and sold, and transactions
could be delayed. In addition, in the event our common shares are delisted, broker-dealers have certain regulatory burdens imposed upon
them, which may discourage broker-dealers from effecting transactions in our common shares, further limiting the liquidity of our common
shares. These factors could result in lower prices and larger spreads in the bid and ask prices for common shares. Such potential delisting
from the Nasdaq and continued or further declines in our share price could also greatly impair our ability to raise additional necessary
capital through equity or debt financing.
Our Board of Directors believes
that the Reverse Split and any resulting increase in the per share price of our Class A Common Stock will enhance the acceptability and
marketability of our Class A Common Stock to the financial community and investing public. Many institutional investors have policies
prohibiting them from holding lower-priced stocks in their portfolios, which reduces the number of potential buyers of our Class A Common
Stock, although we have not been told by them that is the reason for not investing in our Class A Common Stock. Additionally, analysts
at many brokerage firms are reluctant to recommend lower-priced stocks to their clients or monitor the activity of lower-priced stocks.
Brokerage houses frequently have internal practices and policies that discourage individual brokers from dealing in lower-priced stocks.
Further, because brokers’ commissions on lower-priced stock generally represent a higher percentage of the stock price than commissions
on higher priced stock, investors in lower-priced stocks pay transaction costs which are a higher percentage of their total share value,
which may limit the willingness of individual investors and institutions to purchase our Class A Common Stock.
We cannot assure you that the Reverse
Split will have any of the desired effects described above. More specifically, we cannot assure you that after the Reverse Split the market
price of our Class A Common Stock will increase proportionately to reflect the ratio for the Reverse Split, that the market price of our
Class A Common Stock will not decrease to its pre-split level, that our market capitalization will be equal to the market capitalization
before the Reverse Split, or that we will be able to maintain our listing on Nasdaq.
Potential Disadvantages of the Reverse Split
As noted above, the
principal purpose of the Reverse Split would be to help increase the per share market price of our Class A Common Stock by up to a factor
of 40. We cannot assure you, however, that the Reverse Split will accomplish this objective for any meaningful period
of time. While we expect that the reduction in the number of outstanding shares of Class A Common Stock will increase the market price
of our Class A Common Stock, we cannot assure you that the Reverse Split will increase the market price of our Class A Common Stock by
a multiple equal to the number of pre-split shares, or result in any permanent increase in the market price of our Class A Common Stock,
which is dependent upon many factors, including our business and financial performance, general market conditions and prospects for future
success. If the per share market price does not increase proportionately as a result of the Reverse Split, then the value of our Company
as measured by our stock capitalization will be reduced, perhaps significantly.
The number of shares held by each
individual holder of Class A Common Stock would be reduced if the Reverse Split is implemented. This will increase the number of stockholders
who hold less than a “round lot,” or 100 shares. Typically, the transaction costs to stockholders selling “odd lots”
are higher on a per share basis. Consequently, the Reverse Split could increase the transaction costs to existing holders of Class A Common
Stock in the event they wish to sell all or a portion of their position.
Although our Board of Directors
believes that the decrease in the number of shares of our Class A Common Stock outstanding as a consequence of the Reverse Split and the
anticipated increase in the market price of our Class A Common Stock could encourage interest in our Class A Common Stock and possibly
promote greater liquidity for our stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding
after the Reverse Split.
Effecting the Reverse Split
Upon receipt of stockholder approval
for the Reverse Split Proposal, if our Board of Directors concludes that it is in the best interests of our Company and our stockholders
to effect the Reverse Split, the Certificate of Amendment will be filed with the Secretary of State of Delaware. The actual timing of
the filing of the Certificate of Amendment with the Secretary of State of Delaware to effect the Reverse Split will be determined by our
Board of Directors. In addition, if for any reason our Board of Directors deems it advisable to do so, the Reverse Split may be abandoned
at any time prior to the filing of the Certificate of Amendment, without further action by our stockholders. In addition, our Board of
Directors may deem it advisable to effect the Reverse Split even if the price of our Common Stock is above $1.00 at the time the Reverse
Split is to be effected. The Reverse Split will be effective as of the date of filing of the Certificate of Amendment with the Secretary
of State of the State of Delaware (the “Effective Time”).
Upon the filing of the Certificate
of Amendment, without further action on our part or our stockholders, the outstanding shares of Class A Common Stock and Class B Common
Stock held by stockholders of record as of the Effective Time would be converted into a lesser number of shares of Class A Common Stock
and Class B Common Stock, as applicable, based on a Reverse Split ratio as determined by the Board of Directors.
Effect on Outstanding Shares, Options and Certain
Other Securities
If the Reverse Split is implemented,
the number of shares our Class A Common Stock and Class B Common Stock owned by each stockholder will be reduced in the same proportion
as the reduction in the total number of shares outstanding, such that the percentage of our Class A Common Stock and Class B Common Stock
owned by each stockholder will remain unchanged except for any de minimus change resulting from rounding up to the nearest number of whole
shares so that we are not obligated to issue cash in lieu of any fractional shares that such stockholder would have received as a result
of the Reverse Split. The number of shares of our Class A Common Stock that may be purchased upon exercise of outstanding options or other
securities convertible into, or exercisable or exchangeable for, shares of our Class A Common Stock, and the exercise or conversion prices
for these securities, will also be ratably adjusted in accordance with their terms as of the Effective Time. Pursuant to the Company’s
Amended and Restated Certificate of Incorporation, if the Reverse Split is implemented, the one-to-one conversion ratio for the conversion
of Class B Common Stock into Class A Common Stock will be maintained.
Effect on Registration
Our Class A Common Stock is currently
registered under the Securities Act of 1933, as amended, and we are subject to the periodic reporting and other requirements of the Exchange
Act. The proposed Reverse Split will not affect the registration of our Class A Common Stock.
Fractional Shares; Exchange of Stock Certificates
Our Board of Directors does not
currently intend to issue fractional shares in connection with the Reverse Split. Therefore, we do not expect to issue certificates representing
fractional shares. In lieu of any fractional shares, we will issue to stockholders of record who would otherwise hold a fractional share
because the number of shares of Class A Common Stock or Class B Common Stock they hold of record before the Reverse Split is not evenly
divisible by the Reverse Split ratio that number of shares of Class A Common Stock or Class B Common Stock, as applicable, as rounded
up to the nearest whole share. No stockholders will receive cash in lieu of fractional shares.
We do not expect the Reverse Split
and the rounding up of fractional shares to whole shares to result in a significant reduction in the number of record holders. We presently
do not intend to seek any change in our status as a reporting company for federal securities law purposes, either before or after the
Reverse Split.
On or after the Effective Time,
we will mail a letter of transmittal to each stockholder. Each stockholder will be able to obtain a certificate evidencing his, her or
its post-Reverse Split shares only by sending the exchange agent (who will be our transfer agent) the stockholder’s old stock certificate(s),
together with the properly executed and completed letter of transmittal and such evidence of ownership of the shares as we may require.
Stockholders will not receive certificates for post-Reverse Split shares unless and until their old certificates are surrendered. Stockholders
should not forward their certificates to the exchange agent until they receive the letter of transmittal, and they should only send in
their certificates with the letter of transmittal. The exchange agent will send each stockholder, if elected in the letter of transmittal,
a new stock certificate after receipt of that stockholder’s properly completed letter of transmittal and old stock certificate(s).
A stockholder that surrenders his, her or its old stock certificate(s) but does not elect to receive a new stock certificate in the letter
of transmittal will be deemed to have requested to hold that stockholder’s shares electronically in book-entry form with our transfer
agent.
Certain of our registered holders
of Class A Common Stock and Class B Common Stock hold some or all of their shares electronically in book-entry form with our transfer
agent. These stockholders do not have stock certificates evidencing their ownership of our Class A Common Stock or Class B Common Stock,
as applicable. They are, however, provided with a statement reflecting the number of shares registered in their accounts. If a stockholder
holds registered shares in book-entry form with our transfer agent, the stockholder may return a properly executed and completed letter
of transmittal.
Stockholders who hold shares in
street name through a nominee (such as a bank or broker) will be treated in the same manner as stockholders whose shares are registered
in their names, and nominees will be instructed to effect the Reverse Split for their beneficial holders. However, nominees may have different
procedures and stockholders holding shares in street name should contact their nominees.
Stockholders will not have to pay
any service charges in connection with the exchange of their certificates.
Authorized Shares
If and when our Board of Directors
elects to effect the Reverse Split, the Certificate of Amendment will not reduce the authorized number of shares of our capital stock.
In accordance with our Certificate
of Incorporation, and Delaware law, our stockholders do not have any preemptive rights to purchase or subscribe for any of our unissued
or treasury shares.
Anti-Takeover and Dilutive Effects
The authorized Class A Common Stock
and Class B Common Stock will not be diluted as a result of the Reverse Split. The Class A Common Stock and Class B Common Stock that
is authorized but unissued provides the Board of Directors with flexibility to effect among other transactions, public or private financings,
acquisitions, stock dividends, stock splits and the granting of equity incentive awards. However, these authorized but unissued shares
may also be used by our Board of Directors, consistent with and subject to its fiduciary duties, to deter future attempts to gain control
of us or make such actions more expensive and less desirable. The Certificate of Amendment would continue to give our Board of Directors
authority to issue additional shares from time to time without delay or further action by the stockholders except as may be required by
applicable law or regulations. The Certificate of Amendment is not being recommended in response to any specific effort of which we are
aware to obtain control of us, nor does our Board of Directors have any present intent to use the authorized but unissued Class A Common
Stock or Class B Common Stock or preferred stock to impede a takeover attempt. There are no plans or proposals to adopt other provisions
or enter into any arrangements that have material anti-takeover effects.
Accounting Consequences
As of the Effective Time, the stated
capital attributable to Class A Common Stock and Class B Common Stock on our balance sheet will be reduced proportionately based on the
Reverse Split ratio that is determined by the Board of Directors (including a retroactive adjustment of prior periods), and the additional
paid-in capital account will be credited with the amount by which the stated capital is reduced. Reported per share net income or loss
will be higher because there will be fewer shares of our Class A Common Stock and Class B Common Stock outstanding.
Federal Income Tax Consequences
The following discussion is a summary
of the U.S. federal income tax consequences of the Reverse Split generally applicable to U.S. holders (as defined below) of our Class
A Common Stock and Class B Common Stock, and is based upon U.S. federal income tax law and relevant interpretations thereof in effect
as of the date of this proxy statement, all of which are subject to change, possibly with retroactive effect. This summary does not discuss
all aspects of U.S. federal income taxation that may be important to you in light of your individual circumstances, including if you are
subject to special tax rules that apply to certain types of investors (e.g., financial institutions, insurance companies, broker-dealers,
partnerships or other pass-through entities for U.S. federal income tax purposes, tax-exempt organizations (including private foundations),
taxpayers that have elected mark-to-market tax accounting, S corporations, regulated investment companies, real estate investment trusts,
investors that will hold our securities as part of a straddle, hedge, conversion, or other integrated transaction for U.S. federal income
tax purposes, or investors that have a functional currency other than the U.S. dollar), all of whom may be subject to tax rules that differ
materially from those summarized below. In addition, this summary does not discuss other U.S. federal tax consequences (e.g., estate or
gift tax), any state, local, or non-U.S. tax considerations, the Medicare tax on certain investment income or the alternative minimum
tax.
This summary is limited to U.S.
holders that hold our Class A Common Stock and Class B Common Stock as “capital assets” (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”). We have not sought, and
will not seek, a ruling from the Internal Revenue Service (the “IRS”) regarding any matter discussed herein, and no assurance
can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax aspects set forth
below.
For purposes of this summary, a
“U.S. holder” is a beneficial holder of Class A Common Stock or Class B Common Stock who or that, for U.S. federal income
tax purposes, is:
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an individual who is a United States citizen or resident of the United States; |
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a corporation or other entity treated as a corporation for United States federal income tax purposes that is created or organized (or treated as created or organized) in or under the laws of the United States or any state or political subdivision thereof; |
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an estate the income of which is subject to United States federal income taxation regardless of its source; or |
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a trust if (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons (within the meaning of the Code) who have the authority to control all substantial decisions of the trust or (B) it has in effect a valid election under applicable Treasury regulations to be treated as a United States person. |
If a partnership (or other entity
classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our Class A Common Stock or Class B Common
Stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the
activities of the partnership. Partnerships that hold our Class A Common Stock or Class B Common Stock, and partners in such partnerships,
should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Split.
Each stockholder should consult
his, her or its own tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences of the Reverse
Split.
The Reverse Split should be treated
as a recapitalization for U.S. federal income tax purposes. Therefore, no gain or loss should be recognized by a U.S. holder upon the
Reverse Split. Accordingly, the aggregate tax basis in the Class A Common Stock and Class B Common Stock received pursuant to the Reverse
Split should equal the aggregate tax basis in the Class A Common Stock or Class B Common Stock, as applicable, surrendered and the holding
period for the Class A Common Stock or Class B Common Stock received should include the holding period for the Class A Common Stock or
Class B Common Stock, respectively, surrendered.
Vote Required and Board of Directors’ Recommendation
Assuming a quorum is present, the
vote of a majority of the shares present and entitled to vote, either in person or by proxy, is required for approval of this Proposal
No. 3. For purposes of the approval of Proposal No. 3, abstentions will have the same effect as a vote against this proposal, and broker
non-votes will have no effect on the result of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” PROPOSAL NO. 3.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board
of Directors, on behalf of the Board of Directors, serves as an independent and objective party to monitor and provide general oversight
of the integrity of our financial statements, the independent registered public accounting firm’s qualifications and independence,
the performance of the independent registered public accounting firm, the compliance by us with legal and regulatory requirements and
our standards of business conduct. The Audit Committee performs these oversight responsibilities in accordance with its Audit Committee
Charter.
Our management is responsible for
preparing our financial statements and our financial reporting process. Our independent registered public accounting firm is responsible
for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting
Oversight Board (“PCAOB”). The Audit Committee’s responsibility is to administer and oversee these processes.
However, the members of the Audit
Committee are not practicing certified public accountants or professional auditors and rely, without independent verification, on information
provided to them and on the representations made by management, and on the report issued by the independent registered public accounting
firm.
The Audit Committee met with the
independent registered public accounting firm, with and without management present, to discuss the audit plan, the results of their examinations,
and the overall quality of our financial reporting.
In this context, the Audit Committee
has reviewed and discussed the audited financial statements for the year ended December 31, 2022 with management and with the independent
registered public accounting firm. The Audit Committee has discussed with the independent registered public accounting firm the matters
required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, which includes, among other items,
matters related to the conduct of the audit of our annual financial statements.
The Audit Committee has also received
the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the
PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed
with the independent registered public accounting firm the issue of its independence from us and management. In addition, the Audit Committee
has considered whether the provision of any non-audit services by the independent registered public accounting firm in the year ended
December 31, 2022 is compatible with maintaining the registered public accounting firm’s independence and has concluded that it
is.
Based on its review of the audited
financial statements and the various discussions noted above, the Audit Committee recommended to the Board of Directors that the audited
financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2022.
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Respectfully, |
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Yusil Yeo, Chairman |
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Jay Kim
Harinne Kim |
The foregoing Audit Committee Report
does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any of our filings under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this Audit
Committee Report by reference therein.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth
information regarding compensation earned during the years ended December 31, 2022 and 2021 by our principal executive officers and our
other most highly compensated executive officers as of the end of December 31, 2022 (“NEOs”).
(a) | |
(b) | | |
(c) | | |
(d) | | |
(e) | | |
(f) | | |
(g) | | |
(h) | | |
(i) | | |
(j) | |
Name and Principal Position | |
Year | | |
Salary | | |
Bonus | | |
Stock Awards | | |
Option Awards | | |
Non-equity Incentive plan compensation | | |
Change in Pension Value and Nonqualified deferred compensation earnings | | |
All other compensation | | |
Total | |
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| | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
James Chae, CEO Chairman of the Board of Directors | |
| 2022 | | |
$ | 285,000 | | |
$ | 632,000 | | |
| -0- | | |
| -0- | | |
| -0- | | |
| -0- | | |
| -0- | | |
$ | 917,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
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Soojae Ryan Cho, CFO | |
| 2022 | | |
$ | 91,000 | | |
| -0- | | |
$ | 56,000 | | |
| -0- | | |
| -0- | | |
| -0- | | |
| -0- | | |
$ | 147,000 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
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James Chae, CEO Chairman of the Board of Directors | |
| 2021 | | |
| -0- | | |
| -0- | | |
| -0- | | |
| -0- | | |
| -0- | | |
| -0- | | |
| -0- | | |
| -0- | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
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Kevin Hartley, former CFO | |
| 2021 | | |
$ | 12,000 | | |
| -0- | | |
$ | 50,000 | | |
| -0- | | |
| -0- | | |
| -0- | | |
| -0- | | |
$ | 62,000 | |
Narrative to Summary Compensation Table
The Company entered into an employment
contract on November 21, 2022 with James Chae as Chief Executive Officer for an annual salary of $285,000. There are no stock option and/or
warrant programs at this time, but such programs may be developed in the future.
We entered into a
consulting agreement on October 1, 2021 with Kevin Hartley for his services as Chief Financial Officer of the Company pursuant
to which Mr. Hartley received $12,000 per year and additional compensation in the form of shares of common stock which the parties agreed
is valued at $50,000. Effective May 23, 2022, Kevin Hartley amicably resigned as Chief Financial Officer of the Company and Soojae Ryan
Cho was appointed new full-time Chief Financial Officer of the Company. Mr. Hartley did not receive any compensation from the Company
in 2022.
The Company engaged
Soojae Ryan Cho effective May 23, 2022 to serve as Chief Financial Officer of the Company, effective immediately. The Company’s
offer letter provides for employment at will, for an initial term through May 22, 2023, which shall automatically renew annually, unless
the Company determines not to renew the term with 60 days prior written notice. The Company has agreed to compensate Mr. Cho $144,000
per year, with yearly adjustments, based on performance. Subsequent to December 31, 2022, Mr. Cho received a restricted stock
grant equal to $56,000 in shares of Class A Common Stock which vested three (3) months from the date of engagement.
Except as set forth above we do
not currently have employment agreements with any of our NEOs.
Outstanding Equity Awards at the Year End
As of December 31, 2022, there
were no outstanding equity awards for each of the NEOs.
Payments Upon Termination or Change in Control
None of our NEOs are entitled
to receive payments or other benefits upon termination of employment or a change in control.
Retirement Plans
We do not maintain any deferred
compensation, retirement, pension or profit-sharing plans.
Omnibus Equity Incentive Plan
On February 4, 2022, the Company
adopted an incentive plan, which we refer to as the 2022 Plan, the material terms of which are described below.
Key Features
The Yoshiharu Global Co., Inc.
2022 Omnibus Incentive Plan (the “2022 Plan”) includes a number of provisions that promote best practices by reinforcing the
alignment between equity compensation arrangements for eligible employees, non-employee directors and other service providers and stockholders’
interests. These provisions include, but are not limited to, the following (which are qualified in their entirety by the actual text of
the 2022 Plan, which is attached as Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022):
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No Discounted Options or SARs. Stock options and SARs (as defined below) generally may not be granted with exercise prices lower than the market value of the underlying shares on the grant date. |
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No Repricing without Stockholder Approval. Other than in connection with a change in the Company’s capitalization, at any time when the purchase price of a stock option or SAR is above the market value of a share, the Company will not, without stockholder approval, reduce the purchase price of the stock option or SAR and will not exchange the stock option or SAR for a new award with a lower (or no) purchase price or for cash. |
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No Transferability. Awards generally may not be transferred, except as otherwise provided in the 2022 Plan, including by will or the laws of descent and distribution, unless approved by the Board of Directors and/or the Compensation Committee. |
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No Automatic Grants. The 2022 Plan does not provide for automatic grants to any individual. |
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Multiple Award Types. The 2022 Plan permits the issuance of nonstatutory stock options (NSOs), incentive stock options (ISOs), stock appreciation rights (SARs), restricted stock units (RSUs), restricted stock, other stock-based awards, and cash awards. This breadth of award types will enable the Company to tailor awards in light of the accounting, tax, and other standards applicable at the time of grant. |
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Clawbacks. All awards, amounts or benefits received or outstanding under the 2022 Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction or other similar action in accordance with any Company clawback or similar policy or any applicable law related to such actions. |
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Independent Oversight. The 2022 Plan is administered by a committee of independent members of the Board of Directors. |
Material Features of the 2022 Plan
The material terms of the 2022
Plan are summarized below. This summary of the 2022 Plan is not intended to be a complete description of the 2022 Plan and is qualified
in its entirety by the actual text of the 2022 Plan.
Eligibility and Participation.
Awards may be granted under the 2022 Plan to officers, employees, and consultants of the company and its subsidiaries and to non-employee
directors of the Company. Any of these awards may—but need not—be made as performance incentives to reward attainment of performance
goals in accordance with the terms and conditions hereof.
Plan Administration. The
Board of Directors has power and authority related to the administration of the 2022 Plan as are consistent with our corporate governance
documents and applicable law. Pursuant to its charter, the Compensation Committee administers the 2022 Plan.
Type of Awards. The following
types of awards are available for grant under the 2022 Plan: ISOs, NSOs, SARs, restricted stock, RSUs, other stock-based awards, and cash
awards.
Number of Authorized Shares.
The total number of shares authorized to be awarded under the Plan will not exceed 1,500,000 Shares of Class A common stock, or Shares.
Shares issued under the Plan will consist in whole or in part of authorized but unissued Shares, treasury Shares, or Shares purchased
on the open market or otherwise, all as determined by the Company from time to time. Subject to adjustment under Section 15 of the 2022
Plan, 1,500,000 Shares available for issuance under the Plan will be available for issuance as Incentive Stock Options.
Share Counting. Any award
settled in cash will not be counted as Shares for any purpose under the Plan. If any Award expires, or is terminated, surrendered, or
forfeited, in whole or in part, the unissued Shares covered by that award will again be available for the grant of awards. In the case
of any substitute award, such substitute award will not be counted against the number of Shares reserved under the 2022 Plan.
Stock Options and SARs
Grant of Options and SARs.
The Compensation Committee may award ISOs, NSOs (together, “options”), and SARs to grantees under the 2022 Plan. SARs may
be awarded either in tandem with or as a component of other awards or alone.
Exercise Price of Options and
SARs. A SAR will confer on a grantee a right to receive, upon exercise thereof, the excess of (1) the fair market value of one Share
on the date of exercise over (2) the SAR exercise price. The Award Agreement for a SAR (except those that constitute substitute awards)
will specify the SAR Exercise Price, which will be fixed on the grant date as not less than the fair market value of a Share on that date.
A SAR granted in tandem with an outstanding option after the grant date of such option will have a SAR Exercise Price that is equal to
the option price, provided that the SAR Exercise Price may not be less than the fair market value of a Share on the grant date of the
SAR.
Vesting of Options and SARs.
The Board of Directors and/or Compensation Committee will determine the terms and conditions (including any performance requirements)
under which an option or SAR will become exercisable and will include that information in the award agreement.
Special Limitations on ISOs.
An option will constitute an ISO only if the grantee of the option is an employee of the Company or any subsidiary of the Company and
to the extent that the aggregate fair market value (determined at the time the option is granted) of the Shares with respect to which
all ISOs held by such grantee become exercisable for the first time during any calendar year (under the 2022 Plan and all other plans
of the grantee’s employer and its affiliates) does not exceed $100,000. This limitation will be applied by taking options into account
in the order in which they were granted.
Restricted Shares and RSUs
At the time of grant, the Compensation
Committee may establish a period of time and any additional restrictions including the satisfaction of corporate or individual performance
objectives applicable to an award of Restricted Shares or RSUs. Each award of Restricted Shares or RSUs may be subject to a different
restricted period and additional restrictions. Neither Restricted Shares nor RSUs may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the Restricted Period or before the satisfaction of any other applicable restrictions. Unless the Compensation
Committee otherwise provides in an award agreement, holders of Restricted Shares will have rights as stockholders, including voting and
dividend rights.
Other Stock-Based Awards
The Compensation Committee may,
in its discretion, grant other stock-based awards. The terms of other stock-based awards will be set forth in the applicable award agreements,
subject to the 2022 Plan requirements.
Performance Awards
The right of a grantee to exercise
or receive a grant or settlement of any award, and the timing thereof, may be subject to such performance terms conditions as may be specified
by the Compensation Committee. It may use such business criteria and other measures of performance as it may deem appropriate in establishing
any performance terms or conditions.
Effect of Certain Transactions
Adjustments for Changes in
Capitalization. If changes in our common stock occur by reason of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution payable in stock, or other increase or decrease in the
common stock without receipt of consideration by the Company, or if there occurs any spin-off, split-up, extraordinary cash dividend or
other distribution of assets by the Company, the number and kinds of shares for which grants of awards may be made, the number and kinds
of shares for which outstanding awards may be exercised or settled, and the performance goals relating to outstanding awards, will be
equitably adjusted by the Company.
Adjustments for Certain Transactions.
Except as otherwise provided in an award agreement, in the event of a corporate transaction, the 2022 Plan and the awards will continue
in effect in accordance with their respective terms, except that after a corporate transaction either (1) each outstanding award will
be treated as provided for in the agreement entered into in connection with the corporate transaction or (2) if not so provided in such
agreement, each grantee will be entitled to receive in respect of each Share subject to any outstanding awards, upon exercise or payment
or transfer in respect of any award, the same number and kind of stock, securities, cash, property, or other consideration that each stockholder
was entitled to receive in the corporate transaction in respect of one Share. Unless otherwise determined by the Compensation Committee,
such stock, securities, cash, property or other consideration will remain subject to all of the terms and conditions (including performance
criteria) that were applicable to the awards before such corporate transaction. Without limiting the generality of the foregoing, the
treatment of outstanding options and SARs under in connection with a corporate transaction in which the consideration paid or distributed
to the stockholders is not entirely shares of common stock of the acquiring or resulting corporation may include the cancellation of outstanding
options and SARs upon consummation of the corporate transaction as long as, at the election of the Compensation Committee, (A) the holders
of affected options and SARs have been given a period of at least 15 days before the date of the consummation of the corporate transaction
to exercise the options or SARs (to the extent otherwise exercisable) or (B) the holders of the affected options and SARs are paid (in
cash or cash equivalents) in respect of each Share covered by the Option or SAR being canceled an amount equal to the excess, if any,
of the per Share price paid or distributed to stockholders in the corporate transaction (the value of any noncash consideration to be
determined by the Compensation Committee) over the option price or SAR Exercise Price, as applicable.
Change in Control. For
any Awards outstanding as of the date of a change in control, either of the following provisions will apply, depending on whether, and
the extent to which, awards are assumed, converted, or replaced by the resulting entity in a change in control, unless otherwise provided
by an award agreement:
(1) To the extent such awards
are not assumed, converted or replaced by the resulting entity in the change in control, then upon the change in control such outstanding
awards that may be exercised will become fully exercisable, all restrictions with respect to such outstanding awards, other than for performance
awards, will lapse and become vested and nonforfeitable, and for any outstanding performance awards the target payout opportunities attainable
under such awards will be deemed to have been fully earned as of the change in control based upon the greater of (A) an assumed achievement
of all relevant performance goals at the “target” level or (B) the actual level of achievement of all relevant performance
goals against target as of the Company’s fiscal quarter end preceding the change in control.
(2) To the extent such awards
are assumed, converted, or replaced by the resulting entity in the change in control, if, within 24 months after the date of the change
in control, the service provider has a separation from service by the Company other than for cause (which may include a separation from
service by the service provider for “good reason” if provided in the applicable award agreement), then such outstanding awards
that may be exercised will become fully exercisable, all restrictions with respect to such outstanding awards, other than for performance
awards, will lapse and become vested and nonforfeitable, and for any outstanding performance awards the target payout opportunities attainable
under such awards will be deemed to have been fully earned as of the separation from service based on the greater of an assumed achievement
of all relevant performance goals at the “target” level or the actual level of achievement of all relevant performance goals
against target as of the Company’s fiscal quarter end preceding the change in control.
Term of Plan. Unless earlier
terminated by the Board of Directors or the Compensation Committee, the authority to make grants under the 2022 Plan will terminate on
the tenth anniversary of the 2022 Plan’s effective date.
Employee Benefits
All of our full-time employees
are eligible to participate in health and welfare plans maintained by the Company, including:
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medical, dental and vision benefits; and |
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basic life and accidental death & dismemberment insurance. |
Our NEOs participate in these
plans on the same basis as other eligible employees. We do not maintain any supplemental health and welfare plans for our NEOs.
Nonqualified Deferred Compensation
Our NEOs did not earn any nonqualified
deferred compensation benefits from us during the years 2021 and 2022.
Director Compensation
Our employee directors
did not receive any compensation for serving as a member of our Board of Directors during the years ended December 31, 2021 and December
31, 2022. We plan to implement a compensation plan for our non-employee directors, such that non-employee directors will receive
an annual cash retainer and/or an annual grant of stock options. Our committee chairpersons will receive certain additional retainer
fees.
Directors will be reimbursed for
travel, food, lodging and other expenses directly related to their activities as directors, including expenses incurred in attending board
meetings. Directors are also entitled to the protection provided by their indemnification agreements and the indemnification provisions
in our current certificate of incorporation and bylaws, as well as the amended and restated certificate of incorporation.
SUBMISSION OF STOCKHOLDER PROPOSALS
Our Bylaws require advance notice
of any proposal by a stockholder intended to be presented at an annual meeting that is not included in our notice of annual meeting and
proxy statement because it was not timely submitted under the following paragraph, or made by or at the direction of any member of the
Board of Directors, including any proposal for the nomination for election as a director. To be considered for such presentation at this
2023 annual meeting of stockholders, because the 2023 annual meeting of stockholders is the first annual meeting of stockholders being
held, stockholder proposals must be submitted no later than the close of business on [ ], 2023 (ten (10) days after the filing of this
proxy statement).
To be considered for such presentation
at our 2024 annual meeting of stockholders (the “2024 Annual Meeting”), any such stockholder proposal must be received by
the Secretary, Yoshiharu Global Co., 6940 Beach Blvd., Suite D-705, Buena Park, California 90621 not less than ninety (90) days nor more
than one hundred twenty (120) days before the first anniversary of the date on which the corporation held its annual meeting in the immediately
preceding year, and must otherwise comply with applicable rules and regulations of the SEC, including Rule 14a-8 of Regulation 14A under
the Exchange Act, provided that if the 2024 Annual Meeting is scheduled to be held on a date more than thirty (30) days before or more
than seventy (70) days after the anniversary date of the 2023 annual meeting of stockholders, a stockholder’s proposal shall be
timely if delivered to, or mailed to and received by, the Secretary of our company not later than the close of business on the tenth (10th)
day following the day on which public announcement of the date of the 2024 Annual Meeting is first made by us, and in any case discretionary
authority may be used if such proposal is untimely submitted.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who own more than 10% of a registered class
of our equity securities (“Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Based
solely on our review of the reports filed by Reporting Persons, and written representations from certain Reporting Persons that no other
reports were required for those persons, we believe that, during the year ended December 31, 2022, the Reporting Persons met all applicable
Section 16(a) filing requirements.
OTHER MATTERS
We will furnish without charge
to each person whose proxy is being solicited, upon the written request of any such person, a copy of our Annual Report on Form 10-K for
the fiscal year ended December 31, 2022, as filed with the SEC, including the financial statements. Requests for copies of such Annual
Report on Form 10-K should be directed to Yoshiharu Global Co., 6940 Beach Blvd., Suite D-705, Buena Park, California 90621, Attn: Chief
Financial Officer.
Our Board of Directors does not
know of any other matters that are to be presented for action at the Annual Meeting. If any other matters are properly brought before
the Annual Meeting or any adjournments thereof, the persons named in the enclosed proxy will have the discretionary authority to vote
all proxies received with respect to such matters in accordance with their best judgment.
It is important that the proxies
be returned promptly and that your shares are represented at the Annual Meeting. Stockholders are urged to mark, date, execute and promptly
return the accompanying proxy card in the enclosed envelope.
Annex A
CERTIFICATE OF AMENDMENT
TO
THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
YOSHIHARU GLOBAL CO.
Yoshiharu
Global Co. (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation
Law of the State of Delaware (the “DGCL”), does hereby certify:
FIRST.
The Amended and Restated Certificate of Incorporation of the Corporation is hereby amended by changing Article IV, so that, as amended,
Section 4.1 shall become Section 4.1(a) and the following shall be added as Section 4.1(b):
“(b)
Reverse Stock Split. Effective at [ ], Eastern Time, on [ ] (the “Reverse Split Effective Time”), every ([ ])
share of Class A Common Stock issued and outstanding or held by the Corporation as treasury shares as of the Reverse Split Effective Time
shall automatically, and without action on the part of the stockholders, be combined, reclassified and changed into one (1) validly issued,
fully paid and non-assessable share of Class A Common Stock, without effecting a change to the par value per share of Class A Common Stock;
and every ([ ]) share of Class B Common Stock issued and outstanding or held by the Corporation as treasury shares as of the Reverse Split
Effective Time shall automatically, and without action on the part of the stockholders, be combined, reclassified and changed into one
(1) validly issued, fully paid and non-assessable share of Class B Common Stock, without effecting a change to the par value per share
of Class B Common Stock, in each case, subject to the treatment of fractional interests as described below (the “Reverse Split”).
No fractional shares shall be issued in connection with the exchange. In lieu thereof, any person who holds a fraction of one (1) share
of Class A Common Stock or Class B Common Stock after the exchange shall have their fraction of one (1) share rounded up to the nearest
whole fraction of one (1) share of Class A Common Stock or Class B Common Stock, respectively. As of the Split Effective Time and thereafter,
a certificate(s) representing shares of Class A Common Stock or Class B Common Stock prior to the Reverse Split is deemed to represent
the number of post-Reverse Split shares into which the pre-Reverse Split shares were reclassified and combined. The Reverse Split shall
also apply to any outstanding securities or rights convertible into, or exchangeable or exercisable for, Class A Common Stock or Class
B Common Stock of the Corporation and all references to such Class A Common Stock and Class B Common Stock in agreements, arrangements,
documents and plans relating thereto or any option or right to purchase or acquire shares of Class A Common Stock or Class B Common Stock
shall be deemed to be references to the Class A Common Stock or Class B Common Stock, as applicable, or options or rights to purchase
or acquire shares of Class A Common Stock or Class B Common Stock, as the case may be, after giving effect to the Reverse Split.”
SECOND.
That a resolution was duly adopted by unanimous written consent of the directors of the Corporation, pursuant to Section 242 of the DGCL,
setting forth the above mentioned amendment to the Amended and Restated Certificate of Incorporation and declaring said amendment to be
advisable.
THIRD.
That this amendment was duly authorized by the holders of a majority of the voting stock of the Corporation by written consent of the
stockholders of the Corporation. Said amendment was duly adopted in accordance with the provisions of the DGCL.
IN WITNESS
WHEREOF, this Certificate of Amendment of the Amended and Restated Certificate of Incorporation has been signed by the Chief Executive
Officer of the Corporation this ___ day of ______, 202__.
YOSHIHARU
GLOBAL CO. |
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