What changed in Vestand Inc.'s 2023 10-K compared to 2022?

Across the narrative sections we track, Vestand Inc. (VSTD) added 189 paragraphs, removed 184, and edited 150 between the 2022 and 2023 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+73/−69), Item 1A. Risk Factors (+73/−71), Item 1. Business (+41/−43).

Did Vestand Inc. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 73 new/edited paragraphs and 71 removed paragraphs versus the 2022 10-K.

What changed in Vestand Inc.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 73 new/edited paragraphs and 69 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Where does this VSTD 10-K diff come from?

The source filings are Vestand Inc.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Vestand Inc.'s 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of Vestand Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+189 added−184 removedSource: 10-K (2024-04-01) vs 10-K (2023-03-30)

Top changes in Vestand Inc.'s 2023 10-K

189 paragraphs added · 184 removed · 150 edited across 4 sections

Item 7. Management's Discussion & Analysis+73 / −69 · 56 edited
Item 1A. Risk Factors+73 / −71 · 59 edited
Item 1. Business+41 / −43 · 34 edited
Item 5. Market for Registrant's Common Equity+2 / −1 · 1 edited

Item 1. Business

Business — how the company describes what it does

34 edited+7 added−9 removed95 unchanged

2022 filing

2023 filing

Biggest changeWe lease the property for our corporate offices and all of the properties on which we operate our restaurants. 3 The table below shows the locations of our restaurants as of the date of this Report: Store Location Address Year Launched Orange 1891 N Tustin St, Orange, CA 92865 2016 Buena Park 6970 Beach Blvd, #F206 Buena Park, CA 90621 2017 Whittier 8426 Laurel Ave, STE A Whittier, CA 90605 2017 Chino 4004 Grand Ave STE C Chino, CA 91710 2019 Eastvale 4910 Hamner Ave STE 150, Eastvale, CA 91752 2020 Irvine 3935 Portola Pkwy, Irvine, CA 92602 2021 La Mirada 12806 La Mirada Blvd, La Mirada, CA 90638 2022 Cerritos 11533 South St, Cerritos, CA 90703 3Q 2022* 1 Corona 440 N Mckinley St STE 101, Corona, CA 92879 3Q 2022* 2 Garden Grove 9812 Chapman Avenue Garden Grove, CA 92841 4Q 2022* 2 Menifee 27311 Newport Road, Suite 320, Menifee, CA 92584 4Q 2022* 2 Laguna 32341 Golden Lantern, STE B, Laguna Niguel, CA 92677 4Q 2022* 2 San Clemente 638 Camino de Los Mares STE 16, San Clemente, CA 92673 4Q 2022* 2 * 1 Opened in July 2022. * 2 Under construction.

Biggest changeWe lease the property for our corporate offices and all of the properties on which we operate our restaurants. 3 The table below shows the locations of our restaurants as of the date of this Report: Store Location Address Year Launched Orange 1891 N Tustin St, Orange, CA 92865 2016 Buena Park 6970 Beach Blvd, #F206 Buena Park, CA 90621 2017 Whittier 8426 Laurel Ave, STE A Whittier, CA 90605 2017 Chino 4004 Grand Ave STE C Chino, CA 91710 2019 Eastvale 4910 Hamner Ave STE 150, Eastvale, CA 91752 2020 Irvine 3935 Portola Pkwy, Irvine, CA 92602 2021 La Mirada 12806 La Mirada Blvd, La Mirada, CA 90638 2022 Cerritos 11533 South St, Cerritos, CA 90703 2022 Corona 440 N Mckinley St STE 101, Corona, CA 92879 2023 Garden Grove 9812 Chapman Avenue Garden Grove, CA 92841 2023 Laguna 32341 Golden Lantern, STE B, Laguna Niguel, CA 92677 1Q 2024* 1 Menifee 27311 Newport Road, Suite 320, Menifee, CA 92584 2Q 2024* 2 San Clemente 638 Camino de Los Mares STE 16, San Clemente, CA 92673 2Q 2024* 2 Las Vegas 6125 S.

Although historically and as of December 31, 2022, global supply chain disruptions have not materially adversely affected our business, a substantial increase in the cost of, or inability to procure, the food products most critical to our menu, such as canola oil, rice, meats, fish and other seafood, as well as fresh vegetables, could materially and adversely affect our business, financial condition or results from operations.

Although historically, and as of December 31, 2023, global supply chain disruptions have not materially adversely affected our business, a substantial increase in the cost of, or inability to procure, the food products most critical to our menu, such as canola oil, rice, meats, fish and other seafood, as well as fresh vegetables, could materially and adversely affect our business, financial condition or results from operations.

We have developed a remote management system whereby our senior operations team is able to monitor restaurants in real-time from our headquarters using approximately 8 cameras installed in each restaurant. We utilize this remote management system to maintain operational quality while minimizing inefficiencies caused by a lack of economies of scale in new markets.

We have developed a remote management system whereby our senior operations team is able to monitor restaurants in real-time from our headquarters using approximately eight cameras installed in each restaurant. We utilize this remote management system to maintain operational quality while minimizing inefficiencies caused by a lack of economies of scale in new markets.

Managers, supervisors and management trainees are cross-trained throughout the restaurant in order to create competency across critical restaurant functions, both in the dining area and in the kitchen. In addition, our senior operations team monitors restaurants in real-time from our headquarters using our remote management system of approximately 8 cameras installed in each restaurant.

We also believe there is significant opportunity to employ the strategy in new markets with similar demographics across the U.S. and globally. Expansion Strategy We plan to pursue a multi-facet expansion strategy by opening new corporate restaurants in both new and existing markets, as well as utilizing the franchise market.

We also believe there is significant opportunity to employ the strategy in new markets with similar demographics across the U.S. and globally. Expansion Strategy We plan to pursue a multi-facet expansion strategy by opening new corporate restaurants or acquiring existing restaurants in both new and existing markets, as well as utilizing the franchise market.

We are also exploring initiatives to grow sales of alcoholic beverages at our restaurants, including the potential of a larger format restaurant with a sake bar concept. In addition to the strategies stated above, we expect to initiate sales of franchises in 2023 . Increase Profitability .

The Company granted the underwriters a 45-day option to purchase up to 441,000 additional shares (equal to 15% of the shares of class A common stock sold in the IPO) to cover over-allotments, if any, which the underwriters did not exercise.

We granted the underwriters a 45-day option to purchase up to 441,000 additional shares (equal to 15% of the shares of Class A Common Stock sold in the IPO) to cover over-allotments, if any, which the underwriters did not exercise.

Moreover, we believe that slowly cooking the bone broth makes it high in collagen and rich in nutrients. Yoshiharu also strives to present food that is not only healthy, but also affordable. We feed, entertain and delight our customers, with our active kitchens and bustling dining rooms providing happy hours, student and senior discounts, and special holiday events.

Moreover, we believe that slowly cooking the bone broth makes it high in collagen and rich in nutrients. We also strive to present food that is not only healthy, but also affordable. We feed, entertain and delight our customers, with our active kitchens and bustling dining rooms providing happy hours, student and senior discounts, and special holiday events.

The representative’s warrants will be exercisable at any time and from time to time, in whole or in part, during the four-and-½-year period commencing six months from the date of commencement of the sales of the shares of Class A common stock in connection with the IPO, at an initial exercise price per share of $5.00 (equal to 125% of the initial public offering price per share of class A common stock).

The representative’s warrants are exercisable at any time and from time to time, in whole or in part, during the four-and-½-year period commencing six months from the date of commencement of the sales of the shares of Class A Common Stock in connection with the IPO, at an initial exercise price per share of $5.00 (equal to 125% of the initial public offering price per share of Class A Common Stock).

In addition, the Company issued to the representative of the underwriters warrants to purchase a number of shares of class A common stock equal to 5.0% of the aggregate number of shares of Class A common stock sold in the IPO (including shares of Class A common stock sold upon exercise of the over-allotment option).

In addition, we issued to the representative of the underwriters warrants to purchase a number of shares of Class A Common Stock equal to 5.0% of the aggregate number of shares of Class A Common Stock sold in the IPO (including shares of Class A Common Stock sold upon exercise of the over-allotment option).

Combining the broth with the fresh, savory, and highest-quality ingredients, Yoshiharu serves the perfect, ideal ramen, as well as offers customers a wide variety of sushi rolls, bento menu and other favorite Japanese cuisine. Our acclaimed signature Tonkotsu Black Ramen has become a customer favorite with its slow cooked pork bone broth and freshly made, tender chashu (braised pork belly).

Combining the broth with the fresh, savory, and highest-quality ingredients, we serve the perfect, ideal ramen, as well as offers customers a wide variety of sushi rolls, bento menu and other favorite Japanese cuisine. Our acclaimed signature Tonkotsu Black Ramen has become a customer favorite with its slow cooked pork bone broth and freshly made, tender chashu (braised pork belly).

We have been able to offset to some extent these inflationary and other cost pressures through actions such as increasing menu prices and supply chain initiatives, however, we expect these inflationary and other cost pressures to continue into year 2023. Our Strengths Experienced Management Team Dedicated to Growth .

We have been able to offset to some extent these inflationary and other cost pressures through actions such as increasing menu prices and supply chain initiatives, however, we expect these inflationary and other cost pressures to continue into the year 2024. Our Strengths Experienced Management Team Dedicated to Growth .

We believe our see-through kitchens reflecting the cooks preparing first hand meals, amplify the lively bustle provided by the great casual atmosphere, and serve to highlight the ambiance of getting great food in a modern Japanese style ambiance. 5 Construction Construction of a new restaurant takes approximately 12 to 24 weeks once construction permits (e.g., Health and City) are issued.

As described under Site Selection Process, we use a systematic approach to identify and review existing and new markets. Upon selecting a new market, we typically build one restaurant to prove concept viability in that market.

As described under the heading Site Selection Process above, we use a systematic approach to identify and review existing and new markets. Upon selecting a new market, we typically build one restaurant to prove concept viability in that market.

Item 1. Business. Overview of Yoshiharu Yoshiharu is a fast-growing Japanese restaurant operator and was borne out the idea of introducing the modernized Japanese dining experience to customers all over the world.

Item 1. Business. Overview of Yoshiharu We are a fast-growing Japanese restaurant operator and was borne out of the idea of introducing the modernized Japanese dining experience to customers all over the world.

For a discussion of the various risks we face from regulation and compliance matters, see “ Risk Factors .” Intellectual Property and Trademarks Yoshiharu Holdings Co., our wholly owned subsidiary, owns a number of patents, trademarks and service marks registered or pending with the U.S. Patent and Trademark Office (“PTO”).

At Yoshiharu, we believe our rapid customer turnover, combined with our ability to deliver in 2 major dayparts with lunch and dinner, allows for robust and efficient sales in each of our restaurants. Our average unit volume (“AUV”, as defined herein) was $1.2 million in 2021 and $1.2 million in 2022. Quality of Food and Excellence in Customer Service.

At Yoshiharu, we believe our rapid customer turnover, combined with our ability to deliver in 2 major day parts with lunch and dinner, allows for robust and efficient sales in each of our restaurants. Our average unit volume (“AUV”, as defined herein) was $1.2 million in 2022 and $1.1 million in 2023. Quality of Food and Excellence in Customer Service.

The standard restaurants will be built using our current layout and design which we believe evokes a modern and on-trend Japanese dining atmosphere. The second layout is the larger plan where we will utilize a full service restaurant and bar. We believe the new layout achieves this atmosphere.

The standard restaurants will be built using our current layout and design which we believe evokes a modern and on-trend Japanese dining atmosphere. The second layout is a larger floor plan where we will utilize a full service restaurant and bar.

The Company has registered the following marks with the PTO: YOSHIHARU RAMEN (Trademark Reg. No. 5030823) and Design Mark YOSHIHARU RAMEN (Trademark Reg. No. 5045588). In addition, we have registered the Internet domain name www.yoshiharuramen.com. The information on, or that can be accessed through, our website is not part of this Report.

No. 5030823) and Design Mark YOSHIHARU RAMEN (Trademark Reg. No. 5045588). In addition, we have registered the Internet domain name www.yoshiharuramen.com. The information on, or that can be accessed through, our website is not part of this Report.

Seasonality Due to Yoshiharu’s menu breadth and diversification of offerings, we do not experience significant seasonality. Employees As of December 31, 2022 , we had approximately 130 employees, of whom 24 were exempt employees and the remainder were non-exempt employees.

Seasonality Due to Yoshiharu’s menu breadth and diversification of offerings, we do not experience significant seasonality. Employees As of December 31, 2023, we had approximately 180 employees, of whom 20 were exempt employees and the remainder were non-exempt employees.

We have pursued a disciplined new corporate owned growth strategy. Having expanded our concept and operating model across varying restaurant sizes and geographies, we plan to leverage our expertise opening new restaurants to fill in existing markets and expand into new geographies.

Having expanded our concept and operating model across varying restaurant sizes and geographies, we plan to leverage our expertise opening new restaurants to fill in existing markets and expand into new geographies.

Specializing in Japanese ramen, Yoshiharu gained recognition as a leading ramen restaurant in Southern California within six months of our 2016 debut and has continued to expand our top-notch restaurant service across Southern California, currently operating 8 restaurants with an additional 5 new restaurant stores under construction/development and an additional 6 restaurant stores expected to open in 2023.

Specializing in Japanese ramen, we gained recognition as a leading ramen restaurant in Southern California within six months of our 2016 debut and have continued to expand our top-notch restaurant service across Southern California, currently operating ten restaurants with an additional three new restaurant stores under construction/development.

Properties As of June 30, 2022, we operated 7 restaurants in California and opened 1 new location in July 2022 in California. We operate a variety of restaurant formats, including in-line and end-cap restaurants located in retail centers of varying sizes. Our restaurants currently average approximately 1,578 square feet.

Properties As of December 31, 2023, we operated ten restaurants in California and opened one new location in February 2024 in California. We operate a variety of restaurant formats, including in-line and end-cap restaurants located in retail centers of varying sizes. Our restaurants currently average approximately 1,578 square feet.

We do not own any real property. We opened one restaurant in each year from 2019 through 2021, and we have opened two restaurants so far in 2022. We currently have 5 new locations under construction/development, and we expect to begin operations of the 5 new locations in 2023.

We do not own any real property. We opened one restaurant in each year from 2019 through 2021, and we have opened two restaurants in 2022 and 2023. We also opened a new restaurant in February 2024, and currently have two new locations under construction/development.

We place a premium on serving high-quality, authentic Japanese cuisine. We believe in customer convenience and satisfaction and have created strong, loyal and repeat customers who help expand the Yoshiharu network to their friends, family and co-workers. Flexibility to Pivot to Online and Delivery.

We cannot provide assurance that we will be able to open any specific number of restaurants in any year.

In 2019, we closed our West Hollywood and Lynwood, California restaurants due to underperformance. We cannot provide assurance that we will be able to open any specific number of restaurants in any year.

These requirements may be different or inconsistent with requirements that we are subject to under the ACA, which establishes a uniform, federal requirement for certain restaurants to post nutritional information on their menus.

These requirements may be different or inconsistent with requirements that we are subject to under the the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act, (collectively, the “ACA,”), which establishes a uniform, federal requirement for certain restaurants to post nutritional information on their menus.

We believe we have experienced higher costs due to increased commodity prices and challenges sourcing our supplies due in part to global supply chain disruptions.

Supply Chain Disruption and Inflation Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs, especially in light of recent supply chain disruptions. We believe we have experienced higher costs due to increased commodity prices and challenges sourcing our supplies due in part to global supply chain disruptions.

As a result of our vision, customers can comfortably enjoy our food in a friendly and welcoming atmosphere. In September 2022, the Company consummated its initial public offering (the “IPO”) of 2,940,000 shares of its class A common stock at a public offering price of $4.00 per share, generating gross proceeds of $11,760,000.

In September 2022, we consummated our initial public offering (the “IPO”) of 2,940,000 shares of our Class A common stock, par value $0.0001 per share (“Class A Common Stock”) at a public offering price of $4.00 per share, generating gross proceeds of $11,760,000.

Full-service restaurant sales are expected to increase to $289 billion in calendar year 2022, an increase of 10.9% from 2021 and the limited-service segment is forecast to reach $355 billion in 2022, resulting in a 7.9% increase from 2021.

The limited-service segment generated approximately $370 billion in calendar year 2022, or a roughly $30 billion increase from the prior year. 7 According to the 2023 State of the Restaurant report, full-service restaurant sales are expected to increase to $324 billion in calendar year 2023, an increase of 6.2% from 2022 and the limited-service segment is forecast to reach $395 billion in 2023, resulting in a 6.8% increase from 2022.

We take pride in our warm, hearty, smooth, and rich bone broth, which is slowly boiled for over 12 hours. Customers can taste and experience supreme quality and deep flavors.

Further, we entered into a material definitive agreement to acquire three existing restaurants in Las Vegas and expect to complete the acquisition in early second quarter 2024. We take pride in our warm, hearty, smooth, and rich bone broth, which is slowly boiled for over twelve hours. Customers can taste and experience supreme quality and deep flavors.

We primarily compete with other full-service restaurants, which, according to the NRA, had approximately $285 billion of sales in calendar year 2019, prior to the onset of the COVID-19 pandemic, and an increase of 3.8% over 2019. The limited-service segment generated $309 billion in calendar year 2019, or 3.2% over the prior year.

We primarily compete with other full-service restaurants, which, according to the NRA, had approximately$305 billion of sales in calendar year 2022, up from $266 billion in 2021.

The Company anticipates approximately $350,000 in costs per a new location in development, and has spent approximately $490,000 for the 5 locations under construction/development as of December 31, 2022.

Further, we entered into a material definitive agreement to acquire three existing restaurants in Las Vegas and expect to close the acquisition in the early second quarter of 2024. We anticipate approximately $350,000 in costs per new location in development, and has spent approximately $514,000 for the two locations under construction/development as of December 31, 2023.

Restaurant Industry Overview According to the National Restaurant Association (the “NRA”), U.S. restaurant industry sales in calendar year 2021 were $799.0 billion and are expected to grow at a growth rate of 12.4% to $898 billion in calendar year 2022 and reach $997 billion in calendar year 2023.

Restaurant Industry Overview According to the National Restaurant Association (the “NRA”), restaurant industry sales in 2023 were over $1.0 trillion, up from $966 billion in 2022 and is forecast to grow to $1.1 trillion in 2024.

Removed

No representative’s warrants have been exercised. On September 9, 2022, the Company’s stock began trading on the Nasdaq Capital Market under the symbol “YOSH.” Supply Chain Disruption and Inflation Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs, especially in light of recent supply chain disruptions.

Added

As a result of our vision, customers can comfortably enjoy our food in a friendly and welcoming atmosphere.

Removed

During the onset of the Covid-19 pandemic, we were able to efficiently transition from primarily in-store sales to a diversified mix of channels including takeout and delivery. As our customers’ habits adapt post-pandemic, we intend to invest further in our delivery and takeout programs, which currently rely on third-party providers. . 2 Our Growth Strategies Pursue New Restaurant Development.

Added

On September 9, 2022, the our Class A Common Stock began trading on the Nasdaq Capital Market under the symbol “YOSH.” On November 22, 2023, we filed a Certificate of Amendment (the “Certificate of Amendment”) to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our Class A Common Stock and Class B common stock, par value $0.0001 per share (“Class B Common Stock” and, together with Class A common Stock, “Common Stock”), in the ratio of 1-for-10 (the “Reverse Stock Split”) effective at 11:59 p.m. eastern on November 27, 2023.

Removed

Also, we are expecting to open an additional 6 new restaurants in 2023 by utilizing the net proceeds from the IPO. With respect to the 5 new locations under construction/development, the Company has entered into construction agreements with various developers for certain tenant improvements to the store locations in Corona, Garden Grove, Menifee, Laguna Niguel and San Clemente.

Added

The Class A Common Stock began trading on a split-adjusted basis at the market open on Tuesday, November 28, 2023. No fractional shares were issued as a result of the Reverse Stock Split. Instead, any fractional shares that would have resulted from the Reverse Stock Split were rounded up to the next whole number.

Removed

We have finalized site selection for 6 of the upcoming 2023 restaurants for the following sites in Southern California: Cypress, Santa Ana, Ontario, Dana Point and Tustin; and one location in Washington: Seattle.

Added

As a result, a total of 34,846 shares of Class A Common Stock were issued and total of 1,230,246 shares of Class A Common Stock were outstanding as of December 31, 2023.

Removed

We have executed commercial lease terms for Cypress, and we are in the process of negotiating a lease agreement for Santa Ana, Ontario, Tustin, Dana Point and Seattle. Site selection is ongoing for the other upcoming locations.

Added

The Reverse Stock Split affects all stockholders uniformly and did not alter any stockholder’s percentage interest in our outstanding Common Stock, except for adjustments that may result from the treatment of fractional shares. The number of authorized shares of Common Stock and number of authorized, issued, and outstanding shares of the preferred stock were not changed.

Removed

Assuming the Company is successful in opening the 11 locations in 2023 as set forth above, based on the anticipated development costs of the 1 location, the total anticipated costs of opening the11 locations in 2023 is approximately $3.4 million. In 2019, we closed West Hollywood and Lynwood, California restaurants due to underperformance.

Added

Fort Apache Road, Suite 200, Las Vegas, NV 89148 1Q 2024* 3 Las Vegas 280 E Flamingo Road, Suite C, Las Vegas, NV 89169 1Q 2024* 3 Las Vegas 6572 N Decatur Blvd., Las Vegas, NV 89131 1Q 2024* 3 * 1 Opened in February 2024. * 2 Under construction. * 3 Under closing process.

Removed

COVID-19 had a material impact on consumer spending at restaurants in 2020, resulting in a decrease compared to the prior year. 7 However, for 2021, full-service restaurant sales increased to $261 billion in calendar year 2021, an increase of 31.2% over 2020, while limited-service restaurants generated $329 billion in sales, or 10.8% over the prior year due to rising vaccination numbers and consumers’ pent-up demand.

Added

According to the National Restaurant Association 2023 State of the Industry report, roughly 45% of family and casual dining restaurants plan to add new menu items identified as healthy or nutritious in 2023.

Removed

According to the National Restaurant Association 2019 State of the Industry report, more than 60% of customers cite the availability of healthy menu options as a key factor in restaurant choice when eating out.

Removed

In addition, as referenced in the same report, ethnic spices, ethnic condiments, and Asian soups were among the projected top 25 food trends for limited-service restaurants in calendar year 2019 .

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

59 edited+14 added−12 removed189 unchanged

2022 filing

2023 filing

Biggest changeIn addition to the COVID-19 pandemic, the United States may experience in the future, outbreaks of other viruses, such as norovirus, the bird/avian flu or other diseases. As we have experienced with the COVID-19 pandemic, if a regional or global health pandemic occurs, depending upon its location, duration and severity, our business could be severely affected.

Biggest changeAs we have experienced with the COVID-19 pandemic, if a regional or global health pandemic occurs, depending upon its location, duration and severity, our business could be severely affected. Risks Related to Our Brand Negative publicity relating to one of our restaurants could reduce sales at some or all of our other restaurants.

If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and other items at our restaurants, which could cause a restaurant to remove items from its menu.

We do not own any real property. Payments under our operating leases account for a significant portion of our operating expenses and we expect the new restaurants we open in the future will similarly be leased. The majority of our operating leases have lease terms of 10 years, inclusive of customary extensions which are at the option of the Company.

These potential changes in food and supply costs could materially adversely affect our business, financial condition or results of operations. 17 Our operations may be subject to the effects of a rising rate of inflation which may adversely impact our financial condition and results of operations.

These potential changes in food and supply costs could materially adversely affect our business, financial condition or results of operations. Our operations may be subject to the effects of a rising rate of inflation which may adversely impact our financial condition and results of operations.

The damage may be immediate without affording us an opportunity for redress or correction. 15 Additionally, employee claims against us based on, among other things, wage and hour violations, discrimination, harassment or wrongful termination may also create negative publicity that could adversely affect us and divert our financial and management resources that would otherwise be used to benefit the future performance of our operations.

The damage may be immediate without affording us an opportunity for redress or correction. 17 Additionally, employee claims against us based on, among other things, wage and hour violations, discrimination, harassment or wrongful termination may also create negative publicity that could adversely affect us and divert our financial and management resources that would otherwise be used to benefit the future performance of our operations.

We are experiencing problems in recruiting and retaining employees, and our ability to recruit and retain such individuals may delay the planned openings of new restaurants or result in higher employee turnover in existing restaurants, which could have a material adverse effect on our business, financial condition or results of operations. 19 If we are unable to recruit and retain sufficiently qualified individuals, our business and our growth could be adversely affected, thereby adversely affecting or business, financial condition or results of operations.

We are experiencing problems in recruiting and retaining employees, and our ability to recruit and retain such individuals may delay the planned openings of new restaurants or result in higher employee turnover in existing restaurants, which could have a material adverse effect on our business, financial condition or results of operations. 21 If we are unable to recruit and retain sufficiently qualified individuals, our business and our growth could be adversely affected, thereby adversely affecting or business, financial condition or results of operations.

Although historically and as of December 31, 2023, global supply chain disruptions have not materially adversely affected our business, a substantial increase in the cost of, or inability to procure, the food products most critical to our menu, such as canola oil, rice, meats, fish and other seafood, as well as fresh vegetables, could materially and adversely affect our business, financial condition or results from operations.

Any future actions if brought against us and successful in whole or in part, may affect our ability to compete or could materially adversely affect our business, financial condition or results of operations. 18 The minimum wage, particularly in California, continues to increase and is subject to factors outside of our control.

Any future actions if brought against us and successful in whole or in part, may affect our ability to compete or could materially adversely affect our business, financial condition or results of operations. 20 The minimum wage, particularly in California, continues to increase and is subject to factors outside of our control.

The level of comparable restaurant sales growth, which represents the change in year-over-year sales for restaurants open for at least 3 months, could affect our sales growth. Our ability to increase comparable restaurant sales depends in part on our ability to successfully implement our initiatives to build sales.

The level of comparable restaurant sales growth, which represents the change in year-over-year sales for restaurants open for at least three months, could affect our sales growth. Our ability to increase comparable restaurant sales depends in part on our ability to successfully implement our initiatives to build sales.

During the pandemic and as of December 31, 2022 , construction permits have been significantly delayed, causing us to incur lease payments prior to the opening of such locations, which means prior to the generation of any revenues from such stores.

During the pandemic and as of December 31, 2023, construction permits have been significantly delayed, causing us to incur lease payments prior to the opening of such locations, which means prior to the generation of any revenues from such stores.

A delay in construction permits has had a direct impact on our ability to open our 3 stores currently under construction/development. We are also making lease payments on all 3 of such stores.

A delay in construction permits has had a direct impact on our ability to open our three stores currently under construction/development. We are also making lease payments on all three of such stores.

We could also become subject to fines, penalties and other costs related to claims that we did not fully comply with all recordkeeping obligations of federal and state immigration compliance laws. These factors could materially adversely affect our business, financial condition or results of operations. Compliance with environmental laws may negatively affect our business.

Item 1A. Risk Factors. Our long-term success is highly dependent on our ability to successfully identify and secure appropriate sites and timely develop and expand our operations in existing and new markets. One of the key means of achieving our growth strategies will be through opening and operating new restaurants on a profitable basis for the foreseeable future.

Our long-term success is highly dependent on our ability to successfully identify and secure appropriate sites and timely develop and expand our operations in existing and new markets. One of the key means of achieving our growth strategies will be through opening and operating new restaurants on a profitable basis for the foreseeable future.

We have a substantial number of hourly employees who are paid wage rates based on the applicable federal or state minimum wage. Since January 1, 2022, the State of California has a minimum wage of $15.00 per hour. Moreover, municipalities may set minimum wages above the applicable state standards, including in the municipalities in which we operate.

We have a substantial number of hourly employees who are paid wage rates based on the applicable federal or state minimum wage. Since January 1, 2023, the State of California has a minimum wage of $15.50 per hour. Moreover, municipalities may set minimum wages above the applicable state standards, including in the municipalities in which we operate.

In September 2022, the Company consummated its initial public offering (the “IPO”) of 2,940,000 shares of its class A common stock at a public offering price of $4.00 per share, generating gross proceeds of $11,760,000. Net proceeds from the IPO were approximately $10.3 million after deducting underwriting discounts and commissions and other offering expenses of approximately $1.5 million.

In September 2022, we consummated our IPO (the “IPO”) of 2,940,000 shares of Class A Common Stock at a public offering price of $4.00 per share, generating gross proceeds of $11,760,000. Net proceeds from the IPO were approximately $10.3 million after deducting underwriting discounts and commissions and other offering expenses of approximately $1.5 million.

There can be no assurance that construction permits will be timely obtained on future stores, or that they will ever be obtained (including with respect to the 3 stores under construction/development).

There can be no assurance that construction permits will be timely obtained on future stores, or that they will ever be obtained (including with respect to the two restaurants under construction/development).

To meet our capital needs, we expect to rely on equipment financing and facility improvements, cash flows from operations, the proceeds from the IPO, future offerings and other third-party financing. Third-party financing in the future may not, however, be available on terms favorable to us, or at all.

Developing our business will require significant capital in the future. To meet our capital needs, we expect to rely on equipment financing and facility improvements, cash flows from operations, the proceeds from the IPO, future offerings and other third-party financing. Third-party financing in the future may not, however, be available on terms favorable to us, or at all.

Any future failure to comply with these regulations and obtain or retain liquor licenses could adversely affect our business, financial condition or results of operations. 25 If we fail to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in our company.

Any future failure to comply with these regulations and obtain or retain liquor licenses could adversely affect our business, financial condition or results of operations. 25 Risks Related to Our Organizational Structure & Ownership of Our Common Stock If we fail to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in our company.

The Company, from time to time, has received borrowings from a related party controlled by James Chae, the Company’s Chairman and Chief Executive Officer, which may become repayable on demand. Any unexpected calls for repayment of a significant amount of such borrowings may adversely affect our business.

We have, from time to time, received borrowings from a related party controlled by James Chae, our Chairman and Chief Executive Officer, which may become repayable on demand. Any unexpected calls for repayment of a significant amount of such borrowings may adversely affect our business.

Factors that may result in declining visitor rates include economic or political conditions, anchor tenants closing in retail centers or shopping malls in which we operate, changes in consumer preferences or shopping patterns, changes in discretionary consumer spending, increasing petroleum prices, or other factors, which may adversely affect our business, financial condition or results of operations.

The capital resources required to develop each new restaurant are significant. On average, we estimate that our restaurants require a cash build-out cost of approximately $350,000-$550,000 per restaurant, net of landlord tenant improvement allowances and pre-opening costs and assuming that we do not purchase the underlying real estate.

On average, we estimate that our restaurants require a cash build-out cost of approximately $350,000-$550,000 per restaurant, net of landlord tenant improvement allowances and pre-opening costs and assuming that we do not purchase the underlying real estate.

The occurrence of a similar incident at one or more of our restaurants, or negative publicity or public speculation about an incident, could materially adversely affect our business, financial condition or results of operations. Governmental regulation may adversely affect our ability to open new restaurants or otherwise adversely affect our business, financial condition or results of operations.

We plan to continue to increase the number of our restaurants in the next several years as part of our expansion strategy and expect to open an additional 6 new restaurants in 2023 by utilizing the net proceeds from the IPO. We may in the future open restaurants in markets where we have little or no operating experience.

We plan to continue to increase the number of our restaurants in the next several years as part of our expansion strategy and expect to open an additional two to four new restaurants in 2024. We may in the future open restaurants in markets where we have little or no operating experience.

Further, environmental laws, and the administration, interpretation and enforcement thereof, are subject to change and may become more stringent in the future, each of which could materially adversely affect our business, financial condition or results of operations. Changes in economic conditions could materially affect our ability to maintain or increase sales at our restaurants or open new restaurants.

Our limited number of restaurants, the significant expense associated with opening new restaurants, and the unit volumes of our new restaurants makes us susceptible to significant fluctuations in our results of operations. As of December 31, 2021 and 2022 , we operated 6 and 8 restaurants, respectively. We opened one new restaurant in 2019 and one new restaurant in 2020.

Our limited number of restaurants, the significant expense associated with opening new restaurants, and the unit volumes of our new restaurants makes us susceptible to significant fluctuations in our results of operations. As of December 31, 2022 and 2023, we operated eight and ten restaurants, respectively.

Opening new restaurants in existing markets may negatively affect sales at our existing restaurants. The consumer target area of our restaurants varies by location, depending on a number of factors, including population density, other local retail and business attractions, area demographics and geography.

The consumer target area of our restaurants varies by location, depending on a number of factors, including population density, other local retail and business attractions, area demographics and geography.

The Company, from time to time, has received unsecured borrowings from James Chae and his affiliate APIIS Financial, Inc., a company 100% owned and controlled by our Chairman and Chief Executive Officer, Mr. Chae, which is unsecured, non-interest bearing, and is repayable on demand.

We have, from time to time, have received unsecured borrowings from James Chae and his affiliate APIIS Financial, Inc., a company 100% owned and controlled by our Chairman and Chief Executive Officer, Mr. Chae, which is unsecured, non-interest bearing, and is repayable on demand. As of December 31, 2023 and December 31, 2022, the balance was $24,720 and $172,720, respectively.

Continued supply chain disruptions and other forces beyond our control, and resulting changes in food and supply costs have and could continue to adversely affect our business, financial condition or results of operations. Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs, especially in light of recent supply chain disruptions.

These disruptions could materially adversely affect our business, financial condition or results of operations. 15 Continued supply chain disruptions and other forces beyond our control, and resulting changes in food and supply costs have and could continue to adversely affect our business, financial condition or results of operations.

We believe we have experienced higher costs due to increased commodity prices and challenges sourcing our supplies due in part to global supply chain disruptions. For example, we believe that the cost of certain essential supplies (i.e. gloves and canola oil) has increased as a result of lower supply attributable to supply chain disruptions.

For example, we believe that the cost of certain essential supplies (i.e. gloves and canola oil) has increased as a result of lower supply attributable to supply chain disruptions.

As of the filing date of this Annual Report on Form 10-K, all of our restaurants are operating at 100% indoor dining capacity; however, there can be no assurance that developments with respect to the COVID-19 pandemic and government measures taken to control it will not adversely affect our operations and financial results. 27 Additionally, consumer behavior has changed and may fundamentally change as a result of COVID-19 in both the near and long term and such change may pose significant challenges to our current service and business models.

As of December 31, 2022 and December 31, 2021, the balance was $172,720 and $ 1,448,913, respectively. If James Chae or his affiliate APIIS Financial, Inc. chooses to call for repayment of a significant of such borrowings, the Company may need to use the net proceeds from the IPO, which may adversely impact our operations.

If James Chae or his affiliate APIIS Financial, Inc. chooses to call for repayment of a significant of such borrowings, we may need to use the net proceeds from the IPO, which may adversely impact our operations.

Our ability to maintain consistent price and quality throughout our restaurants depends in part upon our ability to acquire specified food products and supplies in sufficient quantities from third-party vendors and suppliers at a reasonable cost.

We rely significantly on certain vendors and suppliers, which could adversely affect our business, financial condition or results of operations. Our ability to maintain consistent price and quality throughout our restaurants depends in part upon our ability to acquire specified food products and supplies in sufficient quantities from third-party vendors and suppliers at a reasonable cost.

Any such claim or proceeding could cause us to incur significant unplanned expenses, which could have an adverse impact on our business, financial condition or results of operations.

Any such claim or proceeding could cause us to incur significant unplanned expenses, which could have an adverse impact on our business, financial condition or results of operations. Further, adverse publicity resulting from these allegations may have a material adverse effect on us and could substantially affect our reputation and business, financial condition or results of operations.

To date, notwithstanding the current supply chain disruptions which we believe have attributed to increased costs, deliveries have been consistent and not a source of material disruption to our business.

Our ability to maintain our menu depends in part on our ability to acquire ingredients that meet our specifications from reliable suppliers. To date, notwithstanding the current supply chain disruptions which we believe have attributed to increased costs, deliveries have been consistent and not a source of material disruption to our business.

In addition, federal, state and local proposals related to paid sick leave or similar matters could, if implemented, materially adversely affect our business, financial condition or results of operations. 16 We rely significantly on certain vendors and suppliers, which could adversely affect our business, financial condition or results of operations.

In addition, federal, state and local proposals related to paid sick leave or similar matters could, if implemented, materially adversely affect our business, financial condition or results of operations. 23 Compliance with environmental laws may negatively affect our business.

We also continue to invest in other digital marketing initiatives that allow us to reach our guests across multiple digital channels and build their awareness of, engagement with, and loyalty to our brand. These initiatives may not be successful, resulting in expenses incurred without the benefit of higher sales or increased brand recognition.

Additionally, any changes we may make to the services we obtain from our vendors, or new vendors we employ, may disrupt our operations. These disruptions could materially adversely affect our business, financial condition or results of operations.

Additionally, any changes we may make to the services we obtain from our vendors, or new vendors we employ, may disrupt our operations.

The imposition of menu labeling laws and an inability to keep up with consumer eating habits could materially adversely affect our business, financial condition or results of operations, as well as our position within the restaurant industry in general. Failure to comply with antibribery or anticorruption laws could adversely affect our reputation, business, financial condition or results of operations.

The imposition of menu labeling laws and an inability to keep up with consumer eating habits could materially adversely affect our business, financial condition or results of operations, as well as our position within the restaurant industry in general. 19 We rely significantly on information technology, and any material failure, weakness, interruption or breach of security could prevent us from effectively operating our business.

These requirements may be different or inconsistent with requirements we are subject to under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act, collectively, the “ACA,” which establishes a uniform, federal requirement for certain restaurants to post nutritional information on their menus.

These requirements may be different or inconsistent with requirements we are subject to under the ACA which establishes a uniform, federal requirement for certain restaurants to post nutritional information on their menus.

We are subject to various federal, state and local regulations. Our restaurants are subject to state and local licensing and regulation by health, alcoholic beverage, sanitation, food and occupational safety and other agencies.

Governmental regulation may adversely affect our ability to open new restaurants or otherwise adversely affect our business, financial condition or results of operations. We are subject to various federal, state and local regulations. Our restaurants are subject to state and local licensing and regulation by health, alcoholic beverage, sanitation, food and occupational safety and other agencies.

We could face difficulties to obtain a sufficient and consistent supply of these ingredients on a cost-effective basis. Labor disputes may disrupt our operations and affect our profitability, thereby causing a material adverse effect on our business, financial condition or results of operations.

Labor disputes may disrupt our operations and affect our profitability, thereby causing a material adverse effect on our business, financial condition or results of operations.

Further, adverse publicity resulting from these allegations may have a material adverse effect on us and could substantially affect our reputation and business, financial condition or results of operations. 23 In addition, our business requires the collection, transmission and retention of large volumes of guest and employee data, including personally identifiable information, in various information technology systems that we maintain and in those maintained by third parties with whom we contract to provide services.

In addition, our business requires the collection, transmission and retention of large volumes of guest and employee data, including personally identifiable information, in various information technology systems that we maintain and in those maintained by third parties with whom we contract to provide services.

Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. The ongoing COVID-19 pandemic has adversely affected, and may continue to adversely affect, our operations, financial condition, liquidity and financial results.

Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. 27

Construction/development of a new restaurant takes approximately 3 - 6 months once construction permits (e.g., Health and City) are issued. Prior to the COVID-19 pandemic, permits took approximately 2 months to obtain.

We typically are able to negotiate approximately 6 months to complete a construction/development of our stores before we have to make our first lease payment. Construction/development of a new restaurant takes approximately three - six months once construction permits (e.g., Health and City) are issued. Prior to the COVID-19 pandemic, permits took approximately two months to obtain.

Negative publicity relating to one of our restaurants could reduce sales at some or all of our other restaurants. Our success is dependent in part upon our ability to maintain and enhance the value of our brand and consumers’ connection to our brand.

Our success is dependent in part upon our ability to maintain and enhance the value of our brand and consumers’ connection to our brand.

We believe that expected cash flow from operations and the proceeds from the IPO will be adequate to fund operating lease obligations, capital expenditures and working capital obligations for at least the next 12 months and thereafter. 13 We depend on our senior management team and other key employees, and the loss of one or more key personnel or an inability to attract, hire, integrate and retain highly skilled personnel could have an adverse effect on our business, financial condition or results of operations.

Risks Related to Our People and Culture We depend on our senior management team and other key employees, and the loss of one or more key personnel or an inability to attract, hire, integrate and retain highly skilled personnel could have an adverse effect on our business, financial condition or results of operations.

We opened one new restaurant in 2020, and one new restaurant in 2021, and two new restaurants in 2022. We currently have 5 new locations under construction/development, and we expect to open an additional 6 new restaurants in 2023 .

We opened two new restaurants in 2022 and in 2023, respectively, and opened one new restaurant in February 2024. We currently have two new locations under construction/development, and expect to complete the acquisition of three existing restaurants in the early second quarter of 2024. We also plan to open an additional two to four new restaurants in 2024.

The U.S. Foreign Corrupt Practices Act and other similar applicable laws prohibiting bribery of government officials and other corrupt practices are the subject of increasing emphasis and enforcement around the world.

Risks Related to Regulation and Litigation Failure to comply with antibribery or anticorruption laws could adversely affect our reputation, business, financial condition or results of operations. The U.S. Foreign Corrupt Practices Act and other similar applicable laws prohibiting bribery of government officials and other corrupt practices are the subject of increasing emphasis and enforcement around the world.

Reductions in staff levels, asset impairment charges and potential restaurant closures could result from prolonged negative restaurant sales, which could materially adversely affect our business, financial condition or results of operations. 20 New information or attitudes regarding diet and health could result in changes in regulations and consumer consumption habits that could adversely affect our business, financial condition or results of operations.

Reductions in staff levels, asset impairment charges and potential restaurant closures could result from prolonged negative restaurant sales, which could materially adversely affect our business, financial condition or results of operations. 16 We may need capital in the future, and we may not be able to raise that capital on favorable terms.

We have made adjustments to our restaurant operations due to the COVID-19 pandemic and may have to re-design our service and business models to accommodate consumers’ changed behavior patterns. Any such attempted effort could result in capital expenditures, business disruption and lower margin sales, and may not be successful in growing our profitability.

All of this could materially and adversely impact sales at our restaurants and our growth prospects. We have made adjustments to our restaurant operations due to the COVID-19 pandemic and may have to re-design our service and business models to accommodate consumers’ changed behavior patterns.

Failure to receive frequent deliveries of fresh food ingredients and other supplies could harm our business, financial condition or results of operations. Our ability to maintain our menu depends in part on our ability to acquire ingredients that meet our specifications from reliable suppliers.

All of these factors could have a material adverse impact on our business, financial condition or results of operations. 18 Failure to receive frequent deliveries of fresh food ingredients and other supplies could harm our business, financial condition or results of operations.

These initiatives may not be successful, resulting in expenses incurred without the benefit of higher sales or increased brand recognition. 24 We could be party to litigation that could adversely affect us by distracting management, increasing our expenses or subjecting us to material money damages and other remedies.

Our brand’s reputation and image as an employer could also be harmed by these types of security breaches or regulatory violations. 24 We could be party to litigation that could adversely affect us by distracting management, increasing our expenses or subjecting us to material money damages and other remedies.

We have opened one new restaurant in 2021, one new restaurant in the first quarter of 2022, one new restaurant in the third quarter of 2022, and we currently have 5 new locations under construction/development.

In March 2020, the World Health Organization declared the novel strain of coronavirus COVID-19 a global pandemic. For the past two and one-half years, this contagious virus, has continued to spread and has adversely affected workforces, customers, economies and financial markets globally.

The ongoing COVID-19 pandemic has adversely affected, and may continue to adversely affect, our operations, financial condition, liquidity and financial results. In March 2020, the World Health Organization declared the novel strain of coronavirus COVID-19 a global pandemic.

Publicity relating to any noncompliance or alleged noncompliance could also harm our reputation and adversely affect our business, financial condition or results of operations. 21 We may need capital in the future, and we may not be able to raise that capital on favorable terms. Developing our business will require significant capital in the future.

Publicity relating to any noncompliance or alleged noncompliance could also harm our reputation and adversely affect our business, financial condition or results of operations. Delays In Obtaining Construction Permits Can Have A Material Adverse Effect on Our Business.

In response to this outbreak, many state and local authorities mandated the temporary closure of non-essential businesses and dine-in restaurant activity or limited indoor dining capacities. COVID-19 and the government measures taken to control it have caused a significant disruption to our business operation.

COVID-19 and the government measures taken to control it have caused a significant disruption to our business operation.

Traffic in restaurants, including ours, has been affected and may be materially and adversely affected with more consumers relying on off-premises orders. All of this could materially and adversely impact sales at our restaurants and our growth prospects.

Additionally, consumer behavior has changed and may fundamentally change as a result of COVID-19 in both the near and long term and such change may pose significant challenges to our current service and business models. Traffic in restaurants, including ours, has been affected and may be materially and adversely affected with more consumers relying on off-premises orders.

We have incurred operating losses and may not be profitable in the future. Our plans to maintain and increase liquidity may not be successful. The report of the independent registered public accounting firm includes a going concern uncertainty explanatory paragraph in 2021.

Item 1A. Risk Factors. Risks Related to Our Business We have incurred operating losses and may not be profitable in the future. Our plans to maintain and increase liquidity may not be successful. We incurred a net loss of $3.0 million and $3.5 million for the years ended December 31, 2023 and 2022, respectively.

We have opened one new restaurant in 2021, one new restaurant in first quarter of 2022 and one new restaurant in the third quarter of 2022. We currently have 5 new locations under construction/development, and we expect to open an additional 6 new restaurant stores in 2023 by utilizing the net proceeds from the offering.

We have opened one new restaurant in February 2024 and currently have two new locations under construction/development. We expect to complete the acquisition of three existing restaurants in the early second quarter of 2024 and also plan to open an additional two to four new restaurants in 2024. The capital resources required to develop each new restaurant are significant.

Removed

We incurred a net loss of $3.9 million and $1.6 million for the years ended December 31, 2022 and 2021, respectively. These factors raise substantial doubt as to our ability to continue as a going concern, and our independent registered public accounting firm has included a going concern uncertainty explanatory paragraph in their report for 2021.

Added

On January 5, 2024, we entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Alumni Capital LP, a Delaware limited partnership (“Alumni”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, we have the right, but not the obligation, to sell to Alumni, and Alumni is obligated to purchase, up to an aggregate of $5,000,000 in shares of our Class A Common Stock.

Removed

Inflation in the United States began to rise significantly in the second half of the calendar year 2021.

Added

We believe that the expected cash flow from operations, the proceeds from the IPO, and the proceeds from the Securities Purchase Agreement will be adequate to fund operating lease obligations, capital expenditures and working capital obligations for at least the next 12 months and thereafter.

Removed

This is primarily believed to be the result of the economic impacts from the COVID-19 pandemic, including the global supply chain disruptions, strong economic recovery and associated widespread demand for goods, government stimulus packages and the impacts of the many government programs which has resulted in increases to the money supply as well to fund some of these programs and the associated spending to fund them which has created large government deficits in almost every jurisdiction.

Added

Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs, especially in light of recent supply chain disruptions. We believe we have experienced higher costs due to increased commodity prices and challenges sourcing our supplies due in part to global supply chain disruptions.

Removed

Global supply chain disruptions have resulted in shortages in materials and services. Such shortages have resulted in inflationary cost increases for labor, materials, and services, and could continue to cause costs to increase as well as scarcity of certain products. In addition, inflation is often accompanied by higher interest rates.

Added

Supply chain risk could increase our costs and limit the availability of ingredients and supplies that are critical to our restaurant operations.

Removed

The impact of COVID-19 may increase uncertainty in the global financial markets, as well as the possibility of high inflation and extended economic downturn, which could reduce our ability to incur debt or access capital and impact our results of operations and financial condition even after these conditions improve.

Added

The markets for some of our ingredients, such as beef and produce, are particularly volatile due to factors beyond our control such as limited sources, seasonal shifts, climate conditions, recent inflationary trends, military and geopolitical conflicts and industry demand, including as a result of animal disease outbreaks, international commodity markets, food safety concerns, product recalls and government regulation.

Removed

We are experiencing inflationary pressures in certain areas of our business, including with respect to food and beverage costs, energy costs and labor costs, however, we cannot predict any future trends in the rate of inflation or associated increases in our operating costs and how that may impact our business.

Added

In addition, for certain of our ingredients and other materials, we have a limited number of suppliers and distributors.

Removed

Historically and as of the date hereof, inflation has not had a material effect on our results of operations. Severe increases in inflation, however, could affect the global and U.S. economies and could have a materially adverse impact on our business, financial condition or results of operations.

Added

We remain in regular contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain; however, in 2022 costs for certain supplies and ingredients, such as produce, packaging, dairy, beef and chicken increased materially and rapidly, and inflationary pressures could continue and/or spread to more categories as inflation increases continue across the global supply chain.

Removed

Furthermore, future volatile, negative, or uncertain economic conditions and recessionary periods or periods of significant inflation may adversely impact consumer spending at our restaurants, which would materially adversely affect our business, financial condition and results of operations. Such effects can be especially pronounced during periods of economic contraction or slow economic growth.

Added

Our efforts to mitigate future price risk through forward contracts, strong partnerships with key suppliers, careful planning and other activities may not fully insulate us from increases in commodity costs, which could have an adverse impact on our profitability.

Removed

To the extent that we are unable to offset such cost inflation through increased menu prices or increased efficiencies in our operations and cost savings, there could be a negative impact on our business, sales and margin performance, net income, cash flows and the trading price of our common shares.

Added

Any increase in the prices of the ingredients most critical to our menu, such as chicken, beef, dairy, wheat, produce, rice, and pork, would have a particularly adverse effect on our operating results.

Removed

The restaurant industry depends on consumer discretionary spending.

Added

If the cost of one or more ingredients significantly increases, we may choose to temporarily suspend serving menu items that use those ingredients, or one of our proteins, rather than pay the increased cost. Any such changes to our available menu may negatively impact our restaurant traffic and could adversely impact our sales and brand.

Removed

All of these factors could have a material adverse impact on our business, financial condition or results of operations. Delays In Obtaining Construction Permits Can Have A Material Adverse Effect on Our Business. We typically are able to negotiate approximately 6 months to complete a construction/development of our stores before we have to make our first lease payment.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

1 edited+1 added−0 removed3 unchanged

2022 filing

2023 filing

Biggest change(b) Holders On March 29, 2023, there were twenty five holders of record of the shares of our Class A Common Stock and one holder of Class B common stock. (c) Dividends We have not paid any cash dividends on our ordinary shares to date.

Biggest change(b) Holders of Record On April 1, 2024, there were 25 holders of record of the shares of our Class A Common Stock and one holder of Class B Common Stock.

Added

The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of shares of Common Stock whose shares are held in the names of various securities brokers, dealers, and registered clearing agencies. (c) Dividends We have not paid any cash dividends on our ordinary shares to date.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

56 edited+17 added−13 removed32 unchanged

2022 filing

2023 filing

Biggest changeYears ended December 31, Increase / (Decrease) 2022 2021 $ % Revenue $ 8,282,368 $ 6,536,859 $ 1,745,509 26.7 % Restaurant operating expenses: Food, beverages and supplies 2,163,085 1,998,831 164,254 8.2 % Labor 3,670,681 2,969,426 701,255 23.6 % Rent and utilities 1,098,389 689,709 408,680 59.3 % Delivery and service fees 525,747 528,096 (2,349 ) -0.4 % Depreciation 658,371 138,665 519,706 374.8 % Total restaurant operating expenses 8,116,273 6,324,727 1,791,546 28.3 % Net restaurant operating income 166,095 212,132 (46,037 ) -21.7 % General and administrative 2,884,770 2,040,165 844,605 41.4 % Related party compensation 916,891 - 916,891 N/A Advertising and marketing 148,664 31,952 116,712 365.3 % Total operating expenses 3,950,325 2,072,117 1,878,208 90.6 % Loss from operations (3,784,230 ) (1,859,985 ) (1,924,245 ) 103.5 % Other income (expense): PPP loan forgiveness 385,900 269,887 116,013 43.0 % Other income 18,508 26,486 (7,978 ) -30.1 % Interest (88,300 ) (52,224 ) (36,076 ) 69.1 % Loss before income taxes (3,468,122 )) (1,615,836 ) (1,852,286 ) 114.6 % Income tax provision 19,245 14,649 4,596 31.4 % Net loss $ (3,487,367 ) $ (1,630,485 ) $ (1,856,882 ) 113.9 % Years ended December 31, 2022 2021 (as a percentage of revenues) Revenue 100.0 % 100.0 % Restaurant operating expenses: Food, beverages and supplies 26.1 % 30.6 % Labor 44.3 % 45.4 % Rent and utilities 13.3 % 10.6 % Delivery and service fees 6.3 % 8.1 % Depreciation 7.9 % 2.1 % Total restaurant operating expenses 98.0 % 96.8 % Net restaurant operating income 2.0 % 3.2 % General and administrative 34.8 % 31.2 % Related party compensation 11.1 % 0.0 % Advertising and marketing 1.8 % 0.5 % Total operating expenses 47.7 % 31.7 % Loss from operations -45.7 % -28.5 % Other income (expense): PPP loan forgiveness 4.7 % 4.1 % Other income 0.2 % 0.4 % Interest -1.1 % -0.8 % Loss before income taxes -41.9 % -24.7 % Income tax provision 0.2 % 0.2 % Net loss -42.1 % -24.9 % 32 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenues.

Biggest changeYears ended December 31, Increase / (Decrease) 2023 2022 $ % Revenue $ 9,214,779 $ 8,282,368 $ 932,411 11.3 % Restaurant operating expenses: Food, beverages and supplies 2,376,961 2,163,085 213,876 9.9 % Labor 4,234,905 3,670,681 564,224 15.4 % Rent and utilities 1,129,060 1,098,389 30,671 2.8 % Delivery and service fees 563,910 525,747 38,163 7.3 % Depreciation 545,549 658,371 (112,822 ) -17.1 % Total restaurant operating expenses 8,850,385 8,116,273 734,112 9.0 % Net restaurant operating income 364,394 166,095 198,299 119.4 % General and administrative 3,419,036 2,884,770 534,266 18.5 % Compensation to related party 339,740 916,891 (577,151 ) -62.9 % Advertising and marketing 120,872 148,664 (27,792 ) -18.7 % Total operating expenses 3,879,648 3,950,325 (70,677 ) -1.8 % Loss from operations (3,515,254 ) (3,784,230 ) 268,976 -7.1 % Other income (expense): PPP loan forgiveness - 385,900 (385,900 ) -100.0 % RRF loan forgiveness 700,454 - 700,454 N/A Gain on disposal of fixed asset 8,920 - 8,920 N/A Other income 32,316 18,508 13,808 74.6 % Interest (218,153 ) (88,300 ) (129,853 ) 147.1 % Loss before income taxes (2,991,717 ) (3,468,122 ) 476,405 -13.7 % Income tax provision 48,647 19,245 29,402 152.8 % Net loss $ (3,040,364 ) $ (3,487,367 ) $ 447,003 -12.8 % Three months ended December 31, Increase / (Decrease) 2023 2022 $ % Revenue $ 2,500,350 $ 2,536,032 $ (35,682 ) -1.4 % Restaurant operating expenses: Food, beverages and supplies 589,915 669,889 (79,974 ) -11.9 % Labor 1,105,707 1,025,794 79,913 7.8 % Rent and utilities 288,671 348,248 (59,577 ) -17.1 % Delivery and service fees 148,771 152,151 (3,380 ) -2.2 % Depreciation 149,161 103,147 46,014 44.6 % Total restaurant operating expenses 2,282,225 2,299,229 (17,004 ) -0.7 % Net restaurant operating income 218,125 236,803 (18,678 ) -7.9 % General and administrative 718,958 981,837 (262,879 ) -26.8 % Compensation to related party 123,432 284,923 (161,491 ) -56.7 % Advertising and marketing 34,279 70,366 (36,087 ) -51.3 % Total operating expenses 876,669 1,337,126 (460,457 ) -34.4 % Loss from operations (658,544 ) (1,100,323 ) 441,779 -40.1 % Other income (expense): RRF loan forgiveness 700,454 - 700,454 N/A Other income 17,542 12,207 5,335 43.7 % Interest (31,276 ) (26,424 ) (4,852 ) 18.4 % Loss before income taxes 28,176 (1,114,540 ) 1,142,716 -102.5 % Income tax provision 19,579 6,576 13,003 197.7 % Net loss $ 8,597 $ (1,121,116 ) $ 1,129,713 -100.8 % 32 Years ended December 31, Three months ended December 31, 2023 2022 2023 2022 (as a percentage of revenues) (as a percentage of revenues) Revenue 100.0 % 100.0 % 100.0 % 100.0 % Restaurant operating expenses: Food, beverages and supplies 25.8 % 26.1 % 23.6 % 26.4 % Labor 46.0 % 44.3 % 44.2 % 40.4 % Rent and utilities 12.3 % 13.3 % 11.5 % 13.7 % Delivery and service fees 6.1 % 6.3 % 6.0 % 6.0 % Depreciation 5.9 % 7.9 % 6.0 % 4.1 % Total restaurant operating expenses 96.0 % 98.0 % 91.3 % 90.7 % Net operating restaurant operating income 4.0 % 2.0 % 8.7 % 9.3 % General and administrative 37.1 % 34.8 % 28.8 % 38.7 % Compensation to related party 3.7 % 11.1 % 4.9 % 11.2 % Advertising and marketing 1.3 % 1.8 % 1.4 % 2.8 % Total operating expenses 42.1 % 47.7 % 35.1 % 52.7 % Loss from operations -38.1 % -45.7 % -26.3 % -43.4 % Other income (expense): RRF loan forgiveness 7.6 % 0.0 % 28.0 % 0.0 % Other income 0.4 % 0.2 % 0.7 % 0.5 % Interest -2.4 % -1.1 % -1.3 % -1.0 % Loss before income taxes -32.5 % -41.9 % 1.1 % -43.9 % Income tax provision 0.5 % 0.2 % 0.8 % 0.3 % Net loss -33.0 % -42.1 % 0.3 % -44.2 % Revenues.

Our ability to achieve new restaurant growth is impacted by a number of risks and uncertainties beyond our control, including but not limited to landlord delays; competition in existing and new markets, including competition for restaurant sites; and the lack of development and overall decrease in commercial real estate due to a macroeconomic.

The net cash outflows from changes in operating assets and liabilities were primarily the result of a decrease of $1,276,193 in due to related party, and an increase of $150,404 in other assets, partially offset by an increase of $867,049 in accounts payable and accrued expenses.

The net cash outflows from changes in operating assets and liabilities were primarily the result of a decrease of $1,276,193 due to related party expense, and an increase of $150,404 in other assets, partially offset by an increase of $867,049 in accounts payable and accrued expenses.

The decreases in payables to related parties and stockholder were the result of repayment of expenditures incurred by the related parties and stockholder in connection with the opening of new restaurants. The increase in accounts payable was primarily due to the three new restaurants opened in July 2021, February 2022 and July 2022.

The decreases in payables to related parties were the result of repayment of expenditures incurred by the related parties in connection with the opening of new restaurants. The increase in accounts payable was primarily due to the three new restaurants opened in July 2021, February 2022 and July 2022.

Having expanded our concept and operating model across varying restaurant sizes and geographies, we plan to leverage our expertise by opening new restaurants to fill in existing markets and expand into new geographies.

The critical accounting policies affecting our financial reporting are summarized in Note 2 to the financial statements included elsewhere in this Quarterly Report. 38 Recent Accounting Pronouncements We have determined that all other issued, but not yet effective accounting pronouncements are inapplicable or insignificant to us and once adopted are not expected to have a material impact on our financial position.

The critical accounting policies affecting our financial reporting are summarized in Note 2 to the financial statements included elsewhere in this Annual Report. 38 Recent Accounting Pronouncements We have determined that all other issued, but not yet effective accounting pronouncements are inapplicable or insignificant to us and once adopted are not expected to have a material impact on our financial position.

Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. Off Balance Sheet Arrangements As of December 31, 2022, we did not have any material off-balance sheet arrangements.

Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards. Off Balance Sheet Arrangements As of December 31, 2023, we did not have any material off-balance sheet arrangements.

The Company’s customers may order online through third party service providers such as Uber Eats, Door Dash, Grubhub and others. These third-party service providers charge delivery and order fees to the Company. General and administrative expenses.

Our customers may order online through third party service providers such as Uber Eats, Door Dash, Grubhub and others. These third-party service providers charge delivery and order fees to the company. General and administrative expenses.

Advertising and marketing expenses are expected to grow leading up to planned openings of restaurant locations and is expected to stabilize as an average by location as our sales grows. Interest expense. Interest expense includes non-cash charges related to our capital lease obligations and bank notes payable. Income tax provision (benefit).

Advertising and marketing expenses are expected to grow leading up to planned openings of restaurant locations and is expected to stabilize as an average by location as our sales grows. Interest expenses. Interest expenses include non-cash charges related to our capital lease obligations and bank notes payable. Income tax provision (benefit).

The net loss was significantly higher for the period relative to prior periods as a result of restaurant startup costs and increased general and administrative expense.

The net loss was significantly higher for the period relative to prior periods as a result of restaurant startup costs and increased general and administrative expenses.

Various factors impact comparable restaurant sales, including: ● consumer recognition of our brand and our ability to respond to changing consumer preferences; ● overall economic trends, particularly those related to consumer spending; ● our ability to operate restaurants effectively and efficiently to meet consumer expectations; ● pricing; ● guest traffic; ● per-guest spend and average check; ● marketing and promotional efforts; ● local competition; and ● opening of new restaurants in the vicinity of existing locations. 35 The following table shows the comparable restaurant sales growth for the years ended December 31, 2022 and December 31, 2021: Years ended December 31, 2022 2021 Comparable restaurant sales growth (%) 9.9 % 63.4 % Comparable restaurant base 5 4 Number of Restaurant Openings The following table shows the growth in our restaurant base for the years ended December 31, 2022 and December 31, 2021: Years ended December 31, 2022 2021 Restaurant activity: Beginning of period 6 5 Openings 2 1 Closing - - End of period 8 6 Liquidity and Capital Resources Our primary uses of cash are for operational expenditures and capital investments, including new restaurants, costs incurred for restaurant remodels and restaurant fixtures.

Various factors impact comparable restaurant sales, including: ● consumer recognition of our brand and our ability to respond to changing consumer preferences; ● overall economic trends, particularly those related to consumer spending; ● our ability to operate restaurants effectively and efficiently to meet consumer expectations; ● pricing; ● guest traffic; ● per-guest spend and average check; ● marketing and promotional efforts; ● local competition; and ● opening of new restaurants in the vicinity of existing locations. 35 The following table shows the comparable restaurant sales growth for the years ended December 31, 2023 and December 31, 2022: Years ended December 31, 2023 2022 Comparable restaurant sales growth (%) -0.8 % 9.9 % Comparable restaurant base 7 5 Number of Restaurant Openings The following table shows the growth in our restaurant base for the years ended December 31, 2023 and December 31, 2022: Years ended December 31, 2023 2022 Restaurant activity: Beginning of period 8 6 Openings 2 2 Closing - - End of period 10 8 Liquidity and Capital Resources Our primary uses of cash are for operational expenditures and capital investments, including new restaurants, costs incurred for restaurant remodels and restaurant fixtures.

Overview of Yoshiharu Yoshiharu is a fast-growing Japanese restaurant operator and was borne out of the idea of introducing the modernized Japanese dining experience to customers all over the world.

Overview of Yoshiharu We are a fast-growing Japanese restaurant operator and was borne out of the idea of introducing the modernized Japanese dining experience to customers all over the world.

However, you should be aware that Restaurant-level Contribution and Restaurant-level Contribution margin are financial measures which are not indicative of overall results for the Company, and Restaurant-level Contribution and Restaurant-level Contribution margin do not accrue directly to the benefit of stockholders because of corporate-level expenses excluded from such measures.

Restaurant-level Contribution margin allows us to evaluate the level of Restaurant-level Contribution generated from sales. 34 However, you should be aware that Restaurant-level Contribution and Restaurant-level Contribution margin are financial measures which are not indicative of overall results for the company, and Restaurant-level Contribution and Restaurant-level Contribution margin do not accrue directly to the benefit of stockholders because of corporate-level expenses excluded from such measures.

The following table shows the AUVs for the years ended December 31, 2022 and December 31, 2021, respectively: Years ended December 31, 2022 2021 Average Unit Volumes $ 1,182,032 $ 1,239,551 Comparable Restaurant Sales Growth Comparable restaurant sales growth represents the change in year-over-year sales for restaurants open for at least 3 months prior to the start of the accounting period presented, including those temporarily closed for renovations during the year.

The following table shows the AUVs for the years ended December 31, 2023 and December 31, 2023, respectively: Years ended December 31, 2023 2022 Average Unit Volumes $ 1,067,726 $ 1,182,032 Comparable Restaurant Sales Growth Comparable restaurant sales growth represents the change in year-over-year sales for restaurants open for at least three months prior to the start of the accounting period presented, including those temporarily closed for renovations during the year.

Provision for income taxes represents federal, state and local current and deferred income tax expense. 31 Results of Operations The following table presents selected comparative results of operations from our audited financial statements for the year ended December 31, 2022 compared to the year ended December 31, 2021.

Provision for income taxes represents federal, state and local current and deferred income tax expenses. 31 Results of Operations The following table presents selected comparative results of operations from our audited financial statements for the three months and year ended December 31, 2023 compared to the three months and year ended December 31, 2022.

We present Restaurant-level Contribution because it excludes the impact of general and administrative expenses, which are not incurred at the restaurant-level. We also use Restaurant-level Contribution to measure operating performance and returns from opening new restaurants. Restaurant- level Contribution margin allows us to evaluate the level of Restaurant-level Contribution generated from sales.

Food, beverage and supplies costs were approximately $2.2 million for the year ended December 31, 2022 compared to $2.0 million for the year ended December 31, 2021, representing an increase of approximately $0.2 million, or 8%.

Food, beverage and supplies costs were approximately $2.4 million for the year ended December 31, 2023 compared to $2.2 million for the year ended December 31, 2022, representing an increase of approximately $0.2 million, or 9.9%.

Rent and utilities include rent for all restaurant locations and related taxes. Depreciation and amortization expenses. Depreciation and amortization expenses are periodic non-cash charges that consist of depreciation of fixed assets, including equipment and capitalized leasehold improvements. Depreciation is determined using the straight-line method over the assets’ estimated useful lives, ranging from three to ten years. Delivery and service fees.

Depreciation and amortization expenses are periodic non-cash charges that consist of depreciation of fixed assets, including equipment and capitalized leasehold improvements. Depreciation is determined using the straight-line method over the assets’ estimated useful lives, ranging from three to ten years. Delivery and service fees.

We have invested in our infrastructure and personnel, which we believe positions us to continue to scale our business operations. As we continue to grow, we expect to drive higher profitability by taking advantage of our increasing buying power with suppliers and leveraging our existing support infrastructure.

We have invested in our infrastructure and personnel, which we believe position us to continue to scale our business operations. As we continue to grow, we expect to drive higher profitability both at a restaurant-level and corporate-level by taking advantage of our increasing buying power with suppliers and leveraging our existing support infrastructure.

As a percentage of sales, general and administrative expenses increased to 35% in the year ended December 31, 2022 from 31% in the year ended December 31, 2021, primarily due to the significant increase in necessary corporate costs mentioned above outpacing the increase in sales.

As a percentage of sales, general and administrative expenses increased to 37.1% for the year ended December 31, 2023 from 34.8% for the year ended December 31, 2022, primarily due to the significant increase in necessary corporate costs mentioned above outpacing the increase in sales.

General and administrative expenses were approximately $2.9 million for the year ended December 31, 2022 compared to $2.0 million for the year ended December 31, 2021, representing an increase of approximately $0.9 million or 41%.

General and administrative expenses were approximately $3.4 million for the year ended December 31, 2023 compared to $2.9 million for the year ended December 31, 2022, representing an increase of approximately $0.5 million or 18.5%.

Cash Flows Used in Investing Activities Net cash used in investing activities during the years ended December 31, 2022 and 2021 was $1,473,275 and $896,615, respectively.

Cash Flows Used in Investing Activities Net cash used in investing activities during the years ended December 31, 2023 and 2022 was $1,471,151 and $1,473,275, respectively.

These expenditures in each period are primarily related to purchases of property and equipment in connection with current and future restaurant openings and maintaining our existing restaurants. 37 Cash Flows Provided by Financing Activities Net cash provided by financing activities during the year ended December 31, 2022 was $10,694,064, primarily due to $10,285,650 in net proceeds from the sale of 2,940,000 shares of class A common stock after deducting underwriting discounts and commissions and other offering expenses in September 2022, $60,000 in proceeds from the sale of class A common stock in December 2021, and $558,133 cash received through borrowings from banks, offset by $209,719 of repayment of borrowings.

Net cash provided by financing activities during the year ended December 31, 2022 was $10,694,064, primarily due to $10,285,650 in net proceeds from the sale of 2,940,000 shares of Class A Common Stock after deducting underwriting discounts and commissions and other offering expenses in September 2022, $60,000 in proceeds from the sale of Class A Common Stock in December 2021, and $558,133 cash received through borrowings from banks, offset by $209,719 of repayment of borrowings.

Specializing in Japanese ramen, Yoshiharu gained recognition as a leading ramen restaurant in Southern California within six months of our 2016 debut and has continued to expand our top-notch restaurant service across Southern California, currently owning and operating 8 restaurant stores with an additional 5 new restaurant stores under construction/development.

Specializing in Japanese ramen, we gained recognition as a leading ramen restaurant in Southern California within six months of our 2016 debut and have continued to expand our top-notch restaurant service across Southern California, currently owning and operating ten restaurant stores. We have opened one new restaurant in February 2024 and currently have two new locations under construction/development.

Restaurant-level Contribution and Restaurant-level Contribution Margin Restaurant-level Contribution and Restaurant-level Contribution margin are intended as supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP.

(e) Represents non-recurring professional expenses incurred for the IPO preparation Restaurant-level Contribution and Restaurant-level Contribution Margin Restaurant-level Contribution and Restaurant-level Contribution margin are intended as supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP.

We intend to continue to pursue targeted local marketing efforts and plan to increase our investment in advertising. We also are exploring the development of instant ramen noodles which we would distribute through retail channels. We intend to explore partnerships with grocery retailers to provide for small-format Yoshiharu kiosks in stores to promote a limited selection of Yoshiharu cuisine.

Revenues were $8.3 million for the year ended December 31, 2022 compared to $6.5 million for the year ended December 31, 2021, representing an increase of approximately $1.7 million, or 27%.

Revenues were $9.2 million for the year ended December 31, 2023 compared to $8.3 million for the year ended December 31, 2022, representing an increase of approximately $0.9 million, or 11.3%.

This increase in general and administrative expenses was primarily due to the hiring of additional administrative employees, increases in professional services and corporate-level costs to support growth plans, the opening of new restaurants, as well as costs associated with outside administrative, legal and professional fees and other general corporate expenses associated with preparing to become a public company.

Summary of Cash Flows The following table summarizes our cash flows for the periods presented: Years ended December 31, 2022 2021 Statement of Cash Flow Data: Net cash (used in) provided by operating activities $ (3,798,770 ) $ 194,143 Net cash used in investing activities (1,473,275 ) (896,615 ) Net cash provided by financing activities 10,694,064 1,789,574 Cash Flows (Used in) Provided by Operating Activities Net cash used in operating activities during the year ended December 31, 2022 was $3,798,770, which resulted from net loss of $3,487,367, non-cash charges of $658,371 for depreciation and amortization which was offset by the PPP loan forgiveness of $385,900, and net cash outflows of $583,874 from changes in operating assets and liabilities.

Net cash used in operating activities during the year ended December 31, 2022 was $3,798,770, which resulted from net loss of $3,487,367, non-cash charges of $658,371 for depreciation and amortization which was offset by the PPP loan forgiveness of $385,900, and net cash outflows of $583,874 from changes in operating assets and liabilities.

We are also exploring initiatives to grow sales of alcoholic beverages at our restaurants, including the potential of a larger format restaurant with a sake bar concept. Franchise Program Development. We are aiming to initiate sales of franchises beginning in 2023.

Other important factors causing fluctuations in food and beverage costs include seasonality and restaurant-level management of food waste. Food and beverage costs are a substantial expense and are expected to grow proportionally as our sales grows. Labor. Labor includes all restaurant-level management and hourly labor costs, including wages, employee benefits and payroll taxes.

Food and beverage costs are a substantial expense and are expected to grow proportionally as our sales grow. Labor. Labor includes all restaurant-level management and hourly labor costs, including wages, employee benefits and payroll taxes. Similar to the food and beverage costs that we incur, labor and related expenses are expected to grow proportionally as our sales increase.

Similar to the food and beverage costs that we incur, labor and related expenses are expected to grow proportionally as our sales increase. Factors that influence fluctuations in our labor and related expenses include minimum wage and payroll tax legislation, the frequency and severity of workers’ compensation claims, healthcare costs and the performance of our restaurants. Rent and utilities.

Factors that influence fluctuations in our labor and related expenses include minimum wage and payroll tax legislation, the frequency and severity of workers’ compensation claims, healthcare costs and the performance of our restaurants. Rent and utilities. Rent and utilities include rent for all restaurant locations and related taxes. Depreciation and amortization expenses.

Depreciation and amortization expenses incurred were approximately $658,000 for the year ended December 31, 2022 compared to $139,000 for the year ended December 31, 2021, representing an increase of approximately $520,000, or 375%. The increase was primarily due to increased depreciation for the new restaurants opened and to changes in estimated depreciable lives for existing restaurants.

Depreciation and amortization expenses incurred were approximately $546 thousand for the year ended December 31, 2023 compared to $658 thousand for the year ended December 31, 2022, representing a decrease of approximately $113 thousand, or 17.1%. The decrease was primarily due to the changes in estimated depreciable lives for existing restaurants during the first quarter in 2022.

The increase in costs for the period was primarily driven by increases in revenues from three new restaurants opened and from the recovery from lower volume experienced during the pandemic. As a percentage of sales, food, beverage and supplies costs decreased to 26% in the year ended December 31, 2022 compared to 31% in the year ended December 31, 2021.

The increase in costs for the year ended December 31, 2023 was primarily driven by increases in revenues from the new restaurant opened in April 2023. As a percentage of sales, food, beverage and supply costs were comparable during the years ended December 31, 2023 and 2022.

We believe the consumer appetite for Asian cuisine is widespread across many demographics and have an opportunity to expand in both existing and new U.S. markets, as well as internationally. 29 Our Growth Strategies Historically, we have averaged an opening of 1 store per year utilizing solely bank debt, revenues and related party loans.

We believe the consumer appetite for Asian cuisine is widespread across many demographics and have an opportunity to expand in both existing and new U.S. markets, as well as internationally. 29 Our Growth Strategies Pursue New Restaurant Development. We have pursued a disciplined new corporate owned growth strategy.

Rent and utilities expenses were approximately $1.1 million for the year ended December 31, 2022 compared to $0.7 million for the year ended December 31, 2021, representing an increase of approximately $0.4 million, or 59%. The increase was primarily a result of additional occupancy expenses incurred with respect to three new restaurants opened.

Rent and utilities expenses for the year ended December 31, 2023 slightly increased compared to the year ended in December 31, 2022. The increase was primarily a result of additional occupancy expenses incurred with respect to a new restaurant opened in April 2023.

Restaurant sales in a given period are directly impacted by the number of restaurants we operate and comparable restaurant sales growth. Food and beverage. Food and beverage costs are variable in nature, change with sales volume and are influenced by menu mix and subject to increases or decreases based on fluctuations in commodity costs.

Food and beverage costs are variable in nature, change with sales volume and are influenced by menu mix and subject to increases or decreases based on fluctuations in commodity costs. Other important factors causing fluctuations in food and beverage costs include seasonality and restaurant-level management of food waste.

As a percentage of sales, rent and utilities expenses increased to 13% in the year ended December 31, 2022, compared to 11% for the year ended December 31, 2021. The increase in costs as a percentage of sales was primarily driven by the increase in average utility costs during the year 2022 compared to the year 2021.

As a percentage of sales, rent and utilities expenses decreased to 12.3% in the year ended December 31, 2023, compared to 13.3% for the year ended December 31, 2022. The decrease in costs as a percentage of sales was primarily driven by the increases in sales volume from both existing restaurants and a new location.

Labor and related costs were approximately $3.7 million for the year ended December 31, 2022 compared to $3.0 million for the year ended December 31, 2021, representing an increase of approximately $0.7 million, or 24%. The increase in costs was largely driven by additional labor costs incurred with respect to three new restaurants opened.

Labor and related costs were approximately $1.1 million for the three months ended December 31, 2023 compared to $1.0 million for the three months ended December 31, 2022, representing an increase of approximately $0.1 million, or 7.8%. The increase in costs was mainly due to the new restaurant opened in April 2023. Rent and utilities .

Customers can taste and experience supreme quality and deep flavors. Combining the broth with the fresh, savory, and highest-quality ingredients, we serve the perfect, ideal ramen, as well as offers customers a wide variety of sushi rolls, bento menu and other favorite Japanese cuisine.

Delivery and service fees . Delivery and service fees incurred were approximately $0.5 million for the years ended December 31, 2022 and 2021, respectively. The comparable cost was primarily due to the comparable food sales via delivery during the comparable period.

Delivery and service fees incurred were approximately $564 thousand for the year ended December 31, 2023 compared to $526 thousand for the year ended December 31, 2022, representing an increase of approximately $38 thousand or 7.3%, primarily due to an increase in food sales via delivery during the comparable period.

Related party compensation: Compensation to James Chae was approximately $0.9 million for the year ended December 31, 2022 compared to $0 for the year ended December 31, 2021, representing an increase of approximately $0.9 million. $0.6 million of the compensation was made pursuant to a nonwritten arrangement, in exchange for Mr.

Related party compensation: Compensation to James Chae was approximately $340 thousand for the year ended December 31, 2023 compared to $917 thousand for the year ended December 31, 2022, representing a decrease of approximately $577 thousand.

Our mission is to bring our Japanese ramen and cuisine to the mainstream, by providing a meal that customers find comforting.

Our acclaimed signature Tonkotsu Black Ramen has become a customer favorite with its slow cooked pork bone broth and freshly made, tender chashu (braised pork belly). Our mission is to bring our Japanese ramen and cuisine to the mainstream, by providing a meal that customers find comforting.

The net cash in-flows from changes in operating assets and liabilities were primarily the result of increases in inventories of $20,837 and other assets of $105,732, offset by an increase in payables to related parties of $471,802, increases of $296,917 in accounts payable and accrued expenses and $65,700 in other payables.

The net cash outflows from changes in operating assets and liabilities were primarily the result of an increase in other assets of $1,252,669, decreases due to related party expenses of $148,544 and accounts payable and accrued expenses of $33,915, which was offset by an increase in other payables of $59,785.

As a percentage of sales, delivery and service fees decreased to 6% for the year ended December 31, 2022 compared to 8% for the comparable period in the prior year. The change is largely driven by a slight decrease in food sales via delivery during the period. Depreciation and amortization expenses .

Delivery and service fees incurred were approximately $149 thousand the three months ended December 31, 2023 compared to $152 thousand for the three months ended December 31, 2022, representing a decrease of approximately $3 thousand or 2.2% primarily due to a decrease in food sales via delivery during the comparable period. Depreciation and amortization expenses .

As a percentage of sales, labor and related costs slightly decreased to 44% in the year ended December 31, 2022 compared to 45% in the year ended December 31, 2021.

As a result, the depreciation and amortization expenses as a percentage of sales decreased to 5.9% for the year ended December 31, 2023 compared to 7.9% for year ended December 31, 2022.

Net proceeds from the IPO were approximately $10.3 million after deducting underwriting discounts and commissions and other offering expenses of approximately $1.5 million. We believe that expected cash flow from operations and the proceeds from the IPO will be adequate to fund operating lease obligations, capital expenditures and working capital obligations for at least the next 12 months and thereafter.

Net proceeds from the IPO were approximately $10.3 million after deducting underwriting discounts and commissions and other offering expenses of approximately $1.5 million.

Chae’s services rendered in connection with the successful completion of our IPO and the remaining compensation was made pursuant to a written arrangement. As a percentage of sales, related party compensation was 11% in the year ended December 31, 2022. 33 Key Performance Indicators In assessing the performance of our business, we consider a variety of financial and performance measures.

Compensation to James Chae was approximately $123 thousand for the three months ended December 31, 2023 per the employment contract made in November 2022. 33 Key Performance Indicators In assessing the performance of our business, we consider a variety of financial and performance measures.

On top of opening of 5 new restaurants currently under construction/development, we expect to open an additional 6 new restaurant stores in 2023. We take pride in our warm, hearty, smooth, and rich bone broth, which is slowly boiled for over 12 hours. Customers can taste and experience supreme quality and deep flavors.

We expect to complete the acquisition of three existing restaurants in the early second quarter of 2024 and also plan to open an additional two to four new restaurants in 2024. We take pride in our warm, hearty, smooth, and rich bone broth, which is slowly boiled for over twelve hours.

See Note 5 (Bank Notes Payables) and Note 6 (Loan Payables, PPP) to the financial statements report for a more detailed discussion. 36 In September 2022, the Company consummated its initial public offering (the “IPO”) of 2,940,000 shares of its class A common stock at a public offering price of $4.00 per share, generating gross proceeds of $11,760,000.

Historically, our main sources of liquidity have been cash flows from operations, borrowings from banks, and sales of common shares. In September 2022, we consummated our IPO”) of 2,940,000 shares of Class A Common Stock at a public offering price of $4.00 per share, generating gross proceeds of $11,760,000.

The five restaurant locations that were open through all of 2021 each experienced consistent sales growth in the current year. Combined average monthly sales for these locations increased 9.9% for the year ended December 31, 2022 from the comparable period in the prior year. Food, beverage and supplies .

The seven restaurant locations that were open through all of 2022 and 2023 experienced a slight decrease in sales. Combined average monthly sales for these locations decreased by 0.8% for the year 2023 compared to 2022.

Restaurant-level Contribution and Restaurant- level Contribution margin have limitations as analytical tools, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. 34 The following table reconciles net restaurant operating income to Restaurant-level Contribution and Restaurant-level Contribution margin for the years ended December 31, 2022 and December 31, 2021: Years Ended December 31, 2022 2021 Net restaurant operating income, as reported $ 166,095 $ 214,590 Depreciation and amortization 658,371 138,665 Restaurant-level Contribution $ 824,466 $ 353,255 Operating profit margin -45.7 % -28.5 % Restaurant-level Contribution Margin (a) 10.0 % 5.4 % (a) Represents restaurant-level contribution divided by revenue.

The following table reconciles net restaurant operating income to Restaurant-level Contribution and Restaurant-level Contribution margin for the years and three months ended December 31, 2023 and 2022: Years Ended December 31, Three Months Ended December 31, 2023 2022 2023 2022 Net restaurant operating income, as reported $ 364,394 $ 166,095 $ 218,125 $ 236,803 Depreciation and amortization 545,549 658,371 149,161 103,147 Restaurant-level Contribution $ 909,943 $ 824,466 $ 367,286 $ 339,950 Operating profit margin 4.0 % 2.0 % 8.7 % 9.3 % Restaurant-level Contribution Margin (a) 9.9 % 10.0 % 14.7 % 13.4 % (a) Represents restaurant-level contribution divided by revenue.

The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA: Years Ended December 31, 2022 2021 Net loss, as reported $ (3,487,367 ) $ (1,630,485 ) Interest, net 88,300 52,224 Taxes 19,245 14,649 Depreciation and amortization 658,371 138,665 EBITDA (2,721,451 ) (1,424,947 ) PPP loan forgiveness (a) (385,900 ) (269,887 ) Adjusted EBITDA $ (3,107,351 ) $ (1,694,834 ) (a) Represents income recorded upon the forgiveness of payroll protection loans from the SBA.

The following table presents a reconciliation of net loss to EBITDA and Adjusted EBITDA: Years Ended December 31, Three Months Ended December 31, 2023 2022 2023 2022 Net income (loss), as reported $ (3,040,364 ) $ (3,487,367 ) $ 8,597 $ (1,121,116 ) Interest, net 218,153 88,300 31,276 26,424 Taxes 48,647 19,245 19,579 6,576 Depreciation and amortization 545,549 658,371 149,161 103,147 EBITDA (2,228,015 ) (2,721,451 ) 208,613 (984,969 ) PPP loan forgiveness (a) - (385,900 ) - - RRF loan forgiveness (b) (700,454 ) - (700,454 ) - Restaurants opening costs (c) 545,841 169,790 114,769 103,27 Gain on disposal of fixed asset (8,920 ) - - - Related party compensation (d) - 631,968 - - Professional fees (e) - 66,686 - 66,686 Adjusted EBITDA $ (2,391,548 ) $ (2,238,907 ) $ (377,072 ) $ (815,056 ) (a) Represents income recorded upon the forgiveness of payroll protection loans from the SBA.

The increase in sales for the period was mostly driven by $1.4 million in sales for the period from three new restaurants opened in July 2021, February 2022 and July 2022. The remainder of the increase of $0.3 million is considered to be attributable to recovery from the impact of the pandemic on customer traffic during 2022.

The increase in sales for the year was partially driven by $0.3 million in sales for the period from one new restaurant opened in July 2022 and another $0.7 million in sales from a new restaurant opened in April 2023, which were offset by a $0.1 million decrease in other restaurants.

As a percentage of sales, depreciation and amortization expenses increased to 8% for the year ended December 31, 2022 compared to 2% for the comparable period in the prior year. The change is largely driven by the increased depreciation as a result of the new locations and the change in estimated depreciable lives. General and administrative expenses .

The increase in costs was largely driven by additional labor costs incurred with respect to a new restaurant opened in April 2023 and in December 2023. As a percentage of sales, labor and related costs slightly increased during the comparable years ended December 31, 2023 and 2022.

Removed

However, utilizing 38.47% of the net proceeds of our IPO in September 2022, we expect in the short term to open 10 new corporate-owned restaurants (including the 5 stores currently under construction/development).

Added

Appointment of New Director On February 17, 2023, we accepted independent director Helen Lee’s formal resignation, effective immediately. Ms. Lee’s decision to resign was not due to any disagreement with the company on any matter relating to our operations, policies or practices (financial or otherwise). She was replaced on the same day by Ms.

Removed

Based on our internal analysis, we believe that we have the potential to grow our current domestic corporate-owned restaurants and international footprint to at least 250 restaurants domestically and at least 750 restaurants internationally by utilizing revenues generated by an increased number of corporate-owned restaurants, revenues generated through our franchise program (currently we are in the process of developing a program), proceeds from the sale of equity securities in the public markets as a publicly traded company, and debt financings.

Added

Harinne Kim. 30 Components of Our Results of Operations Revenue. Revenue represents sales of food and beverages in restaurants. Restaurant sales in a given period are directly impacted by the number of restaurants we operate and comparable restaurant sales growth. Food and beverage.

Removed

The rate of future restaurant growth in any particular period is inherently uncertain and is subject to numerous factors that are outside of our control. As a result, we do not currently have an anticipated timeframe for such expansion. Pursue New Restaurant Development. We have pursued a disciplined new corporate owned growth strategy.

Added

Revenues for the three months ended December 31, 2022 were comparable to the three months ended December 31, 2022 although there was one more restaurant opened in the comparable period. Food, beverage and supplies .

Removed

We intend to submit an application for franchise registration in California, and we intend to submit franchise applications in additional states over the next few months. While our initial franchise development will focus on the United States, we also believe the Yoshiharu concept will attract future franchise partners around the world. Increase Profitability .

Added

Food, beverage and supplies costs were approximately $590 thousand for the three months ended December 31, 2023 compared to $670 thousand for the three months ended December 31, 2022, representing a decrease of approximately $80 thousand or 11.9%. Labor .

Removed

We intend to explore partnerships with grocery retailers to provide for small-format Yoshiharu kiosks in stores to promote a limited selection of Yoshiharu cuisine. 30 Components of Our Results of Operations Revenue. Revenue represents sales of food and beverages in restaurants.

Added

Labor and related costs were approximately $4.2 million for the year ended December 31, 2023 compared to $3.7 million for the year ended December 31, 2022, representing an increase of approximately $0.6 million, or 15.4%.

Removed

The decrease in costs as a percentage of sales was primarily driven by the increases in our menu prices and management’s efforts to increase purchasing power on ingredients. Labor .

Added

Rent and utilities expenses were approximately $289 thousand for the three months ended December 31, 2023 compared to $348 thousand for the three months ended December 31, 2022, representing a decrease of approximately $60 thousand, or 17.1%. Delivery and service fees .

Removed

The decrease in costs as a percentage of sales was primarily driven by the management efforts to improve the efficiency of employees at the restaurant level which has been supported by the back office managers. Rent and utilities .

Added

As a percentage of sales, delivery and service fees ratio for the year ended December 31, 2023 was comparable to the ratio in the prior year due to comparable sales mix between the dining-in and take-out.

Removed

Historically, our main sources of liquidity have been cash flows from operations, borrowings from banks, and sales of common shares. In recent periods, the Company received assistance from governmental funds available in response to closures and impact on the business as a result of the pandemic.

Added

Depreciation and amortization expenses incurred were approximately $149 thousand for the three months ended December 31, 2023 compared to $103 thousand for the three months ended December 31, 2022, representing an increase of approximately $46 thousand or 44.6% due to the increase in fixed assets during the comparable period. General and administrative expenses .

Removed

During the year ended December 31, 2021, the Company received loans amounting to approximately $1,402,000. Certain of these loans are eligible for forgiveness under the government plans. During the year ended December 31, 2021, PPP loans amounting to approximately $270,000 were forgiven. During the year ended December 31, 2022, additional PPP loans amounting to approximately $386,000 were forgiven.

Added

General and administrative expenses were approximately $719 thousands for the three months ended December 31, 2023 compared to $982 thousands for the three months ended December 31, 2022, representing a decrease of approximately $263 thousands or 26.8%. This decrease in general and administrative expenses was due to the non-recurring expenses incurred for the IPO during the comparing period in 2022.

Removed

Net cash provided by operating activities during the year ended December 31, 2021 was $194,143, which resulted from net loss of $1,630,485, non-cash charges of $138,665 for depreciation and amortization, non-cash professional fees of $1.2 million, and net cash in-flows of $707,850 from changes in operating assets and liabilities, offset by non-cash income of $269,887 from forgiveness of PPP loans.

Added

With the IPO in September 2022, the board has approved a success bonus to James Chae for the amount and the employment contract was made with James Chae in November 2022 for the management of our company.

Removed

The increase in payables to related parties was the result of expenditures incurred by the related parties in connection with the opening of new restaurants. The increase in accounts payable was primarily due to the timing of cash payments.

Added

As a percentage of sales, related party compensation was 3.7% for the year ended December 31, 2023 and 11.1% for the year ended December 31, 2022.

Removed

Net cash provided by financing activities during the year ended December 31, 2021 was $1,789,574, primarily due to $1,280,000 in proceeds from the sale of common stock, $1,402,354 cash received through borrowings from banks and from pandemic relief funds available from government agencies, offset by $167,145 of repayment of borrowings, and shareholder distributions of $696,575, net of shareholder contributions.

Added

(b) Represents income recorded upon the forgiveness of loan from restaurant revitalization fund. (c) Represents expenses incurred to secure the restaurant locations under development and costs to reserve back-office managers to manage those restaurants. (d) Represents non-recurring IPO success bonus.

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Other VSTD 10-K year-over-year comparisons

VSTD 10-K 2023 vs 2024