Maison Solutions Inc.
For the period ended Jan 31, 2025. Filed Mar 17, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jan 31, 2025 · Filed Mar 17, 2025
MSS$1.06+8.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-10-31; filed 2024-12-16.
0001213900-24-109372
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-01-31; filed 2025-03-17.
0001213900-25-024574
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 151 previous paragraphs and 152 current paragraphs.
108 unchanged; 40 reworded; 4 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Liquidity
Current report
The Company believes that its cash on hand and operating cash flows will be sufficient to fund its operations over at least the next 12 months from the date of issuance of these financial statements. However, the Company may need additional cash resources in the future if the Company experiences changed business conditions or other developments and may also need additional cash resources in the future if the Company wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed the Company’s amounts of cash on hand, the Company may seek to issue debt or equity securities or obtain a credit facility.
Current report
On March 12, 2025, we entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Investor” or “Holder”), pursuant to which we agreed to issue and sell (i) a senior unsecured convertible promissory note in the aggregate original principal amount of $3,000,000 with an original issue discount of eight and a half percent (8.5%) (the “Initial Note”), convertible into shares (the “Conversion Shares”) of Class A common stock, $0.0001 par value per share of the Company (the “Common Stock”), and (ii) a note purchase warrant (the “Incremental Warrant”), exercisable for one or more senior unsecured convertible promissory notes in the aggregate original principal amount of up to $6,500,000 with an original issue discount of eight and a half percent (8.5%) and substantially in the form of the Initial Note (each an “Additional Note” and collectively, the “Additional Notes” and together with the Initial Note, the “Notes”). On March 12, 2025 (the “Closing Date”), we issued and sold to the Investor the Initial Note for a purchase price of $2,745,000, representing an original issue discount of eight and a half percent (8.5%), which matures on March 12, 2027, and the Incremental Warrant, which expires on March 12, 2028. The Initial Note bears interest at a rate to 5.25% per annum and may increase to a rate of 18.00% per annum upon the occurrence of an Event of Default (as defined in the Initial Note), for so long as such event remains uncured. Accrued interest will be paid on a monthly basis and, at the Company’s option, will either be paid in cash or paid-in-kind in shares of Common Stock, subject to certain terms and conditions as set forth in the Initial Note.
Current report
On March 12, 2025, we entered into a note modification agreement dated March 12, 2025 (the “Modification Agreement”) with AZLL, Lee Lee, Holders of the Secured Note, John Xu and Grace Xu (together with the Company, the “Parties”) to modify certain terms of the Note, Security Agreement and Guarantees. Pursuant to the Modification Agreement, the Parties agreed to revise the payment schedule of the Note and extend the maturity date of the Note to May 11, 2026 (the “Extended Maturity Date”). The Modification Agreement also provides for an additional extension fee interest to accrue on the outstanding principal balance of the Note as of January 15, 2025 at an annual rate of eight percent (8%), which shall become payable and immediately due on the earliest of (i) the Extended Maturity Date or (ii) immediately upon the occurrence of any “Event of Default” under any of the Loan Documents or the Modification Agreement, as such term is defined under the applicable Loan Document. Furthermore, the Modification Agreement includes additional “Events of Default” and remedies under the Loan Documents, and additional covenants of the Company, among other things. The Modification Agreement increases the annual interest rate on the outstanding Principal Amount, effective as of February 24, 2024, to twelve percent (12%). Additionally, the amount of each Guaranty Premium shall be added to the outstanding Principal Amount of the Note as of the date Issuer’s liability for payment of the Guaranty Premium becomes fixed and shall accrue interest at the rate set forth in the Note until paid in full. The Modification stated that no new debt or encumbrances without holders’ approval. Absent Holders’ prior, express written authorization, Issuer shall not: (i) pay or incur any indebtedness outside the ordinary course of business; or (b) grant, permit or suffer the attachment of any liens or security interests in or to any Collateral; or (c) enter into any single or series of contracts, agreements or commitments requiring cumulative payments in excess of $10,000.00. Moreover, pursuant to the Modification Agreement, issuer shall not make any distributions to Parent, Grantor, Guarantors or any other related party, company or entity related to the Parent, Grantor or Guarantors through any direct or indirect ownership or control or any other financial arrangement (together, the “Related Parties”). Upon execution of the Modification Agreement, the Company paid the Holders a $35,000 documentation fee pursuant to the terms of the Modification Agreement.
Removed paragraphs (3)
Previous report
Going Concern
Previous report
The accompanying consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. For the three months ended October 31, 2024, the Company had a net loss of approximately $256,009. For the six months ended October 31, 2024, the Company had a net income of approximately $444,899. The Company had bank overdraft of $1.32 million, negative working capital of $15.64 million, andan accumulated deficit of approximately $2.37 million as of October 31, 2024. The historical operating results, including recurring losses from operations raise substantial doubt about the Company’s ability to continue as a going concern.
Previous report
On January 22, 2024, a small claim complaint was filed against Maison Monterey Park for unpaid invoice. The Court granted plaintiff a judgement against Maison Monterey Park for $5,128 on April 25, 2024. The Court granted plaintiff a judgment against defendant in the amount of $5,128 on April 25, 2024, which was then set aside on October 30, 2024 and schedule for trial on December 5, 2024. On December 5, 2024, the Court ruled that Maison Monterey Park does not owe plaintiff any money.
Reworded paragraphs (40)
Previous wording
The inflation rate for the United States was 2.6% for the six months ended October 31, 2024, 3.4% for the year ended April 30, 2024 and 4.9% for the year ended April 30, 2023 according to Bureau of Labor Statistics. Inflation increased our purchase costs, occupancy costs, and payroll costs.
Current wording
The inflation rate for the United States was 3.0% for the nine months ended January 31, 2025, 3.4% for the year ended April 30, 2024 and 4.9% for the year ended April 30, 2023 according to Bureau of Labor Statistics. Inflation increased our purchase costs, occupancy costs, and payroll costs.
Previous wording
As of October 31, 2024, we had approximately 385 employees including employees from our newly acquired subsidiary, Lee Lee, which is based in the State of Arizona. Our employees are not unionized nor, to our knowledge, are there any plans for them to unionize. We have never experienced a strike or significant work stoppage. We consider our employee relations to be good. Minimum wage rates in some states have recently increased. For example, in California, the minimum wage was $15.50 per hour in 2023 and increased to $16 per hour starting from January 1, 2024; in Arizona, the minimum wage was $13.85 per hour in 2023, and increased to $14.35 per hour starting from January 1, 2024. Our payroll and payroll tax expenses were $4.3 million and $1.7 million for the three months ended October 31, 2024 and 2023, respectively. Our payroll and payroll tax expenses were $8.0 million and $3.4 million for the six months ended October 31, 2024 and 2023, respectively.
Current wording
As of January 31, 2025, we had approximately 376 employees including employees from our newly acquired subsidiary, Lee Lee, which is based in the State of Arizona. Our employees are not unionized nor, to our knowledge, are there any plans for them to unionize. We have never experienced a strike or significant work stoppage. We consider our employee relations to be good. Minimum wage rates in some states have recently increased. For example, in California, the minimum wage was $15.50 per hour in 2023 and increased to $16 per hour starting from January 1, 2024; in Arizona, the minimum wage was $13.85 per hour in 2023, and increased to $14.35 per hour starting from January 1, 2024. Our payroll and payroll tax expenses were $3.5 million and $1.8 million for the three months ended January 31, 2025 and 2024, respectively. Our payroll and payroll tax expenses were $11.5 million and $5.2 million for the nine months ended January 31, 2025 and 2024, respectively.
Previous wording
Maison believes that a centralized and efficient vendor and supply management system is the key to profitability. Maison has major vendors, including Lawrence Wholesale, BRC International Inc, ONCO Food Corp., GF Distribution, Inc., and XHJC Holding Inc. For the three months ended October 31, 2024, these five suppliers accounted for 14%, 6%, 0.1%, 1% and 7% of the Company’s total purchases, respectively. For the three months ended October 31, 2023, these five suppliers accounted for 0%, 0%, 32%, 17% and 10% of the Company’s total purchases, respectively. For the six months ended October 31, 2024, these five suppliers accounted for 12%, 9%, 1%, 3%, and 9% of the Company’s total purchases, respectively. For the six months ended October 31, 2023, these five suppliers accounted for 0%, 0%, 33%, 18% and 10% of the Company’s total purchases, respectively. Maison believes that its centralized vendor management enhances its negotiating power and improves its ability to manage vendor payables.
Current wording
Maison believes that a centralized and efficient vendor and supply management system is the key to profitability. Maison has major vendors, including Lawrence Wholesale, BRC International Inc, ONCO Food Corp., GF Distribution, Inc., and XHJC Holding Inc. For the three months ended January 31, 2025, these five suppliers accounted for 5%, 6%, -%, 7% and 5% of the Company’s total purchases, respectively. For the three months ended January 31, 2024, two suppliers accounted for 25%, and 16% of the Company’s total purchases, respectively. For the nine months ended January 31, 2025, these five suppliers accounted for 9%, 8%, 1%, 4%, and 7% of the Company’s total purchases, respectively. For the nine months ended January 31, 2024, three suppliers accounted for 30%, 18% and 9% of the Company’s total purchases, respectively. Maison believes that its centralized vendor management enhances its negotiating power and improves its ability to manage vendor payables.
Previous wording
From time to time, Maison conducts maintenance on the fixtures and equipment for its stores. Any maintenance or renovations could interrupt the operation of our stores and result in a decline in customer volume. Significant maintenance or renovation would affect our operations and operating results. Meanwhile, improving the store environment can also attract more customers and lead to an increase in sales. Maison focused on improving and renovating our stores for the three and six months ended October 31, 2024 and 2023. We spent $154,255 for the three months ended October 31, 2024 for repairs and maintenance and supermarket renovation, an increase of $140,808 compared to $13,447 for the three months ended October 31, 2023 mainly due to the acquisition of our new subsidiary Lee Lee. We spent $450,127 (including $310,977 for Lee Lee) for the six months ended October 31, 2024 for repairs and maintenance and supermarket renovation, an increase of $356,406 compared to $93,721 for the six months ended October 31, 2023 mainly due to the acquisition of our new subsidiary Lee Lee.
Current wording
From time to time, Maison conducts maintenance on the fixtures and equipment for its stores. Any maintenance or renovations could interrupt the operation of our stores and result in a decline in customer volume. Significant maintenance or renovation would affect our operations and operating results. Meanwhile, improving the store environment can also attract more customers and lead to an increase in sales. Maison focused on improving and renovating our stores for the three and nine months ended January 31, 2025 and 2024. We spent $0.24 million for the three months ended January 31, 2025 for repairs and maintenance and supermarket renovation, a decrease of $0.11 million compared to $0.35 million for the three months ended January 31, 2024 Lee. We spent $0.69 million (including $0.4 million for Lee Lee) for the nine months ended January 31, 2025 for repairs and maintenance and supermarket renovation, an increase of $0.25 million compared to $0.44 for the nine months ended January 31, 2024 mainly due to the acquisition of our new subsidiary Lee Lee.
Previous wording
The Company plans to increase its revenue by strengthening its sales force, providing attractive sales incentive programs, recruiting experienced industry-related managerial personnel, increasing marketing and promotion activities, seeking suppliers with competitive price and good quality products, opening or acquiring additional specialty supermarkets in the locations that have less-competition. If deemed necessary, management could also seek to raise additional funds by way of admitting strategic investors, or private or public offerings, or by seeking to obtain loans from banks or others, to support the Company’s daily operation. While management of the Company believes in the viability of its strategy to generate sufficient revenues and its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern depends upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its initiatives or attain profitable operations. If the Company is unable to raise additional funding to meet its working capital needs in the future, it may be forced to delay, reduce or cease its operations.
Current wording
As reflected in the accompanying consolidated financial statements, for the three and nine months ended January 31, 2025, the Company had a net income of $1,011,763 and $1,456,662, respectively. However, the Company had an accumulated deficit of approximately $1.36 million and negative working capital of $11.50 million as of January 31, 2025. The Company also need approximately $8.0 million cash to repay Lee Lee's acquisition price, the acquisition was completed on April 8, 2024. The working capital requirements are affected by the efficiency of operations and depend on the Company’s ability to increase its revenue. The Company plans to increase its revenue by strengthening its sales force, providing attractive sales incentive programs, recruiting experienced industry-related managerial personnel, increasing marketing and promotion activities, seeking suppliers with competitive price and good quality products, opening or acquiring additional specialty supermarkets in the locations that have less-competition.
Previous wording
Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The Company records inventory shrinkage based on historical data and management’s estimates and provided a reserve for inventory shrinkage for the three and six months ended October 31, 2024 and 2023. The Company provided a reserve (reversal) for inventory shrinkage of $110,229 and $(322) for the three months ended October 31, 2024 and 2023, respectively. The Company provided a reserve (reversal) for inventory shrinkage of $314,833 and $(3,559) for the six months ended October 31, 2024 and 2023, respectively.
Current wording
Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The Company records inventory shrinkage based on historical data and management’s estimates and provided a reserve for inventory shrinkage for the three and nine months ended January 31, 2025 and 2024. The Company provided a reserve (reversal) for inventory shrinkage of $27,639 and $2,471 for the three months ended January 31, 2025 and 2024, respectively. The Company provided a reserve (reversal) for inventory shrinkage of $342,472 and $(1,088) for the nine months ended January 31, 2025 and 2024, respectively.** **
Previous wording
The Company’s contract liability related to gift cards was $810,798 and $965,696 as of October 31, 2024 and April 30, 2024, respectively.
Current wording
The Company’s contract liability related to gift cards was $769,739 and $965,696 as of January 31, 2025 and April 30, 2024, respectively.
Previous wording
Our net revenues were approximately $31.0 million for the three months ended October 31, 2024, an increase of approximately $17.3 million or 125.3%, from approximately $13.8 million for the three months ended October 31, 2023. The increase in net revenues was driven by the inclusion of revenues from our newly acquired subsidiary, Lee Lee (acquired in April 2024), of $19.2 million, which was partly offset by decreased sales of Maison Monterey Park by $0.5 million, decreased sales of Maison San Gabriel by $0.8 million, decreased sales of Maison Monrovia by $0.5 million and decreased sales of Maison El Monte by $0.2 million, as compared to the three months ended October 31, 2023. Our four California-based supermarkets contributed $11.8 million in revenue during the three months ended October 31, 2024, a decrease of approximately $2.0 million, as compared to the three months ended October 31, 2023. The $2.0 million decrease of our California-based supermarkets was mainly due to increased competition from newly opened Asian supermarkets in nearby area, the effect of certain COVID-19 pandemic-era relief programs ending in fall 2023 such as losing access to foods stamps due to resume of work requirement for food stamps, as well as the temporary slow-down of the Maison El Monte store due to renovation.
Current wording
Our net revenues were approximately $34.1 million for the three months ended January 31, 2025, an increase of approximately $20.6 million or 151.1%, from approximately $13.6 million for the three months ended January 31, 2024. The increase in net revenues was driven by the inclusion of revenues from our newly acquired subsidiary, Lee Lee (acquired in April 2024), of $21.6 million and increased sales of Maison El Monte by $0.2 million, which was partly offset by decreased sales of Maison Monterey Park by $0.5 million, decreased sales of Maison San Gabriel by $0.5 million and decreased sales of Maison Monrovia by $0.3 million, as compared to the three months ended January 31, 2024. Our four California-based supermarkets contributed $12.5 million in revenue during the three months ended January 31, 2025, a decrease of approximately $1.1 million, as compared to the three months ended January 31, 2024. The $1.1 million decrease of our California-based supermarkets was mainly due to increased competition from newly opened Asian supermarkets in nearby area, the effect of certain COVID-19 pandemic-era relief programs ending in fall 2023 such as losing access to foods stamps due to resume of work requirement for food stamps.
Previous wording
Cost of revenues includes cost of supermarket product sales and occupancy costs, which are store rent expense, depreciation for store property and equipment, inventory shrinkage costs and store supplies. The depreciation expense comes from machinery & equipment, such as refrigerators, water heaters, forklifts, and freezers and furniture & fixtures, such as metal shelves, shopping carts, and LED lights. Shrinkage costs are different for different types of products. For example, fruits and vegetables have a high allowance rate during the receiving and display process. The seafood and meat departments have a low allowance rate because the non-fresh products can freeze and sell for the same price or even higher price after being cut. The cost of revenues increased by $12.2 million, from $10.6 million for the three months ended October 31, 2023, to approximately $22.9 million for the three months ended October 31, 2024. The increase in cost of revenues was mainly from our newly acquired subsidiary, Lee Lee (acquired in April 2024), by $13.5 million, which was partly offset by decreased cost of revenues from our four California-based supermarkets by $1.3 million.
Current wording
Cost of revenues includes cost of supermarket product sales and occupancy costs, which are store rent expense, depreciation for store property and equipment, inventory shrinkage costs and store supplies. The depreciation expense comes from machinery & equipment, such as refrigerators, water heaters, forklifts, and freezers and furniture & fixtures, such as metal shelves, shopping carts, and LED lights. Shrinkage costs are different for different types of products. For example, fruits and vegetables have a high allowance rate during the receiving and display process. The seafood and meat departments have a low allowance rate because the non-fresh products can freeze and sell for the same price or even higher price after being cut. The cost of revenues increased by $16.2 million, from $10.4 million for the three months ended January 31, 2024, to approximately 26.6 million for the three months ended January 31, 2025. The increase in cost of revenues was mainly from our newly acquired subsidiary, Lee Lee (acquired in April 2024), by $17.0 million, which was partly offset by decreased cost of revenues from our four California-based supermarkets by $0.8 million.
Previous wording
Gross profit was approximately $16.4 million and $6.2 million for the six months ended October 31, 2024 and 2023, respectively. Gross margin was 27.1% and 22.6% for the six months ended October 31, 2024 and 2023, respectively. Our supermarkets’ sales profit margins increased by 4.4% for the six months ended October 31, 2024 compared to the six months ended October 31, 2023. The increase in our gross profit was mainly due to the higher gross profit from our new acquired subsidiary Lee Lee.
Current wording
Gross profit was approximately $7.5 million and $3.2 million for the three months ended January 31, 2025 and 2024, respectively. Gross margin was 22.1% and 23.4% for the three months ended January 31, 2025 and 2024, respectively. Our supermarkets’ sales profit margins decreased by 1.4% for the three months ended January 31, 2025 compared to the three months ended January 31, 2024. The decrease in our gross profit was mainly due to decreased gross profit from Maison Monterey Park resulting from increased competition from newly opened Asian supermarkets in nearby area.
Previous wording
Total operating expenses were approximately $7.5 million for the three months ended October 31, 2024, an increase of approximately $4.6 million, compared to approximately $2.9 million for the three months ended October 31, 2023. Total operating expenses as a percentage of revenues were 24.1% and 20.8% for the three months ended October 31, 2024 and 2023, respectively. The increase in operating expenses was primarily attributable to the increase in selling expenses, which included the increase in payroll expense, utility expense, advertising and promotion expense, postage & delivery expense and merchant service charges as result of the acquisition of Lee Lee. Payroll expense increased by $2.6 million in the three months ended October 31, 2024, as compared to the three months ended October 31, 2023 due to the increase of hourly rate and increased number of employees due to the acquisition of Lee Lee. Utility expenses increased by $0.3 million in the three months ended October 31, 2024, as compared to the three months ended October 31, 2023. Merchant service charges increased by $0.2 million in the three months ended October 31, 2024, as compared to the three months ended October 31, 2023 due to increased sales as describe above.
Current wording
Total operating expenses were approximately $6.4 million for the three months ended January 31, 2025, an increase of approximately $2.9 million, compared to approximately $3.5 million for the three months ended January 31, 2024. Total operating expenses as a percentage of revenues were 18.8% and 25.7% for the three months ended January 31, 2025 and 2024, respectively. The increase in operating expenses was primarily attributable to the increase in selling expenses, which included the increase in payroll expense, utility expense, advertising and promotion expense, postage & delivery expense and merchant service charges as result of the acquisition of Lee Lee. Payroll expense increased by $1.8 million in the three months ended January 31, 2025, as compared to the three months ended January 31, 2024 due to the increase of hourly rate and increased number of employees due to the acquisition of Lee Lee. Utility expenses increased by $0.2 million in the three months ended January 31, 2025, as compared to the three months ended January 31, 2024. Bank service charges increased by $0.4 million in the three months ended January 31, 2025, as compared to the three months ended January 31, 2024 due to increased sales describe above.
Previous wording
The increase in general and administrative expenses during the three months ended October 31, 2024 was primarily due to increased professional fees by $823,003 related to the contingencies listed in Note 17 — “Commitments and Contingencies” to the consolidated financial Statements, increased office expense by $360,682, increased amortization expense by $136,250 due to the new trademark acquired through the acquisition of Lee Lee, increased utility expense by $25,683, increased bad debt expense by $62,483, and increased repair and maintenance expense by $119,704.
Current wording
The increase in general and administrative expenses during the three months ended January 31, 2025 was primarily due to increased office expense by $384,127, increased amortization expense by $70,958 due to the new trademark acquired through the acquisition of Lee Lee, increased utility expense by $25,459, increased bad debt expense by $62,483, and increased repair and maintenance expense by $194,464, which was partly offset by decreased professional fee by $149,822.
Previous wording
Other expenses were $181,985 for the three months ended October 31, 2024 compare to other income of $14,780 for the three months ended October 31, 2023. For the three months ended October 31, 2024, other expenses mainly consisted of investment loss of $226,274, which was partly offset by other income of $44,289. For the three months ended October 31, 2023, other income mainly consisted of investment income of $15,678, which was partially offset by other expenses of $898.
Current wording
Other income were $158,176 for the three months ended January 31, 2025 compare to other expense of $50,306 for the three months ended January 31, 2024. For the three months ended January 31, 2025, other expenses mainly consisted of investment loss of $71,023, which was partly offset by other income of $229,199. For the three months ended January 31, 2024, other expenses mainly consisted of investment loss of $51,204 from HKGF Arcadia, which was partially offset by other income of $898.
Previous wording
Interest expense was $242,380 for the three months ended October 31, 2024, an increase of $212,415 from $29,965 for the three months ended October 31, 2023. For the three months ended October 31, 2024, the interest expense was for the SBA Loans and note payable arising from the acquisition of Lee Lee. For the three months ended October 31, 2023, the interest expense was for the SBA Loans and the loans with American First National Bank (the “AFNB Loans”). The AFNB Loans were repaid in full as of April 30, 2024.
Current wording
Interest expense was $269,059 for the three months ended January 31, 2025, an increase of $249,634 from $19,425 for the three months ended January 31, 2024. For the three months ended January 31, 2025, the interest expense was for the SBA Loans and note payable arising from the acquisition of Lee Lee. For the three months ended January 31, 2024, the interest expense was for the SBA Loans and the loans with American First National Bank (the “AFNB Loans”). The AFNB Loans were repaid in full as of April 30, 2024.
Previous wording
Income tax expense was $563,096 for the three months ended October 31, 2024, an increase of $415,936 from income taxes expense of $147,160 for the three months ended October 31, 2023. The increase was mainly due to increased taxable income from our new acquisition stores of Lee-Lee for the three months ended October 31, 2024 compared to the three months ended October 31, 2023.
Current wording
Income tax expense was $8,416 for the three months ended January 31, 2025, decrease of $150,240 from income taxes expense of $158,656 for the three months ended January 31, 2024. The decrease was mainly due to the utilization of NOL from the subsidiaries that had NOL since Maison files consolidated income tax return.
Previous wording
Net loss attributable to the Company was $256,009 for the three months ended October 31, 2024, an increase of $347,474, or 379.9%, from a $91,465 net income attributable to the Company for the three months ended October 31, 2023. This was mainly attributable to the reasons discussed above, which included an increase in gross profit by $5,028,566, increased other income by $45,187, which was partly offset by increased investment loss of $241,952, increased interest expenses by $212,415, increased operating expenses by $4,611,023 and increased income tax expense by $415,936.
Current wording
Net income attributable to the Company was $1,011,763 for the three months ended January 31, 2025, an increase of $1,560,717, or 284.3%, from a $548,954 net loss attributable to the Company for the three months ended January 31, 2024. This was mainly attributable to the reasons discussed above, which included an increase in gross profit by $4,353,838, which was partly offset by increased investment loss by $19,819, increased interest expenses by $249,634, and increased operating expenses by $2,932,205.
Previous wording
Results of Operations for the Six Months Ended October 31, 2024 and 2023
Current wording
Results of Operations for the Nine Months Ended January 31, 2025 and 2024
Previous wording
Our net revenues were approximately $60.7 million for the six months ended October 31, 2024, an increase of approximately $33.2 million or 120.5%, from approximately $27.5 million for the six months ended October 31, 2023. The increase in net revenues was driven by the inclusion of revenues from our newly acquired subsidiary, Lee Lee (acquired in April 2024), of $37.4 million, which was partly offset by decreased sales of Maison Monterey Park by $0.8 million, decreased sales of Maison San Gabriel by $1.7 million, decreased sales of Maison Monrovia by $1.1 million and decreased sales of Maison El Monte by $0.7 million, as compared to the six months ended October 31, 2023. Our four California-based supermarkets contributed $23.2 million in revenue during the six months ended October 31, 2024, a decrease of approximately $4.3 million, as compared to the six months ended October 31, 2023. The $4.3 million decrease was mainly due to increased competition from newly opened Asian supermarkets in nearby area, the effect of certain COVID-19 pandemic-era relief programs ending in fall 2023 such as losing access to foods stamps due to resume of work requirement for food stamps, as well as the temporary slow-down of the Maison El Monte store due to renovation.
Current wording
Our net revenues were approximately $94.9 million for the nine months ended January 31, 2025, an increase of approximately $53.7 million or 130.6%, from approximately $41.1 million for the nine months ended January 31, 2024. The increase in net revenues was driven by the inclusion of revenues from our newly acquired subsidiary, Lee Lee (acquired in April 2024), of $59.0 million, which was partly offset by decreased sales of Maison Monterey Park by $1.3 million, decreased sales of Maison San Gabriel by $2.2 million, decreased sales of Maison Monrovia by $1.4 million and decreased sales of Maison El Monte by $0.5 million, as compared to the nine months ended January 31, 2024. Our four California-based supermarkets contributed $35.8 million in revenue during the nine months ended January 31, 2025, a decrease of approximately $5.3 million, as compared to the nine months ended January 31, 2024. The $5.3 million decrease was mainly due to increased competition from newly opened Asian supermarkets in nearby area, the effect of certain COVID-19 pandemic-era relief programs ending in fall 2023 such as losing access to foods stamps due to resume of work requirement for food stamps, as well as the temporary slow-down of the Maison El Monte store due to renovation.
Previous wording
Cost of revenues includes cost of supermarket product sales and occupancy costs, which are store rent expense, depreciation for store property and equipment, inventory shrinkage costs and store supplies. The depreciation expense comes from machinery & equipment, such as refrigerators, water heaters, forklifts, and freezers and furniture & fixtures, such as metal shelves, shopping carts, and LED lights. Shrinkage costs are different for different types of products. For example, fruits and vegetables have a high allowance rate during the receiving and display process. The seafood and meat departments have a low allowance rate because the non-fresh products can freeze and sell for the same price or even higher price after being cut. The cost of revenues increased by $23.0 million, from $21.3 million for the six months ended October 31, 2023, to approximately $44.3 million for the six months ended October 31, 2024. The increase in cost of revenues was mainly from our newly acquired subsidiary, Lee Lee (acquired in April 2024), by $25.9 million, which was partly offset by decreased cost of revenues from our four California-based supermarkets by $2.9 million.
Current wording
Cost of revenues includes cost of supermarket product sales and occupancy costs, which are store rent expense, depreciation for store property and equipment, inventory shrinkage costs and store supplies. The depreciation expense comes from machinery & equipment, such as refrigerators, water heaters, forklifts, and freezers and furniture & fixtures, such as metal shelves, shopping carts, and LED lights. Shrinkage costs are different for different types of products. For example, fruits and vegetables have a high allowance rate during the receiving and display process. The seafood and meat departments have a low allowance rate because the non-fresh products can freeze and sell for the same price or even higher price after being cut. The cost of revenues increased by $39.2 million, from $31.7 million for the nine months ended January 31, 2024, to approximately $70.9 million for the nine months ended January 31, 2025. The increase in cost of revenues was mainly from our newly acquired subsidiary, Lee Lee (acquired in April 2024), by $42.9 million, which was partly offset by decreased cost of revenues from our four California-based supermarkets by $3.7 million.
Previous wording
Gross profit was approximately $8.2 million and $3.1 million for the three months ended October 31, 2024 and 2023, respectively. Gross margin was 26.3% and 22.7% for the three months ended October 31, 2024 and 2023, respectively. Our supermarkets’ sales profit margins increased by 3.6% for the three months ended October 31, 2024 compared to the three months ended October 31, 2023. The increase in our gross profit was mainly due to the higher gross profit from our new acquired subsidiary Lee Lee.
Current wording
Gross profit was approximately $24.0 million and $9.4 million for the nine months ended January 31, 2025 and 2024, respectively. Gross margin was 25.3% and 22.9% for the nine months ended January 31, 2025 and 2024, respectively. Our supermarkets’ sales profit margins increased by 2.4% for the nine months ended January 31, 2025 compared to the nine months ended January 31, 2024. The increase in our gross profit was mainly due to the higher gross profit from our new acquired subsidiary Lee Lee.
Previous wording
Total operating expenses were approximately $14.1 million for the six months ended October 31, 2024, an increase of approximately $7.9 million, compared to approximately $6.2 million for the six months ended October 31, 2023. Total operating expenses as a percentage of revenues were 23.2% and 22.5% for the six months ended October 31, 2024 and 2023, respectively. The increase in operating expenses was primarily attributable to the increase in selling expenses, which included the increase in payroll expense, utility expense, advertising and promotion expense, postage & delivery expense and merchant service charges as result of the acquisition of Lee Lee. Payroll expense increased by $4.6 million in the six months ended October 31, 2024, as compared to the six months ended October 31, 2023 due to the increase of hourly rate and increased number of employees due to the acquisition of Lee Lee. Utility expenses increased by $0.6 million in the six months ended October 31, 2024, as compared to the six months ended October 31, 2023. Merchant service charges increased by $0.4 million in the six months ended October 31, 2024, as compared to the six months ended October 31, 2023 due to increased sales as describe above. Other miscellaneous expenses increased by $0.1 million in the six months ended October 31, 2024, as compared to the six months ended October 31, 2023.
Current wording
Total operating expenses were approximately $20.5 million for the nine months ended January 31, 2025, an increase of approximately $10.9 million, compared to approximately $9.7 million for the nine months ended January 31, 2024. Total operating expenses as a percentage of revenues were 21.7% and 23.6% for the nine months ended January 31, 2025 and 2024, respectively. The increase in operating expenses was primarily attributable to the increase in selling expenses, which included the increase in payroll expense, utility expense, advertising and promotion expense, postage & delivery expense and merchant service charges as result of the acquisition of Lee Lee. Payroll expense increased by $6.4 million in the nine months ended January 31, 2025, as compared to the nine months ended January 31, 2024 due to the increase of hourly rate and increased number of employees due to the acquisition of Lee Lee. Utility expenses increased by $0.8 million in the nine months ended January 31, 2025, as compared to the nine months ended January 31, 2024. Merchant service charges increased by $0.8 million in the nine months ended January 31, 2025, as compared to the nine months ended January 31, 2024 due to increased sales describe above. Other miscellaneous expenses increased by $0.1 million in the nine months ended January 31, 2024, as compared to the nine months ended January 31, 2024.
Previous wording
The increase in general and administrative expenses during the six months ended October 31, 2024 was primarily due to increased office expenses of approximately $508,818, increased professional fees by $625,756, increased amortization expense by $272,500 due to the new trademark acquired through the acquisition of Lee Lee, increased insurance expense by $190,883, increased repair and maintenance expense by $337,690, increased other miscellaneous expenses by $96,955 and decreased bad debt reversal by $167,805.
Current wording
The increase in general and administrative expenses during the nine months ended January 31, 2025 was primarily due to increased office expenses of approximately $569,593, increased professional fees by $475,934, increased amortization expense by $343,458 due to the new trademark acquired through the acquisition of Lee Lee, increased insurance expense by $259,519, increased repair and maintenance expense by $550,870, and increased office expenses and supplies by $555,953.
Previous wording
Other expenses were $379,419 for the six months ended October 31, 2024 compare to other income of $370,273 for the six months ended October 31, 2023. For the six months ended October 31, 2024, other expenses mainly consisted of investment loss of $433,077 ($392,302 investment loss from HKGF Arcadia and $40,775 from Alhambra Store), which was partly offset by other income of $53,658. For the six months ended October 31, 2023, other income mainly consisted of $0.4 million ERC received, which was partly offset by investment loss from HKGF Arcadia of $12,778. The ERC is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to December 31, 2021.
Current wording
Other expenses were $221,243 for the nine months ended January 31, 2025 compared to other income of $319,967 for the nine months ended January 31, 2024. For the nine months ended January 31, 2025, other expenses mainly consisted of investment loss of $504,100 ($463,325 investment loss from HKGF Arcadia and $40,775 from Alhambra Store), which was partly offset by other income of $282,857. For the nine months ended January 31, 2024, other income mainly consisted of $0.4 million ERC received, which was partly offset by investment loss from HKGF Arcadia of $63,982. The ERC is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to December 31, 2021.
Previous wording
Interest expense was $425,767 for the six months ended October 31, 2024, an increase of $349,236 from $76,531 for the six months ended October 31, 2023. For the six months ended October 31, 2024, the interest expense was for the SBA Loans and note payable arising from the acquisition of Lee Lee. For the six months ended October 31, 2023, the interest expense was for the SBA Loans and the loans with American First National Bank (the “AFNB Loans”). The AFNB Loans were repaid in full as of April 30, 2024.
Current wording
Interest expense was $694,826 for the nine months ended January 31, 2025, an increase of $598,870 from $95,956 for the nine months ended January 31, 2024. For the nine months ended January 31, 2025, the interest expense was for the SBA Loans and note payable arising from the acquisition of Lee Lee. For the nine months ended January 31, 2024, the interest expense was for the SBA Loans and the loans with American First National Bank (the “AFNB Loans”). The AFNB Loans were repaid in full as of April 30, 2024.
Previous wording
Income tax expense was $1,199,324 for the six months ended October 31, 2024, an increase of $933,258 from income taxes expense of $266,066 for the six months ended October 31, 2023. The increase was mainly due to increased taxable income from our stores (mainly from Lee Lee store) for the six months ended October 31, 2024 compared to the six months ended October 31, 2023.
Current wording
Income tax expense was $1,207,740 for the nine months ended January 31, 2025, an increase of $783,018 from income taxes expense of $424,722 for the nine months ended January 31, 2024. The increase was mainly due to increased taxable income from our stores (mainly from Lee Lee stores) for the nine months ended January 31, 2025 compared to the nine months ended January 31, 2024.
Previous wording
Net income attributable to the Company was $444,899 for the six months ended October 31, 2024, an increase of $458,373, or 3,401.9%, from a $13,474 net loss attributable to the Company for the six months ended October 31, 2023. This was mainly attributable to the reasons discussed above, which included an increase in gross profit by $10,188,109, which was partly offset by decreased other income by $329,393, increased investment loss of $420,299, increased interest expenses by $349,236, increased operating expenses by $7,918,946 and increased income tax expense by $933,258.
Current wording
Net income attributable to the Company was $1,456,662 for the nine months ended January 31, 2025, an increase of $2,019,090, or 359.0%, from a $562,428 net loss attributable to the Company for the nine months ended January 31, 2024. This was mainly attributable to the reasons discussed above, which included an increase in gross profit by $14,541,947, which was partly offset by decreased other income by $101,092, increased investment loss of $440,118, increased interest expenses by $598,870, increased operating expenses by $10,851,151 and increased income tax expense by $783,018.
Previous wording
Cash Flows for the Six Months Ended October 31, 2024 Compared to the Six Months Ended October 31, 2023
Current wording
Cash Flows for the Nine Months Ended January 31, 2025 Compared to the Nine Months Ended January 31, 2024
Previous wording
As of October 31, 2024, we had cash, cash equivalents of approximately $355,670. We had net income attributable to us of $444,899 for the six months ended October 31, 2024, and had a working capital deficit of approximately $15.6 million as of October 31, 2024. As of October 31, 2024, the Company had outstanding loan facilities of approximately $2.53 million SBA loan and $9.83 million secured senior note payable due to the acquisition of Lee Lee.
Current wording
As of January 31, 2025, we had cash, cash equivalents of approximately $445,357. We had net income attributable to us of $1,456,662 for the nine months ended January 31, 2025, and had a working capital deficit of approximately $11.5 million as of January 31, 2025. As of January 31, 2025, the Company had outstanding loan facilities of approximately $2.51 million SBA loan and $8.29 million secured senior note payable due to the acquisition of Lee Lee.
Previous wording
The following table summarizes our cash flow data for the six months ended October 31, 2024 and 2023.
Current wording
The following table summarizes our cash flow data for the nine months ended January 31, 2025 and 2024.
Previous wording
Net cash provided by operating activities was approximately $4.7 million for the six months ended October 31, 2024, which mainly comprised of net income of $301,731, add-back of non-cash adjustments to net income including depreciation and amortization expense of $527,543, inventory impairment of $314,833, bad debt expense of $62,483 and investment loss from 49% equity investee HKGF Arcadia store of $392,302 and investment loss from 10% cost investee HKGF Alhambra store of $40,775. In addition, for the six months ended October 31, 2024, we had cash inflow from (i) decrease to other receivables and other current assets of $599,926, (ii) increased outstanding accounts payable of $3,783,025 including accounts payable from related parties of $120,804, (iii) increased outstanding income tax payable of $1,222,747, (iv) increased operating lease liabilities of $268,791, and (v) increase of accrued expenses and other payables of $374,645.
Current wording
Net cash provided by operating activities was approximately $6.4 million for the nine months ended January 31, 2025, which mainly comprised of net income of $1,296,896, add-back of non-cash adjustments to net income including depreciation and amortization expense of $779,593, inventory impairment of $342,472, bad debt expense of $29,493 and investment loss from 49% equity investee HKGF Arcadia store of $463,325 and investment loss from 10% cost investee HKGF Alhambra store of $40,775. In addition, for the nine months ended January 31, 2025, we had cash inflow from (i) decrease to other receivables and other current assets of $642,097, (ii) decrease to prepayments of $268,713, (iii) increased outstanding accounts payable of $5,243,603 including accounts payable from related parties of $136,494, (iv) increased outstanding income tax payable of $1,220,635, (v) increased operating lease liabilities of $396,548, and (vi) increase of accrued expenses and other payables of $88,366.
Previous wording
However, our net cash provided by operating activities for the six months ended October 31, 2024 was mainly offset by an increase of inventories of $2,398,913, an increase of prepayments of $442,103, an increase of accounts receivable from related parties of $149,749, and an increase of payment for contract liabilities of $154,898.
Current wording
However, our net cash provided by operating activities for the nine months ended January 31, 2025 was mainly offset by an increase of inventories of $4,197,132, an increase of accounts receivable from related parties of $61,349, and an increase of payment for contract liabilities of $195,957.
Previous wording
Net cash provided by operating activities was approximately $0.5 million for the six months ended October 31, 2023, which mainly comprised of net income of $64,754 with non-cash adjustment to net income including depreciation expense of $127,451, bad debt reversal of $105,322, provision for inventory shrinkage reversal of $3,559, investment loss of $12,778, and changes in deferred taxes of $3,667. In addition, for the six months ended October 31, 2023, we had cash inflow from decrease to outstanding accounts receivable from related parties of $129,105, decrease to inventories on hand of $155,589, decrease to outstanding other receivables and other current assets of $268,343, an increase of operating lease liabilities of $149,093, an increase of accrued expenses and other payables of $87,983, and an increase of taxes payables of $247,505.
Current wording
Net cash used by operating activities was approximately $0.9 million for the nine months ended January 31, 2024, which mainly comprised of net loss of $470,802 with non-cash adjustment to net income including depreciation expense of $274,476, bad debt reversal of $105,322, provision for inventory shrinkage reversal of $1,088, investment loss from 50% equity investee HKGF Arcadia store of $63,982, and changes in deferred taxes of $6,135. In addition, for the nine months ended January 31, 2024, we had cash outflow from 1) increased outstanding accounts receivable from related parties of $219,260, 2) increased inventories on hand of $40,147, 3) increased outstanding accounts receivables of $440,985, 4) payment for accounts payable of $1,451,371, and 5) a decrease to contract liabilities of $141,009.
Previous wording
The net cash provided by operating activities for the six months ended October 31, 2023 was mainly offset by an increase of accounts receivable of $239,161, an increase of prepayments of $138,307, an increase of contract liabilities of $132,180 and an increase of payment to accounts payable of $149,679.
Current wording
The net cash used by operating activities for the nine months ended January 31, 2024 was mainly offset by increased cash inflow from 1) prepayments of $1,065,243, 2) decrease to outstanding other receivables and other current assets of $124,182, 3) an increase of operating lease liabilities of $227,728, 4) an increase of taxes payables of $108,247, and 5) an increase of accounts payable to related parties of $128,599.
Previous wording
We had a net income before noncontrolling interest of $301,731 for the six months ended October 31, 2024, an increase of $236,977 compared with of $64,754 for the six months ended October 31, 2023. Our cash inflow of $4,707,531 for the six months ended October 31, 2024 represented an increase of $4,231,429 cash inflow, compared with a $476,102 cash inflow in the six months ended October 31, 2023. The increased net cash inflow for the six months ended October 31, 2024 was mainly due to increased cash inflow from net income by $236,977 with change of non-cash adjustments by $1,269,190, increased cash inflow from accounts receivable by $245,305, increased cash inflow from other receivables and other current assets by $331,583, increased cash inflow from accounts payable by $3,811,900, increased cash inflow from accounts payable from related party by $121,105, increased cash inflow from accrued expenses and other payables by $286,662, increased cash inflow from operating lease liabilities by $119,698 and increased cash inflow from outstanding income tax payable by $975,242, which was partly offset by increased cash outflow from accounts receivable – related parties by $278,854, increased cash outflow from prepayments by $303,796 and increased cash outflow from inventories by $2,554,502.
Current wording
We had a net income before noncontrolling interest of $1,296,896 for the nine months ended January 31, 2025, an increase of $1,767,698 compared with net loss of $470,802 for the nine months ended January 31, 2024. Our cash inflow of $6,386,143 for the nine months ended January 31, 2025 represented an increase of $7,273,582 cash inflow, from $887,439 cash outflow in the nine months ended January 31, 2024. The increased net cash inflow for the nine months ended January 31, 2025 was mainly due to increased cash inflow from net income by $1,767,698 with change of non-cash adjustments by $1,371,457, increased cash inflow from accounts receivable by $465,903, increased cash inflow from other receivables and other current assets by $517,915, increased cash inflow from accounts payable by $6,558,481, increased cash inflow from accounts payable from related party by $7,895, increased cash inflow from accrued expenses and other payables by $97,820, increased cash inflow from operating lease liabilities by $168,820 and increased cash inflow from outstanding income tax payable by $1,112,388, which was partly offset by increased cash outflow from prepayments by $796,530 and increased cash outflow from inventories by $4,156,985.
Previous wording
Net cash used in investing activities was $195,085 for the six months ended October 31, 2024, which mainly consisted of store renovation and purchase of equipment of $133,085 and investment into HKGF Market of Arcadia, LLC of $62,000.
Current wording
Net cash used in investing activities was $216,427 for the nine months ended January 31, 2025, which mainly consisted of store renovation and purchase of equipment of $154,427 and investment into HKGF Market of Arcadia, LLC of $62,000.
Previous wording
Net cash used in investing activities was approximately $3.0 million for the six months ended October 31, 2023, which mainly consisted of the purchase of equipment of $18,965, payment of intangible assets purchase of $1.5 million, and payment for 40% investment into Good Fortune Arcadia supermarket of approximately $1.4 million.
Current wording
Net cash used in investing activities was approximately $5.1 million for the nine months ended January 31, 2024, which mainly consisted of store renovation and purchase of equipment of $317,083, payment of intangible assets of $2.95 million, payment for investment into TMA Liquor Inc of $75,000, and payment for 50% investment into Good Fortune Arcadia supermarket of approximately $1.8 million.
Previous wording
Net cash used in financing activities was approximately $4.2 million for the six months ended October 31, 2024, which mainly consisted of repayment for a note payable arising from the acquisition of Lee Lee of $5,300,000, loan to related party of $65,000 and repayment on SBA loan payable of $32,287, which was partially offset by increase of bank overdraft of $1,225,672 and increase borrowing from related parties $13,738.
Current wording
Net cash used in financing activities was approximately $5.7 million for the nine months ended January 31, 2025, which mainly consisted of repayment for a note payable arising from the acquisition of Lee Lee of $6,834,057, loan to related party of $65,000 and repayment on SBA loan payable of $48,624, which was partially offset by increase of bank overdraft of $1,200,983 and increase borrowing from related parties $21,238.
Previous wording
Net cash provided by financing activities was approximately $8.5 million for the six months ended October 31, 2023, which mainly consisted of net proceeds from issuance of common stock of approximately $8.7 million, which was partially offset by repayment on loans payable of approximately $0.2 million.
Current wording
Net cash provided by financing activities was approximately $12.9 million for the nine months ended January 31, 2024, which mainly consisted of net proceeds from issuance of common stock of approximately $13.3 million, which was partially offset by repayment on loans payable of approximately $0.3 million, and repayment for a note payable of $150,000.
Previous wording
As of October 31, 2024 and April 30, 2024, the Company’s aggregate balance on the three SBA loans was $2,529,012 and $2,561,299, respectively.
Current wording
As of January 31, 2025 and April 30, 2024, the Company’s aggregate balance on the three SBA loans was $2,512,675 and $2,561,299, respectively.
Previous wording
As of October 31, 2024, the Company had an outstanding note payable of $9,826,065 to the sellers of Lee Lee. The Company is required to repay the full amount before May 5, 2025.
Current wording
As of January 31, 2025, the Company had an outstanding note payable of $8,292,008 to the sellers of Lee Lee. The Company is required to repay the full amount before May 11, 2026.