Financial Performance - The company reported a net income of approximately $700,908 for the three months ended July 31, 2024, with an accumulated deficit of approximately $2.12 million[156]. - Net income for the three months ended July 31, 2024, was $617,826, a significant increase of 2,411.9% from a net loss of $26,724 in the same period in 2023[176][188]. - Net income attributable to the Company was $700,908 for the three months ended July 31, 2024, an increase of 767.9% from a net loss of $104,939 for the same period in 2023[189]. - The Company had a net income before noncontrolling interest of $617,826 for the three months ended July 31, 2024, an increase of $644,550 compared to a net loss of $26,724 for the same period in 2023[205]. Revenue and Expenses - Net revenues for the three months ended July 31, 2024, were approximately $29.6 million, an increase of 115.6% from $13.8 million for the same period in 2023, driven by $18.2 million from the newly acquired subsidiary, Lee Lee[176][179]. - Gross profit for the three months ended July 31, 2024, was approximately $8.3 million, representing a 166.1% increase from $3.1 million in the same period in 2023, with a gross margin of 27.9% compared to 22.6%[181]. - Total operating expenses increased to approximately $6.6 million for the three months ended July 31, 2024, up 99.6% from $3.3 million in the same period in 2023, with selling expenses rising by 116.4%[182][184]. - Cost of revenues for the three months ended July 31, 2024, was approximately $21.4 million, an increase of 100.9% from $10.6 million in the same period in 2023, primarily due to the acquisition of Lee Lee[180]. Acquisitions and Investments - The company acquired 100% of Lee Lee Oriental Supermart, Inc. for approximately $22.2 million, consisting of $7.0 million in cash and a $15.2 million secured promissory note[146]. - The company invested $1,440,000 for a 40% equity interest in HKGF Market of Arcadia, LLC, and an additional $360,000 for another 10% interest[146]. - The acquisition of Lee Lee in April 2024 significantly impacted both revenues and costs, contributing to the overall financial performance for the quarter[179][180]. Operating Costs and Expenses - Payroll expenses increased to $3.7 million for the three months ended July 31, 2024, compared to $1.7 million for the same period in 2023[153]. - The company spent $295,872 on repairs and maintenance and supermarket renovation for the three months ended July 31, 2024, an increase of $215,598 compared to $80,274 for the same period in 2023[155]. - Interest expense for the three months ended July 31, 2024, was $183,387, an increase of 293.8% from $46,566 in the same period in 2023, attributed to SBA Loans and note payable from the acquisition of Lee Lee[187]. - Income tax expense for the three months ended July 31, 2024, was $636,228, an increase of 435.1% from $118,906 in the same period in 2023, due to increased taxable income[188]. - General and administrative expenses increased by 63.6% to $1.7 million for the three months ended July 31, 2024, compared to $1.1 million in the same period in 2023[182][185]. Cash Flow and Financing - Net cash provided by operating activities was approximately $3.6 million for the three months ended July 31, 2024, compared to $596,541 for the same period in 2023[201]. - Net cash used in investing activities was $102,631 for the three months ended July 31, 2024, primarily for store renovation and equipment purchases[206]. - Net cash used in financing activities was approximately $2.9 million for the three months ended July 31, 2024, mainly due to repayment of a note payable from the acquisition of Lee Lee[209]. - The Company received net proceeds of approximately $8.72 million from its IPO of 2,500,000 shares at a price of $4.00 per share, which closed on October 10, 2023[193]. - The Company plans to invest approximately $35 million to $40 million for expansion, with $13 million to $16 million required within the next 12 months for new stores in California and the East Coast[195]. Legal and Regulatory Matters - The company is currently facing class action complaints alleging violations of the Securities Act, with potential compensatory damages sought[219][220]. - The company has not made any accruals for potential losses related to a California health and safety regulation case pending since May 2020[224]. - A settlement of $245,000 was accrued for a California employment law case settled in June 2022[224]. - The company is involved in multiple legal proceedings, but management does not believe any will have a material adverse effect on its financial statements[218]. - The company has guaranteed all loans described, with the CEO personally guaranteeing the SBA loans[226]. Contractual Obligations - As of July 31, 2024, the company's total contractual obligations amount to $55,252,080, with $14,305,410 due within one year[217]. - The senior secured note payable is $10,126,065, all of which is due within one year[217]. - The SBA loan totals $2,545,221, with $2,194,585 due thereafter[217]. - Operating lease obligations and others total $42,580,794, with $4,113,718 due within one year[217]. Market Conditions - The inflation rate in the U.S. was 2.9% for the three months ended July 31, 2024, impacting purchase costs, occupancy costs, and payroll costs[148]. - Major vendors accounted for significant portions of total purchases, with five suppliers contributing 9%, 11%, 3%, 5%, and 11% of total purchases for the three months ended July 31, 2024[154]. - The four California-based supermarkets contributed $11.5 million in revenue during the three months ended July 31, 2024, a decrease of approximately $2.3 million compared to the same period in 2023[179].
Maison Solutions (MSS) - 2025 Q1 - Quarterly Report