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Maison Solutions (MSS) - 2025 Q2 - Quarterly Report

Financial Performance - The company reported a net loss of approximately $256,009 for the three months ended October 31, 2024, but had a net income of approximately $444,899 for the six months ended October 31, 2024[200]. - Net revenues for the three months ended October 31, 2024, were approximately $31.0 million, an increase of $17.3 million or 125.3% from $13.8 million in the same period of 2023[227]. - Net revenues for the six months ended October 31, 2024, reached approximately $60.7 million, a 120.5% increase from $27.5 million in the same period of 2023, driven by revenues from the newly acquired subsidiary, Lee Lee[238]. - Gross profit for the three months ended October 31, 2024, was approximately $8.2 million, representing a 161.0% increase from $3.1 million in 2023, with a gross margin of 26.3% compared to 22.7% in the prior year[229]. - Gross profit for the six months ended October 31, 2024, was approximately $16.4 million, a 163.6% increase from $6.2 million in the same period of 2023, with a gross margin of 27.1%[241]. - The company reported a net income before noncontrolling interest of $301,731 for the six months ended October 31, 2024, up from $64,754 in the same period of 2023[263]. Expenses and Costs - Payroll and payroll tax expenses increased to $4.3 million for the three months ended October 31, 2024, compared to $1.7 million for the same period in 2023[197]. - The company spent $154,255 on repairs and maintenance for the three months ended October 31, 2024, an increase of $140,808 compared to $13,447 for the same period in 2023[199]. - The cost of revenues increased to $22.9 million for the three months ended October 31, 2024, up $12.2 million or 114.9% from $10.6 million in 2023, primarily due to the acquisition of Lee Lee[228]. - Total operating expenses rose to approximately $7.5 million for the three months ended October 31, 2024, an increase of $4.6 million or 160.7% from $2.9 million in 2023[231]. - Selling expenses increased by 135.2% to $5.4 million in the three months ended October 31, 2024, compared to $2.3 million in 2023, driven by higher payroll and advertising costs[231]. - General and administrative expenses surged by 259.7% to $2.1 million for the three months ended October 31, 2024, up from $588,251 in 2023, largely due to increased professional fees and office expenses[232]. - Interest expense increased to $242,380 for the three months ended October 31, 2024, up from $29,965 for the same period in 2023, reflecting a rise of $212,415[234]. - Income tax expense rose to $563,096 for the three months ended October 31, 2024, an increase of $415,936 from $147,160 in the prior year, primarily due to higher taxable income from new acquisition stores[236]. Acquisitions and Investments - The company acquired 100% of Lee Lee Oriental Supermart, Inc. for approximately $22.2 million, including $7.0 million in cash and a senior secured promissory note of approximately $15.2 million[190]. - 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% equity interest[189]. - The increase in payroll expense was $2.6 million for the three months ended October 31, 2024, compared to the same period in 2023, attributed to the acquisition of Lee Lee and increased hourly rates[231]. Financing and Capital Structure - The company completed its IPO on October 10, 2023, raising approximately $8.72 million from the sale of 2,500,000 shares at $4.00 per share[252]. - On November 22, 2023, the company raised approximately $4.60 million through a PIPE offering, selling 1,190,476 shares at $4.20 per share[253]. - The company plans to invest approximately $35 million to $40 million in expanding its supermarket and warehouse footprint on the East and West Coasts, with $13 million to $16 million needed within the next 12 months[254]. - As of October 31, 2024, the company had cash and cash equivalents of approximately $355,670 and a working capital deficit of approximately $15.6 million[249]. - Net cash used in financing activities was approximately $4.2 million for the six months ended October 31, 2024, mainly due to repayment of a note payable of $5.3 million[266]. - The company may seek additional financing, which could involve issuing more equity securities, potentially diluting existing shareholders[255]. Legal Matters - The Company is involved in various legal proceedings, but management does not believe any currently pending legal proceeding will have a material adverse effect on its financial statements[284]. - A class action complaint was filed against the Company alleging violations of the Securities Act, with plaintiffs seeking compensatory damages[287]. - The Company is facing a derivative action alleging breaches of fiduciary duty and gross mismanagement, with no reasonable estimate of contingent loss available at this stage[290]. - A complaint for wrongful termination and labor law violation has been filed against Maison San Gabriel, with potential damages ranging from $300,000 to $3,000,000[291]. Contractual Obligations - The Company has total contractual obligations amounting to $54,405,884, with $14,030,984 due within one year and $25,156,594 due thereafter[285]. - The SBA loan amounts to $2,529,012, with $2,175,496 due after three years[285]. - Operating lease obligations total $42,050,807, with $4,138,759 due within one year[285]. - The company’s aggregate balance on three SBA loans was $2,529,012 as of October 31, 2024[271]. - As of October 31, 2024, the company had an outstanding note payable of $9,826,065 related to the acquisition of Lee Lee, due before May 5, 2025[278]. - AZLL entered into a guarantee to benefit the Sellers, unconditionally guaranteeing the payment by Lee Lee of the principal amount of the Secured Note, totaling $9,826,065[279].