Financial Performance - The company reported a net income of $1,011,763 for the three months ended January 31, 2025, and $1,456,662 for the nine months ended January 31, 2025, despite an accumulated deficit of approximately $1.36 million and negative working capital of $11.50 million as of January 31, 2025[184]. - Net income attributable to Maison Solutions Inc. was $1,011,763 for the three months ended January 31, 2025, compared to a loss of $548,954 in 2024, marking a significant turnaround[207]. - Net income attributable to the Company was $1,011,763 for the three months ended January 31, 2025, an increase of 284.3% from a net loss of $548,954 for the same period in 2024[217]. - For the nine months ended January 31, 2025, net revenues were approximately $94.8 million, an increase of 130.6% from $41.1 million for the same period in 2024, driven by $59.0 million in revenues from the newly acquired subsidiary, Lee Lee[219][220]. - Gross profit for the nine months ended January 31, 2025, was approximately $24.0 million, representing a 154.4% increase from $9.4 million in the same period in 2024, with a gross margin of 25.3%[223]. - The company reported a net income before noncontrolling interest of $1,296,896 for the nine months ended January 31, 2025, compared to a net loss of $470,802 for the same period in 2024[246]. Revenue and Expenses - Net revenues for the three months ended January 31, 2025, were approximately $34.1 million, an increase of $20.6 million or 151.1% compared to $13.6 million for the same period in 2024[207]. - Total operating expenses increased to approximately $20.5 million for the nine months ended January 31, 2025, up 127.9% from $9.7 million in the same period in 2024, primarily due to increased selling expenses[224]. - Total operating expenses increased to approximately $6.4 million, up by $2.9 million or 83.9% compared to $3.5 million in 2024[212]. - Selling expenses increased to $4.9 million, a rise of 99.0% compared to $2.4 million in 2024[212]. - General and administrative expenses increased by 49.1% to $1.6 million for the three months ended January 31, 2025, compared to $1.1 million in 2024[212]. Cash Flow and Financing - Net cash provided by operating activities for the nine months ended January 31, 2025, was $6,386,143, a significant increase from a net cash outflow of $887,439 for the same period in 2024[240][246]. - Net cash used in investing activities was $216,427 for the nine months ended January 31, 2025, primarily for store renovation and equipment purchases[247]. - Net cash used in financing activities was approximately $5.7 million for the nine months ended January 31, 2025, mainly due to repayment of a note payable from the acquisition of Lee Lee[250]. - The Company completed an IPO on October 10, 2023, raising net proceeds of approximately $8.72 million from the sale of 2,500,000 shares at $4.00 per share[233]. - The Company raised approximately $4.60 million from a PIPE Offering on November 22, 2023, selling 1,190,476 shares at a price of $4.20 per share[234]. - The company entered into a securities purchase agreement to issue a senior unsecured convertible promissory note of $3,000,000 with an original issue discount of 8.5%[235]. Acquisitions and Investments - The company acquired 100% of the equity interests in Lee Lee Oriental Supermart, Inc. for approximately $22.2 million, consisting of $7.0 million in cash and a senior secured promissory note of approximately $15.2 million[174]. - 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, adjusting its ownership to 49%[173]. - The company plans to invest approximately $35 million to $40 million for expansion, with $13 million to $16 million needed in the next 12 months for new stores on the East Coast and near California[236]. Legal and Regulatory Matters - The Company is involved in various legal proceedings, including a class action complaint alleging violations of the Securities Act, with potential compensatory damages sought[269][270]. - A shareholder derivative action has been filed against several executives and the Company itself, alleging breaches of fiduciary duty and other claims, with no reasonable estimate of contingent loss available at this stage[272]. - The Company is currently unable to estimate the outcome of several ongoing legal cases due to their early stages[275][276]. Debt and Obligations - The Company has an aggregate balance of $2,512,675 on three SBA loans as of January 31, 2025[254]. - As of January 31, 2025, the Company had an outstanding note payable of $8,292,008 to the sellers of Lee Lee, which is required to be repaid before May 11, 2026[262]. - The Company's total contractual obligations as of January 31, 2025, amount to $52,313,440, with $9,739,611 due within one year[267]. - The Company has guaranteed all loans described, with CEO John Xu personally guaranteeing the loans with the SBA[277]. - The Modification Agreement increased the annual interest rate on the outstanding principal amount to 12% effective February 24, 2024, and an additional extension fee interest of 8% will accrue on the outstanding principal balance[261]. - The annual interest rate on the secured note was increased to 10% effective October 8, 2024, with a new payment schedule established[260]. Operational Insights - The company had payroll and payroll tax expenses of $3.5 million for the three months ended January 31, 2025, compared to $1.8 million for the same period in 2024, and $11.5 million for the nine months ended January 31, 2025, compared to $5.2 million for the same period in 2024[181]. - The company has approximately 376 employees as of January 31, 2025, with payroll expenses affected by recent increases in minimum wage rates in California and Arizona[181]. - The inflation rate in the U.S. was reported at 3.0% for the nine months ended January 31, 2025, impacting purchase, occupancy, and payroll costs[176]. - The company has a collaboration agreement with JD.com to enhance in-store technology, which includes a consultancy fee of $220,000[175]. - The company operates a centralized vendor management system, with major suppliers accounting for 9%, 8%, 1%, 4%, and 7% of total purchases for the nine months ended January 31, 2025[182].
Maison Solutions (MSS) - 2025 Q3 - Quarterly Report