Financial Performance - The company reported a net loss of $784,798 from continuing operations for the three months ended July 31, 2025, with an accumulated deficit of $3.19 million and negative working capital of $9.78 million[204]. - Net revenues for the three months ended July 31, 2025, were approximately $27.2 million, a decrease of $1.0 million or 3.6% from $28.2 million in the same period of 2024[227]. - Gross profit for the three months ended July 31, 2025, was approximately $6.6 million, down from $8.1 million in 2024, reflecting a gross margin decrease from 28.9% to 24.2%[229]. - The company reported a net loss from continuing operations of $831,152 for the three months ended July 31, 2025, compared to a net income of $1,065,331 in 2024, marking a decline of 178.0%[226]. - For the three months ended July 31, 2025, the net loss attributable to the Company from continuing operations was $784,798, an increase of 170.6% from a net income of $1,111,136 for the same period in 2024[239]. Operating Expenses - Total operating expenses increased by approximately $0.3 million to $6.4 million for the three months ended July 31, 2025, with operating expenses as a percentage of revenues rising from 21.5% to 23.5%[230]. - Selling expenses rose by 6.7% to $4.8 million, while general and administrative expenses increased by 0.7% to $1.6 million for the three months ended July 31, 2025[230]. - The cost of revenues increased by $0.6 million to $20.6 million for the three months ended July 31, 2025, primarily driven by increased costs at Lee Lee stores[228]. - Payroll expenses for the three months ended July 31, 2025, were $3.83 million, compared to $3.44 million for the same period in 2024, reflecting an increase due to rising minimum wage rates[201]. Cash Flow and Financing - The net cash provided by operating activities was approximately $1.1 million for the three months ended July 31, 2025, compared to $3.6 million for the same period in 2024[248][250]. - Net cash used in financing activities was approximately $790,259 for the three months ended July 31, 2025, primarily due to repayment for a note payable arising from the acquisition of Lee Lee[253]. - The Company received net proceeds of approximately $8.72 million from its initial public offering (IPO) of 2,500,000 shares at a price of $4.00 per share, which closed on October 10, 2023[242]. - The Company sold an aggregate of 1,190,476 shares of Class A common stock at a price of $4.20 per share to PIPE investors, receiving net proceeds of approximately $4.60 million on November 22, 2023[243]. - The aggregate balance on the three SBA loans was $2,602,237 as of July 31, 2025[257]. Acquisitions and Investments - 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, later adjusting its ownership to 49%[193]. - The company acquired Lee Lee Oriental Supermart, Inc. for approximately $22.2 million, consisting of $7.0 million in cash and a senior secured promissory note of about $15.2 million[194]. - The acquisition of Lee Lee was completed for an aggregate purchase price of approximately $22.2 million, including $7.0 million in cash and a secured note of approximately $15.2 million[258]. Legal Matters - The company agreed to pay $25,000 to settle a wrongful termination claim[278]. - The company agreed to pay $6,000 to settle a claim regarding violations of the Unruh Civil Rights Act[279]. - The company is involved in various legal proceedings, but management does not believe any will have a material adverse effect on its financial statements[273]. - A complaint was filed against multiple entities for unpaid seafood purchase invoices totaling $115,388.39[280]. - The case management conference related to the complaint is scheduled for August 4, 2025[280]. Other Financial Metrics - Interest expense for the three months ended July 31, 2025, was $652,409, an increase of $473,353 from $179,056 for the same period in 2024[235]. - Income tax expense decreased to $320,543 for the three months ended July 31, 2025, down $308,237 from $628,780 for the same period in 2024[237]. - The company’s contract liability related to gift cards was $675,428 as of July 31, 2025, down from $701,929 as of April 30, 2025[213]. - The company’s California-based supermarkets generated $8.7 million in revenue for the three months ended July 31, 2025, a decrease of approximately $1.3 million compared to the same period in 2024[227]. Strategic Plans - The company plans to strengthen its sales force and increase marketing activities to boost revenue and may seek additional funding through strategic investors or loans[205]. - The collaboration with JD.com includes a consultancy fee of $220,000 for updating in-store technology and developing a new mobile app[196]. Economic Factors - The inflation rate in the U.S. was 2.7% for the three months ended July 31, 2025, impacting purchase, occupancy, and payroll costs[197]. - The company is subject to increased operating costs as a result of its initial public offering completed on October 10, 2023[198].
Maison Solutions (MSS) - 2026 Q1 - Quarterly Report