Economic Environment - The inflation rate in the United States was 3.1% for the nine months ended January 31, 2024, and 4.9% for the year ended April 30, 2023, impacting purchase, occupancy, and payroll costs [182]. Payroll and Expenses - Payroll and payroll tax expenses for the three months ended January 31, 2024, were $1.8 million, compared to $2.2 million for the same period in 2023, while for the nine months, expenses were $5.2 million in 2024 versus $5.0 million in 2023 [186]. - The company has approximately 175 employees, with payroll expenses affected by recent increases in minimum wage rates in California [186]. - Selling expenses for the three months ended January 31, 2024, were approximately $2.4 million, down $225,208 or 8.5% from $2.7 million in 2023 [214]. - General and administrative expenses for the three months ended January 31, 2024, were approximately $1.1 million, a decrease of $338,452 or 24.3% from $1.4 million in 2023 [210]. - Interest expense for the three months ended January 31, 2024, was $19,425, an increase of $95,477 from interest income of $76,052 in 2023 [217]. - Income tax expense for the three months ended January 31, 2024, was $158,656, an increase of $59,586 from $99,070 in 2023 [218]. Revenue and Profitability - Net revenues for the three months ended January 31, 2024, were approximately $13.6 million, a decrease of $2.0 million or 13.0% from $15.6 million for the same period in 2023 [210]. - Gross profit for the three months ended January 31, 2024, was approximately $3.2 million, down $822,577 or 20.5% from $4.0 million in 2023, with a gross margin of 23.4% compared to 25.6% in 2023 [213]. - For the nine months ended January 31, 2024, net revenues were approximately $41.1 million, a slight decrease of $98,257 or 0.2% from $41.2 million in 2023 [222]. - The decrease in net revenues was primarily due to increased competition from two newly opened Asian supermarkets and a temporary slowdown of the Maison El Monte store due to renovations [211]. - Gross profit was approximately $9.4 million for both the nine months ended January 31, 2024 and 2023, with a gross margin of 22.9% in 2024 compared to 22.8% in 2023, indicating a slight increase of 0.1% [224]. - Net loss attributable to the Company for the three months ended January 31, 2024, was $548,954, a decrease of $1,537,428 or 155.5% from a net income of $988,474 in 2023 [219]. - Net loss attributable to the Company was $562,428 for the nine months ended January 31, 2024, a decrease of $1,483,054, or 161.1%, from a net income of $920,626 for the same period in 2023 [231]. Operating Costs and Investments - Total operating expenses for the three months ended January 31, 2024, were approximately $3.5 million, a decrease of $563,660 or 13.9% from $4.1 million in 2023 [214]. - Total operating expenses increased by approximately $367,696, from $9.3 million in 2023 to approximately $9.7 million in 2024, with operating expenses as a percentage of revenues rising from 22.6% to 23.6% [225]. - The company spent $0.35 million on repairs and maintenance and supermarket renovation for the three months ended January 31, 2024, an increase of $0.29 million compared to $55,338 for the same period in 2023 [188]. - 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 store openings and acquisitions [237]. Financing and Cash Flow - Cash, cash equivalents, and restricted cash amounted to approximately $9.4 million as of January 31, 2024, with a working capital of approximately $8.0 million [232]. - The Company received net proceeds of approximately $8.72 million from its IPO of 2,500,000 shares at $4.00 per share, which closed on October 10, 2023 [234]. - The PIPE Offering on November 22, 2023, generated net proceeds of approximately $4.35 million from the sale of 1,190,476 shares at a price of $4.20 per share [235]. - The net cash used in operating activities was approximately $887,439 for the nine months ended January 31, 2024, compared to a net cash provided of $364,225 for the same period in 2023 [242]. - Net cash used in investing activities was approximately $5.1 million for the nine months ended January 31, 2024, mainly due to store renovations, equipment purchases, and investments in TMA Liquor Inc and Good Fortune Arcadia supermarket [249]. - Net cash provided by financing activities was approximately $12.9 million for the nine months ended January 31, 2024, primarily from the issuance of common stock [251]. Legal and Compliance - The company completed its initial public offering on October 10, 2023, which has led to increased operating costs related to compliance and reporting [183]. - The company is currently involved in multiple legal proceedings, including class action complaints alleging violations of securities laws, which may impact its financial position [258][259]. - The company accrued a total of $138,500 in litigation losses related to employment law cases for the fiscal years ended April 30, 2022, and April 30, 2023 [261]. - The company has guaranteed all loans described, with the CEO personally guaranteeing the SBA loans, indicating a significant commitment to its financial obligations [263]. Market Expansion - The company acquired a 40% equity interest in HKGF Market of Arcadia, LLC for $1,440,000 and an additional 10% for $360,000, expanding its market presence [179]. - The company plans to acquire the remaining 90% equity interest in the Alhambra Store, funded by proceeds from its initial public offering [179]. - The company plans to acquire and open additional supermarkets on both the West Coast and East Coast, aiming to operate a total of ten center stores by the end of 2025 [236].
Maison Solutions (MSS) - 2024 Q3 - Quarterly Report