Maison Solutions Inc.
12/22/2025 | Press release | Distributed by Public on 12/22/2025 13:52
Quarterly Report for Quarter Ending October 31, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This management's discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks and uncertainties. See "Cautionary Note Regarding Forward-Looking Statements" for a discussion of the uncertainties, risks and assumptions associated with those statements. You should read the following discussion in conjunction with our consolidated financial statements and related notes which are included elsewhere in this Quarterly Report on Form 10-Q. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, but not limited to, those described under "Risk Factors," and included in other portions of this Quarterly Report on Form 10-Q.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties, and assumptions about us that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "continue," or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission ("SEC") filings. References to "we," "us," "our," "Maison" or the "Company" are to Maison Solutions Inc., except where the context requires otherwise.
Overview
We are a fast-growing, specialty grocery retailer offering traditional Asian food and merchandise to modern U.S. consumers, in particular to members of Asian-American communities. We are committed to providing Asian fresh produce, meat, seafood, and other daily necessities in a manner that caters to traditional Asian-American family values and cultural norms, while also accounting for the new and faster-paced lifestyle of younger generations and the diverse makeup of the communities in which we operate. To achieve this, we are developing a center-satellite stores network.
Since our formation in July 2019, we have acquired equity interests in four (4) traditional Asian supermarkets in Los Angeles, California. Since April 30, 2022, we have been operating these supermarkets as center stores. The center stores target traditional Asian-American, family-oriented customers with a variety of meat, fresh produce and other merchandise, while additionally stocking items which appeal to the broader community. We are operating these traditional Asian-American, family-oriented supermarkets with our management's deep cultural understanding of our consumers' unique consumption habits.
In addition to the traditional supermarkets, on December 31, 2021, we acquired a 10% equity interest in a new grocery store located in Alhambra, California, a young and active community (the "Alhambra Store") from Mrs. Grace Xu, the spouse of Mr. John Xu, our chief executive officer ("CEO"), Chairman and President. Our intention is to acquire the remaining 90% equity interest in the Alhambra Store and operate it as our first satellite store. The investment in the Alhambra Store is considered a related party transaction because Mrs. Xu is the spouse of Mr. Xu, our CEO, Chairman and President. Please refer to "Certain Relationships and Related Party Transactions" for further explanation.
In May 2021, the Company acquired 10% of the equity interests in Dai Cheong, a wholesale business which mainly supplies foods and groceries imported from Asia, which is owned by John Xu, our CEO, Chairman and President. We intend to acquire the controlling ownership of Dai Cheong. By adding Dai Cheong to our portfolio, we will take the first step toward creating a vertically integrated supply-retail structure. Having an importer as a part of our portfolio will allow us the opportunity to offer a wider variety of products and to reap the benefits of preferred wholesale pricing.
On June 27, 2023, we invested $1,440,000 for 40% equity interest in HKGF Market of Arcadia, LLC ("HKGF Arcadia"), a supermarket in the city of Arcadia, California, to further expand our footprint to new neighborhood. On December 6, 2023, we invested an additional $360,000 for another 10% equity interest in HKGF Arcadia. On February 1, 2024, the Company and JC Business Guys, Inc., the only other member of HKGF Arcadia ("JC Business Guys"), entered into a third amendment to the operating agreement of HKGF Arcadia to decrease our percentage equity interest in HKGF Arcadia to 49% and increase JC Business Guy's percentage equity interest to 51%. As a result of the amendment, we made an additional investment of $62,000. During the three and six months ended October 31, 2025, the Company recorded nil and $848,493 impairment charges for its investments in HKGF Market of Arcadia due to the Company's plan of closing the supermarket business in this location.
On November 3, 2023, we incorporated a wholly-owned subsidiary, AZLL LLC ("AZLL"), in Arizona. On April 8, 2024, AZLL closed an acquisition transaction and purchased 100% of the equity interests in Lee Lee Oriental Supermart, Inc. ("Lee Lee") for an aggregate purchase price of approximately $22.2 million. Lee Lee is a three-store supermarket chain operating in Arizona under the name Lee Lee International Supermarkets and specializing in ethnic groceries.
As part of the Company's ongoing commitment to improve its profitability and support sustainable growth, the Company closed Maison El Monte store. On June 7, 2025, Maison EL Monte, Inc. entered into a lease termination agreement with Jendo Ermi, LP ("Lessor"). Pursuant to the agreement, the lessee Maison El Monte agreed to pay the lessor a total sum of One Hundred Thousand Dollars ($100,000) as consideration for the lessor's agreement to terminate the lease and release the lessee from all obligations and liabilities under the lease, including, but not limited to, any outstanding rent.
Collaboration with JD.com
On April 19, 2021, JD E-commerce America Limited ("JD US"), the U.S. subsidiary of JD.com, and Maison entered into a Collaboration Agreement (the "Collaboration Agreement") pursuant to which JD.com will provide services to Maison focused on updating in store technology through the development of a new mobile app, the updating of new in-store technology, and revising store layouts to promote efficiency. The agreement included a consultancy and initialization fee of $220,000, 40% of which was payable within three (3) days of effectiveness and which has been paid, 40% of which is due within three (3) days of the completion and delivery of initialization services as outlined in the Collaboration Agreement, and the remaining 20% is payable within three (3) days of the completion and delivery of the implementation services, as outlined in the Collaboration Agreement. The Collaboration Agreement also included certain additional storage and implementation fees to be determined by the parties and royalty fees, following the commercial launch of the platform developed by JD.com, of 1.2% of gross merchandise value based on information generated by the platform. For each additional store requiring consultancy and initialization service, an additional $50,000 will be charged for preparing the feasibility plan for such additional store. The Collaboration Agreement has an initial term of 10 years and customary termination and indemnification provisions. Simultaneously with the effectiveness of the Collaboration Agreement, JD US and Maison entered into an Intellectual Property License Agreement (the "IP Agreement") outlining certain trademarks, logos and designs and other intellectual property rights used in connection with the retail supermarket operations outlined in the Collaboration Agreement, which includes an initial term of 10 years and customary termination provisions.
Key Factors that Affect Operating Results
Inflation
The inflation rate for the United States was 3.0% for the six months ended October 31, 2025, 2.6% for the six months ended October 31, 2024 according to Bureau of Labor Statistics. Inflation increased our purchase costs, occupancy costs, and payroll costs.
Operating Cost Increase After Initial Public Offering
We historically have operated our business as a private company. We completed our initial public offering on October 10, 2023. As a public company, we are subject to increased operating costs related to our listing on Nasdaq, including increased costs related to our compliance with Securities Act and Exchange Act periodic reporting, annual audit expenses, legal service expenses, and related consulting service expenses.
Competition
Food retail is a competitive industry. Our competition varies and includes national, regional, and local conventional supermarkets, national superstores, alternative food retailers, natural foods stores, smaller specialty stores, farmers' markets, supercenters, online retailers, mass or discount retailers and membership warehouse clubs. Our principal competitors include 99 Ranch Market and H-Mart for conventional supermarkets and Weee! for online groceries. Each of these stores competes with us based on product selection, product quality, customer service, price, store format, location, or a combination of these factors. In addition, some competitors are aggressively expanding their number of stores or their product offerings. Some of these competitors may have been in business longer, may have more experience operating multiple store locations, or may have greater financial or marketing resources than us.
As competition in certain areas intensifies or competitors open stores within proximity to our stores, our results of operations may be negatively impacted through a loss of sales, decrease in market share, reduction in margin from competitive price changes, or greater operating costs. In addition, other established food retailers could enter our markets, increasing competition for market share.
Payroll
As of October 31, 2025, we had approximately 334 employees including employees from our newly acquired subsidiary, Lee Lee, which is based in the State of Arizona. Our employees are not unionized nor, to our knowledge, are there any plans for them to unionize. We have never experienced a strike or significant work stoppage. We consider our employee relations to be good. Minimum wage rates in some states have recently increased. For example, in California, the minimum wage was $16.00 per hour in 2024 and increased to $16. 50 per hour starting from January 1, 2025; in Arizona, the minimum wage was $14.35 per hour in 2024, and increased to $14.70 per hour starting from January 1, 2025. Our payroll and payroll tax expenses were $3.04 million and $3.89 million for the three months ended October 31, 2025 and 2024, respectively. Our payroll and payroll tax expenses were $6.87 million and $7.33 million for the six months ended October 31, 2025 and 2024, respectively.
Vendor and Supply Management
Maison believes that a centralized and efficient vendor and supply management system is the key to profitability. Maison has major vendors, including Lawrence Wholesale, Lucky Taro Total, Connex All Produce Total, and Gulf Cost Sea Trade Crop. For the three months ended October 31, 2025, these four suppliers accounted for 11.59%, 9.38%, 6.95% and 4.70% of the Company's total purchases, respectively. For the six months ended October 31, 2025, these four suppliers accounted for 11.05%, 6.52%, 4.83% and 5.23% of the Company's total purchases, respectively. For the three and six months ended October 31, 2024, Maison has major vendors, including Lawrence Wholesale, XHJC Holding Inc, K.C. Produce, and Bach Cuc. For the three months ended October 31, 2024, these four suppliers accounted for 14.23%, 6.84%, 6.60% and 6.39% of the Company's total purchases, respectively. For the six months ended October 31, 2024, these four suppliers accounted for 11.66%, 8.78%, 5.51% and 8.83% of the Company's total purchases, respectively. Maison believes that its centralized vendor management enhances its negotiating power and improves its ability to manage vendor payables.
Store Maintenance and Renovation
From time to time, Maison conducts maintenance on the fixtures and equipment for its stores. Any maintenance or renovations could interrupt the operation of our stores and result in a decline in customer volume. Significant maintenance or renovation would affect our operations and operating results. Meanwhile, improving the store environment can also attract more customers and lead to an increase in sales. Maison focused on improving and renovating our stores. We spent $0.23 million for the three months ended October 31, 2025 for repairs and maintenance and supermarket renovation, an increase of $0.09 million compared to $0.14 million for the three months ended October 31, 2024. We spent $0.47 million for the six months ended October 31, 2025 for repairs and maintenance and supermarket renovation, a decrease of $0.04 million compared to $0.43 million for the six months ended October 31, 2024.
Going Concern
As reflected in the accompanying unaudited consolidated financial statements, for the six months ended October 31, 2025, the Company had a net loss of $5,973,499 from continuing operation. The Company had an accumulated deficit of $8.2 million and negative working capital of $4.19 million as of October 31, 2025.
The Company plans to increase its revenue by strengthening its sales force, providing attractive sales incentive programs, recruiting experienced industry-related managerial personnel, increasing marketing and promotion activities, seeking suppliers with competitive price and good quality products, opening or acquiring additional specialty supermarkets in the locations that have less-competition. If deemed necessary, management could also seek to raise additional funds by way of admitting strategic investors, or private or public offerings, or by seeking to obtain loans from banks or others, to support the Company's daily operation. While management of the Company believes in the viability of its strategy to generate sufficient revenues and its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect.
The Company believes that its cash on hand and operating cash flows will be sufficient to fund its operations over at least the next 12 months from the date of issuance of these financial statements. However, the Company may need additional cash resources in the future if the Company experiences changed business conditions or other developments and may also need additional cash resources in the future if the Company wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed the Company's amounts of cash on hand, the Company may seek to issue debt or equity securities or obtain a credit facility.
Critical Accounting Policy and Estimates
Related Parties
The Company identifies related parties, and accounts for, and discloses related party transactions in accordance with ASC Topic 850 "Related Party Disclosures" and other relevant ASC standards. Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates are used for, but not limited to, useful lives of property and equipment, commitments and contingencies, inventory reserve, allowance for estimated uncollectable accounts receivables and other receivables, impairment of long-lived assets, contract liabilities, and valuation of deferred tax assets. Given the global economic climate and additional or unforeseen effects from the COVID-19 pandemic, these estimates have become more challenging, and actual results could differ materially from these estimates.
Inventories
Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The Company records inventory shrinkage based on historical data and management's estimates and provided a reserve for inventory shrinkage for the three and six months ended October 31, 2025 and 2024. The Company provided a reserve for inventory shrinkage of $6,084 and $110,229 for the three months ended October 31, 2025 and 2024, respectively. The Company provided a reserve for inventory shrinkage of $221,678 and $314,833 for the six months ended October 31, 2025 and 2024, respectively.
Revenue Recognition
The Company adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"), from May 1, 2020 using the modified retrospective transition approach to all contracts that did not have an impact on the beginning retained earnings on May 1, 2020. The Group's revenue recognition policies effective on the adoption date of ASC Topic 606 are presented as below.
In accordance with ASC Topic 606, the Company's performance obligation is satisfied upon the transfer of goods to the customer, which occurs at the point of sale. Revenues are recorded net of discounts, sales taxes, and returns and allowances.
The Company sells Company gift cards to customers. There are no administrative fees on unused gift cards and the gift cards do not have an expiration date. Gift card sales are recorded as contract liability when sold and are recognized as revenue when either the gift card is redeemed or the likelihood of the gift card being redeemed is remote ("gift card breakage"). The Company's gift card breakage rate is based upon historical redemption patterns and it recognizes breakage revenue utilizing the redemption recognition method. The Company also offers discounts on the gift cards sold to its customers. The discounts are recorded as sales discount when gift card been redeemed.
The Company's contract liability related to gift cards was $631,610 and $701,929 as of October 31, 2025 and April 30, 2025, respectively.
Leases
The Company determines if an arrangement contains a lease at the inception of a contract under ASC Topic 842. At the commencement of each lease, management determines its classification as an operating or finance lease. For leases that qualify as operating leases, ROU assets and liabilities are recognized at the commencement date based on the present value of any remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of its leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU assets include adjustments for accrued lease payments.
ROU assets also include any lease payments made prior to commencement and are recorded net of any lease incentives received. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise such options.
A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. When determining whether a lease qualifies as a short-term lease, the Company evaluates the lease term and the purchase option. Hence, the Company does not recognize any operating lease ROU assets and operating lease liabilities for short-term leases.
The Company evaluates the carrying value of ROU assets if there are indicators of impairment and review the recoverability of the related asset group. If the carrying value of the asset group is determined to not be recoverable and is in excess of the estimated fair value, the Company will record an impairment loss in other expenses in the consolidated statements of operations.
The Company also subleases certain mini stores that are within the supermarket to other parties. The Company collects security deposits and rent from these sub-lease tenants. The rent income collected from sub-lease tenants recognized as rental income and deducted occupancy cost.
Derivative liability
A derivative is an instrument whose value is "derived" from an underlying instrument or index such as a future, forward, swap, option contract, or other financial instrument with similar characteristics, including certain derivative instruments embedded in other contracts and for hedging activities.
The Company does not invest in separable financial derivatives or engage in hedging transactions. However, the Company entered into certain debt financing transactions as disclosed in Note 12 containing certain conversion features that have resulted in the instruments being deemed derivatives. The Company evaluates such derivative instruments to properly classify such instruments within equity or as liabilities in the financial statements.
The classification of a derivative instrument is reassessed at each reporting date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.
Instruments classified as derivative liability is remeasured using the Black-Scholes model at each reporting period (or upon reclassification) and the change in fair value is recorded on the consolidated statement of operations. The Company had derivative liability of $2,462,150 and $1,004,230 as of October 31, 2025 and April 30, 2025, respectively.
Fair value of financial instruments
The Company's financial instruments include in current assets and current liabilities are reported in the consolidated balance sheets at cost, which approximate fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rates of interest. Fair value measurements of nonfinancial assets and non-financial liabilities are primarily used in the impairment analysis of intangible assets and long-lived assets.
The Company applies the fair value measurement accounting standard in accordance with ASC 820-10, "Fair Value Measurements and Disclosures," whenever other accounting pronouncements require or permit fair value measurements. Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. Fair value measurements are required to be disclosed by level within the following fair value hierarchy:
Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2 - Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument's anticipated life. As of October 31, 2025 and April 30, 2025, the Company has level 2 fair value calculations on derivative liability.
Level 3 - Inputs lack observable market data to corroborate management's estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
When determining fair value, whenever possible the Company uses observable market data, and relies on unobservable inputs only when observable market data is not available.
The following is the change in derivative liability for the three months ended October 31, 2025:
| Balance, July 1, 2025 | $ | 694,326 | ||
| Issuance of new derivative liability | 3,113,545 | |||
| Conversions | (1,381,635 | ) | ||
| Change in fair market value of derivative liability | 35,914 | |||
| Balance, October 31, 2025 | $ | 2,462,150 |
The following is the change in derivative liability for the six months ended October 31, 2025:
| Balance, May 1, 2025 | $ | 1,004,230 | ||
| Issuance of new derivative liability | 3,113,545 | |||
| Conversions | (1,381,635 | ) | ||
| Change in fair market value of derivative liability | (273,990 | |||
| Balance, October 31, 2025 | $ | 2,462,150 |
Digital assets, net
The Company accounts for all digital assets held as crypto assets, a subset of indefinite-lived intangible assets in accordance with ASC 350-60, Intangibles - Goodwill and Other - Crypto Assets. The Company has ownership of and control over its digital assets and the Company may use third-party custodial services to secure it. The digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheet at fair value.
The Company determines and records the fair value of its digital assets in accordance with ASC 820, Fair Value Measurement ("ASC 820"), based on quoted prices on the active exchange(s) that the Company has determined is the principal market for such assets (Level I inputs). The Company determines the cost basis of its digital assets using the specific identification of each unit received. Realized and unrealized gains and losses are recorded to other income (expense), net in the Company's consolidated statement of operations. See Note 7 - Digital Assets, Net, for further information regarding digital assets.
During the three and six months ended October 31, 2025, the Company purchased digital assets. The table below summarizes the amounts shown on the Company's consolidated balance sheet as of October 31, 2025.
| October 31, 2025 | ||||||||||||
| Units | Cost Basis | Fair Value | ||||||||||
| Digital assets held: | ||||||||||||
| Worldcoin* | 2,550,515 | $ | 2,919,500 | $ | 2,037,096 | |||||||
| * | Worldcoin (WLD) is a market-traded digital token issued as part of the Worldcoin ecosystem developed by Tools for Humanity and related entities. WLD is an ERC-20 digital asset on the Ethereum blockchain and functions as a utility and governance token within the Worldcoin network. WLD does not represent cash, cash equivalents, or a stablecoin, and it is not redeemable or convertible on a dollar-for-dollar basis with any fiat currency. The value of WLD is not fixed and is subject to market volatility, with prices determined by supply and demand in active trading markets. WLD is traded on multiple cryptocurrency exchanges, and observable market prices are available. Accordingly, the fair value of WLD is based on quoted prices in active markets at the reporting date. |
Recently Issued Accounting Pronouncements
Please refer to Note 2 - "Summary of significant accounting policies" for details.
How to Assess Our Performance
In assessing performance, management considers a variety of performance and financial measures, including principal growth in net revenue, gross profit and selling, and general and administrative expenses. The key measures that we use to evaluate the performance of our business are set forth below.
Net Revenue
Our net revenues comprise gross revenues net of returns and discounts. We do not record sales taxes as a component of retail revenues as it is considered a pass-through conduit for collecting and remitting sales taxes.
Gross Profit
We calculate gross profit as net revenues less cost of revenues and occupancy costs. Gross margin represents gross profit as a percentage of net revenues. Occupancy costs include store rental costs. The components of our cost of revenues and occupancy costs may not be identical to those of our competitors. As a result, our gross profit and gross margin may not be comparable to similar data made available by our competitors.
Cost of revenue includes the purchase price of consumer products, inbound and outbound shipping costs, including costs related to our sorting and delivery center, and where we are the transportation service provider. Shipping costs to receive products from our suppliers are included in our inventory and recognized in cost of revenues upon sale of products to our customers.
Selling, General and Administrative Expenses
Selling, general, and administrative expenses primarily consist of retail operational expenses, administrative salaries and benefits costs, marketing costs, advertising costs, and corporate overhead.
Selling expenses mainly consist of advertising costs, promotion expenses, and payroll and related expenses for personnel engaged in selling and marketing activities.
General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses; facilities and equipment expenses, such as depreciation and amortization expense and rent; and professional fees and litigation costs.
Results of Operations for the Three Months Ended October 31, 2025 and 2024
| Three Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change increase (decrease) |
|||||||||||||
| Net revenues | $ | 27,624,503 | $ | 29,351,731 | $ | (1,727,228 | ) | (5.9 | )% | |||||||
| Cost of revenues | 21,172,664 | 21,466,077 | (293,413 | ) | (1.4 | )% | ||||||||||
| Gross profit | 6,451,839 | 7,885,654 | (1,433,815 | ) | (18.2 | )% | ||||||||||
| Operating expenses | ||||||||||||||||
| Selling expenses | 4,797,906 | 4,958,012 | (160,106 | ) | (3.2 | )% | ||||||||||
| General and administrative expenses | 3,010,952 | 2,001,346 | 1,009,606 | 50.4 | % | |||||||||||
| Total operating expenses | 7,808,858 | 6,959,358 | 849,500 | 12.2 | % | |||||||||||
| Income (loss) from operations | (1,357,019 | ) | 926,296 | (2,283,315 | ) | (246.5 | )% | |||||||||
| Other expenses, net | (3,324,260 | ) | (189,395 | ) | 3,134,865 | 1,655.2 | % | |||||||||
| Interest expense, net | (620,320 | ) | (238,074 | ) | (382,246 | ) | 160.6 | % | ||||||||
| Income (loss) before income taxes | (5,301,599 | ) | 498,827 | (5,800,426 | ) | (1,162.8 | )% | |||||||||
| Income tax provisions | (88,676 | ) | 560,985 | (649,661 | ) | (115.8 | )% | |||||||||
| Net loss from continuing operation | (5,212,923 | ) | (62,158 | ) | (5,150,765 | ) | 8,286.6 | % | ||||||||
| Net income (loss) from discontinued operation | 241,037 | (253,937 | ) | 494,974 | (194.9 | )% | ||||||||||
| Net loss before noncontrolling interests | (4,971,886 | ) | (316,095 | ) | (4,655,791 | ) | 1,472.9 | % | ||||||||
| Net loss attributable to noncontrolling interests from continuing operation | (24,222 | ) | (38,933 | ) | 14,711 | (37.8 | )% | |||||||||
| Net income (loss) attributable to noncontrolling interests from discontinued operation | 20,078 | (21,153 | ) | 41,231 | (194.9 | )% | ||||||||||
| Net loss attributable to noncontrolling interests | (4,144 | ) | (60,086 | ) | 55,942 | (93.1 | )% | |||||||||
| Net loss attribute to the Company from continuing operation | (5,188,701 | ) | (23,225 | ) | (5,165,476 | ) | 22,241.0 | % | ||||||||
| Net income (loss) attribute to the Company from discontinued operation | 220,959 | (237,784 | ) | 453,743 | (194.9 | )% | ||||||||||
| Net loss attributable to Maison Solutions Inc. | $ | (4,967,742 | ) | $ | (256,009 | ) | $ | (4,711,733 | ) | 1,840.5 | % | |||||
Revenues
| Three Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change |
|||||||||||||
| Perishables | $ | 14,407,986 | $ | 15,114,556 | $ | (706,570 | ) | (4.7 | )% | |||||||
| Non-perishables | 13,216,517 | 14,237,176 | (1,020,659 | ) | (7.2 | )% | ||||||||||
| Net revenue | $ | 27,624,503 | $ | 29,351,732 | $ | (1,727,229 | ) | (5.9 | )% | |||||||
Our net revenues were approximately $27.6 million for the three months ended October 31, 2025, a decrease of approximately $1.7 million or 5.9%, from approximately $29.4 million for the three months ended October 31, 2024. The decrease in net revenues was driven by decreased sales of Maison Monterey Park by $0.8 million, decreased sales of Maison Monrovia by $0.1 million, which was partly offset by increased sales of Maison San Gabriel by $0.3 million and increased sales of Lee Lee stores by $0.5 million, as compared to the three months ended October 31, 2024. Our California-based supermarkets contributed $8.8 million in revenue during the three months ended October 31, 2025, a decrease of approximately $1.2 million, as compared to the three months ended October 31, 2024. The $1.3 million decrease was mainly due to high competition from nearby Asian supermarkets because there are too many supermarkets including Asia supermarkets in the surrounding area of our stores. For the three months ended October 31, 2025 and 2024, revenue for Maison El Monte were nil and $1,668,193, respectively. We closed our Maison El Monte store on June 7, 2025 due to its continuous loss as well as our ongoing commitment to improve its profitability and support sustainable growth.
Cost of Revenues
| Three Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change |
|||||||||||||
| Total cost of revenues | $ | 21,172,664 | $ | 21,466,077 | $ | (293,413 | ) | (1.4 | )% | |||||||
Cost of revenues includes cost of supermarket product sales and occupancy costs, which are store rent expense, depreciation for store property and equipment, inventory shrinkage costs and store supplies. The depreciation expense comes from machinery & equipment, such as refrigerators, water heaters, forklifts, and freezers and furniture & fixtures, such as metal shelves, shopping carts, and LED lights. Shrinkage costs are different for different types of products. For example, fruits and vegetables have a high allowance rate during the receiving and display process. The seafood and meat departments have a low allowance rate because the non-fresh products can freeze and sell for the same price or even higher price after being cut or sliced. The cost of revenues decreased by $0.3 million, from $21.5 million for the three months ended October 31, 2024, to approximately $21.2 million for the three months ended October 31, 2025. The decrease in cost of revenues was mainly from Maison Monrovia, Maison San Gabriel and Maison Monterey Park by $0.2 million, $0.3 million and $ 0.6 million respectively, resulting from decreased sales in these stores, which was partly offset by increased cost of revenues from Lee Lee stores by $0.8 million. For the three months ended October 31, 2025 and 2024, Cost of revenue for Maison El Monte were nil and $1,402,060, respectively.
Gross Profit and Gross Margin
| Three Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change |
|||||||||||||
| Gross Profit | $ | 6,451,839 | $ | 7,885,654 | $ | 1,443,815 | 18.2 | % | ||||||||
| Gross Margin | 23.4 | % | 26.9 | % | - | 3.5 | % | |||||||||
Gross profit was approximately $6.5 million and $7.9 million for the three months ended October 31, 2025 and 2024, respectively. Gross margin was 23.4% and 26.9% for the three months ended October 31, 2025 and 2024, respectively. Our supermarkets' sales profit margins decreased by 3.5% for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. The decrease in our gross profit was mainly due to the increase of cost of goods sold due to inflation while we kept our products' selling price at a constant level or with a minimum increase for certain products in order to be competitive. For the three months ended October 31, 2025 and 2024, gross profit for Maison El Monte were nil and $266,133, respectively.
Total Operating Expenses
| Three Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change |
|||||||||||||
| Selling Expenses | $ | 4,797,906 | $ | 4,958,012 | $ | (160,106 | ) | (3.2 | )% | |||||||
| General and Administrative Expenses | 3,010,952 | 2,001,346 | 1,009,606 | 50.4 | % | |||||||||||
| Total Operating Expenses | $ | 7,808,858 | $ | 6,959,358 | $ | 849,500 | 12.2 | % | ||||||||
| Percentage of revenue | 28.3 | % | 23.7 | % | 4.6 | % | ||||||||||
Total operating expenses were approximately $7.8 million for the three months ended October 31, 2025, an increase of approximately $0.8 million, compared to approximately $7.0 million for the three months ended October 31, 2024. Total operating expenses as a percentage of revenues were 28.3% and 23.7% for the three months ended October 31, 2025 and 2024, respectively.
The increase in operating expenses was primarily attributable to the increase in general and administrative expenses during the three months ended October 31, 2025 was primarily due to stock compensation expense increased by $1.1 million, which was partly offset by decreased professional expense by $98,725, decreased bad debt expense by $64,014, decreased office supplier by $63,615 and decreased office expense by $77,233.
The increase in operating expense was partially offset by decrease in selling expenses during the three months ended October 31, 2025 was primarily due to decreased payroll and employee benefits by $356,335, which was partly offset by increase in bank service charge by $78,698, increase in utilities expenses by $58,887 and increase in other G&A expenses by $58,644.
For the three months ended October 31, 2025 and 2024, total operating expenses for Maison El Monte were $7,646 and $521,063, respectively.
Other Expenses, Net
Other expenses were $3,324,260 for the three months ended October 31, 2025 compared to other expenses of $189,395 for the three months ended October 31, 2024. For the three months ended October 31, 2025, other expenses mainly consisted of 1) change in fair value of derivative liability of $35,914, 2) loss on note conversion of $2,694,951, 3) unrealized loss on digital assets investment of $882,404, which was partly offset by other income of $289,009, was mainly from providing comprehensive consulting services focusing on enhancing operational efficiency, optimizing resource allocation, and supporting overall business growth to other non-related supermarkets.
For the three months ended October 31, 2024, other expenses mainly consisted of investment loss from equity method investment of $226,274, which was partly offset by other income of $36,879.
For the three months ended October 31, 2025 and 2024, other income for Maison El Monte were $248,683 and $3,104, respectively. For the three months ended October 31, 2025, other income mainly consisted of rent income of $240,000.
Interest Expense
Interest expense was $620,320 for the three months ended October 31, 2025, an increase of $382,246 from $238,074 for the three months ended October 31, 2024. For the three months ended October 31, 2025, the interest expense was for the SBA loans, bank loan, convertible note and note payable arising from the acquisition of Lee Lee. For the three months ended October 31, 2024, the interest expense was for the SBA loans and note payable arising from the acquisition of Lee Lee.
For the three months ended October 31, 2025 and 2024, interest expense for Maison El Monte were $4,230 and $4,306, respectively.
Income Taxes Provisions
Income tax benefit was $88,676 for the three months ended October 31, 2025, a decrease of $649,661 from income taxes expense of $560,985 for the three months ended October 31, 2024. The decrease in income tax expense was mainly due to the net loss from Maison parent company, decreased taxable income for Maison Monterey Park supermarket, and increased taxable loss for our other two California-based supermarkets.
Net Income (Loss) from Discontinued Operation
We generated net income from discontinued operation Maison El Monte of $ 241,037 and net loss of $ 253,937 for the three months ended October 31, 2025 and 2024, respectively.
Net Loss from Continuing Operation
Net loss attributable to the Company from continuing operation was $5,212,923 for the three months ended October 31, 2025, an increase of net loss of $5,150,765, or 8,286.6%, from a net loss of $62,158 attributable to the Company for the three months ended October 31, 2024. This was mainly attributable to the reasons discussed above, which included a decrease in gross profit by $1,433,815, increased loss on note conversion by $2,694,951, increased unrealized loss on digital assets investment by $882,404 and increased operating expenses by $849,500.
Results of Operations for the Six Months Ended October 31, 2025 and 2024
| Six Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change increase (decrease) |
|||||||||||||
| Net revenues | $ | 54,789,637 | $ | 57,529,822 | $ | (2,740,185 | ) | (4.8 | )% | |||||||
| Cost of revenues | 41,778,664 | 41,506,520 | 272,144 | 0.7 | % | |||||||||||
| Gross profit | 13,010,973 | 16,023,302 | (3,012,329 | ) | (18.8 | )% | ||||||||||
| Operating expenses | ||||||||||||||||
| Selling expenses | 9,564,995 | 9,427,816 | 137,179 | 1.5 | % | |||||||||||
| General and administrative expenses | 4,618,782 | 3,598,791 | 1,019,991 | 28.3 | % | |||||||||||
| Total operating expenses | 14,183,777 | 13,026,607 | 1,157,170 | 8.9 | % | |||||||||||
| Income (loss) from operations | (1,172,804 | ) | 2,996,695 | (4,169,499 | ) | (139.1 | )% | |||||||||
| Other expenses, net | (3,366,675 | ) | (386,627 | ) | (2,980,048 | ) | (770.78 | )% | ||||||||
| Interest expense, net | (1,272,729 | ) | (417,130 | ) | (855,599 | ) | 205.1 | % | ||||||||
| Income (loss) before income taxes | (5,812,208 | ) | 2,192,938 | (8,005,146 | ) | (365.0 | )% | |||||||||
| Income tax provisions | 231,867 | 1,189,765 | (975,898 | ) | (80.5 | )% | ||||||||||
| Net income (loss) from continuing operation | (6,044,075 | ) | 1,003,173 | (7,047,248 | ) | (702.5 | )% | |||||||||
| Net loss from discontinued operation | (584,462 | ) | (701,442 | ) | 116,980 | (16.7 | )% | |||||||||
| Net income (loss) before noncontrolling interests | (6,628,537 | ) | 301,731 | (6,930,268 | ) | (2,296.8 | )% | |||||||||
| Net loss attributable to noncontrolling interests from continuing operation | (70,576 | ) | (84,738 | ) | 14,162 | (16.7 | )% | |||||||||
| Net loss attributable to noncontrolling interests from discontinued operation | (48,686 | ) | (58,430 | ) | 9,744 | (16.7 | )% | |||||||||
| Net loss attributable to noncontrolling interests | (119,262 | ) | (143,168 | ) | 23,906 | (16.7 | )% | |||||||||
| Net income (loss) attribute to the Company from continuing operation | (5,973,499 | ) | 1,087,911 | (7,061,410 | ) | (649.1 | )% | |||||||||
| Net loss attribute to the Company from discontinued operation | (535,776 | ) | (643,012 | ) | 107,236 | 16.7 | % | |||||||||
| Net income (loss) attributable to Maison Solutions Inc. | $ | (6,509,275 | ) | $ | 444,899 | $ | (6,954,174 | ) | (1,563.1 | )% | ||||||
Revenues
| Six Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change |
|||||||||||||
| Perishables | $ | 28,556,971 | $ | 29,555,963 | $ | (998,992 | ) | (3.4 | )% | |||||||
| Non-perishables | 26,232,666 | 27,973,860 | (1,741,193 | ) | (6.2 | )% | ||||||||||
| Net revenue | $ | 54,789,637 | $ | 57,529,823 | $ | (2,740,185 | ) | (4.8 | )% | |||||||
Our net revenues were approximately $54.8 million for the six months ended October 31, 2025, a decrease of approximately $2.7 million or 4.8%, from approximately $57.5 million for the six months ended October 31, 2024. The decrease in net revenues was driven by decreased sales of Maison Monterey Park by $1.6 million, decreased sales of Maison Monrovia by $0.4 million, decreased sales of Maison San Gabriel by $0.6 million and decreased sales of Lee Lee stores by $0.2 million, as compared to the six months ended October 31, 2024. Our California-based supermarkets contributed $17.5 million in revenue during the six months ended October 31, 2025, a decrease of approximately $2.6 million, as compared to the six months ended October 31, 2024. The $2.6 million decrease was mainly due to high competition from nearby Asian supermarkets because there are too many supermarkets including Asia supermarkets in the surrounding area of our stores. For the six months ended October 31, 2025 and 2024, revenue for Maison El Monte were $753,579 and $3,139,482, respectively. We closed our Maison El Monte store on June 7, 2025 due to its continuous loss as well as our ongoing commitment to improve its profitability and support sustainable growth.
Cost of Revenues
| Six Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change |
|||||||||||||
| Total cost of revenues | $ | 41,778,664 | $ | 41,506,520 | $ | 272,144 | 0.7 | % | ||||||||
Cost of revenues includes cost of supermarket product sales and occupancy costs, which are store rent expense, depreciation for store property and equipment, inventory shrinkage costs and store supplies. The depreciation expense comes from machinery & equipment, such as refrigerators, water heaters, forklifts, and freezers and furniture & fixtures, such as metal shelves, shopping carts, and LED lights. Shrinkage costs are different for different types of products. For example, fruits and vegetables have a high allowance rate during the receiving and display process. The seafood and meat departments have a low allowance rate because the non-fresh products can freeze and sell for the same price or even higher price after being cut or sliced. The cost of revenues increased by $0.3 million, from $41.5 million for the six months ended October 31, 2024, to approximately $41.8 million for the six months ended October 31, 2025. The increase in cost of revenues was mainly from increased cost of revenues from Lee Lee stores by $2.5 million which was partly offset by decreased cost of revenues from our three California based supermarket by $2.3 million. For the six months ended October 31, 2025 and 2024, Cost of revenue for Maison El Monte were $767,419 and $2,745,358, respectively.
Gross Profit and Gross Margin
| Six Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change |
|||||||||||||
| Gross Profit | $ | 13,010,973 | $ | 16,023,302 | $ | 3,012,329 | 18.8 | % | ||||||||
| Gross Margin | 23.7 | % | 27.9 | % | - | 4.1 | % | |||||||||
Gross profit was approximately $13 million and $16 million for the six months ended October 31, 2025 and 2024, respectively. Gross margin was 23.7% and 27.9% for the six months ended October 31, 2025 and 2024, respectively. Our supermarkets' sales profit margins decreased by 4.1% for the six months ended October 31, 2025 compared to the six months ended October 31, 2024. The decrease in our gross profit was mainly due to the increase cost of goods sold due to inflation. For the six months ended October 31, 2025 and 2024, gross profit (loss) for Maison El Monte were $(13,840) and $394,124, respectively. We sold products in Maison El Monte store at a big discount due to the closure of the store.
Total Operating Expenses
| Six Months Ended October 31, | ||||||||||||||||
| 2025 | 2024 | Change |
Percentage Change |
|||||||||||||
| Selling Expenses | $ | 9,564,995 | $ | 9,427,816 | $ | 137,179 | 1.5 | % | ||||||||
| General and Administrative Expenses | 4,618,782 | 3,598,791 | 1,019,991 | 28.3 | % | |||||||||||
| Total Operating Expenses | $ | 14,183,777 | $ | 13,026,607 | $ | 1,157,170 | 8.9 | % | ||||||||
| Percentage of revenue | 25.9 | % | 22.6 | % | 3.3 | % | ||||||||||
Total operating expenses were approximately $14.2 million for the six months ended October 31, 2025, an increase of approximately $1.2 million, compared to approximately $13.0 million for the six months ended October 31, 2024. Total operating expenses as a percentage of revenues were 25.9% and 22.6% for the six months ended October 31, 2025 and 2024, respectively.
The increase in operating expenses was primarily attributable to the increase in general and administrative expenses during the six months ended October 31, 2025 was primarily due to stock compensation expense increased by $1.1 million and increased other G&A expenses by $0.3 million, which was partly offset decreased professional expense by $0.3 million.
The increase in selling expenses during the six months ended October 31, 2025 was primarily due to increased bank service fees by $132,422, increased computer expense by $28,323, increased delivery expense by $48,816, which was partly offset by decreased utilities expense by $65,449.
For the six months ended October 31, 2025 and 2024, total operating expenses for Maison El Monte were $322,507 and $1,084,578, respectively.
Other Expenses, Net
Other expenses were $3,366,675 for the six months ended October 31, 2025 compared to other expense of $386,627 for the six months ended October 31, 2024. For the six months ended October 31, 2025, other expenses mainly consisted of 1)investment loss of $848,493 from HKGF Arcadia, 2) loss on note conversion of $2,694,951, 3) unrealized loss on digital assets investment of $882,404, which was partly offset by change in fair value of derivative liability of $273,990 and other income of $785,183, which was mainly the $0.56 million consulting income from providing comprehensive consulting services focusing on enhancing operational efficiency, optimizing resource allocation, and supporting overall business growth to other non-related supermarkets.
For the six months ended October 31, 2024, other expenses mainly consisted of investment loss from equity method investment of $433,077, which was partly offset by other income of $46,450.
For the six months ended October 31, 2025, other expenses for Maison El Monte were $238,115. For the six months ended October 31,2024, other income for Maison El Monte were $7,208. For the six months ended October 31, 2025, other expenses mainly consisted of loss on disposal of store assets of $489,380, which was partly offset by other income by $260,150.
Interest Expense
Interest expense was $1,272,729 for the six months ended October 31, 2025, an increase of $855,599 from $417,130 for the six months ended October 31, 2024. For the six months ended October 31, 2025, the interest expense was for the SBA loans, bank loan, convertible note and note payable arising from the acquisition of Lee Lee. For the six months ended October 31, 2024, the interest expense was for the SBA loans and note payable arising from the acquisition of Lee Lee.
For the six months ended October 31, 2025 and 2024, interest expense for Maison El Monte were $8,885 and $8,637, respectively.
Income Taxes Provisions
Income tax expense was $231,867 for the six months ended October 31, 2025, a decrease of $957,898 from income taxes expense of $1,189,765 for the six months ended October 31, 2024. The decrease in income tax expense was mainly due to the taxable loss from Maison parent company, decreased taxable income for Maison Monterey Park supermarket, and increased taxable loss for our other two California-based supermarkets.
Net Loss from Discontinued Operation
We generated net loss from discontinued operation Maison El Monte of $584,462 and $701,442 for the six months ended October 31, 2025 and 2024, respectively.
Net Income (Loss) from Continuing Operation
Net loss attributable to the Company from continuing operation was $6,044,075 for the six months ended October 31, 2025, an increase of net loss of $7,047,248, or 702.5%, from a net income of $1,003,173 attributable to the Company for the six months ended October 31, 2024. This was mainly attributable to the reasons discussed above, which included a decrease in gross profit by $3,012,329 and increased operating expenses by $1,157,170, increased loss on conversion by $2,694,951, increased unrealized loss on digital assets investment by $882,404, which is partly offset by increased other income by $738,733.
Liquidity and Capital Resources
Cash Flows for the six Months Ended October 31, 2025 Compared to the six Months Ended October 31, 2024
As of October 31, 2025, we had cash and cash equivalents of approximately $1,365,377. We had net loss from continuing operation attributable to us of $5,973,499 for the six months ended October 31, 2025, and had a working capital deficit of approximately $4.19 million as of October 31, 2025. As of October 31, 2025, the Company had outstanding loan facilities of approximately $2.60 million SBA loans, $5.0 million bank loan, and $6.00 million convertible note payable.
In assessing its liquidity, management monitors and analyzes the Company's cash on-hand, its ability to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments. We have funded our working capital, operations and other capital requirements in the past primarily by equity contributions from shareholders, cash flow from operations, government grants, and bank loans. Cash is required to pay purchase costs for inventory, rental expenses, salaries, income taxes, other operating expenses and to repay debts. Our ability to repay our current expenses and obligations will depend on the future realization of our current assets. Management has considered the historical experience, the economy, trends in the retail grocery industry, the expected collectability of our accounts receivable and the realization of the inventories as of October 31, 2025 and April 30, 2025. Our ability to continue to fund these items may be affected by general economic, competitive, and other factors, many of which are outside of our control.
On October 4, 2023, we entered into an Underwriting Agreement with Joseph Stone Capital, LLC in connection with the Company's initial public offering (the "IPO") of 2,500,000 shares of Class A common stock, par value $0.0001, at a price of $4.00 per share, less underwriting discounts and commissions. The IPO closed on October 10, 2023, and the Company received net proceeds of approximately $8.72 million, after deducting underwriting discounts and commissions and estimated IPO offering expenses payable by the Company.
On November 22, 2023, we entered into certain securities purchase agreements (the "Securities Purchase Agreements") with certain investors (the "PIPE Investors"). Pursuant to the Securities Purchase Agreements, we sold an aggregate of 1,190,476 shares of the Company's Class A common stock, par value $0.0001 per share, to the PIPE Investors at a per share purchase price of $4.20 (the "PIPE Offering"). The PIPE Offering closed on November 22, 2023. We received net proceeds of approximately $4.60 million, after deducting investment banker's discounts and commissions and offering expenses payable by the Company.
We may also seek additional financing, to the extent needed, and there can be no assurance that such financing will be available on favorable terms, or at all. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders. If it is determined that the cash requirements exceed the Company's amounts of cash on hand, the Company may also seek to issue additional debt or obtain financial support from shareholders.
All of our business expansion endeavors involve risks and will require significant management, human resources, and capital expenditures. There is no assurance that the investment to be made by us as contemplated under our future expansion plans will be successful and generate the expected return. If we are not able to manage our growth or execute our strategies effectively, or at all, our business, results of operations, and prospects may be materially and adversely affected.
The following table summarizes our cash flow data for the six months ended October 31, 2025 and 2024.
|
Six Months Ended October 31, |
||||||||
| 2025 | 2024 | |||||||
| Net cash provided by (used in) operating activities | $ | (636,479 | ) | $ | 4,707,531 | |||
| Net cash used in investing activities | (2,038,096 | ) | (195,085 | ) | ||||
| Net cash provided by (used in) financing activities | 3,264,592 | (4,157,877 | ) | |||||
| Net change in cash | $ | 590,017 | $ | 354,569 | ||||
Operating Activities
Net cash used in operating activities was approximately $636,479 for the six months ended October 31, 2025, which mainly consisted of net loss of $6.6 million, deducting non-cash adjustments from net loss of $389,565, including change in fair value of derivative liability of $273,990 and change in deferred taxes of $115,575. In addition, for the six months ended October 31, 2025, we had cash outflow from (i) increased outstanding accounts receivable from related parties of $53,030, (ii) increased purchase of inventories of $631,655, (iii) increased cash outflow on prepayment of $428,473, (iv) increased cash outflow on other receivables and other current assets of $286,944, (v) increased cash outflow on accounts payable from related parties of $26,420, (vi) increased payment for contract liabilities of $70,319, and (vii) increased payment of other long-term payables of $1,200.
However, our net cash used in operating activities for the six months ended October 31, 2025 was offset by add-back of non-cash adjustments to net loss including depreciation and amortization expense of $441,519, inventory impairment of $221,678, loss on note convertible of $2,694,951, stock compensation expense of $1,075,730, amortization of OID and debt issuance cost of $755,532, investment loss from 49% equity investee HKGF Arcadia store of $848,493, and $489,380 loss from disposal of assets due to Maison El Monte store closure. In addition, for the six months ended October 31, 2025, we had cash inflow from (i) collection of outstanding accounts receivables of $584,831, (ii) increased outstanding accounts payable of $17,882 , (iii) increased outstanding income tax payable of $345,559, (iv) increased operating lease liabilities of $218,711, and (v) increased accrued expenses and other payables of $185,398.
Net cash provided by operating activities was approximately $4.7 million for the six months ended October 31, 2024, which mainly comprised of net income of $301,731, add-back of non-cash adjustments to net income including depreciation and amortization expense of $527,543, inventory impairment of $314,833, bad debt expense of $62,483 and investment loss from 49% equity investee HKGF Arcadia store of $392,302 and investment loss from 10% cost investee HKGF Alhambra store of $40,775. In addition, for the six months ended October 31, 2024, we had cash inflow from (i) decrease to other receivables and other current assets of $599,926, (ii) increased outstanding accounts payable of $3,783,025 including accounts payable from related parties of $120,804, (iii) increased outstanding income tax payable of $1,222,747, (iv) increased operating lease liabilities of $268,791, and (v) increase of accrued expenses and other payables of $374,645.
However, our net cash provided by operating activities for the six months ended October 31, 2024 was mainly offset by an increase of inventories of $2,398,913, an increase of prepayments of $442,103, an increase of accounts receivable from related parties of $149,749, and an increase of payment for contract liabilities of $154,898.
Investing Activities
Net cash used in investing activities was $2.0 million for the six months ended October 31, 2025, which mainly consisted of purchase of equipment of $1,000 and purchase of digital assets of $2,037,096.
Net cash used in investing activities was $195,085 for the six months ended October 31, 2024, which mainly consisted of store renovation and purchase of equipment of $133,085 and investment into HKGF Market of Arcadia, LLC of $62,000.
Financing Activities
Net cash provided by financing activities was approximately $3.3 million for the six months ended October 31, 2025, which mainly consisted of borrowing from bank loan of $5,250,000, proceeds from promissory note of $4,844,000, which was partially offset by bank overdraft of $385,615, loan to related party of $497,562, repayment of loan payable of $304,171, and repayment of notes payable arising from acquisition of Lee Lee of $5,642,060.
Net cash used in financing activities was approximately $4.2 million for the six months ended October 31, 2024, which mainly consisted of repayment for a note payable arising from the acquisition of Lee Lee of $5,300,000, loan to related party of $65,000 and repayment on SBA loan payable of $32,287, which was partially offset by increase of bank overdraft of $1,225,672 and increase borrowing from related parties $13,738.
Debt
U.S. Small Business Administration (the "SBA")
On June 15, 2020, Maison Monrovia entered into a $150,000 Business Loan Agreement with the SBA at 3.75% annual interest rate and the maturity date on June 15, 2050.
On June 15, 2020, Maison San Gabriel entered into a $150,000 Business Loan Agreement with the SBA at 3.75% annual interest rate and the maturity date on June 15, 2050. On January 12, 2022, Maison San Gabriel received an extra $1,850,000 loan from the SBA at 3.75% annual interest rate and the maturity date on June 15, 2050.
On June 15, 2020, Maison El Monte entered into a $150,000 Business Loan Agreement with the SBA at 3.75% annual interest rate and the maturity date on June 15, 2050. On January 6, 2022, Maison El Monte received an extra $350,000 loan from the SBA at 3.75% annual interest rate and the maturity date on June 15, 2050.
As of October 31, 2025 and April 30, 2025, the Company's aggregate balance on the three SBA loans was $2,591,887 and $2,616,050, respectively.
Bank Loan
On August 19, 2025, Lee Lee and AZLL closed a Business Loan Agreement with Royal Business Bank ("RBB") which provided secured financing in the principal amount of $5,250,000. The loan from RBB is further documented by a Promissory Note. The Note bears interest at a rate of 7.5% per year and requires monthly payments of principal and interest in the amount of $91,040, with a final ballon payment in the amount of $1,139,917 due at maturity on September 5, 2030. Under the terms of the loan, the facility is also required to make additional principal curtailments of $150,000 each in November, December, January, and February of every year, totaling $600,000 annually, or $3,000,000 over the full loan term. The Note is secured by a substantially all assets of Lee Lee under the terms of a Commercial Security Agreement and is personally guaranteed by the Company's CEO, John Xu, and his spouse, Grace Xu. In addition, Mr. Xu has pledged certain real property as collateral security for his guaranty of the loan. For the three and six months ended October 31, 2025, the Company recorded and paid $62,985 interest expense for this loan. For the three and six months ended October 31, 2025, the Company repaid $280,009 for this loan. As of October 31, 2025, $1,692,480 was recorded as current liabilities.
Senior Secured Note Payable
On April 8, 2024, AZLL closed an acquisition transaction and purchased 100% of the equity interests in Lee Lee for an aggregate purchase price of approximately $22.2 million, consisting of: (i) $7.0 million in cash paid immediately at the closing of the transaction, and (ii) the Secured Note with an original principal amount of approximately $15.2 million pursuant to the Senior Secured Note Agreement.
Under the Senior Secured Note Agreement, the Secured Note will accrue interest on the outstanding principal amount at an annual interest rate of five percent (5%). The payment schedule of the principal amount of the Secured Note is as follows: (i) $2.5 million due and immediately payable on each of May 8, 2024 and June 8, 2024; (ii) $1.5 million due and immediately payable on each of September 8, 2024, October 8, 2024 and November 8, 2024; (iii) $1.0 million due and immediately payable on December 8, 2024; and (iv) approximately $4.7 million due and immediately payable on February 8, 2025. Additionally, pursuant to the terms and conditions of the Senior Secured Note Agreement, the principal amount may be adjusted to include certain Premium Guarantees (as defined in the Senior Secured Note Agreement) if certain conditions, as set forth in the Senior Secured Note Agreement and the Stock Purchase Agreement, are not met.
Upon an "Event of Default" under the Senior Secured Note Agreement, the holders of the Secured Note will have certain rights, including the right to (i) declare all of the Obligations, as defined in the Senior Secured Note Agreement to be immediately due and payable, and (ii) resume daily operational control of Lee Lee's operations until such time as the Obligations, as defined in the Senior Secured Note Agreement, have been satisfied. Additionally, if an "Event of Default" occurs, the outstanding principal amount will bear interest at the simple interest rate of 10 percent (10%) per annum, from the date of such Event of Default until all such sum are fully paid.
On June 10, 2024, Lee Lee filed a Statement of Conversion with the Arizona Corporation Commission (the "ACC") converting Lee Lee Oriental Supermart, Inc. into Lee Lee Oriental Supermart, LLC, an Arizona limited liability company (the "Conversion"). Following the Conversion, AZLL filed a Statement of Merger with the ACC, pursuant to which Lee Lee merged into AZLL, effective August 28, 2024 (the "Merger"). On September 9, 2024, AZLL filed a Statement of Division with the ACC resulting in the restoration of both Lee Lee and AZLL as separate legal entities (the "Division"). The Conversion, the Merger and the Division are herein referred to collectively as the "Lee Lee Reorganization."
On October 21, 2024, Lee Lee, AZLL, the Company and the Holders entered into the First Amendment to Senior Secured Note Agreement (the "First Amendment"), which amends that certain Senior Secured Note Agreement, dated as of April 8, 2024.Among other things, the First Amendment amends the Secured Note to (i) reflect the Lee Lee Reorganization, (ii) modify certain cure periods pursuant to an "Event of Default" under the Secured Note, and (iii) include certain covenants and representations with respect to the Lee Lee Reorganization. Additionally, pursuant to the First Amendment, Lee Lee, AZLL and the Company irrevocably waive and forfeit any and all defenses, causes or remedies which may have arisen or may arise as a result of the Lee Lee Reorganization in relation to any action or enforcement of any rights, remedies or provisions of the Secured Note, the Security Agreement and/or otherwise at law taken by the Holders.
On October 21, 2024, following the execution of the First Amendment, Lee Lee, AZLL and the Holders entered into the Second Amendment to the Senior Secured Note Agreement (the "Second Amendment"). Among other things, the Second Amendment: (i) increases the annual interest rate on the outstanding Principal Amount, effective as of October 8, 2024, to ten percent (10%); (ii) amends the payment schedule of the principal and interest amounts to be due every Monday of each week starting on October 14, 2024, as set forth in Exhibit A of the Second Amendment; (iii) amends the definition of "Events of Default"; and (iv) increases the Default Rate to fourteen percent (14%) per annum. Additionally, pursuant to the Second Amendment, upon execution of the Second Amendment, the Company paid a restructuring fee of $40,000 to the Holders.
On March 12, 2025, we entered into a note modification agreement dated March 12, 2025 (the "Modification Agreement") with AZLL, Lee Lee, Holders of the Secured Note, John Xu and Grace Xu (together with the Company, the "Parties") to modify certain terms of the Note, Security Agreement and Guarantees. Pursuant to the Modification Agreement, the Parties agreed to revise the payment schedule of the Note and extend the maturity date of the Note to May 11, 2026 (the "Extended Maturity Date"). The Modification Agreement also provides for an additional extension fee interest to accrue on the outstanding principal balance of the Note as of January 15, 2025 at an annual rate of eight percent (8%), which shall become payable and immediately due on the earliest of (i) the Extended Maturity Date or (ii) immediately upon the occurrence of any "Event of Default" under any of the Loan Documents or the Modification Agreement, as such term is defined under the applicable Loan Document. Furthermore, the Modification Agreement includes additional "Events of Default" and remedies under the Loan Documents, and additional covenants of the Company, among other things. The Modification Agreement increases the annual interest rate on the outstanding Principal Amount, effective as of February 24, 2024, to twelve percent (12%). Additionally, the amount of each Guaranty Premium shall be added to the outstanding Principal Amount of the Note as of the date Issuer's liability for payment of the Guaranty Premium becomes fixed and shall accrue interest at the rate set forth in the Note until paid in full. The Modification stated that no new debt or encumbrances without holders' approval. Absent Holders' prior, express written authorization, Issuer shall not: (i) pay or incur any indebtedness outside the ordinary course of business; or (b) grant, permit or suffer the attachment of any liens or security interests in or to any Collateral; or (c) enter into any single or series of contracts, agreements or commitments requiring cumulative payments in excess of $10,000.00. Moreover, pursuant to the Modification Agreement, issuer shall not make any distributions to Parent, Grantor, Guarantors or any other related party, company or entity related to the Parent, Grantor or Guarantors through any direct or indirect ownership or control or any other financial arrangement (together, the "Related Parties"). Upon execution of the Modification Agreement, the Company paid the Holders a $35,000 documentation fee pursuant to the terms of the Modification Agreement.
On April 8, 2024, in connection with the execution of the Senior Secured Note Agreement, and pursuant to the Stock Purchase Agreement, AZLL entered into a guarantee (the "AZLL Guarantee") to and for the benefit of the Sellers, pursuant to which AZLL unconditionally guarantees the payment by Lee Lee of the principal amount of the Secured Note, as adjusted pursuant to the Secured Note and the faithful and prompt performance by Lee Lee of the conditions and covenants of the Secured Note.
Also on April 8, 2024, in connection with the execution of the Senior Secured Note Agreement, and pursuant to the Stock Purchase Agreement, John Jun Xu, Chairman, Chief Executive Officer and controlling stockholder of the Company, and Grace Xu, spouse of John Jun Xu (together with John Jun Xu, the "Xu Guarantors"), entered into a guarantee (the "Xu Guarantee" and, together with the AZLL Guarantee, the "Guarantees") to and for the benefit of the Sellers, pursuant to which the Xu Guarantors unconditionally guarantee the payment by Lee Lee of the principal amount of the Secured Note, as adjusted pursuant to the Secured Note and the faithful and prompt performance by Lee Lee of the conditions and covenants of the Secured Note.
On October 21, 2024, AZLL entered into a First Amendment to Guarantee of Note (the "AZLL Guarantee Amendment"), which amends the AZLL Guarantee to reflect the Lee Lee Reorganization. Additionally, pursuant to the AZLL Guarantee Amendment, AZLL irrevocably waives any and all defenses, causes or remedies which may have arisen or may arise as a result of the Lee Lee Reorganization in relation to any action or enforcement of any rights, remedies or provisions of the AZLL Guarantee, the Secured Note, the Security Agreement and/or otherwise at law taken by the Holders.
On October 21, 2024, the Xu Guarantors entered into a First Amendment to Guarantee of Note (the "Xu Guarantee Amendment" and, together with the AZLL Guarantee Amendment, the "Guarantee Amendments"), which amends the Xu Guarantee to reflect the Lee Lee Reorganization. Additionally, pursuant to the Xu Guarantee Amendment, the Xu Guarantors irrevocably waive any and all defenses, causes or remedies which may have arisen or may arise as a result of the Lee Lee Reorganization in relation to any action or enforcement of any rights, remedies or provisions of the Xu Guarantee, the Secured Note, the Security Agreement and/or otherwise at law taken by the Holders.
As of October 31, 2025 and April 30, 2025, the Company had an outstanding note payable of nil and $5,642,060 to the sellers of Lee Lee. The Company repaid this note in full on September 8, 2025.
Convertible Note Payable
Unsecured convertible promissory note entered on March 12, 2025
On March 12, 2025, we entered into a securities purchase agreement (the "Purchase Agreement") with an institutional investor (the "Investor" or "Holder"), pursuant to which we agreed to issue and sell (i) a senior unsecured convertible promissory note in the aggregate original principal amount of $3,000,000 with an original issue discount of eight and a half percent (8.5%) (the "Initial Note"), convertible into shares (the "Conversion Shares") of Class A common stock, $0.0001 par value per share of the Company (the "Common Stock"), and (ii) a note purchase warrant (the "Incremental Warrant"), exercisable for one or more senior unsecured convertible promissory notes in the aggregate original principal amount of up to $6,500,000 with an original issue discount of eight and a half percent (8.5%) and substantially in the form of the Initial Note (each an "Additional Note" and collectively, the "Additional Notes" and together with the Initial Note, the "Notes"). On March 12, 2025 (the "Closing Date"), we issued and sold to the Investor the Initial Note for a purchase price of $2,745,000, representing an original issue discount of eight and a half percent (8.5%), which matures on March 12, 2027, and the Incremental Warrant, which expires on March 12, 2028. The Initial Note bears interest at a rate to 5.25% per annum and may increase to a rate of 18.00% per annum upon the occurrence of an Event of Default (as defined in the Initial Note), for so long as such event remains uncured. Accrued interest will be paid on a monthly basis and, at the Company's option, will either be paid in cash or paid-in-kind in shares of Common Stock, subject to certain terms and conditions as set forth in the Initial Note. The Conversion Price of the Initial Note is initially $1.38 per share of Class A common stock (the "Fixed Price"). Beginning on the effective date of the initial Registration Statement and on the same day of each successive month thereafter (each, a "Fixed Price Reset Date"), the Conversion Price will be reduced to the lower of (i) the then-effective Fixed Price and (ii) 95% of the lowest daily VWAP during the ten (10) consecutive trading days immediately prior to such Fixed Price Reset Date (the "Variable Price").
The Note Holder may exercise the Incremental Warrant, in whole or in part, in increments of up to $1,500,000, but subject to a minimum increment of $250,000, at any time prior to March 12, 2028. The Incremental Warrant also provides that the Company may request that the Holder exercise the Incremental Warrant if certain terms and conditions are satisfied as set forth in the Incremental Warrant. The aggregate exercise price to purchase the maximum aggregate principal amount of Additional Notes issuable under the Incremental Warrant is $5,947,500, which gives effect to an original issue discount of eight and a half percent (8.5%) for each such Additional Note issued upon the exercise of the Incremental Warrant. The Note Holder is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the ninetieth (90) Trading Day following the effective date of the initial Registration Statement (the "Initial Exercise Date") and on or prior to 5:00 p.m. (New York City time) on March 12, 2028 (the "Termination Date") but not thereafter, to subscribe for and purchase from Maison. The incremental warrant is contingent for exercise upon effectiveness of the initial registration statement, as of October 31, 2025, the initial registration statement was not effective yet and is under SEC review, however, the Company expects it will meet the registration effectiveness deadline described below.
On March 12, 2025, the Company also entered into a registration rights agreement (the "Registration Rights Agreement") with the Investor pursuant to which the Company agreed to register the resale of the Conversion Shares issued or issuable upon conversion of the Initial Note and any Additional Notes. The Registration Rights Agreement requires, among other things, the Company to file an initial resale registration statement covering the Conversion Shares with the SEC within 30 calendar days after the Closing Date. The Company is obligated to use its best efforts to have the registration statement declared effective by the SEC as soon as practicable, but in no event later than the 60th calendar day following the Closing Date (the "Effectiveness Deadline"). However, in the event the Company is notified by SEC that the registration statement will not be reviewed or is no longer subject to further review and comments, the Effectiveness Deadline will be accelerated to the fifth business day following the date on which the Company is so notified if such date precedes the initial Effectiveness Deadline. In the event the registration statement is subject to a full SEC review, or the Company is required to update the financial statements therein, which causes the registration statement not to be declared effective by the Effectiveness Deadline, the Effectiveness Deadline will automatically be deemed to be extended for so long as necessary, provided that the Company is using its best efforts to promptly respond to and satisfy the requests of the SEC. During any such period, the Company will not be in default of satisfying the Effectiveness Deadline.
The Company repaid this note in full through the issuance of 3,185,968 shares and 1,593,208 shares of the Company's common stock on September 29, 2025 and September 30, 2025, respectively. The Company recorded $2.44 million loss on note conversion.
Issuance of second tranche of unsecured convertible promissory note under March 12, 2025 note purchase agreement
On October 22, 2025, the Company issued an additional senior unsecured convertible promissory note in the principal amount of $3,000,000 (the "Additional Note") to the investor pursuant to the initial Note Purchase Agreement dated as of March 12, 2025 by and between the Company and the Holder. The conversion price of the additional Note is initially $0.78 per share of Class A common stock (the "Fixed Price"). Beginning on the effective date of the initial Registration Statement and on the same day of each successive month thereafter, the conversion price will be reduced to the lower of (i) the then-effective Fixed Price and (ii) 95% of the lowest daily VWAP during the ten (10) consecutive trading days immediately prior to such Fixed Price Reset Date (the "Variable Price"). The Note included an original issue discount ("OID") of $255,000 along with debt issuance cost $256,000 for investor's fees, costs and other transaction expenses in connection with the issuance of this note.
The Additional Note is a senior unsecured obligation of the Company and has a maturity date of October 22, 2027. The Additional Note bears interest at a rate to 5.25% per annum and may increase to a rate of 18.00% per annum upon the occurrence of an Event of Default (as defined in the Initial Note), for so long as such event remains uncured. Accrued interest will be paid on a monthly basis and, at the Company's option, will either be paid in cash or paid-in-kind in shares of Common Stock, subject to certain terms and conditions as set forth in the Initial Note.
Senior secured convertible promissory note entered on October 1, 2025
On October 1, 2025, the Company concluded the initial closing under the Securities Purchase Agreement dated as of September 28, 2025, pursuant to which the Company agreed to issue and sell to an institutional investor (the "Investor") a total principal amount of up to $70 million Senior Secured Convertible Promissory Notes (the "Notes"). On October 1, 2025, the Company issued an initial Note to the Investor in the principal amount of $3,000,000 for a purchase price of $2,745,000 (the "Initial Note"). In accordance with the terms of the Purchase Agreement, approximately 90% of the net proceeds received from the purchase and sale of the Initial Note will be used to acquire World Coin (WLD) to be held as a treasury asset for the Company's balance sheet. The Note has an original issue discount of 8.5% ($255,000) along with debt issuance cost $390,000.
The Initial Note has an initial conversion price of $1.0289, bears interest at a rate of eight percent (8%) per year, and matures on October 1, 2027. Interest payments are required to be paid monthly beginning on November 1, 2025, and may be paid in cash or, subject to the satisfaction of certain equity market conditions, in shares of Class A Common Stock of the Company, valued at the conversion price of the Initial Notes then in effect. The Note will be convertible to Class A Common Stock of the Company at price equal to lower of (i) the Nasdaq "Minimum Price" (as defined in Nasdaq Rule 5635(d)) as of the date of issuance of such Note and (ii) 90% of the lowest daily volume weighted average price of the Company's Class A Common Stock during the ten (10) consecutive trading days preceding the conversion notice (the "Conversion Price"). In no event, however, shall the Initial Note be convertible at a price less than the floor price equal to 20% of the Nasdaq "Minimum Price" as of the date of issuance of the Initial Note, or $0.2058 per share (the "Floor Price").
The Company's obligations under the Notes will be secured by a lien on all assets of the Company, including all cryptocurrencies purchased with the proceeds of the Notes, under the terms of a Pledge and Security Agreement to be entered into as of the date of the initial closing(the "Security Agreement"). The Security Agreement will contain customary covenants and restrictions, including prohibitions on the granting of additional liens on any collateral or the transfer or sale of collateral other than in the ordinary course of business. Under the terms of the Security Agreement, all cryptocurrencies acquired by the Company with the proceeds of the Notes will be held for security in a blocked custodial account to be administered by an appointed custodian acting on behalf of the Note holders. Cryptocurrencies held under the control the Note holders in the blocked custodial account may not be sold or transferred for so long as any Notes remain outstanding.
On September 28, 2025, the Company also entered into a registration rights agreement (the "Registration Rights Agreement") with the Investor pursuant to which the Company agreed to register the resale of all shares of Class A Common Stock issuable upon conversion of the Notes. The Registration Rights Agreement requires, among other things, the Company to file an initial resale registration statement covering the conversion shares with the SEC within 30 calendar days after the initial closing date. The Company is obligated to use its best efforts to have the registration statement declared effective by the SEC as soon as practicable, but in no event later than the 90th calendar day following the closing date (the "Effectiveness Deadline"). However, in the event the Company is notified by SEC that the registration statement will not be reviewed or is no longer subject to further review and comments, the Effectiveness Deadline will be accelerated to the 2nd business day following the date on which the Company is so notified if such date precedes the initial Effectiveness Deadline.
Commitments and Contractual Obligations
The following table presents the Company's material contractual obligations as of October 31, 2025:
| Contractual Obligations | Total |
Less than 1 year |
1-3 years | 3-5 years | Thereafter | |||||||||||||||
| Bank loan | $ | 4,969,991 | $ | 1,692,480 | $ | 2,938,152 | $ | 339,359 | $ | - | ||||||||||
| SBA loans | 2,591,887 | 62,568 | 125,136 | 125,136 | 2,279,047 | |||||||||||||||
| Convertible notes payable | 6,000,000 | - | 6,000,000 | - | - | |||||||||||||||
| Operating lease obligations and others | 37,774,254 | 3,447,820 | 6,658,499 | 5,424,999 | 22,242,936 | |||||||||||||||
| $ | 51,336,132 | $ | 5,202,868 | $ | 15,721,787 | $ | 5,889,494 | $ | 24,521,983 | |||||||||||
Contingencies
The Company is otherwise periodically involved in various legal proceedings that are incidental to the conduct of its business, including, but not limited to, employment discrimination claims, customer injury claims, and investigations. When the potential liability from a matter can be estimated and the loss is considered probable, the Company records the estimated loss. Due to uncertainties related to the resolution of lawsuits, investigations, and claims, the ultimate outcome may differ from the estimates. Although the Company cannot predict with certainty the ultimate resolution of any lawsuits, investigations, and claims asserted against it, management does not believe any currently pending legal proceeding to which the Company is a party will have a material adverse effect on its financial statements. Additional information regarding our legal proceedings can be found in Note 18 - "Commitments and Contingencies" to the consolidated financial Statements included in this Annual Report on Form 10-K and is incorporated herein by reference.
On January 2, 2024, the Company and our executive officers and directors, as well as Joseph Stone Capital LLC, and AC Sunshine Securities LLC, the underwriters in the Company's initial public offering (together, the "Defendants"), were named in a class action complaint filed in the Supreme Court of the State of New York alleging violations of Sections 11 and 15 of the Securities Act of 1933, as amended (Ilsan Kim v. Maison Solutions Inc., et. al, Index No. 150024/2024). As relief, the plaintiffs are seeking, among other things, compensatory damages. On or about April 17, 2024, the parties agreed to stay the action in favor of the Rick Green matter described immediately below.
On January 4, 2024, the Defendants were named in a class action complaint filed in the United States District Court for the Central District of California alleging violations of Sections 11 and 15 of the Securities Act of 1933, as amended, as well as violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (Rick Green and Evgenia Nikitina v. Maison Solutions Inc., et. al., Case No. 2:24-cv-00063). As relief, the plaintiffs are seeking, among other things, compensatory damages.
The Company and Defendants believe the allegations in both complaints are without merit and intend to defend each suit vigorously. It is reasonably possible that a loss may be incurred; however, the possible range of losses is not reasonably estimable given the pending status of the cases.
On April 9, 2024, a shareholder derivative action was brought by Shah Azad derivatively on behalf of the Company against John Xu, Tao Han, Alexandria Lopez, Bin Wang, Mark Willis, and Xiaoxia Zhang, and the Company itself as a nominal defendant. The complaint was filed in the United States District Court for the Central District of California, Case No. 2:24-cv-02897. On April 12, 2024, another derivative complaint was filed by Arnab Baral in the United States District Court Central District of California, Case No. 2:24-cv-03018. The two cases have since been consolidated, with the Azad case taking the lead. The lawsuits allege breaches of fiduciary duty, abuse of control, unjust enrichment, gross mismanagement, waste of corporate assets, and contribution under Section 11(f) of the Securities Act and Section 21D of the Exchange Act. The claims arise from the allegations underlying the class action securities lawsuits. On July 19, 2024, the Court ordered the Azad case stayed until a motion to dismiss is heard in the class action securities action. The Company is not able to make a reasonable estimate about the amount of contingent loss of these cases at current stage.
On September 8, 2023, a complaint was filed by former employee against Maison San Gabriel for wrongful termination and labor law violation. Maison San Gabriel filed a general denial in November 2023. Status conference is scheduled for July 1, 2025, and final status conference is scheduled for February 26, 2026. Trial is scheduled for March 9, 2026. In the complaint, the plaintiff's counsel asked for a range of $300,000 to $3,000,000. On August 4, 2025, both parties reached a confidential settlement agreement and release, the Company agreed to pay $25,000 to plaintiff in exchange for plaintiff's release of all claims.
On September 3, 2024, a claim was filed against Maison El Monte alleging violations of the Unruh Civil Rights Act and the California Disabled Persons Act for building not having adequate access for disabilities. The case Management Conference is scheduled for January 30, 2025. On April 8, 2025, both parties reached a confidential settlement agreement and release of claims, and the Company agreed to pay $6,000 to settle the case.
On October 17, 2024, a complaint was filed against HKGF Alhambra, HKGF Arcadia, Maison El Monte, Maison San Gabriel, Maison Monrovia, Maison Monterey Park and Tion Hin for unpaid invoices of seafood purchase for $115,388. The case management conference is scheduled for January 5, 2026. The management is not able to estimate the outcome of the case due to early stage of the case.
Off-Balance Sheet Arrangements
The Company has guaranteed all of the loans described above, and Mr. John Xu, the Company's CEO, Chairman and President, has personally guaranteed the loans with the SBA. The Company does not have any other off-balance sheet arrangements that either have, or are reasonably likely to have, a current or future material effect on its financial condition.
Maison Solutions Inc. published this content on December 22, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on December 22, 2025 at 19:53 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]