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What changed in Maison Solutions Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Maison Solutions Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+347 added−333 removedSource: 10-K (2024-08-13) vs 10-K (2023-07-31)

Top changes in Maison Solutions Inc.'s 2024 10-K

347 paragraphs added · 333 removed · 235 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

77 edited+22 added−21 removed100 unchanged
Biggest changeIn addition, we are subject to environmental laws pursuant to which we could be held responsible for all of the costs relating to any contamination at our or our predecessors’ past or present facilities and at third-party waste disposal sites, regardless of our knowledge of, or responsibility for, such contamination.
Biggest changeOur compliance with these laws may result in modifications to our properties, or prevent us from performing certain further renovations Furthermore, our new store openings could be delayed or prevented or our existing stores could be impacted by difficulties or failures in our ability to obtain or maintain required approvals or licenses. 19 In addition, we are subject to environmental laws pursuant to which we could be held responsible for all of the costs relating to any contamination at our or our predecessors’ past or present facilities and at third-party waste disposal sites, regardless of our knowledge of, or responsibility for, such contamination.
With more trending products and fast delivery or in-store pickup options, satellite stores are expected to attract young customers, who often shop more spontaneously and focus more on the shopping experience rather than needs. ● Promote our “Group Buy” activities: Group Buy activities are single-day promotions designed to increase the volume of sales of a particular product while providing a discount to the consumers.
With more trending products and fast delivery or in-store pickup options, satellite stores are expected to attract young customers, who often shop more spontaneously and focus more on shopping experience rather than needs. ● Promote our “Group Buy” activities — Group Buy activities are single-day promotions designed to increase the volume of sales of a particular product while providing a discount to the consumers.
The Intellectual Property License Agreement Under the Intellectual Property License, JD US granted us a ten-year limited, non-exclusive, non-transferable, non-sublicensable license in the State of California to: ● use the brand consisting of a combination of certain marks of JD.com (the “JD.com Marks”) and certain marks of ours in such forms to be agreed upon by mutual written consent of us and JD US (the “Co-Brand”); ● use the JD.com Marks, but only as incorporated into the Co-Brand; and ● use, copy and distribute any design or embodiment of the brand image or visual identity by which the Co-Brand will be known to the public, including any design of store layout, signage, advertising and marketing materials, consumer communications, artworks, webpages, mobile app content, and other materials that JD US may provide to us, in all cases solely in connection with our operation and promotion of our retail supermarket stores in the State of California as approved by JD US, and the products and goods and the related services offered and sold in such stores.
Under the Intellectual Property License, JD US granted us a ten-year limited, non-exclusive, non-transferable, non-sublicensable license in the State of California to: ● use the brand consisting of a combination of certain marks of JD.com (the “JD.com Marks”) and certain marks of ours in such forms to be agreed upon by mutual written consent of us and JD US (the “Co-Brand”); ● use the JD.com Marks, but only as incorporated into the Co-Brand; and ● use, copy and distribute any design or embodiment of the brand image or visual identity by which the Co-Brand will be known to the public, including any design of store layout, signage, advertising and marketing materials, consumer communications, artworks, webpages, mobile app content, and other materials that JD US may provide to us, in all cases solely in connection with our operation and promotion of our retail supermarket stores in the State of California as approved by JD US, and the products and goods and the related services offered and sold in such stores.
All vegetables and fruits are delivered and sold on a three to five day basis, to lower worn rate, lower human cost and keep up the high quality. 7 ● Meat — Since we can sell more animal body parts than other mainstream grocery stores, the sales we generate from a whole pig, chicken or cow are much higher than those of mainstream groceries, resulting in higher margins on meat and meat products sales.
All vegetables and fruits are delivered and sold on a three to five day basis, to lower worn rate, lower human cost and keep up the high quality. ● Meat — Since we can sell more animal body parts than other mainstream grocery stores, the sales we generate from a whole pig, chicken or cow are much higher than those of mainstream groceries, resulting in higher margins on meat and meat products sales.
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.
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 communities in which we operate. To achieve this, we are developing a center-satellite stores network.
Our flexible shopping options are aimed to provide customers with convenience and flexibility that best match their lifestyles and personal preferences. Currently JD.com is developing a new mobile app for our future stores. For more information please see “ Partnership with JD.com ” below. Pricing Strategy In general, our pricing strategy is to provide premium products at reasonable prices.
Our flexible shopping options are aimed to provide customers with convenience and flexibility that best match their lifestyles and personal preferences. Currently JD.com is developing a new mobile app for our future stores. For more information, please see “ Partnership with JD.com ” below. 12 Pricing Strategy In general, our pricing strategy is to provide premium products at reasonable prices.
Groceries can usually be delivered from the suppliers to the center store first, before needing to use outside suppliers allowing the center store to distribute to all the community stores it covers, with allocations based on historical sales data provided by the community stores. 6 The satellite stores are typically smaller than the traditional supermarkets.
Groceries can usually be delivered from the suppliers to the center store first, before needing to use outside suppliers allowing the center store to distribute to all the community stores it covers, with allocations based on historical sales data provided by the community stores. The satellite stores are typically smaller than the traditional supermarkets.
Products offered by the satellite stores can vary depending on the location and the targeted customers. ● Synergies between center stores and satellite stores: one center store can power many satellite stores from a logistics perspective. The overall cost to the supply chain will be lower, and the efficiency will be higher than the traditional store network.
Products offered by the satellite stores can vary depending on the location and the targeted customers. 7 ● Synergies between center stores and satellite stores — One center store can power many satellite stores from a logistics perspective. The overall cost to the supply chain will be lower, and the efficiency will be higher than the traditional store network.
In addition, multi-channel solutions can help realize the users integration, price integration, inventory integration, price integration, marketing integration and orders integration: ● User integration means establishing a unique ID for each individual consumer which allows us to integrate their shopping experience across online and offline channels and provide standardized services for these consumers based on the data that corresponds to their ID. ● Product integration means different sales channels can form integrated management of products.
In addition, multi-channel solutions can help realize the user’s integration, price integration, inventory integration, price integration, marketing integration and orders integration: ● User integration means establishing a unique ID for each individual consumer which allows us to integrate their shopping experience across online and offline channels, and provide standardized services for these consumers based on the data that corresponds to their ID. ● Product integration means different sales channels can form integrated management of products.
This implies that when sold on various online and offline channels, the same physical good has the same commodity code and states language for life cycle management. ● Price integration means realizing a united price basis for the same product in different online and offline channels with the capability of synchronizing price changes across all channels, providing consumers with a convenient shopping experience without a price differentiation. 11 ● Inventory integration means the realization of inventory sharing, flexible allocation, and inventory forecasting.
This implies that when sold on various online and offline channels, the same physical good has the same commodity code, and states language for life cycle management. 15 ● Price integration means realizing a united price basis for the same product in different online and offline channels with the capability of synchronizing price changes across all channels, providing consumers with a convenient shopping experience without a price differentiation. ● Inventory integration means the realization of inventory sharing, flexible allocation, and inventory forecasting.
The center stores mainly serve traditional family-oriented customers with a variety of fresh produce and daily necessities at competitive prices. The satellite stores in our Center-Satellite store network will be designed to penetrate local communities and neighborhoods with larger populations of younger customers, such as “Millennials” and Generation Z.” What is the Center-Satellite Store Model?
The center stores mainly serve traditional family-oriented customers with a variety of fresh produce and daily necessities at competitive prices. The satellite stores in our Center-Satellite store network will be designed to penetrate local communities and neighborhoods with larger populations of younger customers, such as “Millennials” and “Generation Z.” What is the Center-Satellite Store Model?
On September 8, 2021, the total number of authorized shares of both classes of common stock was increased to 100,000,000 by way of a 200-for-1 stock split, among which, the authorized shares were divided in to 92,000,000 shares of Class A common stock entitled to one (1) vote per share and 3,000,000 shares of Class B common stock entitled to ten (10) votes per share and 5,000,000 shares of preferred stock.
On September 8, 2021, the total number of authorized shares of common stock was increased to 100,000,000 by way of a 200-for-1 stock split, among which, the authorized shares were divided in to 92,000,000 shares of Class A common stock entitled to one (1) vote per share and 3,000,000 shares of Class B common stock entitled to ten (10) votes per share and 5,000,000 shares of preferred stock.
Cost Efficient Supply Chain Unlike many of our direct competitors which are family-owned single stores, we have four retail supermarkets with an average size of 36,000 square feet. We place orders mainly through two primary wholesale agents which purchase products on our behalf from various vendors.
Cost Efficient Supply Chain Unlike many of our direct competitors which are family-owned single stores, we have seven retail supermarkets with an average size of 36,000 square feet. We place orders mainly through two primary wholesale agents which purchase products on our behalf from various vendors.
A large portion of the consumer base within a 3-mile radius of the store is comprised of young students living in apartments and young professionals between the ages of 25 and 44, with annual incomes between $36,000 and $120,000. The Alhambra store is currently designed to target the demographic of its neighborhood.
A large portion of the consumer base within a three-mile radius of the store is comprised of young students living in apartments and young professionals between the ages of 25 and 44, with annual incomes between $36,000 and $120,000. The Alhambra store is currently designed to target the demographic of its neighborhood.
We evaluate our insurance requirements on an ongoing basis to ensure that our insurance programs maintain adequate levels of coverage. 13 REGULATION As a supermarket retailer, we are subject to numerous health and safety laws and regulations. Our suppliers are also subject to such laws and regulations.
We evaluate our insurance requirements on an ongoing basis to ensure that our insurance programs maintain adequate levels of coverage. 18 Regulation As a supermarket retailer, we are subject to numerous health and safety laws and regulations. Our suppliers are also subject to such laws and regulations.
For example, Chinese yams need to be displayed on wood shreds to keep them fresh, while water melons are typically sold in pieces due to their large size. ● Fruit — Almost all of our unique fruits are seasonal offerings in which quality and price are decisive to customer traffic during peak season.
For example, Chinese yams need to be displayed on wood shreds to keep them fresh, while watermelons are typically sold in pieces due to their large size. ● Fruit — Almost all of our unique fruits are seasonal offerings in which quality and price are decisive to customer traffic during peak season.
New or revised government laws and regulations, as well as increased enforcement by government agencies, could result in compliance costs and civil remedies. An example is the FDA Food Safety Modernization Act (referred to as “FSMA”), passed in January 2011, which grant the FDA greater authority over the safety of the national food supply.
New or revised government laws and regulations, as well as increased enforcement by government agencies, could result in additional compliance costs and civil remedies. An example is the FDA Food Safety Modernization Act (referred to as “FSMA”), passed in January 2011, which grants the FDA greater authority over the safety of the national food supply.
Additionally, the SEC maintains a website located at www.sec.gov that contains the information we file or furnish electronically with the SEC. 15
Additionally, the SEC maintains a website located at www.sec.gov that contains the information we file or furnish electronically with the SEC. 20
Our merchandise includes fresh and unique produce, meats, seafood and other groceries which are staples of traditional Asian cuisine and which are not commonly found in mainstream supermarkets, including a variety of Asian vegetables and fruits such as Chinese broccoli, bitter melon, winter gourd, Shanghai baby bok choy, longan and lychee; a variety of live seafood such as shrimp, clams, lobster, geoduck, and Alaska king crab; and Chinese specialty products like soy sauce, sesame oil, oyster sauce, bean sprouts, Sriracha, tofu, noodles and dried fish.
Our merchandise includes fresh and unique produce, meats, seafood and other groceries that are not found in mainstream supermarkets, including a variety of Asian vegetables and fruits such as Chinese broccoli, bitter melon, winter gourd, Shanghai baby bok choy, longan and lychee; a variety of live seafood such as shrimp, clams, lobster, geoduck, and Alaska king crab; and Chinese specialty groceries like soy sauce, sesame oil, oyster sauce, bean sprouts, Sriracha, tofu, noodles and dried fish.
The success of our business is supported by a strong core team that brings deep knowledge and experience in supermarket operations, supply chain, warehouse management and logistics as well as e-commerce. The core team members all come from leading market players such as Freshippo (also known as Hema Shengxian), Yonghui Superstores, H-Mart and other similar industry leading supermarket retailers.
The success of our business is supported by a strong core team that brings deep knowledge and experience in supermarket operations, supply chain, warehouse management and logistics as well as e-commerce. The core team members all come from leading market players such as Freshippo (known as “Hema Shengxian” in China), Yonghui Superstores, H-Mart and other similar industry leading supermarket retailers.
Our business is also marketed mainly on our official website, a third-party Mobile App “Freshdeals24”, and an applet integrated into WeChat. For the fiscal years ended April 30, 2023 and 2022, we recognized $73,678 and $157,561 for marketing and advertising expenses, respectively.
Our business is also marketed mainly on our official website, a third-party Mobile App “Freshdeals24”, and an applet integrated into WeChat. For the fiscal years ended April 30, 2024 and 2023, we recognized $208,000 and $73,678 for marketing and advertising expenses, respectively.
Since the acquisition of our four center stores, we have hired experienced operations and management team members both locally in the United States and from China, including: Tao Han, who will serve as our Chief Operating Officer upon consummation of our initial public offering and has more than 20 years of experience in the retail industry with Yonghui Superstores, one of the largest chain supermarkets in China, as well as Freshippo (known as “Hema Shengxian” in Chinese), the online and offline retail platform under the Alibaba Group; and the store manager for the Alhambra Store who has 16 years of experience in retail industry including extensive familiarity with process management practices in convenience store chains, which transfers directly to our satellite store concept.
Since the acquisition of our four original center stores in California, we have hired experienced operations and management team members both locally in the United States and from China, including: Tao Han, who serves as our Chief Operating Officer and has more than 20 years of experience in the retail industry with Yonghui Superstores, one of the largest chain supermarkets in China, and Freshippo (known as “Hema Shengxian” in China), the online and offline retail platform under the Alibaba Group; and the store manager for the Alhambra Store who has 16 years of experience in retail industry including extensive familiarity with process management practices in convenience store chains, which transfers directly to our satellite store concept.
Having an importer as a part of our portfolio allows us the opportunity to offer a wider variety of products and to reap the benefits of preferred wholesale pricing 8 We work with three primary suppliers. These primary suppliers accounted for approximately 51.5% and 61.3% of our total purchases in fiscal years 2023 and 2022, respectively.
Having an importer as a part of our portfolio allows us the opportunity to offer a wider variety of products and to reap the benefits of preferred wholesale pricing We work with three primary suppliers. These primary suppliers accounted for approximately 48.0% and 51.5% of our total purchases in fiscal years 2024 and 2023, respectively.
Partnership With JD.COM In April 2021, we entered into a series of agreements with JD E-commerce America Limited (“JD US”), the U.S. subsidiary of JD.com, including the Collaboration Agreement and Intellectual Property License Agreement (each as further described below).
Our Multi-Channel and Consumer Coverage 16 Partnership with JD.com In April 2021, we entered into a series of agreements with JD E-commerce America Limited (“JD US”), the U.S. subsidiary of JD.com, including the Collaboration Agreement and Intellectual Property License Agreement (each as further described below).
Immediately upon formation, the Company acquired three retail Asian supermarkets in Los Angeles, California and subsequently rebranded them as “HK Good Fortune Supermarkets” or “Hong Kong Supermarkets.” In September 2021, the Company was reincorporated in the State of Delaware as a corporation registered under the laws of the State of Delaware and renamed “Maison Solutions Inc.” ● In July 2019, the Company acquired 91% of the equity interests in Maison San Gabriel and 85.25% of the equity interests in Maison Monrovia, each of which owns a HK Good Fortune Supermarket in San Gabriel, California and Monrovia, California, respectively. ● In October 2019, the Company acquired 91.67% of the equity interests in Maison El Monte, which owns a Hong Kong Supermarket in El Monte, California. ● 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 100% owned by Mr.
Immediately upon formation, the Company acquired three retail Asian supermarkets in Los Angeles, California and subsequently rebranded them as “HK Good Fortune Supermarkets” or “Hong Kong Supermarkets.” In September 2021, the Company was reincorporated in the State of Delaware as a corporation registered under the laws of the State of Delaware and renamed “Maison Solutions Inc.” ● In July 2019, the Company acquired 91% of the equity interests in Maison San Gabriel and 85.25% of the equity interests in Maison Monrovia, each of which owns a HK Good Fortune Supermarket in San Gabriel, California and Monrovia, California, respectively. ● In October 2019, the Company acquired 91.67% of the equity interests in Maison El Monte, which owns a Hong Kong Supermarket in El Monte, California. ● In May 2021, the Company acquired 10% of the equity interests in Dai Cheong Trading Company, Inc.
Our intention is that the Alhambra Store will serve as our first satellite store. The satellite stores in our network will be designed to penetrate local communities and neighborhoods with larger and growing concentrations of younger customers.
We intend to acquire the remaining 90% equity interest in the Alhambra Store. Our intention is that the Alhambra Store will serve as our first satellite store. The satellite stores in our network will be designed to penetrate local communities and neighborhoods with larger and growing concentrations of younger customers.
After the close of business, we bring perishable, unsold products back to storage to ensure that they remain in saleable condition and we consistently monitor the sell-by dates on dry good products to ensure that they remain in compliance. 10 ● We perform extensive checks on products delivered to our stores prior to accepting them and return or reject any products that are damaged or expired. ● Our distributors utilize the cold chain supply method and vacuum sealing to keep perishable products such as meat and seafood fresh from the point of origin until it reaches our stores and to limit damage caused by fluctuating temperatures, air and moisture. ● Our produce distributors perform quality control checks prior to packaging and delivery to remove any products unsuitable for sale and additionally, much of the produce we sell is grown in greenhouses under controlled conditions.
After the close of business, we bring perishable, unsold products back to storage to ensure that they remain in saleable condition, and we consistently monitor the sell-by dates on dry good products to ensure that they remain in compliance. ● We perform extensive checks on products delivered to our stores prior to accepting them and return or reject any products that are damaged or expired. ● Our distributors utilize the cold chain supply method and vacuum sealing to keep perishable products such as meat and seafood fresh from the point of origin until it reaches our stores and to limit damage caused by fluctuating temperatures, air and moisture. ● Our produce distributors perform quality control checks prior to packaging and delivery to remove any products unsuitable for sale and additionally, much of the produce we sell is grown in greenhouses under controlled conditions. 14 Targeting Popular Product Trends With our relationships with reputable suppliers and distribution agents, we consistently update our product offerings to ensure our catalog stays competitive in the market and to reduce unnecessary redundancy.
In fiscal years 2023 and 2022, our perishable product categories contributed approximately 57.5% and 60.7% to our total net sales respectively, in alignment with the space occupancy of perishables. ● Vegetables — All our stores receive daily deliveries of vegetables and are required to sell out all vegetables on a three to five day basis.
In fiscal years 2024 and 2023, our perishable product categories contributed approximately 54.0% and 56.5%, respectively, to our total net revenue in alignment with the space occupancy of perishables. ● Vegetables — All our stores receive daily deliveries of vegetables and are required to sell out all vegetables on a three to five day basis.
We are exploring multi-channel solutions to customers by leveraging our strategic partnership with JD.com, a leading online retail business in China. See “ Multi-channel Initiatives ” and “ Partnership with JD ” in this section.
We are exploring multi-channel solutions to customers by leveraging our strategic partnership with JD.com, a leading online retail business in China.
We strategically deploy our team members in positions that best match their experience and specialized skills. We established a new performance-based bonus system. If a store meets or exceeds the pre-set Key Performance Indicator (KPI), the employees of that store will receive cash bonuses.
We strategically deploy our team members in positions that best match their experience and specialized skills. We established a new performance-based bonus system. If a store meets or exceeds the pre-set Key Performance Indicator (“KPI”), the employees of that store will receive cash bonuses. Each department needs to provide weekly performance reports, which the management teams will review.
With Maison’s mature retail network and the fast-growing customer base in the United States, more overseas boutique products are expected to be imported to the United States for the benefit of American consumers. 12 The Collaboration Agreement Under the Collaboration Agreement, JD US has agreed to provide the following services to us for fees: ● Stage 0 — the Consultancy Services including: (1) consideration and assessment of our business nature; (2) information and standards and the analysis and study of feasibility of omni channel retailing of our business; and (3) preparation and delivery of feasibility plan of omni channel retailing of our stores; ● Stage 1 — the Initialization Services, including initializing the feasibility plan, digitalization of our stores, delivery of online retailing and e-commerce business and operational solutions for the stores with omni channels; ● Stage 2 — the Implementation Services, including product and merchandise supply chain configuration, staff training for operation and management of the digital solutions, installation and configuration of hardware, customization of software, concept design and implementation; ● Stage 3 — the Platform Services, including providing actual operation and management of the store upon delivery and necessary support services.
Under the Collaboration Agreement, JD US has agreed to provide the following services to us for fees: ● Stage 0 — the Consultancy Services including: (i) consideration and assessment of our business nature; (ii) information and standards, and analysis and study of feasibility of omni channel retailing of our business; and (iii) preparation and delivery of feasibility plan of omni channel retailing of our stores; ● Stage 1 — the Initialization Services, including initializing the feasibility plan, digitalization of our stores, delivery of online retailing and e-commerce business and operational solutions for the stores with omni channels; ● Stage 2 — the Implementation Services, including product and merchandise supply chain configuration, staff training for operation and management of the digital solutions, installation and configuration of hardware, customization of software, concept design and implementation; and ● Stage 3 — the Platform Services, including providing actual operation and management of the store upon delivery and necessary support services.
Market Opportunities and Growth Strategy Emerging Trends in the Asian-American Grocery Market Whether by using technology to streamline supply chains, unlocking the power of social media to influence shoppers, or adapting store designs to meet changing consumer behavior, the Asian grocery market is finding new ways to boost sales.
See “ Multi-channel Initiatives ” and “ Partnership with JD.com ” in this section. 4 Market Opportunities Emerging Trends in the Asian-American Grocery Market Whether by using technology to streamline supply chains, unlocking the power of social media to influence shoppers, or adapting store designs to meet changing consumer behavior, the Asian-American grocery market is finding new ways to boost sales.
We plan to acquire the remaining 90% equity interest in the Alhambra Store with a portion of the net proceeds of our initial public offering and operate it as our first satellite store. Since its opening, our management team has been involved with the operations and management of the Alhambra Store, utilizing our experience in supermarkets.
We intend to acquire the remaining 90% interest in the Alhambra Store and operate the Alhambra Store as our first satellite store. Since its opening, our management team has been involved with the operations and management of the Alhambra Store, utilizing our experience in supermarkets.
We are not currently in any trademark disputes with any third party. INSURANCE We use a combination of insurance and self-insurance to provide coverage for potential liability for worker’s compensation, automobile and general liability, product liability, employee health care benefits and other casualty and property risks.
Insurance We use a combination of insurance and self-insurance to provide coverage for potential liability for worker’s compensation, automobile and general liability, product liability, employee health care benefits and other casualty and property risks.
We define a “center store” as a full service store, similar to a traditional supermarket or grocery store covering a metro area, but with its own storage space to be used as a warehouse to distribute products to smaller satellite stores.
We have been operating these seven supermarkets as center stores, which we define as a full service store, similar to a traditional supermarket or grocery store covering a metro area, but with its own storage space to be used as a warehouse to distribute products to the satellite stores.
Our Products Traditional Supermarkets/Center Stores All four of our traditional supermarkets offer perishable and non-perishable items. We put a significant focus on perishable product categories which include vegetables, seafood, fruit and meat.
Illustration of Center-Satellite Store Layout 8 Shopping Preference by Importance and Urgency 9 Our Products Traditional Supermarkets/Center Stores All of our traditional supermarkets offer perishable and non-perishable items. We put a significant focus on perishable product categories which include vegetables, seafood, fruit and meat.
We believe, that as an MSSM, the Alhambra Store suits the lifestyle of young customers. MSSMs focus largely on ready-to-eat food and ready-to-cook groceries. The Alhambra Store has a built-in kitchen which offers Asian hot foods under the house brand “Chili Point Land.” Ready-to-cook groceries include frozen food as well as prewashed and pre-cut meats and vegetables.
The Alhambra Store has a built-in kitchen which offers Asian hot foods under the house brand “Chili Point Land.” Ready-to-cook groceries include frozen food as well as prewashed and pre-cut meats and vegetables. We believe that the Alhambra has the potential to be a successful satellite store in the Alhambra neighborhood.
Opening Satellite Stores — We currently own a 10% equity interest in the Alhambra Store, which we purchased from Grace Xu, spouse of John Xu, our chief executive officer.
We plan to acquire additional supermarkets to expand our footprint to both the West Coast and the East Coast. Opening Satellite Stores — We currently own a 10% equity interest in the Alhambra Store, which we purchased from Grace Xu, spouse of John Xu, our chief executive officer.
Customers can choose to place orders online through a third-party mobile app, “Freshdeals24”, and an applet integrated into WeChat for the option of a 100% cashier-less shopping experience.
Integrated Online and Offline Services We started a series of online initiatives soon after we acquired our first supermarket in 2019. Customers can choose to place orders online through a third-party mobile app, “Freshdeals24”, and an applet integrated into WeChat for the option of a 100% cashier-less shopping experience.
Newly-designed app that is product centric — JD.com will lead the design and implementation of a new mobile app to serve our customers both online and offline which will include flash sales, daily special promotions, ranking sales and popularity trends, providing customers with targeted recommendations and a calendar of promotional events. ● Newly-designed app that is product centric — JD.com will lead the design and implementation of a new mobile app to serve our customers both online and offline which will include flash sales, daily special promotions, ranking sales and popularity trends, providing customers with targeted recommendations and a calendar of promotional events.
The purpose is to design the store in a scientific way, including section arrangement, self-checkout POS locations, and shelf location deployment to optimize the in-store traffic route and to improve the shopping experience. ● Newly-designed app that is product centric — JD.com will lead the design and implementation of a new mobile app to serve our customers both online and offline which will include flash sales, daily special promotions, ranking sales and popularity trends, providing customers with targeted recommendations and a calendar of promotional events.
As customers are increasingly conscious of the sourcing of their food, investing in technologies which promote health and safety is a sure-fire way to build trust with customers and boost brand loyalty. In collaboration with our current partners, including JD.com, we plan to capitalize on developments in blockchain technologies to meet the evolving needs of our customers.
As customers are increasingly conscious of the sourcing of their food, investing in technologies which promote health and safety is a sure-fire way to build trust with customers and boost brand loyalty.
As the population of Asian Americans continues to expand, we believe that the demand for stores like ours, which provide specialty products that cater to the Asian-American communities, will be expanded as well.
Industry growth is strongly supported by the quickly expanding population of Asian Americans, one of the largest market segments in the United States. As the population of Asian Americans continues to expand, we believe that the demand for stores like ours, which provide specialty products that cater to the Asian-American communities, will be expanded as well.
Maison has retail supermarkets in San Gabriel, California, Monrovia, California, El Monte, California and Monterey Park, California. We are a “smaller reporting company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or (the “Exchange Act”), and have elected to take advantage of certain aspects of the scaled disclosure available for smaller reporting companies.
We are a “smaller reporting company” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or (the “Exchange Act”), and have elected to take advantage of certain aspects of the scaled disclosure available for smaller reporting companies. Available Information Our Internet website is www.maisonsolutionsinc.com .
With an in-house logistics team and strong relationships with local and regional farms, we are capable of offering high-quality specialty perishables at competitive prices.
With an in-house logistics team and strong relationships with local and regional farms, we are capable of offering high-quality specialty perishables at competitive prices. Our customers have diverse shopping habits based on, among other factors, their age and lifestyle.
Our Growth Strategy Continue Building Center Satellite Stores Network Operation of Center Stores — We have a successful record of operating our existing retail supermarkets and have been able to quickly turn distressed stores into profitable assets.
Our payroll and payroll tax expenses were $7.4 million and $6.2 million for the year ended April 30, 2024 and 2023, respectively. Our Growth Strategy Continue Building Center Satellite Stores Network Operation of Center Stores — We have a successful record of operating our existing retail supermarkets and have been able to quickly turn distressed stores into profitable assets.
For instance, Freshhippo uses an omni channel approach to offer customers a seamless transition between online shopping and in-store visits to promote online sales.
For instance, Freshhippo uses an omni channel approach to offer customers a seamless transition between online shopping and in-store visits to promote online sales. Customers can switch between online and offline shopping and enjoy a consistent experience to put them in control of how they want to shop.
The store aims to lead customers from shopping for needs to shopping for experience. Our Vertical Supply and Distribution Chain Our business model features a vertically integrated structure covering upstream supply and downstream retail supermarkets.
We intend to continue to upgrade our stores to provide a more meaningful shopping experience for our customers. Our Vertical Supply and Distribution Chain Our business model features a vertically integrated structure covering upstream supply and downstream retail supermarkets.
These events could interrupt the marketing and sales of products in our stores, severely damage our brand reputation and public image, increase the cost of products in our stores, result in product recalls or litigation, and impede our ability to deliver merchandise in sufficient quantities or quality to our stores, which could result in a material adverse effect on our business, financial condition, and results of operations. 14 We are also subject to laws and regulations more generally applicable to retailers, including labor and employment, taxation, zoning and land use, environmental protection, workplace safety, public health, community right-to-know and alcoholic beverage sales.
These events could interrupt the marketing and sales of products in our stores, severely damage our brand reputation and public image, increase the cost of products in our stores, result in product recalls or litigation, and impede our ability to deliver merchandise in sufficient quantities or quality to our stores, which could result in a material adverse effect on our business, financial condition and results of operations.
The Alhambra Store In December 2021, we acquired a 10% equity interest in a new grocery store in Alhambra, California from Grace Xu, spouse of John Xu, our chief executive officer (the “Alhambra Store”). We intend to purchase the remaining 90% equity interest in the Alhambra Store with a portion of the net proceeds from our initial public offering.
In addition to our traditional supermarkets, in December 2021, we acquired a 10% equity interest in a new grocery store in a young and active community in Alhambra, California (the “Alhambra Store”). We acquired our interest in the Alhambra Store from Grace Xu, the spouse of John Xu, our chief executive officer.
Additionally, a number of federal, state and local laws impose requirements or restrictions on business owners with respect to access by disabled persons. Our compliance with these laws may result in modifications to our properties, or prevent us from performing certain further renovations.
Additionally, a number of federal, state and local laws impose requirements or restrictions on business owners with respect to access by disabled persons.
Our Center-Satellite Stores Model Our four traditional retail supermarkets are set up and operated as center stores. We intend to purchase the remaining 90% equity interest in the Alhambra Store with a portion of the net proceeds from our initial public offering and the Alhambra Store is intended to serve as our first satellite store.
Our Center-Satellite Stores Model Our seven traditional retail supermarkets are set up and operated as center stores. We intend to acquire the remaining 90% equity interest in the Alhambra Store, which we intend to have serve as our first satellite store.
Such trademark is currently the brand of our four retail supermarkets and will also cover such other supermarkets that we acquire in the future. We consider our trademark to be a valuable asset that diversifies customer’s value alternatives, a useful strategy to enhance profit margins and an important way to establish and protect our brand in a competitive environment.
We consider our trademark to be a valuable asset that diversifies customer’s value alternatives, a useful strategy to enhance profit margins and an important way to establish and protect our brand in a competitive environment. We are not currently in any trademark disputes with any third party.
In addition, our initial investment in the Alhambra Store, and plan to acquire the remaining equity interest following our initial public offering, is a key factor in our goal to reach out to the younger community and expand into a large market for young customers, including students.
In addition, our initial investment in the Alhambra Store is a key factor in our goal to reach out to the younger community, and expand into a large market for young customers, including students. Our in-house logistics team is committed to fast and reliable delivery for customers who place online orders for delivery.
Those competitors include: (i) national conventional supermarkets, (ii) regional supermarkets, (iii) national superstores, (iv) alternative food retailers, (v) local foods stores, (vi) small specialty stores, (vii) farmers’ markets, and (viii) e-commerce / online-only grocery stores. 9 The national and regional supermarket chains have strong experiences in operating multiple store locations and expansion management and have greater marketing or financial resources than we do.
Those competitors include: (i) national conventional supermarkets, (ii) regional supermarkets, (iii) national superstores, (iv) alternative food retailers, (v) local foods stores, (vi) small specialty stores, (vii) farmers’ markets, and (viii) e-commerce / online-only grocery stores.
In collaboration with our suppliers and distribution agents we consistently monitor social media and assess store data to identify and subsequently offer products which are popular with our target consumers.
In collaboration with our suppliers and distribution agents we consistently monitor social media and assess store data to identify and subsequently offer products which are popular with our target consumers. Employees As of April 30, 2024, we had approximately 355 employees. Our employees are not unionized nor, to our knowledge, are there any plans for them to unionize.
Since our formation in July 2019, we have acquired equity interests in four traditional Asian supermarkets in Los Angeles, California, and have been operating these four supermarkets as center stores.
Since our formation in July 2019, we have acquired equity interests in four traditional Asian supermarkets in Los Angeles, California and three traditional Asian supermarkets in the greater Phoenix and Tucson, Arizona metro areas.
In the past few years, many Asian-American grocery store chains have risen in popularity in the United States; for example, Korean chain H Mart has expanded to 66 locations across 12 states. Each store offers imported packaged goods as well as prepared foods and general merchandise.
This trend is driven by the increasing immigrant population, as well as robust demand from native populations. In the past few years, many Asian-American grocery store chains have risen in popularity in the United States; for example, Korean chain H Mart has expanded to 66 locations across 12 states.
In addition, online-only grocery stores, by their nature, are not able to offer an in-store shopping experience, such as trying new food or cooked products in store, and in-store pick up. We believe our business model, when compared with the online-only grocery stores, brings a more comprehensive and holistic shopping experience to the customers while maintaining a competitive price point.
In addition, online-only grocery stores, by their nature, are not able to offer in-store shopping experience, such as trying new food or cooked products in store, and in-store pick up.
With four retail supermarkets located in San Gabriel, Monrovia, El Monte and Monterey Park, in the Los Angeles, California metropolitan area, and average store sizes over 36,000 square feet, we had over 1.62 million annual transactions in 2022.
With four retail supermarkets located in San Gabriel, Monrovia, El Monte and Monterey Park, in the Los Angeles, California metropolitan area, and three retail supermarkets located in the Phoenix and Tucson, Arizona metro areas, we had over 1.79 million annual transactions in the year ended April 30, 2024.
Spice of life: As the Asian-American Population Continues to Grow, Demand for Cultural Foods will Likely Increase The ethnic supermarkets industry is composed of companies that sell foods geared toward ethnically diverse populations. Industry growth is strongly supported by the quickly expanding population of Asian Americans, one of the largest market segments in the United States.
Our principal competitors include 99 Ranch Market and HMart for traditional supermarkets and Weee! for online groceries. Spice of Life: As the Asian-American Population Continues to Grow, Demand for Cultural Foods will Likely Increase The ethnic supermarkets industry is composed of companies that sell foods geared toward ethnically diverse populations.
According to a study by LoyaltyOne, Asian-Americans and other consumers looking to cook Asian cuisine are not finding what they need at their local stores and are often turning to independent grocers for their shopping trips. Our principal competitors include 99 Ranch Market and HMart for traditional supermarkets and Weee! for online groceries.
Each store offers imported packaged goods as well as prepared foods and general merchandise. According to a study by LoyaltyOne, Asian-Americans and other consumers looking to cook Asian cuisine are not finding what they need at their local stores and are often turning to independent grocers for their shopping trips.
We believe that our existing partnerships, including with JD.com, will help us to expand and strengthen both our online and offline presence. Lead the Charge with Online Sales While e-commerce only accounted for 3% of all U.S. grocery sales in 2019, the Asian grocery market has been quick to make the most of online retail channels.
Lead the Charge with Online Sales While e-commerce only accounted for 7.4% of all U.S. grocery sales in 2020 according to the U.S. Food and Drug Administration, the Asian grocery market has been quick to make the most of online retail channels.
Our flexible shopping options are designed to provide customers with convenience and flexibility that best match their lifestyles and personal preferences.
Our flexible shopping options are designed to provide customers with convenience and flexibility that best match their lifestyles and personal preferences. We are working closely with JD.com to improve and update our online apps to continue to specifically target and attract a wider variety of our customer base.
Partner with Overseas Providers Asian-American consumers are prepared to look far and wide to obtain the products they want. Retailers are partnering with overseas suppliers, fellow retailers, and even technology companies to pull together resources and accelerate growth. Partnerships are helping brick and mortar retailers to “blur the line” between online and offline retail channels.
Retailers are partnering with overseas suppliers, fellow retailers, and even technology companies to pull together resources and accelerate growth. Partnerships are helping brick and mortar retailers to “blur the line” between online and offline retail channels. We believe that our existing partnerships, including with JD.com, will help us to expand and strengthen both our online and offline presence.
In the fiscal years ended on April 30, 2023 and 2022, the non-perishable grocery category contributed approximately 43.52% and 42.51%, respectively, to our total net sales and realized a markup of 35.09% and 31.80% on average, respectively.
In the fiscal years ended on April 30, 2024 and 2023, the non-perishable grocery category contributed approximately 45.97% and 43.52%, respectively, to our total net sales and realized a markup of 35.13% and 35.09%, on average, respectively. 10 The Alhambra Store In December 2021, we acquired a 10% equity interest in a new grocery store in Alhambra, California from Grace Xu, spouse of John Xu, our chief executive officer (the “Alhambra Store”).
ITEM 1. BUSINESS As used in this Annual Report on Form 10-K, “we”, “us”, “our”, “Maison”, “the Company” or “our Company” refer Maison Solutions Inc., a Delaware corporation, except where the context requires otherwise. Our Company 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.
ITEM 1. BUSINESS As used in this Annual Report on Form 10-K, “we,” “us,” “our,” “Maison,” “the Company” or “our Company” refer to Maison Solutions Inc., a Delaware corporation, except where the context requires otherwise.
In addition to the population increase, the average household income of people of Asian descent also exceeds the overall U.S. population’s average household income. 4 According to Mordor Intelligence’s “ ETHNIC FOODS MARKET — GROWTH, TRENDS, AND FORECASTS (2022 — 2027) ”, the presence of Asian Cuisine in the US Ethnic Food Marketspace is one of the key market trends.
According to Mordor Intelligence’s “ ETHNIC FOODS MARKET — GROWTH, TRENDS, AND FORECASTS (2022 — 2027) ”, the presence of Asian Cuisine in the US Ethnic Food Marketspace is one of the key market trends. The forecast indicated that consumers’ interest in Asian cuisines is increasing globally, and they seek bold flavors.
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.
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 Los Angeles, the minimum wage rose from $13 to $14 per hour from 2020 to 2021 and increased to $15.50 per hour in 2023.
Our Competitive Strengths Strong Management and Operations Team Our core operations team has extensive experience in and knowledge of supermarket operations, supply chain, logistics and warehouse management as well as e-commerce.
We believe our business model, when compared with the online-only grocery stores, brings a more comprehensive and holistic shopping experience to the customers while maintaining a competitive price point. 13 Our Competitive Strengths Strong Management and Operations Team Our core operations team has extensive experience in and knowledge of supermarket operations, supply chain, logistics and warehouse management as well as e-commerce.
Customers can switch between online and offline shopping and enjoy a consistent experience to put them in control of how they want to shop. 5 Our Business Model Our History We were founded in July 2019 as Maison International, Inc., an Illinois corporation, with our principal place of business in California.
Our History We were founded in July 2019 as Maison International, Inc., an Illinois corporation, with our principal place of business in California.
Our in-house logistics team is committed to fast and reliable delivery for customers who place online orders for delivery. Our center-satellite store network gives us the ability to set up in-store, mini-warehouses to achieve fast order fulfillment and speedy delivery.
Our center-satellite store network gives us the ability to set up in-store, mini-warehouses to achieve fast order fulfillment and speedy delivery. We are able to provide same-day delivery for orders placed before noon within a five miles radius of the closest store.
We intend to acquire the remaining 90% equity interest in the Alhambra Store with a portion of the net proceeds from our initial public offering. This transaction was treated as a related party transaction. ● On June 30, 2022, the Company acquired 100% of the equity interests of GF Supermarket of MP, Inc. from DNL Management Inc.
This transaction was treated as a related party transaction. ● On June 30, 2022, the Company acquired 100% of the equity interests of GF Supermarket of MP, Inc. from DNL Management Inc. (51% ownership) and Ms. Grace Xu (49% ownership), spouse of Mr. John Xu, our chief executive officer.
Each department needs to provide weekly performance reports, which the management teams will review and ultimately distribute monthly cash bonuses amounting to 1% of gross revenue to the department’s staff for achievement of these performance goals. 1% of gross revenue will set as bonuses for the department’s staff. Employees As of April 30, 2023, we had approximately 174 employees.
If the department meets or exceeds the pre-set KPI, the management teams will distribute monthly cash bonuses amounting to 1% of gross revenue to the department’s staff for achievement of such performance goals.
We believe that the Alhambra has the potential to be a successful satellite store in the Alhambra neighborhood. The city of Alhambra has a population of 87,000, 53% of which is comprised of Asian Americans.
The city of Alhambra has a population of approximately 83,000, approximately 52% of which is comprised of Asian Americans, according to the 2020 U.S. Census Bureau.
Asians are now the fastest-growing of the nation’s four largest racial and ethnic groups based on the 2021 census numbers.
Asians are now the fastest growing of the nation’s four largest racial and ethnic groups based on the U.S. Census Bureau, 2022 American Community Survey (the “2022 Census”). In addition to the population increase, the median household income of people of Asian descent also exceeds the overall U.S. population’s median household income according to the 2022 Census.
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 our CEO, John Xu. We intend to acquire the controlling ownership of Dai Cheong with a portion of the net proceeds of our initial public offering.
(“Dai Cheong”), a wholesale business which mainly supplies foods and groceries imported from Asia, which is 100% owned by Mr. John Xu.
TRADEMARKS “HK GOOD FORTUNE SUPERMARKET” and registered trademarks consisting of the stylized wording of “GOOD FORTUNE” are our self-owned trademark and were filed with the United States Patent and Trademark Office for registration application in September 2021 and is awaiting approval but the 30-day opposition period has expired.
Trademarks “ HK GOOD FORTUNE SUPERMARKET” and the stylized wording of “GOOD FORTUNE” is our self-owned trademark and was registered with the United States Patent and Trademark Office on December 20, 2022. Such trademark is currently the brand of our four retail supermarkets located in California and may also cover other supermarkets that we acquire in the future.
Removed
In addition to our center stores, in December of 2021, we acquired a 10% equity interest in a new grocery store in a young and active community in Alhambra, California (the “Alhambra Store”). We intend to acquire the remaining 90% equity interest in the Alhambra Store with a portion of the net proceeds from our initial public offering.
Added
Because our acquisition of Lee Lee (as defined below) was completed on April 8, 2024, shortly before our fiscal year-end, the description of our business throughout this Item 1 does not include a description of Lee Lee unless specifically referenced herein.
Removed
We acquired our interest in the Alhambra Store from Grace Xu, the spouse of John Xu, our chief executive officer. It is our intent that we will use a portion of the proceeds of our initial public offering to acquire the remaining equity in the Alhambra Store.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we believe the exclusive forum provision benefits us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, this provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company and its directors, officers, or other employees and may discourage lawsuits with respect to such claims. 32 Our future operating results may fluctuate significantly and our current operating results may not be a good indication of our future performance.
Biggest changeFurthermore, Section 22 of the Securities Act provides for concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, and as such, the exclusive jurisdiction clauses set forth above would not apply to such suits. 37 Although we believe the exclusive forum provision benefits us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, this provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company and its directors, officers, or other employees and may discourage lawsuits with respect to such claims.
These patterns include: control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; manipulation of prices through prearranged matching of purchases and false and misleading press releases; “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
These patterns include: control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
We are, and will remain, a “Controlled Company” as defined under the Nasdaq Stock Market Rules because, as long as our CEO John Xu holds more than 50% of the Company’s voting power, he will exercise control over the management and affairs of the company and matters requiring stockholder approval, including the election of the Company’s directors and the acquisition of us by a third party.
We are, and will remain, a “Controlled Company” as defined under the Nasdaq Stock Market Rules because, and as long as, our CEO, John Xu, holds more than 50% of the Company’s voting power, he will exercise control over the management and affairs of the company and matters requiring stockholder approval, including the election of the Company’s directors and the acquisition of us by a third party.
Our store sales may fluctuate and a variety of factors affect comparable store sales, including: ● general economic conditions; ● the impact of new and acquired stores entering into the comparable store base; ● the opening of new stores that eroded store sales in existing areas; ● increased competitive activity; ● price changes in response to competitive factors; ● possible supply shortage; ● consumer preferences, buying trends and spending levels; ● product price inflation and deflation; ● the number and dollar amount of customer transactions in our stores; ● cycling against any year of above-average sales results; ● our ability to provide product offerings that generate new and repeat visits to our stores; ● the level of customer service that we provide in our stores; ● our price optimization initiative; ● our in-store merchandising-related activities; ● our ability to source products efficiently; and ● the number of stores we open in any period.
Our store sales may fluctuate and a variety of factors affect comparable store sales, including: ● general economic conditions; ● the impact of new and acquired stores entering into the comparable store base; ● the opening of new stores that eroded store sales in existing areas; ● increased competitive activity; ● price changes in response to competitive factors; ● possible supply shortage; ● consumer preferences, buying trends and spending levels; ● product price inflation and deflation; ● the number and dollar amount of customer transactions in our stores; ● cycling against any year of above-average sales results; ● our ability to provide product offerings that generate new and repeat visits to our stores; ● the level of customer service that we provide in our stores; 23 ● our price optimization initiative; ● our in-store merchandising-related activities; ● our ability to source products efficiently; and ● the number of stores we open in any period.
While we seek representations and warranties, indemnifications and/or insurance from our suppliers and contract manufacturers, any claims of non-compliance could significantly damage our reputation and consumer confidence in products we sell. 25 Risks Related to Regulatory Compliance and Legal Matters Changes in U.S. trade policies could have a material adverse impact on our business.
While we seek representations and warranties, indemnifications and/or insurance from our suppliers and contract manufacturers, any claims of non-compliance could significantly damage our reputation and consumer confidence in products we sell. Risks Related to Regulatory Compliance and Legal Matters Changes in U.S. trade policies could have a material adverse impact on our business.
As such, our reliance on relatively few vendors could have an adverse effect on our business, results of operations, financial condition and prospects. 22 If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties or do so on commercially reasonable terms.
As such, our reliance on relatively few vendors could have an adverse effect on our business, results of operations, financial condition and prospects. If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties or do so on commercially reasonable terms.
Compliance with these requirements may make it more difficult for the Company’s stockholders to resell their shares of Class A common stock to third parties or to otherwise dispose of them. The financial and operational projections that we may make from time to time are subject to inherent risks.
Compliance with these requirements may make it more difficult for the Company’s stockholders to resell their shares of Class A common stock to third parties or to otherwise dispose of them. 39 The financial and operational projections that we may make from time to time are subject to inherent risks.
Our profitability may be impacted through increased costs to us which may impact gross margins, or through reduced revenue as a result of a decline in the number and average size of customer transactions. 18 Economic conditions that impact consumer spending could materially affect our business.
Our profitability may be impacted through increased costs to us which may impact gross margins, or through reduced revenue as a result of a decline in the number and average size of customer transactions. Economic conditions that impact consumer spending could materially affect our business.
Any of these factors may disrupt our business and materially and adversely affect our business and financial condition and result of operations . Energy costs are an increasingly significant component of our operating expenses and increasing energy costs, unless offset by more efficient usage or other operational responses, may impact our profitability.
Any of these factors may disrupt our business and materially and adversely affect our business and financial condition and result of operations . 26 Energy costs are an increasingly significant component of our operating expenses and increasing energy costs, unless offset by more efficient usage or other operational responses, may impact our profitability.
We do not maintain key person insurance on any employee. In addition, none of our key employees are subject to non-competition or non-solicitation obligations. If we are unable to attract, train and retain employees, we may not be able to grow or successfully operate our business.
We do not maintain key person insurance on any employee. In addition, none of our key employees are subject to non-competition or non-solicitation obligations. 29 If we are unable to attract, train and retain employees, we may not be able to grow or successfully operate our business.
We cannot assure you that product liability claims will not be asserted against us or that we will not be obligated to perform product recalls in the future. 20 Any lost confidence on the part of our customers would be difficult and costly to re-establish.
We cannot assure you that product liability claims will not be asserted against us or that we will not be obligated to perform product recalls in the future. Any lost confidence on the part of our customers would be difficult and costly to re-establish.
See “ Certain Relationships and Related Party Transactions ” for specific information about our related party transactions. Security incidents and attacks on our information technology systems could lead to significant costs and disruptions that could harm our business, financial results, and reputation.
See “ Certain Relationships and Related Party Transactions ” for specific information about our related party transactions. 22 Security incidents and attacks on our information technology systems could lead to significant costs and disruptions that could harm our business, financial results, and reputation.
Mr. Xu and his affiliates may have interests that differ from other stockholders and may vote their Class B common stock in a way with which other stockholders may disagree or which may be adverse to such other stockholders’ interests.
Xu and his affiliates may have interests that differ from other stockholders and may vote their Class B common stock in a way with which other stockholders may disagree or which may be adverse to such other stockholders’ interests.
Moreover, the FDA has the authority to administratively suspend the registration of any facility producing food, including supplements, deemed to present a reasonable probability of causing serious adverse health consequences. 26 In connection with the marketing and advertisement of products we sell, we could be the target of claims relating to false or deceptive advertising, including under the auspices of the FTC and the consumer protection statutes of some states.
Moreover, the FDA has the authority to administratively suspend the registration of any facility producing food, including supplements, deemed to present a reasonable probability of causing serious adverse health consequences. 32 In connection with the marketing and advertisement of products we sell, we could be the target of claims relating to false or deceptive advertising, including under the auspices of the FTC and the consumer protection statutes of some states.
Additionally, if the supply chain disruptions caused by the COVID-19 pandemic and/or the war in Ukraine continue to occur, we may experience continued supply chain disruption which could result in delays in new store openings. We expect to still be impacted by global logistics challenges in the fiscal year ending April 30, 2023.
Additionally, if the supply chain disruptions caused by the COVID-19 pandemic and/or the war in Ukraine continue to occur, we may experience continued supply chain disruption which could result in delays in new store openings. We expect to still be impacted by global logistics challenges in the fiscal year ending April 30, 2025.
We will need to institute a comprehensive compliance function; establish internal policies; ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis; design, establish, evaluate and maintain a system of internal controls over financial reporting in compliance with the Sarbanes-Oxley Act; involve and retain outside counsel and accountants in the above activities and establish an investor relations function.
As a public company, we will need to institute a comprehensive compliance function; establish internal policies; ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis; design, establish, evaluate and maintain a system of internal controls over financial reporting in compliance with the Sarbanes-Oxley Act; involve and retain outside counsel and accountants in the above activities and establish an investor relations function.
We, as well as our vendors, are subject to numerous federal, and local laws and regulations and our compliance with these laws and regulations, as they currently exist or as modified in the future, may increase our costs, limit or eliminate our ability to sell certain products, raise regulatory enforcement risks not present in the past, or otherwise adversely affect our business, results of operations and financial condition.
We, as well as our vendors, are subject to numerous federal, and local laws and regulations and our compliance with these laws and regulations, as they currently exist or as modified in the future, may increase our costs, limit or eliminate our ability to sell certain products, raise regulatory enforcement risks that were not presented in the past, or otherwise adversely affect our business, results of operations and financial condition.
As a result, John Xu will be able to exert actual control over our management and affairs and over matters requiring stockholder approval, including the election of directors, a merger, consolidation or sale of all or substantially all of our assets and any other significant transaction.
As a result, John Xu is able to exert actual control over our management and affairs and over matters requiring stockholder approval, including the election of directors, a merger, consolidation or sale of all or substantially all of our assets and any other significant transaction.
In addition, we will also become subject to other reporting and corporate governance requirements, including certain requirements of Nasdaq, and certain provisions of the Sarbanes-Oxley Act and the regulations promulgated thereunder, which will impose significant compliance obligations upon us.
In addition, we also are subject to other reporting and corporate governance requirements, including certain requirements of Nasdaq, and certain provisions of the Sarbanes-Oxley Act and the regulations promulgated thereunder, which impose significant compliance obligations upon us.
If our stockholders sell substantial amounts of our Class A common stock in the public market, including shares issuable upon the effectiveness of a registration statement, upon the expiration of any statutory holding period under Rule 144, any lock-up agreement or shares issued upon the exercise of outstanding options, warrants, or restricted stock awards could create a circumstance commonly referred to as an “overhang” and, in anticipation of which, the market price of our Class A common stock could fall.
If our stockholders sell substantial amounts of our Class A common stock in the public market upon the expiration of any statutory holding period under Rule 144, any lock-up agreement or shares issued upon the exercise of outstanding options, warrants, or restricted stock awards could create a circumstance commonly referred to as an “overhang” and, in anticipation of which, the market price of our Class A common stock could fall.
The market price of our stock may be influenced by many factors, some of which are beyond our control, including those described above in “— Risks Related to Our Business ” and the following: ● actual or anticipated fluctuations in our quarterly or annual financial results; ● delays in, or our failure to provide, financial guidance; ● the financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance; ● the failure of securities analysts to cover our Class A common stock after our initial public offering; ● changes in financial estimates by securities analysts; ● the inability to meet the financial estimates of analysts who follow our Class A common stock; ● strategic actions by us or our competitors; ● actual or anticipated growth rates relative to our competitors; ● various market factors or perceived market factors, including rumors, whether or not correct, involving us or our competitors; ● fluctuations in stock market prices and trading volumes of securities of similar companies; ● announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments; ● sales, or anticipated sales, of large blocks of our stock; ● short selling of our Class A common stock by investors; ● additions or departures of key personnel; ● new store openings or entry into new markets by us or by our competitors; ● regulatory or political developments; ● changes in accounting principles or methodologies; ● litigation and governmental investigation; ● general financial market condition or events; ● economic, legal and regulatory factors unrelated to our performance; ● discussion of use or our stock price by the financial press and in online investor forum; ● variations in our quarterly operating results and those of our competitors; ● general economic and stock market conditions; ● risks related to our business and our industry, including those discussed above; ● changes in conditions or trends in our industry, markets or customers; ● terrorist acts; ● future sales of our Class A common stock or other securities; ● public evaluations of our business models and our revenues, earnings and growth potential; and ● investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives. 28 Furthermore, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
The market price of our stock may be influenced by many factors, some of which are beyond our control, including those described above in “— Risks Related to Our Business ” and the following: ● actual or anticipated fluctuations in our quarterly or annual financial results; ● delays in, or our failure to provide, financial guidance; ● the financial guidance we may provide to the public, any changes in such guidance, or our failure to meet such guidance; ● the failure of securities analysts to cover our Class A common stock; ● changes in financial estimates by securities analysts; ● the inability to meet the financial estimates of analysts who follow our Class A common stock; ● strategic actions by us or our competitors; ● actual or anticipated growth rates relative to our competitors; ● various market factors or perceived market factors, including rumors, whether or not correct, involving us or our competitors; ● fluctuations in stock market prices and trading volumes of securities of similar companies; ● announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments; ● sales, or anticipated sales, of large blocks of our stock; ● short selling of our Class A common stock by investors; ● additions or departures of key personnel; ● new store openings or entry into new markets by us or by our competitors; ● regulatory or political developments; 34 ● changes in accounting principles or methodologies; ● litigation and governmental investigation; ● general financial market condition or events; ● economic, legal and regulatory factors unrelated to our performance; ● discussion of use or our stock price by the financial press and in online investor forum; ● variations in our quarterly operating results and those of our competitors; ● general economic and stock market conditions; ● risks related to our business and our industry, including those discussed above; ● changes in conditions or trends in our industry, markets or customers; ● terrorist acts; ● future sales of our Class A common stock or other securities; ● public evaluations of our business models and our revenues, earnings and growth potential; and ● investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives.
As a result, for the foreseeable future and after the consummation of our initial public offering, Mr. Xu and his affiliates will be able to control matters submitted to stockholders for approval, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions.
As a result, for the foreseeable future, Mr. Xu and his affiliates will be able to control matters submitted to stockholders for approval, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions. Mr.
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 HMart for traditional supermarkets and Weee! for online groceries.
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 HMart for traditional supermarkets and Weee! for online groceries.
Such a lawsuit could also divert the time and attention of our management from our business. As a result of these factors, investors in our Class A common stock may not be able to resell their shares at or above the initial offering price or may not be able to resell them at all.
Such a lawsuit could also divert the time and attention of our management from our business. As a result of these factors, investors in our Class A common stock may not be able to resell their shares at or above the price they purchased the shares for or may not be able to resell them at all.
We are a borrower under certain bank loans and loans from the U.S. Small Business Administration (the “SBA”) in the aggregate amount of approximately $2.93 million as of April 30, 2023.
We are a borrower under certain bank loans and loans from the U.S. Small Business Administration (the “SBA”) in the aggregate amount of approximately $2.56 million as of April 30, 2024.
In connection with our initial public offering, the Company, our directors and executive officers and non-affiliate holders of 5% or greater of our Class A common stock have each agreed to lock-up restrictions, meaning that we and they and their permitted transferees will not be permitted to sell any shares of our Class A common stock for twelve (12) months after the closing of our initial public offering, subject to certain exceptions, without the prior joint consent of the Representative.
In connection with our initial public offering, the Company, our directors and executive officers and non-affiliate holders of 5% or greater of our Class A common stock each agreed to lock-up restrictions, meaning that we and they and their permitted transferees are not be permitted to sell any shares of our Class A common stock for twelve (12) months after the closing of our initial public offering, subject to certain exceptions, without the prior joint consent of Joseph Stone Capital, LLC, the representative of the underwriters of our initial public offering (“JSC”).
Rule 15g-9 of the SEC requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. 34 This procedure requires the broker-dealer to (i) obtain from the investor information concerning his financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives.
This procedure requires the broker-dealer to (i) obtain from the investor information concerning his financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives.
While the economic rights of our common stock are the same, the Class A common stock has one (1) vote per share, while Class B common stock has ten (10) votes per share. As of April 30, 2023, our Class B common stockholders represent approximately 62% of our voting power.
While the economic rights of our common stock are the same, the Class A common stock has one (1) vote per share, while Class B common stock has ten (10) votes per share. As of April 30, 2024, our Class B common stockholders represent approximately 56.2% of our voting power.
If we do not succeed in maintaining good relationships with our vendors, introducing and sourcing new products that consumers want to buy or if we are unable to provide a pleasant and appealing shopping environment or maintain our level of customer service, our sales, operating margins and market share may decrease, resulting in reduced profitability, which could materially and adversely affect our business, financial condition and results of operations. 19 If we are unable to successfully identify market trends and react to changing consumer preferences in a timely manner, our sales may decrease.
If we do not succeed in maintaining good relationships with our vendors, introducing and sourcing new products that consumers want to buy or if we are unable to provide a pleasant and appealing shopping environment or maintain our level of customer service, our sales, operating margins and market share may decrease, resulting in reduced profitability, which could materially and adversely affect our business, financial condition and results of operations.
Because our stores rely heavily on sales of perishable products, or product supply disruptions may have an adverse effect on our profitability and operating results. We have a significant focus on perishable products. Sales of perishable products accounted for approximately 56.5% and 57.5% of our total sales in fiscal years 2023 and 2022, respectively.
Our stores rely heavily on sales of perishable products, and product supply disruptions may have an adverse effect on our profitability and operating results. We have a significant focus on perishable products. Sales of perishable products accounted for approximately 54.0% and 56.5% of our total sales in fiscal years 2024 and 2023, respectively.
John Xu has substantial control over the Company and maintains the ability to control the election of directors and other matters submitted to stockholders for approval, which limits your ability to influence corporate matters and may result in actions that you do not believe to be in our interests or your interests.
Our CEO, John Xu, has substantial control over us and has the ability to control the election of directors and other matters submitted to stockholders for approval, which will limit your ability to influence corporate matters and may result in actions that you do not believe to be in our interests or your interests.
Changes in extreme weather conditions or changes in technology are expected to produce widespread and unexpected results. These changes may impact our ability to obtain goods and services required for the success of our business. Additionally, we face the risk of physical damages to stores and distribution or fulfillment centers as a result of the physical risks of climate change.
Changes in extreme weather conditions or changes in technology are expected to produce widespread and unexpected results. These changes may impact our ability to obtain goods and services required for the success of our business. Additionally, we face the risk of physical damage to stores and distribution or fulfillment centers due to the physical risks associated with climate change.
Risks Related to Our Business There is no guarantee that our center-satellite model will succeed. We currently manage and operate four traditional Asian supermarkets, which will be the center stores in our center-satellite business model. We currently own a 10% equity interest in the Alhambra Store.
Risks Related to Our Business There is no guarantee that our center-satellite model will succeed. We currently manage and operate seven traditional Asian supermarkets, which will be the center stores in our center-satellite business model. We currently own a 10% equity interest in the Alhambra Store and intend to acquire the remaining 90% of the equity interest.
We currently rely on a relatively small number of vendors to provide us with the majority of our inventory, with 3 of our vendors providing approximately 33% of our total inventory in the year ended April 30, 2023 and 3 of our vendors providing approximately 58% of our total inventory in the year ended April 30, 2022.
We currently rely on a relatively small number of vendors to provide us with the majority of our inventory, with three of our vendors providing approximately 34% of our total inventory in the year ended April 30, 2024 and three of our vendors providing approximately 33% of our total inventory in the year ended April 30, 2023.
After our initial public offering, we will become obligated to file with the SEC annual and quarterly information and other reports that are specified in Section 13 and Proxy Statements under Section 14 and other sections of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
As a public company, we are obligated to file with the SEC annual and quarterly information and other reports that are specified in Section 13 and Proxy Statements under Section 14 and other sections of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The adoption or expansion of trade restrictions and tariffs, a trade war, or other governmental action related to tariffs may adversely affect our business as it may impact the cost of and demand for our products, our overall costs, our customers, our supplies, and the world economy, which in turn could have a material adverse effect on our business, operational results, financial position and cash flows.
The adoption or expansion of trade restrictions and tariffs, a trade war, or other governmental action related to tariffs may adversely affect our business as it may impact the cost of and demand for our products, our overall costs, our customers, our supplies, and the world economy, which in turn could have a material adverse effect on our business, operational results, financial position and cash flows. 31 Changes in and enforcement of immigration laws could increase our costs and adversely affect our ability to attract and retain qualified store-level employees.
Disruption of any significant supplier relationship could negatively affect our business. We work with four primary suppliers. These primary suppliers accounted for approximately 51.5% and 61.3% of our total purchases in fiscal years 2023 and 2022, respectively.
Disruption of any significant supplier relationship could negatively affect our business. We work with three primary suppliers. These primary suppliers accounted for approximately 48.0% and 51.5% of our total purchases in fiscal years 2024 and 2023, respectively.
They could, however, increase our costs or require the reformulation of certain products to meet new standards, recall or discontinue certain products not able to be reformulated, impose additional recordkeeping, expand documentation of the properties of certain products, expand or require different labeling based on scientific substantiation.
They could, however, increase our costs or require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, additional recordkeeping, expanded documentation of the properties of certain products, expanded or different labeling and/or scientific substantiation.
As a result, capital appreciation, if any, of our Class A common stock will be your sole source of potential gain for the foreseeable future. The market price for our Class A common stock after our initial public offering might not exceed the price that you pay for our Class A common stock in our initial public offering.
As a result, capital appreciation, if any, of our Class A common stock will be your sole source of potential gain for the foreseeable future. The market price for our Class A common stock might not exceed the price that you originally paid for our Class A common stock.
Specifically, maintaining records for inbound warehouse purchases or have specialized personnel to scan goods into the warehouse on a timely basis; (iv) the lack of adequate policies and procedures in control environment and control activities to ensure that the Company’s policies and procedures have been carried out as planned; ;(v) information technology general control in the areas of: (1) Risk and Vulnerability Assessment; (2) Selection and Management/Monitoring of Critical Vendors; (3) System Development and Change Management; (4) Backup Management; (5) System Security & Access: Deficiency in the Area of Audit Trail Record Control, Password Management, Vulnerability Scanning or Penetration Testing; (6) Segregation of Duties, Privileged Access, and Monitoring Controls; and (7) System Monitoring and Incident Management; and (vi) accounting personnel have the ability in the accounting system to prepare, review, and post the same accounting journal entry.
Specifically, maintaining records for inbound warehouse purchases or have specialized personnel to scan goods into the warehouse on a timely basis; (iv) the lack of adequate policies and procedures in control environment and control activities to ensure that the Company’s policies and procedures have been carried out as planned; ;(v) information technology general control in the areas of: (1) Risk and Vulnerability Assessment; (2) Selection and Management/Monitoring of Critical Vendors; (3) System Development and Change Management; (4) Backup Management; (5) System Security & Access: Deficiency in the Area of Audit Trail Record Control, Password Management, Vulnerability Scanning or Penetration Testing; (6) Segregation of Duties, Privileged Access, and Monitoring Controls; and (7) System Monitoring and Incident Management; and (vi) accounting personnel have the ability in the accounting system to prepare, review, and post the same accounting journal entry. 40 Although we continue to remediate our material weakness, we may be unable to remediate it in a timely manner, or at all, and additional weaknesses in our disclosure controls and internal controls over financial reporting may be discovered in the future.
Although we have been advised that there is no present intention, the Representative may, in its sole discretion, release all or any portion of the shares of our Class A common stock from the restrictions in any of the lock-up agreements described above.
Although we have been advised that there is no present intention, JSC may, in its sole discretion, release all or any portion of the shares of our Class A common stock from the restrictions in any of the lock-up agreements described above. 35 Also, in the future, we may issue shares of our Class A common stock in connection with investments or acquisitions.
We currently expect to retain future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any cash dividends after the consummation of our initial public offering. In addition, our ability to declare and pay cash dividends is restricted by our revolving credit facility.
We currently expect to retain future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any cash dividends on our Class A common stock. In addition, our ability to declare and pay cash dividends is restricted by our revolving credit facility.
We may incur additional indebtedness in the future, which could adversely affect our financial health and our ability to react to changes to our business. We may incur additional indebtedness in the future. Any increase in the amount of our indebtedness could require us to divert funds identified for other purposes for debt service and impair our liquidity position.
We may incur additional indebtedness in the future. Any increase in the amount of our indebtedness could require us to divert funds identified for other purposes for debt service and impair our liquidity position.
The current geographic concentration of our stores creates an exposure to local economies, regional downturns or severe weather or catastrophic occurrences that may materially and adversely affect our financial condition and results of operations. We currently operate all of our stores in the Los Angeles, California metropolitan area.
The current geographic concentration of our stores creates an exposure to local economies, regional downturns or severe weather or catastrophic occurrences that may materially and adversely affect our financial condition and results of operations.
In addition, if we are unsuccessful in attempts to protect against these increases in energy costs through long-term energy contracts, improved energy procurement, improved efficiency and other operational improvements, the overall costs of operating our stores will increase, which would impact our profitability, financial condition and results of operations. 21 Our business could be harmed by a failure of our information technology, administrative or outsourcing systems.
In addition, if we are unsuccessful in attempts to protect against these increases in energy costs through long-term energy contracts, improved energy procurement, improved efficiency and other operational improvements, the overall costs of operating our stores will increase, which would impact our profitability, financial condition and results of operations.
We rely on our information technology, administrative and outsourcing systems to effectively manage our business data, communications, supply chain, order entry and fulfillment and other business processes.
Our business could be harmed by a failure of our information technology, administrative or outsourcing systems. We rely on our information technology, administrative and outsourcing systems to effectively manage our business data, communications, supply chain, order entry and fulfillment and other business processes.
Fluctuations in our quarterly financial results could affect our stock price in the future. Our operating results have historically varied from period-to-period, and we expect that they will continue to as a result of a number of factors, many of which are outside of our control.
Our operating results have historically varied from period-to-period, and we expect that they will continue to as a result of a number of factors, many of which are outside of our control.
Any claims brought against us may exceed our existing or future insurance policy coverage or limits. Any judgment against us that is in excess of our policy limits would have to be paid from our cash reserves, which would reduce our capital resources.
Any judgment against us that is in excess of our policy limits would have to be paid from our cash reserves, which would reduce our capital resources.
If such financing is not available to us, or is not available to us on satisfactory terms, our ability to operate and expand our business or to respond to competitive pressures would be limited and we could be required to delay, significantly curtail or eliminate planned store openings or operations or other elements of our growth strategy.
If such financing is not available to us, or is not available to us on satisfactory terms, our ability to operate and expand our business or to respond to competitive pressures would be limited and we could be required to delay, significantly curtail or eliminate planned store openings or operations or other elements of our growth strategy. 30 We may incur additional indebtedness in the future, which could adversely affect our financial health and our ability to react to changes to our business.
If we fail to successfully implement our growth strategy, including by opening new stores, our business and financial condition and operating results may be adversely affected. One of our debt financing arrangements is currently in default, which may restrict our current and future business and operations.
If we fail to successfully implement our growth strategy, including by opening new stores, our business and financial condition and operating results may be adversely affected. 21 The terms of our debt financing arrangements may restrict our current and future operations, which could adversely affect our ability to respond to changes in our business and to manage our operations.
For so long as we remain a controlled company under that definition, we are permitted, and intend, to elect to rely on certain exemptions from corporate governance rules, including: ● an exemption from the rule that a majority of our board of directors must be independent directors; ● an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and ● an exemption from the rule that our director nominees must be selected or recommended solely by independent directors.
For so long as we remain a controlled company under that definition, we are permitted, and intend, to elect to rely on certain exemptions from corporate governance rules, including: ● an exemption from the rule that a majority of our board of directors must be independent directors; ● an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and ● an exemption from the rule that our director nominees must be selected or recommended solely by independent directors. 41 As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements, including that a majority of the members of our board of directors may not be independent directors, and our nominating and corporate governance and compensation committees may not consist entirely of independent directors.
A small number of our employees, including our in-house merchants, are primarily responsible for both sourcing products that meet our high specifications and identifying and responding to changing customer preferences.
Our success depends on our ability to source and market new products that both meet our standards for quality and appeal to customers’ preferences. A small number of our employees, including our in-house merchants, are primarily responsible for both sourcing products that meet our high specifications and identifying and responding to changing customer preferences.
There may also be adverse publicity associated with litigation that may decrease consumer confidence in our business, regardless of whether the allegations are valid or whether we are ultimately found liable.
There may also be adverse publicity associated with litigation that may decrease consumer confidence in our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may materially and adversely affect our business, financial condition, and results of operations.
We historically have operated our business as a private company. As a public company, we will incur additional legal, accounting, compliance and other expenses that we have not incurred as a private company.
As a public company, we will incur additional legal, accounting, compliance and other expenses that we did not incur as a private company.
In addition, this concentrated control will have the effect of delaying, preventing or deterring a change in control of Maison, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of Maison, and might have a negative effect on the market price of shares of our Class A common stock. 37 We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our securities less attractive to investors.
In addition, this concentrated control will have the effect of delaying, preventing or deterring a change in control of Maison, could deprive our stockholders of an opportunity to receive a premium for their capital stock as part of a sale of Maison, and might have a negative effect on the market price of shares of our Class A common stock.
These factors include, among other things, changes in demographics, population and employee bases, wage increases, and changes in economic conditions. Severe weather conditions and other catastrophic occurrences such as earthquakes and fires in areas in which we have stores or from which we obtain products may materially and adversely affect our results of operations.
Severe weather conditions and other catastrophic occurrences such as earthquakes and fires in areas in which we have stores or from which we obtain products may materially and adversely affect our results of operations.
The market price of our Class A common stock could decline significantly as a result of sales of a large number of shares of our Class A common stock in the market after our initial public offering. The sales, or the perception that these sales might occur, could depress the market price.
Future sales, or the perception of future sales, of our Class A common stock may depress the price of our Class A common stock. The market price of our Class A common stock could decline significantly as a result of sales of a large number of shares of our Class A common stock in the market.
Some of these changes may increase our obligations for compliance and oversight, which could subject us to additional costs and make our hiring process more cumbersome, or reduce the availability of potential employees.
Federal and state governments from time to time implement laws, regulations or programs that regulate our ability to attract or retain qualified employees. Some of these changes may increase our obligations for compliance and oversight, which could subject us to additional costs and make our hiring process more cumbersome or reduce the availability of potential employees.
Following the completion of our initial public offering, we will be subject to various regulatory requirements, including those of the SEC and Nasdaq. These requirements include record keeping, financial reporting and corporate governance rules and regulations. Our management team has limited experience in managing a public company and, historically, has not had the resources typically found in a public company.
Our management has limited experience managing a public company and our current resources may not be sufficient to fulfill our public company obligations. As a public company, we are subject to various regulatory requirements, including those of the SEC and Nasdaq. These requirements include record keeping, financial reporting and corporate governance rules and regulations.
This could, in turn, result in the loss of investor confidence in the reliability of our financial statements and negatively impact the trading price of our securities. 36 We are a “Controlled Company” within the meaning of the Nasdaq Stock Market Rules and, as a result, may, and intend to, rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
We are a “Controlled Company” within the meaning of the Nasdaq Stock Market Rules and, as a result, may, and intend to, rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
Exposure to various types of cyber-attacks such as malware, computer viruses, worms or other malicious acts, as well as human error, could also potentially disrupt our operations or result in a significant interruption in the delivery of our goods and services. 17 Risks Related to Our Industry We face competition in our industry, and our failure to compete successfully may have an adverse effect on our profitability and operating results.
Exposure to various types of cyber-attacks such as malware, computer viruses, worms or other malicious acts, as well as human error, could also potentially disrupt our operations or result in a significant interruption in the delivery of our goods and services.
Any such action could harm our reputation and the confidence of investors and customers in our Company and could materially and adversely affect our business and result in the delisting of our Class A common stock with both Nasdaq and the SEC. 30 Our management has limited experience managing a public company and our current resources may not be sufficient to fulfill our public company obligations.
Any such action could harm our reputation and the confidence of investors and customers in our Company and could materially and adversely affect our business and result in the delisting of our Class A common stock with both Nasdaq and the SEC.
As a result, potential investors may be less likely to invest in our securities.
As a result, potential investors may be less likely to invest in our securities. 42 ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Further, if we are unable to control health care and pension costs provided for in the collective bargaining agreements, we may experience increased operating costs which could adversely impact on our financial results. 24 We will require significant additional capital to fund our expanding business, which may not be available to us on satisfactory terms or at all, and even if it is available, failure to use our capital efficiently could have an adverse effect on our profitability.
We will require significant additional capital to fund our expanding business, which may not be available to us on satisfactory terms or at all, and even if it is available, failure to use our capital efficiently could have an adverse effect on our profitability.
Potential investors in our Class A common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be penny stock.
Potential investors in our Class A common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be penny stock. Rule 15g-9 of the SEC requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor.
Our continued growth depends, in large part, on our ability to open new stores and to operate those stores successfully.
Additionally, new stores may place a greater burden on our existing resources and adversely affect our existing business. Our continued growth depends, in large part, on our ability to open new stores and to operate those stores successfully.
We cannot guarantee that our intended center-satellite model will succeed. We may not be able to successfully implement our growth strategy on a timely basis or at all. Additionally, new stores may place a greater burden on our existing resources and adversely affect our existing business.
We intend to operate the Alhambra Store as our first satellite store. Our center-satellite store network model is new, and we cannot guarantee that our intended center-satellite model will succeed. We may not be able to successfully implement our growth strategy on a timely basis or at all.
We do not intend to pay cash dividends on our Class A common stock after the consummation of our initial public offering and, as a result, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.
As a result, he may take actions that you do not believe to be in our interests or your interests and that could depress the price of our Class A common stock. 36 We do not intend to pay cash dividends on our Class A common stock and, as a result, your only opportunity to achieve a return on your investment is if the price of our Class A common stock appreciates.
We are an “emerging growth company ” as defined in the JOBS Act. We may remain an emerging growth company until the fiscal year ended April 30, 2028.
We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our securities less attractive to investors. We are an “emerging growth company” as defined in the JOBS Act. We may remain an emerging growth company until the fiscal year ended April 30, 2028.
As a result, litigation may materially and adversely affect our business, financial condition, and results of operations. 23 Claims under our insurance plans may differ from our estimates, which could materially impact our results of operations.
Claims under our insurance plans may differ from our estimates, which could materially impact our results of operations.
A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. 35 We and our independent registered public accounting firm identified certain material weaknesses in our internal control over financial reporting in connection with the audited consolidated financial statements for the years ended April 30, 2023 and 2022.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
If we were to over-order, which could result in inventory losses, or otherwise were not able to maintain inventory suitable for our business needs, it would materially and negatively impact our operating results.
If we were to over-order, which could result in inventory losses, or otherwise were not able to maintain inventory suitable for our business needs, it would materially and negatively impact our operating results. 25 Products we sell could cause unexpected side effects, illness, injury or death that could result in their discontinuance or expose us to lawsuits, either of which could result in unexpected costs and damage to our reputation.
However, there can be no assurance that our intellectual property rights will be sufficient to distinguish our products and services from those of our competitors and to provide us with a competitive advantage.
However, there can be no assurance that our intellectual property rights will be sufficient to distinguish our products and services from those of our competitors and to provide us with a competitive advantage. 24 Our success depends upon our ability to source and market new products to meet our high standards and customer preferences and our ability to offer our customers an aesthetically pleasing shopping environment.
The transition to alternative energy sources, versus using natural gas, diesel fuel, or gasoline, may increase our costs. The impact of these events can adversely affect our operations, financial condition, and results of operations or cash flows.
The transition to alternative energy sources, versus using natural gas, diesel fuel, or gasoline, may increase our costs.
Moreover, if one or more of the analysts who cover our Company downgrades our stock or if our operating results do not meet their expectations or provide more favorable relative recommendations about our competitors, our stock price could decline. 31 Our amended and restated Certificate of Incorporation contains anti-takeover provisions that could discourage a third party from acquiring us, which could limit our shareholders’ opportunity to sell their shares of Class A common stock at a premium.
Our amended and restated Certificate of Incorporation contains anti-takeover provisions that could discourage a third party from acquiring us, which could limit our shareholders’ opportunity to sell their shares of Class A common stock at a premium.
Products we sell could cause unexpected side effects, illness, injury or death that could result in their discontinuance or expose us to lawsuits, either of which could result in unexpected costs and damage to our reputation. There is increasing governmental scrutiny of and public awareness regarding food safety.
There is increasing governmental scrutiny of and public awareness regarding food safety. Unexpected side effects, illness, injury, or death caused by products we sell could result in the discontinuance of sales of these products or prevent us from achieving market acceptance of the affected products.
The amount of shares of our Class A common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding shares of Class A common stock. 29 Our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.
The amount of shares of our Class A common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding shares of Class A common stock.
This concentrated control will limit your ability to influence corporate matters, and the interests of John Xu may not coincide with our interests or your interests. As a result, he may take actions that you do not believe to be in our interests or your interests and that could depress the price of our Class A common stock.
This concentrated control limits your ability as a stockholder to influence corporate matters, and the interests of John Xu may not coincide with our interests or your interests.
The resale of shares of our Class A common stock could adversely affect the market price of our Class A common stock and our ability to raise additional equity capital. There are currently 13,760,000 shares of Class A common stock issued and outstanding.
Sales, or the perception of sales, of shares of our Class A common stock by us or our existing stockholders in the public market could adversely affect the market price of our Class A common stock and our ability to raise additional equity capital.
As part of any collective bargaining agreements, we may need to fund additional pension contributions, which would negatively impact our free cash flow.
As part of any collective bargaining agreements, we may need to fund additional pension contributions, which would negatively impact our free cash flow. Further, if we are unable to control health care and pension costs provided for in the collective bargaining agreements, we may experience increased operating costs which could adversely impact on our financial results.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES All of our retail supermarkets lease operating space from various third parties with which we maintain long-term leases averaging approximately 19 years. The list below details the information related to our leases: Store Name Location Gross Sq. Ft. Lease Start Lease End Remaining Years Renewal Options Rent Good Fortune Supermarket of San Gabriel, LP 137 S.
Biggest changeThe list below details the information related to our leases: Store Name Location Gross Sq. Ft. Lease End Date (including all renewal options) Good Fortune Supermarket of San Gabriel, LP 137 S. San Gabriel Blvd., San Gabriel, CA, 91776 25,638 11/30/2030 Hong Kong Supermarket Monrovia, LP 935 W.
San Gabriel Blvd., San Gabriel, CA, 91776 25,638 12/1/2015 11/30/2030 8 N/A — Hong Kong Supermarket Monrovia, LP 935 W. Duarte Road, Monrovia, CA, 91016 25,320 9/1/2015 8/31/2055 5 32 years Super HK of El Monte, Inc. 11850 Valley Boulevard, El Monte, CA, 91732 62,000 7/15/2018 7/14/2028 6 5 years GF Supermarket of MP, Inc. (Acquisition on 6/30/2022) 127 N.
Duarte Road, Monrovia, CA, 91016 25,320 8/31/2055 Super HK of El Monte, Inc. 11850 Valley Boulevard, El Monte, CA, 91732 62,000 7/14/2028 GF Supermarket of MP, Inc. (Acquisition on 6/30/2022) 127 N. Garfield Avenue, Monterey Park, CA 91732 31,716 5/1/2028 Lee Lee – Peoria Store 7575 W.
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Garfield Avenue, Monterey Park, CA 91732 31,716 7/1/2020 6/30/2025 3 3 years
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ITEM 2. PROPERTIES The Company leases its current executive office, which is located at 127 N. Garfield Avenue, Monterey Park, California 91732, and is also the location of the Maison Monterey Park store. All of our retail supermarkets lease operating space from various third parties with which we maintain long-term leases.
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Cactus Road, Peoria, AZ 85381 60,080 1/31/2044 Lee Lee – Chandler Store 2025 N. Dobson Road, Chandler, AZ 85224 52,224 2/8/2049 Lee Lee – Tucson Store 1990 Orange Grove Road, Tucson, AZ 85704 51,422 12/31/2050 We believe that our facilities are sufficient for our current needs and operations.
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For more information on the Company’s leases, please refer to Note 13 — “ Leases ” in the notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS In the ordinary course of our business, we are subject to periodic lawsuits, investigations and claims, including, but not limited to, contractual disputes, employment, health and safety matters.
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ITEM 3. LEGAL PROCEEDINGS Information regarding our legal proceedings can be found in Note 17 — “ Commitments and Contingencies ” to the consolidated financial statements included in this Annual Report on Form 10-K and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 43 PART II
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Although we cannot predict with certainty the ultimate resolution of any lawsuits, investigations and claims asserted against it, we do not believe any currently pending legal proceedings to which the Company is a party will have a material adverse effect on our business, prospects, financial condition, cash flows or results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information We have applied to list our Class A common stock on the Nasdaq Capital Market under the symbol “MSS.” Holders of Common Stock As of July 31, 2023, we had 13,760,000 stockholders of record of our Class A common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Class A common stock is listed on the Nasdaq Stock Market LLC under the trading symbol “MSS.” Stockholders As of August 6, 2024, we had six stockholders of record of our Class A common stock.
Dividends We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation of our business and do not intend to declare or pay any cash dividends on our Class A common stock in the foreseeable future.
Dividend Policy We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation of our business and do not intend to declare or pay any cash dividends on our Class A common stock in the foreseeable future.
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Securities Authorized for Issuance Under Equity Compensation Plans The following table provides information as of April 30, 2023, with respect to all of our compensation plans under which equity securities are authorized for issuance. As of April 30, 2023, there have been no shares issued under our 2023 Stock Incentive Plan.
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Recent Sales of Unregistered Securities There were no sales of unregistered securities during fiscal year 2024 other than those transactions previously reported to the SEC on our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
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Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Equity compensation plans approved by stockholders — $ — — Equity compensation plans not approved by stockholders — — — Total — $ — — Sales of Unregistered Securities and Repurchases of Securities During the fourth quarter of fiscal 2023, the Company did not sell any unregistered securities and did not repurchase any securities.
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Issuer Purchases of Equity Securities The Company did not repurchase any of its outstanding shares of Class A common stock during the fourth quarter of the fiscal year ended April 30, 2024. ITEM 6. [RESERVED] 44

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations for the years ended April 30, 2023 and 2022 Years ended April 30, 2023 2022 Change Percentage Change Net revenues $ 55,399,112 $ 41,984,221 $ 13,414,891 32.0 % Cost of revenues 42,947,952 33,697,597 9,250,355 27.5 % Gross profit 12,451,160 8,286,624 4,164,536 50.3 % Operating expenses Selling expenses 8,479,578 6,112,493 2,367,085 38.7 % General and administrative expenses 3,887,935 3,000,721 887,214 29.6 % Total operating expenses 12,367,513 9,113,214 3,254,299 35.7 % Income (loss) from operations 83,647 (826,590 ) 910,237 110.1 % Other income, net 1,849,534 155,821 1,693,713 1,087.0 % Interest income (expenses), net 42,606 43,481 (875 ) 2.0 % Income (loss) before income taxes 1,975,787 (627,288 ) 2,603,075 415.0 % Income tax provisions (336,486 ) (27,738 ) 308,748 1,113.1 % Net income (loss) 1,639,301 (655,026 ) 2,294,327 350.3 % Net income attributable to noncontrolling interests 387,498 (92,282 ) 479,780 519.9 % Net income (loss) attributable to Maison Solutions Inc. $ 1,251,803 $ (562,744 ) $ 1,814,547 322.4 % Revenues Years ended April 30, 2023 2022 Change Percentage Change Perishables $ 31,291,786 $ 24,138,729 $ 7,153,057 29.6 % Non-perishables 24,107,326 17,845,492 6,261,834 35.1 % Net revenue $ 55,399,112 $ 41,984,221 $ 13,414,891 32.0 % Our net revenues were approximately $55.4 million for the year ended April 30, 2023, an increase of approximately $13.4 million or 32.0%, from approximately $42.0 million for the year ended April 30, 2022.
Biggest changeGeneral 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. 49 Results of Operations for the Years Ended April 30, 2024 and 2023 Years ended April 30, 2024 2023 Change Percentage Change Net revenues $ 58,043,161 $ 55,399,112 $ 2,644,049 4.8 % Cost of revenues 46,422,064 42,947,952 3,474,112 8.1 % Gross profit 11,621,097 12,451,160 (830,063 ) (6.7 )% Operating expenses Selling expenses 10,155,828 8,479,578 1,676,250 19.8 % General and administrative expenses 4,169,275 3,887,935 281,340 7.2 % Total operating expenses 14,325,103 12,367,513 1,957,590 15.8 % Income (loss) from operations (2,704,006 ) 83,647 (2,787,653 ) (3,332.6 )% Other income (expenses), net (118,201 ) 1,849,534 (1,967,735 ) (106.4 )% Interest income (expense),net (124,260 ) 42,606 (166,866 ) (391.6 )% Income (loss) before income taxes (2,946,467 ) 1,975,787 (4,922,254 ) (249.1 )% Income tax provisions 440,562 336,486 104,076 30.9 % Net income (loss) (3,387,029 ) 1,639,301 (5,026,330 ) (306.6 )% Net income (loss) attributable to noncontrolling interests (46,823 ) 387,498 (434,321 ) (112.1 )% Net income (loss) attributable to Maison Solutions Inc. $ (3,340,206 ) $ 1,251,803 $ (4,592,009 ) (366.8 )% Revenues Years ended April 30, 2024 2023 Change Percentage Change Perishables $ 31,358,590 $ 31,291,786 $ 66,804 0.2 % Non-perishables 26,684,571 24,107,326 2,577,245 10.7 % Net revenue $ 58,043,161 $ 55,399,112 $ 2,644,049 4.8 % Our net revenues were approximately $58.0 million for the year ended April 30, 2024, an increase of approximately $2,644,049 or 4.8%, from approximately $55.4 million for the year ended April 30, 2023.
The agreement included a consultancy and initialization fee of $220,000, 40% of which was payable within 3 days of effectiveness and which has been paid, 40% of which is due within 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 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.
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, advertising, and corporate overhead.
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.
Investing Activities Net cash provided by investing activities was approximately $1.9 million for the year ended April 30, 2023, which mainly consisted of loan repayment from third parties of approximately $4.4 million. This was partially offset with the purchase of equipment of $49,388 and payment for acquisition of subsidiary Maison Monterey Park of $2.5 million.
Net cash provided by investing activities was approximately $1.9 million for the year ended April 30, 2023, which mainly consisted of loan repayment from third parties of approximately $4.4 million. This was partially offset with the purchase of equipment of $49,388 and payment for acquisition of subsidiary Maison Monterey Park of $2.5 million.
Small Business Administration On June 15, 2020, Maison Monrovia entered into a $150,000 Business Loan Agreement with Small Business Administration, SBA, at 3.75% annual interest rate and the maturity date on June 15, 2050.
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.
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 April 30, 2023 and 2022.
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 April 30, 2024 and 2023.
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 Annual Report on Form 10-K. Forward-Looking Statements This Annual Report on Form 10-K includes forward-looking statements.
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 Annual Report on Form 10-K. Cautionary Note Regarding Forward-Looking Statements This Annual Report on Form 10-K includes forward-looking statements.
The Company records inventory shrinkage based on historical data and management’s estimates and provided a reserve for inventory shrinkage for the fiscal years ended April 30, 2023 and 2022.
The Company records inventory shrinkage based on historical data and management’s estimates and provided a reserve for inventory shrinkage for the fiscal years ended April 30, 2024 and 2023.
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.
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.
On June 15, 2020, Maison San Gabriel entered into a $150,000 Business Loan Agreement with Small Business Administration, 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 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.
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. The cost of revenues increased by approximately $9.3 million, from $33.7 million for year ended April 30, 2022, to approximately $42.9 million for the year ended April 30, 2023.
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. The cost of revenues increased by $3.5 million, from $42.9 million for the year ended April 30, 2023, to approximately $46.4 million for the year ended April 30, 2024.
However, our net cash provided by operating activities was mainly offset by subtracting a non-cash adjustment from net income for reversal of inventory reserve of $0.1 million, a decreased cash inflow from our operating activities due to an increase of outstanding accounts receivable of approximately $0.3 million, an increase of outstanding other receivables and other current assets of approximately $0.5 million, an increase of prepayment of approximately of $0.8 million, an increase of payment for accounts payable of $0.6 million, an increase of payment for accounts payable to related parties of $0.2 million; and an increased payment for accrued liability and other payables of $0.5 million. 47 Despite having net income of $1.6 million for the year ended April 30, 2023 and an increase of $2.3 million compared with a net loss of $0.7 million for the year ended April 30, 2022, our cash inflow of $0.3 million for the year ended April 30, 2023 represented a decrease of $1.2 million, compared with a $1.5 million cash inflow in the year ended April 30, 2022.
However, our net cash provided by operating activities for the year ended April 30, 2023 was mainly offset by subtracting a non-cash adjustment from net income for reversal of inventory reserve of $0.1 million, a decreased cash inflow from our operating activities due to an increase of outstanding accounts receivable of approximately $0.3 million, an increase of outstanding other receivables and other current assets of approximately $0.5 million, an increase of prepayment of approximately of $0.8 million, an increase of payment for accounts payable of $0.6 million, an increase of payment for accounts payable to related parties of $0.2 million, and an increased payment for accrued liability and other payables of $0.5 million.
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”). The Alhambra store is 100% owned by Mrs. Grace Xu, the spouse of Mr. John Xu, our chief executive officer.
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.
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.
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.
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.
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. 47 Use of Estimates The preparation of consolidated financial statements in conformity with U.S.
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.
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.
See Note 13 — “ Leases ” for additional information. 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.
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.
The depreciation expense comes from machinery & equipment, such as refrigerator, water heater, forklift, and freezer and furniture & fixtures, such as metal shelves, shopping cart, 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 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.
Revenue recognition The Company adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 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 606 are presented as below.
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.
Liquidity and Capital Resources Cash Flows for the Year Ended April 30, 2023 Compared to the Year Ended April 30, 2022 As of April 30, 2023, we had cash, cash equivalents and restricted cash of approximately $2.6 million.
Liquidity and Capital Resources Cash Flows for the Year Ended April 30, 2024 Compared to the Year Ended April 30, 2023 As of April 30, 2024, we had cash, cash equivalents and restricted cash of approximately $1,101.
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.
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. 48 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.
Our existing four (4) supermarkets contributed $40.6 million in revenue during the year ended April 30, 2023, a decrease of approximately $1.3 million, as compared to the year ended April 30, 2022.
Our existing four (4) supermarkets contributed $53.4 million in revenue during the year ended April 30, 2024, a decrease of approximately $2.0 million, as compared to the year ended April 30, 2023.
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. 43 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.
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.
Collaboration with JD.com On April 19, 2021, 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.
Lee Lee holds three supermarkets specializing on South-East groceries in Arizona. 45 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.
However, we plan to use part of the proceeds from our initial public offering to support our business expansion described above. 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.
This is based on management’s best estimate as of the date of this Report. We used part of the proceeds from our IPO to support our business expansion described above. 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.
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.
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.
Payroll As of April 30, 2023, we had approximately 174 employees. 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.
Payroll As of April 30, 2024, we had approximately 355 employees including employees from our newly acquired subsidiary Lee Lee. 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.
Financing Activities Net cash used in financing activities was approximately $0.7 million for the year ended April 30, 2023, which mainly consisted of bank overdrafts of $281,941, repayment on loans payable of $362,731, and repayment to other payables of related parties of $112,970, which was partly offset by payment from other receivable – related parties of $11,005.
Net cash used in financing activities was approximately $0.7 million for the year ended April 30, 2023, which mainly consisted of bank overdrafts of $281,941, repayment on loans payable of $362,731, and repayment to related parties of $101,965. 54 Debt U.S.
The increase in other income was mainly attributable to the $1.9 million employee retention credit (“ERC”) received for the year ended April 30,2023. The ERC is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to December 31, 2021.
The ERC is a refundable tax credit for businesses that continued to pay employees while shut down due to the COVID-19 pandemic or had significant declines in gross receipts from March 13, 2020 to December 31, 2021.
Xu, our CEO. 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 our CEO John Xu.
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.
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.
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.
Total operating expenses as a percentage of revenues were 22.3% and 21.7% for the years ended April 30, 2023 and 2022, respectively. The increase in operating expenses was primarily attributable to the increase in selling expenses, which includes the increase in payroll expenses, utilities expenses, property tax, insurance expenses, and credit card service charges.
Total operating expenses as a percentage of revenues were 24.7% and 22.3% for the years ended April 30, 2024 and 2023, respectively. The increase in operating expenses was primarily attributable to the increase in selling expenses, which included the increase in payroll expense, utility expense, advertising and promotion expense, postage & delivery expense and merchant service charges.
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.
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.
Years ended April 30, 2023 2022 Net cash provided by operating activities $ 484,191 $ 1,487,476 Net cash provided by (used in) investing activities 1,860,882 (3,284,997 ) Net cash provided by (used in) financing activities (746,637 ) 1,981,297 Net change in cash and restricted cash $ 1,598,436 $ 183,776 Operating Activities Net cash provided by operating activities was approximately $0.5 million for the year ended April 30, 2023 and was mainly comprised of net income of approximately $1.6 million, add-back of non-cash adjustments to net income including depreciation and amortization expense of approximately $0.4 million, and bad debt expense of $0.2 million.
Net cash provided by operating activities was approximately $0.5 million for the year ended April 30, 2023 and was mainly comprised of net income of approximately $1.6 million, add-back of non-cash adjustments to net income including depreciation and amortization expense of approximately $0.4 million, and bad debt expense of $0.2 million.
The increase in net revenues was driven by the inclusion of revenues from our newly acquired subsidiary Maison Monterey Park supermarket of $14.8 million which was partly offset by decreased sales at Maison San Gabriel of $0.8 million and decreased sales at Maison El Monte of $0.4 million.
The increase in net revenues was driven by the inclusion of revenues from our newly acquired subsidiary (acquired in April 2024) Lee Lee of $4.6 million, and increased sales of Maison Monterey Park supermarket (acquired in July 2023) by $4.4 million, which was partly offset by decreased sales of Maison San Gabriel by $3.3 million, decreased sales of Maison Monrovia by $1.6 million and decreased sales of Maison El Monte by $1.5 million, as compared to the year ended April 30, 2023.
On January 2022, Maison San Gabriel received an extra $1,850,000 fund from Small Business Administration, SBA, at 3.75% annual interest rate and the maturity date on June 15, 2050. Maison El Monte received an extra $350,000 from Small Business Administration, SBA, at 3.75% annual interest rate and the maturity date on June 15, 2050.
Per the SBA loan agreement, all these three loans’ interest payments were deferred to December 2022. On January 12, 2022, Maison San Gabriel received an extra $1,850,000 fund from the SBA at 3.75% annual interest rate and the maturity date on June 15, 2050.
Operating cost increase after initial public offering Following our initial public offering, we will be subject to increased operating costs related to our listing on Nasdaq and we are subject to increased costs related to our compliance with Securities Act and Exchange Act periodic reporting annual audit expenses, the legal service expenses, and related consulting service expenses.
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.
Gross margin was 22.5% and 19.7% for the years ended April 30, 2023 and 2022, respectively. Our supermarkets’ sales profit margins increased by 2.8% from the year ended April 30, 2023 compared to the year ended April 30, 2022, which was mainly due to the increased profit margin of our El Monte store and Monrovia store.
Gross margin was 20.0% and 22.5% for the years ended April 30, 2024 and 2023, respectively. Our supermarkets’ sales profit margins decreased by 2.5% for the year ended April 30, 2024 compared to the year ended April 30, 2023.
We had net income attributable to us of approximately $1,251,803 for the year ended April 30, 2023 and had a working capital deficit of approximately $86,864 as of April 30, 2023.
We had net loss attributable to us of $3,340,206 for the year ended April 30, 2024, and had a working capital deficit of approximately $16.9 million as of April 30, 2024.
Payroll and payroll tax expenses were $6.2 million for the year ended April 30, 2023, and $4.5 million for the year ended April 30, 2022. 41 Vendor and Supply Management Maison believes that a centralized and efficient vendor and supply management system is the key to profitability.
Our payroll and payroll tax expenses were $7.4 million and $6.2 million for the years ended April 30, 2024 and 2023, respectively. 46 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 ONCO Food Corp., GF Distribution, Inc., and XHJC Holding Inc.
Interest Income (Expense), net Interest income was $42,606 for the year ended April 30, 2023, a decrease of $875, from interest income of $43,481 for the year ended April 30, 2022. The interest income was from the loan receivables from Drop in the Ocean, Inc.
The interest income for the year ended April 30, 2023 was from the loan receivables from Drop in the Ocean, Inc, which was repaid in full as of April 30, 2023.
Simultaneously with the effectiveness of the Collaboration Agreement, JD 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. 40 Key Factors that Affect Operating Results Inflation The annual inflation rate for the United States was 4.9% for the year ended April 30, 2023, 8.3% for the year ended April 30, 2022 and 4.2% for the year ended April 30, 2021 according to Bureau of Labor Statistics.
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.
We continually monitor the situation and regularly adjust our policies and practices as more information and guidance becomes available. 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.
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.
Gross Profit and Gross Margin Years ended April 30, 2023 2022 Change Percentage Change Gross Profit $ 12,451,160 $ 8,286,624 $ 4,164,536 50.3 % Gross Margin 22.5 % 19.7 % 2.8 % Gross profit was approximately $12.5 million and $8.3 million for the years ended April 30, 2023 and 2022, respectively.
Gross Profit and Gross Margin Years ended April 30, 2024 2023 Change Percentage Change Gross Profit $ 11,621,097 $ 12,451,160 $ (830,063 ) (6.7 )% Gross Margin 20.0 % 22.5 % (2.5 )% Gross profit was approximately $11.6 million and $12.5 million for the years ended April 30, 2024 and 2023, respectively.
Income Taxes Provisions Income tax expense was $336,486 for the year ended April 30, 2023, an increase of $308,748, from income taxes expense of $27,738 for the year ended April 30, 2022. The increase was mainly due to increased income for the year ended April 30, 2023 compared to loss for the year ended April 30, 2022.
Income Taxes Provisions Income tax expense was $440,562 for the year ended April 30, 2024, an increase of $104,076, from income taxes expense of $336,486 for the year ended April 30, 2023.
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.
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.
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 operation and operating results. Meanwhile, improving the store environment can also attract more customers and lead to an increase in sales.
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 for the years ended April 30, 2024 and 2023.
Total Operating Expenses Years ended April 30, 2023 2022 Change Percentage Change Selling Expense $ 8,479,578 $ 6,112,493 $ 2,367,085 38.7 % General and Administrative Expense 3,887,935 3,000,721 887,214 29.6 % Total Operating Expense $ 12,367,513 $ 9,113,214 $ 3,254,299 35.7 % Percentage of revenue 22.3 % 21.7 % 0.6 % Total operating expenses were approximately $12.4 million for the year ended April 30, 2023, an increase of approximately $3.3 million, compared to approximately $9.1 million for the year ended April 30, 2022.
Total Operating Expenses Years ended April 30, 2024 2023 Change Percentage Change Selling Expenses $ 10,155,828 $ 8,479,578 $ 1,676,250 19.8 % General and Administrative Expenses 4,169,275 3,887,935 281,340 7.2 % Total Operating Expenses $ 14,325,103 $ 12,367,513 $ 1,957,590 15.8 % Percentage of revenue 24.7 % 22.3 % 2.4 % Total operating expenses were approximately $14.3 million for the year ended April 30, 2024, an increase of approximately $1.9 million, compared to approximately $12.4 million for the year ended April 30, 2023.
Payroll expenses increased by approximately $1.6 million for the year ended April 30, 2023, as compared to the year ended April 30, 2022. The increase in payroll expenses was mainly due to the increased employees’ hourly rates and due to the acquisition of Maison Monterey Park.
Payroll expense increased by $1.2 million in the year ended April 30, 2024, as compared to the year ended April 30, 2023 due to the increase of hourly rate and increased number of employees due to the acquisition of Lee Lee.
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.
ROU assets also include any lease payments made prior to commencement and are recorded net of any lease incentives received.
We intend to acquire the remaining 90% equity interest in the Alhambra Store with a portion of the net proceeds from our initial public offering. Our intention is that the Alhambra Store will serve 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.
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.
For the year ended April 30, 2022, three suppliers accounted for 23%, 21%, and 14% 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.
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.
Maison has major vendors, including Drop in The Ocean, Inc., ONCO Food Corp., GF Distribution, Inc., and XHJC Holding Inc. For the year ended April 30, 2023, three suppliers accounted for 20%, 18% and 14% of the Company’s total purchases, respectively.
For the year ended April 30, 2024, these three suppliers accounted for 15%, 7% and 26% of the Company’s total purchases, respectively. For the year ended April 30, 2023, three suppliers accounted for 20%, 14%, and 18% of the Company’s total purchases, respectively.
Maison focused on improving stores for the fiscal years ended April 30, 2023 and 2022. We spent $273,405 for the fiscal year ended April 30, 2023 for repairs and maintenance of all departments, a slight decrease of $20,825 compared to $294,230 for the fiscal year ended April 30, 2022.
We spent $201,608 for the year ended April 30, 2024 for repairs and maintenance and supermarket renovation, a decrease of $71,797 compared to $273,405 for the year ended April 30, 2023.
Net Income (loss) Net income was approximately about $1.6 million for the year ended April 30, 2023, an increase of $2.3 million, or 350.3%, from a $0.7 million net loss for the year ended April 30, 2022.
Net Income (Loss ) Net loss attributable to the Company was $3,340,206 for the year ended April 30, 2024, an increase of $4,592,009, or 366.8%, from a $1,251,803 net income attributable to the Company for the year ended April 30, 2023.
Property tax increased by approximately $0.2 million in the year ended April 30, 2023, as compared to the year ended April 30, 2022 due to the property tax paid at Maison Monterey Park.
Utility expense increased by $0.2 million in the year ended April 30, 2024, as compared to the year ended April 30, 2023. Advertising and promotion expense increased by $79,971 in the year ended April 30, 2024, as compared to the year ended April 30, 2023.
For example, the minimum wage rose from $13 to $14 per hour from 2020 to 2021 and increased to $15.50 per hour in 2023 in Los Angeles.
Minimum wage rates in some states have recently increased. For example, in California, the minimum wage was $15.50 per hour in 2023, and increased to $16 per hour starting from January 1, 2024.
Marketing costs primarily consist of advertising, payroll, and related expenses for personnel engaged in marketing and selling 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.
Selling expenses mainly consist of advertising costs, promotion expenses, and payroll and related expenses for personnel engaged in selling and marketing activities.
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 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.
Net cash provided by financing activities was approximately $2.0 million for the year ended April 30, 2022, which mainly consisted of borrowings from related parties of $64,827 and borrowings from financial institutions of approximately $1.9 million.
Financing Activities Net cash provided by financing activities was approximately $13.1 million for the year ended April 30, 2024, which mainly consisted of net proceeds from issuance of common stock of approximately $13.3 million, bank overdraft of $97,445 and borrowing from related parties $250,000, which was partially offset by repayment on loans payable of approximately $370,825 million, and repayment for a note payable of $150,000.
However, the new coverage ratio would not change the existing treatment for the loan of Good Fortune Supermarket of Monrovia, LP. 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.
As of April 30, 2024, the Company had outstanding loan facilities of approximately $2.56 million SBA loan and $15.1 million secured senior note payable due to acquisition of Lee Lee. 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.
This was mainly attributable to the reasons discussed above, which included an approximately $4.2 million increase in gross profit and a $1.7 million increase in other income, which was partially offset by increased operating expense of $3.3 million and increased income tax expense of $0.3 million.
This was mainly attributable to the reasons discussed above, which included a decrease in gross profit by $830,063, decreased other income by $1,429,193, increased investment loss from equity method investment by $538,542, increased operating expenses by $1,957,590 and increased income tax expense by $104,076, which was partly offset by increased net loss attribute to noncontrolling interest by $434,321.
Utility expense increased by approximately $0.3 million in the year ended April 30, 2023, as compared to the year ended April 30, 2022 due to the increased usage rate and due to the acquisition of Maison Monterey Park. Credit card service charges increased by approximately $0.2 million due to the increased sales from the acquisition of Maison Monterey Park.
Postage and delivery expenses increased by $55,884 in the year ended April 30, 2024, as compared to the year ended April 30, 2023. Merchant eservice charges increased by $0.1 million in the year ended April 30, 2024, as compared to the year ended April 30, 2023 due to increased sales as describe above.
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. 46 We plan to acquire and open additional supermarkets with a portion of the proceeds of our initial public offering to expand our footprint to both the West Coast and the East Coast.
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 plan to acquire and open additional supermarkets with a portion of the proceeds of our IPO and the PIPE Offering to expand our footprint to both the West Coast and the East Coast.
Removed
We intend to acquire the controlling ownership of Dai Cheong with a portion of the net proceeds of our initial public offering. By adding Dai Cheong to our portfolio, we will take the first step toward creating a vertically integrated supply-retail structure.
Added
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 expands our footprint to new neighborhood. On December 6, 2023, we invested additional $360,000 for another 10% equity interest in HKGF Arcadia.
Removed
Inflation increased our purchase costs, occupancy costs, and payroll costs. To offset inflationary pressures for the year ended April 30, 2023, we have increased our products’ selling price to cover these increased costs.
Added
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%.
Removed
Supply chain disruptions Due to ongoing inflationary and supply chain pressures related to the COVID-19 pandemic, the Company experienced financial pressure when ordering and receiving products during 2021 and through April 30, 2023. Specifically, the Company was impacted by increased shipping costs attributable to container shortages, port delays, and truck and driver shortages.
Added
On November 3, 2023, we incorporated a wholly-owned subsidiary AZLL LLC (“AZLL”) in Arizona.
Removed
We attempted to mitigate these disruptions by diversifying our supply chains, establishing backup plans, and increasing our inventory levels, as well as adjusting our products’ prices.
Added
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, consisting of: (i) $7.0 million in cash paid immediately at the closing of the Transaction, and (ii) a senior secured note agreement with an original principal amount of approximately $15.2 million.
Removed
During the fourth quarter of 2023, the Company was able to evolve its operations to successfully navigate such challenges, including the diversification of its supplier network, the adjustment of its inventory purchase pattern, and the continued focus on and investment in automation in its operations and its E-commerce platform.
Added
Key Factors that Affect Operating Results Inflation The inflation rate for the United States was 3.4% for the year ended April 30, 2024, 4.9% for the year ended April 30, 2023 and 8.3% for the year ended April 30, 2022 according to Bureau of Labor Statistics. Inflation increased our purchase costs, occupancy costs, and payroll costs.
Removed
To gain buying power, the Company works with third-party vendors who have more buying power to get products. To work with these third-parties, the Company needs to provide prepayments per order. Moreover, over the course of fiscal year 2023, we saw a gradual easing of shipping costs and improvement in on-time shipping from our overseas vendors.
Added
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.
Removed
While these supply chain challenges have led to an increase in costs to consumers, they have not materially impacted our ability to offer products and our sales increased during the fourth quarter of 2023. For the year ended April 30, 2023, our sales were $55.4 million, a $13.4 million increase from $42.0 million for the year ended April 30, 2022.
Added
Going concern The accompanying consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. For the year ended April 30, 2024, the Company had a net loss of approximately $3.34 million.
Removed
Gross profit increased $4.2 million to approximately $12.5 million for the year ended April 30, 2023 from approximately $8.3 million for the year ended April 30, 2022, as a result of our acquisition of Maison Monterey Park. Competition Food retail is a competitive industry.
Added
The Company had an accumulated deficit of approximately $2.82 million as of April 30, 2024, and negative cash flow from operating activities of approximately $3.50 million for the year ended April 30, 2024. The historical operating results including recurring losses from operations raise substantial doubt about the Company’s ability to continue as a going concern.

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