UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-41720

MAISON SOLUTIONS INC.

(Exact name of registrant as specified in its charter)

Delaware

84-2498797

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

127 N Garfield Avenue

Monterey Park, California 91754

(Address of Principal Executive Offices, including zip code)

(626) 737-5888

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock, $0.0001 par value per share		MSS		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐	Large accelerated filer	☐	Accelerated filer
☒	Non-accelerated filer	☒	Smaller reporting company
		☒	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of March 14, 2025, the number of shares of Class A common stock, $0.0001 par value, outstanding was 17,450,476 shares, and the number of shares of Class B common stock, $0.0001 par value, outstanding was 2,240,000 shares.

MAISON SOLUTIONS INC.

FORM 10-Q FOR THE QUARTER ENDED JANUARY 31, 2025

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		1

Item 1.	Financial Statements	1

	Consolidated Balance Sheets as of January 31, 2025 (Unaudited) and April 30, 2024 (Audited)	1

	Consolidated Statements of Operations for the Three and Nine Months Ended January 31, 2025 and 2024 (Unaudited)	2

	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended January 31, 2025 and 2024 (Unaudited)	3

	Consolidated Statements of Cash Flows for the Nine Months Ended January 31, 2025 and 2024 (Unaudited)	4

	Notes to Financial Statements (Unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	51

Item 4.	Controls and Procedures	51

PART II. OTHER INFORMATION		53

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 3.	Defaults Upon Senior Securities	53

Item 4.	Mine Safety Disclosures	53

Item 5.	Other Information	53

Item 6.	Exhibits	54

SIGNATURES		55

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MAISON SOLUTIONS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	January 31, 2025 (Unaudited)			April 30, 2024
ASSETS
CURRENT ASSETS
Cash	$	445,357		$	—
Accounts receivable		86,957			111,874
Accounts receivable - related parties		424,183			459,647
Inventories, net		10,656,915			6,802,255
Prepayments		2,994,998			3,263,711
Other receivables and other current assets		598,689			1,240,786
Other receivables - related parties		98,995			33,995
Total current assets		15,306,094			11,912,268

NON-CURRENT ASSETS
Restricted cash		—			1,101
Property and equipment, net		2,129,121			2,334,963
Intangible assets, net		7,559,586			7,978,911
Security deposits		958,208			946,208
Investment under cost method		75,000			75,000
Investment under cost method - related parties		162,665			203,440
Investment under equity method		860,133			1,261,458
Operating lease right-of-use assets, net		38,734,925			40,726,647
Goodwill		16,957,147			16,957,147
Total non-current assets		67,436,785			70,484,875
TOTAL ASSETS	$	82,742,879		$	82,397,143

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Bank overdraft	$	1,298,428		$	97,445
Accounts payable		10,501,531			5,394,423
Accounts payable - related parties		607,100			470,605
Accrued expenses and other payables		1,715,448			1,627,082
Other payables - related parties		512,824			491,586
Income tax payable		1,663,153			442,518
Contract liabilities		769,739			965,696
Operating lease liabilities, current		4,163,282			4,088,678
Loan payable, current		66,699			65,098
Notes payable, current		5,509,630			15,126,065
Total current liabilities		26,807,834			28,769,196

NON-CURRENT LIABILITIES
Long-term loan payable		2,445,976			2,496,201
Security deposit from sub-tenants		131,228			125,114
Operating lease liabilities, non-current		37,345,475			39,015,252
Notes payable, non-current		2,782,378			—
Deferred tax liability, net		1,213,972			1,272,260
Total non-current liabilities		43,919,029			42,908,827

TOTAL LIABILITIES		70,726,863			71,678,023

Commitment and contingencies (Note 17)

STOCKHOLDER’S EQUITY
Class A Common stock, $0.0001 par value, 97,000,000 shares authorized; 17,450,476 and 13,760,000 shares issued and outstanding as of January 31, 2025 and April 30, 2024, respectively		1,745			1,745
Class B Common stock, $0.0001 par value, 3,000,000 shares authorized; 2,240,000 shares issued and outstanding		224			224
Additional paid in capital		13,313,523			13,313,523
Accumulated deficit		(1,360,832	)		(2,817,495	)
Total Maison Solutions, Inc. stockholders’ equity		11,954,660			10,497,997
Noncontrolling interest		61,356			221,123
Total stockholders’ equity		12,016,016			10,719,120
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	82,742,879		$	82,397,143

The accompanying notes are an integral part of these unaudited consolidated financial statements.

MAISON SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended January 31,						Nine Months Ended January 31,
	2025			2024			2025			2024

Revenue	$	34,149,223		$	13,598,479		$	94,818,527		$	41,116,998

Cost of goods sold		26,607,590			10,410,684			70,859,468			31,699,886

Gross profit		7,541,633			3,187,795			23,959,059			9,417,112

Operating expenses
Selling expenses		4,852,417			2,438,846			15,116,681			6,984,543
General and administrative expenses		1,574,752			1,056,118			5,421,673			2,702,660

Total operating expenses		6,427,169			3,494,964			20,538,354			9,687,203

Income (loss) from operations		1,114,464			(307,169	)		3,420,705			(270,091	)

Non-operating income (expenses)
Interest expense, net		(269,059	)		(19,425	)		(694,826	)		(95,956	)
Investment loss		(71,023	)		(51,204	)		(504,100	)		(63,982	)
Other income, net		229,199			898			282,857			383,949

Non-operating income (expenses), net		(110,883	)		(69,731	)		(916,069	)		224,011

Income (loss) before income taxes		1,003,581			(376,900	)		2,504,636			(46,080	)

Income tax expenses		8,416			158,656			1,207,740			424,722

Net income (loss) before noncontrolling interest		995,165			(535,556	)		1,296,896			(470,802	)

Less: net income (loss) attributable to noncontrolling interests		(16,598	)		13,398			(159,766	)		91,626

Net income (loss) attributable to Maison Solutions, Inc.	$	1,011,763		$	(548,954	)	$	1,456,662		$	(562,428	)

Net income (loss) per share attributable to Maison Solutions, Inc.
Basic and diluted	$	0.06		$	(0.03	)	$	0.08		$	(0.03	)
Weighted average number of common stock outstanding - basic and diluted		17,450,476			19,405,797			17,450,476			17,334,541

The accompanying notes are an integral part of these unaudited consolidated financial statements.

MAISON SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

NINE AND THREE MONTHS ENDED JANUARY 31, 2025 AND 2024

(UNAUDITED)

	Class A				Class B				Additional		Retained Earnings						Total
	Common Stock				Common Stock				Paid-in		(Accumulated			Noncontrolling			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit)			Interests			Equity
Balance at April 30, 2024		17,450,476	$	1,745		2,240,000	$	224	$	13,313,523	$	(2,817,495	)	$	221,123		$	10,719,120
Net income (loss)		—		—		—		—		—		700,908			(83,082	)		617,826
Balance at July 31, 2024		17,450,476		1,745		2,240,000		224		13,313,523		(2,116,586	)		138,040			11,336,946
Net loss		—		—		—		—		—		(256,009	)		(60,086	)		(316,095	)
Balance at October 31, 2024		17,450,476		1,745		2,240,000		224		13,313,523		(2,372,595	)		77,954			11,020,851
Net loss		—		—		—		—		—		1,011,763			(16,598	)		995,165
Balance at January 31, 2025		17,450,476	$	1,745		2,240,000	$	224	$	13,313,523	$	(1,360,832	)	$	61,356		$	12,016,016

	Class A				Class B				Additional		Retained Earnings						Total
	Common Stock				Common Stock				Paid-in		(Accumulated			Noncontrolling			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit)			Interests			Equity
Balance at April 30, 2023		13,760,000	$	1,376		2,240,000	$	224	$	—	$	522,710		$	267,947		$	792,257
Net income (loss)		—		—		—		—		—		(104,939	)		78,215			(26,724	)
Balance at July 31, 2023		13,760,000		1,376		2,240,000		224		—		417,771			346,162			765,533
Net income		—		—		—		—		—		91,465			13			91,478
Issuance of common stock - IPO		2,500,000		250		—		—		8,716,142		—			—			8,716,392
Balance at October 31, 2023		16,260,000		1,626		2,240,000		224		8,716,142		509,236			346,175			9,573,403
Net income (loss)		—		—		—		—		—		(548,954	)		13,398			(535,556	)
Issuance of common stock		1,190,476		119		—		—		4,597,381		—			—			4,597,500
Balance at January 31, 2024		17,450,476	$	1,745		2,240,000	$	224	$	13,313,523	$	(39,718	)	$	359,573		$	13,635,347

The accompanying notes are an integral part of these unaudited consolidated financial statements.

MAISON SOLUTIONS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended January 31,
	2025			2024
Cash flows from operating activities
Net income (loss) before noncontrolling interest	$	1,296,896		$	(470,802	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expense		779,593			274,476
Inventory impairment (reversal)		342,472			(1,088	)
Bad debt expense (reversal)		29,493			(105,322	)
Investment loss		504,100			63,982
Changes in deferred taxes		(58,288	)		(6,135	)
Changes in operating assets and liabilities:
Accounts receivable		24,918			(440,985	)
Accounts receivable - related parties		5,971			(219,260	)
Inventories		(4,197,132	)		(40,147	)
Prepayments		268,713			1,065,243
Other receivables and other current assets		642,097			124,182
Security deposits		(12,000	)		—
Accounts payable		5,107,110			(1,451,371	)
Accounts payable - related parties		136,494			128,599
Accrued expenses and other payables		88,366			(9,454	)
Income tax payable		1,220,635			108,247
Contract liabilities		(195,957	)		(141,009	)
Operating lease liabilities		396,548			227,728
Other long-term payables		6,114			5,677
Net cash provided by (used in) operating activities		6,386,143			(887,439	)

Cash flows from investing activities
Payments for equipment purchase		(154,427	)		(9,656	)
Payment for leasehold improvement of the supermarket		—			(307,427	)
Payments of intangible assets purchase		—			(2,950,000	)
Investment into TMA Liquor Inc		—			(75,000	)
Investment into HKGF Market of Arcadia, LLC		(62,000	)		(1,800,000	)
Net cash used in investing activities		(216,427	)		(5,142,083	)

Cash flows from financing activities
Bank overdraft		1,200,983			—
Borrowing from related parties		21,238			—
Loan to related party		(65,000	)		—
Repayment of loan payables		(48,624	)		(297,510	)
Repayment of notes payable		—			(150,000	)
Repayment of notes payable arising from acquisition of Lee Lee		(6,834,057	)		—
Net proceeds from issuance of common stock		—			13,313,892
Net cash provided by (used in) financing activities		(5,725,460	)		12,866,382

Net changes in cash and restricted cash		444,256			6,836,860
Cash and restricted cash at the beginning of the period		1,101			2,570,867
Cash and restricted cash at the end of the period	$	445,357		$	9,407,727

Supplemental disclosure of cash and restricted cash
Cash		445,357		$	9,406,626
Restricted cash		—			1,101
Total cash and restricted cash	$	445,357		$	9,407,727

Supplemental disclosure of cash flow information
Cash paid for interest	$	694,826		$	81,369
Cash paid for income taxes	$	116,369		$	322,610

The accompanying notes are an integral part of these unaudited consolidated financial statements.

MAISON SOLUTIONS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 31, 2025 (UNAUDITED) AND APRIL 30, 2024

1. Organization

Maison Solutions Inc. (“Maison”, the “Company”, and formerly known as “Maison International Inc.”) was founded on July 24, 2019 as an Illinois corporation with its principal place of business in California. In September 2021, the Company was redomiciled in the State of Delaware as a corporation registered under the laws of the State of Delaware.

Immediately upon formation, the Company acquired three retail Asian supermarkets with two brands (Good Fortune and Hong Kong Supermarkets) in Los Angeles, California and rebranded them as “HK Good Fortune Supermarkets.” Upon completion of these acquisitions, these entities became controlled subsidiaries of the Company (hereafter collectively referred to as “Maison Group”).

●

In July 2019, the Company purchased 91% of the equity interests in Good Fortune Supermarket San Gabriel, LP (“Maison San Gabriel”) and 85.25% of the equity interests in Good Fortune Supermarket of Monrovia, LP (“Maison Monrovia”), each of which owns a Good Fortune Supermarket.

●

In October 2019, the Company purchased 91.67% of the equity interests in Super HK of El Monte, Inc. (“Maison El Monte”), which owns a Hong Kong Supermarket.

●

On June 30, 2022, the Company purchased 100% equity interest in GF Supermarket of MP, Inc. (“Maison Monterey Park”), the legal entity holding a supermarket in Monterey Park.

On November 3, 2023, the Company incorporated a wholly-owned subsidiary, AZLL LLC (“AZLL”), in Arizona. On April 8, 2024, AZLL closed an acquisition transaction and purchased 100% of the equity interests in Lee Lee Oriental Supermart, Inc. (“Lee Lee”) for an aggregate purchase price of approximately $22.2 million, consisting of: (i) $7.0 million in cash paid immediately at the closing of the transaction, and (ii) a senior secured promissory note (the “Secured Note”) with an original principal amount of approximately $15.2 million pursuant to a senior secured note agreement dated April 8, 2024 and amended on October 21, 2024 (as amended, the “Senior Secured Note Agreement”). Lee Lee is a three-store supermarket chain operating in Arizona under the name Lee Lee International Supermarkets and specializing in South-East groceries.

The Company, through its five subsidiaries, engages in the specialty grocery retailer business. The Company is a fast-growing specialty grocery retailer offering traditional Asian food and merchandise to U.S. consumers, in particular to Asian-American communities.

2. Summary of significant accounting policies

Liquidity

As reflected in the accompanying consolidated financial statements, for the three and nine months ended January 31, 2025, the Company had a net income of $1,011,763 and $1,456,662, respectively. However, the Company had an accumulated deficit of approximately $1.36 million and negative working capital of $14.28 million as of January 31, 2025. The Company also need approximately $8.3 million cash to repay Lee Lee's acquisition price, the acquisition was completed on April 8, 2024. The working capital requirements are affected by the efficiency of operations and depend on the Company’s ability to increase its revenue. The Company plans to increase its revenue by strengthening its sales force, providing attractive sales incentive programs, recruiting experienced industry-related managerial personnel, increasing marketing and promotion activities, seeking suppliers with competitive price and good quality products, opening or acquiring additional specialty supermarkets in the locations that have less-competition.

The Company believes that its cash on hand and operating cash flows will be sufficient to fund its operations over at least the next 12 months from the date of issuance of these financial statements. However, the Company may need additional cash resources in the future if the Company experiences changed business conditions or other developments and may also need additional cash resources in the future if the Company wishes to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed the Company’s amounts of cash on hand, the Company may seek to issue debt or equity securities or obtain a credit facility.

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”).

The interim consolidated financial information as of January 31, 2025 and for the three and nine months periods ended January 31, 2025 and 2024 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. The interim consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2024, previously filed with the SEC on August 13, 2024.

Principles of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries and, when applicable, entities for which the Company has a controlling financial interest. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.

Noncontrolling interests

The Company follows the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” governing the accounting for and reporting of noncontrolling interests (“NCI”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCI be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary be allocated to noncontrolling interests even when such allocation might result in a deficit balance.

The net income attributed to NCI was separately designated in the accompanying statements of operations. Losses attributable to NCI in a subsidiary may exceed a NCI’s interests in the subsidiary’s equity. The excess attributable to NCI is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCIs balance.

As of January 31, 2025 and April 30, 2024, the Company had NCIs of $61,356 and $221,123, respectively, which represent 9% of the equity interest of Maison San Gabriel, 14.75% of the equity interest of Maison Monrovia and 8.33% of the equity interest of Maison El Monte. For the three months ended January 31, 2025 and 2024, the Company had net loss of $16,598 and net income of $13,398 respectively, that were attributable to NCIs. For the nine months ended January 31, 2025 and 2024, the Company had net loss of $159,766 and net income of $91,626, respectively, that were attributable to NCIs.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates are used for, but not limited to, useful lives of property and equipment, commitments and contingencies, inventory reserve, allowance for estimated uncollectable accounts receivable and other receivables, impairment of long-lived assets, contract liabilities and valuation of deferred tax assets.

Cash and cash equivalents

Cash and equivalents include cash on hand, demand deposits and short-term cash investments that are highly liquid in nature and have original maturities when purchased of three months or less. The Company’s cash is maintained at financial institutions in the United States of America. Deposits in these financial institutions may, from time to time, exceed the Federal Deposit Insurance Corporation (“FDIC”)’s federally insured limits. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. The bank deposits exceeding the standard insurance amount will not be covered. As of January 31, 2025 and April 30, 2024, cash balances held in the banks, exceeding the standard insurance amount, are $9,404 and $862,613, respectively. The Company has not experienced any losses in accounts held in these financial institutions and believes it is not exposed to any risks on its cash held in these financial institutions.

Restricted cash

Restricted cash is an amount of cash deposited with banks in conjunction with borrowings from banks. Restriction on the use of such cash and the interest earned thereon is imposed by the banks and remains effective throughout the terms of the bank borrowings and notes payable. Restricted cash is classified as non-current assets on the Company’s consolidated balance sheets, as all the balances are not expected to be released to cash within the next 12 months. As of January 31, 2025 and April 30, 2024, the Company had restricted cash of $0 and $1,101, respectively.

Credit losses

On May 1, 2023, the Company adopted Accounting Standards Update 2016-13 “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements as of May 1, 2023.

The Company’s account receivables, prepayments, other receivables and other current assets in the balance sheet are within the scope of ASC Topic 326. As the Company has limited customers and debtors, the Company uses the loss-rate method to evaluates the expected credit losses on an individual basis. When establishing the loss rate, the Company makes the assessment on various factors, including historical experience, creditworthiness of customers and debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the customers and debtors. The Company also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.

Expected credit losses are recorded as allowance for credit losses on the consolidated statements of operations. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. In the event the Company recovers amount that is previously reserved for, the Company will reduce the specific allowance for credit losses.

Accounts receivable

The Company’s accounts receivable arises from product sales. The Company does not adjust its receivables for the effects of a significant financing component at contract inception if it expects to collect the receivables in one year or less from the time of sale. The Company does not expect to collect receivables greater than one year from the time of sale.

The Company’s policy is to maintain an allowance for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. As of January 31, 2025 and April 30, 2024, there was no allowance for credit losses.

Accounts receivable — related parties

Accounts receivable consist primarily of receivables from related parties on 30-day credit terms and are presented net of an allowance for estimated uncollectible amounts. The Company periodically assesses its accounts receivable for collectability on a specific identification basis. If collectability of an account becomes unlikely, an allowance is recorded for that doubtful account. Once collection efforts have been exhausted, the accounts receivable is written off against the allowance. As of January 31, 2025 and April 30, 2024, the allowance for credit losses was $29,493 and $0, respectively.

Prepayments

Prepayments are mainly comprised of cash deposited and advanced to suppliers for future inventory purchases and services to be performed. This amount is refundable and bears no interest. For any prepayments that management determines will not be in receipts of inventories, services, or refundable, the Company recognizes an allowance account to reserve such balances. Management reviews its prepayments on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of January 31, 2025 and April 30, 2024, the Company had made prepayments to its vendors of $2,994,998 and $3,263,711, respectively. The Company’s management continues to evaluate the reasonableness of the allowance policy and update it if necessary.

Other receivables and other current assets

Other receivables and other current assets primarily include non-interest-bearing loans of the other business entities, mainly the Company’s major vendors. Management regularly reviews the aging of receivables and changes in payment trends and records allowances when management believes collection of amounts due are at risk. Management reviews the composition of other receivables and analyzes historical bad debts, and current economic trends to evaluate the adequacy of the reserves. Accounts considered uncollectable are written off against allowances after exhaustive efforts at collection are made. As of January 31, 2025 and April 30, 2024, the Company did not have any bad debt allowance for other receivables.

Inventories, net

Inventories consisting of finished goods and products available for sale are primarily accounted for using the first-in, first-out method. Merchandise inventories are valued at the lower of cost or net realizable value. This valuation requires the Company to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, liquidations, and expected recoverable values of each disposition category. The Company recorded inventory shrinkage based on the historical data and management’s estimates and provides a reserve for inventory shrinkage for the three and nine months ended January 31, 2025 and 2024. The Company provided a reserve (reversal) for inventory shrinkage of $27,639 and $2,471 for the three months ended January 31, 2025 and 2024. The Company provided a reserve (reversal) for inventory shrinkage of $342,472 and $(1,088) for the nine months ended January 31, 2025 and 2024.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over the estimated useful lives of the individual assets.

SEC Form 10-Q filed by Maison Solutions Inc.