MSS 10-K & 10-Q changes, risk factors and insider trading

In April 2021, we entered into a series of agreements with JD US. Under these agreements, we and JD US agreed that JD US will assist us in upgrading our store management system and improving our product inventory with JD.com’s first tier product sourcing capacity in China. We also expect to benefit from JD.com’s brand name by co-branding our new stores. However, our partnership with JD US is at a very early stage and our success will depend on the long term cooperation with JD US. There is no guarantee that JD US will not terminate its cooperation with us before our business cooperation comes to fruition and there is no guarantee that our business cooperation will come to a successful fruition. Pursuant to our Collaboration Agreement with JD US (the “Collaboration Agreement”),US, either party may terminate the Collaboration Agreement by giving notice in writing to the other party if the other party commits a material breach of agreement or the other party suffers an Insolvency Event (as defined in the Collaboration Agreement).

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 HMartH Mart for traditional supermarkets and Weee! for online groceries. Each of these stores competes with us on the basis of product selection, product quality, customer service, price, store format, and location, or a combination of these factors. In addition, some competitors are aggressively expanding their number of stores or their product offerings. Many of these competitors may have been in business longer or may have more experience operating multiple store locations or may have greater financial or marketing resources than we do and may be able to devote greater resources to sourcing, promoting and selling their products. As competition in certain areas intensifies or competitors open stores within close proximity to one of our stores, our results of operations may be negatively impacted through a loss of sales, decrease in market share, reduction in margin from competitive price changes or greater operating costs. In addition, other established food retailers could enter our markets, increasing competition for market share.

The inflation rate for the United States was 2.3% for the year ended April 30, 2025, 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, 20222024 according to Bureau of Labor Statistics. Inflation increased our purchase costs, occupancy costs, and payroll costs.

As of April 30, 2024,2025, we had approximately 355378 employees including employees from our newly acquired subsidiarysubsidiary, Lee Lee.Lee, which is based in the State of Arizona. Our employees are not unionized nor, to our knowledge, are there any plans for them to unionize. We have never experienced a strike or significant work stoppage. We consider our employee relations to be good. Minimum wage rates in some states have recently increased. For example, in California, the minimum wage was $15.50 per hour in 2023 and increased to $16.50 per hour starting from January 1, 2025; in Arizona, the minimum wage was $13.85 per hour in 2023, and increased to $16$14.35 per hour starting from January 1, 2024. Our payroll and payroll tax expenses were $7.4 $15.0 million and $6.2 $7.4 million for the years ended April 30, 20242025 and 2023,2024, respectively.

Maison believes that a centralized and efficient vendor and supply management system is the key to profitability. Maison has major vendors, including ONCOLawrence Wholesale, Food Corp.,BRC International Inc, XHJC Holding Inc, K.C. Produce and GF Distribution, Inc., and XHJC Holding Inc. For the year ended April 30, 2024,2025, these three five suppliers accounted for 15%,11%, 7%7%, 7%, 5%, and 26% 4% of the Company’s total purchases, respectively. For the year ended April 30, 2023, 2024, three suppliers accounted for 20%,26%, 14%,15% and 18% 7% 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.

From time to time, Maison conducts maintenance on the fixtures and equipment for its stores. Any maintenance or renovations could interrupt the operation of our stores and result in a decline in customer volume. Significant maintenance or renovation would affect our operations and operating results. Meanwhile, improving the store environment can also attract more customers and lead to an increase in sales. Maison focused on improving and renovating our stores for the years ended April 30, 20242025 and 2023.2024. We spent $201,608$0.86 million (including $0.48 million for Lee Lee) for the year ended April 30, 2025 for repairs and maintenance and supermarket renovation, an increase of $0.66 million compared to $0.20 for the year ended April 30, 2024 formainly repairs anddue maintenanceto andthe supermarket renovation, a decreaseacquisition of $71,797our comparednew tosubsidiary $273,405Lee for the year ended April 30, 2023.Lee.

As reflected in the accompanying consolidated financial statements for the year ended April 30, 2025, the Company had a net income of $1,169,273. However, the Company had an accumulated deficit of approximately $1.65 million and negative working capital of $9.82 million as of April 30, 2025. The Company also needs approximately $5.64 million cash to repay Lee Lee’s acquisition price by May 2026, 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. If deemed necessary, management could also seek to raise additional funds by way of admitting strategic investors, or private or public offerings, or by seeking to obtain loans from banks or others, to support the Company’s daily operation. While management of the Company believes in the viability of its strategy to generate sufficient revenues and its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern depends upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its initiatives or attain profitable operations. If the Company is unable to raise additional funding to meet its working capital needs in the future, it may be forced to delay, reduce or cease its operations.

Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The Company records inventory shrinkage based on historical data and management’s estimates and provided a reserve for inventory shrinkage for the fiscal years ended April 30, 20242025 and 2023.2024. The Company provided a reserve (reversal) for inventory shrinkage of $276,900 and $(5,961) for the years ended April 30, 2025 and 2024, respectively .

Cost of revenue includes the purchase price of consumer products, inbound and outbound shipping costs, including costs related to our sorting and delivery center, which is the warehouse attached to the El Monte store, and where we are the transportation service provider. Shipping costs to receive products from our suppliers are included in our inventory and recognized in cost of revenues upon sale of products to our customers.

Our net revenues were approximately $124.2 million for the year ended April 30, 2025, an increase of approximately $66.2 million or 114.0%, from 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, 2023.2024. The increase in net revenues was driven by the inclusion of revenues from our newly acquired subsidiarysubsidiary, Lee Lee (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$78.2 million, which was partly offset by decreased sales of Maison Monterey Park by $2.3 million, decreased sales of Maison San Gabriel by $3.3$2.9 million, decreased sales of Maison Monrovia by $1.6$1.5 million and decreased sales of Maison El Monte by $1.5$0.6 million, as compared to the year ended April 30, 2023.2024. Our existingfour four (4)California-based supermarkets contributed $53.4 $46.1 million in revenue during the year ended April 30, 2024,2025, a decrease of approximately $2.0$7.3 million, as compared to the year ended April 30, 2023.2024. The $2.0$7.3 million decrease was mainly due to increasedhigh competition from newly openednearby Asian supermarkets nearas Maisonthere Sanare Gabriel,too effectmany fromsupermarkets including endingAsia supermarkets in the surrounding area of certainour Covid-9 pandemic-era relief programs in fall 2023 such as losing access to foods stamps due to resume of work requirement for food stamps, as well as temporary slow-down of Maison El Monte store due to renovation.stores.

Cost of revenues includes cost of supermarket product sales and occupancy costs, which are store rent expense, depreciation for store property and equipment, inventory shrinkage costs and store supplies. The depreciation expense comes from machinery & equipment, such as refrigerators, water heaters, forklifts, and freezers and furniture & fixtures, such as metal shelves, shopping carts, and LED lights. Shrinkage costs are different for different types of products. For example, fruits and vegetables have a high allowance rate during the receiving and display process. The seafood and meat departments have a low allowance rate because the non-fresh products can freeze and sell for the same price or even higher price after being cut. The cost of revenues increased by $3.5$51.5 million, from $42.9 million for the year ended April 30, 2023, to approximately $46.4 million for the year ended April 30, 2024, 2024.to approximately $97.9 million for the year ended April 30, 2025. The increase in cost of revenues was mainly duefrom to increase in our revenue,newly increase in inventory shrinkage costs by $0.6 million due to write-off inventory fromacquired subsidiary, Lee Lee after(acquired wein tookApril over,2024), andby increased occupancy$60.9 million, which was partly offset by decreased cost byof $0.9revenues million due to increased monthly rent offrom our existingfour California-based supermarkets andby occupancy$5.8 costs from Lee Lee.million.

Gross profit was approximately $11.6$26.3 million and $12.5$11.6 million for the years ended April 30, 20242025 and 2023,2024, respectively. Gross margin was 20.0%21.3% and 22.5%20.0% for the yearsyear ended April 30, 20242025 and 2023,2024, respectively. Our supermarkets’ sales profit margins decreasedincreased by 2.5%1.3% for the year ended April 30, 20242025 compared to the year ended April 30, 2023.2024. The decreaseincrease in our gross profit was mainly due to the increasehigher ingross inventoryprofit write-offfrom our new andacquired increasesubsidiary inLee supermarkets rent as described above.Lee.

Total operating expenses were approximately $27.6 million for the year ended April 30, 2025, an increase of approximately $13.3 million, compared to 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, 2023.2024. Total operating expenses as a percentage of revenues were 24.7%22.3% and 22.3%24.7% for the years ended April 30, 20242025 and 2023,2024, 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.charges as result of the acquisition of Lee Lee. Payroll expense increased by $1.2$7.6 million in the year ended April 30, 2024,2025, as compared to the year ended April 30, 20232024 due to the increase of hourly rate and increased number of employees due to the acquisition of Lee Lee. Utility expense expenses increased by $0.2 $0.9 million in the year ended April 30, 2024,2025, as compared to the year ended April 30, 2023.2024. AdvertisingMerchant andservice promotioncharges expense increased by $79,971$1.1 million in the year ended April 30, 2024,2025, as compared to the year ended April 30, 2023. 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, 20232024 due to increased sales from Lee Lee as describe above.

The increase in general and administrative expenses during the year ended April 30, 20242025 was primarily due to increased office expenses of approximately $459,270,$554,386, increased professional feefees by $231,645$1.2 andmillion, increased amortization expense ofby $156,475$390,681 due to the new trademark acquired through the acquisition acquisition of Lee Lee, which was partly offset by decreased bad debt expenses by $359,035, decreasedincreased insurance expense by $31,609,$403,442, decreasedincreased repair and maintenance expense by $71,797,$648,967, and decreaseincreased otheroffice expenses miscellaneousand expensessupplies by $103,611.$582,033.

Interest expense was $124,260 for the year ended April 30, 2024, an increase of $166,866, from interest income of $42,606$1,167,895 for the year ended April 30, 2023.2025, an increase of $1,043,635 from $124,260 for the year ended April 30, 2024. For the year ended April 30, 2025, the interest expense was for the SBA loans and note payable arising from the acquisition of Lee Lee. For the year ended April 30, 2024, the interest expense was for the SBA Loansloans and the AFNB Loans.loans. The interestAFNB incomeloans for the year ended April 30, 2023 was from the loan receivables from Drop in the Ocean, Inc, which waswere repaid in full as of April 30, 2023.2024.

Net lossincome attributable to the Company was $3,340,206$1,169,273 for the year ended April 30, 2024,2025, an increase of $4,592,009,$4,509,479, or 366.8%,135.0%, from a $1,251,803$3,340,206 net incomeloss attributable to the Company for the year ended April 30, 2023.2024. This was mainly attributable to the reasons discussed above, which included aan decreaseincrease in gross profit by $830,063,$14,721,454 decreasedmainly from Lee Lee store, and increased 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,$3,623,198, which was partly offset by increased interest net loss attribute to noncontrolling interestexpenses by $434,321.$1,043,635, and increased operating expenses by $13,282,454.

As of April 30, 2024,2025, we had cash,cash and cash equivalents and restricted cash of approximately $1,101.$775,360. We had net lossincome attributable to us of $3,340,206$1,169,273 for the year ended April 30, 2024,2025, and had a working capital deficit of approximately $16.9$9.82 million as of April 30, 2024.2025. As of April 30, 2024,2025, the Company had outstanding loan facilities of approximately $2.56$2.62 million SBA loanloans, and $15.1$5.64 million secured senior note payable due to the acquisition of Lee Lee.Lee, and $3.00 million convertible note payable.

On November 22, 2023, we entered into certain securities purchase agreements (the “Securities Purchase Agreements”) with certain investors (the “PIPE Investors”). Pursuant to the Securities Purchase Agreements, we sold an aggregate of 1,190,476 shares of the Company’s Class A common stock, par value $0.0001 per share, to the PIPE Investors at a per share purchase price of $4.20 (the “PIPE Offering”). The PIPE Offering closed on November 22, 2023. We received net proceeds of approximately $4.60 million, after deducting investment banker’s discounts and commissions and offering expenses payable by the Company.

We plan to acquire and open additional supermarkets, satellite stores and warehouses to expand our footprint to both the West Coast and the East Coast. To accomplish such expansion plan, we estimate the total related capital investment and expenditures to be approximately $35 million to $40 million, among among which approximately $13 million to $16 million will be required within the next 12 months to support our preparation and and opening of new stores in Southern and Northern California and acquiring additional supermarkets on the East Coast.Coast and additional regions near California. This is based on the management’s best estimate as of the date of this Report.

Net cash usedprovided by operating operating activities was approximately $3.5$4.8 million for the year ended April 30, 2024,2025, which mainly comprised of net lossincome of $3,387,029,$920,909, add-back add-back of non-cash adjustmentadjustments to net lossincome including depreciation and amortization expense of $461,868,$1,035,485, inventory impairment of $276,900, bad debt expense of $29,493, amortization of OID and debt issuance cost of $55,417, and investment loss from 49% equity investee HKGF Arcadia store of $538,542.$474,964 and investment loss from 10% cost investee HKGF Alhambra store of $40,775. In addition, for the year ended April 30, 2024,2025, we had cash outflowinflow from 1(i) decrease to other receivables and other current assets of $545,843, (ii) decrease to prepayments of $824,229, (iii) decrease of inventories of $770,431, (iv) increased outstanding accounts receivablepayable of $2,657,601 (including accounts payable from related parties of $271,461,$65,767), 2) increased prepayment to vendors of $1,716,468, 3(v) increased outstanding other receivables and other current assets of $474,943, 4) increased cash outflow on security deposit of $488,717, 5) payment for accounts payable of $59,633, and 6) payment of income tax payable of $518,516.$218,890, (vi) increased operating lease liabilities of $513,802, and (vii) increased accrued expenses and other payables of $138,581.

However, our net cash provided by operating activities for the year ended April 30, 20232025 was mainly offsetimpacted by subtracting adeducting non-cash adjustmentadjustments from net income forincluding change reversalin fair value of inventoryderivative reserve liability of $0.1$801,988 million,and achange decreasedin deferred taxes by $88,346. In addition, for the year ended April 30, 2025, we had cash inflowoutflow from ouri) operating activities due to an increase ofincreased outstanding accounts receivable of approximately $0.3$2,546,650, million,ii) 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 forincreased accounts payablereceivable of $0.6 million, an increase of payment forfrom accounts payable to related parties of $0.2 million,$42,753, and aniii) increased payment for accruedcontract liability and other payablesliabilities of $0.5 million.$263,768.

Net cash used in investing activities was approximately $12.2 million $237,355 for the year ended April 30, 2024,2025, which mainly consisted of store renovation and purchase of equipment of $382,132,$175,355 payment of intangible assets of $2.95 million, payment forand investment into HKGF TMA Liquor IncMarket of $75,000,Arcadia, payment for 49% investment into Good Fortune Arcadia supermarketLLC of approximately $1.8 million, and payment for acquisition of subsidiary Lee Lee of $7,000,000.$62,000.

Net cash providedused byin investing activities was approximately $1.9 million$10,132,834 for the year ended April 30, 2023,2024, which mainly consisted of loanstore repaymentrenovation from third parties of approximately $4.4 million. This was partially offset with theand purchase of equipment of $49,388$382,132, payment of intangible assets of $2,950,000, payment for investment into TMA Liquor Inc of $75,000, payment for 49% investment into Good Fortune Arcadia supermarket of $1,800,000, and payment for acquisition of subsidiary MaisonLee Monterey ParkLee of $2.5$7,000,000, million.which was partly offset by cash acquired from acquisition of Lee-Lee of $2,074,298.

Net cash providedused byin financing activities was approximately $13.1 million$5,818,814 for the year ended April 30, 2024,2025, 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 arising from the acquisition of $150,000.Lee Lee of $9,484,005, which was partially offset by increase of bank overdraft of $1,349,202 and proceeds from a convertible note of $2,335,000.

Net cash usedprovided inby financing activities was approximately approximately $0.7 million$13,140,512 for the year ended April 30, 2023,2024, which mainly consisted of banknet overdraftsproceeds from issuance of $281,941,common stock of approximately $13,313,892, bank overdraft of $97,445 and borrowing from related parties $250,000, which was partially offset by repayment on loans payable of $362,731,$370,825 million, and repayment tofor relateda partiesnote payable of $101,965.$150,000.

On JanuaryJune 12,15, 2022,2020, Maison MaisonMonrovia Sanentered Gabrielinto receiveda an$150,000 extraBusiness $1,850,000Loan fundAgreement fromwith the SBA at 3.75% annual interest rate and the maturity date on June 15, 2050. Maison El Monte received an extra $350,000 from the SBA at 3.75% annual interest rate and the maturity date on June 15, 2050.

On April 8, 2024, AZLL closed an acquisition transaction and purchased 100% of the equity interests in Lee Lee for an aggregate purchase price of approximately $22.2 million, consisting of: (i) $7.0 million in cash paid immediately at the closing of the Transaction,transaction, and (ii) athe seniorSecured secured note agreementNote with an original principal amount of approximately $15.2 million enteredpursuant onto Aprilthe 8,Senior 2024.Secured Note Agreement.

Under the seniorSenior secured noteSecured agreement,Note Agreement, the Secured Note will accrue interest on the outstanding principal amount at an annual interest rate of five percent (5%). The payment schedule of the principal amount of the securedSecured noteNote is as follows: (i) $2.5 million due and immediately payable on each of May 8, 2024 and June 8, 2024; (ii) $1.5 million due and immediately payable on each of September 8, 2024, October 8, 2024 and November 8, 2024; (iii) $1.0 million due and immediately payable on December 8, 2024; and (iv) approximately $4.7 million due and immediately payable on February 8, 2025. Additionally, pursuant to the terms and conditions of the seniorSenior securedSecured noteNote agreement,Agreement, the principal amount may be adjusted to include certain Premium Guarantees (as defined in the seniorSenior securedSecured noteNote agreementAgreement) if certain conditions, as set forth in the seniorSenior Secured securedNote note agreementAgreement and the purchaseStock agreement,Purchase Agreement, are not met.

As of April 30, 2024,2025, the Company had an outstanding note payable of $15,126,065$5,642,060 to the sellers of Lee LeeLee. withThe an annual interest rate of 5%, the Company is required to repay the full amount before FebruaryMay 8,11, 2025 as described above.2026.

On April 8, 2024, in connection with the execution of the Senior Secured Note Agreement, and pursuant to the Stock Purchase Agreement, AZLL entered into a guarantee (the “PurchaserAZLL Guarantee”) to and for the benefit of the Sellers, pursuant to which AZLL unconditionally guarantees the payment by Lee Lee of the Principalprincipal Amount,amount of the Secured Note, as adjusted pursuant to the Secured Note and the faithful and prompt performance by Lee Lee of the conditions and covenants of the Secured Note.

Also on April 8, 2024, in connection with the execution of the Senior Secured Note Agreement, and pursuant to the Stock Purchase Agreement, John Jun Xu, Chairman, Chief Executive Officer and controlling stockholder of the Company, and Grace Xu, spouse of John Jun Xu (together with John Jun Xu, the “Xu Guarantors”), entered into a guarantee (the “Xu Guarantee” and, together with the Purchaser AZLL Guarantee, the “Guarantees”) to and for the benefit of the Sellers, pursuant to which the Xu Guarantors unconditionally guarantee the payment by Lee Lee of the Principalprincipal amount Amount,of the Secured Note, as adjusted pursuant to the Secured Note and the faithful and prompt performance by Lee Lee of the conditions and covenants of the Secured Note.

On June 27, 2023, we invested $1,440,000 for 40% equity interest in HKGF Market of Arcadia, LLC (“HKGF Arcadia”), a supermarket in the city of Arcadia, California, to further expand our footprint to new neighborhood. On December 6, 2023, we invested an additional $360,000 for another 10% equity interest in HKGF Arcadia. On February 1, 2024, the Company and JC Business Guys, Inc., the only other member of HKGF Arcadia (“JC Business Guys”), entered into a third amendment to the operating agreement of HKGF Arcadia to decrease our percentage equity interest in HKGF Arcadia to 49% and increase JC Business Guy’s percentage equity interest to 51%. As a result of the amendment, we made an additional investment of $62,000. During the three and sixnine months ended OctoberJanuary 31, 2025,2026, thewe Company recorded nil and $848,493 impairment charges for itsour investments in HKGF Market of Arcadia. On January 31, 2026, Maison sold its 49% ownership interest in HKGF Market of Arcadia due to the Company’sexisting planshareholder of closingfor the supermarket business in this location.$1.

The inflation rate for the United States was 2.4% for the nine months ended January 31, 2026, 3.0% for the sixnine months ended October January 31, 2025, 2.6% for the six months ended October 31, 20242025 according to Bureau of Labor Statistics. Inflation increased our purchase costs, occupancy costs, and payroll costs.

As of OctoberJanuary 31, 2025,2026, we had approximately 334329 employees including employees from our newly acquired subsidiary, Lee Lee, which is based in the State of Arizona. Our employees are not unionized nor, to our knowledge, are there any plans for them to unionize. We have never experienced a strike or significant work stoppage. We consider our employee relations to be good. Minimum wage rates in some states have recently increased. For example, in California, the minimum wage was $16.00$16.50 per hour in 20242025 and increased to $16. 50$16.90 per hour starting from January 1, 20252026; in Arizona, the minimum wage was $14.35$14.70 per hour in 2024,2025, and increased to $14.70$15.15 per hour starting from January 1, 2025.2026. Our payroll and payroll tax expenses were $3.04$3.75 million and $3.89$3.26 million for the three months ended OctoberJanuary 31, 20252026 and 2024,2025, respectively. Our payroll and payroll tax expenses were $6.87$10.62 million and $7.33$10.59 million for the sixnine months ended OctoberJanuary 31, 20252026 and 2024,2025, respectively.

Maison believes that a centralized and efficient vendor and supply management system is the key to profitability. Maison has major vendors, including including Lawrence Wholesale, Lucky Taro Total, Connex All Produce Total, and Gulf Cost Sea Trade Crop. For the three months ended October January 31, 2025, 2026, these four suppliers accounted for 11.59%,12.46%, 9.38%,7.70%, 6.95%6.94% and 4.70% of the Company’s total purchases, respectively. For the six months ended October 31, 2025, these four suppliers accounted for 11.05%, 6.52%, 4.83% and 5.23% of the Company’s total purchases, respectively. For the three and six months ended October 31, 2024, Maison has major vendors, including Lawrence Wholesale, XHJC Holding Inc, K.C. Produce, and Bach Cuc. For the three months ended October 31, 2024, these four suppliers accounted for 14.23%, 6.84%, 6.60% and 6.39%6.21% of the Company’s total purchases, respectively. For the sixnine months ended OctoberJanuary 31, 2024,2026, these four suppliers accounted for 11.66%,11.53%, 8.78%,6.92%, 5.51%5.54% and 8.83%5.56% of the Company’s total purchases, respectively. For the three and nine months ended January 31, 2025, Maison has major vendors, including Lawrence Wholesale, XHJC Holding Inc, K.C. Produce, and Bach Cuc. For the three months ended January 31, 2025, these four suppliers accounted for 5.39%, 2.20%, 3.21% and 6.30% of the Company’s total purchases, respectively. For the nine months ended January 31, 2025, these four suppliers accounted for 9.21%, 6.24%, 4.60% and 7.81% 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.

From time to time, Maison conducts maintenance on the fixtures and equipment for its stores. Any maintenance or renovations could interrupt the operation of our stores and result in a decline in customer volume. Significant maintenance or renovation would affect our operations and operating results. Meanwhile, improving the store environment can also attract more customers and lead to an increase in sales. Maison focused on improving and renovating our stores. We spent $0.23$0.18 million for the three months ended OctoberJanuary 31, 20252026 for repairs and maintenance and supermarket renovation, ana increasedecrease of $0.09$0.01 million compared to $0.14$0.19 million for the three months ended OctoberJanuary 31, 2024. 2025. We spent $0.47$0.65 million for the sixnine months ended OctoberJanuary 31, 20252026 for repairs and maintenance and supermarket renovation, aan decreaseincrease of $0.04$0.03 million compared to $0.43$0.62 million for the sixnine months ended OctoberJanuary 31, 2024.2025.

As reflected in the accompanying unaudited consolidated financial statements, for the sixnine months ended OctoberJanuary 31, 2025,2026, the Company had a net loss of $5,973,499$11,187,992 from continuing operation. The Company had an accumulated deficit of $8.2$13.4 million and negative working capital of $4.19$6.21 million as of OctoberJanuary 31, 2025.2026.

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.

Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The Company records inventory shrinkage based on historical data and management’s estimates and provided a reserve for inventory shrinkage for the three and sixnine months ended OctoberJanuary 31, 20252026 and 2024.2025. The Company provided a reserve for inventory shrinkage (reversal) of $6,084$(31,114) and $110,229$27,639 for the three months ended OctoberJanuary 31, 20252026 and 2024, 2025, respectively. The Company provided a reserve for inventory shrinkage of $221,678$190,564 and $314,833$342,472 for the sixnine months ended October January 31, 20252026 and 2024,2025, respectively.

The Company’s contract liability related to gift cards was $631,610$591,454 and $701,929 as of OctoberJanuary 31, 20252026 and April 30, 2025, respectively.

Instruments classified as derivative liability is remeasured using the Black-Scholes model at each reporting period (or upon reclassification) and the change in fair value is recorded on the consolidated statement of operations. The Company had derivative liability of $2,462,150$3,278,000 and $1,004,230 as of OctoberJanuary 31, 20252026 and April 30, 2025, respectively.

Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. As of OctoberJanuary 31, 2025 2026 and April 30, 2025, the Company has level 2 fair value calculations on derivative liability.

The following is the change in derivative liability for the three months ended OctoberJanuary 31, 20252026:

The following is the change in derivative liability for the sixnine months ended OctoberJanuary 31, 2025:

The Company determines and records the fair value of its digital assets in accordance with ASC 820, Fair Value Measurement (“ASC 820”), based on quoted prices on the active exchange(s) that the Company has determined is the principal market for such assets (Level I inputs). The Company determines the cost basis of its digital assets using the specific identification of each unit received. Realized and unrealized gains and (losses) are recorded to other income (expense), net in the Company’s consolidated statement of operations. See Note 7 - Digital Assets, Net, for further information regarding digital assets.

During the three and sixnine months ended OctoberJanuary 31, 2025,2026, the Company purchased digital assets. The table below summarizes the amounts shown on the Company’s consolidated balance sheet as of OctoberJanuary 31, 2025.2026.

Results of Operations for the Three Months Ended OctoberJanuary 31, 20252026 and 20242025

Our net revenues were approximately $27.6$29.5 million for the three months ended OctoberJanuary 31, 2025,2026, a decrease of approximately $1.7$2.8 million or 5.9%,8.6%, from approximately $29.4$32.3 million for the three months ended OctoberJanuary 31, 2024.2025. The decrease in net revenues was driven by decreased sales of Maison Monterey Park by $0.8$1.1 million, decreased sales of Maison Monrovia by $0.1$0.3 million, whichdecreased was partly offset by increased sales of Maison San Gabriel by $0.3$0.6 million and increaseddecreased sales of Lee Lee stores by $0.5$0.8 million, as compared to the three months ended October January 31, 2024.2025. Our California-based supermarkets contributed $8.8 million in revenue during the three months ended OctoberJanuary 31, 2025, 2026, a decrease of approximately $1.2$2.0 million, as compared to the three months ended OctoberJanuary 31, 2024.2025. The $1.3$2.0 million decrease was mainly due to high competition from nearby Asian supermarkets because there are too many supermarkets including Asia supermarkets in the surrounding area of our stores. For the three months ended OctoberJanuary 31, 20252026 and 2024,2025, revenue for Maison El Monte were nil and $1,668,193,$1,829,292, respectively. We closed our Maison El Monte store on June 7, 2025 due to its continuous loss as well as our ongoing commitment to improve its profitability and support sustainable growth.

Cost of revenues includes cost of supermarket product sales and occupancy costs, which are store rent expense, depreciation for store property and equipment, inventory shrinkage costs and store supplies. The depreciation expense comes from machinery & equipment, such as refrigerators, water heaters, forklifts, and freezers and furniture & fixtures, such as metal shelves, shopping carts, and LED lights. Shrinkage costs are different for different types of products. For example, fruits and vegetables have a high allowance rate during the receiving and display process. The seafood and meat departments have a low allowance rate because the non-fresh products can freeze and sell for the same price or even higher price after being cut or sliced. The cost of revenues decreased by $0.3$3.3 million, from $21.5$25.3 million for the three months ended OctoberJanuary 31, 2024,2025, to approximately $21.2$22.0 million for the three months ended OctoberJanuary 31, 2025.2026. The decrease in cost of revenues was mainly from Maison Monrovia, Maison San Gabriel and Maison Monterey Park by $0.2 million, $0.3$0.5 million and $ 0.9 0.6 million respectively, and decreased cost of revenues from Lee Lee stores by $1.6 million, resulting from decreased sales in these stores, which was partly offset by increased cost of revenues fromstores. Lee Lee stores by $0.8 million. For the three months ended OctoberJanuary 31, 20252026 and 2024,2025, Cost of revenue for Maison El Monte were nil and $1,402,060, $1,333,950, respectively.

Gross profit was approximately $6.5$7.5 million and $7.9$7.0 million for the three months ended OctoberJanuary 31, 20252026 and 2024,2025, respectively. Gross margin was 23.4%25.5% and 26.9%21.8% for the three months ended OctoberJanuary 31, 20252026 and 2024,2025, respectively. Our supermarkets’ sales profit margins increased decreased by 3.5%3.7% for the three months ended OctoberJanuary 31, 20252026 compared to the three months ended OctoberJanuary 31, 2024.2025. The decreaseincrease in our gross profit was mainly due to the increase of cost of goods sold dueresulting tofrom the inflation while we kept our products’ selling price at a a constant level or with a minimum increase for certain products in order to be competitive. For the three months ended OctoberJanuary 31, 20252026 and 2024,2025, gross profit for Maison El Monte were nil and $266,133,$495,342, respectively.

Total operating expenses were approximately $7.8$10.4 million for the three months ended OctoberJanuary 31, 2025,2026, an increase of approximately $0.8$4.5 million, compared to approximately $7.0$5.9 million for the three months ended OctoberJanuary 31, 2024.2025. Total operating expenses as a percentage of revenues were 28.3%35.1% and 23.7%18.1% for the three months ended OctoberJanuary 31, 20252026 and 2024,2025, respectively.

The increase in operating expenses was primarily attributable to the increase in general and administrative expenses during the three months ended OctoberJanuary 31, 20252026 was primarily due to stock compensation expense increased by $1.1$0.8 million, increased bad debt expense by $1.9 million, increase office supplies by $0.2 million, increase professional fee by $1.8 million, which was partly offset by decreased insurance expense professionalby $0.1 million, decreased uniform service expense by $98,725,$0.1 decreased bad debt expense by $64,014, decreased office supplier by $63,615 and decreased office expense by $77,233.million.

The increase in operating expense was partially offset by decrease in selling expenses during the three months ended OctoberJanuary 31, 20252026, was primarily due to decreased payrollproperty and employee benefitstax by $356,335,$61,474, which was partly offset by increaseincreased indelivery bank service chargefee by $78,698, increase in utilities expenses by $58,887 and increase in other G&A expenses by $58,644.$15,420.

For the three months ended OctoberJanuary 31, 20252026 and 2024,2025, total operating expenses for Maison El Monte were $7,646$nil and $521,063,$124,437, respectively.

Other expenses were $3,324,260$1,624,446 for the three months ended OctoberJanuary 31, 2025 2026 compared to other expensesincome of $189,395$157,596 for the three months ended October January 31, 2024.2025. For the three months ended OctoberJanuary 31, 2025, 2026, other expenses mainly consisted of 1) change in fair value of derivative liability of $35,914,$992,094, 2) investment loss onfrom notethe conversioninvestment of $2,694,951, an liquor wholesale company for $75,000, 3) unrealized loss on digital assets investment of $882,404,$982,337, which was partly offset by other income of $289,009,$424,985, was mainly from providing comprehensive consulting services focusing on enhancing operational efficiency, optimizing resource allocation, and supporting overall business growth to other non-related supermarkets.

For the three months ended OctoberJanuary 31, 2024,2025, other expenses mainly consisted of investment loss from equity methodequity-method investment of $226,274,HKGF market of Arcadia for $71,023, which was partly offset by other income of $36,879.$228,619.

For the three months ended OctoberJanuary 31, 20252026 and 2024,2025, other incomeexpenses for Maison El Monte were $248,683$199 and $3,104, respectively. For the three months ended October 31, 2025, other income mainly consisted of rent income of $240,000.$3,701.

Interest expense was $620,320$718,833 for the three months ended OctoberJanuary 31, 2025,2026, an increase of $382,246$454,055 from $238,074$264,778 for the three months ended OctoberJanuary 31, 2024.2025. For the three months ended OctoberJanuary 31, 2026, the interest expense was for the SBA loans, bank loan and convertible note. For the three months ended January 31, 2025, the interest expense was for the SBA loans,loans bank loan, convertible note and note payable arising from the acquisition of Lee Lee. For the three months ended October 31, 2024, the interest expense was for the SBA loans and note payable arising from the acquisition of Lee Lee.

For the three months ended OctoberJanuary 31, 20252026 and 2024,2025, interest expense for Maison El Monte were $4,230$84 and $4,306,$4,281, respectively.

We generated net incomeloss from discontinued operation Maison El Monte of $ 241,037$183 and net loss of $ 253,937$92,386 for the three months ended October January 31, 20252026 and 2024, 2025, respectively.

Net loss attributable to the Company from continuing operation was $5,212,923 $5,214,493 for the three months ended OctoberJanuary 31, 2025,2026, an increase of net loss of $5,150,765,$6,318,642, or 8,286.6%,572.3%, from a net lossincome of $62,158 $1,104,149 attributable to the Company for the three months ended OctoberJanuary 31, 2024. 2025. This was mainly attributable to the reasons discussed above, which included a decrease in gross profit by $1,433,815,an increased loss on notechange conversionin fair value of derivative liability by $2,694,951,$992,094, increased unrealized loss on digital assets investment by $882,404$982,337, increased interest expense by $454,055 and increased operating expenses by $849,500.$4,500,457.

Results of Operations for the SixNine Months Ended OctoberJanuary 31, 20252026 and 20242025

Our net revenues were approximately $54.8$84.3 million for the sixnine months ended OctoberJanuary 31, 2025,2026, a decrease of approximately $2.7$5.5 million or 4.8%, 6.1%, from approximately $57.5 $89.8 million for the sixnine months ended OctoberJanuary 31, 2024.2025. The decrease in net revenues was driven by decreased sales of Maison Monterey Park by $1.6$2.7 million, decreased sales of Maison Monrovia by $0.4$0.7 million, decreased sales of Maison San Gabriel by $0.6$1.2 million and decreased sales of Lee Lee stores by $0.2$0.9 million, as compared to the sixnine months ended OctoberJanuary 31, 2024.2025. Our California-based supermarkets contributed $17.5 $26.2 million in revenue during the sixnine months ended OctoberJanuary 31, 2025,2026, a decrease of approximately $2.6$4.6 million, as compared to the six nine months ended OctoberJanuary 31, 2024.2025. The $2.6$4.6 million decrease was mainly due to high competition from nearby Asian supermarkets because there are too many supermarkets including Asia supermarkets in the surrounding area of our stores. For the sixnine months ended October January 31, 20252026 and 2024,2025, revenue for Maison El Monte were $753,579 and $3,139,482,$4,968,775, respectively. We closed our Maison El Monte store on June 7, 2025 due to its continuous loss as well as our ongoing commitment to improve its profitability and support sustainable growth.

Cost of revenues includes cost of supermarket product sales and occupancy costs, which are store rent expense, depreciation for store property and equipment, inventory shrinkage costs and store supplies. The depreciation expense comes from machinery & equipment, such as refrigerators, water heaters, forklifts, and freezers and furniture & fixtures, such as metal shelves, shopping carts, and LED lights. Shrinkage costs are different for different types of products. For example, fruits and vegetables have a high allowance rate during the receiving and display process. The seafood and meat departments have a low allowance rate because the non-fresh products can freeze and sell for the same price or even higher price after being cut or sliced. The cost of revenues increaseddecreased by $0.3$3.0 million, from $41.5$66.8 million for the sixnine months ended OctoberJanuary 31, 2024,2025, to approximately $41.8$63.8 million for the sixnine months ended OctoberJanuary 31, 2025.2026. The increasedecrease in cost of revenues was mainly from increaseddecreased cost of revenues from Lee Lee stores by $2.5 million which was partly offset by decreased cost of revenues from our three California based supermarket by $2.3$3.8 million.million, which was partly offset by increased cost of revenues from Lee Lee stores by $0.8 million . For the sixnine months ended OctoberJanuary 31, 20252026 and 2024,2025, Cost of of revenue for Maison El Monte were $767,419 and $2,745,358,$4,079,309, respectively.

Gross profit was approximately $13$20.6 million and $16$23.1 million for the sixnine months ended OctoberJanuary 31, 20252026 and 2024,2025, respectively. Gross margin was was 23.7%24.4% and 27.9%25.7% for the sixnine months ended OctoberJanuary 31, 20252026 and 2024,2025, respectively. Our supermarkets’ sales profit margins decreased by 4.1%1.3% for the sixnine months ended OctoberJanuary 31, 20252026 compared to the sixnine months ended OctoberJanuary 31, 2024.2025. The decrease in our gross profit was mainly due to the increaseincreased cost of goods sold dueresulting tofrom the inflation. For the sixnine months ended OctoberJanuary 31, 20252026 and 2024,2025, gross profit profit (loss) for Maison El Monte were $(13,840) and $394,124,$889,466, respectively. We sold products in Maison El Monte store at a big discount due due to the closure of the store.

Total operating expenses were approximately $14.2$24.5 million for the sixnine months ended OctoberJanuary 31, 2025,2026, an increase of approximately $1.2$5.7 million, compared to approximately $13.0$18.9 million for the sixnine months ended OctoberJanuary 31, 2024.2025. Total operating expenses as a percentage of revenues were 25.9%29.1% and 22.6%21.0% for the sixnine months ended OctoberJanuary 31, 20252026 and 2024,2025, respectively.

The increase in operating expenses was primarily attributable to the increase in general and administrative expenses during the sixnine months ended OctoberJanuary 31, 20252026, was primarily due to stock compensation expense increased by $1.1$1.9 million andmillion, increased otherbad G&Adebt expenses expense by $0.3 $1.9 million, which was partly offset decreasedincreased professional expense by $0.3$1.4 million.million, increased office expense by $0.2 million, increased repair and maintenance by $29,667 and increased loan service expense by $74,554.

The increase in selling expenses during the sixnine months ended OctoberJanuary 31, 20252026 was primarily due to increased bank service fees by $132,422,$53,741, increased computer expense by $28,323,$16,637 and increased deliveryauto expense by $48,816, which was partly offset by decreased utilities expense by $65,449.$10,348.

For the sixnine months ended OctoberJanuary 31, 20252026 and 2024,2025, total operating expenses for Maison El Monte were $322,507 and $1,084,578,$1,651,665, respectively.

Other expenses were $3,366,675$4,991,121 for the sixnine months ended OctoberJanuary 31, 2025 2026 compared to other expense of $386,627$229,031 for the sixnine months ended October January 31, 2024.2025. For the sixnine months ended OctoberJanuary 31, 2025,2026, other expenses mainly consisted of 1) investment loss of $848,493 from HKGF Arcadia,$923,493, 2) losschange onin fair note conversionvalue of $2,694,951,derivative liability of $3,413,055, 3) unrealized loss on digital assets investment of $882,404,$1,864,741, which was partly offset by change in fair value of derivative liability of $273,990 and other income of $785,183,$1,210,168, which was mainly from the $0.56$0.98 million consulting income from providing comprehensive consulting services focusing focusing on enhancing operational efficiency, optimizing resource allocation, and supporting overall business growth to other non-related supermarkets.

For the sixnine months ended OctoberJanuary 31, 2024,2025, other expenses mainly consisted of investment loss from equity method investment of $433,077,$504,100, which was partly offset by other income of $46,450.$275,069.

For the sixnine months ended OctoberJanuary 31, 2025,2026, other expenses for Maison El Monte were $238,115. For the sixnine months ended OctoberJanuary 31,2024,31,2025, other income for Maison El Monte were $7,208.$7,788. For the sixnine months ended OctoberJanuary 31, 2025,2026, other expenses mainly consisted of loss on disposal of store assets of $489,380, which was partly offset by other income by $260,150.

Interest expense was $1,272,729$1,991,562 for the sixnine months ended OctoberJanuary 31, 2025,2026, an increase of $855,599$1,309,654 from $417,130$681,908 for the sixnine months ended OctoberJanuary 31, 2024.2025. For the sixnine months ended OctoberJanuary 31, 2025,2026, the interest expense was for the SBA loans, bank loan, convertible note and note payable arising from the acquisition of Lee Lee. For the sixnine months ended OctoberJanuary 31, 2024,2025, the interest expense was for the SBA loans and note payable arising from the acquisition of Lee Lee.

For the sixnine months ended OctoberJanuary 31, 20252026 and 2024,2025, interest expense for Maison El Monte were $8,885$8,969 and $8,637,$12,918, respectively.

Income tax expense was $231,867$282,260 for the sixnine months ended OctoberJanuary 31, 2025,2026, a decrease of $957,898$890,586 from income taxes expense of $1,189,765$1,172,846 for the sixnine months ended OctoberJanuary 31, 2024.2025. The decrease in income tax expense was mainly due to the taxable loss from Maison parent company, decreased taxable income for Maison Monterey Park supermarket, and increased taxable loss for our other two California-based supermarkets.

We generated net loss from discontinued operation Maison El Monte of $584,462$535,959 and $701,442$735,398 for the sixnine months ended OctoberJanuary 31, 20252026 and 2024,2025, respectively.

Net loss attributable to the Company from continuing operation was $6,044,075 $11,187,992 for the sixnine months ended OctoberJanuary 31, 2025,2026, an increase of net loss of $7,047,248,$13,380,052, or 702.5%,610.4%, from a net income of $1,003,173 $2,192,060 attributable to the Company for the sixnine months ended OctoberJanuary 31, 2024. 2025. This was mainly attributable to the reasons discussed above, which included a decrease in gross profit by $3,012,329$2,516,254 and increased operating expenses by $1,157,170,$5,657,627, increased losschange onin conversionfair value of derivative liability by $2,694,951,$3,413,055, increased investment loss by $419,393, increased unrealized loss on digital assets investment by $882,404,$1,864,741, which is partly offset by increased other income by $738,733.$935,099.

Cash Flows for the sixnine Months Ended OctoberJanuary 31, 20252026 Compared to the sixnine Months Ended OctoberJanuary 31, 20242025

As of OctoberJanuary 31, 2025,2026, we had cash and cash equivalents of approximately $1,365,377.$1,518,958. We had net loss from continuing operation attributable to us of $5,973,499 $11,187,992 for the sixnine months ended OctoberJanuary 31, 2025,2026, and had a working capital deficit of approximately $4.19$6.2 million as of October January 31, 2025.2026. As of OctoberJanuary 31, 2025,2026, the Company had outstanding loan facilities of approximately $2.60 million SBA loans, $5.0 $4.3 million bank loan, and $6.00$5.8 million convertible note payable.

In assessing its liquidity, management monitors and analyzes the Company’s cash on-hand, its ability to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments. We have funded our working capital, operations and other capital requirements in the past primarily by equity contributions from shareholders, cash flow from operations, government grants, and bank loans. Cash is required to pay purchase costs for inventory, rental expenses, salaries, income taxes, other operating expenses and to repay debts. Our ability to repay our current expenses and obligations will depend on the future realization of our current assets. Management has considered the historical experience, the economy, trends in the retail grocery industry, the expected collectability of of our accounts receivable and the realization of the inventories as of OctoberJanuary 31, 20252026 and April 30, 2025. Our ability to continue to fund these items may be affected by general economic, competitive, and other factors, many of which are outside of our control.

The following table summarizes our cash flow data for the sixnine months ended OctoberJanuary 31, 20252026 and 2024.2025.

However, our netNet cash usedprovided inby operating activities was approximately $911,790 for the sixnine months ended OctoberJanuary 31, 20252026, waswhich offsetmainly byconsisted of add-back of non-cash adjustments to net loss including depreciation and amortization expense of $441,519, $661,001, unrealized loss on digital assets investment of $1,864,741, inventory impairment of $190,564, $221,678,change lossin onfair note convertiblevalue of $2,694,951,derivative liability of $3,413,055, bad debt expense of $1,900,000 stock compensation expense of $1,075,730, $1,922,055, amortization of OID and debt issuance cost of $755,532,$1,292,949, investment loss from 49% equity investee HKGF Arcadia store of $848,493,$923,493, and $489,380 loss from disposal of assets due to Maison El Monte store closure. In addition, for the sixnine months ended OctoberJanuary 31, 2025,2026, we had cash inflow from (i) collection of outstanding accounts receivables of $423,942, (ii) decreased outstanding accounts receivables offrom $584,831,related (ii) increased outstanding accounts payableparties of $17,882$148,520 , (iii) increased outstanding income tax payable of $345,559,$269,645, (iv) increased operating lease liabilities of $218,711,$321,940, and (v) increased accrued expenses and other payables of $185,398.$1,400,454.

Net However, our net cash provided by operating activities was approximately $4.7 million for the six nine months ended OctoberJanuary 31, 2024,2026 whichwas mainlyoffset comprised ofby net incomeloss of $301,731,$11.8 add-backmillion, ofdeducting non-cash adjustments tofrom net incomeloss of $35,718, including gain depreciationon disposal of assets due to store closure of $11,543 and amortizationchange expensein deferred taxes of $527,543, inventory impairment of $314,833, bad debt expense of $62,483 and investment loss from 49% equity investee HKGF Arcadia store of $392,302 and investment loss from 10% cost investee HKGF Alhambra store of $40,775.$24,175. In addition, for the sixnine months ended October January 31, 2024,2026, we had cash inflowoutflow from (i) decreaseincreased topurchase of inventories of $103,846, (ii) increased cash outflow on prepayment of $1,085,637, (iii) increased cash outflow on other receivables and other current assets of $599,926,$456,078, (ii) increased outstanding accounts payable of $3,783,025 including accounts payable from related parties of $120,804, (iii) increased outstanding income tax payable of $1,222,747, (iv) increased operatingcash leaseoutflow on accounts payable of $699,901, (v) increased payment for contract liabilities of $268,791,$110,475, and (vvi) increaseincreased payment of accrued expenses and other long-term payables of $374,645.$4,716 .

However, our net cash provided by operating activities for the sixnine months ended OctoberJanuary 31, 20242025 was mainly offset by an increase of inventories of $2,398,913, an increase of prepayments of $442,103,$4,197,132, an increase of accounts receivable from related parties of $149,749,$61,349, and an increase of payment for contract liabilities of $154,898.$195,957.

Net cash used in investing activities was $2.0 million$2,919,113 for the sixnine months ended OctoberJanuary 31, 2025,2026, which mainly consisted of purchase of equipment of $1,000$14,613 and purchase of digital assets of $2,037,096.$2,919,500, partly offset by cash received from disposal of fix assets of $15,000.