Maison Solutions (MSS) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01There is no guarantee that our center-satellite model will succeed
2. 02We 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
3. 03The 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
4. 04There is no guarantee that our partnership with JD US will be successful
5. 05Our new store base, or stores opened or acquired in the future, may negatively impact our financial results in the short-term, and may not achieve sales and operating levels consistent with our mature store base on a timely basis or at all and may negatively impact our business and financial results
6. 06Because we have entered into a significant number of related party transactions through the course of our routine business operations, there is a risk of conflicts of interest involving our management, and that such transactions may not reflect terms that would be available from unaffiliated third parties
7. 07Security incidents and attacks on our information technology systems could lead to significant costs and disruptions that could harm our business, financial results, and reputation

Risks Related to Our Industry

1. 08We face competition in our industry, and our failure to compete successfully may have an adverse effect on our profitability and operating results
2. 09Our inability to maintain or improve levels of comparable store sales could cause our stock price to decline
3. 10Increased commodity prices and availability may impact profitability
4. 11Economic conditions that impact consumer spending could materially affect our business
5. 12Our inability to maintain or increase our operating margins could adversely affect the price of our Class A common stock
6. 13We may be unable to protect or maintain our intellectual property, including HK Good Fortune, which could result in customer confusion and adversely affect our business
7. 14Our 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
8. 15If we are unable to successfully identify market trends and react to changing consumer preferences in a timely manner, our sales may decrease
9. 16Our stores rely heavily on sales of perishable products, and product supply disruptions may have an adverse effect on our profitability and operating results
10. 17Products 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
11. 18We may experience negative effects to our reputation from real or perceived quality or health issues with our food products, which could have an adverse effect on our operating results
12. 19The 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
13. 20Energy 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
14. 21Our business could be harmed by a failure of our information technology, administrative or outsourcing systems
15. 22If we experience a data security breach and confidential customer information is disclosed, we may be subject to penalties and experience negative publicity, which could affect our customer relationships and have a material adverse effect on our business
16. 23Disruption of any significant supplier relationship could negatively affect our business
17. 24Our reliance on relatively few vendors for the majority of our inventory could adversely affect our ability to operate
18. 25Supply chain risks may affect our business plans
19. 26Our high level of fixed lease obligations could adversely affect our financial performance
20. 27Legal proceedings could materially impact our business, financial condition and results of operations
21. 28We are currently subject to certain class action and derivative litigation and may be subject to other litigation in the future
22. 29Claims under our insurance plans may differ from our estimates, which could materially impact our results of operations
23. 30Failure to sustain customer growth or failure to maintain customer relationships could materially and adversely affect our business and operating results
24. 31Failure to retain our senior management and other key personnel could negatively affect our business
25. 32If we are unable to attract, train and retain employees, we may not be able to grow or successfully operate our business
26. 33Prolonged labor disputes with employees and increases in labor costs could adversely affect our business
27. 34As we grow, we may face organized labor disputes or work stoppages, which could have an adverse impact on our operations and financial results
28. 35We 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
29. 36We may incur additional indebtedness in the future, which could adversely affect our financial health and our ability to react to changes to our business
30. 37We are dependent on third-party e-commerce platforms and on third-party networks

Risks Related to Regulatory Compliance and Legal Matters

1. 38Changes in U.S. trade policies could have a material adverse impact on our business
2. 39Changes in and enforcement of immigration laws could increase our costs and adversely affect our ability to attract and retain qualified store-level employees
3. 40The effects of global climate change could present risks to our business

Risks Related to Ownership of Our Class A Common Stock

1. 41The market for our Class A common stock is new, and we cannot assure you that an active trading market will develop for our Class A common stock
2. 42If our stock price declines, you could lose a significant part of your investment, and we may be sued in a securities class action
3. 43Future sales, or the perception of future sales, of our Class A common stock may depress the price of our Class A common stock
4. 44We will continue to incur increased costs 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
5. 45Our management has limited experience managing a public company and our current resources may not be sufficient to fulfill our public company obligations
6. 46Our 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
7. 47We 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
8. 48Our 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
9. 49Our future operating results may fluctuate significantly, and our current operating results may not be a good indication of our future performance. Fluctuations in our quarterly financial results could affect our stock price in the future
10. 50Limitation of liability and indemnification of officers and directors could adversely impact investors’ ability to bring claims against them
11. 51Sales, 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
12. 52If we are unable to continue to meet the Nasdaq Capital Market rules for continued listing, our Class A common stock could be delisted
13. 53We may become subject to “penny stock” rules, which could damage our reputation and the ability of investors to sell their shares of Class A common stock
14. 54The financial and operational projections that we may make from time to time are subject to inherent risks
15. 55If we were to dissolve, the holders of our securities may lose all or substantial amounts of their investments
16. 56An investment in our Company may involve tax implications, and you are encouraged to consult your own tax and other advisors as neither we nor any related party is offering any tax assurances or guidance regarding our Company or your investment
17. 57A 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
18. 58If we do not appropriately maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, we may be unable to accurately report our financial results and the market price of our securities may be adversely affected
19. 59We 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
20. 60We are an “emerging growth company” and the reduced disclosure requirements applicable to emerging growth companies may make our securities less attractive to investors