What changed in this filing

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Item 1. Financial Statements

2020-11-23 compared with 2020-08-14 · 674 added, 729 removed, 409 unchanged (77% of the section changed)

Financial Statements and Supplementary Data

the three months ended June 30, 2020 and 2019

Balance sheets as of June 30, 2020 (unaudited) and March 31, 2020 (audited)

Statements of Income and Comprehensive Income for the three months ended June 2020 and 2019 (unaudited)

Statements of Changes in Equity for the three months ended June 30, 2020 and 2019

Statements of Cash Flows for the three months ended June 30, 2020 and 2019 (unaudited)

to Consolidated Financial Statements for the three months ended June 30, 2020 and 2019

the six months ended September 30, 2020 and 2019

Consolidated Balance sheets as of September 30, 2020 (unaudited) and March 31, 2020

Consolidated Statements of Income and Comprehensive Income for the six months ended

September 30, 2020 and 2019 (unaudited)

Consolidated Statements of Changes in Equity for the six months ended September 30,

2020 and 2019 (unaudited)

Consolidated Statements of Cash Flows for the six months ended September 30, 2020

and 2019 (unaudited)

to Condensed Consolidated Financial Statements for the six months ended September 30, 2020 and 2019 (unaudited)

AND SUBSIDIARIES

BALANCE SHEETS

CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars, except share data or otherwise stated)

OF JUNE 30, 2020 (UNAUDITED) AND MARCH 31, 2020 (AUDITED)

OF SEPTEMBER 30, 2020 AND MARCH 31, 2020 (UNAUDITED)

CURRENT ASSETS

1 unchanged sentence

Accounts receivables, net

Inventories, net

Other receivables

12 unchanged sentences

Accrued expenses and other payables

Lease liabilities,

current portion

Total current

Operating lease

liability, net of current portion

liability current portion

Total current

lease liability, net of current portion

Total non-current

COMMITMENTS AND CONTINGENCIES

Common stock ($0.001 par value, 25,346,004 shares issued and

outstanding for the three months ended June 30, 2020 and 2019 respectively)

Common stock ($0.001 par value, 50,000,000

shares authorized, 26,093,004 and 25,346,004 shares issued and outstanding at September 30, 2020 and March 31,

2020, respectively)

Additional paid-in capital

7 unchanged sentences

AND SUBSIDIARIES

STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS

OF LOSS AND COMPREHENSIVE LOSS

Dollars, except share data or otherwise stated)

THE THREE MONTHS ENDED JUNE 30, 2020 AND 2019

the three months ended June 30,

THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

September 30,

COST OF REVENUES

(14,705,387 )

(19,825,963 )

OPERATING EXPENSES

2 unchanged sentences

Total operating expenses

INCOME (LOSS) FROM

FINANCE COST, NET

INCOME/(EXPENSES)

INCOME (LOSS) BEFORE

FROM OPERATIONS

Interest income

Interest expenses

(expense), net

LOSS BEFORE INCOME

INCOME TAX EXPENSE

NET INCOME (LOSS)

currency translation gain or loss

COMPREHENSIVE INCOME (LOSS)

EARNINGS (LOSS) PER SHARE

currency translation gain (loss)

COMPREHENSIVE LOSS

$ (3,544,221 )

LOSS PER SHARE

Weighted average

3 unchanged sentences

AND SUBSIDIARIES

STATEMENTS OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Dollars, except share data or otherwise stated)

THE THREE MONTHS ENDED JUNE 30, 2020(UNADUDITED) AND 2019 (AUDITED)

THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

comprehensive

AT MARCH 31, 2019

BALANCE AT JULY 1, 2019

$ (2,143,115 )

$ (2,032,892 )

to Statutory reserve

currency translation

Foreign currency translation

loss for the period

AT JUNE 30, 2019

BALANCE AT SEPTEMBER 30, 2019

$ (2,465,040 )

BALANCE AT JULY 1, 2020

$ (3,029,222 )

AT MARCH 31, 2020

$ (2,867,279 )

Issue of ordinary shares

Foreign currency translation

loss for the period

BALANCE AT SEPTEMBER

$ (6,489,747 )

to Statutory reserve

currency translation

$ (2,676,500 )

BALANCE AT MARCH 31, 2019

$ (1,775,767 )

$ (1,702,547 )

Foreign currency translation

loss for the period

AT JUNE 30, 2020

BALANCE AT SEPTEMBER 30, 2019

$ (2,465,040 )

BALANCE AT MARCH 31, 2020

$ (3,233,122 )

accompany notes to the consolidated financial statements.

$ (3,066,724 )

of common stocks

Foreign currency translation

loss for the period

BALANCE AT SEPTEMBER

$ (6,489,747 )

$ (2,676,500 )

accompany notes to the unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

THE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

Dollars, except share data or otherwise stated)

THE THREE MONTHS ENDED JUNE 30, 2020 AND 2019

FLOWS FROM OPERATING ACTIVITIES:

to reconcile net income to net cash used in operating activities:

on disposal of plant and equipment

in operating assets and liabilities:

expenses and other payables

from customers

cash provided by (used in) operating activities

FLOWS FROM INVESTING ACTIVITIES:

CASH FLOWS FROM OPERATING

$ (3,256,625 )

Adjustments to reconcile net income

to net cash used in operating activities:

Loss on disposal

of plant and equipment

cash used in investing activities

FLOWS FROM FINANCING ACTIVITIES:

from related party borrowings

of related party borrowings

cash provided by financing activities

INCREASE IN CASH AND CASH EQUIVALENTS

of exchange rate changes on cash and cash equivalents

and cash equivalents, beginning of the period

Changes in operating assets and liabilities:

Accounts receivable

Advances to suppliers

Other receivables

Accounts payables

Accrued expenses

and other payables

from customers

Net cash provided by (used in) operating

$ (3,062,555 )

CASH FLOWS FROM INVESTING

Purchase of plant and equipment

Proceeds from

sale of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING

from issuance of common stocks

Proceeds from related party borrowings

Repayment of related party borrowings

Proceeds from bank borrowings

bank borrowings

Net cash provided by financing activities

NET INCREASE IN CASH

AND CASH EQUIVALENTS

Effect of exchange rate changes on cash

and cash equivalents

Cash and cash

equivalents, beginning of the period

AND CASH EQUIVALENTS, END OF THE PERIOD

disclosure of cash flow information:

paid during the year for interest

paid during the year for income tax

disclosure of non-cash investing and financing activities:

Supplemental disclosure

of cash flow information:

Cash paid during the year for interest

Cash paid during the year for income

Supplemental disclosure

of non-cash investing and financing activities:

assets obtained in exchange for operating lease obligations

accompany notes to the consolidated financial statements.

accompany notes to the unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE THREE MONTHS ENDED JUNE 30, 2020 AND 2019

TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

AND BUSINESS ACQUISITIONS

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ATXG, together with Yingxi and its subsidiaries (the “Company”)

operates primarily in the People’s Republic of China (“PRC”

or “China”) and is engaged in the business

of garments manufacturing and providing logistic services.

December 15, 2016, Yingxi entered into an equity transfer agreement with the shareholder of Yingxi Industrial Chain Investment

Co., Ltd (“Yingxi HK”) under which Yingxi agreed to pay total consideration of RMB21,008,886 (approximately $3,048,936)

in cash in exchange for a 100% ownership interest in Yingxi HK.

Yingxi HK was incorporated in Hong Kong in 2016.

a holding company with no assets other than a 100% equity interest of the following subsidiaries:

Yingxi Textile & Garments Co., Ltd (“QYTG”), a wholly-owned subsidiary of Yingxi HK, was incorporated in the PRC

Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), a wholly-owned subsidiary of QYTG, was incorporated in the

Kuai Jie Transport Co., Ltd (“XKJ”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2001.

engaged in the provision of logistic services.

Hua Peng Fa Logistics Co., Ltd (“HPF”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2006.

is engaged in the provision of logistic services.

Heng Sheng Wei Garments Co., Ltd (“HSW”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2009.

is a garment manufacturer.

Chenghai Dai Tou Garments Co., Ltd (“DT”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2009.

is a garment manufacturer.

Yingxi Daying Commercial Co., Ltd (“DY”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2019.

is a property management company for the garment manufacturing industry.

Yushang Clothing Co., Ltd (“YS”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2019.

YS is a garment

manufacturer.

Yi Bai Yi Garments Co., Ltd (“YBY”), a wholly-owned subsidiary of YX, was incorporated in PRC in 2019, YBY is a garment

manufacturer.

OF PRESENTATION, LIQUIDITY

accompanying consolidated financial statements of the Company and its subsidiaries are prepared pursuant to the rules and regulations

of the U.S Securities and Exchanges Commission (“SEC”) and in conformity with generally accepted accounting principles

(“US GAAP”).

All material inter-company accounts and transactions have been eliminated in consolidation.

accompanying consolidated financial statements are presented on the basis that the Company is a going concern.

The going concern

assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Company incurred net income of $203,900, and net loss of $367,348 for the three months ended June 30, 2020 and 2019, respectively.

As of June 30, 2020 and March 31, 2020, the Company had net current liability of $3,987,967 and $4,095,286, respectively, and

a deficit on total equity of $2,867,279 and $3,066,724, respectively.

is engaged in the business of garments manufacturing, providing logistic services in the People’s Republic of

China (“PRC”

or “China”) and epidemic prevention supplies manufacturing and distribution both in China

and overseas markets.

OF PRESENTATION

the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring

nature that are necessary for a fair presentation of the results for the interim periods presented.

All significant intercompany

transactions and balances are eliminated in consolidation.

However, the results of operations included in such financial statements

may not necessary be indicative of annual results.

Company uses the same accounting policies in preparing quarterly and annual financial statements.

Certain information and footnote

disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles

generally accepted in the United States of America (“U.S.

GAAP”) have been condensed or omitted.

These unaudited condensed

consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements

and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2020 filed

with the Securities and Exchange Commission (“SEC”) on June 29, 2020 (“2020 Form 10-K.”).

CONCERN UNCERTAINTY

accompanying unaudited condensed consolidated financial statements are presented on the basis that the Company

is a going concern.

The going concern assumption contemplates the realization of assets and the satisfaction of liabilities in

the normal course of business.

Company incurred net loss of $3,460,525 and $321,925 for the three months ended September 30, 2020 and 2019, respectively, and

$3,256,625 and $689,273 for the six months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020 and March

31, 2020, the Company had net current liability of $4,043,938 and $4,095,286, respectively, and a deficit on total equity of $2,676,500

and $3,066,724, respectively.

These conditions raise substantial doubt about the Company’s ability to continue as a going

ability to continue as a going concern is dependent upon the Company’s profit generating operations in the future and/or

9 unchanged sentences

objectives, the CEO has indicated the intent and ability to provide additional equity financing.

conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s continuation

as a going concern is dependent on the Company’s ability to meet obligations as they become due and to obtain additional

equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated.

can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing

on acceptable terms, or if at all.

The consolidated financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

OF SIGNIFICANT ACCOUNTING POLICIES

and Political Risks

Company’s operations are conducted in the PRC.

Accordingly, the Company’s business, financial condition and results

of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC

Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with

companies in North America and Western Europe.

These include risks associated with, among others, the political, economic and

legal environment and foreign currency exchange.

The Company’s results may be adversely affected by changes in the political

and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary

measures, currency conversion, remittances abroad, and rates and methods of taxation.

Currency Translation

Company’s reporting currency is the U.S.

The functional currency of the parent company is the U.S.

dollar and the

functional currency of the Company’s operating subsidiaries is the Chinese Renminbi (“RMB”).

For the subsidiaries

whose functional currencies are the RMB, all assets and liabilities are translated at exchange rates at the balance sheet date

and revenue and expenses are translated at the average yearly exchange rates and equity is translated at historical exchange rates.

Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustments

to other comprehensive loss, a component of equity.

preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions

4 unchanged sentences

materially from those estimates.

Value Measurement

Standards Codification (“ASC”) 820 “

Fair Value Measurements and Disclosures “, which defines fair value,

establishes a framework for measuring fair value and expands disclosures about fair value measurements.

The statement clarifies

that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability

in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous

market for the asset or liability.

It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement,

and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset.

ASC establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The hierarchy

gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements)

and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially

the full term of the asset or liability;

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable

(supported by little or no market activity).

at June 30, 2020, the Company has no financial assets or liabilities subject to recurring fair value measurements.

Company’s financial instruments include cash, accounts receivable, advances to suppliers, other receivables, accounts payable,

other payables, taxes payables and related party receivables or payables.

Management estimates that the carrying amounts of financial

instruments approximate their fair values due to their short-term nature.

The fair value of amounts with related parties is not

practicable to estimate due to the related party nature of the underlying transactions.

and Cash Equivalents

Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

All cash and cash equivalents relate to cash on hand and cash at bank at June 30, 2020 and March 31, 2020.

Renminbi is not freely convertible into foreign currencies.

Under the PRC Foreign Exchange Control Regulations and Administration

of Settlement, Sales and Payment of Foreign Exchange Regulations, the Company is permitted to exchange Renminbi for foreign currencies

through banks that are authorized to conduct foreign exchange business.

instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable.

Company extends credit to its customers in the normal course of business and generally does not require collateral.

The Company’s

credit terms are dependent upon the segment, and the customer.

The Company assesses the probability of collection from each customer

at the outset of the arrangement based on a number of factors, including the customer’s payment history and its current

creditworthiness.

If in management’s judgment collection is not probable, the Company does not record revenue until the

uncertainty is removed.

performs ongoing credit evaluations, and the Company maintains an allowance for potential credit losses based upon its loss history

and its aging analysis.

The allowance for doubtful accounts is the Company’s best estimate of the amount of credit losses

in existing accounts receivable.

Management reviews the allowance for doubtful accounts each reporting period based on a detailed

analysis of trade receivables.

In the analysis, management primarily considers the age of the customer’s receivable, and

also considers the creditworthiness of the customer, the economic conditions of the customer’s industry, general economic

conditions and trends, and the business relationship and history with its customers, among other factors.

If any of these factors

change, the Company may also change its original estimates, which could impact the level of the Company’s future allowance

for doubtful accounts.

If judgments regarding the collectability of receivables were incorrect, adjustments to the allowance may

be required, which would reduce profitability.

receivable are recognized and carried at the original invoice amount less an allowance for any uncollectible amounts.

for doubtful accounts receivable is made when collection of the full amount is no longer probable.

Bad debts are written off as

No allowance for doubtful accounts was made for the three months ended June 30, 2020 and 2019.

followings are the percentages of accounts receivable balance of the top five customers over total accounts receivable as at June

30, 2020 and March 31, 2020.

Manufacturing

segment inventories consist of raw materials, work in progress and finished goods and are stated at the lower of cost, determined

on a weighted average basis, or net realizable value.

Net realizable value is the estimated selling price in the ordinary course

of business less the estimated cost of completion and the estimated costs necessary to make the sale.

When inventories are sold,

their carrying amount is charged to expense in the period in which the revenue is recognized.

Write-downs for declines in net

realizable value or for losses of inventories are recognized as an expense in the period the impairment or loss occurs.

for obsolete finished goods for both periods ended June 30, 2020 and 2019.

the three months ended June 30, 2020 and 2019, approximately 98% and 74% of total inventory purchases were from the Company’s

five largest suppliers, respectively.

Management believes that should the Company lose any one of its major suppliers, other suppliers

are available that could provide similar products to the Company.

and Equipment

and equipment are carried at cost less accumulated depreciation.

Depreciation is provided over the assets’

estimated useful

lives, using the straight-line method.

Estimated useful lives of the plant and equipment are as follows:

Production plant

Motor vehicles

Office equipment

cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or

loss is included in the statement of income.

The cost of maintenance and repairs is charged to the statement of income as incurred,

whereas significant renewals and betterments are capitalized.

represents the excess of the purchase price over the net fair value of the identifiable tangible and intangible assets acquired

and the fair value of liabilities assumed in acquisitions.

ASC350-30-50 “Goodwill and Other Intangible Assets”, requires

the testing of goodwill and indefinite-lived intangible assets for impairment at least annually.

The Company tests goodwill for

impairment in the fourth quarter of each years.

applicable accounting guidance, the goodwill impairment analysis is a two-step test.

The first step of the goodwill impairment

test involves comparing the fair value of each reporting unit with its carrying amount including goodwill.

If the fair value of

a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired;

however, if the carrying

amount of the reporting unit exceeds its fair value, the second step must be performed to measure potential impairment.

second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step indicated

possible impairment.

If the implied fair value of goodwill exceeds the goodwill assigned to the reporting unit, there is no impairment.

If the goodwill assigned to a reporting unit exceeds the implied fair value of goodwill, an impairment charge is recorded for

Company tested goodwill for impairment as of March 31, 2020 and it was determined that recoverable amount of one of the Company’s

reporting units was lower than the carrying amount of the goodwill recorded.

Therefore it was concluded that carrying amount of

goodwill of $475,003 was impaired (Nil for 2019).

balance of goodwill was Nil as of June 30, 2020 and March 31, 2020.

for the Impairment of Long-Lived Assets

assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the

carrying amount of assets may not be recoverable.

It is reasonably possible that these assets could become impaired as a result

of technology or other industry changes.

Determination of recoverability of assets to be held and used is by comparing the carrying

amount of an asset to future net undiscounted cash flows to be generated by the assets.

If such assets are considered to be impaired,

the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

was no impairment of long-lived assets as of June 30, 2020 and March 31, 2020.

is generated through sale of goods and delivery services.

Revenue is recognized when a customer obtains control of promised goods

or services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for

those goods or services.

In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue

and cash flows arising from contracts with customers.

The amount of revenue that is recorded reflects the consideration that the

Company expects to receive in exchange for those goods and services.

The Company applies the following five-step model in order

to determine this amount:

identification of the promised goods and services in the contract;

determination of whether the promised goods and services are performance obligations, including whether they are distinct in the

context of the contract;

measurement of the transaction price, including the constraint on variable consideration;

allocation of the transaction price to the performance obligations;

recognition of revenue when (or as) the Company satisfies each performance obligation.

Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is

entitled to in exchange for the goods or services it transfers to the customer.

Once a contract is determined to be within the

scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company

must deliver and which of these performance obligations are distinct.

The Company recognizes as revenues the amount of the transaction

price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied.

Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery.

all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product and service

revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under

the adopted rules

of revenues for manufacturing segment includes the direct raw material cost, direct labor cost, manufacturing overheads including

depreciation of production equipment and rent.

Cost of for service segment includes gasoline and diesel fuel, toll charges and

subcontracting fees.

Company reports earnings per share in accordance with ASC 260 “Earnings Per Share”, which requires presentation of

basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per

Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted

average common shares outstanding during the reporting period.

Diluted earnings per share takes into account the potential dilution

that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.

if the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of

a reverse stock split, the computations of a basic and diluted earnings per share shall be adjusted retroactively for all periods

presented to reflect that change in capital structure.

Company’s basic earnings per share is computed by dividing the net income available to holders by the weighted average number

of the Company’s ordinary shares outstanding.

Diluted earnings per share reflects the amount of net income available to

each ordinary share outstanding during the period plus the number of additional shares that would have been outstanding if potentially

dilutive securities had been issued.

The Company had no potentially dilutive ordinary shares as of June 30, 2020 and March 31,

Company accounts for income taxes using the asset and liability method prescribed by ASC 740 “Income Taxes”.

this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax

bases of assets and liabilities using enacted tax rates that will be in effect in the years in which the differences are expected

The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence,

it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.

The effect on deferred

taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

Company has a history of tax losses and there is no convincing evidence that sufficient taxable income will be available against

which the deferred tax asset can be utilised, therefore, the Company does not recognize any tax benefits for the three months

ended June 30, 2020 & 2019.

Company is governed by the Income Tax Laws of the PRC.

The PRC federal statutory tax rate is 25%.

The Company files income tax

returns with the relevant government authorities in the PRC.

The Company does not believe there will be any material changes in

its unrecognized tax positions over the next 12 months.

Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income

The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was

any interest expense recognized during the three months ended June 30, 2020 and 2019.

The Company’s effective tax rate differs

from the PRC federal statutory rate primarily due to non-deductible expenses, temporary differences and preferential tax treatments.

federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S.

Tax Reform”), was signed

into law on December 22, 2017.

Tax Reform modified the U.S.

Internal Revenue Code by, among other things, reducing the

statutory U.S.

federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017;

and/or eliminating many business deductions;

migrating the U.S.

to a territorial tax system with a one-time transaction tax on

a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries;

subject to certain limitations,

generally eliminating U.S.

corporate income tax on dividends from foreign subsidiaries;

and providing for new taxes on certain

foreign earnings.

Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump-sum payment.

Company measured the current and deferred taxes based on the provisions of the Tax legislation.

After the Company’s measurement,

no deferred tax benefit nor expense were recorded relating to the Tax Act changes for the months ended June 30, 2020 and 2019.

party balances and transactions

related party is generally defined as:

any person that holds the Company’s securities including such person’s immediate families,

the Company’s management,

someone that directly or indirectly controls, is controlled by or is under common control with the Company, or

anyone who can significantly influence the financial and operating decisions of the Company.

transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related

Company’s exposure to interest rate risk primarily relates to the interest expenses on our outstanding bank borrowings and

the interest income generated by cash invested in cash deposits and liquid investments.

As of June 30, 2020, the total outstanding

borrowings amounted to $353,854 (RMB 2,500,000) with various interest rate from 4.84% to 6.96% p.a.

Company determines if an arrangement is a lease at inception.

Operating leases are included in operating lease right-of-use (“ROU”)

assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets.

Finance leases are included

in property and equipment, other current liabilities, and other long-term liabilities in the consolidated balance sheets.

assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make

lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on

the present value of lease payments over the lease term.

As most of the leases do not provide an implicit rate, The Company generally

use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of

the lease payments at commencement date.

The operating lease ROU asset also includes any lease payments made and excludes lease

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

issued and adopted accounting pronouncements

August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value

Measurement to ASC Topic 820, Fair Value Measurement (“ASC 820”) .

ASU 2018-13 modifies the disclosure requirements

for fair value measurements by removing, modifying, and/or adding certain disclosures.

ASU 2018-13 is effective for interim and

annual reporting periods in fiscal years beginning after December 15, 2019.

An entity is permitted to early adopt by modifying

existing disclosures and delay adoption of the additional disclosures until the effective date.

The Company adopted this guidance

on April 1, 2020 and determined it had no impact on its consolidated financial statements and related disclosures.

February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated

Other Comprehensive Income.

The amendments allow a reclassification from accumulated other comprehensive income to retained earnings

for stranded tax effects resulting from the Tax Cuts and Jobs Act.

This standard was effective for the Company on September 1,

The adoption of this standard did not have a material impact on the Company’s consolidated financial position, results

of operations or cash flows.

is no change on the accounting policies from the year ended March 31, 2020.

issued accounting pronouncements

June 2016, the FASB issued ASU No.

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on the financial asset.

This standard will be effective for the Company on December 15, 2019.

The Company adopted this ASU on

April 1, 2020 and determined it had no impact on its consolidated financial statements.

February 2016, the FASB issued ASU 2016-02, “Lease (Topic 842) “

, which amends recognition of lease assets

and lease liabilities by lessees for those leases classified as operating leases.

Under the new guidance, lessees will be required

to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement

This standard takes effect for fiscal years, and interim periods within those fiscal years, beginning after December 15,

According to this new standard, the Company recorded both right-of-use asset and lease liability of $1.7 million and $1.8

million on its consolidated financial statements as at June 30, 2020 and March 31, 2020.

This standard will be effective for the Company on April 1, 2023.

The Company is currently evaluating

the impact the adoption of this ASU will have on its consolidated financial statements.

Company reviews new accounting standards as issued.

1 unchanged sentence

have a significant impact on the Company’s consolidated financial statements.

receivables and allowance balances at June 30, 2020 and March 31, 2020 are as follows:

AND UNCERTAINTIES

and Political Risks

Company’s operations are conducted in the PRC.

Accordingly, the Company’s business, financial condition and results

of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC

Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with

companies in North America and Western Europe.

These include risks associated with, among others, the political, economic and

legal environment and foreign currency exchange.

The Company’s results may be adversely affected by changes in the political

and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary

measures, currency conversion, remittances abroad, and rates and methods of taxation.

Concentration Risks

the three and six months ended September 30, 2020 and 2019, approximately 99.6% and 88.4%, 97.2% and 74.5% of total inventory

purchases were from the Company’s five largest suppliers, respectively.

Management believes that should the Company lose

any one of its major suppliers, other suppliers are available that could provide similar products to the Company.

the three and six months ended September 30, 2020 and 2019, approximately 93.6% and 54.5%, 86.8% and 34.6% of total sales were

from the Company’s five largest customers, respectively.

For the three months ended September 30, 2020, two customers provided

more than 10% of total revenue of the Company, with one from garment segment and the other one from epidemic prevention supplies

segment, represented 13.7% and 74.9% of total revenue of the Company for the three months, respectively.

For the six months ended

September 30, 2020, two customers provided more than 10% of our total revenue, with one from garments segment and the other one

from epidemic prevention supplies segment, represented 14.7% and 59.3% of total revenue of the Company for the six months, respectively.

The high concentration in three and six months ended September 30, 2020 was mainly due to concentration of distributors in trading

of epidemic prevention supplies.

Management believes that should the Company lose any one of its major customers, it was able

to sell similar products to other customers.

Company’s exposure to interest rate risk primarily relates to the interest expenses on our outstanding bank borrowings and

the interest income generated by cash invested in cash deposits and liquid investments.

As of September 30, 2020, the total outstanding

borrowings amounted to $234,149 (RMB1,590,000) with various interest rate from 4.84% to 6.96% p.a.

receivables and allowance balances at September 30, 2020 and March 31, 2020 are as follows:

Accounts receivable

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Accounts receivable,

allowance for doubtful accounts was made for the three months ended June 30, 2020 and March 31, 2020.

receivables primarily represent rental deposit;

refundable security deposits to customers for quality assurance on the provision

of logistic service;

and unsecured and non-interest bearing short-term advances that the Company makes from time-to-time to employees.

These advances are unsecured and due on demand.

allowance for doubtful accounts was made for the three and six months ended September 30, 2020 and 2019.

PARTY TRANSACTIONS

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Company leases Shenzhen XKJ office rent-free from Bihua Yang.

Company had the following related party balances as of June 30, 2020 and March 31, 2020:

September, the Company disposed of $114,229 aged inventories in HSW to Mr.

Jinlong Huang at cost with no gain or loss recognized.

Company had the following related party balances as of September 30, 2020 and March 31, 2020:

to related parties

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balances with related parties are unsecured, non-interest bearing and repayable on demand.

consist of the following as of June 30, 2020 and March 31, 2020:

consist of the following as of September 30, 2020 and March 31, 2020:

Raw materials

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Total inventories

is no inventory allowance for the three months ended June 30, 2020 and 2019.

is no inventory write-off for the three and six months ended September 30, 2020 and 2019.

Company has made advances to third-party suppliers in advance of receiving inventory parts.

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would recognize bad debt expense in the period they are considered unlikely to be collected.

AND EQUIPMENT

and equipment consists of the following as of June 30, 2020 and March 31, 2020:

accumulated depreciation

and equipment, net

Company acquired two production lines amounted to $54,327 to manufacture masks for the epidemic prevention supplies business

and two new motor truckers amounted to $86,072 for the logistic service business.

During the period, the Company

disposed of an old motor trucker with original cost of $22,505 and accumulated depreciation of $15,791.

The Company also replaced

a few small items of old machinery and office equipment.

expense for the three months ended June 30, 2020 and 2019 was $23,473 and $28,699, respectively.

PLANT AND EQUIPMENT

plant and equipment consists of the following as of September

30, 2020 and March 31, 2020:

Production plant

Motor vehicles

Office equipment

Plant and equipment,

the nine months ended September 30, 2020, the Company acquired two production lines amounted to

$54,327 to manufacture masks for the epidemic prevention supplies business and seven new motor truckers amounted to $315,920 for

the logistic service business .

During the period, the Company disposed of an old motor trucker with original cost of $22,505

and accumulated depreciation of $15,791.

The Company also replaced a few small items of old machinery and office equipment.

expense for the three and six months ended September 30, 2020 and 2019 was $27,686 and $27,931, $51,159 and $29,238, respectively.

September 2018, HSW, a subsidiary of the Company entered into a facility agreement with Dongguan Agricultural Commercial Bank

and obtained a line of credit, which allows the Company to borrow up to approximately $212,334 (RMB1,500,000) for daily operations

with fixed interest rate of 6.96% per annum.

The loans are guaranteed at no cost by legal representative of HSW.

As of June 30, 2020, the Company has borrowed $212,334 (RMB1,500,000)

under this line of credit with fixed interest rate of 6.96% per annum.

The line of credit is fully used.

The outstanding loan

balance will be due in September 2020.

August 2019, HSW entered into a new facility agreement with Agricultural Bank of China and obtained a line of credit, which allows

2020, the Company fully repaid the outstanding loan and this line of credit was cancelled (March 31, 2020:

August 2019, HSW entered into a facility agreement with Agricultural Bank of China and obtained a line of credit, which allows

the Company to borrow up to approximately $147,264 (RMB1,000,000) for daily operations.

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the legal representative of HSW.

As of June 30, 2020, the Company has borrowed $141,543 (RMB1,000,000) under this line of credit

with various annual interest rates from 4.84% to 4.9%.

As of September 30, 2020, the Company has borrowed $147,264 (RMB1,000,000) (March 31, 2020:

$141,246) under this line of credit with various annual interest rates from 4.84% to 4.9%.

The line of credit is fully used.

The outstanding loan balance will be

due in July 2020.

The outstanding loan balance will be due on March 31, 2021.

August 2020, DT entered into a new facility agreement with Webank and obtained a credit facility of $88,358 (RMB600,000) for daily

operations with various annual interest rate from 16.2% to 16.29%.

The loans are guaranteed at no cost by the legal representative

The loan borrowing was $86,886 (RMB590,000) as of September 30, 2020 (March 31, 2020:

Income Tax (“EIT”)

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Islands, is not subject to income taxes.

HK was incorporated in Hong Kong and is subject to Hong Kong income tax at a tax rate of 16.5%.

No provision for income taxes

in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended June 30, 2020 and 2019.

HK was incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive rate of 16.5%.

No provision for

income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the three and six months ended September 30, 2020

were incorporated in the PRC and is subject to the EIT tax rate of 25%.

No provision for income taxes in the PRC has been made

as YX had no taxable income for the three months ended June 30, 2020 and 2019.

as YX had no taxable income for the three and six months ended September 30, 2020 and 2019.

Company is governed by the Income Tax Laws of the PRC.

Yingxi’s operating companies, QYTG, HSW, HPF, DT and YS were subject

to an EIT rate of 25% in 2020 and 2019.

XKJ enjoyed the preferential tax benefits and its EIT rate was 15% in 2020 and 2019.

All Yingxi’s operating companies were subject to progressive

EIT rates from 5% to 15% in 2020 and 2019.

The preferential tax rate will be expired at end of year 2022 and the

EIT rate will be 25% from year 2023.

Company’s parent entity, Addentax Group Corp.

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had no United States taxable income for

the three months ended June 30, 2020 and 2019.

deferred taxes were recognized for the three months ended June 30, 2020 and 2019.

reconciliation of income taxes computed at the PRC federal statutory tax rate applicable to the PRC, to income tax expenses are

months ended June 30

the three and six months ended September 30, 2020 and 2019.

reconciliation of income taxes computed at the PRC statutory tax rate applicable to the PRC, to income tax expenses are as follows:

Three months ended

Six months ended

PRC statutory tax rate

Computed expected benefits

Temporary differences not recognized

assets not recognized

Computed expected expenses

Temporary differences

Deferred tax assets

Income tax expense

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The subsidiaries HSW, DT and YS enjoyed preferential VAT rate of 13%.

The Companies

are required to remit the VAT they collect to the tax authority.

A credit is available whereby VAT paid on purchases can be used

to offset the VAT due on sales.

services, the applicable VAT rate is 11% under the relevant tax category for logistic company, except the branch of HPF enjoyed

the preferential VAT rate of 3% in 2020 and 2019.

The Company is required to pay the full amount of VAT calculated at the applicable

VAT rate of the invoiced value of sales as required.

A credit is available whereby VAT paid on gasoline and toll charges can be

used to offset the VAT due on service income.

information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses

operating performance.

Companies are required to remit the VAT they collect to the tax authority.

A credit is available whereby VAT paid on purchases

can be used to offset the VAT due on sales.

services, the applicable VAT rate is 9% under the relevant tax category for logistic company, except the branch of HPF

enjoyed the preferential VAT rate of 3% in 2020 and 2019.

The Company is required to pay the full amount of VAT calculated at

the applicable VAT rate of the invoiced value of sales as required.

A credit is available whereby VAT paid on gasoline and toll

charges can be used to offset the VAT due on service income.

information is consistent with how chief operating decision maker reviews the businesses, makes investing and resource

allocation decisions and assesses operating performance.

The segment data presented reflects this segment structure.

The Company reports financial and operating

information in the following three segments:

reports financial and operating information in the following three segments:

Including manufacturing and distribution of garments;

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prevention supplies .

manufacturing, distribution and trading of epidemic prevention supplies.

Including manufacturing, distribution and trading of epidemic prevention supplies.

Company also provides general corporate services to its segments and these costs are reported as “Corporate and others”.

information in the segment structure is presented in the following tables:

by segment for the three months ended June 30, 2020 and 2019 are as follows:

months ended June 30,

by segment for the three and six months ended September 30, 2020 and 2019 are as follows:

September 30,

Logistic service

Epidemic prevention

from operations by segment for the three months ended June 30, 2020 and 2019 are as follows:

months ended June 30,

income (loss)

from operations by segment for the three and six months ended September 30, 2020 and 2019 are as follows:

prevention supplies

(loss) from operations

$ (3,492,921 )

$ (3,304,489 )

prevention supplies

(loss) before income tax

$ (3,456,472 )

income (loss)

and amortization by segment for the three months ended June 30, 2020 and 2019 are as follows:

months ended June 30,

Logistic service

Epidemic prevention

assets by segment as at June 30, 2020 and March 31, 2020 are as follows:

$ (3,460,525 )

$ (3,256,625 )

assets by segment as at September 30, 2020 and March 31, 2020 are as follows:

Logistic service

1 unchanged sentence

EXPENSES AND OTHER PAYABLES

expenses and other payables consist of the following as of June 30, 2020 and March 31, 2020:

Accrued wages and welfare

Other payables

expenses and other payables consist of the following as of September 30, 2020 and March 31, 2020:

wages and welfare

Other tax payable

Rental payable

RIGHT-OF-USE ASSET AND LEASE LIABILITIES

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Lease liabilities

are measured at present value of the sum of remaining rental payments as of June 30, 2020, with discounted rate of 4.35%.

lease cost is recognized over the lease term on a generally straight-line basis.

All cash payments of operating lease cost are

classified within operating activities in the statement of cash flows.

of June 30, 2020 and March 31, 2020, the right-of use asset and lease liabilities are as follows:

asset –

operating leases

Lease liabilities –

Lease liabilities

non-current portion

months ended June 30,

are measured at present value of the sum of remaining rental payments as of September 30, 2020, with discounted rate of 4.35%.

A single lease cost is recognized over the lease term on a generally straight-line basis.

All cash payments of operating lease

cost are classified within operating activities in the statement of cash flows.

September 30,

Operating lease cost

months ended June 30,

Cash paid for amounts included in the measurement of lease liabilities

September 30,

Cash paid for amounts included in the

measurement of lease liabilities

cash flow from operating leases

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Weighted average discount rate - Operating

accordance with the relevant laws and regulations of the PRC, the subsidiary of the Company established in the PRC is required

to transfer 10% of its profit after taxation prepared in accordance with the accounting regulations of the PRC to the statutory

reserve until the reserve balance reaches 50% of the subsidiary’s paid-up capital.

Such reserve may be used to offset accumulated

losses or increase the registered capital of the subsidiary, subject to the approval from the PRC authorities, and are not available

for dividend distribution to the shareholders.

The paid-up statutory reserve was $23,514 as of June 30, 2020 and March 31, 2020.

translation reserve

currency translation reserve represents translation differences arising from translation of foreign currency financial statements

into the Company’s functional currency.

January 24, 2019, the Board of Directors of the Company approved a reverse stock split of the Company’s issued and outstanding

shares of common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1-for-20 (the “Reverse

Stock Split”).

The Reverse Stock Split was effective on February 27, 2019 (the “Effective Date”).

of the filing of the Certificate, the number of shares of the Company’s authorized Common Stock was reduced from 1,000,000,000

shares to 50,000,000 shares and the issued and outstanding number of shares of the Company’s Common Stock was correspondingly

decreased to 25,346,004.

There was no change to the par value of the Company’s Common Stock.

The decrease of Share Capital

was transferred to and increased the Additional Paid In Capital.

The Company has adjusted all references to number of share and

loss per share amounts in the accompanying consolidated financial statements and notes to reflect the reverse stock split.

No subsequent events have

occurred that would require recognition or disclosure in the financial statements.

SHARE CAPITAL

August 2020, the Company offered 747,000 common stocks to an individual investor.

The subscription price was $5.00 per

The proceeds were all received in August 2020.

SUBSEQUENT EVENTS

November 2020, the Company disposed of $194,164 inventories in HSW to Mr.

Huang and a third party at cost for cash with no gain

or loss recognized.

Such cash was received in November 2020.

other subsequent events have occurred that would require recognition or disclosure in the financial statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

following discussion and analysis of our financial condition and results of operations for the three months ended June 30, 2020

and 2019 should be read in conjunction with the Financial Statements and corresponding notes included in this Report on Form 10-Q.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such

as our plans, objectives, expectations, and intentions.

Actual results and the timing of events could differ materially from those

anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors

and Special Note Regarding Forward-Looking Statements in this report.

following discussion and analysis of our financial condition and results of operations for the three and six months ended

September 30, 2020 and 2019 should be read in conjunction with the Financial Statements and corresponding notes included

in this Report on Form 10-Q.

Our discussion includes forward-looking statements based upon current expectations that involve risks

and uncertainties, such as our plans, objectives, expectations, and intentions.

Actual results and the timing of events could

differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those

set forth under the Risk Factors and Special Note Regarding Forward-Looking Statements in this report.

We use words such as “anticipate,”

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“could,”

“target”,

“forecast”

“target”, “forecast”

and similar expressions to identify forward-looking statements.

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Garment, Logistics services and Epidemic prevention supplies.

garment business consists of sales made principally to wholesaler located in the People’s Republic of China

(“PRC”).

We have our own manufacturing facilities, with sufficient production capacity and skilled workers on production

lines to ensure that we meet our high quality control standards and timely delivery requirement for our customers.

our garment manufacturing operations through five wholly owned subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd

(“HSW”), Shantou Chenghai Dai Tou Garments Co., Ltd (“DT”), Dongguan Yingxi Daying Commercial Co., Ltd

(“DY”), Dongguan Yushang Clothing Co., Ltd (“YS”), and Shantou Yi Bai Yi Garments Co., Ltd (“YBY”)

which are located in the Guangdong province, China.

garment business consists of sales made principally to wholesaler located in the People’s Republic of China (“PRC”).

We have our own manufacturing facilities, with sufficient production capacity and skilled workers on production lines to ensure

that we meet our high quality control standards and timely delivery requirement for our customers.

We conduct our garment manufacturing

operations through five wholly owned subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), Shantou

Chenghai Dai Tou Garments Co., Ltd (“DT”), Dongguan Yingxi Daying Commercial Co., Ltd (“DY”), Dongguan

Yushang Clothing Co., Ltd (“YS”), and Shantou Yi Bai Yi Garments Co., Ltd (“YBY”) which are located in

the Guangdong province, China.

logistic business consists of delivery and courier services covering approximately 79 cities in approximately seven provinces

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Ltd (“HPF”), which are located in the Guangdong province, China.

epidemic prevention supplies business consists of manufacturing and distribution of epidemic prevention products and trading of

epidemic prevention supplies in both domestic and overseas markets.

We conduct our manufacturing of the epidemic prevention products

in Dongguan Yushang Clothing Co., Ltd (“YS”).

We conduct the trading of epidemic prevention suppliers through Addentax

(“ATXG”) and Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”).

Garment Business

believe the strength of our garment business is mainly due to our consistent emphasis on exceptional quality and

timely delivery.

The primary business objective for our garment segment is to expand our customer base and improve

epidemic prevention supplies business consists of manufacturing and distribution of epidemic prevention products and resale

of epidemic prevention supplies purchased from third party in both domestic and overseas markets.

We conduct our manufacturing

of the epidemic prevention products in Dongguan Yushang Clothing Co., Ltd (“YS”).

We conduct the trading of epidemic

prevention suppliers through Addentax Group Corp.

(“ATXG”) and Shenzhen Qianhai Yingxi Industrial Chain Services Co.,

Ltd (“YX”).

believe the strength of our garment business is mainly due to our consistent emphasis on exceptional quality and timely delivery.

The primary business objective for our garment segment is to expand our customer base and improve our profit.

business objective and future plan for our logistic service segment is to establish an efficient logistic system and to build

a nationwide delivery and courier network in China.

As of June 30, 2020, we provide logistic service to over 66 cities in approximately

seven provinces and two municipalities.

We expect to develop an additional 20 logistics points in existing serving cities and

improve the Company’s profit in the year end of 2020.

As of September 30, 2020, we provide logistic service to over 79 cities

in approximately seven provinces and two municipalities.

We expect to develop an additional 20 logistics points in existing

serving cities and improve the Company’s profit in the year end of 2020.

prevention supplies Business

The primary objective

of our epidemic prevention supplies business is to take the advantage of our resource in supply chain from the garment segment

to facilitate the production, distribution and trading of epidemic prevention supplies, to increase our revenue base and improve

our net profit.

primary objective of our epidemic prevention supplies business is to take the advantage of our resource in supply chain from the

garment segment to facilitate the production, distribution and trading of epidemic prevention supplies, to increase our revenue

base and improve our net profit.

business is affected by seasonal trends, with higher levels of garment sales in our second and third quarters and higher logistic

service revenue in our third and fourth quarters.

These trends primarily result from the timing of seasonal garment

shipments and holiday periods in the logistic segment.

These trends primarily result from the timing of seasonal garment shipments

and holiday periods in the logistic segment.

our new customers, we generally require orders placed to be backed by advances or deposits.

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finished goods.

We would also give our long-term customers with an installment policy which would provide them 12 months installment

to maintain a good business relationship.

We would also give our long-term customers with an 12 months long credit term policy to maintain a good

business relationship.

business is dependent on consumer demand for our products and services.

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the adopted rules .

Concentrations

of Credit Risk

held in banks:

We maintain cash balances at the financial institutions in China.

We have not experienced any losses in such accounts.

Customer accounts typically are collected within a short period of time, and based on its assessment of current conditions

and its experience collecting such receivables, management believes it has no significant risk related to its concentration within

its accounts receivable.

Company determines if an arrangement is a lease at inception.

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Lease expense for lease payments is recognized on a straight-line basis over the lease term.

issued and adopted accounting pronouncements

August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value

Measurement to ASC Topic 820, Fair Value Measurement (“ASC 820”) .

ASU 2018-13 modifies the disclosure requirements

for fair value measurements by removing, modifying, and/or adding certain disclosures.

ASU 2018-13 is effective for interim and

annual reporting periods in fiscal years beginning after December 15, 2019.

An entity is permitted to early adopt by modifying

existing disclosures and delay adoption of the additional disclosures until the effective date.

The Company adopted this guidance

on April 1, 2020 and determined it had no impact on its consolidated financial statements and related disclosures.

February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated

Other Comprehensive Income.

The amendments allow a reclassification from accumulated other comprehensive income to retained earnings

for stranded tax effects resulting from the Tax Cuts and Jobs Act.

This standard was effective for the Company on September 1,

The adoption of this standard did not have a material impact on the Company’s consolidated financial position, results

of operations or cash flows.

issued accounting pronouncements

June 2016, the FASB issued ASU No.

7 unchanged sentences

on the financial asset.

This standard will be effective for the Company on December 15, 2019.

The Company adopted this ASU on

April 1, 2020 and determined it had no impact on its consolidated financial statements.

February 2016, the FASB issued ASU 2016-02, “Lease (Topic 842) “

, which amends recognition of lease assets

and lease liabilities by lessees for those leases classified as operating leases.

Under the new guidance, lessees will be required

to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement

This standard takes effect for fiscal years, and interim periods within those fiscal years, beginning after December 15,

According to this new standard, the Company recorded both right-of-use asset and lease liability of $1.7 million and $1.8

million on its consolidated financial statements as at June 30, 2020 and March 31, 2020.

This standard will be effective for the Company on April 1, 2023.

The Company is currently evaluating

the impact the adoption of this ASU will have on its consolidated financial statements.

Company reviews new accounting standards as issued.

1 unchanged sentence

have a significant impact on the Company’s consolidated financial statements.

of Operations for the three months ended June 30, 2020 and 2019

following tables summarize our results of operations for the three months ended June 30, 2020 and 2019.

The table and the discussion

below should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere in this

of Operations for the three months ended September 30, 2020 and 2019

following tables summarize our results of operations for the three months ended September 30, 2020 and 2019.

The table and the

discussion below should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere

in this report.

Months Ended September 30,

(decrease) in

compared to 2019

dollars, except for percentages)

Cost of revenues

(14,705,387 )

(13,081,304 )

Operating expenses

Income (Loss) from operations

(Loss) Income from operations

Other income, net

2 unchanged sentences

Net income (loss)

generated from our garment business contributed $1,274,806 or 21.5% of our total revenue for the three months ended June 30, 2020.

Revenue generated from our garment business contributed $551,317 or 25.0% of our total revenue for the three months ended June

The increase of $0.7 million was mainly because revenue in HSW decreased by $0.4 million while revenue in DT increased

by $0.9 million and revenue in YBY increased by $0.2 million.

generated from our logistic business contributed $1,533,381 or 25.9% of our total revenue for the three months ended June 30,

Revenue generated from our logistic business contributed $1,658,175 or 75.0% of our total revenue for the three months ended

June 30, 2019.

$ (3,460,525 )

$ (3,138,600 )

generated from our garment business contributed $1,623,255 or 13.9% of our total revenue for the three months ended September

Revenue generated from our garment business contributed $322,131 or 16.6% of our total revenue for the three months

ended September 30, 2019.

The increase of $1.3 million was mainly because production capacity increased from newly setup subsidiary,

generated from our logistic business contributed $1,307,003 or 11.2% of our total revenue for the three months ended September

Revenue generated from our logistic business contributed $1,622,871 or 83.4% of our total revenue for the three months

ended September 30, 2019.

The decrease mainly due to COVID-19, we cannot smoothly go through the logistics business.

generated from our epidemic prevention supplies business contributed $8,754,039, or 74.9% of our total revenue for the three months

ended June 30, 2020.

ended September 30, 2020.

This is a new business developed in the current period.

It included revenue from trading of merchandise and

revenue from sales of our own products.

The revenue from trading of merchandise was $3,041,672, representing 97.8% of total revenue

from the epidemic prevention suppliers business.

revenue for the three months ended June 30, 2020 and 2019 were $5,918,215 and $2,209,492, respectively, a 167.9% increase compared

with the three months ended June 30, 2019.

The increase was mainly because the increase of garment business in DT and YBY and

the epidemic prevention supplies business newly developed in current period.

months ended June 30,

It included revenue from resale of purchased

products and revenue from sales of our own products.

The revenue from trading of merchandise was $8,588,243, representing

98.1% of total revenue from the epidemic prevention suppliers business.

revenue for the three months ended September 30, 2020 and 2019 were $11,684,297 and $1,945,002, respectively, a 500.7% increase

compared with the three months ended September 30, 2019.

The increase was mainly because the increase of garment production

capacity from newly setup subsidiary DT and YBY and the epidemic prevention supplies business newly developed in current period.

months ended September 30,

(decrease) in

dollars, except for percentages)

revenue for garment

Raw materials

Other and Overhead

cost of revenue for garment

profit for garment

revenue for logistic service

toll and other cost of logistic service

Gross profit for

Net revenue for logistic

Fuel, toll and other cost of logistic

Subcontracting

cost of revenue for logistic service

Profit for logistic service

revenue for epidemic prevention supplies

Gross Profit for

logistic service

Net revenue for epidemic

prevention supplies

Merchandise/Finished

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cost of revenue

of revenue for our garment segment for the three months ended June 30, 2020 and 2019 was $1,182,807 and $449,602, respectively,

which includes direct raw material cost, direct labor cost, manufacturing overheads including depreciation of production equipment

Cost of revenue for our service segment for the three months ended June 30, 2020 and 2019 was $1,286,294 and $1,401,958,

respectively, which includes gasoline and diesel fuel, toll charges, other cost of logistic service and subcontracting fees.

of revenue for our new epidemic prevention supplies segment for the three months ended June 30, 2020 was $2,651,475.

$ (3,021,090 )

$ (3,342,009 )

our garment business, we purchase the majority of our raw materials directly from numerous local fabric and accessories suppliers.

Aggregate purchases from our five largest raw material suppliers represented approximately 97.9% and 73.8% of raw materials purchases

for the three months ended June 30, 2020 and 2019, respectively.

Two suppliers provided more than 10% of our raw materials purchases

for both three months ended June 30, 2020 and 2019.

We have not experienced difficulty in obtaining raw materials essential to

our business, and we believe we maintain good relationships with our suppliers.

material costs for our garment business were 74.2% of our total garment business revenue in the three months ended June 30, 2020,

compared with 68.3% in the three months ended June 30, 2019.

The increased in percentages was mainly due to the purchase cost

of the raw materials as the continuing high demand from epidemic prevention supplies industry drove up the prices of cotton fabrics.

costs for our garment business were 18.0% of our total garment business revenue in the three months ended June 30, 2020, compared

with 9.7% in the three months ended June 30, 2019.

The increase in percentages was mainly due to the rising wages in the PRC.

Aggregate purchases from our five largest raw material suppliers represented approximately 99.6% and 88.4% of raw materials

purchases for the three months ended September 30, 2020 and 2019, respectively.

Two and three suppliers provided more than

10% of our raw materials purchases for the three months ended September 30, 2020 and 2019.

We have not experienced difficulty

in obtaining raw materials essential to our business, and we believe we maintain good relationships with our suppliers.

material costs for our garment business were 70.4% of our total garment business revenue in the three months ended September 30,

2020, compared with 71.0% in the three months ended September 30, 2019.

The increased in percentages was mainly due to the purchase

cost of the raw materials as the continuing high demand from epidemic prevention supplies industry drove up the prices of cotton

costs for our garment business were 20.6% of our total garment business revenue in the three months ended September 30, 2020,

compared with 14.7% in the three months ended September 30, 2019.

The increase in percentages was mainly due to the rising wages

and other expenses for our garment business accounted for 0.4% of our total garment business revenue for the three months ended

June 30, 2020, compared with 3.6% of total garment business revenue for the three months ended June 30, 2019.

September 30, 2020, compared with 3.7% of total garment business revenue for the three months ended September 30, 2019.

our logistic business, we outsource some of the business to our contractors.

1 unchanged sentence

the subcontracting fees to our largest contractor represented approximately 32.8% and 24.2% of total cost of revenues for our

service segment for the three months ended June 30, 2020 and 2019, respectively.

The percentage decreased as we used new suppliers

after evaluation of suppliers’

We have not experienced any disputes with our subcontractor and we believe we

maintain good relationships with our contract logistic service provider.

toll and other costs for our service business for the three months ended June 30, 2020 were $384,229 compared with $564,507 for

the three months ended June 30, 2019.

Fuel, toll and other costs for our service business accounted for 25.1% of our total service

revenue for the three months ended June 30, 2020, compared with 34.0% for the three months ended June 30, 2019.

The decrease in

percentages was primarily attributable to increase of use of subcontractors.

service segment for the three months ended September 30, 2020 and 2019, respectively.

The percentage decreased as we used new

suppliers after evaluation of suppliers’

We have not experienced any disputes with our subcontractor and we

believe we maintain good relationships with our contract logistic service provider.

toll and other costs for our service business for the three months ended September 30, 2020 were $500,955 compared with $356,780

for the three months ended September 30, 2019.

Fuel, toll and other costs for our service business accounted for 38.3% of our

total service revenue for the three months ended September 30, 2020, compared with 22.0% for the three months ended September

The increase in percentages was primarily attributable to decrease of use of subcontractors under the epidemic circumstance.

Subcontracting

fees for our service business for the three months ended June 30, 2020 increased 7.7% to $902,065 from $837,451 for the three

months ended June 30, 2019.

Subcontracting fees accounted for 58.8% and 50.5% of our total service business revenue in the three

months ended June 30, 2020 and 2019, respectively.

This increase in percentages was primarily because the Company subcontracted

more shipping orders to subcontractors in 2019 due to the increase in shipping orders with the destination that were not covered

by the Company’s own delivery and transportation networks.

Moreover, the delivery cost of third-party has raised due to

the market condition.

fees for our service business for the three months ended September 30, 2020 decreased 39.9% to $588,397 from $978,881 for the

three months ended September 30, 2019.

Subcontracting fees accounted for 45.0% and 60.3% of our total service business revenue

in the three months ended September 30, 2020 and 2019, respectively.

This decrease in percentages was primarily because the Company

used less subcontractors under the epidemic circumstance.

epidemic prevention supplies business, we have trading and own production.

3 unchanged sentences

supplies business.

cost of revenue for the three months ended June 30, 2020 was $5,120,576, compared with the amount of $1,851,560 for the three

months ended June 30, 2019.

Total cost of sales as a percentage of total sales for the three months ended June 30, 2020 was 86.5%,

compared with 83.8% for the three months ended June 30, 2019.

Gross margin for the three months ended June 30, 2020 was 13.5%

compared with 16.2% for the three months ended June 30, 2019.

months ended June 30,

cost of revenue for the three months ended September 30, 2020 was $14,705,387, compared with the amount of $1,624,083 for the

three months ended September 30, 2019.

Total cost of sales as a percentage of total sales for the three months ended September

30, 2020 was 125.9%, compared with 83.5% for the three months ended September 30, 2019.

Gross (loss) margin for the three months

ended September 30, 2020 was (25.9)% compared with 16.5% for the three months ended September 30, 2019.

business gross profit for the three months ended September 30, 2020 was $140,519 compared with $33,709 for the three months ended

September 30, 2019.

Gross profit accounted for 8.7% of our total Garment business revenue for the three months ended September

30, 2020, compared with 10.5% for the three months ended September 30, 2019.

The decrease of gross margin was due to increase

of raw materials cost and labor cost.

profit in our logistic service business for the three months ended September 30, 2020 was $217,650 and gross margin was 16.7 %.

Gross profit in our logistic service business for the three months ended September 30, 2019 was $287,210 and gross margin was

loss in our epidemic prevention supplies business for the three months ended September 30, 2020 was $(3,379,259) and gross margin

The large lost was mainly because the cost of materials increased significantly and rapidly while the selling price

was fixed in the sales agreement with the customers.

months ended September 30,

compared to 2019

dollars, except for percentages)

$ (3,021,090 )

Operating expenses:

3 unchanged sentences

from operations

business gross profit for the three months ended June 30, 2020 was $91,999 compared with $101,715 for the three months ended June

Gross profit accounted for 7.2% of our total manufacturing business revenue for the three months ended June 30, 2020,

compared with 18.4% for the three months ended June 30, 2019.

The decrease of gross margin was due to increase of raw materials

cost and labor cost.

profit in our service business for the three months ended June 30, 2020 was $247,087 and gross margin was 16.1%.

in our service business for the three months ended June 30, 2019 was $256,217 and gross margin was 15.5%.

profit in our epidemic prevention supplies business for the three months ended June 30, 2020 was $458,553 and gross margin was

$ (3,492,921 )

General and administrative expenses

selling expenses in our manufacturing segment for the three months ended June 30, 2020 and 2019 was $611 and $7,227, respectively.

Our selling expenses in our service segment was $nil for the three months ended June 30, 2020 and 2019, respectively.

expenses in our epidemic prevention supplies segment was $152,634 for the three months ended June 30, 2020.

Selling expenses consist

primarily of local transportation, unloading charges and product inspection charges.

Total selling expenses for the three months

ended June 30, 2020 increased 2020.4% to $153,245 from $7,227 for the months ended June 30, 2019.

general and administrative expenses in our manufacturing segment for the three months ended June 30, 2020 and 2019 was $25,825

selling expenses in our Garment business segment for the three months ended September 30, 2020 and 2019 was $1,112 and $3,639,

respectively.

Our selling expenses in our logistic service segment was $nil for the three months ended September 30, 2020 and

2019, respectively.

Selling expenses in our epidemic prevention supplies segment was $4,677 for the three months ended September

Selling expenses consist primarily of local transportation, unloading charges and product inspection charges.

selling expenses for the three months ended September 30, 2020 increased 59.1% to $5,788 from $3,639 for the three months ended

September 30, 2019.

general and administrative expenses in our Garment business segment for the three months ended September 30, 2020 and 2019 was

$63,125 and $46,752, respectively.

Our general and administrative expenses in our service segment, for the three months ended June 30,

2020 and 2019 was $237,526 and $274,528, respectively.

Our general and administrative expenses in our epidemic prevention supplies

segment was $17,202 for the three months ended June 30, 2020.

Our general and administrative expenses in our corporate office

for the three months ended June 30, 2020 and 2019 was $175,409 and $381,647, respectively.

General and administrative expenses

consist primarily of administrative salaries, office expense, certain depreciation and amortization charges, repairs and maintenance,

legal and professional fees, warehousing costs and other expenses that are not directly attributable to our revenues.

general and administrative expenses for the three months ended June 30, 2020 decreased 35.3% to $455,962 from $704,446 for the

three months ended June 30, 2019.

The amount was $248,483 higher in the three months ended June 30, 2019 was mainly due to the

professional fees for Form S1 filing.

Our general and administrative expenses in our logistic service segment, for the three months

ended September 30, 2020 and 2019 was $191,927 and $261,183, respectively.

Our general and administrative expenses in our epidemic

prevention supplies segment was $1,228 for the three months ended September 30, 2020.

Our general and administrative expenses

in our corporate office for the three months ended September 30, 2020 and 2019 was $209,763 and $318,713, respectively.

and administrative expenses consist primarily of administrative salaries, office expense, certain depreciation and amortization

charges, repairs and maintenance, legal and professional fees, warehousing costs and other expenses that are not directly attributable

to our revenues.

general and administrative expenses for the three months ended September 30, 2020 decreased 32.2% to $466,043 from $626,647 for

the three months ended September 30, 2019.

The amount was $160,605 higher in the three months ended September 30, 2019 was mainly

due to the professional fees for Form S1 filing.

(loss) from operations

(loss) from operations for the three months ended June 30, 2020 and 2019 was $188,432 and $(353,741), respectively.

operations of $65,562 and $46,217 was attributed from our garment segment for the three months ended June 30, 2020 and 2019, respectively.

Income (loss) from operations of $9,560 and $(18,311) was attributed from our service segment for the three months ended June

from operations for the three months ended September 30, 2020 and 2019 was $(3,492,921) and $(309,367), respectively.

Income (loss)

from operations of $75,956 and $(16,681) was attributed from our garment segment for the three months ended September 30, 2020

and 2019, respectively.

Income from operations of $369,578 was attributed from our epidemic prevention supplies segment

for the three months ended June 30, 2020.

We incurred a loss from operations in corporate office of $256,268 and $381,647 for

the three months ended June 30, 2020 and 2019, respectively.

The loss from our corporate office was mainly due to increase in

legal and professional fees to comply with the SEC accounting, disclosure and reporting requirements.

tax expense for the three months ended June 30, 2020 and 2019 was $3,359 and $2,212, respectively, a 51.9% increase compared to

Income (loss) from operations of $25,724 and $26,027 was attributed from our logistic service segment

for the three months ended September 30, 2020 and 2019, respectively.

Loss from operations of $(3,384,835) was attributed from

our epidemic prevention supplies segment for the three months ended September 30, 2020.

We incurred a loss from operations in

corporate office of $(209,766) and $(318,712) for the three months ended September 30, 2020 and 2019, respectively.

The loss from

our corporate office was mainly due to increase in legal and professional fees to comply with the SEC accounting, disclosure and

reporting requirements.

tax expense for the three months ended September 30, 2020 and 2019 was $4,053 and $852, respectively, a 375.6% increase compared

The Company operates in the PRC and files tax returns in the PRC jurisdictions.

1 unchanged sentence

Islands, is not subject to income taxes.

HK was incorporated in Hong Kong and is subject to Hong Kong income tax at a tax rate of 16.5%.

No provision for income taxes

in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended June 30, 2020 and 2019.

HK was incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive tax rate of 16.5%.

for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended September 30, 2020 and

and YX were incorporated in the PRC and is subject to the PRC Enterprise Income Tax (EIT) rate is 25%.

No provision for income

taxes in the PRC has been made as QYTG and YX had no taxable income for the three months ended June 30, 2020 and 2019.

taxes in the PRC has been made as QYTG and YX had no taxable income for the three months ended September 30, 2020 and 2019.

Company is governed by the Income Tax Laws of the PRC.

Yingxi’s operating companies, HSW, HPF, DT, YS and YBY were subject

to an EIT rate of 25% in 2020.

XKJ enjoyed the preferential tax benefits and its EIT rate was 15% in 2020.

All Yingxi’s operating companies are subject to progressive

EIT rates from 5% to 15% in 2020.

The preferential tax rates will be expired at end of year 2022 and the EIT rate

will be 25% from year 2023.

Company’s parent entity, Addentax Group Corp.

2 unchanged sentences

had no United States taxable income for

the three months ended June 30, 2020 and 2019.

the three months ended September 30, 2020 and 2019.

incurred a net loss of $3,460,525 and $321,925 for the three months ended September 30, 2020 and 2019, respectively.

and diluted loss per share were $(0.14) and $(0.00) for the three months ended September 30, 2020 and 2019, respectively.

PARTY TRANSACTIONS

of Related Parties

with the Company

CEO, and a director of the Company

legal representative of HPF

legal representative of XKJ

legal representative of DT

spouse of legal representative of HSW

Company leases Shenzhen XKJ office rent-free from Bihua Yang.

September, the Company disposed of $114,229 aged inventories in HSW to Mr.

Jinlong Huang at cost with no gain or loss recognized.

Company had the following related party balances as of September 30, 2020 and March 31, 2020:

due to related parties

Zhongpeng Chen

Jinlong Huang

balances with related parties are unsecured, non-interest bearing and repayable on demand.

of Operations for the six months ended September 30, 2020 and 2019

following tables summarize our results of operations for the six months ended September 30, 2020 and 2019.

The table and the discussion

below should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere in this

months Ended September 30,

(decrease) in

compared to 2019

dollars, except for percentages)

Cost of revenues

(19,825,963 )

(16,350,320 )

Operating expenses

(Loss) Income from operations

Other income, net

Net finance cost

Income tax expense

Net income (loss)

$ (3,256,625 )

$ (2,567,352 )

generated from our garment business contributed $2,898,061 or 16.5% of our total revenue for the six months ended September 30,

Revenue generated from our garment business contributed $873,448 or 21.0% of our total revenue for the six months ended

September 30, 2019.

The increase of $2.0 million was mainly because revenue in production capacity increased from newly setup

subsidiary YBY.

generated from our logistic business contributed $2,840,384 or 16.1% of our total revenue for the six months ended September 30,

Revenue generated from our logistic business contributed $3,281,046 or 79.0% of our total revenue for the six months ended

September 30, 2019.

The decrease mainly due to COVID-19, we cannot smoothly go through the logistics business.

generated from our epidemic prevention supplies business contributed $11,864,067, or 67.4% of our total revenue for the six months

ended September 30, 2020.

This is a new business developed in the current period.

It included revenue from trading of merchandise

and revenue from sales of our own products.

The revenue from trading of merchandise was $11,791,672, representing 99.4% of total

revenue from the epidemic prevention suppliers business.

revenue for the six months ended September 30, 2020 and 2019 were $17,602,512 and $ 4,154,494, respectively, a 323.7% increase

compared with the six months ended September 30, 2019.

The increase was mainly because the increase of garment production capacity

in newly setup subsidiaries, DT and YBY, and the epidemic prevention supplies business newly developed in current period.

months ended September 30,

(decrease) in

dollars, except for percentages)

Raw materials

Other and Overhead

cost of revenue for garment

Gross profit for

Net revenue for logistic

Fuel, toll and other cost of logistic

Subcontracting

cost of revenue for logistic service

Gross Profit for

logistic service

Net revenue for epidemic

prevention supplies

Merchandise/Finished goods/Raw materials

Other and Overhead

cost of revenue for epidemic prevention supplies

profit for epidemic prevention supplies

cost of revenue

$ (2,223,451 )

$ (2,902,302 )

our garment business, we purchase the majority of our raw materials directly from numerous local fabric and accessories suppliers.

Aggregate purchases from our five largest raw material suppliers represented approximately 97.2% and 74.5% of raw materials purchases

for the six months ended September 30, 2020 and 2019, respectively.

One and two suppliers provided more than 10% of our raw materials

purchases for both six months ended September 30, 2020 and 2019, respectively.

We have not experienced difficulty in obtaining

raw materials essential to our business, and we believe we maintain good relationships with our suppliers.

material costs for our garment business were 72.1% of our total garment business revenue in the six months ended September 30,

2020, compared with 69.3% in the six months ended September 30, 2019.

The increased in percentages was mainly due to the purchase

cost of the raw materials as the continuing high demand from epidemic prevention supplies industry drove up the prices of cotton

costs for our garment business were 19.4% of our total garment business revenue in the six months ended September 30, 2020, compared

with 11.6% in the six months ended September 30, 2019.

The increase in percentages was mainly due to the rising wages in the PRC.

and other expenses for our garment business accounted for 0.5% of our total garment business revenue for the six months ended

September 30, 2020, compared with 3.7% of total garment business revenue for the six months ended September 30, 2019.

our logistic business, we outsource some of the business to our contractors.

The Company relied on a few subcontractors, in which

the subcontracting fees to our largest contractor represented approximately 33.6% and 17.0% of total cost of revenues for our

service segment for the six months ended September 30, 2020 and 2019, respectively.

The percentage increased as we used the good

suppliers after evaluation of suppliers’

We have not experienced any disputes with our subcontractor and we

believe we maintain good relationships with our contract logistic service provider.

toll and other costs for our service business for the six months ended September 30, 2020 were $885,185 compared with $921,287

for the six months ended September 30, 2019.

Fuel, toll and other costs for our service business accounted for 31.2% of our total

service revenue for the six months ended September 30, 2020, compared with 28.1% for the six months ended September 30, 2019.

The increase in percentages was primarily attributable to decrease of use of subcontractors under the epidemic circumstance.

Subcontracting

fees for our service business for the six months ended September 30, 2020 decreased 17.9% to $1,490,462 from $1,816,332 for the

six months ended September 30, 2019.

Subcontracting fees accounted for 52.5% and 55.4% of our total service business revenue in

the six months ended September 30, 2020 and 2019, respectively.

This decrease in percentages was primarily because the Company

used less subcontractors under the epidemic circumstance.

epidemic prevention supplies business, we have trading and own production.

The cost of revenue included cost of merchandise and

cost of our own products.

The cost of merchandise was $14,680,253, represented 123.7% of total cost of revenue of the epidemic

prevention supplies business.

cost of revenue for the six months ended September 30, 2020 was $19,825,963, compared with the amount of $3,475,643 for the six

months ended September 30, 2019.

Total cost of sales as a percentage of total sales for the six months ended September 30, 2020

was 112.6%, compared with 83.7% for the six months ended September 30, 2019.

Gross (loss) margin for the six months ended September

30, 2020 was (12.6)% compared with 16.3% for the six months ended September 30, 2019.

profit of Garment business for the six months ended September 30, 2020 was $232,518 compared with $135,424 for the six months

ended September 30, 2019.

Gross profit accounted for 8.0% of our total Garment business revenue for the six months ended September

30, 2020, compared with 15.5% for the six months ended September 30, 2019.

The decrease of gross margin was due to increase of

raw materials cost and labor cost.

profit in our logistic service business for the six months ended September 30, 2020 was $464,737 and gross margin was 16.4%.

profit in our logistic service business for the six months ended September 30, 2019 was $543,427 and gross margin was 16.6%.

loss in our epidemic prevention supplies business for the six months ended September 30, 2020 was $(2,920,706) and gross margin

The large lost was mainly because the cost of materials increased significantly and rapidly while the selling price

was fixed in the sales agreement with the customers.

months ended September 30,

dollars, except for percentages)

$ (2,223,451 )

Operating expenses:

Selling expenses

General and administrative

$ (1,081,038 )

$ (1,341,959 )

Income (Loss)

incurred a net income of $203,900 and a net loss of $367,348 for the three months ended June 30, 2020 and 2019, respectively.

Our basic and diluted earnings per share were $0.01 and $0.00 for the three months ended June 30, 2020 and 2019, respectively.

from operations

$ (3,304,489 )

General and administrative expenses

selling expenses in our Garment business segment for the six months ended September 30, 2020 and 2019 was $1,723 and $10,866,

respectively.

Our selling expenses in our logistic service segment was $nil for the six months ended September 30, 2020 and 2019,

respectively.

Selling expenses in our epidemic prevention supplies segment was $157,311 for the six months ended September 30,

Selling expenses consist primarily of local transportation, unloading charges and product inspection charges.

Total selling

expenses for the six months ended September 30, 2020 increased 1,363.6% to $159,033 from $10,866 for the six months ended September

general and administrative expenses in our Garment business segment for the six months ended September 30, 2020 and 2019 was $88,950

and $95,023, respectively.

Our general and administrative expenses in our logistic service segment, for the six months ended September

30, 2020 and 2019 was $429,453 and $535,711, respectively.

Our general and administrative expenses in our epidemic prevention

supplies segment was $18,429 for the six months ended September 30, 2020.

Our general and administrative expenses in our corporate

office for the six months ended September 30, 2020 and 2019 was $385,173 and $700,360, respectively.

General and administrative

expenses consist primarily of administrative salaries, office expense, certain depreciation and amortization charges, repairs

and maintenance, legal and professional fees, warehousing costs and other expenses that are not directly attributable to our revenues.

general and administrative expenses for the six months ended September 30, 2020 decreased 30.7% to $922,005 from $1,331,093 for

the six months ended September 30, 2019.

The amount was $409,088 higher in the six months ended September 30, 2019 was mainly

due to the professional fees for Form S1 filing.

(loss) from operations

from operations for the six months ended September 30, 2020 and 2019 was $(3,304,489) and $(663,108), respectively.

operations of $141,518 and $29,535 was attributed from our garment segment for the six months ended September 30, 2020 and 2019,

respectively.

Income (loss) from operations of $35,284 and $7,716 was attributed from our logistic service segment for the six

months ended September 30, 2020 and 2019, respectively.

Loss from operations of $(3,096,118) was attributed from our epidemic

prevention supplies segment for the six months ended September 30, 2020.

We incurred a loss from operations in corporate office

of $(385,173) and $(700,360) for the six months ended September 30, 2020 and 2019, respectively.

The loss from our corporate office

was mainly due to increase in legal and professional fees to comply with the SEC accounting, disclosure and reporting requirements.

tax expense for the six months ended September 30, 2020 and 2019 was $7,412 and $3,064, respectively, a 141.9% increase compared

The Company operates in the PRC and files tax returns in the PRC jurisdictions.

tax jurisdiction and income tax rate of each entity was described in the above section of analysis of three months’

Addentax, Yingxi, Yingxi HK, QYTG, YX, HSW, HPF and YS had no taxable income for the six months ended September 30, 2020 and 2019.

Income (Loss)

incurred a net loss of $3,256,625 and $689,273 for the six months ended September 30, 2020 and 2019, respectively.

Our basic and

diluted loss per share were $(0.13) and $(0.00) for the six months ended September 30, 2020 and 2019, respectively.

of cash flows

cash flows information for the three months ended June 30, 2020 and 2019 is as follow:

months ended June 30,

Net cash provided by (used

in) operating activities

cash flows information for the six months ended September 30, 2020 and 2019 is as follow:

months ended September 30,

Net cash used in operating

$ (3,062,555 )

Net cash used in investing activities

Net cash provided by financing

Net cash used in operating activities consist

of net income of $203,900, increased by depreciation of $23,473, loss on disposal of property and equipment of $4,947,

and decrease in change of operating assets and liabilities of $566,071.

We will continue to improve our operating cash

flow by closely monitoring the timely collection of accounts and other receivables.

We generally do not hold any significant inventory

for more than ninety days, as we typically manufacture upon customers’

cash used in investing activities consist of purchase of plant and equipment of $143,148.

cash provided by financing activities consist of repayment of related party borrowings of $2,942,222 and we received related party

proceeds of $3,302,608.

Net cash provided by financing activities

cash used in operating activities consist of net loss of $3,256,625, increased by depreciation and amortization of $78,079,

loss on disposal of property and equipment of $32,988, and increase in change of operating assets and liabilities of

We will continue to improve our operating cash flow by closely monitoring the timely collection of accounts and

other receivables.

We generally do not hold any significant inventory for more than ninety days, as we typically manufacture upon

customers’

cash used in investing activities consist of purchase of plant and equipment of $400,585 and proceeds from disposal of

plant and equipment of $21,192.

cash provided by financing activities consist of repayment of related party borrowings of $5,621,945 and we received related

party proceeds of $6,079,859;

Repayment of bank loan of $205,850 and draw down of new bank loan of $86,886;

$3,735,000 from subscription of ordinary shares offered to a shareholder.

Condition, Liquidity and Capital Resources

of June 30, 2020, we had cash on hand of $1,549,409, total current assets of $4,527,818 and current liabilities of $8,515,785.

of September 30, 2020, we had cash on hand of $1,178,394, total current assets of $4,282,093 and current liabilities of $8,326,031.

We presently finance our operations primarily from cash flows from borrowings from related parties and third parties.

improve our operating cash flows and anticipate that cash flows from our operations and borrowings from related parties and third

parties will continue to be our primary source of funds to finance our short-term cash needs.

raised equity fund of $3,735,000 by issuance of common stocks in August 2020.

We aim to improve our operating cash flows and

anticipate that cash flows from our operations and borrowings from related parties and third parties will continue to be our primary

source of funds to finance our short-term cash needs.

The Company’s financial conditions raise substantial doubt about

the Company’s ability to continue as a going concern.

The ability to continue as a going concern is dependent upon the Company’s

profit generating operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities

arising from normal business operations when they become due.

The Company expects to finance operations primarily through cash

flow from revenue and capital contributions from the CEO.

During the year, the CEO has provided financial support for the operations

of the Company.

In the event that the Company requires additional funding to finance the growth of the Company’s current

and expected future operations as well as to achieve our strategic objectives, the CEO has indicated the intent and ability to

provide additional equity financing.

growth and development of our business will require a significant amount of additional working capital.

26 unchanged sentences

In the past years, RMB continued to appreciate against the U.S.

As of June 30, 2020, the market foreign exchange

rate had decreased to RMB 7.07 to one U.S.

As of September 30, 2020, the market foreign

exchange rate had decreased to RMB 6.79 to one U.S.

Our financial statements are translated into U.S.

dollars using the closing

dollars using the

closing rate method.

The balance sheet items are translated into U.S.

dollars using the exchange rates at the respective balance sheet

dollars using the exchange rates at the respective balance

The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions

3 unchanged sentences

The foreign currency translation (loss) gain for the three

months ended June 30, 2020 and 2019 was $(4,455) and $37,002, respectively.

and six months ended September 30, 2020 and 2019 was $(83,969) and $72,153, (88,151) and $49,162, respectively.

Sheet Arrangements

have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of June 30, 2020 that

have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues

or expenses, results of operations, liquidity, capital expenditures or capital resources.

have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of September 30, 2020

that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,

revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements