What changed in this filing

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Item 1. Financial Statements

2021-02-22 compared with 2020-11-23 · 709 added, 592 removed, 491 unchanged (73% of the section changed)

Financial Statements and Supplementary Data

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)

the nine months ended December 31, 2020 and 2019

Condensed Consolidated Balance sheets as of December 31, 2020 (unaudited) and March 31, 2020 (unaudited)

Condensed Consolidated Statements of Income and Comprehensive Income for the Nine months ended December 31, 2020 and 2019 (unaudited)

Condensed Consolidated Statements of Changes in Equity for the nine months ended December 31, 2020 and 2019 (unaudited)

Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2020 and 2019 (unaudited)

Notes to Condensed Consolidated Financial Statements for the nine months ended December 31, 2020 and 2019 (unaudited)

AND SUBSIDIARIES

1 unchanged sentence

Dollars, except share data or otherwise stated)

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

OF DECEMBER 31, 2020 AND MARCH 31, 2020 (UNAUDITED)

December 31, 2020

March 31, 2020

CURRENT ASSETS

1 unchanged sentence

Accounts receivables, net

Other receivables

Other receivables - disposal of subsidiaries

Other receivables - other

Advances to suppliers

Total current

Total current assets

NON-CURRENT ASSETS

Plant and equipment, net

Operating lease

right of use asset

Total non-current

Operating lease right of use asset

Total non-current assets

LIABILITIES AND EQUITY

CURRENT LIABILITIES

4 unchanged sentences

Accrued expenses and other payables

Operating lease

liability current portion

Total current

lease liability, net of current portion

Total non-current

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)

Operating lease liability current portion

Total current liabilities

NON-CURRENT LIABILITIES

Operating lease liability

TOTAL LIABILITIES

Common stock ($0.001 par value, 50,000,000 shares authorized, 26,093,004 and 25,346,004 shares

issued and outstanding at December 31, 2020 and March 31, 2020, respectively)

Additional paid-in capital

1 unchanged sentence

Statutory reserve

Accumulated other

comprehensive loss

Accumulated other comprehensive loss

Total deficit

LIABILITIES AND EQUITY

accompany notes to the consolidated financial statements.

TOTAL LIABILITIES AND EQUITY

accompany notes to the unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS

OF LOSS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

Dollars, except share data or otherwise stated)

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

September 30,

THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019

COST OF REVENUES

(22,776,087 )

(19,825,963 )

GROSS (LOSS) PROFIT

OPERATING EXPENSES

Selling and marketing

and administrative

General and administrative

Total operating expenses

FROM OPERATIONS

LOSS FROM OPERATIONS

Interest income

Interest expenses

(expense), net

LOSS BEFORE INCOME

Other income (expense), net

LOSS BEFORE INCOME TAX EXPENSE

INCOME TAX EXPENSE

currency translation gain (loss)

COMPREHENSIVE LOSS

$ (3,544,221 )

Foreign currency translation gain (loss)

TOTAL COMPREHENSIVE LOSS

LOSS PER SHARE

Weighted average

number of shares outstanding –

Basic and diluted

accompany notes to the consolidated financial statements.

Weighted average number of shares outstanding –

Basic and diluted

accompany notes to the unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

1 unchanged sentence

Dollars, except share data or otherwise stated)

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

comprehensive

BALANCE AT JULY 1, 2019

THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019

Retained earnings

Accumulated other

Statutory reserve

comprehensive loss

BALANCE AT OCTOBER 1, 2019 (Restated)

$ (2,940,044 )

1 unchanged sentence

Foreign currency translation

loss for the period

BALANCE AT SEPTEMBER 30, 2019

Movement of Statutory reserve

Net loss for the period

BALANCE AT DECEMBER 31, 2019

$ (3,199,991 )

BALANCE AT JULY 1, 2020

$ (3,066,320 )

BALANCE AT OCTOBER 1, 2020

$ (6,489,747 )

Issue of ordinary shares

$ (2,676,500 )

Movement of Statutory reserve

Foreign currency translation

loss for the period

BALANCE AT SEPTEMBER

Net loss for the period

BALANCE AT DECEMBER 31, 2020

$ (6,804,107 )

$ (3,065,809 )

BALANCE AT MARCH 31, 2019

BALANCE AT MARCH 31, 2019 (Restated)

$ (2,250,770 )

$ (2,177,550 )

Movement of Statutory reserve

Foreign currency translation

loss for the period

BALANCE AT SEPTEMBER 30, 2019

Net loss for the period

BALANCE AT DECEMBER 31, 2019

$ (3,199,991 )

$ (3,066,320 )

BALANCE AT MARCH 31, 2020

1 unchanged sentence

$ (3,066,724 )

of common stocks

Issuance of common stocks

Movement of Statutory reserve

Foreign currency translation

loss for the period

BALANCE AT SEPTEMBER

Net loss for the period

BALANCE AT DECEMBER 31, 2020

$ (6,804,107 )

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

THE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THE NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019

Dollars, except share data or otherwise stated)

CASH FLOWS FROM OPERATING

CASH FLOWS FROM OPERATING ACTIVITIES:

$ (3,560,206 )

Adjustments to reconcile net income

to net cash used in operating activities:

Loss on disposal

of plant and equipment

Changes in operating assets and liabilities:

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

Loss on disposal of plant and equipment

Changes in operating assets and liabilities, net of effects from disposal of subsidiaries:

Accounts receivable

2 unchanged sentences

Accounts payables

Accrued expenses

and other payables

from customers

Net cash provided by (used in) operating

Accrued expenses and other payables

Advances from customers

Net cash provided by (used in) operating activities

$ (3,782,116 )

CASH FLOWS FROM INVESTING

$ (1,058,936 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of plant and equipment

Proceeds from

sale of property and equipment

Proceeds from sale of property and equipment

Cash decreased in disposal of subsidiaries

Net cash used in investing activities

CASH FLOWS FROM FINANCING

from issuance of common stocks

$ (1,094,344 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stocks

Proceeds from related party borrowings

1 unchanged sentence

Proceeds from bank borrowings

bank borrowings

Repayment of 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

Supplemental disclosure

of cash flow information:

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

CASH AND CASH EQUIVALENTS, END OF THE PERIOD

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

Cash paid during the year for income tax

Supplemental disclosure of non-cash investing and financing activities:

Right-of-use assets obtained in exchange for operating lease obligations

Net assets of subsidiaries disposed of recorded as Other Receivables

accompany notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019

AND BUSINESS ACQUISITIONS

(“ATXG”) was incorporated in Nevada on October 28, 2014, and before the transaction described below, ATXG

is engaged in the field of producing images on multiple surfaces using heat transfer technology.

December 28, 2016, ATXG acquired 250,000,000 shares of the issued and outstanding stock of Yingxi Industrial Chain Group Co.,

(“Yingxi”).

The 250,000,000 shares of Yingxi were acquired from the members of Yingxi in a share exchange transaction

in return for the issuance of 500,000,000 shares of common stock of ATXG.

The 250,000,000 shares of Yingxi constitute 100% of

its issued and outstanding stock, and as a result of the transaction, Yingxi became a wholly-owned subsidiary of ATXG.

And following

the consummation of the reverse acquisition effective on September 25, 2017, and giving effect to the securities exchanged in

the offering, the members of Yingxi will beneficially own approximately ninty-nine percent (99%) of the issued and outstanding

common stock of ATXG.

For accounting purposes, the Company was treated as an acquiree and Yingxi as an acquirer, as a result,

the business and financial information contained in this report is that of the acquirer prior to the consummation date and that

of the combined entity after that date.

was incorporated in the Republic of Seychelles on August 4, 2016.

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

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.

and its subsidiaries (the “Company”) are engaged in the business of garments manufacturing, providing logistic services,

property leasing and management service 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

12 unchanged sentences

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.”).

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.”) and Form S-1/A filed with

SEC on January 22, 2021.

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

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

Company incurred net loss of $303,581 and $258,212 for the three months ended December 31, 2020 and 2019, respectively, and $3,560,206

and $947,485 for the nine months ended December 31, 2020 and 2019, respectively.

As of December 31, 2020 and March 31, 2020, the

Company had net current liability of $7,882,411 and $4,095,286, respectively, and a deficit on total equity of $3,065,809 and

$3,066,724, respectively.

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

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

33 unchanged sentences

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

AND UNCERTAINTIES

RISKS AND UNCERTAINTIES

and Political Risks

9 unchanged sentences

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.

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.

Concentration

followings are the percentages of accounts receivable balance of the top five customers over accounts receivable for each segment

as of December 31, 2020 and March 31, 2020.

manufacturing segment

high concentration as of March 31, 2020 was mainly due to business development of a large distributor of garments.

believes that should the Company lose any one of its major customers, it was able to sell similar products to other customers.

services segment

December 31, 2020

March 31, 2020

prevention supplies segment

accounts receivables in this segment.

the three months ended December 31, 2020, one customer from garment segment provided more than 10% of total revenue of the Company,

represented 62.8% of total revenue of the Company for the three months.

For the nine months ended December 31, 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 14.0% and 49.6% of total revenue of the Company for the nine months, respectively.

high concentration in three and nine months ended December 31, 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.

following tables summarized the purchases from five largest suppliers of each of the reportable segment for the three and nine

months ended December 31, 2020 and 2019.

Three months ended

Nine months ended

Garment manufacturing segment

Logistics services segment

Property management and subleasing

Epidemic prevention supplies

believes that should the Company lose any one of its major suppliers, other suppliers are available that could provide similar

products to the Company.

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

As of December 31, 2020, the total outstanding

borrowings amounted to $153,172 (RMB1,000,000) 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

for doubtful accounts

Accounts receivable,

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

Coronavirus Disease (COVID-19) outbreak and the measures taken to contain the spread of the pandemic have created a high level

of uncertainty to global economic prospects and this has impacted the Company’s operations and its financial performance

in the last three quarters of the financial year and subsequent to the financial year end.

the situation continues to evolve with significant level of uncertainty, the Company is unable to reasonably estimate the full

financial impact of the COVID-19 outbreak.

The Company is monitoring the situation closely and to mitigate the financial impact,

it is conscientiously managing its cost by adopting an operating cost reduction strategy and conserving liquidity by working with

major creditors to align repayment obligations with receivable collections.

PARTY TRANSACTIONS

2 unchanged sentences

CEO, and a director of the Company

legal representative of HPF

legal representative of HPF, became not a related party when HPF was disposed of in November, 2020

legal representative of XKJ

4 unchanged sentences

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

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

Related parties borrowings

December 31, 2020

March 31, 2020

Zhongpeng Chen

Jinlong Huang

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

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

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

consist of the following as of December 31, 2020 and March 31, 2020:

December 31, 2020

March 31, 2020

Raw materials

2 unchanged sentences

Total inventories

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

is no inventory write-off for the three and nine months ended December 31, 2020 and 2019.

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

7 unchanged sentences

PLANT AND EQUIPMENT

plant and equipment consists of the following as of September

30, 2020 and March 31, 2020:

plant and equipment consists of the following as of December 31, 2020 and March 31, 2020:

December 31, 2020

March 31, 2020

Production plant

1 unchanged sentence

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.

accumulated depreciation

Plant and equipment, net

the nine months ended December 31, 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 old machinery with original cost of $19,303 and accumulated depreciation of $18,661,

and two old motor truckers 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 nine months ended December 31, 2020 and 2019 was $32,051 and $27,648, $83,210 and $84,277, respectively.

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

7 unchanged sentences

the legal representative of HSW.

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

As of December 31, 2020, the Company has borrowed $153,172 (RMB1,000,000) (March 31, 2020:

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 on March

3 unchanged sentences

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

The loan was transferred to

the buyer with the disposal of DT on September 30, 2020.

Income Tax (“EIT”)

3 unchanged sentences

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

No provision for income

taxes in Hong Kong has been made as Yingxi HK had no taxable income for the three and nine months ended December 31, 2020 and

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 and six months ended September 30, 2020 and 2019.

as YX had no taxable income for the three and nine months ended December 31, 2020 and 2019.

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

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.

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.

2 unchanged sentences

had no United States taxable income for

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

the three and nine months ended December 31, 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

Nine months ended

PRC statutory tax rate

Computed expected expenses

Computed expected benefits

Temporary differences

Deferred tax assets

Permanent difference

Changes in valuation allowance

Income tax expense

3 unchanged sentences

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

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 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.

reports financial and operating information in the following three segments:

The Company reports

financial and operating information in the following four segments:

manufacturing .

Including manufacturing and distribution of garments;

2 unchanged sentences

Including manufacturing, distribution and trading of epidemic prevention supplies.

Property management and subleasing.

shops subleasing and property management services for garment wholesalers and retailers in garment market.

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 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 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)

$ (3,460,525 )

by segment for the three and nine months ended December 31, 2020 and 2019 are as follows:

Three months ended

Nine months ended

Garments manufacturing segment

Logistics services segment

Property management and subleasing

Epidemic prevention supplies segment

Total of reportable segments and consolidated revenue

from operations by segment for the three and nine months ended December 31, 2020 and 2019 are as follows:

Three months ended

Nine months ended

Garment manufacturing segment

Logistics services segment

Property management and subleasing

Epidemic prevention supplies

Total of reportable segments

Reconciliation –

Total consolidated loss from operations

$ (3,593,015 )

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

Logistic service

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

December 31, 2020

March 31, 2020

Garment manufacturing segment

Logistics services segment

Property management and subleasing

Epidemic prevention supplies

Total of reportable segments

Reconciliation –

Consolidated total assets

EXPENSES AND OTHER PAYABLES

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

wages and welfare

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

December 31, 2020

March 31, 2020

Accrued wages and welfare

Other tax payable

Rental payable

Customers’

Other payables

RIGHT-OF-USE ASSET AND LEASE LIABILITIES

4 unchanged sentences

Lease liabilities

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

are measured at present value of the sum of remaining rental payments as of December 31, 2020, with discounted rate of 4.35%.

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

1 unchanged sentence

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

September 30,

Company leases its head office.

The lease period is 5 years with an option to extend the lease.

The Company leases its plant and

dormitory for 4.5 years with an option to extend the lease.

The Company leased several floors in a commercial building for its

sublease business for 3 years with an option to extend the lease.

Following table summarizes the components of lease expense:

Three months ended

Nine months ended

Operating lease cost

September 30,

Cash paid for amounts included in the

measurement of lease liabilities

cash flow from operating leases

Right-of-use assets obtained in exchange

for new operating leases liabilities

Weighted average remaining lease term

- Operating leases (years)

Weighted average discount rate - Operating

Short-term lease cost

following table summarizes supplemental information related to leases:

Three months ended

Nine months ended

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flow from operating leases

Right-of-use assets obtained in exchange for new operating leases liabilities

Weighted average remaining lease term - Operating leases (years)

Weighted average discount rate - Operating leases

following table summarizes the maturity of operating lease liabilities:

Years ending December 31

Total lease payments

SHARE CAPITAL

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

The subscription price was $5.00 per

The subscription price was $5.00 per share.

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.

DISPOSITION OF SUBSIDIARIES

Company sold its subsidiary DT, a manufacturing company in garment manufacturing segment on October 1 to a third party and sold

HPF, a subsidiary in logistics services segment in November 2020 to another third party.

After disposition, the two subsidiaries

became third parties to the Company.

The Company will not have any businesses with the two subsidiaries nor the buyers.

operations, customers and suppliers of DT and HPF were retained by the Company;

therefore, the disposition of the two subsidiaries

did not qualify as discontinued operations.

position of the entities at disposal date and gain or loss on disposal:

Manufacturing Segment

Financial position of DT

September 30, 2020, date of disposal

Current assets

Noncurrent assets

Current liabilities

consideration was at the fair value as of date of disposal, which was also the carrying value of DT, resulting no gain or loss

recognized on the disposal.

Services Segment

Financial position of HPF

November 16, 2020, date of disposal

Current assets

Noncurrent assets

Current liabilities

consideration was at the fair value as of date of disposal, which was also the carrying value of HPF, resulting no gain or loss

recognized on the disposal.

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 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.

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

31, 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,”

13 unchanged sentences

and similar expressions to identify forward-looking statements.

are a garment manufacturer and logistic service provider based in China.

are a garment manufacturer and logistics services provider based in China.

We are listed on the OTCQB under the symbol of “ATXG”.

We classify our businesses into three segments:

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.

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.

We classify our businesses into four segments:

Garment manufacturing, Logistics services, Property management and subleasing,

and Epidemic prevention supplies.

garment manufacturing 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 Yushang Clothing Co., Ltd (“YS”),

and Shantou Yi Bai Yi Garments Co., Ltd (“YBY”) which are located in the Guangdong province, China.

In October, the

Company disposed of DT to a third party at fair value, which was also its carrying value as of September 30, 2020.

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

4 unchanged sentences

expenditures and the costs of keeping drivers during slow seasons.

We conduct our logistic operations through two wholly owned

subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”) and Shenzhen Hua Peng Fa Logistic Co.,

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

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 our logistics services operations through three

wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”), Shenzhen Yingxi Peng

Fa Logistic Co., Ltd., which was incorporated in November 2020, and Shenzhen Hua Peng Fa Logistic Co., Ltd (“HPF”),

which are located in the Guangdong province, China.

In November, the Company disposed of HPF to a third party at fair value, which

was also its carrying value as of November 30, 2020.

business operations, customers and suppliers of DT and HPF were retained by the Company;

therefore, the disposition of the two

subsidiaries did not qualify as discontinued operations.

property management and subleasing provides shops subleasing and property management services for garment wholesalers and retailers

in garment market.

We conduct our property management and subleasing operation through a wholly owned subsidiary, namely Dongguan

Yingxi Daying Commercial Co., Ltd (“DY”).

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

1 unchanged sentence

(“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

Ltd (“YX”), a wholly owned subsidiary of the Company.

Manufacturing Business

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

timely delivery of our products.

The primary business objective for our garment manufacturing segment is to expand our customer

base and improve our profit.

Services Business

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

a nationwide delivery and courier network in China.

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.

As of December 31, 2020, we provide logistics services 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 2021.

Management and Subleasing Business

business objective of our property management and subleasing segment is to integrate resources in shopping mall, develop e-commerce

bases and the Internet celebrity economy together to drive to increase the value of the stores in the area.

The short-term goal

for the year is to increase the occupancy rate of stores in the mall to more than 70%.

Prevention Supplies Business

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.

garment manufacturing business segment to facilitate and maximize the production, distribution and resale of epidemic prevention

supplies, in order 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 logistics

services revenue in our third and fourth quarters.

These trends primarily result from the timing of seasonal garment manufacturing

shipments and holiday periods in the logistics services segment.

manufacturing business

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

For our long-term and established

customers with good payment track records, we generally provide payment terms between 30 to 180 days following the delivery of

finished goods.

logistic service, we generally receive payments from the customers between 30 to 90 days following the date of the register receipt

customers with good payment track records, we generally provide payment terms between 30 to 180 days following their acknowledgement

of receipt of goods.

services business

logistics services, we generally receive payments from the customers between 30 to 90 days following the date of the registration

of our receipt of packages.

management and subleasing business

property management and subleasing business, we generally collect rental and management fees of the following month each month

prevention supplies business

1 unchanged sentence

finished goods.

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

business relationship.

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

relationship.

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

68 unchanged sentences

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

a lessor, the Company’s leases are classified as operating leases under ASC 842.

Leases, in which the Company is the lessor,

are substantially all accounted for as operating leases and the lease components and non-lease components are accounted for separately.

Rental income from operating leases is recognized on a straight‑line basis over the term of the relevant lease.

direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and

recognized on a straight‑line basis over the lease term.

issued accounting pronouncements

14 unchanged sentences

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

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.

of Operations for the three months ended December 31, 2020 and 2019

following tables summarize our results of operations for the three months ended December 31, 2020 and 2019.

The table and the

1 unchanged sentence

in this report.

Months Ended September 30,

Three Months Ended December 31,

(decrease) in 2020

2 unchanged sentences

Cost of revenues

(14,705,387 )

(13,081,304 )

Operating expenses

(Loss) Income from operations

Loss from operations

Other income, net

1 unchanged sentence

Income tax expense

Net income (loss)

$ (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

generated from our garment manufacturing business contributed $2,287,981 or 67.1% of our total revenue for the three months ended

December 31, 2020.

Revenue generated from our garment manufacturing business contributed $2,643,560 or 65.6% of our total revenue

for the three months ended December 31, 2019.

The decrease of $0.4 million was mainly due to adverse effects of COVID-19.

generated from our logistics services business contributed $824,025 or 24.2% of our total revenue for the three months ended December

Revenue generated from our logistic business contributed $1,384,342 or 34.4% 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 September 30, 2020.

This is a new business developed in the current period.

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,

ended December 31, 2019.

The decrease of $0.6 million mainly because of the adverse effects of COVID-19, we cannot smoothly go

through the logistics business.

generated from our property management and subleasing business contributed $294,759 or 8.6% of our total revenue for the three

months ended December 31, 2020.

This is a new business segment developed in current period and there was no revenue for the three

months ended December 31, 2019.

was minor revenue generated from our epidemic prevention supplies business for the three months ended December 31, 2020

because no profitable orders were obtained in the quarter.

The Company accepted sales orders very cautiously to make sure the

sales orders can be matched with stable suppliers to secure profitability of each order.

This is a new business developed

and there was no revenue for the three months ended December 31, 2019.

revenue for the three months ended December 31, 2020 and 2019 were $3,411,552 and $4,027,902, respectively, a 15.3% decrease compared

with the three months ended December 31, 2019.

The decrease was mainly because of the decrease of logistics services business

which was adversely affected by the COVID-19.

Three months ended December 31,

(decrease) in

2020 compared to 2019

dollars, except for percentages)

Net revenue for garment manufacturing

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

cost of revenue for epidemic prevention supplies

profit for epidemic prevention supplies

cost of revenue

$ (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 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

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

Total cost of revenue for garment manufacturing

Gross profit for garment manufacturing

Net revenue for logistics services

Fuel, toll and other cost of logistics services

Subcontracting fees

Total cost of revenue for logistics services

Gross Profit for logistics services

Net revenue for property management and subleasing

Total cost of revenue for property management and subleasing

Gross Profit for property management and subleasing

Net revenue for epidemic prevention supplies

Merchandise/Finished goods/Raw materials

Total cost of revenue for epidemic prevention supplies

Gross profit for epidemic prevention supplies

Total cost of revenue

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

Aggregate purchases from our five largest raw material suppliers represented approximately 100.0% and 98.7% of raw

materials purchases for the three months ended December 31, 2020 and 2019, respectively.

One supplier provided more than 10% of

our raw materials purchases for the three months ended December 31, 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 manufacturing business were 70.8% of our total garment manufacturing business revenue in the three

months ended December 31, 2020, compared with 73.6% in the three months ended December 31, 2019.

The decreased in percentages

was mainly due to the purchase cost of the raw materials dropped.

costs for our garment manufacturing business were 20.4% of our total garment manufacturing business revenue in the three months

ended December 31, 2020, compared with 17.8% in the three months ended December 31, 2019.

The increase in percentages

was mainly due to the rising wages in the PRC.

and other expenses for our garment manufacturing business accounted for 0.7% of our total garment business revenue for the three

months ended December 31, 2020, compared with 0.8% of total garment business revenue for the three months ended December 31, 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 10.4% and 61.0% of total cost of revenues for our

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

service segment for the three months ended December 31 , 2020 and 2019, respectively.

The percentage decreased as we

used our own logistics more than the subcontractors under COVID-19 epidemic.

We have not experienced any disputes with our subcontractor

and we believe we maintain good relationships with our contract logistics services provider.

toll and other costs for our service business for the three months ended December 31, 2020 were $482,568 compared with $464,583

for the three months ended December 31, 2019.

Fuel, toll and other costs for our service business accounted for 58.6% of our total

service revenue for the three months ended December 31, 2020, compared with 33.5% for the three months ended December 31, 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 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.

fees for our service business for the three months ended December 31, 2020 decreased 89.8% to $85,766 from $843,800 for the three

months ended December 31, 2019.

Subcontracting fees accounted for 10.4% and 61.0% of our total service business revenue in the

three months ended December 31, 2020 and 2019, respectively.

This decrease in percentages was primarily because the Company used

less subcontractors under the epidemic circumstance.

property management and subleasing business, the cost of revenue was mainly the amortization of operating lease assets for the

subleasing business.

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

1 unchanged sentence

cost of our own products.

The cost of merchandise was $12,133,298, represented 100% of total cost of revenue of the epidemic prevention

supplies business.

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,

The cost of merchandise was $4,030, represented 84.2% of total cost of revenue of the epidemic

prevention supplies business.

cost of revenue for the three months ended December 31, 2020 was $2,950,123, compared with the amount of $3,746,040 for

the three months ended December 31, 2019.

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

31, 2020 was 86.5%, compared with 93.0% for the three months ended December 31, 2019.

Gross margin for the three months

ended December 31, 2020 was 13.5% compared with 7.0% for the three months ended December 31, 2019.

manufacturing business gross profit for the three months ended December 31, 2020 was $182,981 compared with $205,903 for the three

months ended December 31, 2019.

Gross profit accounted for 8.0% of our total Garment manufacturing business revenue for the three

months ended December 31, 2020, compared with 7.8% for the three months ended December 31, 2019.

The gross margin was slightly

the same for both periods.

profit in our logistics services business for the three months ended December 31, 2020 was $255,691 and gross margin was 31.0%.

Gross profit in our logistics services business for the three months ended December 31, 2019 was $75,959 and gross margin was

The increase of gross margin was mainly due to use less subcontractors, strict control of logistic cost and focus on

high profitable customers.

profit in our property management and subleasing business for the three months ended December 31, 2020 was $22,000, or 7.5% of

our total property management and subleasing business revenue.

This is a new business developed in current period.

profit in our epidemic prevention supplies business for the three months ended December 31, 2020 was $756.

Three months ended December 31,

(decrease) in

2020 compared to 2019

dollars, except for percentages)

$ (3,021,090 )

Operating expenses:

Selling expenses

General and administrative

Income (Loss)

from operations

$ (3,492,921 )

General and administrative expenses

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

Loss from operations

General and administrative expenses

selling expenses in our Garment manufacturing business segment for the three months ended December 31, 2020 and 2019 was $883

and $960, respectively.

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

Our selling expenses in our logistics services segment was $nil for the three months ended December 31,

2020 and 2019, respectively.

Selling expenses in our property management and subleasing business was $15,490 and nil for the three

months ended December 31, 2020 and 2019, respectively.

Selling expenses in our epidemic prevention supplies segment was $201,569

and nil for the three months ended December 31, 2020 and 2019, respectively.

The selling expense for the three months ended

December 31, 2020 mainly was consist of $200,000 free goods to customers as a marketing expense.

Selling expenses consist

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

Total selling expenses for

the three months ended December 31, 2020 increased 22.6 times to $217,942 from $960 for the three months ended December

It was mainly due to increase of marketing expenses of epidemic prevention supplies business and the marketing

expenses in the new property management and subleasing business segment.

general and administrative expenses in our Garment manufacturing business segment for the three months ended December 31, 2020

and 2019 was $83,188 and $46,675, respectively.

Our general and administrative expenses in our logistics services segment, for

the three months ended December 31, 2020 and 2019 was $198,469 and $252,309, respectively.

The general and administrative expenses

in our property management and subleasing business was $544 for the three months ended December 31, 2020.

Our general and administrative

expenses in our epidemic prevention supplies segment was $338 for the three months ended December 31, 2020.

Our general and administrative

expenses in our corporate office for the three months ended December 31, 2020 and 2019 was $249,473 and $227,210, 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 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.

general and administrative expenses for the three months ended December 31, 2020 increased slightly by 1.1% to $532,012 from $526,194

for the three months ended December 31, 2019.

(loss) from operations

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 (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

from operations for the three months ended December 31, 2020 and 2019 was $288,526 and $245,292, respectively.

Income from operations

of $98,905 and $158,268 was attributed from our garment manufacturing segment for the three months ended December 31, 2020 and

2019, respectively.

Income (loss) from operations of $57,222 and $(176,350) was attributed from our logistics services segment

for the three months ended December 31, 2020 and 2019, respectively.

Income from operations of $5,966 was attributed from our

newly developed property management and subleasing business.

Loss from operations of $(201,147) was attributed from our epidemic

prevention supplies segment for the three months ended December 31, 2020.

We incurred a loss from operations in corporate office

of $249,472 and $227,210 for the three months ended December 31, 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 December 31, 2020 and 2019 was $15,784 and $9,022, respectively, a 74.9% increase compared

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

2 unchanged sentences

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

No provision for income

taxes in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended December 31, 2020 and 2019.

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 September 30, 2020 and 2019.

taxes in the PRC has been made as QYTG and YX had no taxable income for the three months ended December 31, 2020 and 2019.

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

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.

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

Company’s parent entity, Addentax Group Corp.

is an U.S entity and is subject to the United States federal income tax.

provision for income taxes in the United States has been made as Addentax Group Corp.

had no United States taxable income for

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.

is a U.S entity and is subject to the United States federal income

No provision for income taxes in the United States has been made as Addentax Group Corp.

had no United States taxable income

for the three months ended December 31, 2020 and 2019.

incurred a net loss of $303,581 and $258,212 for the three months ended December 31, 2020 and 2019, respectively.

Our basic and

diluted loss per share were $(0.01) and $(0.01) for the three months ended December 31, 2020 and 2019, respectively.

of Operations for the nine months ended December 31, 2020 and 2019

following tables summarize our results of operations for the nine months ended December 31, 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

Nine months Ended December 31,

Increase (decrease) in

2020 compared to 2019

2 unchanged sentences

(22,776,087 )

(16,350,320 )

Operating expenses

3 unchanged sentences

Income tax expense

Net income (loss)

$ (3,560,206 )

$ (2,612,721 )

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.

generated from our garment manufacturing business contributed $5,186,042 or 24.7% of our total revenue for the nine months ended

December 31, 2020.

Revenue generated from our garment manufacturing business contributed $3,517,009 or 34.0% of our total revenue

for the nine months ended December 31, 2019.

The increase of $1.7 million was mainly because revenue in production capacity increased

from newly setup subsidiary YBY.

generated from our logistic business contributed $3,664,409 or 17.4% of our total revenue for the nine months ended December 31,

Revenue generated from our logistic business contributed $4,665,387 or 57.0% of our total revenue for the nine months ended

December 31, 2019.

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

generated from our property management and subleasing business contributed $294,759 or 1.4% of our total revenue for the nine

months ended December 31, 2020.

This is a new business segment developed in current period and there was no revenue for the nine

months ended December 31, 2019.

generated from our epidemic prevention supplies business contributed $11,868,854, or 56.5% of our total revenue for the nine months

ended December 31, 2020.

This is a new business developed in the current period.

3 unchanged sentences

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

revenue for the nine months ended December 31, 2020 and 2019 were $21,014,064 and $ 8,182,396, respectively, a 156.8% increase

compared with the nine months ended December 31, 2019.

The increase was mainly because the increase of garment manufacturing production

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

Nine months ended December 31,

Increase (decrease) in

2020 compared to

dollars, except for percentages)

Net revenue for garment manufacturing

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

Total cost of revenue for garment manufacturing

Gross profit for garment manufacturing

Net revenue for logistics services

Fuel, toll and other cost of logistics services

Subcontracting fees

Total cost of revenue for logistics services

Gross Profit for logistics services

Net revenue for property management and subleasing

Total cost of revenue for property management and subleasing

Gross Profit for property management and subleasing

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

Total cost of revenue for epidemic prevention supplies

Gross profit for epidemic prevention supplies

Total cost of revenue

$ (1,762,023 )

$ (2,722,736 )

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

Aggregate purchases from our five largest raw material suppliers represented approximately 97.7% and 91.2% of raw materials

purchases for the nine months ended December 31, 2020 and 2019, respectively.

One suppliers provided more than 10% of our raw

materials purchases for both nine months ended December 31, 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 manufacturing business were 71.5% of our total garment manufacturing business revenue in the nine

months ended December 31, 2020, compared with 72.5% in the nine months ended December 31, 2019.

The decreased in percentages was

mainly due to the purchase cost of the raw materials dropped.

costs for our garment manufacturing business were 19.9% of our total garment manufacturing business revenue in the nine months

ended December 31, 2020, compared with 16.2% in the nine months ended December 31, 2019.

The increase in percentages was mainly

due to the rising wages in the PRC.

and other expenses for our garment manufacturing business accounted for 0.6% of our total garment manufacturing business revenue

for the nine months ended December 31, 2020, compared with 1.5% of total garment manufacturing business revenue for the nine months

ended December 31, 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 43.0% and 57.0% 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.

service segment for the nine months ended December 31, 2020 and 2019, respectively.

The percentage decreased as we used less subcontractors

during the COVID-19 epidemic circumstance.

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

good relationships with our contract logistics services provider.

toll and other costs for our service business for the nine months ended December 31, 2020 were $1,367,753 compared with $1,385,870

for the nine months ended December 31, 2019.

Fuel, toll and other costs for our service business accounted for 37.3% 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.

service revenue for the nine months ended December 31, 2020, compared with 29.7% for the nine months ended December 31, 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.

fees for our service business for the nine months ended December 31, 2020 decreased 40.7% to $1,576,228 from $2,660,132 for the

nine months ended December 31, 2019.

Subcontracting fees accounted for 43.0% and 57.0% of our total service business revenue in

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

the nine months ended December 31, 2020 and 2019, respectively.

This decrease in percentages was primarily because the Company

used less subcontractors under the epidemic circumstance.

property management and subleasing business, the cost of revenue was mainly the amortization of operating lease assets for the

subleasing business.

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

3 unchanged sentences

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,

cost of revenue for the nine months ended December 31, 2020 was $22,776,087, compared with the amount of $7,221,683 for

the nine months ended December 31, 2019.

Total cost of sales as a percentage of total sales for the nine months ended December

31, 2020 was 108.4%, compared with 88.3% for the nine months ended December 31, 2019.

Gross (loss) margin for the nine

months ended December 31, 2020 was (8.4)% compared with 11.7% for the nine months ended December 31, 2019.

profit of Garment manufacturing business for the nine months ended December 31, 2020 was $415,499 compared with $341,327 for the

nine months ended December 31, 2019.

Gross profit accounted for 8.0% of our total Garment manufacturing business revenue for the

nine months ended December 31, 2020, compared with 9.7% for the nine months ended December 31, 2019.

The decrease of gross margin

was due to increase of labor cost.

profit in our logistics services business for the nine months ended December 31, 2020 was $720,428 and gross margin was 19.7%.

Gross profit in our logistics services business for the nine months ended December 31, 2019 was $619,386 and gross margin was

profit in our property management and subleasing business for the nine months ended December 31, 2020 was $22,000, or 7.5% of

our total property management and subleasing business revenue.

This is a new business developed in current period.

loss in our epidemic prevention supplies business for the nine months ended December 31, 2020 was $2,919,950 and gross

margin was (24.6)%.

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.

Nine months ended December 31,

(decrease) in

compared to 2019

dollars, except for percentages)

Gross (loss) profit

$ (1,762,023 )

1 unchanged sentence

Selling expenses

General and administrative

General and administrative expenses

$ (1,830,992 )

$ (1,869,113 )

Income (Loss)

from operations

Loss from operations

$ (3,593,015 )

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

selling expenses in our Garment manufacturing business segment for the nine months ended December 31, 2020 and 2019 was $2,606

and $11,826, respectively.

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

Our selling expenses in our logistics services segment was $nil for the nine months ended December

31, 2020 and 2019, respectively.

Selling expenses in our property management and subleasing business was $15,490 and nil for the

nine months ended December 31, 2020 and 2019, respectively.

Selling expenses in our epidemic prevention supplies segment was $358,879

for the nine months ended December 31, 2020.

Selling expenses consist primarily of advertisement, local transportation, unloading

charges and product inspection charges.

Total selling expenses for the nine months ended December 31, 2020 increased 30.9 times

to $376,975 from $11,825 for the nine months ended December 31, 2019, mainly due to the selling and marketing expenses

in the newly developed epidemic prevention supplies segment and property management and subleasing segment.

general and administrative expenses in our Garment manufacturing business segment for the nine months ended December 31, 2020

and 2019 was $172,138 and $141,698, 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,

Our general and administrative expenses in our logistics services segment, for

the nine months ended December 31, 2020 and 2019 was $627,922 and $788,021, respectively.

The general and administrative expenses

in our property management and subleasing business was $544 for the nine months ended December 31, 2020.

Our general and administrative

expenses in our epidemic prevention supplies segment was $18,767 for the nine months ended December 31, 2020.

Our general and

administrative expenses in our corporate office for the nine months ended December 31, 2020 and 2019 was $634,645 and $927,569,

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

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 nine months ended December 31, 2020 decreased 21.7% to $1,454,017 from $1,857,288

for the nine months ended December 31, 2019.

The amount was $403,271 higher than in the nine months ended December 31, 2019 was

mainly due to the professional fees for Form S1 filing.

(loss) from operations

from operations for the nine months ended December 31, 2020 and 2019 was $(3,593,015) and $(908,400), respectively.

operations of $240,423 and $187,803 was attributed from our garment manufacturing segment for the nine months ended December 31,

2020 and 2019, respectively.

Income (loss) from operations of $92,506 and $(168,634) was attributed from our logistics services

segment for the nine months ended December 31, 2020 and 2019, respectively.

Income from operations of $5,966 was attributed from

our newly developed property management and subleasing business for the nine months ended December 31, 2020.

Loss from operations

of $3,297,265 was attributed from our epidemic prevention supplies segment for the nine months ended December 31,

We incurred a loss from operations in corporate office of $634,645 and $927,569 for the nine months ended December

31, 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 nine months ended December 31, 2020 and 2019 was $23,196 and $12,086, respectively, a 91.9% 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.

Addentax, Yingxi, Yingxi HK, QYTG, YX, HXPF, HPF and YS had no taxable income for the nine months ended December 31, 2020 and

Income (Loss)

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

incurred a net loss of $3,560,206 and $947,485 for the nine months ended December 31, 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.

diluted (loss) per share were $(0.14) and $(0.04) for the nine months ended December 31, 2020 and 2019, respectively.

of cash flows

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

cash flows information for the nine months ended December 31, 2020 and 2019 is as follow:

Nine months ended December 31,

Net cash used in operating activities

$ (3,782,116 )

$ (1,058,936 )

Net cash used in investing activities

$ (1,094,344 )

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;

cash used in operating activities consist of net loss of $3,560,206, increased by depreciation and amortization of $83,210, loss

on disposal of property and equipment of $1,472, and decrease in change of operating assets and liabilities of $306,592.

continue to improve our operating cash flow by closely monitoring the timely collection of accounts and other receivables.

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 $392,108 and proceeds from disposal of plant and

equipment of $2,243, and cash decreased of $704,479 in disposal of two subsidiaries.

cash provided by financing activities consist of repayment of related party borrowings of $6,605,044 and we received related party

proceeds of $7,697,827;

Repayment of bank loan of $196,456 and draw down of new bank loan of $86,886;

and Proceeds of $3,735,000

from subscription of ordinary shares offered to a shareholder.

Condition, Liquidity and Capital Resources

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.

of December 31, 2020, we had cash on hand of $356,728, total current assets of $4,779,450 and current liabilities of $12,661,861.

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

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

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.

29 unchanged sentences

Currency Translation Risk

operations are located in the China, which may give rise to significant foreign currency risks from fluctuations and the degree

of volatility in foreign exchange rates between the U.S.

operations are located in China, which may give rise to significant foreign currency risks from fluctuations and the

degree of volatility in foreign exchange rates between the U.S.

dollar and the Chinese Renminbi (“RMB”).

All of our sales

sales are in RMB.

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

As of September 30, 2020, the market foreign

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

As of December 31, 2020, the market

foreign exchange rate had decreased to RMB 6.53 to one U.S.

Our financial statements are translated into U.S.

dollars using the

closing rate method.

using the closing rate method.

The balance sheet items are translated into U.S.

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

while income and expenses items are translated at the average exchange rate for the period.

All translation adjustments are included

in accumulated other comprehensive income in the statement of equity.

The foreign currency translation (loss) gain for the three

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

dollars using the exchange rates at the respective

balance sheet dates.

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

transactions while income and expenses items are translated at the average exchange rate for the period.

All translation adjustments

are included in accumulated other comprehensive income in the statement of equity.

The foreign currency translation (loss) gain

for the three and nine months ended December 31, 2020 and 2019 was $(85,728) and $(50,440), (173,879) and $58,715, 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 September 30, 2020

have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of December 31, 2020

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

3 unchanged sentences

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