ADDENTAX GROUP CORP. 10-K

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchasers of Equity Securities Market Information Our common stock is currently quoted on the OTCQB under the symbol “ATXG.” Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market for our common stock in the future. We received our trading symbol on September 12, 2016 and were first quoted on September 12, 2016 but no shares were traded until December 12, 2016. The following table sets forth the high and low trading prices of one share of our common stock for each fiscal quarter over the past two fiscal years, and April 1, 2021 to the date of this Form 10-K. The quotations provided are for the over the counter market, which reflect interdealer prices without retail mark-up, mark-down or commissions, and may not represent actual transactions. Our common stock trades on a limited, sporadic and volatile basis. These high and low bid prices per share of common stock have been adjusted to give effect to the 1-for-20 reverse stock split of our common stock effected on February 27, 2019. Fiscal Year 2022 High Bid Low Bid First Quarter $ 7.50 $ 7.00 Second Quarter (through June 29, 2021) $ 7.00 $ 7.00 Fiscal Year 2021 High Bid Low Bid First Quarter $ 7.00 $ 7.00 Second Quarter $ 7.00 $ 7.00 Third Quarter $ 7.00 $ 7.00 Fourth Quarter $ 7.00 $ 7.00 Fiscal Year 2020 High Bid Low Bid First Quarter $ 89.75 $ 89.75 Second Quarter $ 89.75 $ 89.75 Third Quarter $ 89.75 $ 89.75 Fourth Quarter $ 89.75 $ 89.75 Number of Holders 26,693,004 shares of common stock were issued and outstanding as of June 29, 2021. They were held by a total of 588 shareholders of record. The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There is no redemption or sinking fund provisions applicable to the common stock. Transfer Agent The transfer agent for the common stock is Transfer Online, Inc. The transfer agent’s address is 512 SE Salmon St., Portland, OR 97214, and its telephone number is +1 (503) 227-2950. Dividends No cash dividends were paid on our shares of common stock during the fiscal year ended March 31, 2021 and March 31, 2020. We have not paid any cash dividends since October 28, 2014 (inception) and do not foresee declaring any cash dividends on our common stock in the foreseeable future. Securities Authorized for Issuance under Equity Compensation Plans We do not have in effect any compensation plans under which our equity securities are authorized for issuance. 21 Recent Sales of Unregistered Securities We claim an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, and the rules and regulations promulgated thereunder in connection with the sales and issuances described above since the foregoing issuances and sales did not involve a public offering, the recipients were (a) “ accredited investors ”, and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act. With respect to the transactions described above, no general solicitation was made either by us or by any person acting on our behalf. The transactions were privately negotiated, and did not involve any kind of public solicitation. No underwriters or agents were involved in the foregoing issuances and we paid no underwriting discounts or commissions. The securities sold are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom. During August 2020, the company sold a total of 747,000 common shares for cash contribution of $3,735,000.00 at $5.00 per share During December 2020, the company sold a total of 600,000 common shares for cash contribution of $3,000,000.00 at $5.00 per share Item 6. Selected Financial Data Not applicable to smaller reporting companies . Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations for the years ended March 31, 2021 and 2020 should be read in conjunction with the Financial Statements and corresponding notes included in this Annual Report on Form 10-K. 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,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “target”, “forecast” and similar expressions to identify forward-looking statements. Overview Our Business We are a garment manufacturer and logistic service provider based in China. We are listed on the OTCQB under the symbol of “ATXG”. We classify our businesses into four segments: Garment manufacturing, logistics services, property management and subleasing, and epidemic prevention supplies segments. For the fiscal year ended 2020 and in previous fiscal years: (i) garment manufacturing and (ii) logistics services. During the fiscal year 2021, we developed two new business segments: property management and subleasing, and epidemic prevention supplies. Our 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. We conduct our garment manufacturing operations through four 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. Our logistics business consists of delivery and courier services covering approximately seven provinces in China. Although we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors. We believe outsourcing allows us to maximize our capacity and maintain flexibility while reducing capital expenditures and the costs of keeping drivers during slow seasons. We conduct our logistic operations through three wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”),Shenzhen Hua Peng Fa Logistic Co., Ltd (“HPF”), and Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”) 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. The 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. Our property management and subleasing business 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”). Our epidemic prevention supplies business consists of manufacturing and distribution of epidemic prevention products and reselling of epidemic prevention supplies purchased from third parties in both domestic and overseas markets. We conduct our manufacturing of the epidemic prevention products in YS. We conduct the trading of epidemic prevention suppliers through Addentax Group Corp. (“ATXG”) and Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), an indirect wholly owned subsidiary of the Company. 22 Business Objectives Garment Manufacturing Business We believe the strength of our garment manufacturing business is mainly due to our consistent emphasis on exceptional quality and timely delivery. The primary business objective for our garment manufacturing segment is to expand our customer base and improve our profit. Logistics Services Business The 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 March 31, 2021, 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 of 2021. Property Management and Subleasing Business The 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%. Epidemic Prevention Supplies Business The primary objective of our epidemic prevention supplies business is to take the advantage of our resource in supply chain from the garment 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. Seasonality of Business Our 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 manufacturing shipments and holiday periods in the logistic segment. Collection Policy Garment manufacturing business For 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. Logistics Services business For 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. Property management and subleasing business For property management and subleasing business, we generally collect rental and management fees of the following month each month in advance. Epidemic prevention supplies business For Epidemic prevention supplies business, we generally receive payment from the customers within 30 days following the delivery of finished goods. We would also give our long-term customers with a 12 months long credit term policy to maintain a good business relationship. Economic Uncertainty Our business is dependent on consumer demand for our products and services. We believe that the significant uncertainty in the economy in China has increased our clients’ sensitivity to the cost of our products and services. We have experienced continued pricing pressure. If the economic environment becomes weak, the economic conditions could have a negative impact on our sales growth and operating margins, cash position and collection of accounts receivable. Additionally, business credit and liquidity have tightened in China. Some of our suppliers and customers may face credit issues and could experience cash flow problems and other financial hardships. These factors currently have not had an impact on the timeliness of receivable collections from our customers. We cannot predict at this time how this situation will develop and whether accounts receivable may need to be allowed for or written off in the coming quarters. Despite the various risks and uncertainties associated with the current economy in China, we believe our core strengths will continue to allow us to execute our strategy for long-term sustainable growth in revenue, net income and operating cash flow. Summary of Critical Accounting Policies We have identified critical accounting policies that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operation involved could result in material changes to our financial position or results of operations under different conditions or using different assumptions. 23 Estimates and Assumptions We regularly evaluate the accounting estimates that we use to prepare our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. Revenue Recognition Revenue is generated through sale of goods and delivery services. Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods and services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods and services in the contract; (ii) determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery. For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product and service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules. Leases Lessee The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in the consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, The Company generally use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lessor As 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. Initial 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. 24 Recently issued and adopted accounting pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This standard requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. This standard will be effective for the Company on April 1, 2023. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements. The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s consolidated financial statements. Results of Operations for the years ended March 31, 2021 and 2020 The following tables summarize our results of operations for the years ended March 31, 2021 and 2020. The table and the discussion below should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere in this report. 2021 2020 Increase (decrease) in 2021 compared to 2020 (In U.S. dollars, except for percentages) Revenue $ 24,734,759 100.0 % $ 10,172,379 100 % $ 14,562,380 143.2 % Cost of revenues (25,921,936 ) (104.8 )% (8,787,018 ) (86.4 )% (17,134,918 ) (195.0 )% Gross (loss) profit (1,187,177 ) (4.8 )% 1,385,361 13.6 % (2,572,538 ) (185.7 )% Operating expenses (2,420,997 ) (9.8 )% (2,249,679 ) (22.1 )% (171,318 ) (7.6 )% Loss from operations (3,608,174 ) (14.6 )% (864,318 ) (8.5 )% (2,743,856 ) (317.5 )% Other income, net 62,784 0.3 % (79,560 ) (0.8 )% 142,344 178.9 % Net finance cost (18,912 ) (0.1 )% (20,669 ) (0.2 ) 1,757 8.5 % Income tax expense (25,867 ) (0.1 )% (16,070 ) (0.2 )% (9,797 ) (61.0 )% Net loss $ (3,590,169 ) (14.5 )% $ (980,617 ) (9.6 )% $ (2,609,552 ) (266.1 )% Revenue Total revenue for the year ended March 31, 2021 significantly increased by approximately $14.5 million, or approximately 143.2%, as compared with the year ended March 31, 2020. The significant increase was mainly due to the increase of garment manufacturing production capacity in YBY, a newly setup subsidiary in 2020, and the epidemic prevention supplies business newly developed in 2020. Revenue generated from our garment manufacturing business contributed approximately $6.9 million, or approximately 27.9%, of our total revenue for the year ended March 31, 2021. Revenue generated from the segment contributed approximately $4.3 million, or approximately 42.3%, of our total revenue for the year ended March 31, 2020. The increase of approximately $2.6 million was mainly due to an increase of $5.4 million in YBY’s revenue, offset by the decrease of approximately $0.6 million and $2.2 million in HSW’s and DT’s revenue, respectively. Revenue generated from our logistics services business contributed approximately $4.6 million, or approximately 18.5%, of our total revenue for the year ended March 31, 2021. Revenue generated from the segment contributed approximately $5.9 million, or approximately 57.7%, of our total revenue for the year ended March 31, 2020. The decrease of approximately $1.3 million was mainly due to COVID-19, as we cannot complete timely logistics services deliveries. Revenue generated from our property management and subleasing business contributed approximately $1.3 million, or approximately 5.2%, of our total revenue for the year ended March 31, 2021. This is a new business segment developed in 2020. Revenue generated from our epidemic prevention supplies business contributed approximately $12.0 million, or approximately 48.4%, of our total revenue for the year ended March 31, 2021. This is a new business developed in the 2020. It included revenue from trading of merchandise and revenue from sales of our own products. The revenue from trading of merchandise was approximately $11.7 million, representing approximately 97.5% of total revenue from the epidemic prevention supplies business. 25 Cost of revenue 2021 2020 Increase (decrease) in 2021 compared to 2020 (In U.S. dollars, except for percentages) Net revenue for garment manufacturing $ 6,896,410 100.0 % $ 4,298,518 100 % $ 2,597,892 60.4 % Raw materials 4,892,837 70.9 % 3,127,959 72.8 % 1,764,878 56.4 Labor 1,388,069 20.1 % 704,104 16.4 % 683,965 97.1 Other and Overhead 58,417 0.9 % 70,381 1.6 % (11,964 ) (17.0 )% Total cost of revenue for garment manufacturing 6,339,323 91.9 % 3,902,444 90.8 % 2,436,879 62.4 % Gross profit for garment manufacturing 557,087 8.1 % 396,074 9.2 % 161,013 40.7 % 　 　 Net revenue for logistics services 4,580,733 100.0 % 5,873,861 100.0 % (1,293,128 ) (22.0 )% Fuel, toll and other cost of logistics services 1,763,441 38.5 % 1,932,149 32.9 % (168,708 ) (8.7 )% Subcontracting fees 1,817,975 39.5 % 2,952,425 50.3 % -1,134,450 ) (38.4 )% Total cost of revenue for logistics services 3,581,416 78.0 % 4,884,574 83.2 % (1,303,158 ) (26.7 )% Gross Profit for logistics services 999,317 22.0 % 989,287 16.8 % 10.030 1.0 % 　 Net revenue for property management and subleasing 1,278,517 100.0 % - - 1,278,517 Total cost of revenue for property management and subleasing 1,120,632 87.3 % - - 1,120,632 Gross Profit for property management and subleasing 157,885 12.7 % - - 157,885 　 Net revenue for epidemic prevention supplies 11,979,099 100.0 % - - 11,979,099 Merchandise/Finished goods/Raw materials 14,771,316 123.3 - - 14,771,316 Labor 67,885 0.6 - - 67,885 Other and Overhead 41,364 0.3 - - 41,364 Total cost of revenue for epidemic prevention supplies 14,880,565 124.2 % - - 14,880,565 Gross profit for epidemic prevention supplies (2,901,466 ) (24.2 )% - - (2,901,466 ) 　 Total cost of revenue $ 25,921,936 104.9 % $ 8,787,018 86.4 % $ 17,134,918 195.0 % Gross profit $ (1,187,177 ) (4.7 )% $ 1,385,361 13.6 % $ (2,572,538 ) (185.7 )% For our garment manufacturing business, we purchased 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 98.7% and 92.7% of raw materials purchases for the years ended March 31, 2021 and 2020, respectively. Two and one suppliers provided more than 10% of our raw materials purchases for the years ended March 31, 2021 and 2020, respectively. We have not experienced difficulty in obtaining raw materials essential to our business, and we believe we maintain good relationships with our suppliers. Raw materials cost for our garment manufacturing business was approximately 70.9% of our total garment manufacturing business revenue in the year ended March 31, 2021, as compared with approximately 72.8% in the year ended March 31, 2020. The decrease in raw materials cost for our garment manufacturing business was mainly due to the purchase cost of the raw materials remained consistent, offset by the continued rising labor costs in the PRC. Labor costs for our garment manufacturing business was approximately 20.1% of our total garment manufacturing business revenue in the year ended March 31, 2021, as compared with 16.4% in the year ended March 31, 2020. The increase in labor costs for our garment manufacturing business was mainly due to the continued rising labor costs in the PRC. Overhead and other expenses for our garment manufacturing business accounted for approximately 0.9% of our total garment manufacturing business revenue for the year ended March 31, 2021, as compared with 1.6% of total garment manufacturing business revenue for the year ended March 31, 2020. 26 For our logistic business, we outsource some of the business to our subcontractors. Our subcontractors are contract logistic service provides. The Company relied on a few subcontractors, which the subcontracting fees to our largest contractor represented approximately 7.6% and 25.6% of total cost of revenues for our service segment for the years ended March 31, 2021 and 2020, respectively. The decrease in subcontracting fee was mainly due to less usage of subcontractors during the COVID-19 epidemic circumstance. We have not experienced any disputes with our subcontractors and we believe we maintain good relationships with our contract logistic service provider. Fuel, toll and other costs for our logistics business for the year ended March 31, 2021 was approximately $1.8 million, as compared with $1.9 million for the year ended March 31, 2020. Fuel, toll and other costs for our logistics business accounted for approximately 38.5% of our total service revenue for the year ended March 31, 2021, as compared with approximately 32.9% for the year ended March 31, 2020. The decrease in fuel, toll and other costs was primarily attributable to the decreased usage of subcontractors during the COVID-19 epidemic circumstance. Subcontracting fees for our logistics business for the year ended March 31, 2021 decreased to approximately $1.8 million from $2.9 million for the year ended March 31, 2020, representing a decrease of approximately 38.7%. Subcontracting fees accounted for 39.7% and 50.3% of our total logistics business revenue in the years ended March 31, 2021 and 2020, respectively. The decrease in subcontracting fees was primarily because we used less subcontractors during the COVID-19 epidemic circumstance. For property management and subleasing business, the cost of revenue was mainly the amortization of operating lease assets for the subleasing business. 27 For epidemic prevention supplies business, we have sales of our own branded products as well as purchases and resale of goods of other brands. The cost of revenue included cost of merchandise and cost of our own products. The cost of merchandise was approximately $14.7 million, representing approximately 98.6% of our total cost of revenue of the epidemic prevention supplies business. Gross profit Gross profit of garment manufacturing business for the year ended March 31, 2021 was approximately $0.6 million, as compared with approximately $0.4 million for the year ended March 31, 2020. Gross profit ratio was approximately 8.1% of revenue of the segment, as compared with approximately 9.2% for the year ended March 31, 2020. The decrease of gross margin was due to an increase of raw materials costs and labor costs. Gross profit of our logistics services business for the year ended March 31, 2021 was approximately $1.0 million and gross profit ratio was approximately 22.0%. Gross profit of the segment for the year ended March 31, 2020 was approximately $1.0 million and gross profit ratio was approximately 16.8%. The increase of gross profit ratio was mainly because of a decrease of operating expenses due to replacement of old vehicles and shifting our strategic focus on high margin customers. Gross profit of our property management and subleasing business for the year ended March 31, 2021 was approximately $0.2 million, representing approximately 12.7% of our total property management and subleasing business revenue. This is a new business developed in 2021. Gross loss of our epidemic prevention supplies business for the year ended March 31, 2021 was approximately $2.9 million and gross margin was approximately negative 24.2%. The significant loss was mainly due to the significant increase cost of materials while the selling price was fixed in the sales agreement with the customers. Increase (decrease) in 2021 2020 2021compared to 2020 (In U.S. dollars, except for percentages) Gross (loss) profit $ (1,187,177 ) 100 % $ 1,385,361 100 % (2,572,538 ) (185.7 )% Operating expenses: Selling expenses (413,654 ) 34.5 % (13,406 ) (1.0 )% (400,248 ) (2985.6 )% General and administrative expenses (2,007,343 ) 165.3 % (2,236,273 ) (161.4 )% 228,930 10.2 % Total $ (2,420,997 ) 199.8 % $ (2,249,679 ) (162.4 )% (171,318 ) (7.6 )% Loss from operations $ (3,608,174 ) 299.8 % $ (864,318 ) (62.4 )% (2,743,856 ) (317.5 )% Selling, General and administrative expenses Our selling expenses in our garment manufacturing segment for the years ended March 31, 2021 and 2020 was $0.04 million and $0.013 million, respectively. Our selling expenses in our logistics services segment for the year ended March 31, 2021 and 2020 was nil and nil, respectively. Selling expenses in our property management and subleasing business was $0.05 million and nil for the year ended March 31, 2021 and 2020, respectively. Selling expenses in our epidemic prevention supplies business segment was approximately $0.36 million and nil for the year ended March 31, 2021 and 2020. Selling expenses consist primarily of local transportation, unloading charges and product inspection charges. Total selling expenses for the year ended March 31, 2021 significantly increased by approximately 215.4%to approximately $0.41 million from approximately $0.13 million for the year ended March 31, 2020. 28 Our general and administrative expenses in our garment manufacturing segment for the years ended March 31, 2021 and 2020 was approximately $0.23 million and $0.17 million, respectively. Our general and administrative expenses in our logistics services segment for the year ended March 31, 2021 and 2020 was approximately $0.81 million and $0.91 million, respectively. The general and administrative expenses in our property management and subleasing business was approximately $0.10 million for the year ended March 31, 2021. The general and administrative expenses in our epidemic prevention supplies business segment was $0.02 million for the year ended March 31, 2021. Our general and administrative expenses in our corporate office for the year ended March 31, 2021 and 2020 was approximately $0.85 million and $1.16 million, 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. Total general and administrative expenses for the year ended March 31, 2021 decreased approximately 10.2% to approximately $2.01 million from approximately $2.24 million for the year ended March 31, 2020. It was mainly due to the professional fees for the uplisting Form S-1 filing in the year ended March 31, 2019 and lower administrative expenses in XKJ resulting from shifting more business to outside subcontractors in the year ended March 31, 2021. Loss from operations Loss from operations for the years ended March 31, 2021 and 2020 was approximately $3.61 million and $0.86, respectively. Income from operations of approximately $0.33 million and $0.22 million was attributed from our garment manufacturing segment for the years ended March 31, 2021 and 2020, respectively. Income from operations of approximately $0.19 million and $0.08 million was attributed from our logistics services segment for the years ended March 31, 2021 and 2020, respectively. Income from operations of $0.004 million was attributed from our newly developed property management and subleasing business for the year ended March 31, 2021. Loss from operations of approximately $3.28 million was attributed from our epidemic prevention supplies business segment for the year ended March 31, 2021. We incurred general and administrative expenses in corporate office of approximately $0.85 million and approximately $1.16 million for the year ended March 31, 2021 and 2020, respectively. Income Tax Expenses Income tax expense for the years ended March 31, 2021 and 2020 was $0.03 million and $0.02 million, respectively, a 61.0% increase compared to 2020. The Company operates in the PRC and files tax returns in the PRC jurisdictions. Yingxi Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of the British Virgin Islands, is not subject to income taxes. Yingxi HK was incorporated in Hong Kong and is subject to Hong Kong income tax at a tax rate of 16.5%. No provision for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the years ended March 31, 2021 and 2020. QYTG 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 years ended March 31, 2021 and 2020. The Company is governed by the Income Tax Laws of the PRC. Yingxi’s operating companiesare subject to progressive EIT rate from 5% to 15% in year ended March 31, 2021. The preferential tax rates will be expired at end of year 2022 and the EIT rate will be 25% from year 2023. The Company’s parent entity, Addentax Group Corp. is a U.S entity and is subject to the United States federal income tax. No provision for income taxes in the United States has been made as Addentax Group Corp. had no United States taxable income for the years ended March 31, 2021 and 2020. 29 Net Loss We incurred a net loss of approximately $3.59 million and $0.98 million for the years ended March 31, 2021 and 2020, respectively. Our basic and diluted earnings per share were $0.14 and $0.04 for the year ended March 31, 2021 and 2020, respectively. Summary of cash flows Summary cash flows information for the years ended March 31, 2021 and 2020 is as follow: 2021 2020 (In U.S. dollars) Net cash used in operating activities $ (4,223,008 ) $ (1,150,853 ) Net cash used in investing activities $ (563,052 ) $ (136,001 ) Net cash provided by financing activities $ 6,099,656 $ 1,555,984 Net cash used in operating activities in the year ended March 31, 2021 was approximately $3.1 million more than that of the year ended March 31, 2020. It was mainly because the net loss of fiscal year ended March 31, 2021 was approximately $2.6 million more than the net loss of the fiscal year ended March 31, 2020. The movement of operating assets and liabilities of the year ended March 31, 2021 resulted in negative cash flow of approximately $0.8 million, while the movement of operating assets and liabilities of the year ended March 31, 2020 resulted in negative cash flow of approximately $0.3 million. We shall try 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’ order. Net cash used in investing activities for the year ended March 31, 2021 was approximately $0.4 million more than that of the year ended March 31, 2020. It was mainly because the purchase of plant and equipment in the year ended March 31, 2021, which mainly motor truckers, was approximately $0.3 million more than the purchase of plant and equipment in prior year. The Company had a cash decrease of approximately $0.7 million in disposal of one subsidiary in garment manufacturing segment and one subsidiary in logistics services segment. The Company also had proceeds of approximately $0.5 million from the disposal of the two subsidiaries. Net cash provided by financing activities for the year ended March 31, 2021 was approximately $4.5 million more than the year ended March 31, 2020. It was mainly because the Company had net cash decrease of approximately $2.5 million to related parties’ borrowings, net cash decrease of approximately $0.3 million attributable to bank borrowings and a proceeds of approximately $6.7 million from issue of ordinary shares. Financial Condition, Liquidity and Capital Resources As of March 31, 2021, we had cash on hand of approximately $1.8 million, total current assets of approximately $8.0 million and current liabilities of approximately $12.4 million. We presently finance our operations primarily from cash flows from borrowings from related parties and third parties. We also raised equity fund of approximately $3.74 million and approximately $3.0 million from the issuance of common stocks in August 2020 and March 2021, respectively. We aim to improve our operating cash flows and anticipate that cash flows from our operations and borrowings from related parties and third parties will continue to be our primary source of funds to finance our short-term cash needs. The Company’s financial conditions raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company’s profit generating operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. The Company expects to finance operations primarily through cash flow from revenue and capital contributions from the CEO. During the year, the CEO has provided financial support for the operations of the Company. In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, the CEO has indicated the intent and ability to provide additional equity financing. The growth and development of our business will require a significant amount of additional working capital. We currently have limited financial resources and based on our current operating plan, we will need to raise additional capital in order to continue as a going concern. We currently do not have adequate cash to meet our short or long-term objectives. In the event additional capital is raised, it may have a dilutive effect on our existing stockholders. We are subject to all the substantial risks inherent in the development of a new business enterprise within an extremely competitive industry. Due to the absence of a long standing operating history and the emerging nature of the markets in which we compete, we anticipate operating losses until we can successfully implement our business strategy, which includes all associated revenue streams. Our revenue model is new and evolving, and we cannot be certain that it will be successful. The potential profitability of this business model is unproven. We may never ever achieve profitable operations. Our future operating results depend on many factors, including demand for our services, the level of competition, and the ability of our officers to manage our business and growth. As a result of the emerging nature of the market in which we compete, we may incur operating losses until such time as we can develop a substantial and stable revenue base. Additional development expenses may delay or negatively impact the ability of the Company to generate profits. Accordingly, we cannot assure you that our business model will be successful or that we can sustain revenue growth, achieve or sustain profitability, or continue as a going concern. Foreign Currency Translation Risk Our 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. dollar and the Chinese Renminbi (“RMB”). All of our sales are in RMB. In the past years, RMB continued to appreciate against the U.S. dollar. As of March 31, 2021, the market foreign exchange rate had increased to RMB 6.55 to one U.S. dollar. Our financial statements are translated into U.S. dollars using the closing rate method. The balance sheet items are translated into U.S. dollars using the exchange rates at the respective balance sheet 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 years ended March 31, 2021 and 2020 was $(0.2) million and $0.1 million, respectively. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of March 31, 2021 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Not applicable to smaller reporting companies. 30