What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-02-22 · 272 added, 1031 removed, 169 unchanged (89% of the section changed)

Financial Statements and Supplementary Data

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)

the three months ended June 30, 2021 and 2020

Condensed Consolidated Balance sheets as of June 30, 2021 (unaudited) and March 31, 2021 (unaudited)

Condensed Consolidated Statements of Income and Comprehensive Income for the Three months ended June 30, 2021 and 2020 (unaudited)

Condensed Consolidated Statements of Changes in Equity for the three months ended June 30, 2021 and 2020 (unaudited)

Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2021 and 2020 (unaudited)

Notes to Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 (unaudited)

AND SUBSIDIARIES

1 unchanged sentence

Dollars, except share data or otherwise stated)

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

December 31, 2020

June 30, 2021

March 31, 2021

2 unchanged sentences

Accounts receivables, net

Other receivables - disposal of subsidiaries

Other receivables - other

Prepayments and other receivables

Advances to suppliers

Amount due from related party

Total current assets

15 unchanged sentences

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)

Common stock ($ 0.001 par value, 50,000,000 shares authorized, 26,693,004 shares issued and outstanding at June 30, 2021 and March 31, 2021)

Additional paid-in capital

Retained earnings

( 6,755,281 )

( 6,834,228 )

Statutory reserve

4 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Dollars, except share data or otherwise stated)

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

Three months ended June 30,

COST OF REVENUES

( 3,703,026 )

GROSS (LOSS) PROFIT

( 5,120,576 )

OPERATING EXPENSES

2 unchanged sentences

Total operating expenses

LOSS FROM OPERATIONS

INCOME FROM OPERATIONS

Interest income

1 unchanged sentence

Other income (expense), net

LOSS BEFORE INCOME TAX EXPENSE

INCOME BEFORE INCOME TAX EXPENSE

INCOME TAX EXPENSE

Foreign currency translation gain (loss)

TOTAL COMPREHENSIVE LOSS

LOSS PER SHARE

Basic and diluted

Weighted average number of shares outstanding –

Foreign currency translation loss

TOTAL COMPREHENSIVE INCOME

EARNING PER SHARE

Basic and diluted

Weighted average number of shares outstanding – Basic and diluted

accompany notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

Dollars, except share data or otherwise stated)

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

Retained earnings

2 unchanged sentences

comprehensive loss

BALANCE AT OCTOBER 1, 2019 (Restated)

$ (2,940,044 )

$ (2,757,668 )

Foreign currency translation

Movement of Statutory reserve

Net loss for the period

BALANCE AT DECEMBER 31, 2019

$ (3,199,991 )

$ (3,066,320 )

BALANCE AT OCTOBER 1, 2020

$ (6,489,747 )

$ (2,676,500 )

Movement of Statutory reserve

Foreign currency translation

Net loss for the period

BALANCE AT DECEMBER 31, 2020

$ (6,804,107 )

$ (3,065,809 )

BALANCE AT MARCH 31, 2019 (Restated)

BALANCE AT MARCH 31, 2020

$ ( 3,233,122 )

$ ( 3,066,724 )

Movement of Statutory reserve

Foreign currency translation

Net loss for the period

BALANCE AT DECEMBER 31, 2019

Net income for the period

BALANCE AT JUNE 30, 2020

$ ( 3,029,222 )

3 unchanged sentences

$ ( 103,117 )

Issuance of common stocks

Movement of Statutory reserve

Foreign currency translation

Net loss for the period

BALANCE AT DECEMBER 31, 2020

Net income for the period

BALANCE AT JUNE 30, 2021

$ ( 6,755,281 )

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THE NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019

Dollars, except share data or otherwise stated)

Three Months Ended June 30

CASH FLOWS FROM OPERATING ACTIVITIES:

$ (3,560,206 )

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

2 unchanged sentences

Accounts receivable

( 2,031,892 )

Advances to suppliers

1 unchanged sentence

Accounts payables

( 2,087,678 )

Accrued expenses and other payables

Advances from customers

Net cash provided by (used in) operating activities

$ (3,782,116 )

Net cash (used in) provided by operating activities

$ ( 1,250,664 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of plant and equipment

Proceeds from sale of property and equipment

Cash decreased in disposal of subsidiaries

Purchase of plant and equipment and other assets

Net cash used in investing activities

$ ( 104,235 )

$ ( 143,148 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stocks

Proceeds from related party borrowings

Repayment of related party borrowings

Proceeds from bank borrowings

Repayment of bank borrowings

( 2,942,222 )

Net cash provided by financing activities

NET INCREASE IN CASH AND CASH EQUIVALENTS

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

Effect of exchange rate changes on cash and cash equivalents

6 unchanged sentences

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 NINE MONTHS ENDED DECEMBER 31, 2020 AND 2019

AND BUSINESS ACQUISITIONS

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.

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

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

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

All significant intercompany

transactions and balances are eliminated in consolidation.

However, the results of operations included in such financial statements

may not necessary be indicative of annual results.

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

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

All significant intercompany transactions

and balances are eliminated in consolidation.

However, the results of operations included in such financial statements may not necessary

be indicative of annual results.

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

Certain information and footnote

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

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

GAAP”) have been condensed or omitted.

These unaudited condensed

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

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

Securities and Exchange Commission (“SEC”) on June 29, 2020 (“2020 Form 10-K.”) and Form S-1/A filed with

SEC on January 22, 2021.

Certain information and footnote disclosures

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

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

GAAP”) have been condensed or omitted.

These unaudited condensed consolidated financial

statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included

in the Company’s Annual Report on Form 10-K for the year ended March 31, 2021 filed with the Securities and Exchange Commission

(“SEC”) on June 29, 2021 (“2020 Form 10-K.”).

CONCERN UNCERTAINTY

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

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

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

obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when

they become due.

These consolidated financial statements do not include any adjustments to the recoverability and classification

of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as

a going concern.

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

Company incurred net income of $ 78,947 and $ 203,900 for the three months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021

and March 31, 2021, the Company had net current liability of $ 4,574,925 and $ 4,430,933 , respectively, and a deficit on total equity of

$ 33,067 and $ 81,498 , respectively.

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

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

the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.

These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts

and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Company expects to finance operations primarily through cash flow from revenue and capital contributions from the CEO.

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.

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.

OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

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

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of

the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

makes these estimates using the best information available at the time the estimates are made;

however actual results could differ

materially from those estimates.

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

that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated

financial statements and the reported amounts of revenues and expenses during the reporting periods.

Management makes these estimates

using the best information available at the time the estimates are made;

however actual results could differ materially from those estimates.

is no change on the accounting policies for the three months ended June 30, 2021.

issued accounting pronouncements

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.

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

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 is currently evaluating the impact the adoption

of this ASU will have on its consolidated financial statements.

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.

RISKS AND UNCERTAINTIES

and Political Risks

Company’s operations are conducted in the PRC.

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

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

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

companies in North America and Western Europe.

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

legal environment and foreign currency exchange.

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

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

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

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 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.

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.

Management has not identified any other new standards that it believes will have

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

PARTY TRANSACTIONS

OF RELATED PARTIES

of Related Parties

with the Company

CEO, and a director of the Company

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

legal representative of XKJ

legal representative of DT

spouse of legal representative of HSW

President, CEO, and a director of the Company

Zhongpeng Chen

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

A legal representative of XKJ

A legal representative of YBY

Jinlong Huang

A 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 December 31, 2020 and March 31, 2020:

Related parties borrowings

December 31, 2020

Company had the following related party balances as of June 30, 2021 and March 31, 2021:

OF RELATED PARTIES TRANSACTION

Amount due from related party

June 30, 2021

March 31, 2021

Zhongpeng Chen

Hongye Financial Consulting (Shenzhen) Co., Ltd.

Related party borrowings

June 30, 2021

March 31, 2021

Zhida Hong (1)

Bihua Yang (2)

Dewu Huang (3)

Jinlong Huang

decrease was due to net repayment of debt due to Zhida Hong.

During the three months ended June 30, 2021, the Company received financial

support of $ 0.2 million from Zhida Hong and repaid $ 0.2 million of debts due to him.

financial support from Bihua Yang for XKJ’s daily operation.

increase of related party debt was additional financial support provided by Dewu Huang for YBY’s daily operation.

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

consist of the following as of June 30, 2021 and March 31, 2021:

OF INVENTORIES

June 30, 2021

March 31, 2021

3 unchanged sentences

Total inventories

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

is no inventory write-off for the three months ended June 30, 2021 and 2020.

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

These advances are generally made

to expedite the delivery of required inventory when needed and to help to ensure priority and preferential pricing on such inventory.

The amounts advanced to suppliers are fully refundable on demand.

Company reviews a supplier’s credit history and background information before advancing a payment.

If the financial condition

of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company

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

PLANT AND EQUIPMENT

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

December 31, 2020

These advances are generally made to expedite

the delivery of required inventory when needed and to help to ensure priority and preferential pricing on such inventory.

advanced to suppliers are fully refundable on demand.

Company reviews a supplier’s credit history and background information before advancing a payment.

If the financial condition of

its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would

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

AND OTHER RECEIVABLES

and other receivables consist of the following as of June 30, 2021 and March 31, 2021:

OF PREPAYMENTS AND OTHER RECEIVABLES

June 30, 2021

March 31, 2021

Production plant

Motor vehicles

Office equipment

Receivable of consideration on disposal of subsidiaries

Other receivables

Prepayments and other receivables

PLANT AND EQUIPMENT

plant and equipment consists of the following as of June 30, 2021 and March 31, 2021:

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

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

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

with fixed interest rate of 6.96% per annum.

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

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

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

the Company to borrow up to approximately $153,172 (RMB1,000,000) for daily operations.

The loans are guaranteed at no cost by

the legal representative of HSW.

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 outstanding loan balance will be due on March

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

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

and equipment, net

expense for the three months ended June 30, 2021 and 2020 was $ 29,389 and $ 23,473 , respectively.

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

to borrow up to approximately $ 153,172 (RMB 1,000,000 ) for daily operations.

The loans are guaranteed at no cost by the legal representative

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

The loan was transferred to

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

Income Tax (“EIT”)

As of June 30, 2021, the Company has borrowed $ 154,833 (RMB 1,000,000 ) (March 31, 2021:

$ 152,607 ) under this line of credit with

various annual interest rates from 4.84 % to 4.9 % .

The outstanding loan balance will be due on September 30, 2021.

August 2020, DT entered into a new facility agreement with Webank and obtained a credit facility of $ 88,358

(RMB 600,000 )

for daily operations with various annual interest rate from 16.2 %

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

The loan borrowing was $ 86,886

(RMB 590,000 )

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”)

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

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.

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.

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 nine months ended December 31, 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 June 30, 2021 and 2020.

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

No provision for income taxes in the PRC has been made

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

No provision for income taxes in the PRC has been made as YX

had no taxable income for the three months ended June 30, 2021 and 2020.

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.

Company’s parent entity, Addentax Group Corp.

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

All Yingxi’s operating companies were subject to progressive EIT rates from

5 % to 15 % in 2021 and 2020.

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.

is a 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 and nine months ended December 31, 2020 and 2019.

had no United States taxable income for the three

months ended June 30, 2021 and 2020.

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

OF RECONCILIATION OF INCOME TAXES

Three months ended

Nine months ended

PRC statutory tax rate

4 unchanged sentences

Income tax expense

Added Tax (“VAT”)

accordance with the relevant taxation laws in the PRC, the normal VAT rate for domestic sales is 13 % , which is levied on the invoiced

1 unchanged sentence

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

The Companies

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

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

to offset the VAT due on sales.

services, the applicable VAT rate is 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 2021 and 2020.

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

value of sales as required.

A credit is available whereby VAT paid on gasoline and toll charges can be used to offset the VAT due on

service income.

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

and assesses operating performance.

The segment data presented reflects this segment structure.

The Company reports

financial and operating information in the following four segments:

The Company reports financial and operating

information in the following four segments:

manufacturing .

3 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”.

management and subleasing.

Providing 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 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 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

OF SEGMENT REPORTING INFORMATION, BY SEGMENT

Logistics Services

Property management and leasing

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 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

Corporate and other

Revenue from external customers

Intersegment revenue

Interest income

Interest expense

Depreciation and amortization

Operating income (loss)

Segment assets

Expenditures for segment assets

Company operates predominantly in China.

In presenting information on the basis of geographical location, revenue is based on the geographical

location of customers and long-lived assets are based on the geographical location of the assets.

OF REVENUE AND LONG-LIVED ASSETS, BY GEOGRAPHICAL LOCATION

Long-Lived Assets

RIGHT-OF-USE ASSET AND LEASE LIABILITIES

Company implemented new accounting policy according to the ASC 842, Leases, on April 1, 2019 on a modified retrospective basis

and did not restate comparative periods.

Under the new policy, the Company recognized approximately $0.06 million lease liability

as well as right-of-use asset for all leases (with the exception of short-term leases) at the commencement date.

Lease liabilities

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

Company recognized right-of-use asset as well as lease liability according to the ASC 842, Leases (with the exception of short-term leases).

Lease liabilities are measured at present value of the sum of remaining rental payments as of June 30, 2021, with discounted rate of

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

3 unchanged sentences

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.

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

OF COMPONENTS OF LEASE EXPENSE

Three months ended June 30,

Operating lease cost

1 unchanged sentence

following table summarizes supplemental information related to leases:

Three months ended

Nine months ended

OF SUPPLEMENTAL INFORMATION RELATED TO LEASES

Three months ended June 30,

Cash paid for amounts included in the measurement of lease liabilities

4 unchanged sentences

following table summarizes the maturity of operating lease liabilities:

Years ending December 31

SCHEDULE OF MATURITY OF OPERATING

LEASE LIABILITIES

Years ending June 30

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 share.

The proceeds were all received in August 2020.

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:

RISKS AND UNCERTAINTIES

and Political Risks

Company’s operations are conducted in the PRC.

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

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

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

in North America and Western Europe.

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

and foreign currency exchange.

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

in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion,

remittances abroad, and rates and methods of taxation.

Currency Translation

Company’s reporting currency is the U.S.

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

dollar and the functional

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

For the subsidiaries whose functional

currencies are the RMB, all assets and liabilities are translated at exchange rates at the balance sheet date, which was 6.459 and 6.553

as of June 30 June, 2021 and March 31, 2021, respectively.

Revenue and expenses are translated at the average yearly exchange rates,

which was 6.461 and 6.779 for the three months ended June 30, 2021 and 2020, respectively.

Equity is translated at historical exchange

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 customers over accounts receivable for each segment as

of June 30, 2021 and March 31, 2021.

OF CONCENTRATION OF RISK BY CUSTOMERS

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.

June 30, 2021

March 31, 2021

high concentration as of June 30, 2021 was mainly due to business development of a large distributor of garments.

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 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,”

“estimate,”

“plan,”

“project,”

“continuing,”

“ongoing,”

“expect,”

“believe,”

“intend,”

“may,”

“will,”

“should,”

“could,”

“target”, “forecast”

and similar expressions to identify forward-looking statements.

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 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

and two municipalities 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 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

prevention suppliers through Addentax Group Corp.

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

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 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 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 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

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.

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

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.

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.

of Critical Accounting Policies

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.

and Assumptions

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.

is generated through sale of goods and delivery services.

Revenue is recognized when a customer obtains control of promised goods

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

those goods or services.

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

and cash flows arising from contracts with customers.

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

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

The Company applies the following five-step model in order

to determine this amount:

identification

of the promised goods and services in the contract;

determination

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

of the contract;

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

of the transaction price to the performance obligations;

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

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

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

Once a contract is determined to be within the

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

must deliver and which of these performance obligations are distinct.

The Company recognizes as revenues the amount of the transaction

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

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

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

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

the adopted rules.

Company determines if an arrangement is a lease at inception.

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

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

Finance leases are included

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

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

lease payments arising from the lease.

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

the present value of lease payments over the lease term.

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

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

the lease payments at commencement date.

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

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

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

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.

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.

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

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

in this report.

Three Months Ended December 31,

(decrease) in 2020

compared to 2019

dollars, except for percentages)

Cost of revenues

Operating expenses

Loss from operations

Other income, net

Net finance cost

Income tax expense

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 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

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.

The Company relied on a few subcontractors, in which

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 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 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.

The cost of revenue included cost of merchandise and

cost of our own products.

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)

Operating expenses:

Selling expenses

General and administrative expenses

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 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 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 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.

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.

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

No provision for income

taxes in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended 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 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

Company’s parent entity, Addentax Group Corp.

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

Nine months Ended December 31,

Increase (decrease) in

2020 compared to 2019

dollars, except for percentages)

Cost of revenues

(22,776,087 )

Operating expenses

(Loss) Income from operations

Other income, net

Net finance cost

Income tax expense

$ (3,560,206 )

$ (2,612,721 )

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.

It included revenue from trading of merchandise

and revenue from sales of our own products.

The revenue from trading of merchandise was $11,791,672, representing 99.3% of total

revenue from the epidemic prevention suppliers business.

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

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

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 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.

The Company relied on a few subcontractors, in which

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 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 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 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 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.

The cost of revenue included cost of merchandise and

cost of our own products.

The cost of merchandise was $14,684,284, represented 99.3% of total cost of revenue of the epidemic

prevention supplies business.

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 )

Operating expenses:

Selling expenses

General and administrative expenses

$ (1,830,992 )

$ (1,869,113 )

Loss from operations

$ (3,593,015 )

General and administrative expenses

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 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 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.

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, HXPF, HPF and YS had no taxable income for the nine months ended December 31, 2020 and

Income (Loss)

incurred a net loss of $3,560,206 and $947,485 for the nine months ended December 31, 2020 and 2019, respectively.

Our basic and

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

of cash flows

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 $3,560,206, 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 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

arising from normal business operations when they become due.

The Company expects to finance operations primarily through cash

flow from revenue and capital contributions from the CEO.

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

of the Company.

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

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

provide additional equity financing.

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

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.

are subject to all the substantial risks inherent in the development of a new business enterprise within an extremely competitive

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

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

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.

Currency Translation Risk

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”).

sales are in RMB.

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

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 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 December 31, 2020

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

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

Quantitative and Qualitative Disclosures About Market Risk

applicable to smaller reporting companies.

June 30, 2021

March 31, 2021

management and subleasing

OF PROPERTY MANAGEMENT AND SUBLEASING

June 30, 2021

March 31, 2021

prevention supplies segment

accounts receivables in this segment.

the three months ended June 30, 2021, one customer from garment segment provided more than 10 % of total revenue of the Company, represented

98.8 % of total revenue of the Company for the three months (2020:

high concentration in three months ended June 30, 2021 was mainly due to concentration of distributors in trading of epidemic prevention

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

following tables summarized the purchases from five largest suppliers of each of the reportable segment for the three months ended June

30, 2021 and 2020.

SCHEDULE OF INVENTORY PURCHASES FROM

Three months ended

Garment manufacturing segment

Logistics services segment

Property management and subleasing

Epidemic prevention supplies

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

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

As of June 30, 2021, the total outstanding borrowings

amounted to $ 154,833 (RMB 1,000,000 ) with various interest rate from 4.84 % to 6.96 % p.a.

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.

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