What changed in this filing

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Item 1. Financial Statements

2021-11-19 compared with 2021-08-16 · 217 added, 136 removed, 305 unchanged (54% of the section changed)

Financial Statements and Supplementary Data

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)

the six months ended September 30, 2021 and 2020

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

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

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

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

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

AND SUBSIDIARIES

1 unchanged sentence

Dollars, except share data or otherwise stated)

June 30, 2021

September 30, 2021

March 31, 2021

8 unchanged sentences

Plant and equipment, net

Long-term prepayments

Operating lease right of use asset

12 unchanged sentences

TOTAL LIABILITIES

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)

EQUITY ( deficit )

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

Additional paid-in capital

Retained earnings

Accumulated Deficit

( 6,723,260 )

8 unchanged sentences

Dollars, except share data or otherwise stated)

Three months ended June 30,

Three months ended

September 30,

Six months ended

September 30,

COST OF REVENUES

1 unchanged sentence

( 14,705,387 )

( 5,990,433 )

( 19,825,963 )

GROSS PROFIT (LOSS)

( 3,021,090 )

( 2,223,451 )

OPERATING EXPENSES

2 unchanged sentences

Total operating expenses

INCOME FROM OPERATIONS

( 1,015,393 )

( 1,081,038 )

(LOSS) INCOME FROM OPERATIONS

( 3,492,921 )

( 3,304,489 )

Interest income

1 unchanged sentence

Other income (expense), net

INCOME BEFORE INCOME TAX EXPENSE

INCOME (LOSS) BEFORE INCOME TAX EXPENSE

( 3,456,472 )

( 3,249,213 )

INCOME TAX EXPENSE

NET INCOME (LOSS)

( 3,460,525 )

( 3,256,625 )

Foreign currency translation loss

TOTAL COMPREHENSIVE INCOME

EARNING PER SHARE

TOTAL COMPREHENSIVE INCOME (LOSS)

$ ( 3,544,221 )

$ ( 3,344,776 )

EARNINGS (LOSS) PER SHARE

Basic and diluted

4 unchanged sentences

Dollars, except share data or otherwise stated)

Retained earnings

Retained earnings (accumulated

Accumulated other

1 unchanged sentence

comprehensive loss

BALANCE AT MARCH 31, 2020

BALANCE AT JUNE 30, 2020

$ ( 3,029,222 )

$ ( 2,867,279 )

Paid in capital

Foreign currency translation

Net income for the period

( 3,460,525 )

BALANCE AT SEPTEMBER 30, 2020

$ ( 6,489,747 )

$ ( 2,676,500 )

BALANCE AT JUNE 30, 2021

1 unchanged sentence

$ ( 133,633 )

Foreign currency translation

Net income for the period

BALANCE AT SEPTEMBER 30, 2021

$ ( 6,723,260 )

$ ( 137,259 )

BALANCE AT MARCH 31, 2020

1 unchanged sentence

( 3,066,724 )

Paid in capital

Foreign currency translation

Net income for the period

BALANCE AT JUNE 30, 2021

( 3,256,625 )

BALANCE AT SEPTEMBER 30, 2020

( 6,489,747 )

( 2,676,500 )

BALANCE AT MARCH 31, 2021

$ ( 6,834,228 )

$ ( 103,117 )

Foreign currency translation

Net income for the period

BALANCE AT SEPTEMBER 30, 2021

$ ( 6,723,260 )

$ ( 137,259 )

accompany notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

Dollars, except share data or otherwise stated)

Three Months Ended June 30

Six Months Ended September 30

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Net income (loss)

$ ( 3,256,625 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Loss on disposal of plant and equipment

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

Changes in operating assets and liabilities

Accounts receivable

( 2,031,892 )

Advances to suppliers

( 1,114,244 )

Other receivables

1 unchanged sentence

( 1,801,257 )

( 2,500,432 )

Accrued expenses and other payables

Advances from customers

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

$ ( 3,062,555 )

1 unchanged sentence

Purchase of plant and equipment and other assets

Proceeds from sale of property and equipment

Net cash used in investing activities

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of common stocks

Proceeds from related party borrowings

1 unchanged sentence

( 2,762,272 )

Net cash provided by financing activities

( 5,621,945 )

Proceeds from bank borrowings

Repayment of bank borrowings

Net cash (used in) provided by financing activities

$ ( 1,138,547 )

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

( 1,130,987 )

Effect of exchange rate changes on cash and cash equivalents

32 unchanged sentences

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

Company incurred net income of $ 32,021 and net loss of $ 3,460,525 for the three months ended September 30, 2021 and 2020, respectively,

and net income of $ 110,968 and net loss of $ 3,256,626 for the six months ended September 30, 2021 and 2020, respectively.

As of September

30, 2021 and March 31, 2021, the Company had net current liability of $ 4,608,802 and $ 4,430,933 , respectively, and a deficit on total

equity of $ 4,672 and $ 81,498 , 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

9 unchanged sentences

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

4 unchanged sentences

however actual results could differ materially from those estimates.

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

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

issued accounting pronouncements

13 unchanged sentences

PARTY TRANSACTIONS

OF RELATED PARTIES

SCHEDULE OF RELATED PARTIES

of Related Parties

with the Company

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

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

General Manager of XKJ

legal representative of YBY

spouse of legal representative of HSW

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

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

OF RELATED PARTIES TRANSACTION

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

SCHEDULE OF RELATED PARTIES TRANSACTION

Amount due from related party

June 30, 2021

September 30, 2021

March 31, 2021

Hongye Financial Consulting (Shenzhen) Co., Ltd.

Zhiyong Zhou (1)

Related party borrowings

June 30, 2021

September 30, 2021

March 31, 2021

3 unchanged sentences

Jinlong Huang

Being cash advance to Zhiyong Zhou to pay for daily operating

expenditures of XKJ.

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.

During the three and six months ended September 30, 2021, the Company

received financial support of $ 0.04 million and 0.24 million from Zhida Hong and repaid $ 0.4 million and $ 0.6 million of debts due

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.

decrease was due to net repayment of debt due to Dewu Huang.

During the six months ended September 30, 2021, the company received

interest free advanced loan as financial support of approximately $ 1.3

million from Dewu Huang

and repaid approximately $ 2.0

million of debts due to

The 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 June 30, 2021 and March 31, 2021:

OF INVENTORIES

June 30, 2021

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

SCHEDULE OF INVENTORIES

September 30, 2021

March 31, 2021

3 unchanged sentences

Total inventories

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

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

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

7 unchanged sentences

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

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

SCHEDULE OF PREPAYMENTS AND OTHER RECEIVABLES

September 30, 2021

March 31, 2021

3 unchanged sentences

PLANT AND EQUIPMENT

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

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

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT

September 30, 2021

March 31, 2021

Production plant

Motor vehicles

Office equipment

accumulated depreciation

and equipment, net

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

Plant and equipment, net

expense for the three and six months ended September 30, 2021 and 2020 was $ 42,008 and $ 27,686 , $ 71,397 and $ 51,159 , respectively.

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

1 unchanged sentence

The loans are guaranteed at no cost by the legal representative

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.

As of September 30, 2021, the Company has borrowed $ 155,120 (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 was due on September 30, 2021.

The Company is still

negotiating with the bank on renewal of the loan facility.

Before renewal, the Company is paying additional 2.22 % as penalty interest.

Income Tax (“EIT”)

4 unchanged sentences

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.

in Hong Kong has been made as Yingxi HK had no taxable income for the three and six months ended September 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 months ended June 30, 2021 and 2020.

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

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

4 unchanged sentences

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

months ended June 30, 2021 and 2020.

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

had no United States taxable income for the three and six

months ended September 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

SCHEDULE OF RECONCILIATION OF INCOME TAXES

Three months ended

Six months ended

September 30,

PRC statutory tax rate

Computed expected benefits

Computed expected benefits (expense)

Temporary differences

31 unchanged sentences

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

OF SEGMENT REPORTING INFORMATION, BY SEGMENT

SCHEDULE OF SEGMENT REPORTING INFORMATION, BY SEGMENT

Logistics Services

13 unchanged sentences

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

SCHEDULE OF REVENUE AND LONG-LIVED ASSETS, BY GEOGRAPHICAL LOCATION

September 30,

RIGHT-OF-USE ASSET AND LEASE LIABILITIES

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

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

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

8 unchanged sentences

Following table summarizes the components of lease expense:

OF COMPONENTS OF LEASE EXPENSE

Three months ended June 30,

SCHEDULE OF COMPONENTS OF LEASE EXPENSE

Three months ended

September 30,

Six months ended

September 30,

Operating lease cost

1 unchanged sentence

following table summarizes supplemental information related to leases:

OF SUPPLEMENTAL INFORMATION RELATED TO LEASES

Three months ended June 30,

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES

Three months ended

September 30,

Six months ended

September 30,

Cash paid for amounts included in the measurement of lease liabilities

4 unchanged sentences

following table summarizes the maturity of operating lease liabilities:

SCHEDULE OF MATURITY OF OPERATING

LEASE LIABILITIES

Years ending June 30

SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITIES

Years ending September 30

Total lease payments

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.

Economic and Political Risks

The Company’s operations are conducted

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.

The 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.

Foreign Currency Translation

The Company’s reporting currency

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

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 6.447 and 6.553 as of September 30, 2021

and March 31, 2021, respectively.

Revenue and expenses are translated at the average yearly exchange rates, which was 6.466 and 6.779

for the six months ended September 30, 2021 and 2020, respectively.

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 Risks

The followings are the percentages of accounts

receivable balance of the top customers over accounts receivable for each segment as of September 30, 2021 and March 31, 2021.

SCHEDULE OF CONCENTRATION OF RISK BY CUSTOMERS

manufacturing segment

June 30, 2021

September 30, 2021

March 31, 2021

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

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

services segment

June 30, 2021

September 30, 2021

March 31, 2021

management and subleasing

OF PROPERTY MANAGEMENT AND SUBLEASING

June 30, 2021

SCHEDULE OF PROPERTY MANAGEMENT AND SUBLEASING

September 30, 2021

March 31, 2021

1 unchanged sentence

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

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

represented 14.0 % of total revenue of the Company for the three months and 34.5 % for the six months.

For the three and six months ended

September 30, 2020, one customer from garment segment and one customer from epidemic prevention supplies segment provided more than 10 %

of total revenue of the Company.

The high concentration in three months

ended September 30, 2021 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.

The following tables summarized the purchases

from five largest suppliers of each of the reportable segment for the three and six months ended September 30, 2021 and 2020.

SCHEDULE OF INVENTORY PURCHASES FROM SUPPLIERS

Three months ended

Six months ended

September 30,

Garment manufacturing segment

2 unchanged sentences

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.

Interest Rate Risk

The Company’s exposure to interest

rate risk primarily relates to the interest expenses on our outstanding bank borrowings and the interest income generated by cash invested

in cash deposits and liquid investments.

As of September 30, 2021, the total outstanding borrowings amounted to $ 155,120 (RMB 1,000,000 )

with various interest rate from 4.84 % to 6.96 % p.a.

The 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.

As 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.

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

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