What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-19 compared with 2021-08-16 · 375 added, 167 removed, 287 unchanged (65% of the section changed)

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

following discussion and analysis of our financial condition and results of operations for the three months ended June 30, 2021 and 2020

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.

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

30, 2021 and 2020 should be read in conjunction with the Financial Statements and corresponding notes included in this Report on Form

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.

21 unchanged sentences

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.

In November 2020, 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;

19 unchanged sentences

delivery and courier network in China.

As of June 30, 2021, we provide logistics services to over 79 cities in approximately seven provinces

and two municipalities.

As of September 30, 2021, 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

90 unchanged sentences

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.

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

Initial direct costs incurred

in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line

basis over the lease term.

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

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

12 unchanged sentences

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

of Operations for the three months ended June 30, 2021 and 2020

following tables summarize our results of operations for the three months ended June 30, 2021 and 2020.

of Operations for the three months ended September 30, 2021 and 2020

following tables summarize our results of operations for the three months ended September 30, 2021 and 2020.

The table and the discussion

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

Three Months Ended June 30,

Increase (decrease)

Three Months Ended September 30,

Changes in 2021

compared to 2020

2 unchanged sentences

Cost of revenues

(14,705,387 )

Gross profit (loss)

Operating expenses

Income from operations

Loss from operations

Other income, net

1 unchanged sentence

Income tax expense

revenue for the three months ended June 30, 2021 decreased by approximately $1.6 million, or 27.6%, as compared with the three months

ended June 30, 2020.

Net income (loss)

$ (3,460,525 )

revenue for the three months ended September 30, 2021 decreased by approximately $8.9 million, or 76.4%, as compared with the three months

ended September 30, 2020.

The significant decrease was mainly because of the decrease of epidemic supply business and logistics services

business offset by increases in garment manufacturing business and property management and leasing business.

generated from our garment manufacturing business contributed approximately $2.1 million (48.3%) and $1.3 million (21.5%) of total

revenue for the three months ended June 30, 2021 and 2020, respectively.

The $0.8 million increase was mainly due

to recovery of economic when the epidemic was well controlled.

generated from our garment manufacturing business contributed approximately $0.4 million (14.3%) and $1.6 million (13.9%) of total revenue

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

The decrease of $1.2 million was mainly due to factory re-decoration,

remaining factories cannot provide as much capacity as before, we estimate the capacity will recover at late 2021.

generated from our logistics services business contributed approximately $1.3 million or 47.8% of our total revenue for the three months

ended June 30, 2021.

ended September 30, 2021.

Revenue generated from our logistic business contributed approximately $1.3 million or 11.2% of our total revenue

for the three months ended June 30, 2020.

The $0.4 million decrease mainly because the Company disposed of a subsidiary, HPF,

in September 2020 and set up a new subsidiary, YXPF.

The new subsidiary took time to develop the business gradually to

replace the business of HPF.

generated from our property management and subleasing business contributed approximately $1.1 million increase or 25.9% of our

total revenue for the three months ended June 30, 2021.

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

for the three months ended June 30, 2020.

was no revenue generated from our epidemic prevention supplies business for the three months ended June 30, 2021 because no profitable

orders were obtained in the quarter.

for the three months ended September 30, 2020.

YXPF, the new subsidiary has developed the business to replace the business of HPF, which

was disposed of in September 2020.

generated from our property management and subleasing business contributed approximately $1.0 million or 38.0% of our total revenue for

the three months ended September 30, 2021.

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

three months ended September 30, 2020.

was no revenue generated from our epidemic prevention supplies business for the three months ended September 30, 2021 because no orders were obtained in the quarter.

The Company accepted sales orders very cautiously to make sure the sales orders can be matched with

1 unchanged sentence

Revenue generated from our epidemic prevention supplies business contributed

approximately $3.1 million decrease, or 52.6% of our total revenue for the three months ended June 30, 2020.

Three months ended June 30,

approximately $8.8 million, or 74.9% of our total revenue for the three months ended September 30, 2020.

Three months ended September 30,

(decrease) in

2 unchanged sentences

Net revenue for garment manufacturing

$ (1,229,864 )

Raw materials

12 unchanged sentences

Merchandise/Finished goods/Raw materials

Other and Overhead

(12,133,298 )

Total cost of revenue for epidemic prevention supplies

(12,133,298 )

Gross (loss) income for epidemic prevention supplies

1 unchanged sentence

$ (12,417,980 )

$ (3,021,090 )

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

material costs for our garment manufacturing business were 68.4% of our total garment manufacturing business revenue in the three months

ended June 30, 2021, compared with 74.2% in the three months ended June 30, 2020.

The decreased in percentages was mainly due to the

purchase cost of the raw materials dropped.

ended September 30, 2021, compared with 70.3% in the three months ended September 30, 2020.

The decreased in percentages was mainly due

to the purchase cost of the raw materials dropped.

costs for our garment manufacturing business were 21.9% of our total garment manufacturing business revenue in the three months ended

June 30, 2021, compared with 18.0% in the three months ended June 30, 2020.

The increase in percentages was mainly due to the rising

wages in the PRC.

September 30, 2021, compared with 20.6% in the three months ended September 30, 2020.

The increase in percentages was mainly due to the

rising wages in the PRC.

and other expenses for our garment manufacturing business accounted for 1.6% of our total garment business revenue for the three months

ended June 30, 2021, compared with 0.7% of total garment business revenue for the three months ended June 30, 2020.

ended September 30, 2021, compared with 0.4% of total garment business revenue for the three months ended September 30, 2020.

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

1 unchanged sentence

subcontracting fees to our largest contractor represented approximately 35.6% and 32.8% of total cost of revenues for our service segment

for the three months ended June 30, 2021 and 2020, respectively.

for the three months ended September 30, 2021 and 2020, 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 September 30, 2021 were approximately $0.4 million compared

with $0.5 million for the three months ended September 30, 2020.

Fuel, toll and other costs for our service business accounted for 34.1%

of our total service revenue for the three months ended September 30, 2021, compared with 38.3% for the three months ended September

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

Subcontracting

fees for our service business for the three months ended September 30, 2021 decreased 8.3% to approximately $0.5 million from $0.6 million

for the three months ended September 30, 2020.

Subcontracting fees accounted for 40.9% and 45.0% of our total service business revenue

in the three months ended September 30, 2021 and 2020, 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

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 other cost of the quarter represented depreciation of machinery.

manufacturing business gross profit for the three months ended September 30, 2021 was approximately $0.03 million, as compared with approximately

$0.1 million for the three months ended September 30, 2020.

Gross profit accounted for 8.1% of our total Garment manufacturing business

revenue for the three months ended September 30, 2021, compared with 8.7% for the three months ended September 30, 2020.

The gross margin

was 0.6% lower due to higher raw material cost in the quarter ended September 30, 2021.

profit in our logistics services business for the three months ended September 30, 2021 was approximately $0.3 million and gross margin

Gross profit in our logistics services business for the three months ended September 30, 2020 was approximately $0.2 million

and gross margin was 16.7%.

The increase of gross profit ratio was mainly because of a decrease of operating expenses due to replacement

of old vehicles and shifting our strategic focus on high margin customers.

profit in our property management and subleasing business for the three months ended September 30, 2021 was approximately $0.1 million,

or 10.4% of our total property management and subleasing business revenue.

This is a new business developed in last quarter.

Three months ended September 30,

(decrease) in

2021 compared to 2020

dollars, except for percentages)

$ (3,021,090 )

Operating expenses:

Selling expenses

General and administrative expenses

Income from operations

$ (3,492,921 )

General and administrative expenses

selling expenses in our Garment manufacturing business segment for the three months ended September 30, 2021 and 2020 was approximately

$0.071 million and $0.001 million, respectively.

Our selling expenses in our logistics services segment was nil for the three months

ended September 30, 2021 and 2020, respectively.

Selling expenses in our property management and subleasing business was approximately

$0.05 million for the three months ended September 30, 2021 and 2020, respectively.

Selling expenses in our epidemic prevention supplies

segment was nil and approximately $0.005 million for the three months ended September 30, 2021 and 2020, respectively.

Selling expenses

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

Total selling expenses for

the three months ended September 30, 2021 increased 691.2% to approximately $0.04 million from $0.006 million for the three months ended

September 30, 2020.

It was mainly due to decrease of marketing expenses of epidemic prevention supplies business.

general and administrative expenses in our Garment manufacturing business segment for the three months ended September 30, 2021 and 2020

was approximately $0.03 million and $0.06 million, respectively.

Our general and administrative expenses in our logistics services segment,

for the three months ended September 30, 2021 and 2020 was both approximately $0.2 million.

The general and administrative expenses in

our property management and subleasing business was approximately $0.09 million for the three months ended September 30, 2021.

and administrative expenses in our epidemic prevention supplies segment was nil and approximately $0.001 million for the three months

ended September 30, 2021 and 2020, respectively.

Our general and administrative expenses in our corporate office for the three months

ended September 30, 2021 and 2020 was approximately $0.1 million and $0.2 million, respectively.

General and administrative expenses

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

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

general and administrative expenses for the three months ended September 30, 2021 decreased slightly by 0.7% to approximately $0.46 million

from $0.47 million for the three months ended September 30, 2020.

from operations

from operations for the three months ended September 30, 2021 and 2020 was approximately $0.04 million and $3.5 million, respectively.

Income from operations of approximately $0.001 million and $0.08 million was attributed from our garment manufacturing segment for the

three months ended September 30, 2021 and 2020, respectively.

Income from operations of approximately $0.1 million and $0.03 million

was attributed from our logistics services segment for the three months ended September 30, 2021 and 2020, respectively.

Loss from operations

of approximately $0.02 million was attributed from our newly developed property management and subleasing business.

Income (loss) from

operations of nil and approximately ($3.4) million was attributed from our epidemic prevention supplies segment for the three months

ended September 30, 2021 and 2020, respectively.

We incurred a loss from operations in corporate office of approximately $0.1 million

and $0.2 million for the three months ended September 30, 2021 and 2020, respectively.

The loss from our corporate office was mainly

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

tax expense for the three months ended September 30, 2021 and 2020 was approximately $0.005 million and $0.004 million, respectively,

22.4% increase compared to 2020.

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 September 30, 2021 and 2020.

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

No provision for income taxes

in the PRC has been made as QYTG and YX had no taxable income for the three months ended September 30, 2021 and 2020.

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 2021.

The preferential tax rates will be expired at end of year 2022 and the EIT rate will be 25% from year 2023.

Company’s parent entity, Addentax Group Corp.

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

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

had no United States taxable income for the three months

ended September 30, 2021 and 2020.

Income (Loss)

incurred a net income of approximately $0.03 million and a net loss of $3.5 million for the three months ended September 30, 2021 and

2020, respectively.

Our basic and diluted earnings per share were $0.00 and ($0.14) for the three months ended September 30, 2021 and

2020, respectively.

of Operations for the six months ended September 30, 2021 and 2020

following tables summarize our results of operations for the six months ended September 30, 2021 and 2020.

The table and the discussion

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

Six months Ended September 30,

Changes in 2021

compared to 2020

dollars, except for percentages)

$ (10,558,249 )

Cost of revenues

(19,825,963 )

Gross profit (loss)

Operating expenses

Income (loss) from operations

Other income, net

Net finance cost

Income tax expense

Net income (loss)

$ (3,256,625 )

revenue for the six months ended September 30, 2021 decreased by approximately $10.6 million, or 60.0%, as compared with the six months

ended September 30, 2020.

The significant decrease was mainly because of the decrease of epidemic supply business and logistics services

business offset by increases in property management and leasing business.

generated from our garment manufacturing business contributed approximately $2.5 million (35.0%) and $2.9 million (16.5%) of total revenue

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

The decrease approximately $0.4 million mainly due to factory

re-decoration which caused a capacity decrease.

We estimate the capacity will recover at late 2021.

generated from our logistics services business contributed approximately $2.4 million or 34.4% of our total revenue for the six months

ended September 30, 2021.

Revenue generated from our logistic business contributed approximately $2.8 million or 16.1% of our total revenue

for the six months ended September 30, 2020.

The decrease of $0.4 million was because YXPF, the new subsidiary was developing the business

in first quarter to replace the business of HPF, which was disposed of in September 2020.

generated from our property management and subleasing business contributed approximately $2.2 million or 30.6% of our total revenue for

the six months ended September 30, 2021.

This is a new business segment developed in current period.

was no revenue generated from our epidemic prevention supplies business for the six months ended September 30, 2021 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.

Revenue generated from our epidemic prevention supplies business contributed

approximately $11.9 million, or 67.4% of our total revenue for the six months ended September 30, 2020.

Six months ended September 30,

(decrease) in

2021 compared to 2020

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

(11,864,067 )

Merchandise/Finished goods/Raw materials

(14,680,253 )

Other and Overhead

Total cost of revenue for epidemic prevention supplies

(14,784,773 )

Gross loss for epidemic prevention supplies

Total cost of revenue

$ (13,835,531 )

$ (2,223,452 )

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

material costs for our garment manufacturing business were 69.5% of our total garment manufacturing business revenue in the six months

ended September 30, 2021, compared with 72.1% in the six months ended September 30, 2020.

The decreased in percentages was mainly due

to the purchase cost of the raw materials dropped.

costs for our garment manufacturing business were 21.5% of our total garment manufacturing business revenue in the six months ended September

30, 2021, compared with 19.4% in the six months ended September 30, 2020.

The increase in percentages was mainly due to the rising wages

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

ended September 30, 2021, compared with 0.5% of total garment business revenue for the six months ended September 30, 2020.

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 18.8% and 33.6% of total cost of revenues for our service segment

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

The percentage decreased as we used our own logistics more than the

2 unchanged sentences

with our contract logistics services provider.

toll and other costs for our service business for the three months ended June 30, 2021 were approximately $0.4 million compared with

$0.4 million for the three months ended June 30, 2020.

Fuel, toll and other costs for our service business accounted for 35.5% of our

total service revenue for the three months ended June 30, 2021, compared with 25.1% for the three months ended June 30, 2020.

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

toll and other costs for our service business for the six months ended September 30, 2021 were approximately $0.8 million compared with

$0.9 million for the six months ended September 30, 2020.

Fuel, toll and other costs for our service business accounted for 34.7% of

our total service revenue for the six months ended September 30, 2021, compared with 31.1% for the six months ended September 30, 2020.

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

Subcontracting

fees for our service business for the three months ended June 30, 2021 decreased 46.0% to approximately $0.5 million from $0.9 million

for the three months ended June 30, 2020.

Subcontracting fees accounted for 43.9% and 58.8% of our total service business revenue in

the three months ended June 30, 2021 and 2020, respectively.

This decrease in percentages was primarily because the Company used less

subcontractors under the epidemic circumstance.

fees for our service business for the six months ended September 30, 2021 decreased 31.2% to approximately $1.0 million from $1.5 million

for the six months ended September 30, 2020.

Subcontracting fees accounted for 42.3% and 52.5% of our total service business revenue

in the six months ended September 30, 2021 and 2020, 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

3 unchanged sentences

The other cost of the quarter represented depreciation of machinery.

manufacturing business gross profit for the three months ended June 30, 2021 was approximately $0.2 million, as compared with approximately

$0.1 million for the three months ended June 30, 2020.

Gross profit accounted for 8.4% of our total Garment manufacturing business revenue

for the three months ended June 30, 2021, compared with 7.2% for the three months ended June 30, 2020.

manufacturing business gross profit for the six months ended September 30, 2021 was approximately $0.2 million, nearly the same as for

the six months ended September 30, 2020.

Gross profit accounted for 8.4% of our total Garment manufacturing business revenue for the

six months ended September 30, 2021, compared with 8.0% for the six months ended September 30, 2020.

The gross margin was 0.4% higher

due to higher raw material cost in the quarter ended June 30, 2020.

profit in our logistics services business for the three months ended June 30, 2021 was approximately $0.2 million and gross margin was

Gross profit in our logistics services business for the three months ended June 30, 2020 was approximately $0.2 million and gross

margin was 16.1%.

The increase of gross profit ratio was mainly because of a decrease of operating expenses due to replacement of old

vehicles and shifting our strategic focus on high margin customers.

profit in our property management and subleasing business for the three months ended June 30, 2021 was approximately $0.2 million, or

16.5% of our total property management and subleasing business revenue.

This is a new business developed in last quarter.

loss in our epidemic prevention supplies business for the three months ended June 30, 2021 was approximately $0.001 million.

Three months ended June 30,

due to lower raw material cost in the months ended September 30, 2021.

profit in our logistics services business for the six months ended September 30, 2021 was approximately $0.6 million and gross margin

Gross profit in our logistics services business for the six months ended September 30, 2020 was approximately $0.5 million

and gross margin was 16.4%.

The increase of gross profit ratio was mainly because of a decrease of operating expenses due to replacement

of old vehicles and shifting our strategic focus on high margin customers.

profit in our property management and subleasing business for the six months ended September 30, 2021 was approximately $0.3 million,

or 13.5% of our total property management and subleasing business revenue.

Six months ended September 30,

(decrease) in

1 unchanged sentence

dollars, except for percentages)

$ (2,223,451 )

Operating expenses:

1 unchanged sentence

General and administrative expenses

$ (1,015,393 )

$ (1,081,038 )

Income from operations

$ (3,304,489 )

General and administrative expenses

selling expenses in our Garment manufacturing business segment for the three months ended June 30, 2021 and 2020 was nil and approximately

$0.001 million, respectively.

Our selling expenses in our logistics services segment was nil for the three months ended June 30, 2021

and 2020, respectively.

Selling expenses in our property management and subleasing business was nil for the three months ended June 30,

2021 and 2020, respectively.

Selling expenses in our epidemic prevention supplies segment was nil and approximately $0.2 million for

the three months ended June 30, 2021 and 2020, respectively.

Selling expenses consist primarily of advertisement, local transportation,

unloading charges and product inspection charges.

Total selling expenses for the three months ended June 30, 2021 decreased 69.7% to

$0.05 million from $0.2 million for the three months ended June 30, 2020.

It was mainly due to decrease of marketing expenses of epidemic

prevention supplies business.

general and administrative expenses in our Garment manufacturing business segment for the three months ended June 30, 2021 and 2020 was

selling expenses in our Garment manufacturing business segment for the six months ended September 30, 2021 and 2020 was $0.0001 million

and approximately $0.002 million, respectively.

Our selling expenses in our logistics services segment was nil for the six months ended

September 30, 2021 and 2020, respectively.

Selling expenses in our property management and subleasing business was $0.09 million for

the six months ended September 30, 2021.

Selling expenses in our epidemic prevention supplies segment was nil and approximately $0.2

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

Selling expenses consist primarily of advertisement, local

transportation, unloading charges and product inspection charges.

Total selling expenses for the six months ended September 30, 2021

decreased 42.0% to $0.09 million from $0.2 million for the six months ended September 30, 2020.

It was mainly due to decrease of marketing

expenses of epidemic prevention supplies business.

general and administrative expenses in our Garment manufacturing business segment for the six months ended September 30, 2021 and 2020

was both approximately $0.08 million.

Our general and administrative expenses in our logistics services segment, for the six months ended

September 30, 2021 and 2020 was both approximately $0.4 million.

The general and administrative expenses in our property management and

subleasing business was approximately $0.2 million for the six months ended September 30, 2021.

Our general and administrative expenses

in our epidemic prevention supplies segment was nil and approximately $0.02 million for the six months ended September 30, 2021 and 2020,

respectively.

Our general and administrative expenses in our corporate office for the six months ended September 30, 2021 and 2020 was

approximately $0.2 million and $0.4 million, respectively.

Our general and administrative expenses in our logistics services segment,

for the three months ended June 30, 2021 and 2020 was approximately $0.2 million and $0.2 million, respectively.

The general and administrative

expenses in our property management and subleasing business was approximately $0.08 million for the three months ended June 30, 2021.

Our general and administrative expenses in our epidemic prevention supplies segment was nil and approximately $0.02 million for the three

months ended June 30, 2021 and 2020, respectively.

Our general and administrative expenses in our corporate office for the three months

ended June 30, 2021 and 2020 was approximately $0.1 million and $0.2 million, respectively.

General and administrative expenses consist

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

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

general and administrative expenses for the three months ended June 30, 2021 decreased slightly by 1.0% to approximately $0.46 million

from $0.45 million for the three months ended June 30, 2020.

from operations

from operations for the three months ended June 30, 2021 and 2020 was approximately $0.08 million and $0.2 million, respectively.

from operations of approximately $0.1 million and $0.07 million was attributed from our garment manufacturing segment for the three months

ended June 30, 2021 and 2020, respectively.

Income from operations of approximately $0.005 million and $0.001 million was attributed

from our logistics services segment for the three months ended June 30, 2021 and 2020, respectively.

General and administrative expenses consist primarily of administrative salaries,

office expense, certain depreciation and amortization charges, repairs and maintenance, legal and professional fees, warehousing costs

and other expenses that are not directly attributable to our revenues.

general and administrative expenses for the six months ended September 30, 2021 was nearly the same as that for the six months ended

September 30, 2020.

(loss) from operations

from operations for the six months ended September 30, 2021 was approximately $0.04 million and loss from operations for the six months

ended September 30, 2020 was approximately $3.3 million.

Income from operations of approximately $0.1 million was attributed from our

garment manufacturing segment for both the six months ended September 30, 2021 and 2020.

Income from operations of approximately $0.1

$0.06 million was attributed from our newly developed property management and subleasing business.

Income from operations of nil and

approximately $0.4 million was attributed from our epidemic prevention supplies segment for the three months ended June 30, 2021 and

2020, respectively.

We incurred a loss from operations in corporate office of approximately $0.1 million and $0.3 million for the three

months ended June 30, 2021 and 2020, respectively.

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

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

tax expense for the three months ended June 30, 2021 and 2020 was approximately $0.01 million and $0.003 million, respectively, a two

times increase compared to 2020.

million and $0.04 million was attributed from our logistics services segment for the six months ended September 30, 2021 and 2020, respectively.

Loss from operations of approximately $0.03 million was attributed from our newly developed property management and subleasing business.

Income (loss) from operations of nil and approximately ($3.1) million was attributed from our epidemic prevention supplies segment for

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

We incurred a loss from operations in corporate office of approximately

$0.2 million and $0.4 million for the six months ended September 30, 2021 and 2020, respectively.

The loss from our corporate office

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

tax expense for the six months ended September 30, 2021 and 2020 was approximately $0.015 million and $0.007 million, respectively, 111.6%%

increase compared to 2020.

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

3 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 six months ended September 30, 2021 and 2020.

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

No provision for income taxes

in the PRC has been made as QYTG and YX had no taxable income for the three months ended June 30, 2021 and 2020.

in the PRC has been made as QYTG and YX had no taxable income for the six months ended September 30, 2021 and 2020.

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

5 unchanged sentences

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.

incurred a net income of approximately $0.08 million and $0.2 million for the three months ended June 30, 2021 and 2020, respectively.

Our basic and diluted earnings per share were $0.00 and $0.01 for the three months ended June 30, 2021 and 2020, respectively.

had no United States taxable income for the six months ended

September 30, 2021 and 2020.

Income (Loss)

incurred a net income of approximately $0.1 million and a net loss of $3.3 million for the six months ended September 30, 2021 and 2020,

respectively.

Our basic and diluted earnings per share were $0.00 and ($0.13) for the six months ended September 30, 2021 and 2020, respectively.

of cash flows

cash flows information for the three months ended June 30, 2021 and 2020 is as follow:

Three months ended June 30,

Net cash (used in) provided by operating activities

cash flows information for the three months ended September 30, 2021 and 2020 is as follow:

Three months ended September 30,

Net cash used in operating activities

$ (3,062,555 )

1 unchanged sentence

Net cash provided by financing activities

cash used in operating activities in the three months ended June 30, 2021 was approximately $2.1 million more than that of the three

months ended June 30, 2020.

It was mainly because the net income of the three months ended June 30, 2021 was approximately $0.1 million

less than the net income of the three months ended June 30, 2020.

The movement of operating assets and liabilities of the three months

ended June 30, 2021 resulted in negative cash flow of approximately $1.4 million, while the movement of operating assets and liabilities

of the three months ended June 30, 2020 resulted in positive cash inflow of approximately $0.6 million.

We will continue to improve our

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

We generally do not hold any significant

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

cash used in investing activities for the three months ended June 30, 2021 was approximately $0.04 million less than that of the three

months ended June 30, 2020.

It was mainly because the purchase of plant and equipment and other assets in the three months ended June

30, 2021 was approximately $0.04 million less than the purchase of plant and equipment in the three months ended June 30, 2020.

cash provided by financing activities for the three months ended June 30, 2021 was approximately $0.1 million more than the three months

ended June 30, 2020.

It was mainly because the net proceeds from related party borrowings increased approximately $0.1 million.

$ (1,138,547 )

cash used in operating activities in the six months ended September 30, 2021 was approximately $2.9 million less than that of the six

months ended September 30, 2020.

It was mainly because the net income of the six months ended September 30, 2021 was approximately $0.1

million while the net loss of the six months ended September 30, 2020 was approximately $3.3 million.

The movement of operating assets

and liabilities of the six months ended September 30, 2021 resulted in negative cash flow of approximately $0.03 million, while the movement

of operating assets and liabilities of the three months ended September 30, 2020 resulted in positive cash inflow of approximately $0.1

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

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

cash used in investing activities for the six months ended September 30, 2021 was approximately $0.3 million less than that of the three

months ended September 30, 2020.

It was mainly because the purchase of plant and equipment and other assets in the six months ended September

30, 2021 was approximately $0.3 million less than the purchase of plant and equipment in the six months ended September 30, 2020.

cash provided by financing activities for the six months ended September 30, 2021 was approximately $3.0 million more than the six months

ended September 30, 2020.

It was mainly because there was proceeds of $3.7 million from issue of ordinary shares in the six months ended

September 30, 2020;

the net repayment of related party borrowings in current period was approximately $0.6 million more than that of

the six months ended September 30, 2020;

and there was repayment of bank borrowing of $0.1 million in the six months ended September

Condition, Liquidity and Capital Resources

of June 30, 2021, we had cash on hand of approximately $1.0 million, total current assets of approximately $10.1 million and current

of September 30, 2021, we had cash on hand of approximately $0.7 million, total current assets of approximately $5.3 million and current

liabilities of approximately $9.9 million.

We presently finance our operations primarily from cash flows from borrowings from related

We presently finance our operations by using the cash flows borrowed from related

parties and third parties.

40 unchanged sentences

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

As of June 30, 2021, the market foreign exchange rate had decreased to RMB

6.46 to one U.S.

As of September 30, 2021, the market foreign exchange rate was RMB 6.45 to

Our financial statements are translated into U.S.

dollars using the closing rate method.

The balance sheet items

are translated into U.S.

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

The foreign currency translation loss for the three months ended June 30, 2021 and 2020 was approximately $0.03 million and

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

The foreign currency translation loss for the six months ended September 30, 2021 and 2020 was approximately $0.03 million and

$0.09 million respectively.

Sheet Arrangements

have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of June 30, 2021 that have

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

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

have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of September 30, 2021 that

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

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

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis