What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 355 added, 208 removed, 222 unchanged (72% 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, 2022 and 2021

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,

2022 and 2021 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 are listed on the Nasdaq Capital Market 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, 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”).

30 unchanged sentences

delivery and courier network in China.

As of June 30, 2022, we provide logistics services to over 79 cities in approximately seven provinces

and two municipalities.

As of September 30, 2022, 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

110 unchanged sentences

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

of Operations for the three months ended June 30, 2022 and 2021

following tables summarize our results of operations for the three months ended June 30, 2022 and 2021.

of Operations for the three months ended September 30, 2022 and 2021

following tables summarize our results of operations for the three months ended September 30, 2022 and 2021.

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,

Three Months Ended September 30,

Changes in 2022

1 unchanged sentence

dollars, except for percentages)

$ (1,900,047 )

Cost of revenues

5 unchanged sentences

Net income (loss)

revenue for the three months ended June 30, 2022 decreased by approximately $1.9 million, or 44.3%, as compared with the three months

ended June 30, 2021.

The significant decrease was mainly because of the decrease of $2.0 million in garment manufacturing and $0.1 million

in property management and subleasing business and offset by $0.2 million increases in logistics services business.

generated from our garment manufacturing business contributed approximately $0.04 million (1.7%) and $2.1 million (48.3%) of total revenue

for the three months ended June 30, 2022 and 2021, respectively.

The decrease of $2.1 million was mainly due to factory facilities renewal

and repair, remaining factories cannot provide as much capacity as before.

We estimate the capacity will appear to recover at second

quarter of FY2023.

revenue for the three months ended September 30, 2022 decreased by approximately $0.6 million, or 22.3%, as compared with the three months

ended September 30, 2021.

The decrease was mainly due to a decrease of approximately $0.4 million in garment manufacturing, a decrease

of approximately $0.1 million in logistics services business, and a decrease of approximately $0.1 million in property management and

subleasing business.

was nearly no revenue generated from our garment manufacturing business for the three months ended September 30, 2022.

The revenue generated

from the segment was $0.4 million, or approximately 14.3%, of total revenue for the three months ended September 30, 2021.

of approximately $0.4 million was mainly due to factory facilities renewal and repair, remaining factories cannot provide as much capacity

as previously.

We estimate the capacity will appear to recover in the third quarter of FY2023.

generated from our logistics services business contributed approximately $1.2 million, or 57.0%, of our total revenue for the three months

ended June 30, 2022.

Revenue generated from our logistic business contributed approximately $1.1 million or 25.8% of our total revenue

for the three months ended June 30, 2021.

generated from our property management and subleasing business contributed approximately $1.0 million or 40.0% of our total revenue for

the three months ended June 30, 2022.

The revenue from this business segment was $1.1 million or 25.9% of our total revenue of this business

for the three months ended June 30, 2021.

was only $0.0004 million generated from our epidemic prevention supplies business for the three months ended June 30, 2022 because no

other 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.

There was no revenue generated from this business for the three months ended

June 30, 2021.

Three months ended June 30,

(decrease) in

2022 compared

ended September 30, 2022.

Revenue generated from our logistic business contributed approximately $1.3 million, or 47.8%, of our total

revenue for the three months ended September 30, 2021.

generated from our property management and subleasing business contributed approximately $0.9 million, or 42.9%, of our total revenue

for the three months ended September 30, 2022.

The revenue from this business segment was $1.0 million, or 38.0%, of our total revenue

of this business for the three months ended September 30, 2021.

was only $1,299 generated from our epidemic prevention supplies business for the three months ended September 30, 2022 because

no other 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.

There was no revenue generated from this business for the three

months ended September 30, 2021.

Three months ended September 30,

Increase (decrease) in

2022 compared to 2021

dollars, except for percentages)

Net revenue for garment manufacturing

$ (2,028,715 )

Raw materials

1 unchanged sentence

Total cost of revenue for garment manufacturing

Gross profit for garment manufacturing

Gross profit (loss) for garment manufacturing

Net revenue for logistics services

8 unchanged sentences

Merchandise/Finished goods/Raw materials

Other and Overhead

Total cost of revenue for epidemic prevention supplies

1 unchanged sentence

Total cost of revenue

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 69.1% of our total garment manufacturing business revenue in the three months

ended June 30, 2022, compared with 69.7% in the three months ended June 30, 2021.

The decreased in percentages was mainly due to the

purchase cost of the raw materials dropped.

costs for our garment manufacturing business were 21.1% of our total garment manufacturing business revenue in the three months ended

June 30, 2022, compared with 21.4% in the three months ended June 30, 2021.

The increase in percentages was mainly due to the rising

wages in the PRC.

and other expenses for our garment manufacturing business accounted for 1.4% of our total garment business revenue for the three months

ended June 30, 2022, compared with 0.5% of total garment business revenue for the three months ended June 30, 2021.

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

material costs for our garment manufacturing business was nil in the three months ended September 30, 2022, as compared with approximately

$0.3 million in the three months ended September 30, 2021.

costs for our garment manufacturing business was approximately 90.5% of our total garment manufacturing business revenue in the three

months ended September 30, 2022, as compared with approximately 21.9% in the three months ended September 30, 2021.

The increase was

mainly due to the rising wages in the PRC.

and other expenses for our garment manufacturing business accounted for approximately 67.8% of our total garment business

revenue for the three months ended September 30, 2022, compared with approximately 0.5% of total garment business revenue for the three

months ended September 30, 2021.

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

1 unchanged sentence

subcontracting fees to our largest contractor represented approximately 26.7% and 35.6% of total cost of revenues for our service segment

for the three months ended June 30, 2022 and 2021, 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 June 30, 2022 were approximately $0.6 million compared with

$0.4 million for the three months ended June 30, 2021.

Fuel, toll and other costs for our service business accounted for 44.3% of our

total service revenue for the three months ended June 30, 2022, compared with 35.5% for the three months ended June 30, 2021.

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

for the three months ended September 30, 2022 and 2021, respectively.

The decrease was mainly due to our usage of our own logistics more

than the subcontractors during the COVID-19 epidemic.

We have not experienced any disputes with our subcontractors 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, 2022 were approximately $0.7 million as compared

with $0.4 million for the three months ended September 30, 2021.

Fuel, toll and other costs for our service business accounted for approximately

54.4% of our total service revenue for the three months ended September 30, 2022, as compared with approximately 34.1% for the three

months ended September 30, 2021.

The increase was primarily attributable to a decrease in the use of subcontractors under the COVID-19

epidemic circumstance.

Subcontracting

fees for our service business for the three months ended June 30, 2022 decreased 8.3% to approximately $0.4 million from $0.5 million

for the three months ended June 30, 2021.

Subcontracting fees accounted for 31.7% and 43.9% of our total service business revenue in

the three months ended June 30, 2022 and 2021, respectively.

This decrease in percentages was primarily because the Company used less

subcontractors under the epidemic circumstance.

fees for our service business for the three months ended September 30, 2022 decreased significantly by approximately 63.6% to approximately

$0.2 million from $0.5 million for the three months ended September 30, 2021.

Subcontracting fees accounted for approximately 16.1% and

40.9% of our total service business revenue in the three months ended September 30, 2022 and 2021, respectively.

The decrease was primarily

due to the Company used less subcontractors under the COVID-19 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 June 30, 2022 was approximately $0.003 million, as compared with approximately

$0.2 million for the three months ended June 30, 2021.

Gross profit accounted for 8.3% of our total Garment manufacturing business revenue

for the three months ended June 30, 2022, compared with 8.4% for the three months ended June 30, 2021.

profit in our logistics services business for the three months ended June 30, 2022 was approximately $0.3 million and gross margin was

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

margin was 20.6%.

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, 2022 was approximately $0.1 million, or

11.1% of our total property management and subleasing business revenue.

It was approximately $0.2 million, or 16.5% for the three months

ended June 30, 2021.

Three months ended June 30,

(decrease) in

2022 compared

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

The cost of revenue was predominately the cost of

merchandise and cost of our own products.

manufacturing business gross loss for the three months ended September 30, 2022 was approximately $502, as compared with a gross profit

of approximately $31,670 for the three months ended September 30, 2021.

Gross loss accounted for -58.3% of our total Garment manufacturing

business revenue for the three months ended September 30, 2022, as compared with a gross profit of 8.1% for the three months ended September

profit in our logistics services business for the three months ended September 30, 2022 was approximately $0.4 million and gross margin

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

and gross margin was 25.0%.

The increase of gross profit margin was mainly attributable to 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, 2022 was approximately $0.2 million,

or 22.4% of our total property management and subleasing business revenue.

It was approximately $0.1 million, or 10.4% for the three

months ended September 30, 2021.

Three months ended September 30,

Increase (decrease) in

2022 compared to 2021

dollars, except for percentages)

6 unchanged sentences

It was approximately $0.03 million and $0.07

million for the three months ended June 30, 2022 and 2021, respectively.

million for the three months ended September 30, 2022 and 2021, respectively.

Selling expenses consist primarily of advertisement, local

transportation, unloading charges and product inspection charges.

general and administrative expenses in our Garment manufacturing business segment for the three months ended September 30, 2022 and 2021

was both approximately $0.03 million.

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

ended September 30, 2022 and 2021 was both approximately $0.2 million.

The general and administrative expenses in our property management

and subleasing business remained stable at approximately $0.09 million for the three months ended September 30, 2022 and 2021.

and administrative expenses in our epidemic prevention supplies segment was both nil for the three months ended September 30, 2022 and

2021, respectively.

Our general and administrative expenses in our corporate office for the three months ended September 30, 2022 and

2021 remained stable at approximately $0.1 million.

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, 2022 increased by approximately 0.5% to approximately $0.47

million from $0.46 million for the three months ended September 30, 2021.

(Loss) from operations

(loss) from operations for the three months ended September 30, 2022 and 2021 was approximately $0.07 million and ($0.04) million, respectively.

(Loss) Income from operations of approximately ($28,088) and $1,119 was attributed from our garment manufacturing segment

for the three months ended September 30, 2022 and 2021, respectively.

Income from operations of approximately $0.15 million and $0.1

million was attributed from our logistics services segment for the three months ended September 30, 2022 and 2021, respectively.

from operations of approximately $0.09 million and $0.02 million was attributed from our property management and subleasing business

for the three months ended September 30, 2022 and 2021, respectively.

There was a loss of approximately $974 and nil from operations

attributed from our epidemic prevention supplies segment for the three months ended September 30, 2022 and 2021, respectively.

a loss from operations in corporate office of approximately $0.1 million and $0.1 million for both the three months ended September 30,

2022 and 2021.

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, 2022 and 2021 was approximately $0.009 million and $0.005 million, respectively.

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,

and 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 have been made as Yingxi HK had no taxable income for the three months ended September 30, 2022 and 2021.

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 have been made as QYTG and YX had no taxable income for the three months ended September 30, 2022 and 2021.

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 2022.

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 have been made as Addentax Group Corp.

had no United States taxable income for the three months

ended September 30, 2022 and 2021.

Income (Loss)

incurred net income of approximately $0.08 million and $0.03 million for the three months ended September 30, 2022 and 2021, respectively.

Our basic and diluted earnings per share were $0.00 and $0.00 for the three months ended September 30, 2022 and 2021, respectively.

of Operations for the six months ended September 30, 2022 and 2021

following tables summarize our results of operations for the six months ended September 30, 2022 and 2021.

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.

months Ended September 30,

dollars, except for percentages)

from operations

revenue for the six months ended September 30, 2022 decreased by approximately $2.5 million, or 35.7%, as compared with the six months

ended September 30, 2021.

The decrease was mainly due to the significant decrease of Garment Manufacturing Business.

generated from our garment manufacturing business contributed approximately $0.04 million (0.9%) and $2.5 million (35.0%) of total losses

for the six months ended September 30, 2022 and 2021, respectively.

The decrease mainly due to factory facilities renewal and repair, remaining factories cannot provide as much capacity as previously.

We estimate the capacity will

appear to recover in the third quarter of FY2023.

generated from our logistics services business contributed approximately $2.6 million, or 57.7%, of our total revenue for the six months

ended September 30, 2022.

Revenue generated from our logistic business contributed approximately $2.4 million, or 34.4%, of our total

revenue for the six months ended September 30, 2021.

The increase of $0.2 million was due to XKJ’s sales were $0.3 million higher

than the six months ended September 30, 2021.

generated from our property management and subleasing business contributed approximately $1.9 million, or 41.4%, of our total revenue

for the six months ended September 30, 2022.

Revenue 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.

was only a minor sale of $1,540 of epidemic prevention supplies products for the six months ended September 30, 2022.

There 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 ensure the sales orders can be matched with stable suppliers

to secure profitability of each order.

Six months ended September 30,

Increase (decrease) in

2022 compared to 2021

dollars, except for percentages)

Net revenue for garment manufacturing

$ (2,421,245 )

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 loss for epidemic prevention supplies

Total cost of revenue

$ (2,481,875 )

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 approximately66.7% of our total garment manufacturing business revenue in

the six months ended September 30, 2022, as compared with 69.5% in the six months ended September 30, 2021.

The decrease was mainly due

to the decrease of the average purchase cost of the raw materials.

costs for our garment manufacturing business were approximately 22.4% of our total garment manufacturing business revenue in the six

months ended September 30, 2022, as compared with 21.5% in the six months ended September 30, 2021.

The increase was mainly due to the

rising wages in the PRC.

and other expenses for our garment manufacturing business accounted for approximately 3.9% of our total garment business revenue for

the six months ended September 30, 2022, as compared with 0.7% of total garment business revenue for the six months ended September 30,

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

The Company relied on a few subcontractors, in which the

subcontracting fees to our largest subcontractor represented approximately 24.4% and 18.8% of total cost of revenues for our service

segment for the six months ended September 30, 2022 and 2021, respectively.

The percentage decreased due to the usage of our own logistics

more than usage of the subcontractors under COVID-19 epidemic.

We have not experienced any disputes with our subcontractors and we believe

we maintain good relationships with our contract logistics services providers.

toll and other costs for our service business for the six months ended September 30, 2022 were approximately $1.3 million compared with

$0.8 million for the six months ended September 30, 2021.

Fuel, toll and other costs for our service business accounted for approximately

48.5% of our total service revenue for the six months ended September 30, 2022, as compared with 34.7% for the six months ended September

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

Subcontracting

fees for our service business for the six months ended September 30, 2022 decreased approximately 37.9% to approximately $0.6 million

from $1.0 million for the six months ended September 30, 2021.

Subcontracting fees accounted for approximately 24.4% and 42.3% of our

total service business revenue in the six months ended September 30, 2022 and 2021, respectively.

This decrease 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.

manufacturing business generated a gross profit of approximately $2,849 for the six months ended September 30, 2022.

There was approximately

$0.2 million gross profit for the six months ended September 30, 2021.

Gross profit accounted for 6.9% of our total Garment manufacturing

business revenue for the six months ended September 30, 2022, as compared with a gross profit of 8.4% for the six months

ended September 30, 2021.

profit in our logistics services business for the six months ended September 30, 2022 was approximately $0.7 million and gross margin

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

and gross margin was 23.0%.

The increase of gross profit ratio was mainly attributable to a decrease of subcontracting fees under the

COVID-19 epidemic circumstances and 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, 2022 and 2021was both approximately

$0.3 million.

It accounted for approximately 16.7% and 13.5% of our total property management and subleasing business revenue for the

six months ended September 30, 2022 and 2021, respectively.

months ended September 30,

compared to 2021

dollars, except for percentages)

and administrative expenses

from operations

General and administrative expenses

selling expenses in our Garment manufacturing business segment for the six months ended September 30, 2022 and 2021 was nil and approximately

$0.001 million, respectively.

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

30, 2022 and 2021, respectively.

Selling expenses in our property management and subleasing business was $0.04 million and $0.09 million

for the six months ended September 30, 2022 and 2021, respectively.

Selling expenses in our epidemic prevention supplies segment was

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

Selling expenses consist primarily of advertisement, local transportation,

unloading charges and product inspection charges.

general and administrative expenses in our Garment manufacturing business segment for the three months ended June 30, 2022 and 2021 was

approximately $0.03 million and $0.05 million, respectively.

Total selling expenses for the six months ended September 30, 2022 decreased approximately

61.3% to $0.04 million from $0.09 million for the six months ended September 30, 2021.

general and administrative expenses in our Garment manufacturing business segment was approximately $0.06 million and $0.08 million for

the six months ended September 30, 2022 and 2021, respectively.

Our general and administrative expenses in our logistics services segment,

for the three months ended June 30, 2022 and 2021 was both approximately $0.2 million.

The general and administrative expenses in our

property management and subleasing business was approximately $0.07 million and $0.08 million for the three months ended June 30, 2022

Our general and administrative expenses in our epidemic prevention supplies segment was both nil for the three months ended

June 30, 2022 and 2021, respectively.

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

30, 2022 and 2021 was approximately $0.08 million and $0.1 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, 2022 decreased by 12.0% to approximately $0.40 million from $0.46

million for the three months ended June 30, 2021.

from operations

from operations for the three months ended June 30, 2022 and 2021 was approximately $0.05 million and $0.08 million, respectively.

Income from operations of approximately ($0.03) million and $0.12 million was attributed from our garment manufacturing segment for the

three months ended June 30, 2022 and 2021, respectively.

Income from operations of approximately $0.12 million and $0.005 million was

attributed from our logistics services segment for the three months ended June 30, 2022 and 2021, respectively.

Income from operations

of approximately $0.03 million and $0.06 million was attributed from our property management and subleasing business for the three months

ended June 30, 2022 and 2021, respectively.

There was no income or loss from operations attributed from our epidemic prevention supplies

segment for the three months ended June 30, 2022 and 2021, respectively.

We incurred a loss from operations in corporate office of approximately

$0.08 million and $0.1 million for the three months ended June 30, 2022 and 2021, 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, 2022 and 2021 was approximately $0.001 million and $0.01 million, respectively.

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

for the six months ended September 30, 2022 and 2021 was both approximately $0.4 million.

The general and administrative expenses in

our property management and subleasing business was approximately $0.2 million for both the six months ended September 30, 2022 and 2021.

Our general and administrative expenses in our epidemic prevention supplies segment was nil for both the six months ended September 30,

2022 and 2021.

Our general and administrative expenses in our corporate office for the six months ended September 30, 2022 and 2021 was

both approximately $0.2 million.

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, 2022 was nearly the same as that for the six months ended

September 30, 2021.

(loss) from operations

from operations was approximately $0.1 million and $0.04 million for the six months ended September 30, 2022 and 2021, respectively.

Loss from operations of approximately $0.06 million was attributed from our garment manufacturing segment for the six months ended September

Income from operations of approximately $0.1 million was attributed from our garment manufacturing segment for the six months

ended September 30, 2021.

Income from operations of approximately $0.3 million and $0.1 million was attributed from our logistics services

segment for the six months ended September 30, 2022 and 2021, respectively.

Our property management and subleasing business segment generated

approximately $0.1 million income from operations and approximately $0.03 million loss from operations for the six months ended September

30, 2022 and 2021, respectively.

Loss from operations of $974 and nil was attributed from our epidemic prevention supplies

segment for the six months ended September 30, 2022 and 2021, respectively.

We incurred a loss from operations in corporate office of

approximately $0.2 million for both the six months ended September 30, 2022 and 2021.

The loss from our corporate office was mainly due

to an 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, 2022 and 2021 was approximately $10,755 and $15,684, respectively.

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.

and 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 June 30, 2022 and 2021.

in Hong Kong have been made as Yingxi HK had no taxable income for the six months ended September 30, 2022 and 2021.

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, 2022 and 2021.

in the PRC have been made as QYTG and YX had no taxable income for the six months ended September 30, 2022 and 2021.

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

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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 June 30, 2022 and 2021.

for income taxes in the United States have been made as Addentax aGroup Corp.

had no United States taxable income for the six months

ended September 30, 2022 and 2021.

Income (Loss)

incurred net income of approximately $0.1 million for both three months ended June 30, 2022 and 2021, respectively.

Our basic and diluted

earnings per share were $0.00 and $0.00 for the three months ended June 30, 2022 and 2021, respectively.

incurred a net income of approximately $0.2 million and $0.1 million for the six months ended September 30, 2022 and 2021, respectively.

Our basic and diluted earnings per share were $0.01 and $0.00 for the six months ended September 30, 2022 and 2021, respectively.

of cash flows

cash flows information for the three months ended June 30, 2022 and 2021 is as follow:

months ended June 30,

cash provided by (used in) operating activities

cash flows information for the six months ended September 30, 2022 and 2021 is as follow:

months ended September 30,

cash (used in) provided by operating activities

$ (1,526,530 )

cash used in investing activities

cash provided by financing activities

cash provided by operating activities in the three months ended June 30, 2022 was approximately $1.5 million more than that of the three

months ended June 30, 2021.

It was mainly because the movement of operating assets and liabilities of the three months ended June 30,

2022 resulted in cash inflow of approximately $0.1 million, while the movement of operating assets and liabilities of the three months

ended June 30, 2021 resulted in cash outflow of approximately $1.4 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, 2022 was Nil, approximately $0.1 million less than that of the

three months ended June 30, 2021.

It was mainly because there was no purchase of plant and equipment and other assets in the three months

ended June 30, 2022.

cash provided by financing activities for the three months ended June 30, 2022 was approximately $0.1 million more than the three months

ended June 30, 2021.

It was mainly because the net cash from related party borrowings in current period was approximately $0.1 million

more than that of the three months ended June 30, 2021.

$ (17,500,000 )

cash provided by (used in) financing activities

$ (1,138,547 )

cash provided by operating activities in the six months ended September 30, 2022 was approximately $1.7 million less than that of the

six months ended September 30, 2021.

The decrease mainly because the movement of operating assets and liabilities of the six months ended

September 30, 2022 resulted in cash outflow of approximately $1.9 million, while the movement of operating assets and liabilities of

the six months ended September 30, 2021 resulted in cash inflow of approximately $0.5 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 six months ended September 30, 2022 was approximately $17.5 million, approximately $17.4 million

more than that of the six months ended September 30, 2021.

The increase was mainly because there was a purchase of debt securities in

the six months ended September 30, 2022.

cash provided by financing activities for the six months ended September 30, 2022 was approximately $20.8 million more than the six months

ended September 30, 2021.

The increase was mainly because the Company received approximately $20.2 million proceeds from its public offering,

and the net cash repayment of related party borrowings in current period was approximately $1.1 million less than that of the six months

ended September 30, 2021.

Condition, Liquidity and Capital Resources

of June 30, 2022, we had cash on hand of approximately $2.2 million, total current assets of approximately $6.9 million and current liabilities

of approximately $11.1 million.

We presently finance our operations by using the cash flows borrowed from related parties and third parties.

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, fund raising from IPO proceedings 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 industry.

Due to the absence of a long standing operating history and the emerging nature of the markets in which we compete, we anticipate operating

losses until we can successfully implement our business strategy, which includes all associated revenue streams.

Our revenue model is

new and evolving, and we cannot be certain that it will be successful.

The potential profitability of this business model is unproven.

We may never ever achieve profitable operations.

Our future operating results depend on many factors, including demand for our services,

the level of competition, and the ability of our officers to manage our business and growth.

As a result of the emerging nature of the

market in which we compete, we may incur operating losses until such time as we can develop a substantial and stable revenue base.

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.

of September 30, 2022, we had cash on hand of approximately $2.0 million, total current assets of approximately $27.4 million and current

liabilities of approximately $8.6 million.

We presently finance our operations by using the cash flows from revenue, fund raising from

IPO proceedings and capital contributions from the CEO.

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.

Currency Translation Risk

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

As of June 30, 2022, the market foreign exchange rate was RMB 6.70 to one

As of September 30, 2022, the market foreign exchange rate was RMB 7.116

Our financial statements are translated into U.S.

dollars using the closing rate method.

The balance sheet items are translated

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.

foreign currency translation gain (loss) for the three months ended June 30, 2022 and 2021 was approximately $0.1 million and $0.03 million

respectively.

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 gain (loss) for the six months ended September 30, 2022 and 2021 was approximately $0.2 million

and $(0.03) 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, 2022 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, 2022 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

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What changed 10-Q

Item 2. Management’s Discussion and Analysis