What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-06-29 compared with 2022-06-23 · 300 added, 346 removed, 168 unchanged (79% of the section changed)

12 unchanged sentences

identify forward-looking statements.

We (Addentax Group Corp.)

are a Nevada holding company with no material operations of our own.

We conduct substantially all of our operations through our operating

companies established in the PRC, primarily Shenzhen Qianhai Yingxi Industrial Chain Service Co., Ltd.

(“YX”), our wholly

owned subsidiary and its subsidiaries.

(Addentax Group Corp.) are a Nevada holding company with no material operations of our own.

We conduct substantially all of our operations

through our operating companies established in the PRC, primarily Shenzhen Qianhai Yingxi Industrial Chain Service Co., Ltd.

our wholly owned subsidiary and its subsidiaries.

We are not a Chinese operating company.

We are a holding company and do not directly own any substantive

business operations in China.

Therefore, our investors will not directly hold any equity interests in our operating companies.

company structure involves unique risks to investors.

Chinese regulatory authorities could disallow our operating structure, which would

likely result in a material change in our operations and/or the value of our common stock, including that it could cause the value of

such securities to significantly decline or become worthless.

Our holding company, Addentax Group Corp., is listed on the OTCQB under

the symbol of “ATXG”.

We classify our businesses into four segments:

garment manufacturing, logistics services, property

management and subleasing, and epidemic prevention supplies.

the context otherwise requires, all references in this annual report to “ Addentax ”

refer to Addentax Group Corp., a holding company, and references to “ we, ”

“ us, ” “ our, ” the “ Registrant ”, the

“ Company, ” or “ our company ” refer to Addentax and/or

its consolidated subsidiaries.

Addentax Group Corp., our Nevada holding company, is the entity

in which our investors are investing.

We are a holding company and do not directly

own any substantive business operations in China.

Therefore, our investors will not directly hold any equity interests in our operating

Our holding company structure involves unique risks to investors.

Chinese regulatory authorities could disallow our operating

structure, which would likely result in a material change in our operations and/or the value of our common stock, including that it could

cause the value of such securities to significantly decline or become worthless.

Our holding company, Addentax Group Corp., is listed

on the Nasdaq Capital Market under the symbol of “ATXG”.

We classify our businesses into three segments:

garment manufacturing,

logistics services, property management and subleasing, and .

the context otherwise requires, all references in this annual report to “ Addentax ” refer to Addentax Group Corp.,

a holding company, and references to “ we, ” “ us, ” “ our, ” the “ Registrant ”,

the “ Company, ” or “ our company ” refer to Addentax and/or its consolidated subsidiaries.

Group Corp., our Nevada holding company, is the entity in which our investors are investing.

subsidiaries include (i) Yingxi Industrial Chain Group Co., Ltd., a Republic of Seychelles company;

(ii) Yingxi Industrial Chain Investment

Co., Ltd., a Hong Kong company (“Yingxi HK”);

(iii) Qianhai Yingxi Textile & Garments Co., Ltd., a PRC company;

Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng Wei Garments Co.,

Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”), (vii) Shantou Yi Bai

Yi Garment Co., Ltd, a PRC company (“YBY”), (viii) Shantou Chenghai Dai Tou Garments Co., Ltd, a PRC company (“DT”);

(ix) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (x) Shenzhen Hua Peng Fa Logistic Co., Ltd, a

PRC company (“HPF”), (xi) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”), (xii) Shenzhen Yingxi

Tongda Logistic Co., Ltd, a PRC company (“TD”) and (xiii) Dongguan Yingxi Daying Commercial Co., Ltd., a PRC company (“DY”).

(ii) Yingxi Industrial Chain

Investment Co., Ltd., a Hong Kong company (“Yingxi HK”);

(iii) Qianhai Yingxi Textile & Garments Co., Ltd., a PRC

(iv) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng

Wei Garments Co., Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”),

(vii) Shantou Yi Bai Yi Garment Co., Ltd, a PRC company (“YBY”), (viii) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a

PRC company (“PF”);

(ix) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (x) Shenzhen

Yingxi Tongda Logistic Co., Ltd, a PRC company (“TD”), (xi) Dongguan Yingxi Daying Commercial Co., Ltd., a PRC company

(“DY”), (xii) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and (xiii)

Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”).

Subsidiaries ” refer to, collectively, (i) Qianhai Yingxi Textile & Garments Co., Ltd.;

(ii) Shenzhen Qianhai Yingxi Industrial

Chain Services Co., Ltd (“YX”), (iii) Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), (iv) Dongguan Yushang

Clothing Co., Ltd (“YS”);

(ii) Shenzhen Qianhai Yingxi

Industrial Chain Services Co., Ltd (“YX”), (iii) Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), (iv)

Dongguan Yushang Clothing Co., Ltd (“YS”);

(v) Shantou Yi Bai Yi Garment Co., Ltd (“YBY”);

(vi) Shantou Chenghai Dai Tou Garments

Co., Ltd (“DT”);

(vii) Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”);

(viii) Shenzhen Hua Peng Fa Logistic

Co., Ltd (“HPF”);

(ix) Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”).;

(x) Shenzhen Yingxi Tongda Logistic

Co., Ltd (“TD”);

and (xi) Dongguan Yingxi Daying Commercial Co., Ltd (“DY”).

In 2020, the Company disposed DT

and HFP to a third party respectively.

(vi) Shenzhen

Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”);

(vii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC

company (“XKJ”), (viii) Shenzhen Yingxi Tongda Logistic Co., Ltd, a PRC company (“TD”), (ix) Dongguan Yingxi

Daying Commercial Co., Ltd., a PRC company (“DY”), (x) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC

company (“ZHJ”), and (xi) Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”).

February 2023, the Company disposed DY to an independent third party respectively.

refers to Qianhai Yingxi Textile & Garments Co., Ltd, a wholly foreign owned enterprise in China, which is indirectly wholly owned

by Addentax Group Corp.

garment manufacturing business consists of sales made principally to wholesaler located in the People’s Republic of China (“PRC”).

We have our own manufacturing facilities, with sufficient production capacity and skilled workers on production lines to ensure that

we meet our high quality control standards and timely delivery requirement for our customers.

garment manufacturing business consists of sales made principally to wholesaler located in the PRC.

We have our own manufacturing

facilities, with sufficient production capacity and skilled workers on production lines to ensure that we meet our high quality

control standards and timely meet the delivery requirements for our customers.

We conduct our garment manufacturing operations

through four wholly owned subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), Shantou Chenghai Dai Tou

Garments Co., Ltd (“DT”), Dongguan Yushang Clothing Co., Ltd (“YS”), and Shantou Yi Bai Yi Garments Co., Ltd

(“YBY”) which are located in the Guangdong province, China.

In October, the Company disposed of DT to a third party at fair

value, which was also its carrying value as of September 30, 2020.

logistics business consists of delivery and courier services covering approximately seven provinces in China.

Although we have our own

motor vehicles and drivers, we currently outsource some of the business to our contractors.

We believe outsourcing allows us to maximize

our capacity and maintain flexibility while reducing capital expenditures and the costs of keeping drivers during slow seasons.

our logistic operations through three wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”),Shenzhen

Hua Peng Fa Logistic Co., Ltd (“HPF”), and Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”) which are located

in the Guangdong province, China.

In November, the Company disposed of HPF to a third party at

fair value, which was also its carrying value as of November 30, 2020.

business operations, customers and suppliers of DT and HPF were retained by the Company;

therefore, the disposition of the two subsidiaries

did not qualify as discontinued operations.

property management and subleasing business provides shops subleasing and property management services for garment wholesalers and retailers

in garment market.

We conduct our property management and subleasing operation through a wholly owned subsidiary, namely Dongguan Yingxi

Daying Commercial Co., Ltd (“DY”).

epidemic prevention supplies business consists of manufacturing and distribution of epidemic prevention products and reselling of epidemic

prevention supplies purchased from third parties in both domestic and overseas markets.

We conduct our manufacturing of the epidemic

prevention products in YS.

We conduct the trading of epidemic prevention suppliers through Addentax Group Corp.

and Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), an indirect wholly owned subsidiary of the Company.

through five wholly owned subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), Dongguan Yushang

Clothing Co., Ltd (“YS”), Shantou Yi Bai Yi Garment Co., Ltd (“YBY”), Zhuang

Hao Jia (Dongguan) Decoration Engineering Co.,Ltd (“ZHJ”), and Dongguan Aotesi Garments Co., Ltd.,

(“AOT”) , which are located in the Guangdong province, China.

logistics business consists of delivery and courier services covering 86 cities in 11 provinces and 3 municipalities in China.

we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors.

We believe outsourcing allows

us to maximize our capacity and maintain flexibility while reducing capital expenditures and the costs of keeping drivers during slow

We conduct our logistic operations through three wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co.,

Ltd (“XKJ”), Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”) and Shenzhen Yingxi Tongda Logistic Co., Ltd (“TD”),

which are located in the Guangdong province, China.

property management and subleasing business provides shops subleasing and property management services for garment wholesalers and

retailers in the garment market.

We conduct our property management and subleasing operation through a wholly owned subsidiary,

namely Dongguan Yingxi Daying Commercial Co., Ltd.

(“DY”), which is located in the Guangdong province, China.

In February 2023, the Company disposed of DY to an independent third party at fair value, which was also its carrying value as of February 28, 2023.

business operations, customers and suppliers of DY were retained by the Company;

therefore, the disposition of the subsidiary did not

qualify as discontinued operations.

Manufacturing Business

2 unchanged sentences

Services Business

business objective and future plan for our logistics services segment is to establish an efficient logistic system and to build a nationwide

delivery and courier network in China.

As of March 31, 2022, we provide logistic service to over 79 cities in approximately seven provinces

and two municipalities.

We expect to develop 20 additional logistics routes in existing serving cities and improve the

Company’s profit in the year of 2023.

business objective and future plan for our logistics services segment is to establish an efficient logistic system and to build a

nationwide delivery and courier network in China.

As of March 31, 2023, we provide logistic service to over 86 cities in

approximately eleven provinces and three municipalities.

We expect to develop 20 additional logistics routes in existing serving

cities and improve the Company’s profit in the year 2024.

Management and Subleasing Business

1 unchanged sentence

and the Internet celebrity economy together to drive to increase the value of the stores in the area.

The short-term goal for the year

is to increase the occupancy rate of stores in the mall to more than 70%.

Prevention Supplies Business

primary objective of our epidemic prevention supplies business is to take the advantage of our resource in supply chain from the garment

manufacturing business segment to facilitate and maximize the production, distribution and resale of epidemic prevention supplies, in

order to increase our revenue base and improve our net profit.

In February 2023, the Company disposed of DY to an independent third party at fair value, which was also its carrying value as of February 28, 2023.

business is affected by seasonal trends, with higher levels of garment sales in our second and third quarters and higher logistic service

11 unchanged sentences

property management and subleasing business, we generally collect rental and management fees of the following month each month in advance.

prevention supplies business

Epidemic prevention supplies business, we generally receive payment from the customers within 30 days following the delivery of finished

We would also give our long-term customers with a 12 months long credit term policy to maintain a good business relationship.

business is dependent on consumer demand for our products and services.

30 unchanged sentences

The Company applies the following five-step model in order to determine this amount:

identification

of the promised goods and services in the contract;

determination

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

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

of the transaction price to the performance obligations;

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

identification of the promised

goods and services in the contract;

determination of whether

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

measurement of the transaction

price, including the constraint on variable consideration;

allocation of the transaction

price to the performance obligations;

recognition of revenue

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

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

41 unchanged sentences

of this ASU will have on its consolidated financial statements.

Company reviews new accounting standards as issued.

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

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

of Operations for the years ended March 31, 2022 and 2021

following tables summarize our results of operations for the years ended March 31, 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.

Accounting for Convertible Instruments:

In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06),

as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or

improving the usefulness of the information provided to users of financial statements.

Among other changes, the new guidance removes from

GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless

the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium.

As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will

instead account for the convertible debt wholly as debt.

The new guidance also requires use of the “if-converted” method when

calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting

treatment under the current guidance.

The guidance is effective for financial statements issued for fiscal years beginning after December

15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year.

The Company reviews new accounting

standards as issued.

Management has not identified any other new standards that it believes will have a significant impact on the Company’s

consolidated financial statements.

Results of Operations for the years ended March

31, 2023 and 2022

The following tables summarize

our results of operations for the years ended March 31, 2023 and 2022.

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.

Changes in 2023 compared to 2022

3 unchanged sentences

(10,627,379 )

(25,921,936 )

Gross profit (loss)

2 unchanged sentences

Other income, net

Fair value gain or loss

Net finance cost

Income tax expense

$ (3,590,169 )

revenue for the year ended March 31, 2022 significantly decreased by approximately $12.0 million, or approximately 48.7%, as compared

with the year ended March 31, 2021.

The significant decrease was mainly due to the decrease of revenue from the epidemic prevention supplies

business in the year ended March 31, 2022.

generated from our garment manufacturing business contributed approximately $2.5 million, or approximately 19.9%, of our total revenue

for the year ended March 31, 2022.

Revenue generated from the segment contributed approximately $6.9 million, or approximately 27.9%,

of our total revenue for the year ended March 31, 2021.

Total revenue for the year ended

March 31, 2023 significantly decreased by approximately $4.7 million, or approximately 37.4%, as compared with the year ended March 31,

The decrease was mainly due to the decrease of revenue from the garment manufacturing business.

Revenue generated from our garment

manufacturing business contributed approximately $0.2 million, or approximately 2.2%, of our total revenue for the year ended March 31,

Revenue generated from the segment contributed approximately $2.5 million, or approximately 19.9%, of our total revenue for the

year ended March 31, 2022.

The decrease of approximately $2.3 million was mainly due to factory

facilities renewal and repair , remaining factories cannot provide as much capacity

We estimate the capacity will appear to recover at second quarter of FY2023.

generated from our logistics services business contributed approximately $5.3 million, or approximately 42.0%, of our total revenue for

the year ended March 31, 2022.

Revenue generated from the segment contributed approximately $4.6 million, or approximately 18.5%, of

our total revenue for the year ended March 31, 2021.

The increase of approximately $0.7 million was mainly due to development of company’s

generated from our property management and subleasing business contributed approximately $4.3 million, or approximately 33.6%, of our

total revenue for the year ended March 31, 2022.

Revenue generated from our property management and subleasing business contributed approximately

$1.3 million, or approximately 5.2%, of our total revenue for the year ended March 31, 2021.

The increase of approximately

$3 million was mainly due to the increase in sub-leasing rate of the property.

generated from our epidemic prevention supplies business contributed approximately $0.6 million, or approximately 4.5%, of our total

revenue for the year ended March 31, 2022.

Revenue generated from our epidemic prevention supplies business contributed approximately

$12.0 million, or approximately 48.4%, of our total revenue for the year ended March 31, 2021.

It included revenue from trading of merchandise

of epidemic prevention supplies.

The significant decrease mainly because no profitable orders were

obtained during the year.

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.

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 FY2024.

Revenue generated from our logistics

services business contributed approximately $4.6 million, or approximately 58.2%, of our total revenue for the year ended March 31, 2023.

Revenue generated from the segment contributed approximately $5.3 million, or approximately 42.0%, of our total revenue for the year ended

March 31, 2022.

The increase of approximately $0.7 million was mainly due to development of company’s business.

Revenue generated from our property

management and subleasing business contributed approximately $3.1 million, or approximately 39.0%, of our total revenue for the year ended

March 31, 2023.

Revenue generated from our property management and subleasing business contributed approximately $4.3 million, or approximately

33.6%, of our total revenue for the year ended March 31, 2022.

The decrease of approximately $1.2 million was mainly due to the increase

in sub-leasing rate of the property.

Cost of revenue

Increase (decrease) in 2023 compared to 2022

14 unchanged sentences

Gross Profit for property management and subleasing

Net revenue for epidemic prevention supplies

(11,411,415 )

Merchandise/Finished goods/Raw materials

(14,255,248 )

Net revenue for corporate and others

Other and Overhead

Total cost of revenue for epidemic prevention supplies

(14,358,500 )

Gross profit for epidemic prevention supplies

Total cost of revenue for corporate and others

Gross profit for corporate and others

Total cost of revenue

$ (4,524,270 )

$ (1,187,177 )

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

Aggregate purchases from our five largest raw material suppliers represented approximately 99.3% and 98.7% of raw materials

purchases for the years ended March 31, 2022 and 2021, respectively.

One and Two suppliers provided more than 10% of our raw materials

purchases for the years ended March 31, 2022 and 2021, respectively.

We have not experienced difficulty in obtaining raw materials essential

to our business, and we believe we maintain good relationships with our suppliers.

materials cost for our garment manufacturing business was approximately 69.1% of our total garment manufacturing business revenue in

the year ended March 31, 202, as compared with approximately 70.9% in the year ended March 31, 2021.

The decrease in raw materials cost

for our garment manufacturing business was mainly due to the purchase cost of the raw materials

costs for our garment manufacturing business was approximately 21.7% of our total garment manufacturing business revenue in the year

ended March 31, 2022, as compared with 20.1% in the year ended March 31, 2021.

The increase in labor costs for our garment manufacturing

business was mainly due to the continued rising labor costs in the PRC.

and other expenses for our garment manufacturing business accounted for approximately 0.9% of our total garment manufacturing business

revenue for both the years ended March 31, 2022 and 2021.

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

Our subcontractors are contract logistic service provides.

The Company relied on a few subcontractors, which the subcontracting fees to our largest contractor represented approximately 14.8% and

7.6% of total cost of revenues for our service segment for the years ended March 31, 2022 and 2021, respectively.

The increase in subcontracting

fee to the largest contractor was mainly to optimize resources and cost efficiencies.

For our garment manufacturing

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

Raw materials cost for our garment

manufacturing business was approximately 16.0% of our total garment manufacturing business revenue in the year ended March 31, 2023, as

compared with approximately 69.1% in the year ended March 31, 2022.

The decrease in raw materials cost for our garment manufacturing business

was mainly due to decrease of manufacturing during renovation of the factory.

Labor costs for our garment manufacturing

business were approximately 54.7% of our total garment manufacturing business revenue in the year ended March 31, 2023, as compared with

21.7% in the year ended March 31, 2022.

The increase in labor costs for our garment manufacturing business was mainly due to the increase

of sub-contracting business in AOT.

Overhead and other expenses for

our garment manufacturing business accounted for approximately 3.9% and 0.9% of our total garment manufacturing business revenue for the

years ended March 31, 2023 and 2022, respectively.

For our logistic business, we

outsource some of the business to our subcontractors.

Our subcontractors are contract logistic service providers.

The Company relied on

a few subcontractors, which the subcontracting fees to our largest contractor represented approximately 25.2% and 14.8% of total cost

of revenues for our service segment for the years ended March 31, 2023 and 2022, respectively.

The increase in subcontracting fee to the

largest contractor was mainly to optimize resources and cost efficiencies.

We have not experienced any disputes with our subcontractors

and we believe we maintain good relationships with our contract logistic service provider.

toll and other costs for our logistics business for the year ended March 31, 2022 was approximately $1.9 million, as compared with $1.8

million for the year ended March 31, 2021.

Fuel, toll and other costs for our logistics business accounted for approximately 35.9% of

our total service revenue for the year ended March 31, 2022, as compared with approximately 38.5% for the year ended March 31, 2021.

Subcontracting

fees for our logistics business for the year ended March 31, 2022 increased to approximately $2.3 million from $1.8 million for the year

ended March 31, 2021, representing an increase of approximately 25.7%.

Subcontracting fees accounted for 42.9% and 39.5% of our total

logistics business revenue in the years ended March 31, 2022 and 2021, respectively.

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 only resale of goods of other brands for the year ended March 31, 2022.

For the year ended

March 31, 2021, we had sales of our own branded products as well as purchases and resale of goods of other brands.

The cost of revenue

included cost of merchandise and cost of our own products.

profit of garment manufacturing business for the year ended March 31, 2022 was approximately $0.2 million, as compared with approximately

$0.6 million for the year ended March 31, 2021.

Gross profit ratio was approximately 8.3% of revenue of the segment, as compared with

approximately 8.1% for the year ended March 31, 2021.

profit of our logistics services business for the year ended March 31, 2022 was approximately $1.1 million and gross profit ratio was

approximately 21.2%.

Gross profit of the segment for the year ended March 31, 2021 was approximately $1.0 million and gross profit ratio

was approximately 22.0%.

The decrease of gross profit ratio was mainly because of an increase of subcontracting fees.

profit of our property management and subleasing business for the year ended March 31, 2022 was approximately $0.7 million, representing

approximately 15.9% of our total property management and subleasing business revenue.

Gross profit in our property management and subleasing

business for the year ended March 31, 2021 was $0.2 million, or 12.7% of our total property management and subleasing business revenue.

profit of our epidemic prevention supplies business for the year ended March 31, 2022 was approximately $0.05 million and gross

margin was approximately 8.0%.

Gross loss of our epidemic prevention supplies business for the year ended March 31, 2021 was approximately

$2.9 million.

Fuel, toll and other costs for

our logistics business for the year ended March 31, 2023 was approximately $2.4 million, as compared with $1.9 million for the year ended

March 31, 2022.

Fuel, toll and other costs for our logistics business accounted for approximately 52.6% of our total service revenue for

the year ended March 31, 2023, as compared with approximately 35.9% for the year ended March 31, 2022.

Subcontracting fees for our logistics

business for the year ended March 31, 2023 decreased to approximately $1.1 million from $2.3 million for the year ended March 31, 2022,

representing a decrease of approximately 53.0%.

Subcontracting fees accounted for 23.2% and 42.9% of our total logistics business revenue

in the years ended March 31, 2023 and 2022, respectively.

For property management and subleasing

business, the cost of revenue was mainly the amortization of operating lease assets for the subleasing business.

The cost of revenue for

property management and subleasing business for the year ended March 31, 2023 was $2.4 million, approximately 78.9% of our total property

management and subleasing business revenue, as compared with $3.6 million, approximately 84.1% of total property management and subleasing

business revenue for the year ended March 31, 2022.

Gross profit of garment manufacturing

business for the year ended March 31, 2023 was approximately $0.05 million, as compared with approximately $0.2 million for the year ended

March 31, 2022.

Gross profit ratio was approximately 25.5% of revenue of the segment, as compared with approximately 8.3% for the year

ended March 31, 2022.

Gross profit of our logistics

services business for the year ended March 31, 2023 was approximately $1.1 million and gross profit ratio was approximately 24.2%.

profit of the segment for the year ended March 31, 2022 was approximately $1.1 million and gross profit ratio was approximately 21.2%.

The increase in the gross profit ratio was mainly because of a decrease of subcontracting fees.

Gross profit of our property management

and subleasing business for the year ended March 31, 2023 was approximately $0.7 million, representing approximately 21.1% of our total

property management and subleasing business revenue.

Gross profit in our property management and subleasing business for the year ended

March 31, 2022 was $0.7 million, or 15.9% of our total property management and subleasing business revenue.

Changes in 2023

1 unchanged sentence

dollars, except for percentages)

Gross profit (loss)

$ (1,187,177 )

Operating expenses:

4 unchanged sentences

Loss from operations

$ (3,608,174 )

General and administrative expenses

selling expenses in our garment manufacturing segment for the years ended March 31, 2022 and 2021 was $0.001 million and $0.04 million,

respectively.

Our selling expenses was nil in our logistics services segment for both the years ended March 31, 2022 and 2021.

expenses in our property management and subleasing business was $0.2 million and $0.05 million for the year ended March 31, 2022 and

Selling, General and administrative expenses

We have selling expenses mainly

in our property management and subleasing business.

It was $0.1 million and $0.2 million for the year ended March 31, 2023 and 2022, respectively.

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

Our general and administrative

expenses in our garment manufacturing segment for the years ended March 31, 2023 and 2022 were approximately $0.11 million and $0.13 million,

respectively.

Selling expenses in our epidemic prevention supplies business segment was approximately $nil and 0.36 million for

the year ended March 31, 2022 and 2021.

Selling expenses consist primarily of local transportation, unloading charges and product inspection

Total selling expenses for the year ended March 31, 2022 significantly decreased by approximately 50.1%to approximately $0.2

million from approximately $0.4 million for the year ended March 31, 2021.

general and administrative expenses in our garment manufacturing segment for the years ended March 31, 2022 and 2021 was approximately

$0.13 million and $0.23 million, respectively.

Our general and administrative expenses in our logistics services segment for the year

Our general and administrative expenses in our logistics services segment for the year ended March 31, 2023 and 2022 was

approximately $0.83 million and $0.89 million, respectively.

The general and administrative expenses in our property management and subleasing

business were approximately $0.31 million and $0.37 million for the years ended March 31, 2023 and 2022.

Our general and administrative

expenses in our corporate office for the years ended March 31, 2023 and 2022 were approximately $0.97 million and $0.52 million, respectively.

General and administrative expenses consist primarily of administrative salaries, office expense, certain depreciation and amortization

charges, repairs and maintenance, legal and professional fees, warehousing costs and other expenses that are not directly attributable

to our revenues.

Total general and administrative

expenses for the year ended March 31, 2023 increased approximately 16.3% to approximately $2.2 million from approximately $1.9 million

for the year ended March 31, 2022.

Loss from operations

Loss from operations for the years

ended March 31, 2023 and 2022 was approximately $0.5 million and $0.06 million, respectively.

The general and administrative expenses

in our property management and subleasing business was approximately $0.37 million and $0.10 million for the years ended March 31, 2022

The general and administrative expenses in our epidemic prevention supplies business segment was nil and $0.02 million for

the years ended March 31, 2022 and 2021.

Our general and administrative expenses in our corporate office for the years ended March 31,

2022 and 2021 was approximately $0.52 million and $0.85 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 year ended March 31, 2022 decreased approximately 4.6% to approximately $1.9 million from

approximately $2.0 million for the year ended March 31, 2021.

from operations

from operations for the years ended March 31, 2022 and 2021 was approximately $0.06 million and $3.61 million, respectively.

operations of approximately $0.08 million and $0.33 million was attributed from our garment manufacturing segment for the years ended

March 31, 2022 and 2021, respectively.

Income from operations of approximately $0.24 million and $0.19 million was attributed from our

logistics services segment for the years ended March 31, 2022 and 2021, respectively.

Income from operations of $0.1 million and $0.004

million was attributed from our property management and subleasing business for the years ended March 31, 2022 and 2021.

operations of $0.05 million was attributed from our epidemic prevention supplies business segment for the year ended March 31, 2022.

Loss from operations of approximately $3.28 million was attributed from our epidemic prevention supplies business segment for the year

ended March 31, 2021.

We incurred general and administrative expenses in corporate office of approximately $0.52 million and approximately

$0.85 million for the years ended March 31, 2022 and 2021, respectively.

tax expense for the years ended March 31, 2022 and 2021 was $0.02 million and $0.03 million, respectively, a 9.2% decrease compared to

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 tax rate of 16.5%.

No provision for income taxes in Hong

Kong has been made as Yingxi HK had no taxable income for the years ended March 31, 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 WFOE and YX had

no taxable income for the years ended March 31, 2022 and 2021.

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

Yingxi’s operating companiesare subject to progressive EIT rate from 5%

to 15% in year ended March 31, 2022.

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

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 years ended March

31, 2022 and 2021.

incurred a net profit of approximately $0.08 million and a net loss of $3.59 million for the years ended March 31, 2022 and 2021, respectively.

Our basic and diluted earnings per share were $0.00 and $0.14 for the year ended March 31, 2022 and 2021, respectively.

of cash flows

cash flows information for the years ended March 31, 2022 and 2021 is as follow:

Loss from operations of approximately $0.07

million and $0.08 million was attributed from our garment manufacturing segment for the years ended March 31, 2023 and 2022, respectively.

Income from operations of approximately $0.28 million and $0.24 million was attributed from our logistics services segment for the years

ended March 31, 2023 and 2022, respectively.

Income from operations of $0.27 million and $0.1 million was attributed from our property

management and subleasing business for the years ended March 31, 2023 and 2022.

We incurred general and administrative expenses in corporate

office of approximately $0.9 million and approximately $0.5 million for the years ended March 31, 2023 and 2022, respectively.

Income Tax Expenses

expense for the years ended March 31, 2023 and 2022 was both $0.02 million.

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

PRC jurisdictions.

Yingxi Industrial Chain Group

Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of the British Virgin Islands, is not subject to income

Yingxi HK was incorporated in

Hong Kong and is subject to Hong Kong income tax at a tax rate of 16.5%.

No provision for income taxes in Hong Kong has been made as Yingxi

HK had no taxable income for the years ended March 31, 2023 and 2022.

WFOE and YX were incorporated

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

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

WFOE and YX had no taxable income for the years ended March 31, 2023 and 2022.

The Company is governed by the

Income Tax Laws of the PRC.

Yingxi’s operating companiesare subject to progressive EIT rate from 5% to 15% in year ended March 31,

The preferential tax rates will be expired at the end of year 2023.

The Company’s parent entity,

Addentax Group Corp.

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

No provision for income taxes in the United

States has been made as Addentax Group Corp.

had no United States taxable income for the years ended March 31, 2023 and 2022.

We incurred a net profit of approximately

$1.3 million and $0.08 million for the years ended March 31, 2023 and 2022, respectively.

Our basic and diluted earnings per share were

$0.04 and $0.00 for the year ended March 31, 2023 and 2022, respectively.

Summary of cash flows

Summary cash flows information

for the years ended March 31, 2023 and 2022 is as follow:

Net cash provided by (used in) operating activities

1 unchanged sentence

Net cash used in investing activities

Net cash used in (provided by) financing activities

$ (21,168,153 )

cash provided by operating activities in the year ended March 31, 2022 was approximately $5.3 million more than that of the year ended

March 31, 2021.

It was mainly because the net profit of fiscal year ended March 31, 2022 was approximately $3.7 million more than the

net loss of the fiscal year ended March 31, 2021.

The movement of operating assets and liabilities of the year ended March 31, 2022 resulted

in cash inflow of approximately $0.9 million, while the movement of operating assets and liabilities of the year ended March 31, 2021

resulted in negative cash flow of approximately $0.8 million.

We shall try to improve our operating cash flow by closely monitoring the

timely collection of accounts and other receivables.

We generally do not hold any significant inventory for more than ninety days, as

we typically manufacture upon customers’ order.

cash used in investing activities for the year ended March 31, 2022 was approximately $0.3 million less than that of the year ended March

It was mainly because the purchase of plant and equipment in the year ended March 31, 2022 was approximately $0.2 million less

than the purchase of plant and equipment in prior year.

In prior year, the Company also had a cash decrease of approximately $0.7 million

in disposal of one subsidiary in garment manufacturing segment and one subsidiary in logistics services segment.

The Company also had

proceeds of approximately $0.5 million from the disposal of the two subsidiaries.

cash provided by financing activities for the year ended March 31, 2022 was approximately $7.5 million less than the year ended March

It was mainly because the Company had net cash repayment of approximately $1.4 million to related parties’ borrowings,

while the Company has a proceeds of approximately $6.7 million from issue of ordinary shares in the year ended March 31, 2021.

Condition, Liquidity and Capital Resources

of March 31, 2022, we had cash on hand of approximately $1.4 million, total current assets of approximately $5.7 million and current

liabilities of approximately $10.4 million.

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

parties and third parties.

We also raised equity fund of approximately $3.74 million and approximately $3.0 million from the issuance

of common stocks in August 2020 and March 2021, respectively.

We aim to improve our operating cash flows and anticipate that cash flows

from our operations and borrowings from related parties and third parties will continue to be our primary source of funds to finance

our short-term cash needs.

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

During the year,

the CEO has provided financial support for the operations of the Company.

In the event that the Company requires additional funding to

finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, the

CEO has indicated the intent and ability to provide additional equity financing.

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

We currently have limited financial

resources and based on our current operating plan, we will need to raise additional capital in order to continue as a going concern.

We currently do not have adequate cash to meet our short or long-term objectives.

In the event additional capital is raised, it may have

a dilutive effect on our existing stockholders.

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

Currency Translation Risk

operations are located in the China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility

in foreign exchange rates between the U.S.

Net cash provided by (used in) financing activities

$ (1,372,803 )

provided by operating activities in the year ended March 31, 2023 decreased by approximately $2.7 million compared with that of the

year ended March 31, 2022.

It was mainly because the net profit adjusted to cash provided (used in) operating activities of fiscal

year ended March 31, 2023 was approximately $0.3 million less than the amount of the fiscal year ended March 31, 2022.

of operating assets and liabilities of the year ended March 31, 2023 resulted in cash outflow of approximately $2.4 million mainly

due to cash inflow from decrease of account receivable in prior year was $2.3 million more than that in current year.

We aim to improve our operating cash flow by closely monitoring the timely collection of accounts and

other receivables.

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

customers’ order.

Net cash used in

investing activities for the year ended March 31, 2023 was approximately $21.0 million more as compared to the year ended March 31,

It was mainly due to the purchase of debt securities of $17.5 million in the year ended March 31, 2023, payment of long-term

loan of $2.5 million to an independent third party, and the purchase of plant and equipment in the year ended March 31, 2023 was

approximately $0.2 million less than the purchase of plant and equipment in prior year.

For the year ended March 31, 2023, the

Company also had a cash decrease of approximately $1.2 million in disposal of one subsidiary in property management and subleasing

provided by financing activities for the year ended March 31, 2023 was approximately $23.2 million more than the year ended March

It was mainly because the Company received the proceeds of $22.7 million from its initial public offering

(“IPO”), the proceeds of $15.0 million from issuance of the Notes and warrants and deposit of $14.75 million to the

restricted cash account pursuant to the PIPE Securities Purchase Agreement.

Financial Condition, Liquidity and Capital Resources

As of March 31, 2023, we had cash

on hand of approximately $0.6 million and restricted cash of approximately $14.8 million, total current assets of approximately $37.8

million and current liabilities of approximately $3.5 million.

We presently finance our operations primarily from cash flows from revenue,

fund raising from our IPO proceeds and capital contributions from our chief executive officer, Mr.

Hong Zhida (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.

Foreign Currency Translation Risk

Our operations are located in

the mainland China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility in foreign

exchange rates between the U.S.

dollar and the Chinese Renminbi (“RMB”).

All of our sales are in RMB.

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

As of March 31, 2022, the market foreign exchange rate had decreased to RMB

6.34 to one U.S.

In the past years, RMB

continued to appreciate against the U.S.

As of March 31, 2023, the market foreign exchange rate had decreased to RMB6.87 to one

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

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 years ended March 31, 2022 and 2021 was $0.1 million and $0.2 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 March 31, 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

applicable to smaller reporting companies.

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.

currency translation gain (loss) for the years ended March 31, 2023 and 2022 was $0.2 million and $(0.1) million, respectively.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements

(as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of March 31, 2023 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

Not applicable to smaller reporting companies.

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-K

Item 7. Management’s Discussion and Analysis