What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-02-14 · 300 added, 282 removed, 239 unchanged (71% of the section changed)

Financial Statements and Supplementary Data

the nine months ended December 31, 2022 and 2021

Condensed Consolidated Balance sheets as of December 31, 2022 and March 31, 2022 (unaudited)

Condensed Consolidated Statements of Income and Comprehensive Income for the nine months ended June 30, 2022 and 2021 (unaudited)

Condensed Consolidated Statements of Changes in Equity for the nine months ended December 31, 2022 and 2021 (unaudited)

Condensed Consolidated Statements of Cash Flows for the nine months ended December 31, 2022 and 2021 (unaudited)

Notes to Condensed Consolidated Financial Statements for the nine months ended December 31, 2022 and 2021 (unaudited)

the three months ended June 30, 2023 and 2022

Consolidated Balance sheets as of June 30, 2023 and March 31, 2023 (unaudited)

Consolidated Statements of Income and Comprehensive Income for the Three months ended June 30, 2023 and 2022 (unaudited)

Consolidated Statements of Changes in Equity for the three months ended June 30, 2023 and 2022 (unaudited)

Consolidated Statements of Cash Flows for the three months ended June 30, 2023 and 2022 (unaudited)

Condensed Consolidated Financial Statements for the three months ended June 30, 2023 and 2022 (unaudited)

AND SUBSIDIARIES

1 unchanged sentence

Dollars, except share data or otherwise stated)

December 31, 2022

March 31, 2022

CURRENT ASSETS

Cash and cash equivalents

Restricted cash

Accounts receivables, net

2 unchanged sentences

Advances to suppliers

Amount due from related party

Total current assets

NON-CURRENT ASSETS

due from related party

current assets

Plant and equipment, net

Long-term prepayments

Operating lease right of use asset

Total non-current assets

LIABILITIES AND EQUITY

Restricted cash

Long-term receivables

lease right of use asset

non-current assets

CURRENT LIABILITIES

4 unchanged sentences

Accrued expenses and other payables

Operating lease liability current portion

Total current liabilities

lease liability current portion

current liabilities

Convertible debts

Derivative liabilities

lease liability

non-current liabilities

Operating lease liability

TOTAL LIABILITIES

EQUITY (deficit)

Common stock ($ 0.001 par value, 50,000,000 shares authorized, 31,693,004 shares and 26,693,004 shares issued and outstanding at December 31 and March 31, 2022, respectively)

Common stock ($ 0.001 par value,

250,000,000 shares authorized, 3,739,581 and 35,454,670 shares issued and outstanding at June 30 and March 31, 2023, respectively)

Additional paid-in capital

3 unchanged sentences

Statutory reserve

Accumulated other comprehensive loss

Total equity (deficit)

TOTAL LIABILITIES AND EQUITY

other comprehensive loss

LIABILITIES AND EQUITY

accompany notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

Dollars, except share data or otherwise stated)

Three months ended

Nine months ended

COST OF REVENUES

( 1,929,700 )

( 2,323,716 )

( 5,023,338 )

( 8,314,149 )

and administrative

operating expenses

Selling and marketing

General and administrative

INCOME FROM OPERATIONS

Fair value gain or loss

( 1,288,003 )

Interest income

Interest expenses

( 1,292,715 )

Total operating expenses

income (expense), net

(LOSS) INCOME

BEFORE INCOME TAX EXPENSE

( 2,727,457 )

( 2,728,721 )

(LOSS) INCOME FROM OPERATIONS

Interest income

Interest expenses

Other income, net

(LOSS) INCOME BEFORE INCOME TAX EXPENSE

INCOME TAX EXPENSE

NET (LOSS) INCOME

Foreign currency translation gain (loss)

TOTAL COMPREHENSIVE (LOSS) INCOME

currency translation gain (loss)

COMPREHENSIVE (LOSS) INCOME

$ ( 2,641,271 )

EARNINGS PER SHARE

Basic and diluted

Weighted average number of shares outstanding – Basic and diluted

EARNINGS (LOSS) PER SHARE

average number of shares outstanding – Basic and diluted

accompany notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

Dollars, except share data or otherwise stated)

Statutory reserve

comprehensive loss

Retained earnings

(accumulated deficit)

Accumulated other

Statutory reserve

comprehensive loss

BALANCE AT SEPTEMBER 30, 2021

$ ( 6,723,260 )

$ ( 137,259 )

Foreign currency translation

Net income for the period

BALANCE AT DECEMBER 31, 2021

$ ( 6,711,641 )

comprehensive

BALANCE AT MARCH 31, 2022

$ ( 6,756,230 )

BALANCE AT SEPTEMBER 30, 2022

$ ( 170,984 )

Appropriation to Statutory Reserves

Foreign currency translation

Net loss for the period

BALANCE AT DECEMBER 31, 2022

for the period

BALANCE AT JUNE 30, 2022

$ ( 6,659,559 )

1 unchanged sentence

$ ( 5,451,209 )

Balance, value

$ ( 5,451,209 )

Foreign currency translation

Net income for the period

BALANCE AT DECEMBER 31, 2021

Issuance of new shares

Reverse stock split

( 33,655,878 )

New shares for round up of fragmental

Additional paid-in capital from

conversion of convertible debts

Foreign currency translation

for the period

( 2,728,721 )

BALANCE AT MARCH 31, 2022

( 2,728,721 )

BALANCE AT JUNE 30, 2023

$ ( 8,179,930 )

Paid in capital

Appropriation to Statutory Reserves

Foreign currency translation

Net income for the period

Net income (loss)

BALANCE AT DECEMBER 31, 2022

Balance, value

$ ( 8,179,930 )

accompany notes to the unaudited condensed consolidated financial statements.

accompanying notes to the unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

1 unchanged sentence

Dollars, except share data or otherwise stated)

Nine Months Ended December 31

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Depreciation and amortization

Changes in operating assets and liabilities

Accounts receivable

Advances to suppliers

Months Ended June 30

FROM OPERATING ACTIVITIES:

Net (loss) income

$ ( 2,728,721 )

Adjustments to reconcile net

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

financial cost

operating assets and liabilities

Other receivables

( 1,789,539 )

Accounts payables

( 1,309,228 )

( 1,899,642 )

Accrued expenses and other payables

Advances from customers

Net cash (used in) provided by operating activities

$ ( 1,528,118 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of plant and equipment and other assets

Purchase of debt securities

( 17,500,000 )

Net cash used in investing activities

$ ( 17,500,000 )

Accrued expenses

and other payables

from customers

Net cash (used in) provided by

operating activities

$ ( 1,110,878 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issue of ordinary shares

FROM FINANCING ACTIVITIES:

Proceeds from related party borrowings

1 unchanged sentence

( 1,831,373 )

( 5,341,046 )

Repayment of bank borrowings

Net cash provided by (used in) financing activities

$ ( 1,543,573 )

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

( 1,336,016 )

Effect of exchange rate changes on cash and cash equivalents

Cash and cash equivalents, beginning of the period

CASH AND CASH EQUIVALENTS, END OF THE PERIOD

Supplemental disclosure of cash flow information:

Cash paid during the year for interest

Cash paid during the year for income tax

Supplemental disclosure of non-cash investing and financing activities:

Right-of-use assets obtained in exchange for operating lease obligations

accompany notes to the unaudited condensed consolidated financial statements.

Release of restricted cash

of bank borrowings

Net cash provided by financing

(DECREASE) IN CASH AND CASH EQUIVALENTS

Effect of exchange rate changes

on cash and cash equivalents

cash equivalents, beginning of the period

AND CASH EQUIVALENTS, END OF THE PERIOD

disclosure of cash flow information:

Cash paid during the period for

disclosure of non-cash investing and financing activities:

assets obtained in exchange for operating lease obligations

accompanying notes to the unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

1 unchanged sentence

ORGANIZATION AND BUSINESS ACQUISITIONS

and its subsidiaries (the “Company”) are engaged in the business of garments manufacturing, providing logistic services and

and its subsidiaries (the “Company”) are engaged in the business of garments manufacturing, providing logistic services,

property leasing and management service in the People’s Republic of China (“PRC” or “China”).

4 unchanged sentences

and balances are eliminated in consolidation.

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

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

be indicative of annual results.

15 unchanged sentences

however actual results could differ materially from those estimates.

is no change on the accounting policies for the three months ended December 31, 2022.

is no change in the accounting policies for the three months ended June 30, 2023.

issued accounting pronouncements

9 unchanged sentences

of this ASU will have on its consolidated financial statements.

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

Company reviews new accounting standards as issued.

2 unchanged sentences

RELATED PARTY TRANSACTIONS

OF RELATED PARTIES RELATIONSHIP WITH THE COMPANY

SUMMARY OF FINANCIAL POSITION OF ENTITIES AND GAIN OR LOSS ON DISPOSAL

of Related Parties

with the Company

CEO, and a director of the Company

Financial Consulting (Shenzhen) Co., Ltd .

company controlled by CEO, Mr.

legal representative of Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”), a wholly subsidiary of our Company

legal representative of Shantou Yi Bai Yi Garments Co., Ltd (“YBY”), a wholly-owned subsidiary of our Company

spouse of legal representative of Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), a wholly owned subsidiary of our

legal representative of Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”), a wholly-owned subsidiary of our Company

President, CEO, and a director of the

Hongye Financial Consulting (Shenzhen)

A company controlled by CEO, Mr.

A legal representative

Jinlong Huang

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

Company had the following related party balances as of December 31, 2022 and March 31, 2022:

OF RELATED PARTY TRANSACTION

Amount due from related party

December 31, 2022

March 31, 2022

Hongye Financial Consulting (Shenzhen) Co., Ltd.

Related party borrowings

December 31, 2022

March 31, 2022

Company had the following related party balances as of June 30, 2023 and March 31, 2023:

OF AMOUNT DUE FROM RELATED PARTY

due from related party

OF RELATED PARTIES BORROWINGS

party borrowings

Zhida Hong (1)

Hongye Financial Consulting (Shenzhen) Co., Ltd.

Bihua Yang (2)

Jinlong Huang

interest free loan as financial support from Zhida Hong to daily operation of the Company.

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

interest free advanced loan as financial support from Dewu Huang for YBY’s daily operation.

Hongye Financial Consulting (Shenzhen)

Dewu Huang (2)

Total Related

party borrowings

Being interest

free loan as financial support from Zhida Hong to daily operation of the Company.

Being interest

free loan as financial support from Dewu Huang to pay for daily operating expenditures of YBY.

borrowing balances with related parties are unsecured, non-interest bearing and repayable on demand.

1 unchanged sentence

OF DEBT SECURITIES HELD TO MATURITY

December 31, 2022

March 31, 2022

June 30, 2023

Debt securities held-to-maturity

1 unchanged sentence

The principal amount of the note is $ 17,500,000 .

The note was renewable with one-year tenor and 2.5 % p.a.

consist of the following as of December 31, 2022 and March 31, 2022:

The note is renewable with one-year tenor on August 23, 2023 and 2.5 % p.a.

As of June 30, and March 31, 2023, the coupon receivable

was $ 328,125 and $ 218,750 , respectively.

consist of the following as of June 30, 2023 and March 31, 2023:

OF INVENTORIES

December 31, 2022

March 31, 2022

Raw materials

Work in progress

Finished goods

Total inventories

ADVANCES TO SUPPLIERS

8 unchanged sentences

PREPAYMENTS AND OTHER RECEIVABLES

and other receivables consist of the following as of December 31, 2022 and March 31, 2022:

and other receivables consist of the following as of June 30, 2023 and March 31, 2023:

OF PREPAYMENTS AND OTHER RECEIVABLES

December 31, 2022

March 31, 2022

Receivable of consideration on disposal of subsidiaries

Other receivables

Receivable of consideration

on disposal of subsidiaries

Receivable of consideration of convertible note issued (Note)

In June, one of the holder of the convertible note withdrawn the consideration of $ 7.5 million paid for the convertible note issued from

the escrow account.

The Company was negotiating with the holder on this matter.

In July, the Company entered into a Waiver and Ratification

Agreement with this holder of the Convertible Note.

According to the agreement, the holder redeemed the full amount of $ 7.5 million for

the Convertible Note and irrevocably waives any past, present or future claims, rights and obligations under the Note and the Warrant.

PROPERTY, PLANT AND EQUIPMENT

plant and equipment consists of the following as of December 31, 2022 and March 31, 2022:

OF PROPERTY PLANT AND EQUIPMENT

December 31, 2022

March 31, 2022

plant and equipment consists of the following as of June 30, 2023 and March 31, 2023:

OF PLANT AND EQUIPMENT

Production plant

Motor vehicles

Office equipment

accumulated depreciation

Plant and equipment, net

expense for the three and nine months ended December 31, 2022 and 2021 was $ 33,817 and $ 44,164 , $ 102,649 and $ 115,561 , respectively.

and equipment, net

expense for the three months ended June 30, 2023 and 2022 was $ 33,982 and $ 35,883 , respectively.

LONG-TERM RECEIVABLES

The Company entered into a long-term loan

agreement with an independent third party in September 2022.

The principal to the borrower is $ 2.5 million.

The loan is interest free

and will be expired in August 2025 .

SHORT-TERM BANK LOAN

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

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

In August 2019, HSW entered into a facility agreement with Agricultural

Bank of China and obtained a line of credit, which allows the Company to borrow up to approximately $ 153,172 (RMB 1,000,000 ) for daily operations.

The loans are guaranteed at no cost by the legal representative

As of December 31, 2022, the Company has borrowed $ 138,265 (RMB 955,281 ) (March 31, 2022:

$ 151,090 ) under this line of credit

with various annual interest rates from 4.84 % to 4.9 % .

The outstanding loan balance was due on December 31, 2021.

The Company was not

able to renew the loan facility with the bank.

The Company is negotiating with the bank on repayment schedule of the loan balance and

interest payable.

As of June 30, 2023, the Company has borrowed $ 130,176 (RMB 944,255 ) (March 31, 2023:

$ 137,468 ) under this line of credit with

various annual interest rates from 4.34 % to 4.9 % .

The outstanding loan balance was due on September 30, 2021.

The Company was not able

to renew the loan facility with the bank.

The Company is negotiating with the bank on repayment schedule of the loan balance and interest

Income Tax (“EIT”)

1 unchanged sentence

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.

is not subject to income taxes.

It’s wholly owned subsidiary of Addentax Group Corp.

1 unchanged sentence

and is subject to Hong Kong income tax at a progressive 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 and nine months ended December 31, 2022 and 2021.

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, 2023 and 2022.

our wholly owned subsidiary, were incorporated in the PRC and is subject to the EIT tax rate of 25 % .

No provision for income taxes in

the PRC have been made as YX had no taxable income for the three and nine months ended December 31, 2022 and 2021.

the PRC has been made as YX had no taxable income for the three months ended June 30, 2023 and 2022.

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

4 unchanged sentences

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

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

had no United States taxable income for the three and nine

months ended December 31, 2022 and 2021.

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, 2023 and 2022.

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

1 unchanged sentence

Three months ended

Nine months ended

PRC statutory tax rate

Computed expected benefits

PRC statutory tax

Computed expected benefits (expense)

Temporary differences

Permanent difference

Changes in valuation allowance

Income tax expense

in valuation allowance

tax assets had not been recognized in respect of any potential tax benefit that may be derived from non-capital loss carry forward and

property and equipment due to past negative evidence of previous cumulative net losses and uncertainty upon restructuring.

The management

will continue to assess at each reporting period to determine the realizability of deferred tax assets.

Added Tax (“VAT”)

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

value of sales and is payable by the purchaser.

The subsidiaries HSW, YBY, OTX, ZHJ and YS enjoyed preferential VAT rate of 13 % .

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

A credit is available whereby VAT paid on purchases can be

used to offset the VAT due on sales.

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

which is levied on the invoiced value of sales and is payable by the purchaser.

The subsidiaries HSW, YBY, AOT, ZHJ and YS enjoyed

preferential VAT rate of 13 % .

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

A credit is available whereby VAT paid on purchases

can be used to offset the VAT due on sales.

services, the applicable VAT rate is 9 % under the relevant tax category for logistic company, except the branch of YXPF enjoyed the preferential

9 unchanged sentences

The Company reports financial and operating

information in the following three segments:

information in the following four segments:

manufacturing .

5 unchanged sentences

Company also provides general corporate services to its segments and these costs are reported as “Corporate and others”.

Company used to have an operating segment named “Epidemic prevention supplies”, which included manufacturing, distribution

and trading of epidemic prevention supplies.

As the COVID-19 pandemic is getting better, the Company ceased to operate in the Epidemic

prevention supplies business at the beginning of the quarter.

The remaining assets of the segment was reclassified into the “Corporate

and others” segment.

The corresponding items of segment information for the earlier periods was restated to reflect the change

of the new segment structure.

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

by segment for the three and nine months ended December 31, 2022 and 2021 are as follows:

by segment for the three months ended June 30, 2023 and 2022 are as follows:

OF SEGMENT REPORTING FOR REVENUE

Revenues from external customers

Three months ended

Nine months ended

Revenues from external customers

Garments manufacturing segment

from external customers

Garments manufacturing

Logistics services segment

Property management and subleasing

management and subleasing

Total of reportable segments

Corporate and other

Total consolidated revenue

Intersegment revenue

Garments manufacturing segment

(loss) from operations by segment for the three and nine months ended December 31, 2022 and 2021 are as follows:

SCHEDULE OF SEGMENT REPORTING FOR INCOME FROM OPERATION

of reportable segments and consolidated revenue

manufacturing segment

of reportable segments and consolidated revenue

Income from operations by segment for the three ended June 30, 2023 and 2022 are as follows:

OF SEGMENT REPORTING FOR (LOSS) INCOME FROM OPERATION

from external customers

Three months ended

Nine months ended

Garments manufacturing segment

Garment manufacturing

Logistics services segment

Property management and subleasing

management and subleasing

Total of reportable segments

Corporate and other

Total consolidated income (loss) from operations

assets by segment as of December 31, 2022 and March 31, 2022 are as follows:

consolidated income from operations

$ ( 260,949 )

assets by segment as of June 30, 2023 and March 31, 2023 are as follows:

SCHEDULE OF SEGMENT REPORTING FOR ASSETS

Garment manufacturing segment

Garment manufacturing

Logistics services segment

Property management and subleasing

Total of reportable segments

Corporate and other

Consolidated total assets

Company operates predominantly in China.

2 unchanged sentences

SCHEDULE OF GEOGRAPHICAL INFORMATION

Three months ended

Nine months ended

December 31, 2022

Long-Lived Assets

FINANCIAL INSTRUMENTS

January 4, 2023, the Company entered into a series of agreements with certain accredited investors, pursuant to which the Company received

a net proceed of $ 15,000,000 in consideration of the issuance of:

secured convertible notes in the aggregate original principal amount of approximately $ 16.7 million with interest rate of 5 % per

annum (the “Convertible Notes”);

The Convertible Notes shall be matured on July 4, 2024 .

The conversion price is $ 1.25 ,

subject to adjustment under several conditions.

to purchase up to approximately 16.1 million shares of common stock of the Company (the “Common Stock”) until on or prior

to 11:59 p.m.

(New York time) on the five-year anniversary of the closing date at an exercise price of $ 1.25 per share, also subject

to adjustment under several conditions.

Warrant is considered a freestanding instrument issued together with the Convertible Note and measured at its issuance date fair value.

Proceeds received were first allocated to the Warrant based on its initial fair value.

The initial fair value of the Warrant was $ 3.9

The Warrant were marked to the market with the changes in the fair value of warrant recorded in the consolidated statements

of operations and comprehensive loss.

As of March 31, 2023, the balance of the Warrant was approximately $ 2.0 million.

Convertible Note is classified as a liability and is subsequently stated at amortized cost with any difference between the initial carrying

value and the repayment amount as interest expenses using the effective interest method over the period from the issuance date to the

maturity date.

The embedded conversion feature should be bifurcated and separately accounted for using fair value, as this embedded feature

is considered not clearly and closely related to the debt host.

The bifurcated conversion feature was recorded at fair value with the

changes recorded in the consolidated statements of operations and comprehensive loss.

The initial fair value of the embedded conversion

feature was $ 1.2 million.

As of March 31, 2023, the fair value of the conversion option was $ 0.3 million.

Company determined that the other embedded features do not require bifurcation as they either are clearly and closely related to the

Convertible Note or do not meet the definition of a derivative.

total proceeds of the Convertible Note and the Warrants, net of issuance cost, of $ 15.0 million was received by the Company in January

2023, and allocated to each of the financial instruments as following:

OF FINANCIAL INSTRUMENTS

of January 4, 2023

liabilities – Fair value of the Warrants

liabilities – Embedded conversion feature

January 2023, the Company also granted to the placement agent a warrant as partial of agent fee to purchase 0.7 million shares of common

stock of the Company.

The warrant is matured in five years with exercise price of $ 1.25 subject to adjustments under different conditions.

The warrant was recognized as derivative liability and the initial fair value was $ 0.168 million.

Company’s convertible notes obligations were as the following for the three months ended March 31, 2023 and 2022:

OF CONVERTIBLE NOTES OBLIGATION

value – beginning balance

to ordinary shares

( 2,882,444 )

of debt discount

debt discount and cost of issuance

( 1,117,667 )

value – ending balance

the period, $ 1.5 million of the convertible notes was converted into approximately 2.3 million ordinary shares, with average effective

conversion price of $ 0.6795 per share.

Company’s derivative liabilities were as the following for the three months ended March 31, 2023 and 2022:

OF DERIVATIVE LIABILITIES

liabilities –Warrants

to the market

liabilities – Embedded conversion feature

to ordinary shares

Remeasurement

on change of convertible price

to the market

Derivative fair value at end of period

LEASE RIGHT-OF-USE ASSET AND LEASE LIABILITIES

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

Lease liabilities are measured at present value of the sum of remaining rental payments as of December 31, 2022, with discounted rate

Lease liabilities are measured at present value of the sum of remaining rental payments as of June 30, 2023, with discounted rate of

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

9 unchanged sentences

SCHEDULE OF LEASE COST

Three months ended

Nine months ended

Operating lease cost

Short-term lease cost

Operating lease

following table summarizes supplemental information related to leases:

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES

Three months ended

Nine months ended

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flow from operating leases

Right-of-use assets obtained in exchange for new operating leases liabilities

Weighted average remaining lease term - Operating leases (years)

Weighted average discount rate - Operating leases

Cash paid for amounts included

in the measurement of lease liabilities

Operating cash flow

from operating leases

Right-of-use assets obtained

in exchange for new operating leases liabilities

Weighted average remaining lease

term - Operating leases (years)

Weighted average discount rate

- Operating leases

following table summarizes the maturity of operating lease liabilities:

SCHEDULE OF MATURITY OF OPERATING LEASE

Years ending December 31

Total lease payments

ending June 30

lease payments

SHARE CAPITAL

The Company effected the amendment and

combination to the outstanding shares of our common stock into a lesser number of outstanding shares (the “Reverse Stock Split Amendment”)

on a ratio of one-for-ten, with effected date on June 26, 2023.

After the reverse stock split, 3,739,581 ordinary shares are issued and

outstanding as of June 30, 2023.

RISKS AND UNCERTAINTIES

and Political Risks

Economic and Political Risks

Company’s operations are conducted in the PRC.

15 unchanged sentences

currencies are the RMB, all assets and liabilities are translated at exchange rates at the balance sheet date, which was 7.25 and 6.87

as of December 31, 2022 and March 31, 2022, respectively.

as of June 30, 2023 and March 31, 2023, respectively.

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

was 6.852 and 6.466 for the nine months ended December 31, 2022 and 2021, respectively.

was 7.004 and 6.603 for the three months ended June 30, 2023 and 2022, respectively.

Equity is translated at historical exchange rates.

1 unchanged sentence

other comprehensive loss, a component of equity.

Concentration

followings are the percentages of accounts receivable balance of the top customers over accounts receivable for each segment as of December

Concentration Risks

followings are the percentages of accounts receivable balance of the top customers over accounts receivable for each segment as of June

30, 2023 and March 31, 2023.

SCHEDULE OF CONCENTRATION RISKS

manufacturing segment

December 31, 2022

March 31, 2022

high concentration as of December 31, 2022 was mainly due to business development of a large distributor of garments.

OF CONCENTRATION RISKS

high concentration as of June 30, 2023 was mainly due to business development of a large distributor of garments.

Management believes

1 unchanged sentence

services segment

December 31, 2022

March 31, 2022

management and subleasing segment

is no account receivable for Property management and subleasing segment as of both December 31, 2022 and March 31, 2022.

the three months ended December 31, 2022, one customer from logistics services segment provided more than 10 % of total revenue of the

Company, represented 11.8 % of total revenue of the Company for the three months.

For the nine months ended December 31, 2022, one customer

from logistics services segment provided more than 10 % of total revenue of the Company, represented 10.8 % of total revenue of the Company

for the nine months.

For the three months ended December 31, 2021, no customer provided more than 10 % of total revenue of the Company.

For nine months ended December 31, 2021, one customer from garment segment provided more than 10 % of total revenue of the Company, represented

24.8 % of total revenue for the nine months.

is no account receivable for Property management and subleasing segment as for June 30, and March 31, 2023.

prevention supplies segment

accounts receivable of Epidemic prevention supplies segment as of June 30, 2022 was from one customer only.

There was no more sales in year ended June 30, 2023.

Concentration on customers

For the three months ended June 30, 2023, three customers from Logistics

services segment provided more than 10 % of total revenue of the Company, represented 40.6 % of total revenue of the Company for the three

the three months ended June 30, 2022, one customer from Logistics services segment provided more than 10 % of total revenue of the Company,

representing 13.1 % of total revenue of the Company for the three months.

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

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

ended December 31, 2022 and 2021.

SCHEDULE OF PURCHASES FROM SUPPLIERS

Concentration on suppliers

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

30, 2023 and 2022.

OF PURCHASES FROM SUPPLIERS

Three months ended

Nine months ended

Garment manufacturing segment

Logistics services segment

Logistics services

Property management and subleasing

Interest Rate Risk

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

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

As of December 31, 2022, the total outstanding borrowings

As of June 30, 2023, the total outstanding borrowings

amounted to $ 130,176 (RMB 944,255 ) with various interest rate from 4.3 % to 4.9 % p.a.

Coronavirus Disease (COVID-19) outbreak and the measures taken to contain the spread of the pandemic have created a high level of uncertainty

to global economic prospects and this has impacted the Company’s operations and its financial performance in the last three quarters

of the financial year and subsequent to the financial year end.

the situation continues to evolve with significant level of uncertainty, the Company is unable to reasonably estimate the full financial

impact of the COVID-19 outbreak.

The Company is monitoring the situation closely and to mitigate the financial impact, it is conscientiously

managing its cost by adopting an operating cost reduction strategy and conserving liquidity by working with major creditors to align

repayment obligations with receivable collections.

SUBSEQUENT EVENTS

January 4, 2023, Addentax Group Corp.

(the “Company”) entered into a Securities Purchase Agreement (the “Securities

Purchase Agreement) with certain accredited investors (the “Purchasers”), pursuant to which the Company received a net proceed

of $ 15,000,000 in consideration of the issuance of:

senior secured convertible notes in the aggregate original principal amount of $ 16,666,666.66 (the “Convertible

warrants to purchase up to 16,077,172 shares of common stock of the Company (the “Common Stock”) until on or prior to

(New York time) on the five year anniversary of the closing date at an exercise price of $ 1.25 per share.

transactions contemplated under the Securities Purchase Agreement closed on January 4, 2023.

The Company intends to use the proceeds

from the issuance of the Convertible Notes and the PIPE Warrants for general corporate purposes.

Convertible Notes bear interest at an interest rate of 5 % per annum payable on each installment date commencing on the original date

January 10, 2023, the Company entered into an amendment (the “Amendment”, and the Original Purchase Agreement, as amended,

the “Purchase Agreement”) to the Original Purchase Agreement with each Investor in accordance with the terms of the Original

Purchase Agreement.

Under the Amendment, the original increase in the authorized shares of the Company from 50,000,000 to 150,000,000

was increased to 250,000,000 .

July 13, 2023, the Company entered into a Waiver and Ratification Agreement with one of the holders of the Convertible Note.

According to the agreement, the

holder redeemed the full amount of $7.5 million for the Convertible Note and irrevocably waives any past, present or future claims,

rights and obligations under the Note and the Warrant.

July 2023, approximately $ 2.4 million of convertible note including principal and related accrued interest were converted into approximately

0.44 million common stock.

The effective average conversion price was $ 5.74 per share.

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

What changed 10-Q

Item 1. Financial Statements