What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-02-14 compared with 2023-11-14 · 217 added, 218 removed, 391 unchanged (53% 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 and six months ended September 30,

following discussion and analysis of our financial condition and results of operations for the three and nine months ended December 31,

2023 and 2022 should be read in conjunction with the Financial Statements and corresponding notes included in this Report on Form 10-Q.

37 unchanged sentences

(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”), (xiv) Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).

a PRC company (“TD”), (xi) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and

(xii) Dongguan Aotesi Garments Co., Ltd., a PRC company (“AOT”), (xiii) Dongguan Hongxiang Commercial Co., Ltd., a PRC company

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

6 unchanged sentences

(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”), (xiv) Dongguan Hongxiang Commercial Co., Ltd., a PRC company

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

(viii) Shenzhen Yingxi Tongda Logistic Co., Ltd, a PRC company (“TD”),,(ix) Zhuang Hao Jia (Dongguan) Decoration Engineering

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

Hongxiang Commercial Co., Ltd., a PRC company (“HX”).

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

6 unchanged sentences

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,

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.

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.

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

3 unchanged sentences

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

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

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

5 unchanged sentences

delivery and courier network in China.

As of September 30, 2023, we provide logistics services to over 86 cities in approximately seven

provinces and two municipalities.

As of December 31, 2023, we provide logistics services to over 86 cities in approximately 11 provinces

and 3 municipalities .

We expect to develop an additional 20 logistics points in existing serving cities and improve the Company’s

121 unchanged sentences

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

of Operations for the three months ended September 30, 2023 and 2022

following tables summarize our results of operations for the three months ended September 30, 2023 and 2022.

of Operations for the three months ended December 31, 2023 and 2022

following tables summarize our results of operations for the three months ended December 31, 2023 and 2022.

The table and the discussion

1 unchanged sentence

Three Months Ended

September 30,

Changes in 2023

9 unchanged sentences

Net (loss) income

revenue for the three months ended September 30, 2023 decreased by approximately $0.8 million, or 37.7%, as compared with the three months

ended September 30, 2022.

The decrease was mainly due to the decrease of $0.9 million in property management and subleasing business

and $0.1 million increase in garment manufacturing business.

generated from our garment manufacturing business contributed approximately $0.1 million or 6.8% of our total revenue for the three months

ended September 30, 2023.

Revenue generated from garment manufacturing business contributed approximately $0.4 million or 14.3% of our

total revenue for the three months ended September 30, 2022, respectively.

The low level of sales was mainly due to factory facilities

renewal and repair, remaining factories cannot provide the same capacity as previously.

We estimate the capacity will recover at the

last quarter of the fiscal year ending 2024.

$ (2,607,662 )

$ (2,525,444 )

revenue for the three months ended December 31, 2023 decreased by approximately $0.7 million, or 30.8%, as compared with the three months

ended December 31, 2022.

The decrease was mainly due to the decrease of $0.6 million in property management and subleasing business and

$0.1 million decrease in garment manufacturing business.

Revenue generated from our garment manufacturing business

contributed approximately $0.03 million or 1.8% of our total revenue for the three months ended December 31, 2023.

Revenue generated from

garment manufacturing business contributed approximately $0.1 million or 4.7% of our total revenue for the three months ended December

31, 2022, respectively.

The low level of sales was mainly due to factory facilities renewal and repair, remaining factories cannot provide

the same capacity as previously.

We estimate the capacity will recover at the last quarter of the fiscal year ending 2024.

generated from our logistics services business contributed approximately $1.2 million or 81.0% of our total revenue for the three months

ended September 30, 2023.

ended December 31, 2023.

Revenue generated from our logistic business contributed approximately $1.2 million or 57.2% of our total revenue

for the three months ended September 30, 2022.

for the three months ended December 31, 2022.

generated from our property management and subleasing business was $0.3 million or 17.2% of our total revenue for the three months ended

September 30, 2023.

December 31, 2023.

The revenue from this business segment was $0.8 million or 37.5% of our total revenue of this business for the three

months ended September 30, 2022.

months ended December 31, 2022.

Three months ended

September 30,

(decrease) in

14 unchanged sentences

Gross Profit for property management and subleasing

Net revenue for epidemic prevention supplies

Other and Overhead

Total cost of revenue for epidemic prevention supplies

Gross (loss) income for epidemic prevention supplies

Net revenue for corporate and others

Merchandise/Finished goods/Raw materials

Total cost of revenue for corporate and others

Gross (loss) income for corporate and others

Total cost of revenue

1 unchanged sentence

material costs for our garment manufacturing business was approximately 15.7% of our total garment manufacturing business revenue for

the three months ended September 30, 2023, as compared with nil for the three months ended September 30, 2022.

the three months ended December 31, 2023, as compared with 0.8% for the three months ended December 31, 2022.

costs for our garment manufacturing business was approximately 25.8% of our total garment manufacturing business revenue for the three

months ended September 30, 2023, as compared with 90.5% for the three months ended September 30, 2022.

and other expenses for our garment manufacturing business accounted for approximately 2.9% of our total garment business revenue for

the three months ended September 30, 2023, as compared with 67.8% of total garment business revenue for the three months ended September

months ended December 31, 2023, as compared with 63.7% for the three months ended December 31, 2022.

and other expenses for our garment manufacturing business accounted for approximately (4.8)% of our total garment business

revenue for the three months ended December 31, 2023, as compared with 2.7% of total garment business revenue for the three months ended

December 31, 2022.

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

The Company relied on a few subcontractors, which the subcontracting

fees to our largest contractor represented approximately 35.1% and 26.7% of total cost of revenues for our service segment for the three

months ended September 30, 2023 and 2022, respectively.

The increase was attributed to a decrease usage of our own logistics as compared

to the subcontractors after the COVID-19 epidemic.

fees to our largest contractor represented approximately 53.1% and 28.1 % of total cost of revenues for our service segment

for the three months ended December 31, 2023 and 2022, respectively.

The increase was attributed to a decrease usage of our own logistics

as compared to the subcontractor.

We have not experienced any dispute 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, 2023 was approximately $0.5 million as compared

with $0.7 million for the three months ended September 30, 2022.

toll and other costs for our service business for the three months ended December 31, 2023 was approximately $0.5 million as compared

with $0.6 million for the three months ended December 31, 2022.

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

43.3% of our total service revenue for the three months ended September 30, 2023, as compared with 54.4% for the three months ended September

The decrease was primarily attributable to an increase of usage of subcontractors after the COVID-19 epidemic.

41.6% of our total service revenue for the three months ended December 31, 2023, as compared with 53.5% for the three months ended December

The decrease was primarily attributable to an increase of subcontractors usage after the COVID-19 epidemic.

Subcontracting

fees for our service business for the three months ended September 30, 2023 increased significantly by approximately 72.7% to $0.3 million

from $0.2 million for the three months ended September 30, 2022.

fees for our service business for the three months ended December 31, 2023 increased significantly by approximately 121.3% to $0.6 million

from $0.3 million for the three months ended December 31, 2022.

Subcontracting fees accounted for approximately 47.2% and 20.9% of our

total service business revenue in the three months ended September 30, 2023 and 2022, respectively.

total service business revenue in the three months ended December 31, 2023 and 2022, respectively.

The increase was primarily attributable

2 unchanged sentences

The Company disposed of DY in February 2023 and acquired HX in September 2023.

Therefore, there was minor revenue from this

segment in the quarter.

manufacturing business gross profit for the three months ended September 30, 2023 was approximately $15.8 thousand, as compared with

a loss of approximately $0.5 thousand for the three months ended September 30, 2022.

Gross profit accounted for approximately 17.3% of

our total garment manufacturing business revenue for the three months ended September 30, 2023.

profit in our logistics services business for the three months ended September 30, 2023 was approximately $333,700 and gross

Therefore, the revenue in the quarter was only

$0.3 million compared to $0.8 million for the three months ended December 31, 2022.

manufacturing business gross profit for the three months ended December 31, 2023 was approximately $17,113, as compared with gross profit

of approximately $33,082 for the three months ended December 31, 2022.

Gross profit accounted for approximately 63.3% of our total garment

manufacturing business revenue for the three months ended December 31, 2023.

profit in our logistics services business for the three months ended December 31, 2023 was approximately $132,917 and gross margin was

Gross profit in our logistics services business for the three months ended December 31, 2022 was approximately $311,300 and gross

margin was 25.6%.

Gross profit in our logistics services business for the three months ended September 30, 2022 was approximately $360,200

and gross margin was 29.5%.

The decrease of gross profit ratio was mainly because.

profit in our property management and subleasing business for the three months ended September 30, 2023 was approximately $53,500 .

It was approximately $206,300 , or 22.4% margin for the three months ended September 30, 2022.

The decrease of gross profit ratio was mainly because the subsidiary PF used more subcontractors to proceed the orders

which increase the cost of revenue.

profit in our property management and subleasing business for the three months ended December 31, 2023 was approximately $16,186, or

6.4% of revenue of the segment.

It was approximately $259,611, or 32.6% margin for the three months ended December 31, 2022.

Three months ended

September 30,

(decrease) in

7 unchanged sentences

selling expenses were mainly incurred for our property management and subleasing business.

It was $37,200 and approximately $30,000

for the three months ended September 30, 2023 and 2022, respectively.

Selling expenses consisted 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, 2023 and 2022

It was $81,817 for property management and

subleasing business and $13,504 for garments manufacturing business for the three months ended December 31, 2023 It was approximately

$24,511 for property management and subleasing business for the three months ended December 31, 2022.

Selling expenses consisted 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 December 31, 2023 and 2022

was approximately $34,008 and $25,228, respectively.

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

three months ended September 30, 2023 and 2022 was approximately $160,700 and $207,800, respectively.

The general and administrative

expenses in our property management and subleasing business was approximately nil and $86,700 for the three months ended September 30,

three months ended December 31, 2023 and 2022 was approximately $174,618 and $220,052, respectively.

The general and administrative expenses

in our property management and subleasing business was approximately $132,336 and $103,999 for the three months ended December 31, 2023

and 2022, respectively.

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

Our general and administrative expenses in our corporate office for the three months ended December 31, 2023

and 2022 was approximately $175,636 and $326,639, respectively.

2 unchanged sentences

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

general and administrative expenses for the three months ended September 30, 2023 increased by approximately 44.2% to $670,600 from $465,000

for the three months ended September 30, 2022.

general and administrative expenses for the three months ended December 31, 2023 decreased by approximately 23.6% to $516,598 from $675,918

for the three months ended December 31, 2022.

Income from operations

from operations for the three months ended September 30, 2023 was approximately $304,900, while income from operations for the three

months ended September 30, 2022 was $70,200.

Loss from operations of approximately $19,000 and $28,100 for the three months ended September

30, 2023 and 2022, respectively.

Income from operations of approximately $172,300 thousand and $152,400 thousand was attributed from

our logistics services segment for the three months ended September 30, 2023 and 2022, respectively.

from operations for the three months ended December 31, 2023 was approximately $449,592, while loss from operations for the three months

ended December 31, 2022 was $92,967.

Loss from operations of approximately $30,398 and income from operations of $7,745 was attributed

from our garment manufacturing segment for the three months ended December 31, 2023 and 2022, respectively.

Loss from operations of approximately

$13,400 and income from operations of $89,600 for the three months ended September 30, 2023 and 2022 was attributed from our property

management and subleasing business, respectively.

We incurred expenses from operations in corporate office of approximately $444,900

and $143,800 for the three months ended September 30, 2023 and 2022, respectively.

The increase of expenses 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, 2023 and 2022 was approximately $3,200 and $9,500, respectively.

$41,699 and income from operations of approximately $91,147 was attributed from our logistics services segment for the three months ended

December 31, 2023 and 2022, respectively.

Loss from operations of approximately $168,012 and income from operations of $131,213 for the

three months ended December 31, 2023 and 2022 was attributed from our property management and subleasing business, respectively.

expenses from operations in corporate office of approximately $209,483 and $324,046 for the three months ended December 31, 2023 and

2022, respectively.

The decrease of expenses from our corporate office was mainly due to decrease in legal and professional fees to comply

with the SEC accounting, disclosure and reporting requirements.

tax expense for the three months ended December 31, 2023 and 2022 was approximately $3,255 and $8,184, respectively.

The Company operates

4 unchanged sentences

No provision for income taxes

in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended September 30, 2023 and 2022.

in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended December 31, 2023 and 2022.

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 QYTG and YX had no taxable income for the three months ended September 30, 2023 and 2022.

in the PRC has been made as QYTG and YX had no taxable income for the three months ended December 31, 2023 and 2022.

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

6 unchanged sentences

had no United States taxable income for the three months

ended September 30, 2023 and 2022.

ended December 31, 2023 and 2022.

Income (Loss)

incurred net income of approximately $1.4 million for the three months ended September 30, 2023 and a net income of approximately $0.08

million for the three months ended September 30, 2022.

Our basic and diluted earnings per share were $0.37 and $0.00 for the three months

ended September 30, 2023 and 2022, respectively.

of Operations for the six months ended September 30, 2023 and 2022

following tables summarize our results of operations for the six months ended September 30, 2023 and 2022.

incurred net loss of approximately $2.6 million for the three months ended December 31, 2023 and a net loss of approximately $0.08 million

for the three months ended December 31, 2022.

Our basic and diluted loss per share were $0.66 and $0.00 for the three months ended December

31, 2023 and 2022, respectively.

of Operations for the nine months ended December 31, 2023 and 2022

following tables summarize our results of operations for the nine months ended December 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.

Six Months Ended

September 30,

Nine Months Ended

Changes in 2023

12 unchanged sentences

$ (4,071,653 )

revenue for the six months ended September 30, 2023 decreased by approximately $2.1 million, or 47.3%, as compared with the six months

ended September 30, 2022.

The decrease was mainly due to the increase of $0.1 million in garment manufacturing business, the decrease

of $0.4 million in logistics services and $1.8 million in property management and subleasing business.

generated from our garment manufacturing business contributed approximately $0.1 million or 6.1% of our total revenue for the six months

ended September 30, 2023.

revenue for the nine months ended December 31, 2023 decreased by approximately $2.8 million, or 42.0%, as compared with the nine months

ended December 31, 2022.

The decrease was mainly due to the decrease of $0.4 million in logistics services and $2.3 million in property

management and subleasing business.

generated from our garment manufacturing business contributed approximately $0.2 million or 4.5% of our total revenue for the nine months

ended December 31, 2023.

Revenue generated from garment manufacturing business contributed approximately $0.1 million or 2.1% of our

total revenue for the six months ended September 30, 2022, respectively.

total revenue for the nine months ended December 31, 2022, respectively.

The low level of sales was mainly due to factory facilities

2 unchanged sentences

at last quarter of for the fiscal year ending 2024.

generated from our logistics services business contributed approximately $2.2 million or 91.5% of our total revenue for the six months

ended September 30, 2023.

generated from our logistics services business contributed approximately $3.4 million or 87.5% of our total revenue for the nine months

ended December 31, 2023.

Revenue generated from our logistic business contributed approximately $3.8 million or 57.5% of our total revenue

for the six months ended September 30, 2022.

generated from our property management and subleasing business was $0.06 million for the six months ended September 30, 2023.

from this business segment was $1.9 million or 41.4% of our total revenue of this business for the six months ended September 30, 2022.

Six months ended

September 30,

for the nine months ended December 31, 2022.

generated from our property management and subleasing business was $0.3 million or 8.1% of our total revenue for the nine months ended

December 31, 2023.

The revenue from this business segment was $2.7 million or 40.2% of our total revenue of this business for the nine

months ended December 31, 2022.

Nine months ended

(decrease) in

14 unchanged sentences

Gross Profit for property management and subleasing

Net revenue for epidemic prevention supplies

Net revenue for supplies corporate and others

Other and Overhead

Total cost of revenue for epidemic prevention supplies

Gross (loss) income for epidemic prevention supplies

Total cost of revenue for corporate and others

(loss) income for corporate and others

Total cost of revenue

$ (1,969,145 )

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 was approximately 17.5% of our total garment manufacturing business revenue for

the six months ended September 30, 2023, as compared with 66.7% for the six months ended September 30, 2022.

the nine months ended December 31, 2023, as compared with 19.9% for the nine months ended December 31, 2022.

The decrease in percentages

was mainly due to.

costs for our garment manufacturing business was approximately 64.2% of our total garment manufacturing business revenue for the six

months ended September 30, 2023, as compared with 22.4% for the six months ended September 30, 2022.

The increase was mainly due to.

was mainly due to the company develop new raw material suppliers..

costs for our garment manufacturing business was approximately 58.2% of our total garment manufacturing business revenue for the nine

months ended December 31, 2023, as compared with 51.7% for the nine months ended December 31, 2022.

The increase was mainly due to rising

and other expenses for our garment manufacturing business accounted for approximately 0.8% of our total garment business revenue for

the six months ended September 30, 2023, as compared with 3.9% of total garment business revenue for the six months ended September 30,

the nine months ended December 31, 2023, as compared with 3.1% of total garment business revenue for the nine months ended December 31,

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

The Company relied on a few subcontractors, which the subcontracting

fees to our largest contractor represented approximately 36.1% and 24.4% of total cost of revenues for our service segment for the six

months ended September 30, 2023 and 2022, respectively.

The increase was attributed to a decrease usage of our own logistics as compared

to the subcontractors after 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 six months ended September 30, 2023 was approximately $1.0 million as compared

with $1.3 million for the six months ended September 30, 2022.

fees to our largest contractor represented approximately 39.9% and 25.8% of total cost of revenues for our service segment for the nine months

ended December 31, 2023 and 2022, respectively.

The increase was attributed to a decrease usage of our own logistics as compared to the

subcontractors after 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 nine months ended December 31, 2023 was approximately $1.5 million as compared

with $1.9 million for the nine months ended December 31, 2022.

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

45.8% of our total service revenue for the six months ended September 30, 2023, as compared with 48.5% for the six months ended September

44.4% of our total service revenue for the nine months ended December 31, 2023, as compared with 50.1% for the nine months ended December

The decrease was primarily attributable to an increase of usage of subcontractors after the COVID-19 epidemic.

Subcontracting

fees for our service business for the six months ended September 30, 2023 decreased approximately 2.6% to $0.62 million from $0.64 million

for the six months ended September 30, 2022.

fees for our service business for the nine months ended December 31, 2023 increased approximately 32.6% to $1.2 million from $0.9 million

for the nine months ended December 31, 2022.

Subcontracting fees accounted for 35.0% and 23.3% of our total service business revenue

in the six months ended September 30, 2023 and 2022, respectively.

in the nine months ended December 31, 2023 and 2022, respectively.

The increase was primarily attributable a decrease usage of our own

1 unchanged sentence

property management and subleasing business, the cost of revenue was mainly the amortization of operating lease assets for the subleasing

The Company disposed of DY in February 2023 and acquired HX in September 2023.

Therefore, there was no revenue from this segment

in the quarter.

manufacturing business gross profit for the six months ended September 30, 2023 was approximately $23,300, as compared with approximately

$2,800 for the six months ended September 30, 2022.

manufacturing business gross profit for the nine months ended December 31, 2023 was approximately $40,433, as compared with approximately

$35,931 for the nine months ended December 31, 2022.

Gross profit accounted for 23.5% of our total garment manufacturing business revenue

for the six months ended September 30, 2023, as compared to 6.9% for the six months ended September 30, 2022.

profit in our logistics services business for the six months ended September 30, 2023 was approximately $563,000 and gross margin was

Gross profit in our logistics services business for the six months ended September 30, 2022 was approximately $707,300 and gross

for the nine months ended December 31, 2023, as compared to 25.3% for the nine months ended December 31, 2022.

profit in our logistics services business for the nine months ended December 31, 2023 was approximately $695,940 and gross margin was

Gross profit in our logistics services business for the nine months ended December 31, 2022 was approximately $1,018,453 and gross

margin was 26.6%.

The decrease of gross profit ratio was mainly because.

profit in our property management and subleasing business for the six months ended September 30, 2023 was $53,500.

It was approximately

$312,700, or 16.7% for the six months ended September 30, 2022.

Six months ended

September 30,

The decrease of gross profit ratio was mainly because the subsidiary PF used more subcontractors to proceed the orders

which increase the cost of revenue.

profit in our property management and subleasing business for the nine months ended December 31, 2023 was $69,639, or 22.4% gross margin.

It was approximately $572,329, or 21.4% for the nine months ended December 31, 2022.

The decrease was due to disposal of DY.

Nine months ended

(decrease) in

5 unchanged sentences

$ (1,817,596 )

$ (1,606,020 )

(Loss) Income from operations

$ (1,015,473 )

General and administrative expenses

selling expenses were mainly incurred for our property management and subleasing business.

It was $37,200 and approximately $35,600 for

the six months ended September 30, 2023 and 2022, respectively.

Selling expenses consisted primarily of advertisement, local transportation,

unloading charges and product inspection charges.

general and administrative expenses in our garment manufacturing business segment for the six months ended September 30, 2023 and 2022

It consisted of $13,857 for garments manufacturing

segment and approximately $118,676 for our property management and subleasing business for the nine months ended December 31, 2023.

was $60,155 for property management and subleasing business for the nine months ended December 31, 2022.

Selling expenses consisted primarily

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

general and administrative expenses in our garment manufacturing business segment for the nine months ended December 31, 2023 and 2022

was approximately $98,117 and $84,821, respectively.

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

six months ended September 30, 2023 and 2022 was approximately $388,100 and $434,800, respectively.

nine months ended December 31, 2023 and 2022 was approximately $562,696 and $654,883, respectively.

The general and administrative expenses

in our property management and subleasing business was approximately nil and $153,400 for the six months ended September 30, 2023 and

2022, respectively.

Our general and administrative expenses in our corporate office for the six months ended September 30, 2023 and 2022

in our property management and subleasing business was approximately $132,336 and $257,351 for the nine months ended December 31, 2023

and 2022, respectively.

Our general and administrative expenses in our corporate office for the nine months ended December 31, 2023 and

2022 was approximately $891,914 and $548,810, respectively.

General and administrative expenses consisted 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, 2023 increased by approximately 34.3% to $1.2 million from

$0.9 million for the six months ended September 30, 2022.

General and administrative expenses consisted 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 nine months ended December 31, 2023 increased by approximately 9.0% to $1.7 million from

$1.5 million for the nine months ended December 31, 2022.

Income from operations

from operations for the six months ended September 30, 2023 was approximately $565,900, while income from operations for the six months

ended September 30, 2022 was $116,300.

Loss from operations of approximately $41,100 and $56,700 for the six months ended September 30,

from operations for the nine months ended December 31, 2023 was approximately $1.0 million, while income from operations for the nine

months ended December 31, 2022 was $23,287.

Loss from operations of approximately $71,541 and $48,999 for the nine months ended December

31, 2023 and 2022 was attributed from our garment manufacturing segment, respectively.

Income from operations of approximately $174,200 and

$272,400 was attributed from our logistics services segment for the six months ended September 30, 2023 and 2022, respectively.

from operations of approximately $13,400 and income of $123,700 for the six months ended September 30, 2023 and 2022 was attributed from

our property management and subleasing business, respectively.

Income from operations of approximately $132,530

and $363,569 was attributed from our logistics services segment for the nine months ended December 31, 2023 and 2022, respectively.

from operations of approximately $181,372 and income of $254,934 for the nine months ended December 31, 2023 and 2022 was attributed

from our property management and subleasing business, respectively.

We incurred expenses from operations in corporate office of approximately

$685,600 and $223,100 for the six months ended September 30, 2023 and 2022, respectively.

$895,090 and $546,217 for the nine months ended December 31, 2023 and 2022, respectively.

The increase of expenses from our corporate

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

tax expense for the six months ended September 30, 2023 and 2022 was approximately $4,500 and $10,800, respectively.

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 nine months ended December 31, 2023 and 2022 was approximately $7,726 and $18,939, respectively.

The Company operates

4 unchanged sentences

No provision for income taxes

in Hong Kong has been made as Yingxi HK had no taxable income for the six months ended September 30, 2023 and 2022.

in Hong Kong has been made as Yingxi HK had no taxable income for the nine months ended December 31, 2023 and 2022.

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 QYTG and YX had no taxable income for the six months ended September 30, 2023 and 2022.

in the PRC has been made as QYTG and YX had no taxable income for the nine months ended December 31, 2023 and 2022.

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

5 unchanged sentences

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

had no United States taxable income for the six months ended

September 30, 2023 and 2022.

had no United States taxable income for the nine months ended

December 31, 2023 and 2022.

Income (Loss)

incurred net loss of approximately $1.4 million for the six months ended September 30, 2023 and a net income of approximately $0.2 million

for the six months ended September 30, 2022.

Our basic and diluted earnings per share were ($0.37) and $0.00 for the six months ended

September 30, 2023 and 2022, respectively.

incurred net loss of approximately $4.0 million for the nine months ended December 31, 2023 and a net income of approximately $0.1 million

for the nine months ended December 31, 2022.

Our basic and diluted earnings per share were ($1.0) and $0.00 for the nine months ended

December 31, 2023 and 2022, respectively.

of cash flows

cash flows information for the six months ended September 30, 2023 and 2022 is as follow:

Six months ended

September 30,

cash flows information for the nine months ended December 31, 2023 and 2022 is as follow:

Nine months ended

Net cash used in operating activities

1 unchanged sentence

$ (1,528,118 )

Net cash used in investing activities

Net cash provided by (used in) investing activities

$ (17,500,000 )

Net cash provided by financing activities

cash used in operating activities in the six months ended September 30, 2023 was nearly the same as that of the three months ended September

cash used in investing activities in the six months ended September 30, 2023 was for purchase of property and equipment.

Net cash used

in investing activities in the six months ended September 30, 2022 was for investment in debt securities.

cash provided by financing activities for the six months ended September 30, 2023 included $3.9 million released from restricted cash

and net repayment of $1.1 million to related parties.

Net cash provided by financing activities for the six months ended September 30,

2022 included $20.2 million proceeds from its public offering and $0.6 million net repayment to related parties.

cash used in operating activities in the nine months ended December 31, 2023 was $1.5 million, nearly the same as that of the nine months ended

December 31, 2022.

cash provided by investing activities in the nine months ended December 31, 2023 was consist of $0.1 million purchase of property

and equipment and long-term prepayment and $0.2 million cash from acquired investee.

Net cash used in investing activities in the

nine months ended December 31, 2022 was for investment in debt securities.

cash provided by financing activities for the nine months ended December 31, 2023 included $3.9 million released from restricted cash,

proceeds from bank borrowings of $0.2 million and net repayment of $2.7 million to related parties.

Net cash provided by financing activities

for the nine months ended December 31, 2022 included $20.2 million proceeds from its public offering and $1.0 million net repayment to

related parties.

Condition, Liquidity and Capital Resources

of September 30, 2023, we had cash on hand of approximately $1.7 million, total current assets of approximately $30.2 million and current

of December 31, 2023, we had cash on hand of approximately $0.5 million, total current assets of approximately $30.3 million and current

liabilities of approximately $5.4 million.

5 unchanged sentences

Currency Translation Risk

operations are located in 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.

operations are located in 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

In last year, RMB depreciated against the U.S.

As of September 30, 2023, the market foreign exchange rate

was RMB 7.28 to one U.S.

All of our sales are in RMB.

year, RMB depreciated against the U.S.

As of December 31, 2023, the market foreign exchange rate was RMB 7.10 to one U.S.

Our financial statements are translated into U.S.

dollars using the closing rate method.

balance sheet items are translated into U.S.

The balance sheet items are translated into

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.

The foreign currency translation gain (loss) for the six months ended September 30,

2023 and 2022 was approximately $0.09 million and $0.2 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 of equity.

currency translation gain (loss) for the nine months ended December 31, 2023 and 2022 was approximately $0.05 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 September 30, 2023 that

have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of December 31, 2023 that

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

3 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis