What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-07-15 compared with 2023-06-29 · 279 added, 287 removed, 181 unchanged (76% of the section changed)

26 unchanged sentences

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

We classify our businesses into three segments:

We classify our businesses into three main segments:

garment manufacturing,

logistics services, property management and subleasing, and .

logistics services, and property management and subleasing.

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

2 unchanged sentences

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

(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 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;

(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) 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 (“HX”).

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) 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.

(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) Zhuang Hao Jia (Dongguan) Decoration Engineering

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

1 unchanged sentence

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 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.

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 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,

logistics business consists of delivery and courier services covering 44 cities in 10 provinces and 2 municipalities in China.

5 unchanged sentences

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.

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

in the garment market.

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

garment market.

In February 2023, the Company disposed of DY to an independent third party at fair value in February, 2023.

our property management and subleasing operation through a wholly owned subsidiary acquired in September 2023, namely Dongguan Hongxiang

Commercial Co., Ltd., a PRC company (“HX”), which is located in the Guangdong province, China.

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, 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.

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, 2024, we provide logistic service to over 44 cities in approximately 10 provinces

and 2 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.

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

revenue in our third and fourth quarters.

These trends primarily result from the timing of seasonal garment manufacturing shipments and

holiday periods in the logistic segment.

In February 2023, the Company disposed

of DY to an independent third party at fair value and conduct the business through a wholly owned subsidiary acquired in September 2023,

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

Manufacturing Business

generally receive more purchase orders during our second and third quarters and fewer manufacture orders during May and June.

Services Business

generally receive more delivery orders in our third and fourth quarters and are more vulnerable to shipping delays in the PRC during

Chinese New Year due to traffic and port congestion, border crossing delays and customs clearance issues.

Management and Subleasing Business

is no significant seasonality in our business.

manufacturing business

our new customers, we generally require orders placed to be backed by advances or deposits.

38 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 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.

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.

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

30 unchanged sentences

basis over the lease term.

receivable, net

receivable, net are stated at the historical carrying amount net of allowance for doubtful accounts.

receivables are classified as financial assets subsequently measured at amortized cost.

Account receivables are recognized when the Company

becomes a party to the contractual provisions of the receivables.

They are measured, at initial recognition, at fair value plus transaction

costs, if any and are subsequently measured at amortized cost.

The amortized cost is the amount recognized on the receivable initially,

minus principal repayments, plus cumulative amortization (interest) using the effective interest method of any difference between the

initial amount and the maturity amount, adjusted for any loss allowance.

loss allowance for expected credit losses is recognized on account receivables and is updated at each reporting date.

The Company determines

the expected credit losses provisions based on ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of

Credit Losses on Financial Instruments (‘‘ASC 326’’) using a modified retrospective approach which did not have

a material impact on the opening balance of accumulated deficit.

To determine expected credit losses on account receivables, the Company

will consider the historic credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions,

and an assessment of both the current and forecasted direction of conditions at the reporting date, including the time value of money,

where appropriate.

loss allowance is calculated on a collective basis for all trade and other receivables in totality.

An impairment gain or loss is recognized

in profit or loss with a corresponding adjustment to the carrying amount of account receivables, through use of a loss allowance account.

The impairment loss is included in operating expenses as a movement in credit loss allowance.

are written off when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic

prospect of recovery, e.g., when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings.

written off may still be subject to enforcement activities under the Company’s recovery procedures, considering legal advice where

Any recoveries made are recognized in profit or loss.

issued and adopted accounting pronouncements

June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on

Financial Instruments.

This standard requires a financial asset (or group of financial assets) measured at amortized cost basis to be

presented at the net amount expected to be collected.

The allowance for credit losses is a valuation account that is deducted from the

amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial

This standard will be effective for the Company on April 1, 2023.

The Company is currently evaluating the impact the adoption

of this ASU will have on its consolidated financial statements.

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.

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.

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, 2024 and 2023

following tables summarize our results of operations for the years ended March 31, 2024 and 2023.

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 2024 compared to 2023

2 unchanged sentences

Cost of revenues

(10,627,379 )

Gross profit (loss)

5 unchanged sentences

Income tax expense

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,

$ (3,109,418 )

$ (4,429,075 )

revenue for the year ended March 31, 2024 significantly decreased by approximately $2.8 million, or approximately 35.1%, as compared

with the year ended March 31, 2023.

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 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

generated from our garment manufacturing business contributed approximately $0.2 million, or approximately 4.5%, of our total revenue

for the year ended March 31, 2024.

Revenue generated from the segment contributed approximately $0.2 million, or approximately 2.2%,

of our total revenue for the year ended March 31, 2023.

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

in sub-leasing rate of the property.

Cost of revenue

The low amount of sales was mainly due to insufficient

customer volume, we cannot receive as large order quantity from remaining customers as before while new developed customer still at the

generated from our logistics services business contributed approximately $4.3 million, or approximately 84.3%, of our total revenue for

the year ended March 31, 2024.

Revenue generated from the segment contributed approximately $4.6 million, or approximately 58.2%, of

our total revenue for the year ended March 31, 2023.

The decrease of approximately $0.3 million was mainly due to market volatility.

generated from our property management and subleasing business contributed approximately $0.6 million, or approximately 11.3%, of our

total revenue for the year ended March 31, 2024.

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.

The decrease of approximately $2.5 million

was mainly due to the disposal of DY.

Increase (decrease) in 2024 compared to 2023

1 unchanged sentence

Net revenue for garment manufacturing

$ (2,347,891 )

Raw materials

15 unchanged sentences

Total cost of revenue

$ (4,524,270 )

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.

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.

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

materials cost for our garment manufacturing business was approximately 14.6% of our total garment manufacturing business revenue in

the year ended March 31, 2024, as compared with approximately 16.0% in the year ended March 31, 2023.

The decrease in raw materials cost

for our garment manufacturing business was mainly due to decrease of manufacturing during renovation

of the factory.

costs for our garment manufacturing business were approximately 56.7% of our total garment manufacturing business revenue in the year

ended March 31, 2024, as compared with 54.7% in the year ended March 31, 2023.

The increase in labor costs for our garment manufacturing

business was mainly due to the increase of sub-contracting business in AOT.

and other expenses for our garment manufacturing business accounted for approximately 1.0% and 3.9% of our total garment manufacturing

business revenue for the years ended March 31, 2024 and 2023, respectively.

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

Our subcontractors are contract logistic service

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

42.0% and 25.2% of total cost of revenues for our logistics services segment for the years ended March 31, 2024 and 2023, 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, 2024 was approximately $1.9 million, as compared with $2.4

million for the year ended March 31, 2023.

Fuel, toll and other costs for our logistics business accounted for approximately 43.3% of

our total service revenue for the year ended March 31, 2024, as compared with approximately 52.6% for the year ended March 31, 2023.

Subcontracting

fees for our logistics business for the year ended March 31, 2024 increased to approximately $1.5 million from $1.1 million for the year

ended March 31, 2023, representing an increase of approximately 33.0%.

Subcontracting fees accounted for 34.9% and 23.2% of our total

logistics business revenue in the years ended March 31, 2024 and 2023, respectively.

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

The cost of revenue for property management and subleasing business for the year ended March 31, 2024 was $0.5 million, approximately

81.4% of our total property management and subleasing business revenue, as compared with $2.4 million, approximately 78.9% of total property

management and subleasing business revenue for the year ended March 31, 2023.

profit of garment manufacturing business for the year ended March 31, 2024 was approximately $63,544, as compared with approximately

$0.2 million for the year ended March 31, 2023.

Gross profit ratio was approximately 27.7% of revenue of the segment, as compared with

approximately 25.5% for the year ended March 31, 2023.

profit of our logistics services business for the year ended March 31, 2024 was approximately $0.9 million and gross profit ratio was

approximately 21.8%.

Gross profit of the segment for the year ended March 31, 2023 was approximately $1.1 million and gross profit ratio

was approximately 24.2%.

The decrease in the gross profit ratio was mainly because we did not have enough delivery orders to fill the

trucks every time which increased our cost.

profit of our property management and subleasing business for the year ended March 31, 2024 was approximately $0.1 million, representing

approximately 18.6% of our total property management and subleasing business revenue.

Gross profit in our property management and subleasing

business for the year ended March 31, 2023 was $0.7 million, or 21.1% of our total property management and subleasing business revenue.

Changes in 2024

7 unchanged sentences

Loss from operations

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.

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.

$ (1,131,196 )

General and administrative expenses

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

It was $83,987 for property management and

subleasing business and $46,617 for garments manufacturing business for the year ended March 31, 2024.

It was approximately $78,769 for

property management and subleasing business for the year ended March 31, 2023.

Selling expenses consist primarily of local transportation,

unloading charges and product inspection charges.

general and administrative expenses in our garment manufacturing segment for the years ended March 31, 2024 and 2023 were approximately

$160,800 and $113,208, respectively.

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

31, 2024 and 2023 was approximately $766,960 and $832,722, respectively.

The general and administrative expenses in our property management

and subleasing business were approximately $310,134 and $306,040 for the years ended March 31, 2024 and 2023.

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.

expenses in our corporate office for the years ended March 31, 2024 and 2023 were approximately $961,771 and $973,237, respectively.

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

1 unchanged sentence

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.

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,

general and administrative expenses for the year ended March 31, 2024 decreased approximately 4.9% to approximately $2.1 million from

approximately $2.2 million for the year ended March 31, 2023.

from operations

from operations for the years ended March 31, 2024 and 2023 was approximately $1.1 million and $0.5 million, respectively.

operations of approximately $143,872 and $68,215 was attributed from our garment manufacturing segment for the years ended March 31,

2024 and 2023, respectively.

Income from operations of approximately $179,450 and $284,911 was attributed from our logistics services

segment for the years ended March 31, 2024 and 2023, respectively.

(Loss) / Income from operations of $(201,746) and $267,359 was attributed

from our property management and subleasing business for the years ended March 31, 2024 and 2023.

We incurred general and administrative

expenses in corporate office of approximately $965,028 and approximately $946,970 for the years ended March 31, 2024 and 2023, respectively.

tax expense for the years ended March 31, 2024 and 2023 was $11,605 and $22,143, respectively.

The Company operates in the PRC and files

tax returns in the PRC jurisdictions.

Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of the British Virgin Islands,

is not subject to income taxes.

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, 2024 and 2023.

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, 2024 and 2023.

operating companies are governed by the Income Tax Laws of the PRC and subject to progressive EIT rate from 5% to 15% in year ended March

The preferential tax rates will be expired at the end of year 2025.

The Company’s parent entity,

Addentax Group Corp.

Income taxes of the PRC companies were $11,605 and $22,143

for the year ended March 31, 2024 and 2023, respectively.

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

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, 2024 and 2023.

incurred a net loss of approximately $3.1 million and a net profit of approximately $1.3 million for the years ended March 31, 2024 and

2023, respectively.

Our basic and diluted (loss) earnings per share were $(0.71) and $0.04 for the year ended March 31, 2024 and 2023,

respectively.

of cash flows

cash flows information for the years ended March 31, 2024 and 2023 is as follow:

Net cash used in operating activities

$ (1,569,159 )

Net cash used in investing activities

Net cash provided by (used in) investing activities

$ (21,168,153 )

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

cash used in operating activities in the year ended March 31, 2024 decreased by approximately $1.1 million compared with that of the

year ended March 31, 2023.

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.

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

ended March 31, 2024 was approximately $0.8 million less than the amount of the fiscal year ended March 31, 2023.

The movement of operating

assets and liabilities of the year ended March 31, 2024 resulted in cash inflow of approximately $0.5 million compared to cash outflow

of approximately $1.5 million in the movement of operating assets and liabilities of the year ended March 31, 2023.

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.

cash provided by investing activities for the year ended March 31, 2024 was approximately $0.09 million, compared to cash used of $21.2

million in investing activities for the year ended March 31, 2023.

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 a cash decrease of approximately

$1.2 million in disposal of one subsidiary in property management and subleasing segment.

cash provided by financing activities for the year ended March 31, 2024 was approximately $21.3 million less than the year ended March

It was mainly because in the year ended March 31 2023, 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.

Condition, Liquidity and Capital Resources

of March 31, 2024, we had cash on hand of approximately $0.8 million and restricted cash of approximately $2.8 million, total current

assets of approximately $29.2 million and current liabilities of approximately $4.6 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.

Zhida (the “CEO”).

the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations

as well as to achieve our strategic objectives, the CEO has indicated the intent and ability to provide additional equity financing.

Currency Translation Risk

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.

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

All of our sales are in

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

As of March 31, 2024, the market foreign exchange rate had decreased to RMB7.22

Our financial statements are translated into U.S.

dollars using the closing rate method.

The balance sheet items are translated

The balance sheet items

are translated into U.S.

dollars using the exchange rates at the respective balance sheet dates.

The capital and various reserves are translated at historical

exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate

for the period.

All translation adjustments are included in accumulated other comprehensive income in the statement of equity.

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.

The capital and various reserves are

translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at

the average exchange rate for the period.

All translation adjustments are included in accumulated other comprehensive income in the statement

The foreign currency translation gain (loss) for the years ended March 31, 2024 and 2023 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, 2024 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.

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