Item 9A. Controls and Procedures
Item
9A. Controls and Procedures
Disclosure
Controls and Procedures
We
maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the
“Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities
and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We
carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2024. Based on the evaluation
of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting,
our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective .
Management’s
Remediation Initiatives
In
an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate
the following series of measures to further strengthen the Company’s internal controls going forward:
1.
hire a reporting manager (“Internal Finance Manager”) who has the requisite relevant U.S. GAAP and SEC reporting
experience and qualifications;
2.
make an overall assessment on the current finance and accounting resources and hire additional accounting members with appropriate
levels of accounting knowledge and experience;
3.
streamline our accounting department structure and enhance our staff’s U.S. GAAP and SEC reporting requirements on a
continuous basis through internal training provided by the Internal Finance manager;
4.
participate in trainings and seminars provided by professional services firms on a regular basis to gain knowledge on regular U.S.
GAAP /SEC reporting requirements updates; and
5.
engage an external “Sarbanes-Oxley 404” consulting firm to help us implement Sarbanes-Oxley 404 internal controls
compliance together with the establishment of our internal audit function.
We
anticipate that these initiatives will be at least partially, if not fully, implemented by the end of fiscal year 2024.
Management’s
Report on Internal Control over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)).
The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally
accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the
Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of March 31,
2024 using the criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”).
A
material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented
or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of March 31, 2024
the Company determined that there were control deficiencies that constituted material weaknesses, as described below.
We
did not maintain a sufficient complement of personnel with an appropriate level of knowledge of accounting, experience, and training
commensurate with its financial reporting requirements.
58
Accordingly,
the Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual
or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.
As
a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control
over financial reporting as of March 31, 2024 based on criteria established in Internal Control- Integrated Framework issued by COSO.
Changes
in Internal Controls over Financial Reporting
There
was no change in the Company’s internal control over financial reporting period covered by this report that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Limitations
on the Effectiveness of Controls
Our
disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving
their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures or our internal
control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated,
is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further,
no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control
issues and instances of fraud, if any, within the Company have been detected.
Item
9B. Other Information
None.
Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not
applicable.
59
PART
III
Item
10. Directors, Executive Officers and Corporate Governance
DIRECTORS
AND EXECUTIVE OFFICERS
The
name, address, age and titles of our executive officers and directors are as follows:
Name
& Address
Age
Title
Date
of First Appointment
Hong
Zhida
34
Chairman
of the Board, Chief Executive Officer, President and Secretary
March
10, 2017
Huang
Chao
31
Chief
Financial Officer and Treasurer
March
8, 2019
Hong
Zhiwang
30
Director
March
13, 2019
Li
Weilin (1)(2)(3)
43
Independent
Director
April
26, 2024
Alex.
P. Hamilton (1)(2)(3)
52
Independent
Director
May
10, 2021
Xiao
Jiangping (Gary) (1)(2)(3)
46
Independent
Director
May
12, 2021
(1)
Member
of the Audit Committee
(2)
Member
of the Compensation Committee
(3)
Member
of the Nominating and Corporate Governance Committee
Hong
Zhida, Chairman, CEO, President and Secretary
Hong
Zhida received his Bachelor’s Degree in Electronic Information Science and Technology from Sun Yat-sen University in July 2013.
From June 2014 to present, he served as the Director of China Huiying Joint Supply Chain Group Co. Ltd. He was responsible for assisting
the company’s chairman to plan development strategy. From September 2013 to May 2014, he served as Head of Membership Department
of the Guangzhou Haifeng Chamber of Commerce. In that position he was responsible for the membership management of the institution. Mr.
Hong’s extensive experience in the Company which demonstrates his familiarity with the Company’s overall operations and governance
structure led to the conclusion that he should serve as a director.
60
Huang
Chao, Chief Financial Officer and Treasurer
Huang
Chao earned two bachelor’s degrees, one in marketing from Shaoguan University, China in 2014 and the other in international logistics
and trade finance from University of Northampton, United Kingdom in 2015. He earned his master’s degree in finance and investment
management from University of Liverpool, United Kingdom in 2016 to broaden and deepen his knowledge in the accounting and finance field.
After his graduation in 2016, he was appointed as a secretary to Chairman in Addentax Group Corp. He handles all Company’s filings
to ensure the Company complies with regulations and advising on good corporate governance practice. Huang Chao interacts with the directors,
general manager of each business unit, various regulatory and professional bodies such as the SEC, auditors and attorneys to ensure the
compliance. His management experiences, and profound knowledge in finance make him well positioned for his role as Chief Financial Officer
and Treasurer.
Li
Weilin, Independent Director
Li
Weilin has been serving as the information and network center director in Xinhua College of Sun Yat-sen University since 2005. Since
2015, Mr. Li has been serving as the chief of senior engineer of Computer Application & Technology program in Guangdong Polytechnic
College. From March 2019 to May 2021, Mr. Li was appointed independent director, a compensation committee member, an audit committee
member and the chairperson of the nominating and corporate governance committee of Addentax Group Corp. Mr. Li is experienced in the
field of network & system safety, image processing, data mining, business intelligence, big data management and network physical
system. Mr. Li obtained a bachelor’s degree in Computer Science & Technology and a master’s degree in Software Engineering
from Sun Yat-sen University, China in 2005 and 2011, respectively. We believe Mr. Li is qualified to be an independent director due to
his extensive experience in information technology and his prior experience in the Company which demonstrates his familiarity with the
Company’s operations and governance structure.
Hong
Zhiwang, Director
Hong
Zhiwang earned his bachelor’s degree in Automation Engineering from Beijing Institute of Technology University Zhuhai Campus, China
in 2014. Mr. Hong has been the brand marketing manager at Addentax Group Corp. since 2018 and is responsible for e-commerce marketing
covering design website, brand marketing, market investigation and development, and expanding marketing channels to develop new clients,
designing the company’s logo and registering copyrights. In 2014, he was the PDM Software Engineer for Hongfan Computer & Technology
Co., Ltd. and was responsible for developing software, on-site inspection and guidance and software maintenance, in assistance of ERP
to manage the system and create brand new demands design and in charge of R&D of PLM System, surface model design and function model
development, structure development and communications technology development. He brings to the Board deep brand marketing experience.
Alex
P. Hamilton, Independent Director
Alex
P. Hamilton obtained his B.A. in Economics from Brandeis University in 1994. Mr. Alex P. Hamilton, age 52, is currently the CEO and co-founder
of Donald Capital. He also served as the Chief Financial Officer and Director of CBD Biotech Inc. and was a Director and chairman of
the audit committee of Wunong Net Technology Company Limited (Nasdaq: WNW). Other experience includes having founded and lead, Hamilton
Laundry and Hamilton Strategy Group. From November 2013 to November 2014, Mr. Hamilton was the president of Kei Advisors. Mr. Hamilton
has been serving as an independent director and the chairman of the audit committee 0.
The
Board has determined that Mr. Hamilton satisfies the definition of “independent director” in accordance with Rule 5605(a)(2)
of the Marketplace Rules of The Nasdaq Stock Market, Inc. and Section 10(A)(m)(3) of the Securities Exchange Act of 1934, as amended.
Mr. Hamilton has accepted our appointment to be our independent director, effective on the Appointment Effective Date.
61
Xiao
iangping (Gary), Independent Director
Xiao
Jiangping (Gary) obtained a master’s degree in business administration from the Ross School of Business Management at the University
of Michigan in 2006 and a bachelor’s degree in accounting from Tsinghua University in Beijing, China, in 2000. Mr. Jiangping (Gary)
Xiao, age 46, has been the CFO at Degiulio Kitchen Design since August 2023. He was the CFO for Big Red Rooster Flow from June 2021 to
August 2023, and vice president of finance and accounting at Hilco IP Merchant Banking July 2019 to June 2021. Since December 2020, Mr.
Xiao has been serving as an independent director and the chairman of the nominating and corporate governance committee of Wunong Net
Technology Company Limited (Nasdaq: WNW). From March 2017 to March 2019, Mr. Xiao served as the chief financial officer of Professional
Diversity Network, Inc. From June 2013 to April 2016, Mr. Xiao served as the chief financial officer and financial controller of Petstages
Inc. From August 2008 to May 2013, Mr. Xiao served as the operation financial controller of the operations management group of The Jordan
Company, a private equity firm. From June 2006 to August 2008, Mr. Xiao served as a senior finance associate in the financial planning
and analysis department of United Airlines, Inc. Mr. Xiao obtained a master’s degree in business administration from the Ross School
of Business Management at the University of Michigan in 2006 and a bachelor’s degree in accounting from Tsinghua University in
Beijing, China, in 2000.
The
Board has determined that Mr. Xiao satisfies the definition of “independent director” in accordance with Rule 5605(a)(2)
of the Marketplace Rules of The Nasdaq Stock Market, Inc. and Section 10(A)(m)(3) of the Securities Exchange Act of 1934, as amended.
Mr. Hamilton has accepted our appointment to be our independent director, effective on the Appointment Effective Date.
Board
Committees
Our
board of directors has established standing committees in connection with the discharge of its responsibilities. These committees include
an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Our board of directors has adopted
written charters for each of these committees.
Audit
Committee
The
Audit Committee consists of (i) Alex P. Hamilton, who is the Chairman of the Audit Committee, (ii) Li Weilin, and (iii) Xiao Jiangping
(Gary). Each member of the Audit Committee meets the requirements for independence, including the enhanced requirements applicable to
audit committee members, and can read and understand fundamental financial statements in accordance with the applicable rules and regulations
of the SEC and the Nasdaq listing standards. In arriving at this determination, the Board has examined each Audit Committee member’s
professional experience and the nature of their employment in the corporate finance sector. The Board has also determined that Mr. Hamilton
qualifies as an “audit committee financial expert,” as defined under applicable SEC and Nasdaq listing standards.
The
Audit Committee operates pursuant to a written charter that is available on the Company’s website at: https://www.addentax.com/government.
According
to its charter, the Audit Committee consists of at least three members, each of whom shall be a non-employee director who has been determined
by the Board to meet the independence requirements of NASDAQ, and also Rule 10A-3(b)(1) of the SEC, subject to the exemptions provided
in Rule 10A-3(c). We do not have a website containing a copy of the Audit Committee Charter. The Audit Committee Charter describes the
primary functions of the Audit Committee, including the following:
●
Oversee
the Company’s accounting and financial reporting processes;
●
Oversee
audits of the Company’s financial statements;
●
Discuss
policies with respect to risk assessment and risk management, and discuss the Company’s major financial risk exposures and
the steps management has taken to monitor and control such exposures;
●
Review
and discuss with management the Company’s audited financial statements and review with management and the Company’s independent
registered public accounting firm the Company’s financial statements prior to the filing with the SEC of any report containing
such financial statements.
62
●
Recommend
to the board that the Company’s audited financial statements be included in its annual report on Form 10-K for the last fiscal
year;
●
Meet
separately, periodically, with management, with the Company’s internal auditors (or other personnel responsible for the internal
audit function) and with the Company’s independent registered public accounting firm;
●
Be
directly responsible for the appointment, compensation, retention and oversight of the work of any independent registered public
accounting firm engaged to prepare or issue an audit report for the Company;
●
Take,
or recommend that the board take, appropriate action to oversee and ensure the independence of the Company’s independent registered
public accounting firm; and
●
Review
major changes to the Company’s auditing and accounting principles and practices as suggested by the Company’s independent
registered public accounting firm, internal auditors or management.
Compensation
Committee
The
Compensation Committee evaluates, recommends, and approves policy relating to compensation and benefits of the Company’s officers
and employees. The Compensation Committee is directly responsible for, among other matters:
●
reviewing
and approving, or recommending to the board of directors to approve the compensation of our CEO and other executive officers and
directors reviewing key employee compensation goals, policies, plans and programs;
●
administering
incentive and equity-based compensation;
●
reviewing
and approving employment agreements and other similar arrangements between us and our executive officers; and
●
appointing
and overseeing any compensation consultants or advisors.
The
Compensation Committee consists of (i) Li Weilin, who is the Chairperson of the Compensation Committee (ii) Alex P. Hamilton, and (iii)
Xiao Jiangping (Gary). The Board has determined that Li Weilin, Alex P. Hamilton and Xiao Jiangping (Gary) are independent under the
applicable Nasdaq listing standards, including the enhanced requirements applicable to compensation committee members, and all current
members qualify as a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. The Board has determined
that each of the members of the Compensation Committee is an “outside director” as that term is defined in Section 162(m)
of the Revenue Code, or Section 162(m). The Compensation Committee held 1 meeting during 2023.
The
Compensation Committee operates pursuant to a written charter that is available on the Company’s website at: https://www.addentax.com/government.
The
Compensation Committee may delegate its responsibilities under its charter to one or more subcommittees as it deems appropriate from
time to time. The Compensation Committee may also employ a compensation consultant, independent legal counsel or other adviser to assist
in the evaluation of the compensation of the Company’s executive officers and its other duties.
Corporate
Governance and Nominating Committee
The
Nominating Committee is responsible for making recommendations to the Board regarding candidates for directorship, and the structure
and composition of the Company’s Board and committees of the Board. The Nominating Committee is directly responsible for, among
other matters:
●
selecting
or recommending for selection candidates for directorships;
●
evaluating
the independence of directors and director nominees;
●
reviewing
and making recommendations regarding the structure and composition of our board and the board committees;
●
developing
and recommending to the board corporate governance principles and practices;
●
reviewing
and monitoring the Company’s Code of Business Conduct and Ethics; and
●
overseeing
the evaluation of the Company’s management.
63
The
Nominating Committee consists of: (i) Xiao Jiangping (Gary), who is the Chairman of the Nominating Committee, (ii) Alex P. Hamilton,
and (ii) Li Weilin. The Board has determined that Xiao Jiangping (Gary), Li Weilin and Alex P. Hamilton are independent under the applicable
rules and regulations of Nasdaq. The Nominating Committee held 1 meeting during 2023.
The
Nominating Committee operates pursuant to a written charter that is available on the Company’s website at: https://www.addentax.com/government.
Board
Leadership Structure and Role in Risk Oversight
The
Board currently consists of five directors. Mr. Hong Zhida holds the positions of chief executive officer and chairman of the board of
the Company. The board believes that Mr. Hong Zhida’s services as both chief executive officer and chairman of the board is in
the best interest of the Company and its shareholders. Mr. Hong Zhida possesses detailed and in-depth knowledge of the issues, opportunities
and challenges facing the Company in its business and is thus best positioned to develop agendas that ensure that the Board’s time
and attention are focused on the most critical matters relating to the business of the Company. His combined role enables decisive leadership,
ensures clear accountability, and enhances the Company’s ability to communicate its message and strategy clearly and consistently
to the Company’s shareholders, employees and customers.
The
board has not designated a lead director. Given the limited number of directors comprising the Board, the independent directors call
and plan their executive sessions collaboratively and, between meetings of the Board, communicate with management and one another directly.
Under these circumstances, the directors believe designating a lead director to take on responsibility for functions in which they all
currently participate might detract from rather than enhance performance of their responsibilities as directors.
Management
is responsible for assessing and managing risk, subject to oversight by the board of directors. The board oversees our risk management
policies and risk appetite, including operational risks and risks relating to our business strategy and transactions. Various committees
of the board assist the board in this oversight responsibility in their respective areas of expertise.
Code
of Ethics
In
September 2018, we adopted a Code of Ethical Business Conduct that applies to, among other persons, members of our board of directors,
our Company’s officers including our Chief Executive Officer, employees, consultants and advisors. As adopted, our Code of Business
Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
1.
honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional
relationships;
2.
full,
fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other
public communications made by us;
3.
compliance
with applicable governmental laws, rules and regulations;
4.
the
prompt internal reporting of violations of the Code of Ethical Business Conduct to an appropriate person or persons identified in
the Code of Ethical Business Conduct; and
5.
accountability
for adherence to the Code of Ethical Business Conduct.
Our
Code of Code of Ethical Business Conduct requires, among other things, that all of our company’s senior officers commit to timely,
accurate and consistent disclosure of information; that they maintain confidential information; and that they act with honesty and integrity.
64
In
addition, our Code of Ethical Business Conduct emphasizes that all employees, and particularly senior officers, have a responsibility
for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal and state
securities laws. Any senior officer, who becomes aware of any incidents involving financial or accounting manipulation or other irregularities,
whether by witnessing the incident or being told of it, must report it to our Company. Any failure to report such inappropriate or irregular
conduct of others is to be treated as a severe disciplinary matter. It is against our Company policy to retaliate against any individual
who reports in good faith the violation or potential violation of our company’s Code of Ethical Business Conduct by another.
Recovery
of Erroneously Awarded Compensation
The
Company has adopted a clawback policy in connection with recovery of erroneously awarded compensation.
Family
Relationships
Mr.
Hong Zhida, an executive officer of the Company, and Mr. Hong Zhiwang, a director of the Company, are brothers. Apart from this, there
are no family relationships between any director or executive officer of the Company.
Item
11. Executive Compensation
The
following tables set forth certain information about compensation paid, earned or accrued for services by our Executive Officer for the
fiscal years ended March 31, 2024 and 2023:
Summary
Compensation Table
Summary Compensation Table Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock Awards
($)
Option Awards ($)
Non-Equity
Incentive Plan
Compensation
($)
Non-Qualified Deferred Compensation Earnings
($)
All Other Compensation
($)
Totals
($)
Hong Zhida
2024
$ 17,229
0
0
0
0
0
0
$ 17,229
(CEO)
2023
$ 17,229
0
0
0
0
0
0
$ 17,229
Huang Chao
2024
$ 29,143
0
0
0
0
0
0
$ 31,579
(CFO)
2023
$ 22,187
0
0
0
0
0
0
$ 29,143
There
are no current employment agreements between the Company and its officers.
Mr.
Hong Zhida is the Company’s Chief Executive Officer, President and Secretary. Mr. Hong’s compensation is $1,436 per
month. Mr. Hong may be entitled to options from time to time as authorized and approved by the Compensation Committee or the Board of
Directors.
Mr.
Huang Chao as the Company’s Chief Financial Officer and Treasurer. On April 15, 2019, the Company entered into an employment agreement
with Mr. Chao. Mr. Chao’s compensation is $2,631 per month. Mr. Chao may be entitled to options from time to time as
authorized and approved by the Compensation Committee or the Board of Directors.
65
Narrative
Disclosure to Summary Compensation Table
There
are no annuity, pension or retirement benefits proposed to be paid to the officer or director or employees in the event of retirement
at normal retirement date pursuant to any presently existing plan provided or contributed to by the Company or any of its subsidiaries,
if any.
Stock
Option Plan
On
May 28, 2024 , our Board adopted our 2024 Equity Incentive Plan (the “2024 Equity Incentive Plan”), which was
approved by our shareholders at our annual shareholders meeting on June 28, 2024. The 2024 Equity Incentive Plan gives us the ability
to grant stock options, stock appreciation rights (SARs), restricted stock and other stock-based awards to officers, directors (including
independent directors), employees or consultants of our company or of any subsidiary of our company and to non-employee members of our
advisory board or our Board or the board of directors of any of our subsidiaries. The Board and the Compensation Committee believe the
ability to grant restricted stock, stock options and make other stock-based awards under the Plan is an important factor in attracting,
stimulating and retaining qualified and distinguished personnel with proven ability and vision to serve as employees, officers, consultants
or members of the Board or advisory board of our company and our subsidiaries, and to chart our course towards continued growth and financial
success.
Grants
of Plan-Based Awards
To
date, there have been no grants or plan-based awards.
Outstanding
Equity Awards
To
date, there have been no outstanding equity awards.
Option
Exercises and Stock Vested
To
date, there have been no options exercised by our named officers.
Compensation
of Directors
Summary
Compensation Table
Name and Position
Year
Salary
($)
Bonus
($)
Stock Awards
($)
Option Awards ($)
Non-Equity
Incentive Plan
Compensation
($)
Non-Qualified Deferred Compensation Earnings
($)
All Other Compensation
($)
Totals
($)
Alex P. Hamilton
2024
$ 15,000
0
0
0
0
0
0
$ 15,000
(Independent Director)
2023
$ 7,500
0
0
0
0
0
0
$ 7,500
Li Weilin
2024
$ 0
0
0
0
0
0
0
$ 0
(Independent Director)
2023
$ 0
0
0
0
0
0
0
$ 0
Xiao Jiangping (Gary)
2024
$ 15,000
0
0
0
0
0
0
$ 15,000
(Independent Director)
2023
$ 7,500
0
0
0
0
0
0
$ 7,500
Yu Jiaxin
2024
$ 15,000
0
0
0
0
0
0
$ 15,000
(Ceased to be Independent Director since Apr. 26, 2024)
2023
$ 15,000
0
0
0
0
0
0
$ 15,000
Mr.
Li Weilin has entered into an independent director agreement with the company, pursuant to which Mr. Li will receive annual cash compensation
of $15,000 payable quarterly in advance on the first business day of each calendar quarter.
Mr.
Alex P. Hamilton has entered into an independent director agreement with the Company, pursuant to which Mr. Hamilton will receive annual
cash compensation of $15,000 payable quarterly in advance on the first business day of each calendar quarter.
Mr.
Xiao Jiangping (Gary) has entered into an independent director agreement with the Company, pursuant to which Mr. Xiao will receive annual
cash compensation of $15,000 payable quarterly in advance on the first business day of each calendar quarter.
Ms.
Yu Jiaxin has entered into an independent director agreement with the company, pursuant to which Ms. Yu will receive annual cash compensation
of $15,000 payable quarterly in advance on the first business day of each calendar quarter. She resigned to ceased to be independent
director since April 26, 2024.
Pension,
Retirement or Similar Benefit Plans
There
are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have
no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive
officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
66
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The
following table sets forth, as of July 14, 2024, certain information concerning the beneficial ownership of our common stock by (i) each
stockholder known by us to own beneficially five percent or more of our outstanding common stock or series a common stock; (ii) each
director; (iii) each named executive officer; and (iv) all of our executive officers and directors as a group, and their percentage ownership
and voting power. The column entitled “Percentage Ownership of Shares of Common Stock” is based on a total of 6,043,769 shares
of our issued and outstanding common stock.
The
information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of
the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person
is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of
the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as
to which such person has the right to acquire sole or shared voting or investment power within sixty (60) days through the conversion
or exercise of any convertible security, warrant, option, or other right. More than one (1) person may be deemed to be a beneficial owner
of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number
of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting
or investment power within sixty (60) days, by the sum of the number of shares outstanding as of such date. Consequently, the denominator
used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable
community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power
with respect to the shares shown.
Name and Address (1)
Number of
Shares
Beneficially
Owned
Percentage
Ownership of
Shares of
Common Stock
Directors and Officers
Hong Zhida
150,795
2.50 %
Hong Zhiwang
50,118
0.83 %
Huang Chao
2,572
0.04 %
Alex. P. Hamilton
-
-
Li Weilin
-
-
Xiao Jiangping (Gary)
-
-
All Officers and Directors (six persons)
203.485
3.37 %
Owner of more than 5% of Class
Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B (2)
380,390
6.29 %
Liu Lu
334,048
5.53 %
Chai Hua
330,000
5.46 %
(1)
Except
as otherwise set forth below, the address of each beneficial owner is c/o Addentax Group Corp., Kingkey 100, Block A, Room 4805,
Luohu District, Shenzhen City, China 518000.
(2)
Ayrton
Capital LLC, the investment manager to Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B, has discretionary authority
to vote and dispose of the shares held by Alto Opportunity Master Fund, SPC - Segregated Master Portfolio B and may be deemed to
be the beneficial owner of these shares. Waqas Khatri, in his capacity as Managing Member of Ayrton Capital LLC, may also be deemed
to have investment discretion and voting power over the shares held by Alto Opportunity Master Fund, SPC - Segregated Master Portfolio
B. Ayrton Capital LLC and Mr. Khatri each disclaim any beneficial ownership of these shares. The address of Ayrton Capital LLC is
55 Post Rd West, 2nd Floor, Westport, CT 06880.
67
Item
13. Certain Relationships, Related Transactions and Director Independence
During
the year ended March 31, 2024, we have related party transactions as set forth below:
Name
of Related Parties
Relationship
with the Company
Zhida
Hong
President,
CEO, and a director of the Company
Hongye
Financial Consulting (Shenzhen) Co., Ltd.
A
company controlled by CEO, Mr. Zhida Hong
Bihua
Yang
A
legal representative of XKJ
Dewu
Huang
A
legal representative of YBY
Jinlong
Huang
Management
of HSW
The
Company leases Shenzhen XKJ office rent-free from Bihua Yang.
Hongye
Financial Consulting (Shenzhen) Co., Ltd. provided guarantee to the consideration receivable of transfer of a debt security to a third
party.
The
Company had the following related party balances at the end of the years:
SCHEDULE
OF AMOUNT DUE FROM RELATED PARTY
Amount due from related party
2024
2023
Hong Zhida (1)
2,154,759
-
Bihua Yang (2)
858,133
375,092
$ 3,012,892
$ 375,092
SCHEDULE
OF RELATED PARTIES BORROWINGS
Related party borrowings
2024
2023
Zhida Hong
$ -
$ 901,110
Hongye Financial Consulting (Shenzhen) Co., Ltd.
170,967
45,841
Dewu Huang (3)
864,599
1,305,758
Jinlong Huang
111,179
131,924
$ 1,146,745
$ 2,384,633
(1)
The
increase of related party from Hong Zhida was short term loan to Hong Zhida, which is interest free and would be repaid in one year.
(2)
The
increase of related party debt from Yang Bihua was mainly due to the cash paid in advance to Yang Bihua. During year ended March
31, 2024, the Company received financial support of approximately $1.44 million from Yang Bihua and provided a short term loan of
approximately $1.92 million to Yang Bihua.
(3)
The
Company received financial support from Huang Dewu to fund company’s daily operation. The decrease mainly due to repayment
of the debt. During year ended March 31, 2024, the Company received approximately $0.9 million and repaid $1.35 million of debts
due to Huang Dewu.
The
borrowing balances of related party are unsecured, non-interest bearing and repayable on demand.
The
Board has determined that each of Li Weilin, Alex P. Hamilton and Xiao Jiangping (Gary) satisfies the definition of “independent
director” in accordance with Rule 5605(a)(2) of the Marketplace Rules of The Nasdaq Stock Market, Inc. and Section 10(A)(m)(3)
of the Securities Exchange Act of 1934, as amended.
Item
14. Principal Accountant Fees and Services
The
following table sets forth fees billed, or expected to be billed, to us by our independent registered public accounting firm for the
years ended March 31, 2024 and 2023, for (i) services rendered for the audit of our annual financial statements and the review of our
quarterly financial statements; (ii) services rendered that are reasonably related to the performance of the audit or review of our financial
statements that are not reported as “audit fees;” (iii) services rendered in connection with tax preparation, compliance,
advice and assistance; and (iv) all other services:
ACCOUNTING FEES AND SERVICES
2024
2023
Audit fees
$ 120,000
$ 155,000
Audit-related fees
-
-
Tax fees
-
-
All other fees
-
3,500
Total
$ 120,000
$ 158,500
Audit
fees consist of fees incurred for professional services rendered for the audit of financial statements, for reviews of our fiscal year
end financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with
statutory or regulatory filings or engagements. The aggregate fees in connection with services rendered by Pan-China Singapore PAC was
$120,000 for both years ended March 31, 2024 and 2023. For the year ended March 31, 2023, the Company also paid audit fees of $35,000
and other fees of $3,500 in connection with services rendered by BF Borgers CPA PC.
Our
Board pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by
the Board either before or after the respective services were rendered.
Our
Board has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for
activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
68
PART
IV
Item
15. Exhibits , Financial Statement Schedules.
The
following exhibits are included as part of this report by reference:
Exhibit
Filed
or Furnished
Incorporated
by Reference
Number
Herewith
Form
Exhibit
Date
File
No.
3.1
Articles of Incorporation
S-1
3.1
8/5/2015
333-206097
3.2
Certificate of Amendment Pursuant to NRS 78.386 and 78.390, effectuating the two for one forward stock split and increasing the authorized shares of common stock of Addentax Group Corp. from 75,000,000 to 150,000,000
8-K
3.1
7/21/2016
333-206097
3.3
Certificate of Amendment Pursuant to NRS 78.385 and 78.390, increasing the authorized shares of common stock of Addentax Group Corp. to 1,000,000,000
S-1
3.3
4/18/2019
333-230943
3.4
Certificate of Change Pursuant to NRS 78.209, effectuating the 20-for-1 reverse stock split and decreasing the authorized shares of common stock of Addentax Group Corp. from 1,000,000,000 to 50,000,000
8-K
3.1
3/5/2019
333-206097
3.5
Amended and Restated Bylaws
8-K
3.1
3/15/2019
333-206097
3.6
Certificate of Amendment to the Amended and Restated Articles of Incorporation increasing the authorized shares of common stock of Addentax Group Corp. to 250,000,000
8-K
3.1
3/23/2023
001-41478
3.7
Amendment to the Articles of Incorporation, as amended, of Addentax Group Corp. for 1-for-10 Reverse Stock Split
8-K
3.1
6/30/2023
001-41478
3.9
Stamped copy of the Certificate of Amendment to the Articles of Incorporation, as amended, of Addentax Group Corp. for 1-for-10 Reverse Stock Split
8-K
3.2
6/30/2023
001-41478
3.10
Stamped copy of Certificate of Correction to the Certificate of Amendment to the Articles of Incorporation, as amended, of Addentax Group Corp. for 1-for-10 Reverse Stock Split
8-K
3.3
6/30/2023
001-41478
4.1
Description of Securities.
X
4.2
Form of Senior Secured Convertible Note
8-K
4.1
1/4/2023
4.3
Form of PIPE Warrant
8-K
10.2
1/4/2023
4.4
Form of Placement Agent Warrant
8-K
10.8
1/4/2023
10.1
Form of Subscription Agreement
S-1
99.1
8/5/2015
333-206097
10.2
Sale and Purchase Agreement for the Acquisition of 100% of the shares and assets of Yingxi Industrial Chain Group Co., Ltd.; Dated December 26, 2016
8-K
10.1
12/28/2016
333-206097
10.3
Sale and Purchase Agreement for the Acquisition of 100% of the shares and assets of Yingxi Industrial Chain Group Co., Ltd.; Dated March 6, 2017
8-K
10.1
3/7/2017
333-206097
10.4
Independent Director Agreement with Mr. Alex P. Hamilton
8-K
10.1
5/10/2021
333-206097
10.5
Independent Director Agreement with Mr. Li Weilin
8-K
10.1
4/29/2024
001-41478
10.6
Independent Director Agreement with Xiao Jiangping (Gary)
8-K
10.1
5/13/2021
333-206097
10.7
Securities Purchase Agreement dated January 4, 2023
8-K
10.1
1/4/2023
001-41478
10.8
Form of Amendment No. 1 to Securities Purchase Agreement dated January 10, 2023
8-K
10.1
1/10/2023
001-41478
10.9
Form of Registration Rights Agreement
8-K
10.3
1/4/2023
001-41478
10.10
Form of Security and Pledge Agreement
8-K
10.4
1/4/2023
001-41478
10.11
Form of Guaranty Agreement
8-K
10.5
1/4/2023
001-41478
10.12
Form of Voting Agreement
8-K
10.6
1/4/2023
001-41478
10.13
Form of Placement Agency Agreement dated January 4, 2023
8-K
10.7
1/4/2023
001-41478
10.14
2024 Equity Incentive Plan
X
14.1
Code of Ethics
10-K/A
14.1
9/21/2018
333-206097
21.1
Subsidiaries of the Registrant.
X
23.1
Consent of Hiways Law Firm (Shenzhen)
X
23.2
Consent of independent registered public - Pan-China Singapore PAC
31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
X
31.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
X
32.1
Certifications by the Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
X
32.2
Certifications by the Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
97.1
Policy Relating to Recovery of Erroneously Awarded Compensation
8-K
99.1
10/25/2023
001-41478
101.INS
XBRL
Instance Document +
101.SCH
XBRL
Taxonomy Extension Schema Document +
101.CAL
XBRL
Taxonomy Extension Calculation Linkbase Document +
101.DEF
XBRL
Taxonomy Extension Definitions Linkbase Document +
101.LAB
XBRL
Taxonomy Extension Label Linkbase Document +
101.PRE
XBRL
Taxonomy Extension Presentation Linkbase Document +
104
Cover
Page Interactive Data File (embedded within the Inline XBRL document)
X
Filed herewith
Item
16. 10-K Summary
As
permitted, the registrant has elected not to supply a summary of information required by Form 10-K.
69
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date:
July 15 , 2024
ADDENTAX
GROUP CORP.
By:
/s/
Hong Zhida
Name:
Hong
Zhida
Title:
President,
Chief Executive Officer, Secretary and Director
Pursuant
to the requirements of the Securities Act of 1933, this report has been signed below by the following persons on behalf of the registrant
and in the capacities on the dates indicated.
Signature
Title
Date
/s/
Hong Zhida
CEO,
President, Secretary and Director
July
15 , 2024
Hong
Zhida
(Principal
Executive Officer)
/s/
Huang Chao
CFO
and Treasurer
July
15 , 2024
Huang
Chao
(Principal
Financial and Accounting Officer)
/s/
Hong Zhiwang
July
15 , 2024
Hong
Zhiwang
Director
/s/
Li Weilin
July
15 , 2024
Li
Weilin
Independent
Director
/s/
Alex P. Hamilton
July
15 , 2024
Alex
P. Hamilton
Independent
Director
/s/
Xiao Jiangping (Gary)
July
15 , 2024
Xiao
Jiangping (Gary)
Independent
Director
* /s/
Hong Zhida
Hong
Zhida
Attorney-in-Fact
70