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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-14 · 364 added, 200 removed, 258 unchanged (69% 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 months ended June 30, 2023 and 2022

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

Our discussion

includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives,

expectations, and intentions.

Actual results and the timing of events could differ materially from those anticipated in these forward-looking

statements as a result of a number of factors, including those set forth under the Risk Factors and Special Note Regarding Forward-Looking

Statements in this report.

We use words such as “anticipate,” “estimate,” “plan,” “project,”

“continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,”

“will,” “should,” “could,” “target”, “forecast” and similar expressions to

identify forward-looking statements.

We (Addentax Group Corp.) are a Nevada holding company with no material

operations of our own.

We conduct substantially all of our operations through our operating companies established in the People’s

Republic of China, or the PRC, primarily Shenzhen Qianhai Yingxi Industrial Chain Service Co., Ltd.

(“YX”), our wholly owned

subsidiary and its subsidiaries.

following discussion and analysis of our financial condition and results of operations for the three months ended September 30, 2024

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

discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans,

objectives, expectations, and intentions.

Actual results and the timing of events could differ materially from those anticipated in these

forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Special Note Regarding

Forward-Looking Statements in this report.

We use words such as “anticipate,” “estimate,” “plan,”

“project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”

“may,” “will,” “should,” “could,” “target”, “forecast” and similar

expressions to identify forward-looking statements.

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

We conduct substantially all of our operations

through our operating companies established in the People’s Republic of China, or the PRC, primarily Shenzhen Qianhai Yingxi Industrial

Chain Service Co., Ltd.

(“YX”), our wholly owned subsidiary and its subsidiaries.

We are not a Chinese operating company.

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

business operations in China.

Our holding company structure involves unique risks to investors.

Chinese regulatory authorities could disallow

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

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

Our holding company, Addentax Group Corp.,

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

We are a holding company and do not directly own any substantive business operations in China.

Our holding company structure involves

unique risks to investors.

Chinese regulatory authorities could disallow our operating structure, which would likely result in a material

change in our operations and/or the value of our common stock, including that it could cause the value of such securities to significantly

decline or become worthless.

Our holding company, Addentax Group Corp., is listed on the Nasdaq Capital Market under the symbol of “ATXG”.

We classify our businesses into three main segments:

garment manufacturing, logistics services, and property management and subleasing.

The Company previously engaged in the provision of

epidemic prevention supplies, which included manufacturing, distribution and trading of epidemic prevention supplies.

As the COVID-19

pandemic is near an endemic, the Company ceased to operate in this business in the first quarter of 2023.

The remaining assets of this

business segment were reclassified into the “Corporate and others” segment.

The corresponding items of segment information

for the earlier periods were restated to reflect the change of the new segment structure.

The Company previously engaged in the provision of epidemic prevention supplies, which included manufacturing, distribution and trading

of epidemic prevention supplies.

As the COVID-19 pandemic is near an endemic, the Company ceased to operate in this business in the first

quarter of 2023.

The remaining assets of this business segment were reclassified into the “Corporate and others” segment.

The corresponding items of segment information for the earlier periods were restated to reflect the change of the new segment structure.

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”);

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

Dongguan Au Te Si Garments Co., Ltd., a PRC company (“AOT”), (xii) Dongguan Hongxiang Commercial 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) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”);

(viii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (ix) Zhuang Hao Jia (Dongguan) Decoration Engineering

Co.,Ltd, a PRC company (“ZHJ”), (x) Dongguan Au Te Si Garments Co., Ltd., a PRC company (“AOT”), (xi) Dongguan

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

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

2 unchanged sentences

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) Zhuang Hao Jia (Dongguan) Decoration Engineering

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

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

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

(vi) Shenzhen

Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (vii) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd,

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

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 44 cities in 10 provinces and 2 municipalities in China.

6 unchanged sentences

in the garment market.

We currently have an aggregate of 56,238 square meters floor space and provide approximately 1,300

shop space to clients.

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

conduct 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.

To focus on the core businesses of the Group, the

Company dissolved one of its subsidiaries, Shenzhen Yingxi Tongda Logistic Co., Ltd, in April 2024 and received approval from RPC authorities.

As at the date of this report, the Company is in the

process of dissolving another subsidiary, ZHJ.

We currently have an aggregate of 56,238 square meters floor space and provide approximately 1,300 shop space

We conduct 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.

focus on the core businesses of the Group, the Company dissolved one of its subsidiaries, Shenzhen Yingxi Tongda Logistic Co., Ltd, in

April 2024 and received approval from RPC authorities.

at the date of this report, the Company is in the process of dissolving another subsidiary, ZHJ.

Manufacturing Business

5 unchanged sentences

delivery and courier network in China.

As of June 30, 2024, we provide logistics services to over 44 cities in approximately 10 provinces

and 2 municipalities.

As of September 30, 2024, we provide logistics services 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

3 unchanged sentences

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 and conduct the business through a wholly owned subsidiary acquired in September 2023, namely Dongguan Hongxiang Commercial

Co., Ltd., a PRC company (“HX”).

The Company conduct the business

through a wholly owned subsidiary acquired in September 2023, namely Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).

Manufacturing Business

133 unchanged sentences

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

of Operations for the three months ended June 30, 2024 and 2023

following table summarize our results of operations for the three months ended June 30, 2024 and 2023.

of Operations for the three months ended September 30, 2024 and 2023

following table summarize our results of operations for the three months ended September 30, 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.

Months Ended June 30,

Three Months Ended September 30,

Changes in 2024

compared to 2023

dollars, except for percentages)

7 unchanged sentences

$ (2,083,932 )

$ (2,728,721 )

revenue for the three months ended June 30, 2024 decreased by approximately $0.2 million, or 19.2%, as compared with the

three months ended June 30, 2023.

The decrease was mainly due to the decrease of $0.5 million in logistics services and

increase of $0.3 million in property management and subleasing business.

generated from our garment manufacturing business contributed approximately $0.09 million, or 10.2%, of our total revenue for the

three months ended June 30, 2024.

revenue for the three months ended September 30, 2024 was nearly the same as compared with the three months ended September 30, 2023.

generated from our garment manufacturing business contributed approximately $0.1 million, or 11.1%, of our total revenue for the three

months ended September 30, 2024.

Revenue generated from garment manufacturing business contributed approximately $0.1 million or 6.8%

5.1% of our total revenue for the three months ended June 30, 2023, respectively.

The low level of sales was mainly due to factory

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

We estimate the capacity

will recover at the fiscal year ending 2025.

of our total revenue for the three months ended September 30, 2023, respectively.

The low level of sales was mainly due to factory facilities

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

We estimate the capacity will recover

at the fiscal year ending 2025.

generated from our logistics services business contributed approximately $1.0 million, or 71.9%, of our total revenue for the three months

ended June 30, 2024.

ended September 30, 2024.

Revenue generated from our logistic business contributed approximately $1.2 million or 88.8% of our total revenue

for the three months ended June 30, 2023.

for the three months ended September 30, 2023.

generated from our property management and subleasing business was 0.2 million, or 17.0%, of our total revenue for the three months ended

June 30, 2024.

The revenue from this business segment was nil for the three months ended June 30, 2023.

Three months ended June 30,

September 30, 2024.

The revenue from this business segment was $0.06 million or 4.3% of our total revenue for the three months ended

September 30, 2023.

Three months ended September 30,

Increase (decrease) in

17 unchanged sentences

material costs for our garment manufacturing business were approximately 58.8% of our total garment manufacturing business revenue for

the three months ended June 30, 2024, as compared with 49.0% for the three months ended June 30, 2023.

The decrease in percentage was

mainly due to the purchase cost of the raw materials dropped.

costs for our garment manufacturing business was approximately 20.9% of our total garment manufacturing business revenue for the

three months ended June 30, 2024, as compared with 32.0% for the three months ended June 30, 2023.

the three months ended September 30, 2024, as compared with 28.9% for the three months ended September 30, 2023.

The increase in percentage

was mainly due to increased orders received.

costs for our garment manufacturing business was approximately 24.5% of our total garment manufacturing business revenue for the three

months ended September 30, 2024, as compared with 50.9% for the three months ended September 30, 2023.

We maintained a sustainable level

1 unchanged sentence

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

the three months ended June 30, 2024, as compared with 5.0% of total garment business revenue for the three months ended June 30, 2023.

the three months ended September 30, 2024, as compared with 2.9% of total garment business revenue for the three months ended September

our logistic business, we outsourced some of the business to our contractors.

We relied on a few subcontractors, of which the

subcontracting fees to our largest contractor represented approximately nil% and 35.1% of total cost of revenues for our service

segment for the three months ended September 30, 2024 and 2023, respectively.

The decrease was attributed to an increase in usage of

our own logistics as compared to the subcontractor.

We have not experienced any disputes with our subcontractors and we believe we

maintain good relationships with our contract logistics services providers.

toll and other costs for our service business for the three months ended September 30, 2024 were approximately $0.5 million as compared

with $0.5 million for the three months ended September 30, 2023.

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

53.0% of our total service revenue for the three months ended September 30, 2024, as compared with 43.3% for the three months ended September

The increase was primarily attributable to a decrease of usage of subcontractors during the quarter.

Subcontracting

fees for our service business for the three months ended September 30, 2024 decreased approximately 100.0% to $nil from $0.3 million

for the three months ended September 30, 2023.

Subcontracting fees accounted for nil% and 28.6% of our total service business revenue

in the three months ended September 30, 2024 and 2023, respectively.

The decrease was primarily attributable to a decrease of usage of

subcontractors during the quarter.

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 three months ended September 30, 2024 was $371,019,

approximately 162.3% of our total property management and subleasing business revenue, as compared with $4,610, or 7.9% of the total

property management and subleasing business revenue for the three months ended September 30, 2023.

manufacturing business gross profit for the three months ended September 30, 2024 was $17,679, as compared with $15,767 for the three

months ended September 30, 2023.

Gross profit accounted for 11.9% of our total garment manufacturing business revenue for the three months

ended September 30, 2024, as compared to 17.3% for the three months ended September 30, 2023.

The decrease of gross profit ratio was

mainly due to the increased raw material costs.

profit in our logistics services business for the three months ended September 30, 2024 was approximately $453,406 and gross margin was

Gross profit in our logistics services business for the three months ended September 30, 2023 was approximately $333,667 and gross

margin was 28.1%.

The increase of gross profit ratio was mainly because the Company re-allocated the orders received and reduced fuel

loss in our property management and subleasing business for the three months ended September 30, 2024 was $142,440.

Gross profit was

$53,453 for the three months ended September 30, 2023.

Gross loss accounted for (62.3)% of our total property management and subleasing

business revenue for the three months ended September 30, 2024, as compared to 92.1% for the three months ended September 30, 2023.

decrease of gross profit ratio was mainly because the property management and subleasing business are still in preliminary stage.

Three months ended September 30,

Increase (decrease) in

2024 compared to 2023

dollars, except for percentages)

Operating expenses:

Selling expenses

General and administrative expenses

(Loss) Income from operations

General and administrative expenses

selling expenses for our garment manufacturing business for the three months ended September 30, 2024 and 2023 was approximately $13,400

and nil, respectively.

The selling expenses for property management and subleasing business for the three months ended September 30,

2024 and 2023 was approximately $8,952 and $37,200, 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, 2024 and 2023

was approximately $2,653 and $34,400, respectively.

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

three months ended September 30, 2024 and 2023 was approximately $223,375 and $160,700, respectively.

The general and administrative

expenses in our property management and subleasing business was approximately $50,473 and nil for the three months ended September 30,

2024 and 2023, respectively.

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

2024 and 2023 was approximately $274,855 and $475,600, 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 three months ended September 30, 2024 decreased by approximately 4.2% to $1.1 million from

$1.2 million for the three months ended September 30, 2023.

from operations

from operations for the three months ended September 30, 2024 and 2023 was approximately $245,066 and $304,932, respectively.

from operations of approximately $1,622 and loss from operation of $19,000 for the three months ended September 30, 2024 and 2023, respectively,

which was attributed from our garment manufacturing segment.

Income from operations of approximately $229,558 and $172,300 was attributed

from our logistics services segment for the three months ended September 30, 2024 and 2023, respectively.

Loss from operations of approximately

$201,865 and $13,400for the three months ended September 30, 2024 and 2023, respectively, which was attributed from our property management

and subleasing business.

We incurred expenses from operations in corporate office of approximately $274,381 and $444,900 for the three

months ended September 30, 2024 and 2023, respectively.

tax expense for the three months ended September 30, 2024 and 2023 was approximately $1,062 and $3,237, respectively.

Yingxi primarily

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 progressive 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 three months ended September 30, 2024 and 2023.

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

No provision for income taxes

in the PRC has been made as QYTG and YX had no taxable income for the three months ended September 30, 2024 and 2023.

majority of our subsidiaries are governed by the Income Tax Laws of the PRC.

All Yingxi’s operating companies are subject to progressive

EIT rates from 5% to 15% in 2024.

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

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 three months ended September 30, 2024 and 2023.

incurred net loss of approximately $0.7 million and net income of $1.4 million for the three months ended September 30, 2024 and 2023,

respectively.

Our basic and diluted earnings per share were ($0.13) and $0.837 for the three months ended September 30, 2024 and 2023,

respectively.

of Operations for the six months ended September 30, 2024 and 2023

following table summarize our results of operations for the six months ended September 30, 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.

Six Months Ended September 30,

Changes in 2024

compared to 2023

dollars, except for percentages)

Cost of revenues

Operating expenses

Loss from operations

Other income, net

Fair value gain or loss

Net finance cost

Income tax expense

$ (1,942,643 )

$ (1,366,321 )

revenue for the six months ended September 30, 2024 decreased by approximately $0.2 million, or 8.2%, as compared with the six months

ended September 30, 2023.

The decrease was mainly due to the decrease of $0.7 million in logistics services, increase of $0.1 million

in garment manufacturing business and increase of $0.4 million in property management and subleasing business.

generated from our garment manufacturing business contributed approximately $0.2 million, or 10.7%, of our total revenue for the six

months ended September 30, 2024.

Revenue generated from garment manufacturing business contributed approximately $0.1 million or 6.1%

of our total revenue for the six months ended September 30, 2023, respectively.

The low level of sales was mainly due to factory facilities

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

We estimate the capacity will recover

at the fiscal year ending 2025.

generated from our logistics services business contributed approximately $1.5 million, or 66.2%, of our total revenue for the six months

ended September 30, 2024.

Revenue generated from our logistic business contributed approximately $2.2 million or 91.5% of our total revenue

for the six months ended September 30, 2023.

generated from our property management and subleasing business was 0.5 million, or 23.1%, of our total revenue for the six months ended

September 30, 2024.

The revenue from this business segment was $0.06 million for the six months ended September 30, 2023.

Six months ended September 30,

Increase (decrease) in

2024 compared to 2023

dollars, except for percentages)

Net revenue for garment manufacturing

Raw materials

Other and Overhead

Total cost of revenue for garment manufacturing

Gross profit for garment manufacturing

Net revenue for logistics services

Fuel, toll and other cost of logistics services

Subcontracting fees

Total cost of revenue for logistics services

Gross Profit for logistics services

Net revenue for property management and subleasing

Total cost of revenue for property management and subleasing

Gross Profit for property management and subleasing

Total cost of revenue

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 were approximately 53.2% of our total garment manufacturing business revenue for

the six months ended September 30, 2024, as compared with 17.9% for the six months ended September 30, 2023.

The increase in percentage

was mainly due to the increased order received.

costs for our garment manufacturing business was approximately 23.2% of our total garment manufacturing business revenue for the six

months ended September 30, 2024, as compared with 64.2% for the six months ended September 30, 2023.

We maintained a sustainable level

in wages, the decrease in portion of labor cost was mainly due to the increased in revenue.

and other expenses for our garment manufacturing business accounted for approximately 4.5% of our total garment business revenue for

the six months ended September 30, 2024, as compared with 1.8% of total garment business revenue for the six months ended September 30,

our logistic business, we outsourced some of the business to our contractors.

We relied on a few subcontractors, which the

subcontracting fees to our largest contractor represented approximately nil% and 36.1% of total cost of revenues for our service

segment for the three months ended June 30, 2024 and 2023, respectively.

The decrease was attributed to an increase usage of our own

logistics as compared to the subcontractor.

We have not experienced any disputes with our subcontractors and we believe we maintain

good relationships with our contract logistics services providers.

toll and other costs for our service business for the three months ended June 30, 2024 were approximately $0.2 million as compared with

$0.5 million for the three months ended June 30, 2023.

segment for the six months ended September 30, 2024 and 2023, respectively.

The decrease was attributed to an increase in usage of

our own logistics as compared to the subcontractor.

We have not experienced any disputes with our subcontractors and we believe we

maintain good relationships with our contract logistics services providers.

toll and other costs for our service business for the six months ended September 30, 2024 were approximately $0.8 million as compared

with $1.0 million for the six months ended September 30, 2023.

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

51.2% of our total service revenue for the three months ended June 30, 2024, as compared with 48.3% for the three months ended June 30,

52.4% of our total service revenue for the six months ended September 30, 2024, as compared with 45.8% for the six months ended September

The increase was primarily attributable to a decrease of usage of subcontractors during the quarter.

Subcontracting

fees for our service business for the three months ended June 30, 2024 decreased approximately 100.0% to $nil from $0.3 million

for the three months ended June 30, 2023.

Subcontracting fees accounted for nil% and 28.7% of our total service business revenue in

the three months ended June 30, 2024 and 2023, respectively.

fees for our service business for the six months ended September 30, 2024 decreased approximately 100.0% to $nil from $0.6 million for

the six months ended September 30, 2023.

Subcontracting fees accounted for nil% and 28.4% of our total service business revenue in the

six months ended September 30, 2024 and 2023, respectively.

The decrease was primarily attributable to a decrease of usage of subcontractors

1 unchanged sentence

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 three months ended June 30, 2024 was $0.3 million,

approximately (122.3)% of our total property management and subleasing business revenue, as compared with nil for the three months ended

June 30, 2023.

manufacturing business gross profit for the three months ended June 30, 2024 was $27,267, as compared with $7,553 for the three months ended June 30, 2023.

Gross profit accounted for 31.5% of our total garment manufacturing business revenue

for the three months ended June 30, 2024, as compared to 14.0% for the three months ended June 30, 2023.

The increase of gross profit ratio was mainly due to increased sales.

profit in our logistics services business for the three months ended June 30, 2024 was approximately $237,211 and gross margin was 48.8%.

Gross profit in our logistics services business for the three months ended June 30, 2023 was approximately $229,356 and gross margin

The increase of gross profit ratio was mainly because the Company re-allocated the orders received and reduced fuel cost.

loss in our property management and subleasing business for the three months ended June 30, 2024 was $61,883.

Gross profit was nil for

the three months ended June 30, 2023.

Gross loss accounted for 22.3% of our total property management and subleasing

business revenue for the three months ended June 30, 2024, as compared to nil% for the three months ended June 30, 2023.

of gross profit ratio was mainly because the property management and subleasing business still in preliminary stage.

months ended June 30,

(decrease) in

The cost of revenue for property management and subleasing business for the six months ended September 30, 2024 was $0.7 million,

approximately 140.3% of our total property management and subleasing business revenue, as compared with $$4,610 for the six months ended

September 30, 2023.

manufacturing business gross profit for the six months ended September 30, 2024 was $44,942, as compared with $23,300 for the six months

ended September 30, 2023.

Gross profit accounted for 19.1% of our total garment manufacturing business revenue for the six months ended

September 30, 2024, as compared to 16.1% for the six months ended September 30, 2023.

The increase of gross profit ratio was mainly due

to increased sales.

profit in our logistics services business for the six months ended September 30, 2024 was approximately $690,617 and gross margin was

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

margin was 25.8%.

The increase of gross profit ratio was mainly because the Company re-allocated the orders received and reduced fuel

loss in our property management and subleasing business for the six months ended September 30, 2024 was $204,323.

Gross profit was

$53,500 for the six months ended September 30, 2023.

Gross loss accounted for (40.3)% of our total property management and

subleasing business revenue for the six months ended September 30, 2024, as compared to gross profit of 16.7% for the six months

ended September 30, 2023.

The decrease of gross profit ratio was mainly because the property management and subleasing business are

still in preliminary stage.

Six months ended September 30,

Increase (decrease) in

2024 compared to 2023

2 unchanged sentences

Selling expenses

and administrative expenses

Income from operations

General and administrative expenses

selling expenses for our garment manufacturing business for the three months ended June 30, 2024 and 2023 was approximately $82,603 and

nil, respectively.

The selling expenses for property management and subleasing business for the three months ended June 30, 2024 and

2023 was approximately $56,757 and nil, 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 June 30, 2024 and 2023 was

approximately $8,310 and $29,708, respectively.

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

months ended June 30, 2024 and 2023 was approximately $216,250 and $227,423, respectively.

The general and administrative expenses in

our property management and subleasing business was approximately $85,793 and nil for the three months ended June 30, 2024 and 2023,

$ (1,281,318 )

$ (1,205,677 )

(Loss) Income from operations

General and administrative expenses

selling expenses for our garment manufacturing business for the six months ended September 30, 2024 and 2023 was approximately $96,002

and nil, respectively.

The selling expenses for property management and subleasing business for the six months ended September 30, 2024

and 2023 was approximately $65,709 and $37,200, 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, 2024 and 2023

was approximately $10,963 and $64,100, respectively.

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

six months ended September 30, 2024 and 2023 was approximately $439,625 and $388,100, respectively.

The general and administrative expenses

in our property management and subleasing business was approximately $136,266 and nil for the six months ended September 30, 2024 and

2023, respectively.

Our general and administrative expenses in our corporate office for the three months ended June 30, 2024 and 2023 was approximately

$257,898 and $240,727, 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 three months ended June 30, 2024 increased by approximately 14.1% to $568,251 from $497,858

for the three months ended June 30, 2023.

Our general and administrative expenses in our corporate office for the six months ended September 30, 2024 and 2023

was approximately $532,753 and $716,300, 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, 2024 decreased by approximately 4.2% to $1.1 million from

$1.2 million for the six months ended September 30, 2023.

from operations

from operations for the three months ended June 30, 2024 and 2023 was approximately $505,016 and $260,949, respectively.

operations of approximately $63,645 and $22,155 for the three months ended June 30, 2024 and 2023, respectively, which was

attributed from our garment manufacturing segment.

Income from operations of approximately $20,879 and $1,934 was attributed from

our logistics services segment for the three months ended June 30, 2024 and 2023, respectively.

Loss from operations of

approximately $204,433 and nil for the three months ended June 30, 2024 and 2023, respectively, which was attributed from our

property management and subleasing business.

We incurred expenses from operations in corporate office of approximately

$257,817 and $240,728 for the three months ended June 30, 2024 and 2023, respectively.

tax expense for the three months ended June 30, 2024 and 2023 was approximately $484 and $1,264, respectively.

Yingxi primarily operates in

the PRC and files tax returns in the PRC jurisdictions.

from operations for the six months ended September 30, 2024 and 2023 was approximately $750,082 and $565,881, respectively.

operations of approximately $62,023 and $41,100 for the six months ended September 30, 2024 and 2023, respectively, which was attributed

from our garment manufacturing segment.

Income from operations of approximately $250,437 and $174,200 was attributed from our logistics

services segment for the six months ended September 30, 2024 and 2023, respectively.

Loss from operations of approximately $406,298 and

$13,400 for the six months ended September 30, 2024 and 2023, respectively, which was attributed from our property management and subleasing

We incurred expenses from operations in corporate office of approximately $532,198 and $685,600 for the six months ended September

30, 2024 and 2023, respectively.

tax expense for the six months ended September 30, 2024 and 2023 was approximately $1,546 and $4,501, respectively.

Yingxi primarily

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,

2 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 June 30, 2024 and 2023.

in Hong Kong has been made as Yingxi HK had no taxable income for the six months ended September 30, 2024 and 2023.

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

No provision for income taxes

in the PRC has been made as QYTG and YX had no taxable income for the three months ended June 30, 2024 and 2023.

in the PRC has been made as QYTG and YX had no taxable income for the six months ended September 30, 2024 and 2023.

majority of our subsidiaries are governed by the Income Tax Laws of the PRC.

All Yingxi’s operating companies are subject to

progressive EIT rates from 5% to 15% in 2024.

All Yingxi’s operating companies are subject to progressive

EIT rates from 5% to 15% in 2024.

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

Addentax Group Corp.

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

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

had no United States taxable income for the three months

ended June 30, 2024 and 2023.

incurred net loss of approximately $1.2 million and $2.7 million for the three months ended June 30, 2024 and 2023, respectively.

basic and diluted earnings per share were ($0.25) and ($0.83) for the three months ended June 30, 2024 and 2023, respectively.

No provision 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, 2024 and 2023.

incurred net loss of approximately $1.9 million and $1.4 million for the six months ended September 30, 2024 and 2023, respectively.

Our basic and diluted earnings per share were ($0.36) and ($0.37) for the six months ended September 30, 2024 and 2023, respectively.

of cash flows

cash flows information for the three months ended June 30, 2024 and 2023 is as follow:

Three months ended June 30,

Net cash used in operating activities

cash flows information for the three months ended September 30, 2024 and 2023 is as follow:

Six months ended

September 30,

Net cash provided by (used in) operating activities

$ (1,579,486 )

Net cash used in investing activities

Net cash provided by financing activities

cash used in operating activities in the three months ended June 30, 2024 was approximately $0.2 million as compared to $1.1 million

in the three months ended June 30, 2023, which was approximately $0.9 million less than that of the three months ended June 30,

The decrease was mainly due to (i) net loss adjusted to operating cash flow for the three months ended June 30, 2024 was $0.1

million less than that of the three months ended June 30, 2023;

(ii) the movement of operating assets and liabilities of the three

months ended June 30, 2024 resulted in cash outflow of approximately $0.1 million, which was $0.8 million less than that of

cash used in investing activities for the three months ended June 30, 2024 was approximately $0.3 million, which was mainly due to

Net cash (used in) provided by financing activities

cash provided by operating activities in the six months ended September 30, 2024 was approximately $0.5 million as compared to net cash

used in operating activities of $1.6 million in the six months ended September 30, 2023, which was approximately $2.1 million more than

that of the six months ended September 30, 2023.

The increase was mainly due to (i) net loss adjusted to operating cash flow for the

six months ended September 30, 2024 was $0.8 million less than that of the six months ended September 30, 2023;

(ii) the movement of

operating assets and liabilities of the three months ended September 30, 2024 resulted in cash inflow of approximately $0.1 million,

which was $1.2 million more than that of 2023;.

cash used in investing activities for the six months ended September 30, 2024 was approximately $0.1 million, which was mainly due to

purchase of property, plant and equipment.

Net cash provided by financing activities for the three months ended June

30, 2024 was approximately $0.3 million as compared to $1.0 million in the three months ended June 30, 2023, which was approximately $0.7

million less than the three months ended June 30, 2023.

The decrease was mainly because in the three months ended June 30, 2024, the Company

received proceeds of $0.7 million from a private placement, while the Company had release of restricted cash of $1.4 million in the three

months ended June 30, 2023.

cash used in financing activities for the three months ended September 30, 2024 was approximately $0.4 million as compared to $1.0 million

in the three months ended September 30, 2023, which was approximately $2.7 million net cash provided by financing activities in the six

months ended September 30, 2023.

In the six months ended September 30, 2024, the Company received proceeds of $0.7 million from a private

placement and paid $1.0 million cash advance to related parties, while the Company had release of restricted cash of $3.85 million in

the six months ended September 30, 2023.

Condition, Liquidity and Capital Resources

of June 30, 2024, we had cash on hand of approximately $0.9 million, total current assets of approximately $29.3 million and current

of September 30, 2024, we had cash on hand of approximately $0.8 million, total current assets of approximately $28.3 million and current

liabilities of approximately $2.5 million.

We currently finance our operations from revenue, fund raising from our initial public offering

We currently finance our operations from revenue, fund raising from public offering

and private placement proceeds and capital contributions from our chief executive officer, Mr.

Hong 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.

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 debt

or equity financing.

Currency Translation Risk

4 unchanged sentences

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

As of June 30, 2024, the market foreign exchange rate was RMB 7.27 to one

As of September 30, 2024, the market foreign exchange rate was RMB 7.02 to

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.

foreign currency translation gain (loss) for the three months ended June 30, 2024 and 2023 was approximately $0.01 million and $0.09

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

The foreign currency translation gain (loss) for the six months ended September 30, 2024 and 2023 was approximately $(0.05) million

and $0.09 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 June 30, 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.

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, 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

1 unchanged sentence

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What changed 10-Q

Item 2. Management’s Discussion and Analysis