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Item 2. Management’s Discussion and Analysis

2025-11-14 compared with 2025-08-14 · 356 added, 267 removed, 189 unchanged (77% 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, 2025 and 2024

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.

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

2025 and 2024 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.

(“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 PRC, primarily YX, our wholly-owned subsidiary and its subsidiaries.

Chinese operating company.

We conduct substantially all

of our operations through our operating companies established in the PRC, primarily 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 investors will not directly hold any equity interests in our operating companies.

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.

Therefore, our investors will not directly hold any equity interests in our operating companies.

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”.

9 unchanged sentences

(iii) Qianhai Yingxi Textile & Garments Co., Ltd., a PRC company;

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”);

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

July 2025, Shenzhen Yingxi Industrial Chain Services Co., Ltd, previously known as Shenzhen Qianhai Yingxi Industrial Chain Services

Co., Ltd, changed its name to Shenzhen Yingxi Industrial Chain Services Co., Ltd due to a relocation of its registered address.

change did not result in any material change to the subsidiary’s operations, financial position, or results.

Subsidiaries” refers to, collectively, YX, HSW, YS, PF, XKJ, AOT and HX.

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

indirectly wholly owned by Addentax Group Corp.

refers to Yingxi Textile & Garments Co., Ltd or “QYTG”, a wholly foreign-owned enterprise in China, which is indirectly

wholly owned by Addentax Group Corp.

August 2025, Yingxi Textile & Garments Co., Ltd ,

previously known as Qianhai Yingxi Textile & Garments Co., Ltd , changed its name to

Yingxi Textile & Garments Co., Ltd due to a relocation of its registered address.

name change did not result in any material change to the subsidiary’s operations, financial position, or results.

garment manufacturing business consists of sales made principally to wholesalers located in the PRC.

2 unchanged sentences

and delivery requirements for our customers.

We conduct our garment manufacturing operations through five wholly owned

subsidiaries, namely HSW, YS and AOT, which are located in the Guangdong

province, China.

May 2025, the Company disposed of AOT

to the management of AOT.

We conduct our garment manufacturing operations through three wholly-owned subsidiaries,

namely HSW, YS and AOT , which are located in the Guangdong province, China.

May 2025, the Company disposed of AOT to the management of AOT.

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

2 unchanged sentences

us to maximize our capacity and maintain flexibility while reducing capital expenditures and the costs of keeping drivers during slow

We conduct our logistic operations through two wholly owned subsidiaries, namely XKJ and PF, which are located in the Guangdong province, China.

Our property management and subleasing

business provides subleasing of shops and property management services to garment wholesalers and retailers in the garment market.

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

conduct our property management and subleasing operation through a wholly owned subsidiary acquired in September 2023, HX, which is located

in the Guangdong province, China.

We conduct our logistic operations through two wholly-owned subsidiaries, namely XKJ and PF, which are located in the Guangdong

province, China.

property management and subleasing business provides subleasing of shops and property management services to garment wholesalers and

retailers 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.

We conduct our property management and subleasing operation through a wholly-owned subsidiary acquired in September

2023, HX, which is located in the Guangdong province, China.

On July 1, 2025, the Company disposed of HX to its management.

As of date of disposal, the net assets

of HX was approximately $6,972.

of disposal, the net assets of HX was $6,972.

The consideration was $13,829, resulting in an income of $6,857 from disposal.

4 unchanged sentences

Services Business

The business objective and future plan for our logistics

services segment is to establish an efficient logistics system and to build a nationwide delivery and courier network in China.

June 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 profit in the year 2025.

Property Management and Subleasing Business

The business objective of our property management

and subleasing segment was to integrate resources in a shopping mall, develop develop e-commerce and the Internet celebrity economy increase

the value of the stores in that area.

The Company conducted the business through a wholly

owned subsidiary, HX.

business objective and future plan for our logistics services segment is to establish an efficient logistics system and to build a nationwide

delivery and courier network in China.

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

2 municipalities.

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

in the year 2025.

Management and Subleasing Business

business objective of our property management and subleasing segment was to integrate resources in a shopping mall, develop e-commerce

and the Internet celebrity economy and increase the value of the stores in that area.

Company conducted the business through a wholly-owned subsidiary, HX.

In July 2025, the Company disposed of HX to the management of HX.

The property management and subleasing

business was then classified as discontinued operation.

The property management and subleasing business was then classified as discontinued operation.

Manufacturing Business

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

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

Services Business

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

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

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

Management and Subleasing Business

68 unchanged sentences

value of lease payments over the lease term.

As most of the leases do not provide an implicit rate, The Company generally use the incremental

As most of the leases do not provide an implicit rate, the Company generally uses the incremental

borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement

57 unchanged sentences

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

of Operations for the three months ended June 30, 2025 and 2024

following table summarizes our results of operations for the three months ended June 30, 2025 and 2024.

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.

Three Months Ended June 30,

Changes in 2025

of Operations for the three months ended September 30, 2025 and 2024

following table summarizes our results of operations for the three months ended September 30, 2025 and 2024.

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 September 30,

dollars, except for percentages)

from operations

value gain or loss

from continuing operations

(loss) from discontinued operations

revenue for the three months ended September 30, 2025 decreased by approximately $0.3 million, or 26.3%, as compared with the three months

ended September 30, 2024.

The decrease was mainly due to the decrease of $0.1 million in garment manufacturing business revenue and decrease

of $0.2 million in logistics services revenue.

generated from our garment manufacturing business contributed approximately $0.01 million, or 1.6%, of our total revenue for the three

months ended September 30, 2025.

By comparison, revenue generated from garment manufacturing business contributed approximately $0.1

million or 11.1% of our total revenue for the three months ended September 30, 2024.

The low level of sales was mainly due to a decrease

in order volume and fierce market competition.

generated from our logistics services business contributed approximately $0.8 million, or 98.4%, of our total revenue for the three months

ended September 30, 2025.

By comparison, revenue generated from our logistic business contributed approximately $1.0 million or 71.9%

of our total revenue for the three months ended September 30, 2024.

months ended September 30,

(decrease) in

compared to 2024

dollars, except for percentages)

Cost of revenues

Operating expenses

revenue for garment manufacturing

cost of revenue for garment manufacturing

profit for garment manufacturing

revenue for logistics services

toll and other cost of logistics services

Subcontracting

cost of revenue for logistics services

profit for logistics services

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 49.8% of our total garment manufacturing business revenue for

the three months ended September 30, 2025, as compared with 58.8% for the three months ended September 30, 2024.

The decrease in percentage

was mainly due to a reduction in the costs of the raw materials.

costs for our garment manufacturing business was nil for the three months ended September 30, 2025, as compared with 24.5% for the three

months ended September 30, 2024.

There was no production during the three months ended September 30, 2025 as we procured products from external manufacturers for resale instead of manufacturing.

and other expenses for our garment manufacturing business was nil for the three months ended September 30, 2025, as compared with 4.8%

of total garment business revenue for the three months ended September 30, 2024.

There was no production during the three months ended

September 30, 2025.

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

We relied on a few contractors, and the contracting

fees to our largest contractor represented approximately 16.0% ($0.09 million) and nil% of total cost of revenues for our service segment

for the three months ended September 30, 2025 and 2024, respectively.

The increase was attributed to the use of contractors.

not experienced any disputes with our contractors and we believe we maintain good relationships with our contract logistics services

toll and other costs for our logistics services business for the three months ended September 30, 2025 were approximately $0.5 million

as compared with $0.5 million for the three months ended September 30, 2024.

Fuel, toll and other costs for our logistics services business

accounted for approximately 62.4% of our total service revenue for the three months ended September 30, 2025, as compared with 53.0%

for the three months ended September 30, 2024.

The increase in percentage was primarily attributable to an increased use of contractors

during the quarter.

manufacturing business gross profit for the three months ended September 30, 2025 was $6,491, as compared with $17,679 for the three

months ended September 30, 2024.

Gross profit accounted for 50.2% of our total garment manufacturing business revenue for the three months

ended September 30, 2025, as compared to 47.0% for the three months ended September 30, 2024.

The increase of gross profit ratio was

mainly due to the procurement of products from external manufacturers for resale instead of manufacturing.

profit in our logistics services business for the three months ended September 30, 2025 was $218,656 and gross margin was 27.1%.

profit in our logistics services business for the three months ended September 30, 2024 was $453,406 and gross margin was 47.0%.

decrease of gross profit ratio was mainly due to a combination of cost and market factors:

significantly higher toll expenses;

competitive “low-margin, high-volume” pricing strategy adopted to maintain market share amid intense economic competition,

despite year-over-year revenue growth in the 2025 period.

months ended September 30,

(decrease) in

compared to 2024

dollars, except for percentages)

and administrative expenses

Income from operations

General and administrative expenses

selling expenses for our garment manufacturing business for the three months ended September 30, 2025 and 2024 were $4,643 and $13,400,

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, 2025 and 2024

were $4,569 and $2,653, respectively.

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

ended September 30, 2025 and 2024 were $155,397 and $223,375, respectively.

Our general and administrative expenses in our corporate

office for the three months ended September 30, 2025 and 2024 were $510,384 and $274,855, 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, 2025 increased by approximately 34.3% to $670,352 from $499,193

for the three months ended September 30, 2024.

from operations

from operations for the three months ended September 30, 2025 and 2024 was $449,848 and $245,066, respectively.

Loss from operations

Other income, net

Fair value gain or loss

Net finance cost

Income tax expense

in our garment manufacturing segments was $2,723 and income from operation of $1,622 for the three months ended September 30, 2025

and 2024, respectively.

The increase in losses was mainly due to the decrease in revenue.

Income (loss) from operations in our

logistics services segment was $63,258 and $229,558 for the three months ended September 30, 2025 and 2024, respectively.

decrease in income was mainly due to decreased sales.

We incurred expenses from operations in corporate office of $510,383 and

$274,381 for the three months ended September 30, 2025 and 2024, respectively.

tax expense for the three months ended September 30, 2025 and 2024 was $70 and $1,062, respectively.

YX 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 Seychelles, 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, 2025 and 2024.

and YX were incorporated in the PRC and is subject to the PRC Enterprise Income Tax (EIT) rate of 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, 2025 and 2024.

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

All YX’s operating companies are subject to progressive

EIT rates from 5% to 15% in 2025.

The preferential tax rates will expire 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, 2025 and 2024.

incurred net loss of approximately $0.1 million and net loss of approximately $0.7million for the three months ended September 30, 2025

and 2024, respectively.

Our basic and diluted loss per share were ($0.01) and ($0.13) for the three months ended September 30, 2025 and

2024, respectively.

of Operations for the six months ended September 30, 2025 and 2024

following table summarizes our results of operations for the six months ended September 30, 2025 and 2024.

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 September 30,

dollars, except for percentages)

Cost of revenues

from operations

value gain or loss

from continuing operations

(loss) from discontinued operations

$ (1,942,643 )

Total revenue for the three months ended June 30,

2025 increased by approximately $0.1 million, or 15.3%, as compared with the three months ended June 30, 2024.

The increase was mainly

due to the increase of $0.3 million in logistics services revenue.

Revenue generated from our garment manufacturing business contributed approximately

$0.02 million, or 2.0%, of our total revenue for the three months ended June 30, 2025.

By comparison, revenue generated from garment manufacturing

business contributed approximately $0.09 million or 10.2% of our total revenue for the three months ended June 30, 2024.

The low level

of sales was mainly due to a decrease in order volume and fierce market competition

Revenue generated from our logistics services business contributed approximately

$0.8 million, or 82.2%, of our total revenue for the three months ended June 30, 2025.

By comparison, revenue generated from our logistic

business contributed approximately $0.5 million or 57.2% of our total revenue for the three months ended June 30, 2024.

Revenue generated from our property management and subleasing business

was $0.15 million, or 15.8%, of our total revenue for the three months ended June 30, 2025.

The revenue from this business segment was

$0.3 million, or 32.7% for the three months ended June 30, 2024.

Three months ended June 30,

Increase (decrease) in

revenue for the six months ended September 30, 2025 decreased by $38,962, or 2.3%, as compared with the six months ended September 30,

The decrease was mainly due to the increase of $0.16 million in logistics services revenue and a decrease of $0.20 million in garment

manufacturingrevenue.

generated from our garment manufacturing business contributed $32,831, or 2.0%, of our total revenue for the six months ended September

By comparison, revenue generated from garment manufacturing business contributed approximately $0.2 million or 10.7% of our

total revenue for the six months ended September 30, 2024.

The low level of sales was mainly due to a decrease in order volume and fierce

market competition.

generated from our logistics services business contributed approximately $1.6 million, or 98.0%, of our total revenue for the six months

ended September 30, 2025.

By comparison, revenue generated from our logistic business contributed approximately $1.5 million or 66.2%

of our total revenue for the six months ended September 30, 2024.

months ended September 30,

(decrease) in

compared to 2024

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

revenue for garment manufacturing

cost of revenue for garment manufacturing

profit for garment manufacturing

revenue for logistics services

toll and other cost of logistics services

Subcontracting

cost of revenue for logistics services

profit for logistics services

cost of revenue

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

Raw material costs for our garment manufacturing business were approximately

35.3% of our total garment manufacturing business revenue for the three months ended June 30, 2025, as compared with 43.5% for the three

months ended June 30, 2024.

The decrease in percentage was mainly due to a reduction in the costs of the raw materials.

Labor costs for our garment manufacturing business

was approximately 40.8% of our total garment manufacturing business revenue for the three months ended June 30, 2025, as compared with

20.9% for the three months ended June 30, 2024.

We maintained a sustainable level in wages.

The increase in portion of labor cost against

revenue was mainly due to the decrease in revenue.

Overhead and other expenses for our garment manufacturing

business accounted for approximately 6.2% of our total garment business revenue for the three months ended June 30, 2025, as compared

with 4.1% of total garment business revenue for the three months ended June 30, 2024.

For our logistic services business, we outsourced

some of the business to our contractors.

We relied on a few contractors, and the contracting fees to our largest contractor represented

approximately 6.0% ($0.05 million) and nil% of total cost of revenues for our service segment for the three months ended June 30, 2025

and 2024, respectively.

material costs for our garment manufacturing business were approximately 40.9% of our total garment manufacturing business revenue for

the six months ended September 30, 2025, as compared with 53.2% for the six months ended September 30, 2024.

The decrease in percentage

was mainly due to a reduction in the costs of the raw materials.

costs for our garment manufacturing business was approximately 24.8% of our total garment manufacturing business revenue for the six

months ended September 30, 2025, as compared with 23.2% for the six months ended September 30, 2024.

We maintained a sustainable level

The increase in portion of labor cost against revenue was mainly due to the decrease in revenue.

and other expenses for our garment manufacturing business accounted for approximately 3.8% of our total garment business revenue for

the six months ended September 30, 2025, as compared with 4.5% of total garment business revenue for the six months ended September 30,

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

We relied on a few contractors, and the contracting

fees to our largest contractor represented approximately 7.8% ($0.09 million) and nil% of total cost of revenues for our service segment

for the six months ended September 30, 2025 and 2024, respectively.

The increase was attributed to the use of contractors.

We have not experienced any disputes with our contractors

and we believe we maintain good relationships with our contract logistics services providers.

Fuel, toll and other costs for our logistics services

business for the three months ended June 30, 2025 were approximately $0.6 million as compared with $0.2 million for the three months ended

June 30, 2024.

Fuel, toll and other costs for our logistics services business accounted for approximately 70.8% of our total service revenue

for the three months ended June 30, 2025, as compared with 51.2% for the three months ended June 30, 2024.

The increase was primarily

attributable to a increased use of contractors during the quarter.

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

assets for the subleasing business.

The cost of revenue for property management and subleasing business for the three months ended June

30, 2025 was $0.3 million, approximately (219.2)% of our total property management and subleasing business revenue, as compared with $0.3

million, or (122.3)% for the three months ended June 30, 2024.

manufacturing business gross profit for the three months ended June 30, 2025 was $3,523, as compared with $27,267 for the three months

ended June 30, 2024.

Gross profit accounted for 17.7% of our total garment manufacturing business revenue for the three months ended

June 30, 2025, as compared to 31.5% for the three months ended June 30, 2024.

The decrease of gross profit ratio was mainly due to a

decline in segment revenue, primarily driven by reduced sales on the Taobao platform, which resulted in less efficient absorption of

fixed and variable costs across operations.

profit in our logistics services business for the three months ended June 30, 2025 was approximately $186,891 and gross margin was 23.2%.

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

experienced any disputes with our contractors and we believe we maintain good relationships with our contract logistics services providers.

toll and other costs for our logistics services business for the six months ended September 30, 2025 were approximately $1.1 million

as compared with $0.8 million for the six months ended September 30, 2024.

Fuel, toll and other costs for our logistics services business

accounted for approximately 66.6% of our total service revenue for the six months ended September 30, 2025, as compared with 52.4% for

the six months ended September 30, 2024.

The increase was primarily attributable to an increased use of contractors during the quarter

ended September 30, 2025.

manufacturing business gross profit for the six months ended September 30, 2025 was $10,014, as compared with $44,942 for the six months

ended September 30, 2024.

Gross profit accounted for 30.5% of our total garment manufacturing business revenue for the six months ended

September 30, 2025, as compared to 19.1% for the six months ended September 30, 2024.

The increase of gross profit ratio was mainly due

to the procurement of products from external manufacturers for resale

instead of manufacturing.

profit in our logistics services business for the six months ended September 30, 2025 was $405,547 and gross margin was 25.1%.

profit in our logistics services business for the six months ended September 30, 2024 was $690,617 and gross margin was 47.6%.

The decrease of gross profit ratio was mainly due to a combination of cost and market factors:

significantly higher toll expenses;

and a competitive “low-margin, high-volume” pricing strategy adopted to maintain market share amid intense economic competition,

a competitive “low-margin, high-volume” pricing strategy adopted to maintain market share amid intense economic competition,

despite year-over-year revenue growth in the 2025 period.

Gross loss in our property management and subleasing business for the three

months ended June 30, 2025 was $(184,354).

Gross loss was $(61,883) for the three months ended June 30, 2024.

Gross loss accounted for

(119.2)% of our total property management and subleasing business revenue for the three months ended June 30, 2025, as compared to 22.3%

for the three months ended June 30, 2024.

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

business was still in its preliminary stages and centered around a new building.

In order to incentivize tenants, rental rates were reduced but are expected to improve over time.

Three months ended June 30,

Increase (decrease) in

months ended September 30,

(decrease) in

compared to 2024

dollars, except for percentages)

Operating expenses:

Selling expenses

General and administrative expenses

(Loss) Income from operations

and administrative expenses

$ (1,220,284 )

$ (1,076,097 )

Income from operations

General and administrative expenses

selling expenses for our garment manufacturing business for the three months ended June 30, 2025 and 2024 was approximately $6,661

selling expenses for our garment manufacturing business for the six months ended September 30, 2025 and 2024 were $11,304

and $96,002, respectively.

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

2025 and 2024 was approximately $46,846 and $56,757, 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, 2025 and 2024 were

approximately $26,450 and $8,310, respectively.

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

months ended June 30, 2025 and 2024 were approximately $200,372 and $216,250, respectively.

The general and administrative expenses in our property management and subleasing business were approximately $41,131

and $ 85,793 for the three months ended June 30, 2025 and 2024,

respectively.

Our general and administrative expenses in

our corporate office for the three months ended June 30, 2025 and 2024 were approximately $311,806 and $257,898, respectively.

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

general and administrative expenses for the three months ended June 30, 2025 increased by approximately 2.0% to $579,759 from $568,251

for the three months ended June 30, 2024.

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, 2025 and 2024

were $31,019 and $10,963, respectively.

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

six months ended September 30, 2025 and 2024 were $355,769 and $439,625, respectively.

Our general and administrative expenses in our

corporate office for the six months ended September 30, 2025 and 2024 were $822,192 and $532,753, 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, 2025 increased by approximately 23.4% to $1.2 million from

$1.0 million for the six months ended September 30, 2024.

from operations

Loss from operations for the three months

ended June 30, 2025 and 2024 was approximately $627,207 and $505,016, respectively.

Loss from operations in our garment

manufacturing segments was $29,587 and $63,645 for the three months ended June 30, 2025 and 2024, respectively.

The decrease in

losses was mainly due to implementing operational cost-saving measures.

Income (loss) from operations in our logistics services

segment was approximately $(13,481) and $20,879 for the three months ended June 30, 2025 and 2024, respectively.

The increase in

income was mainly due to increased sales.

Loss from operations in our property management and subleasing business was $272,331 and

$204,433 for the three months ended June 30, 2025 and 2024, respectively.

The increase in loss was mainly due to the decreased rental rates.

incurred expenses from operations in corporate office of approximately $311,807 and $257,817 for the three months ended June 30,

from operations for the six months ended September 30, 2025 and 2024 was $804,723 and $750,082, respectively.

Loss from operations in

our garment manufacturing segments was $32,310 and $62,023 for the six months ended September 30, 2025 and 2024, respectively.

in losses was mainly due to implementing operational cost-saving measures.

Income (loss) from operations in our logistics services segment

was $49,777 and $250,437 for the six months ended September 30, 2025 and 2024, respectively.

The decrease in income was mainly due to

decreased sales.

We incurred expenses from operations in corporate office of $822,190and $532,198 for the six months ended September

30, 2025 and 2024, respectively.

Income tax expense for the three months ended June

30, 2025 and 2024 was approximately $764 and $465, respectively.

Addentax incorporated in the US is dormant ( No

income, no expenses except for listing/ administrative expenses).

Addentax has no current US tax.

All the taxable income are generated

by the foreign subsidiaries and the income tax computation is disclosed in Note 12

Income tax expense for the six months ended September 30, 2025 and

2024 was $834 and $1,527, respectively.

YX primarily operates in the PRC and files tax returns in the PRC jurisdictions.

Yingxi Industrial Chain Group Co., Ltd was incorporated

in the Republic of Seychelles and, under the current laws of Seychelles, is not subject to income taxes.

Yingxi 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 June 30, 2025 and 2024.

QYTG and YX were incorporated in the PRC and is subject

to the PRC Enterprise Income Tax (EIT) rate of 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, 2025 and 2024.

The majority of our subsidiaries are governed by the

Income Tax Laws of the PRC.

All YX’s operating companies are subject to progressive EIT rates from 5% to 15% in 2025.

The preferential

tax rates will expire at end of year 2025.

Addentax Group Corp.

entity and is subject

to the United States federal income tax.

No provision for income taxes in the United States has been made as Addentax Group Corp.

no United States taxable income for the three months ended June 30, 2025 and 2024.

We incurred net income of approximately $0.4 million

and net loss of approximately $1.2 $ million for the three months ended June 30, 2025 and 2024, respectively.

Our basic and diluted loss

per share were ($0.06) and ($0.25) for the three months ended June 30, 2025 and 2024, respectively.

Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of Seychelles, 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 six months ended September 30, 2025 and 2024.

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

No provision for income taxes

in the PRC has been made as QYTG and YX had no taxable income for the six months ended September 30, 2025 and 2024.

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

All YX’s operating companies are subject to progressive

EIT rates from 5% to 15% in 2025.

The preferential tax rates will expire 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 six months ended September 30, 2025 and 2024.

incurred net loss of approximately $0.5 million and $1.9 million for the six months ended September 30, 2025 and 2024, respectively.

Our basic and diluted loss per share were ($0.06) and ($0.36) for the six months ended September 30, 2025 and 2024, respectively.

of cash flows

cash flows information for the three months ended June 30, 2025 and 2024 is as follow:

months ended June 30,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash used in operating activities in the three

months ended June 30, 2025 was approximately $0.3 million as compared to $0.2 million in the three months ended June 30, 2024, which was

approximately $0.1 million less than that of the three months ended June 30, 2024.

The decrease was mainly due to (i) net income adjusted

to operating cash flow for the three months ended June 30, 2025 was $0.3 million more than that of the three months ended June 30, 2024;

(ii) the movement of operating assets and liabilities in the three months ended June 30, 2025 resulted in cash outflow of approximately

$0.5 million, which was $0.4 million less than that of the corresponding period in 2024;.

Net cash used in investing activities for the three

months ended June 30, 2025 was approximately $0.08 million, which was mainly due to purchase of property, plant and equipment and disposal

of subsidiaries.

Net cash provided

by financing activities for the three months ended June 30, 2025 was approximately $0.6 million as compared to $0.3 million in the

three months ended June 30, 2024, which was approximately $0.3 million less than the three months ended June 30, 2025.

was mainly because in the three months ended June 30, 2025, the Company had release of restricted cash of $1.3 million, paid net

cash advance of $0.9 million to related parties, and received net proceeds from bank loans of $0.1 million.

While in the three

months ended June 30, 2024, the Company received proceeds from a private placement of $0.7 million, paid $0.5 million net cash

advance to related parties, and received net proceeds from bank loans of $0.1 million.

Financial Condition, Liquidity and Capital Resources

As of June 30, 2025, we had cash on hand of approximately

$0.5 million, total current assets of approximately $30.0 million and current liabilities of approximately $4.9 million.

finance our operations from revenue, fund raising from our initial public offering and private placement proceeds and capital contributions

from our chief executive officer, Mr.

In the event that the Company requires additional

funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives,

cash flows information for the six months ended September 30, 2025 and 2024 is as follow:

months ended September 30,

cash (used in) provided by operating activities

cash used in investing activities

cash provided by (used in) financing activities

cash used in operating activities in the six months ended September 30, 2025 was approximately $0.9 million as compared to cash of $0.5

million provided by operating activities in the six months ended September 30, 2024, which was approximately $1.5 million less than that

of the six months ended September 30, 2024.

The decrease was mainly due to (i) net income adjusted to operating cash flow for the six

months ended September 30, 2025 was $0.4 million more than that of the six months ended September 30, 2024;

(ii) the movement of operating

assets and liabilities in the six months ended September 30, 2025 resulted in cash outflow of approximately $1.2 million, which was $1.1

million more than that of the corresponding period in 2024;.

cash used in investing activities for the six months ended September 30, 2025 was approximately $0.27 million, which was $0.15 million

more than the six months ended September 30, 2024.

The cash outflow was mainly due to purchase of property, plant and equipment of $0.12

million and cash decrease of $0.16 million in disposal of subsidiaries.

cash provided by financing activities for the six months ended September 30, 2025 was approximately $1.4 million as compared to cash

used in financing activities of $0.4 million in the six months ended September 30, 2024, which was approximately $1.8 million less than

the six months ended September 30, 2025.

The increase was mainly because in the six months ended September 30, 2025, the Company had

release of restricted cash of $2.7 million, paid net cash advance of $1.0 million to related parties, and payment of $0.39 million for

redemption of convertible notes.

While in the six months ended September 30, 2024, the Company released restricted cash of $1.3 million,

paid $0.9 million net cash advance to related parties, and received net proceeds from bank loans of $0.1 million.

Condition, Liquidity and Capital Resources

of September 30, 2025, we had cash on hand of approximately $0.4 million, total current assets of approximately $27.8 million and current

liabilities of approximately $1.1 million.

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

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

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, Mr.

Hong has indicated the intent and ability to provide additional equity financing.

Foreign Currency Translation Risk

Our operations are located in China, which may give

rise to significant foreign currency risks from fluctuations and the degree of volatility in foreign exchange rates between the U.S.

and the Chinese Renminbi (“RMB”).

Currency Translation Risk

operations are located in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility

in foreign exchange rates between the U.S.

dollar and the Chinese Renminbi (“RMB”).

All of our sales are in RMB.

In the past years, RMB continued to appreciate against the

As of June 30, 2025, the market foreign exchange rate was RMB 7.17 to one U.S.

Our financial statements are translated

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

As of September 30, 2025, the market foreign exchange rate was RMB 7.12 to

Our financial statements are translated into U.S.

dollars using the closing rate method.

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.

The foreign currency translation gain (loss) for the

three months ended June 30, 2025 and 2024 was approximately $(0.04) million and $0.01 million, respectively.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements (as that

term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of June 30, 2025 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.

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

The foreign currency translation gain (loss) for the six months ended September 30, 2025 and 2024 was approximately $(0.08) million

and $(0.05) million, respectively.

Sheet Arrangements

have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of September 30, 2025 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