ADDENTAX GROUP CORP. 10-Q

Item 1. Financial Statements. ADDENTAX GROUP CORP. FINANCIAL STATEMENTS For the six months ended September 30, 2025 and 2024 TABLE OF CONTENTS Condensed Consolidated Balance sheets as of September 30, 2025 and March 31, 2025 (unaudited) F-2 Condensed Consolidated Statements of Income and Comprehensive Income for the six months ended September 30, 2025 and 2024 (unaudited) F-3 Condensed Consolidated Statements of Changes in Equity for the six months ended September 30, 2025 and 2024 (unaudited) F-4 Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2025 and 2024 (unaudited) F-5 Notes to Condensed Consolidated Financial Statements for the six months ended September 30, 2025 and 2024 (unaudited) F-6 – F-15 F- 1 ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In U.S. Dollars, except share data or otherwise stated) (UNAUDITED) September 30, 2025 March 31, 2025 ASSETS CURRENT ASSETS Cash and cash equivalents $ 445,726 $ 324,953 Restricted cash 10,756 2,750,000 Accounts receivables, net 776,559 929,817 Debt securities held-to-maturity 17,500,000 17,500,000 Inventories 172,386 166,874 Prepayments and other receivables 3,494,701 3,638,347 Advances to suppliers 227,202 198,494 Amount due from related party 5,186,933 4,283,129 Total current assets 27,814,263 29,791,614 NON-CURRENT ASSETS Plant and equipment, net 367,424 387,997 Operating lease right of use asset - 18,722,277 Long-term prepayments 25,288 265,449 Total non-current assets 392,712 19,375,723 TOTAL ASSETS $ 28,206,975 $ 49,167,337 LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loan $ 643,194 $ 640,878 Accounts payable 36,547 53,199 Amount due to related parties 159,286 161,594 Advances from customers 36,590 332,492 Accrued expenses and other payables 267,278 1,858,198 Operating lease liability current portion - 905,958 Total current liabilities 1,142,895 3,952,319 NON-CURRENT LIABILITIES Convertible debts - 2,900,160 Derivative liabilities 1,191,178 2,772,350 Operating lease liability - 17,810,700 Total non-current liabilities 1,191,178 23,483,210 TOTAL LIABILITIES $ 2,334,073 $ 27,435,529 EQUITY Common stock ($ 0.001 par value, 250,000,000 shares authorized, 11,715,348 and 6,043,769 shares issued and outstanding at September 30 and March 31, 2025, respectively) $ 11,715 $ 6,044 Additional paid-in capital 39,948,903 35,240,981 Accumulated Deficit ( 14,159,065 ) ( 13,663,790 ) Statutory reserve 37,020 37,422 Accumulated other comprehensive loss 34,329 111,151 Total equity 25,872,902 21,731,808 TOTAL LIABILITIES AND EQUITY $ 28,206,975 $ 49,167,337 See accompanying notes to the unaudited condensed consolidated financial statements. F- 2 ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In U.S. Dollars, except share data or otherwise stated) 2025 2024 2025 2024 Three months ended September 30, Six months ended September 30, 2025 2024 2025 2024 REVENUES $ 820,692 $ 1,112,899 $ 1,647,046 $ 1,686,008 COST OF REVENUES ( 595,545 ) ( 641,819 ) ( 1,231,485 ) ( 950,450 ) GROSS PROFIT 225,147 471,080 415,561 735,558 OPERATING EXPENSES Selling and marketing ( 4,643 ) ( 13,399 ) ( 11,304 ) ( 96,002 ) General and administrative ( 670,352 ) ( 499,193 ) ( 1,208,980 ) ( 980,095 ) Total operating expenses ( 674,995 ) ( 512,592 ) ( 1,220,284 ) ( 1,076,097 ) INCOME (LOSS) FROM OPERATIONS ( 449,848 ) ( 41,512 ) ( 804,723 ) ( 340,539 ) Fair value gain or loss ( 452,983 ) ( 531,614 ) 465 ( 397,397 ) Interest income 285 309 572 677 Interest expenses ( 12,074 ) ( 57,905 ) ( 595,093 ) ( 905,601 ) Other income, net 82,832 84,137 436,483 66,096 (LOSS) INCOME BEFORE INCOME TAX EXPENSE ( 831,788 ) ( 546,585 ) ( 962,296 ) ( 1,576,764 ) INCOME TAX EXPENSE ( 70 ) ( 1,062 ) ( 834 ) ( 1,527 ) LOSS FROM CONTINUING OPERATIONS, NET OF INCOME TAXES ( 831,858 ) ( 547,647 ) ( 963,130 ) ( 1,578,291 ) Income (loss) on discontinued operations 729,021 ( 173,885 ) 467,855 ( 364,352 ) NET (LOSS) INCOME ( 102,837 ) ( 721,532 ) ( 495,275 ) ( 1,942,643 ) Foreign currency translation gain ( 34,786 ) ( 59,460 ) ( 76,822 ) ( 45,050 ) TOTAL COMPREHENSIVE INCOME (LOSS) $ ( 137,623 ) $ ( 780,992 ) $ ( 572,097 ) $ ( 1,987,693 ) LOSS PER SHARE FROM CONTINUING OPERATIONS - Basic and diluted ( 0.11 ) ( 0.10 ) ( 0.12 ) ( 0.29 ) EARNINGS (LOSS) PER SHARE FROM DISCONTINUED OPERATIONS - Basic and diluted 0.09 ( 0.03 - 0.06 ( 0.07 ) Weighted average number of shares outstanding – Basic and diluted 7,869,104 5,360,143 7,869,104 5,360,143 See accompanying notes to the unaudited condensed consolidated financial statements. F- 3 ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In U.S. Dollars, except share data or otherwise stated) Shares Amount capital Unrestricted reserve loss Equity Retained earnings Accumulated Additional (accumulated deficit) other Common Stock paid-in Statutory comprehensive Total Shares Amount capital Unrestricted reserve loss Equity BALANCE AT JULY 1, 2024 6,043,769 $ 6,044 $ 35,157,009 $ ( 9,790,301 ) $ 37,020 $ 77,427 $ 25,487,199 Additional paid-in capital from conversion of convertible debts - - 83,972 - - - 83,972 Foreign currency translation - - - - - ( 59,460 ) ( 59,460 ) Net income for the period - - - ( 721,532 ) - - ( 721,532 ) BALANCE AT SEPTEMBER 30, 2024 6,043,769 $ 6,044 $ 35,240,981 $ ( 10,511,833 ) $ 37,020 $ 17,967 $ 24,790,179 BALANCE AT JULY 1, 2025 10,090,963 $ 10,091 $ 39,099,581 $ ( 14,056,228 ) $ 37,020 $ 69,115 $ 25,159,579 Issuance of new shares 1,624,385 1,624 68,377 - - - 70,001 - Additional paid-in capital from conversion of convertible debts - - 780,945 - - - 780,945 Foreign currency translation - - - - - ( 34,786 ) ( 34,786 ) Net income for the period - - - ( 102,837 ) - - ( 102,837 ) BALANCE AT SEPTEMBER 30, 2025 11,715,348 $ 11,715 $ 39,948,903 $ ( 14,159,065 ) $ 37,020 $ 34,329 $ 25,872,902 BALANCE AT APRIL 1, 2024 5,383,769 $ 5,384 $ 34,510,869 $ ( 8,569,190 ) $ 37,020 $ 63,017 $ 26,047,100 Issuance of new shares 660,000 660 646,140 - - - 646,800 Additional paid-in capital from conversion of convertible debts - - 83,972 - - - 83,972 Foreign currency translation - - - - - ( 45,050 ) ( 45,050 ) Net income for the period - - - ( 1,942,643 ) - - ( 1,942,643 ) BALANCE AT SEPTEMBER 30, 2024 6,043,769 $ 6,044 $ 35,240,981 $ ( 10,511,833 ) $ 37,020 $ 17,967 $ 24,790,179 BALANCE AT APRIL 1, 2025 6,043,769 $ 6,044 $ 35,240,981 $ ( 13,663,790 ) $ 37,422 $ 111,151 $ 21,731,808 Balance 6,043,769 $ 6,044 $ 35,240,981 $ ( 13,663,790 ) $ 37,422 $ 111,151 $ 21,731,808 Issuance of new shares 5,671,579 5,671 - - - Additional paid-in capital from conversion of convertible debts - - 4,643,592 - - - 4,643,592 Apropriation for Statutory reserve - - - - ( 402 ) - ( 402 ) Foreign currency translation - - - - - ( 76,822 ) ( 76,822 ) Net income for the period - - - ( 495,275 ) - - ( 495,275 ) BALANCE AT SEPTEMBER 30, 2025 11,715,348 $ 11,715 $ 39,948,903 $ ( 14,159,065 ) $ 37,020 $ 34,329 $ 25,872,902 Balance 11,715,348 $ 11,715 $ 39,948,903 $ ( 14,159,065 ) $ 37,020 $ 34,329 $ 25,872,902 See accompanying notes to the unaudited condensed consolidated financial statements. F- 4 ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. Dollars, except share data or otherwise stated) 2025 2024 Six Months Ended September 30 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 495,275 ) $ ( 1,942,643 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 451,653 365,733 Non-cash financial cost 572,449 878,228 Stock-Based Compensation Expense 70,001 - Investment income ( 364,583 ) 330,000 Fair value gain or loss ( 454 ) 397,398 ) Gain on debts extinguishment ( 8,979 ) - Loss from sale of property and equipment - 43,081 Loss on disposal of subsidiaries 18,004 334,135 Changes in operating assets and liabilities Accounts receivable 115,442 489,599 Inventories ( 5,512 ) ( 137,062 ) Advances to suppliers ( 60,178 ) ( 50,236 ) Other receivables ( 565,684 ) ( 74,993 ) Accounts payables ( 2,134 ) ( 280,124 ) Accrued expenses and other payables ( 766,719 ) 134,732 ) Advances from customers 74,451 41,150 ) Net cash used in operating activities $ ( 967,518 ) $ 528,998 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment and intangible assets ( 116,446 ) ( 107,432 ) Cash decreased in disposal of subsidiaries ( 155,563 ) ( 8,219 Net cash used in investing activities $ ( 272,009 ) $ ( 115,651 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from related party borrowings 16,228 151,574 Repayment of related party borrowings ( 21,625 ) ( 273,632 ) Proceeds from bank borrowings 386,200 695,343 Repayment of bank borrowings ( 382,438 ) ( 683,638 ) Cash advance to related parties ( 2,160,313 ) ( 2,962,753 ) Repayment from related parties 1,177,098 2,010,740 Proceeds from issue of ordinary shares - 646,800 Redemption of convertible debt ( 390,000 ) - Release of restricted cash 2,739,244 - Net cash provided by financing activities $ 1,364,394 $ ( 415,566 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 124,867 ( 2,219 Effect of exchange rate changes on cash and cash equivalents ( 4,094 ) ( 3,422 Cash and cash equivalents, beginning of the period 324,953 816,186 CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 445,726 $ 810,545 Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 21,882 $ 26,731 Cash paid during the period for income tax $ 834 $ 1,546 See accompanying notes to the unaudited condensed consolidated financial statements. F- 5 ADDENTAX GROUP CORP. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND BUSINESS ACQUISITIONS Addentax Group Corp. and its subsidiaries (“ATXG” or the “Company”) are engaged in the business of garment manufacturing, providing logistic services, property leasing and management services in the People’s Republic of China (“PRC” or “China”). 2. BASIS OF PRESENTATION In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are eliminated in consolidation. However, the results of operations included in such financial statements may not necessarily be indicative of annual results. The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on June 30 2025 (“2024 Form 10-K”). 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates. Stock-Based Compensation The compensation expense for all share-based payment awards made to employees and directors, including stock options and restricted stock units (“RSUs”) is measured and recognized based on the fair value of the awards on the date of grant. The compensation expense, net of estimated forfeitures, is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award. The fair value of RSUs is determined based on the closing market price of our common stock on the date of grant. There is no change in the accounting policies for the six months ended September 30, 2025. Recently issued accounting pronouncements Accounting for Convertible Instruments: In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s consolidated financial statements. F- 6 4. DISPOSITION OF SUBSIDIARIES AND DISCONTINUED OPERATIONS In May 2025, the Company disposed of Dongguan Aotesi Garments Co., Ltd., (“AOT”). The Company will carry on the garment manufacturing segment business through other subsidiaries. The disposition of AOT did not qualify as discontinued operations. Financial position of the entities at disposal date and gain or loss on disposal: Garment Manufacturing Segment SCHEDULE OF FINANCIAL POSITION OF ENTITIES AND GAIN OR LOSS ON DISPOSAL Financial position of AOT May 6, 2025, date of disposal Current assets $ 71,373 Noncurrent assets - Current liabilities ( 45,194 ) Net assets $ 26,179 The consideration was $ 13,829 , resulting in a loss of $ 12,137 recognized on the disposal. At end of June 2025, the Company disposed of Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”) to the management of the subsidiary. The property management and subleasing business was then classified as discontinued operation. Comparative period amounts have been restated retrospectively. Financial position of the entities at disposal date and gain or loss on disposal: Property Management and Subleasing Business Segment Financial position of HX July 1, 2025, date of disposal Current assets $ 1,227,389 Noncurrent assets 354,622 Current liabilities ( 1,588,983 ) Net assets $ 6,972 The consideration was $ 13,829 , with the reversal of over-accrual of lease payment, resulting in an income of $ 6,857 recognized on the disposal. 5. RELATED PARTY TRANSACTIONS SCHEDULE OF RELATED PARTIES RELATIONSHIP WITH COMPANY Name of Related Parties Relationship with the Company Zhida Hong President, CEO, and a director of the Company Hongye Financial Consulting (Shenzhen) Co., Ltd. A company controlled by CEO, Mr. Zhida Hong Bihua Yang A legal representative of Shenzhen Xin Kuai Jie Transportation (“XKJ”) Jinlong Huang Management of Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”) The Company leases XKJ’s office rent-free from Bihua Yang. Hongye Financial Consulting (Shenzhen) Co., Ltd. provided a guarantee to the consideration receivable for the transfer of a debt security to a third party. The Company had the following related party balances as of September 30, 2025 and March 31, 2025: SCHEDULE OF RELATED PARTY BALANCES Amount due from related party September 30, 2025 March 31, 2025 Zhida Hong (1) $ 3,934,476 $ 2,856,262 Bihua Yang (2) 1,252,457 1,426,867 Amount due from related party $ 5,186,933 $ 4,283,129 Related party borrowings September 30, 2025 March 31, 2025 Hongye Financial Consulting (Shenzhen) Co., Ltd. 46,965 39,174 Jinlong Huang 112,321 122,420 Amount due to related party $ 159,286 $ 161,594 (1) The increase of related party from Zhida Hong was short term loan to Zhida Hong, which is interest-free and would be repaid in one year. (2) The decrease of related party debt from Bihua Yang was mainly due to the repayment from Bihua Yang. During the quarter ended September 30, 2025, the Company provided a short term loan of approximately $ 0.3 million to Bihua Yang and received repayment of approximately $ 0.6 million from him. During the six months ended September 30, 2025, the Company provided a short term loan of approximately $ 0.5 million to Bihua Yang and received repayment of approximately $ 0.7 million from him. The borrowing balances with related parties are unsecured, non-interest bearing and repayable on demand. F- 7 6. DEBT SECURITIES HELD-TO-MATURITY SCHEDULE OF DEBT SECURITIES HELD TO MATURITY September 30, 2025 March 31, 2025 Debt securities held-to-maturity $ 17,500,000 $ 17,500,000 The Company purchased a note issued by a third-party investment company on August 24, 2022. The principal amount of the note was $ 17,500,000 . The note was renewable with a one-year term on August 23, 2023 and it was a 2.5 % p.a. coupon. On August 23, 2023, the Company entered into an agreement to transfer the principal and coupon receivable to a third party. The debt is guaranteed by Hongye Financial Consulting (Shenzhen) Co., Ltd., the company controlled by our CEO, Mr. Zhida Hong. On August 24, 2024, a Supplemental Agreement to the note was signed to extend the maturity date to August 24, 2025. As of September 30, and March 31, 2025, the coupon receivable was $ 437,500 and $ 365,000 . 7. INVENTORIES Inventories consist of the following as of September 30, and March 31, 2025: SCHEDULE OF INVENTORIES September 30, 2025 March 31, 2025 Raw materials $ 10,574 $ 10,623 Finished goods 161,812 156,251 Total inventories $ 172,386 $ 166,874 8. ADVANCES TO SUPPLIERS The Company has made advances to third-party suppliers in advance of receiving inventory parts. These advances are generally made to expedite the delivery of required inventory when needed and to help to ensure priority and preferential pricing on such inventory. The amounts advanced to suppliers are fully refundable on demand. The Company reviews a supplier’s credit history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would recognize bad debt expense in the period they are considered unlikely to be collected. 9. PREPAYMENTS AND OTHER RECEIVABLES Prepayments and other receivables consist of the following as of September 30 and March 31, 2025: SCHEDULE OF PREPAYMENTS AND OTHER RECEIVABLES September 30, 2025 March 31, 2025 Prepayment 51,900 50,590 Deposit 31,906 722,035 Receivable of consideration on disposal of subsidiaries 14,044 - Coupon receivable of debt security held-to-maturity 437,500 - Loan to third party 2,500,000 2,500,000 Other receivables 459,351 365,722 Prepayments and other receivables $ 3,494,701 $ 3,638,347 10. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following as of September 30 and March 31, 2025: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT September 30, 2025 March 31, 2025 Production plant $ 63,983 $ 103,242 Motor vehicles 804,269 734,990 Office equipment 31,922 52,194 Property, plant and equipment gross 900,174 890,426 Less: accumulated depreciation ( 532,750 ) ( 502,429 ) Plant and equipment, net $ 367,424 $ 387,997 Depreciation expense for the three and six months ended September 30, 2025 and 2024 was $ 17,429 and $ 26,942 , $ 37,733 and $ 75,919 , respectively. F- 8 11. SHORT-TERM BANK LOAN In August 2019, HSW entered into a facility agreement with Agricultural Bank of China and obtained a line of credit, which allows the Company to borrow up to approximately $ 153,172 (RMB 1,000,000 ) for daily operations. The loans are guaranteed at no cost by the legal representative of HSW. As of September 30, 2025, the Company has borrowed $ 132,608 (RMB 944,255 ) (March 31, 2025: $ 130,051 ) under this line of credit with various annual interest rates from 4.34 % to 4.9 %. The outstanding loan balance was due on September 30, 2021. The Company was not able to renew the loan facility with the bank. The Company is negotiating with the bank on repayment schedule of the loan balance and interest payable. In February 2023, XKJ entered into a facility agreement with China Construction Bank and obtained a line of revolving credit, which allows the Company to borrow up to approximately $ 1,254,858 (RMB 9,000,000 ) for daily operations, with Loan Prime Rate of the day prior to the draw down day. The loans are guaranteed by the legal representative of XKJ at no cost. As of September 30, 2025, the Company has borrowed $ 470,462 (RMB 3,350,000 ) (March 31, 2025: $ 406,300 ) under this line of credit with annual interest rate of 3.9 %. The revolving credit facility will expire on February 1, 2026. In December 2023, Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”) entered into a facility agreement with Sichuan Xinwang Bank Co., Ltd. and obtained a line of credit, which allows the Company to borrow up to approximately $ 69,714 (RMB 500,000 ) for daily operations. The annual interest rate of this line of credit is 16.2 %. The loan facility will expire on December 26, 2025. As of September 30, 2025, the Company has fully repaid this loan facility (March 31, 2025: $ 25,824 ) In March 2024, PF entered into a new facility agreement with WeBank Co., Ltd. and obtained a line of credit, which allows the Company to borrow up to approximately $ 139,429 (RMB 1,000,000 ) for daily operations. As of September 30, 2025, the Company has borrowed $ 40,125 (RMB 285,714 ) (March 31, 2025: $ 78,702 ) under this line of credit with annual interest rate of 8.244 %. The loan facility will expire on March 22, 2026. 12. TAXATION (a) Enterprise Income Tax (“EIT”) The Company operates in the PRC and files tax returns in the PRC. 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. It is a wholly owned subsidiary of Addentax Group Corp. Yingxi HK (Yingxi Industrial Chain Investment Co., Ltd.) was incorporated in Hong Kong, is indirectly wholly-owned by Addentax Group Corp., and is subject to Hong Kong income tax at a progressive 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. Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), our wholly-owned subsidiary, was incorporated in the PRC and is subject to the EIT tax rate of 25 %. No provision for income taxes in the PRC has been made as YX had no taxable income for the six months ended September 30, 2025 and 2024. YX is governed by the Income Tax Laws of the PRC. All YX’s operating companies were subject to progressive EIT rates from 5 % to 15 % in 2025 and 2024. The preferential tax rate will expire at end of year 2025 and the EIT rate will be 25% from year 2026 . YX’s parent entity, Addentax Group Corp. is a U.S. 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 U.S. taxable income for the six months ended September 30, 2025 and 2024. F- 9 The reconciliation of income taxes computed at the PRC statutory tax rate applicable to the PRC, to income tax expenses are as follows: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION 2025 2024 2025 2024 Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 PRC statutory tax rate 25 % 25 % 25 % 25 % Computed expected benefits (expense) ( 190,447 ) ( 180,118 ) ( 223,074 ) ( 394,191 ) Temporary differences 160,908 ( 30,436 ) 194,533 ( 46,207 ) Permanent difference 29,609 ( 78,809 ) 29,354 ( 46,196 ) Changes in valuation allowance - 290,425 21 488,121 Income tax expense $ 70 $ 1,062 834 1,527 Deferred tax assets had not been recognized in respect of any potential tax benefit that may be derived from non-capital loss carry forward and property and equipment due to past negative evidence of previous cumulative net losses and uncertainty upon restructuring. The management will continue to assess at each reporting period to determine the realizability of deferred tax assets. (b) Value Added Tax (“VAT”) In accordance with the relevant taxation laws in the PRC, the normal VAT rate for domestic sales is 13 %, which is levied on the invoiced value of sales and is payable by the purchaser. The subsidiaries HSW, AOT and YS enjoyed preferential VAT rate of 13 %. The companies are required to remit the VAT they collect to the tax authority. A credit is available whereby VAT paid on purchases can be used to offset the VAT due on sales. For services, the applicable VAT rate is 9 % under the relevant tax category for a logistics company, except that PF enjoys the preferential VAT rate of 3 % in 2025 and 2024. XKJ and PF are required to pay the full amount of VAT calculated at the applicable VAT rate of the invoiced value of sales as required. A credit is available whereby VAT paid on gasoline and toll charges can be used to offset the VAT due on service income. 13. CONSOLIDATED SEGMENT DATA Segment information is consistent with how chief operating decision maker reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. The segment data presented reflects this segment structure. The Company reports financial and operating information in the following six segments: (a) Garment manufacturing . Including manufacturing and distribution of garments; (b) Logistics services . Providing logistic services; and (c) Property management and subleasing. Providing subleasing of shops and property management services for garment wholesalers and retailers in garment market. At end of June 2025, the Company disposed of HX to the management of the subsidiary. The property management and subleasing business was then classified as discontinued operation. The Company also provides general corporate services to its segments and these costs are reported as “Corporate and others”. F- 10 Selected information in the segment structure is presented in the following tables: Revenues by segment for the three and six months ended September 30, 2025 and 2024 are as follows: SCHEDULE OF SEGMENT REPORTING FOR REVENUE Revenues from external customers 2025 2024 2025 2024 Three months ended Six months ended September 30, September 30, Revenues from external customers 2025 2024 2025 2024 Garments manufacturing segment 12,935 148,470 32,831 235,072 Logistics services segment 807,757 964,429 1,614,215 1,450,936 Total of reportable segments and consolidated revenue $ 820,692 $ 1,112,899 $ 1,647,046 $ 1,686,008 Intersegment revenue Garments manufacturing segment - - - - Loss from operations by segment for the three and six ended September 30, 2025 and 2024 is as follows: SCHEDULE OF SEGMENT REPORTING FOR INCOME FROM OPERATION 2025 2024 2025 2024 Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 Garments manufacturing segment ( 2,723 ) 1,622 ( 32,310 ) ( 62,023 ) Logistics services segment 63,258 229,558 49,777 250,437 Total of reportable segments $ 60,535 $ 231,180 $ 17,467 $ 188,414 Corporate and other ( 510,383 ) ( 272,692 ) ( 822,190 ) ( 528,953 ) Total consolidated income (loss) from operations ( 449,848 ) ( 41,512 ) ( 804,723 ) ( 340,539 ) Total assets by segment as of September 30 and March 31, 2025 are as follows: SCHEDULE OF SEGMENT REPORTING FOR ASSETS Total assets September 30, 2025 March 31, 2025 Garment manufacturing segment $ 169,341 $ 238,981 Logistics services segment 2,978,511 3,167,654 Property management and subleasing - 19,855,305 Total of reportable segments 3,147,852 23,261,939 Corporate and other 25,059,123 25,905,398 Consolidated total assets $ 28,206,975 $ 49,167,337 Geographical Information The Company operates predominantly in China. In presenting information on the basis of geographical location, revenue is based on the geographical location of customers and long-lived assets are based on the geographical location of the assets. Geographic Information SCHEDULE OF GEOGRAPHICAL INFORMATION Three months ended September 30, Six months ended September 30, 2025 2024 2025 2024 Revenues China 820,692 1,112,899 1,647,046 1,686,008 September 30, 2025 March 31, 2025 Long-Lived Assets China 392,712 19,375,723 F- 11 14. FINANCIAL INSTRUMENTS On January 4, 2023, the Company entered into a series of agreements with certain accredited investors, pursuant to which the Company received a net proceed of $ 15,000,000 in consideration of the issuance of: ● senior secured convertible notes in the aggregate original principal amount of approximately $ 16.7 million with an interest rate of 5 % per annum (the “Convertible Notes”); The Convertible Notes matured on July 4, 2024 . The conversion price is $ 1.25 , subject to adjustment under several conditions. ● warrants (“Warrants”) to purchase up to approximately 16.1 million shares of common stock of the Company (the “Common Stock”) until on or prior to 11:59 p.m. (New York time) on the five-year anniversary of the closing date at an exercise price of $ 1.25 per share, also subject to adjustment under several conditions. The Warrants are considered a freestanding instrument issued together with the Convertible Notes and measured at their issuance date fair value. Proceeds received were first allocated to the Warrants based on their initial fair value. The initial fair value of the Warrants was $ 3.9 million. The Warrants were marked to the market with the changes in the fair value of warrant recorded in the consolidated statements of operations and comprehensive loss. As of September 30, 2025, the balance of the Warrants was approximately $ 0.8 million (March 31, 2025: $ 1.0 million). The Convertible Notes are classified as a liability and is subsequently stated at amortized cost with any difference between the initial carrying value and the repayment amount as interest expenses using the effective interest method over the period from the issuance date to the maturity date. The embedded conversion feature should be bifurcated and separately accounted for using fair value, as this embedded feature is considered not clearly and closely related to the debt host. The bifurcated conversion feature was recorded at fair value with the changes recorded in the consolidated statements of operations and comprehensive loss. The initial fair value of the embedded conversion feature was $ 1.2 million. As of September 30, 2025, the fair value of the conversion option was $ Nil (March 31, 2025: $ 1.4 million). The Company determined that the other embedded features do not require bifurcation as they either are clearly and closely related to the Convertible Notes or do not meet the definition of a derivative. The total proceeds of the Convertible Notes and the Warrants, net of issuance cost, of $ 15.0 million were received by the Company in January 2023, and allocated to each of the financial instruments as following: SCHEDULE OF FINANCIAL INSTRUMENTS As of January 4, 2023 Derivative liabilities – Fair value of the Warrants $ 3,858,521 Derivative liabilities – Embedded conversion feature 1,247,500 Convertible Notes 9,893,979 $ 15,000,000 In January 2023, the Company also granted to the placement agent a warrant as partial payment of an agency fee to purchase 0.7 million shares of Common Stock of the Company. The warrant matures in five years with an exercise price of $ 1.25 subject to adjustments under different conditions. The warrant was recognized as a derivative liability with an initial fair value of $ 0.168 million. The Company’s Convertible Notes’ obligations were as the following for the three and six months ended September 30, 2025 and 2024: SCHEDULE OF CONVERTIBLE NOTES OBLIGATION Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 Carrying value – beginning balance $ 1,162,204 $ 3,518,999 $ 2,900,160 $ 2,684,697 Converted to ordinary shares ( 763,832 ) ( 82,642 ) ( 3,054,240 ) ( 82,642 ) Redemption ( 400,756 ) - ( 334,534 ) - Amortization of debt discount 1,843 - 418,510 682,648 Deferred debt discount and cost of issuance - ( 264,186 ) - ( 263,925 ) Interest charge 541 44,187 70,104 195,580 Carrying value – ending balance $ Nil $ 3,216,358 $ Nil $ 3,216,358 During the three months ended September 30, 2025, $ 0.8 million of Convertible Notes was converted into approximately 1.5 million shares of Common Stock, with an average effective conversion price of $ 0.5222 per share. During the six months ended September 30, 2025, approximately $ 3.1 million of the Convertible Notes was converted into approximately 5.7 million shares of Common Stock, with an average effective conversion price of $ 0.5327 per share. During the three and six months ended September 30, 2024, $ 82,642 of the Convertible Notes was converted into 132,994 shares of Common Stock, with average effective conversion price of $ 0.6214 per share. F- 12 The Company’s derivative liabilities were as the following for the three and six months ended September 30, 2025 and 2024: SCHEDULE OF DERIVATIVE LIABILITIES 2025 2024 2025 2024 Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 Derivative liabilities –Warrants $ $ $ $ Beginning balance 738,195 117,440 989,852 251,657 Marked to the market 452,983 184,549 201,326 50,332 Ending fair value 1,191,178 301,989 1,191,178 301,989 Derivative liabilities – Embedded conversion feature Beginning balance 27,925 36,036 1,782,498 36,298 Converted to shares of Common Stock ( 17,114 ) ( 1,330 ) ( 1,589,352 ) ( 1,330 ) Remeasurement on change of convertible price ( 1,832 ) 264,186 17,625 263,925 Redemption ( 8,979 ) - ( 8,979 ) - Marked to the market - 347,065 ( 201,792 ) 347,064 Ending fair value Nil 645,957 Nil 645,957 Total Derivative fair value at end of period $ 1,191,178 $ 947,946 $ 1,191,178 $ 947,946 15. LEASE As a lessee Right-of-use asset and lease liabilities The Company recognized right-of-use asset as well as lease liability according to the ASC 842, Leases (with the exception of short-term leases). Lease liabilities are measured at present value of the sum of remaining rental payments as of September 30, 2025, with a discounted rate of 4.9 %. A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are classified within operating activities in the statement of cash flows. The Company leases its head office. The lease period is 5 years with an option to extend the lease. The Company leases its plant and dormitory for 4.5 years with an option to extend the lease. The Company leased several floors in a commercial building for its subleasing and property management services business for 16 years with an option to extend the lease. The following table summarizes the components of lease expense: SCHEDULE OF LEASE EXPENSES 2025 2024 2025 2024 Three months ended September 30, Six months ended September 30, 2025 2024 2025 2024 Operating lease cost 339,428 265,894 339,428 524,976 Short-term lease cost 31,219 32,408 31,219 68,871 Lease Cost $ 370,647 $ 298,302 $ 370,647 $ 593,847 The following table summarizes supplemental information related to leases: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES 2025 2024 2025 2024 Three months ended September 30, Six months ended September 30, 2025 2024 2025 2024 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow from operating leases $ 370,647 $ 298,302 593,847 Right-of-use assets obtained in exchange for new operating leases liabilities - 1,096,683 - 1,233,672 Weighted average remaining lease term - Operating leases (years) 13.3 13.9 13.3 13.9 Weighted average discount rate - Operating leases 4.90 % 4.90 % 4.90 % 4.90 % There are no operating lease liabilities for the following five years and the years after due to disposal of the subsidiary, HX, on July 1, 2025. As a lessor The Company subleased its leased commercial building by entering into operating leases with third party garment wholesalers and retailers. These leases are negotiated for terms ranging from one to five years. All leases include the term to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. Rental income from subleasing is disclosed in Note 13 segment data. There will be no future rental income as HX, the subsidiary conducting the subleasing and property management services business was disposed of on July 1, 2025. F- 13 16. SHARE CAPITAL AND RESERVE Common Stock In August 2022, the Company completed its IPO and 5,000,000 shares of Common Stock were issued and sold to the public, with proceeds of approximately $ 20.2 million, net of underwriter commissions and relevant offering expenses. In September, 2022, 391,666 shares of Common Stock were issued upon cashless exercise of Underwriter Warrants. On February 3, 2023, 3,370,000 shares of Common Stock were issued as pre-delivery shares to the placement agents. In January 2023, the Company increased its authorized share capital and the authorized share capital is $ 250,000 divided into 250,000,000 shares of Common Stock with par value of US$ 0.001 per share. The Company effected the amendment and combination to the outstanding shares of its Common Stock into fewer number of outstanding shares (the “Reverse Stock Split Amendment”) at a ratio of one-for-ten, with effect on September 26, 2023. As a result, the number of shares was reduced by 33,655,839 shares. After the Reverse Stock Split Amendment, the Company issued 1,644,188 shares of Common Stock with par value of US$ 0.001 per share. On April 29, 2024, the Company entered into two private placement agreements (the “Agreements”) with certain individual investors (the “Investors”) who are independent third parties, pursuant to which the Company issued to each of the Investors 330,000 shares of its Common Stock, par value $ 0.001 per share, at a price of $ 0.98 per share, resulting in aggregate gross proceeds to the Company of $ 646,800 , which closed on the same day. Pursuant to the Agreements, the Company issued an aggregate of 660,000 unregistered shares of Common Stock to the Investors. There are 11,715,348 and 6,043,769 shares of Common Stock issued and outstanding at September 30, 2025 and March 31, 2025, respectively. Statutory reserve In accordance with the relevant laws and regulations of the PRC, a subsidiary of the Company established in the PRC is required to transfer 10% of its profit after taxation prepared in accordance with the accounting regulations of the PRC to the statutory reserve until the reserve balance reaches 50% of the subsidiary’s paid-up capital. Such reserve may be used to offset accumulated losses or increase the registered capital of the subsidiary, subject to the approval from the PRC authorities, and are not available for dividend distribution to the shareholders. The amount appropriated to statutory reserve for the six months ended September 30, 2025 and 2024 was $ 402 and $ Nil , respectively. The balance of paid-up statutory reserve was $ 37,020 as of both September 30, 2025 and 2024. 17. 2024 EQUITY INCENTIVE PLAN On August 11, 2025, 161,665 shares of Common Stock were issued and granted to the directors and executive officers pursuant to the 2024 Equity Incentive Plan. These incentive shares were vested immediately. The stock-based payment was measured at fair value using closing market price of the day prior to the grant date. The fair value was charged to income statement when the common stocks were granted. During the three months ended September 30, 2025, the stock-based payment expense was $ 70,001 (2024: Nil ). 18. RISKS AND UNCERTAINTIES (a) Economic and Political Risks The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. (b) Foreign Currency Translation The Company’s reporting currency is the U.S. dollar. The functional currency of the parent company is the U.S. dollar and the functional currency of the Company’s operating subsidiaries is the Chinese Renminbi (“RMB”). For the subsidiaries whose functional currencies are the RMB, all assets and liabilities are translated at exchange rates at the balance sheet date, which was 7.12 and 7.26 as of September 30, 2025 and March 31, 2025, respectively. Revenue and expenses are translated at the average yearly exchange rates, which was 7.231 and 7.004 , 7.194 and 7.20 for the three and six months ended September 30, 2025 and 2024, respectively. Equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustments to other comprehensive loss, a component of equity. F- 14 (c) Concentration Risks The followings are the percentages of accounts receivable balance of the top customers over accounts receivable for each segment as of September 30, 2025 and March 31, 2025. Garment manufacturing segment SCHEDULE OF CONCENTRATION RISKS September 30, 2025 March 31, 2025 Customer A 100.0 % 100.0 % The high concentration as of September 30, 2025 was mainly due to business development of a large distributor of garments. Logistics services segment September 30, 2025 March 31, 2025 Customer A 23.4 % 20.2 % Customer B 23.1 % 17.6 % Customer C 6.6 % 3.4 % Customer D 6.0 % 5.4 % Customer E 5.9 % 5.9 % Property management and subleasing segment There was no account receivable for the property management and subleasing segment as of September 30, 2025 and March 31, 2025. Concentration on customers For the three months ended September 30, 2025, three customers from the logistics services segment provided more than 10% of total revenue of the Company, representing 63.5 % of total revenue of the Company for that period. For the six months ended September 30, 2025, three customers from the logistics services segment provided more than 10% of total revenue of the Company, representing 53.8 % of total revenue of the Company for that period . For the three months ended September 30, 2024, three customers from the logistics services segment provided more than 10% of total revenue of the Company, representing 48.6 % of total revenue of the Company for that period. For the six months ended September 30, 2024, two customers from logistics services segment provided more than 10% of total revenue of the Company, representing 36.5 % of total revenue of the Company for that period. Concentration on suppliers The following tables summarize the purchases from five largest suppliers of each of the reportable segments for the three and six months ended September 30, 2025 and 2024. SCHEDULE OF PURCHASES FROM SUPPLIERS Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 Garment manufacturing segment Nil % 60.6 % 100 % 41.8 % Logistics services segment 100 % 100 % 100 % 100 % (d) Interest Rate Risk The Company’s exposure to interest rate risk primarily relates to the interest expenses on our outstanding bank borrowings and the interest income generated by cash invested in cash deposits and liquid investments. As of September 30, 2025, the total outstanding borrowings amounted to $ 643,194 (RMB 4,579,969 ) with various interest rate from 4.34 % to 16.2 % p.a. (Note 12) 19. SUBSEQUENT EVENTS There are no other subsequent events have occurred that would require recognition or disclosure in the financial statements. F- 15