What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-06-29 compared with 2025-06-30 · 227 added, 274 removed, 173 unchanged (74% of the section changed)

12 unchanged sentences

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.

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.

We are not a Chinese operating company.

We are a holding company and do not directly

own any substantive business operations in China.

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

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

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”.

We classify our businesses into three main segments:

garment manufacturing,

logistics services, and property management and subleasing.

the context otherwise requires, all references in this Form 10-K to “Addentax” refer to Addentax Group Corp., a holding

company, and references to “we,” “us,” “our,” the “Registrant,” the “Company,”

or “our company” refer to Addentax and/or its consolidated subsidiaries.

Addentax Group Corp., our Nevada holding company,

is the entity in which our investors are investing.

subsidiaries include (i) Yingxi Industrial Chain Group Co., Ltd., a Republic of Seychelles company;

(ii) Yingxi Industrial Chain Investment

Co., Ltd., a Hong Kong company (“Yingxi HK”);

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

(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

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

(ii) Shenzhen Qianhai Yingxi Industrial

Chain Services Co., Ltd (“YX”), (iii) Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), (iv) Dongguan Yushang

Clothing Co., Ltd (“YS”);

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

(vi) Shenzhen

Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (vii) Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”),

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

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

by Addentax Group Corp.

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.

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

During the fiscal year

ended March 31, 2026, our continuing operations primarily consisted of garment manufacturing, logistics services and consulting services.

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

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with sufficient production capacity and skilled workers on production lines to ensure that we meet our high quality control standards

and timely meet the delivery requirements for our customers.

We conduct our garment manufacturing operations through five wholly owned

subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), Dongguan Yushang Clothing Co., Ltd (“YS”)

and Dongguan Aotesi Garments Co., Ltd., (“AOT”) , which are located in the Guangdong

province, China.

and delivery requirements for our customers.

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

namely YX and YS, which are located in Guangdong province, China.

logistics business consists of delivery and courier services covering 45 cities in 10 provinces and 2 municipalities in China.

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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 three wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co.,

Ltd (“XKJ”) and Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”) which are located in the Guangdong province,

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

in the garment market.

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

garment market.

We conduct our property management and subleasing operation through a wholly owned subsidiary acquired in September 2023,

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

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

province, China.

provide business consulting and coordination services to customers seeking overseas wealth planning, insurance-related information and

related cross-border service support.

Our services primarily include customer consultation, appointment coordination, referral and liaison

with third-party insurance brokers or other service providers, and related administrative support.

We conduct our consulting service

business through our wholly owned subsidiary, Yingxi HK, which is located in Hong Kong, China.

March 30, 2026, we completed the acquisition of KMFG, a Nevada corporation with headquarters in Shenzhen, China.

KMFG operates two core

business segments:

(i) an apparel and garment trading business focused on the wholesale distribution of men’s and women’s

apparel to distributors primarily in China, sourcing directly from manufacturers without maintaining its own production facilities;

(ii) a digital publishing business conducted through its wholly owned subsidiary, GW Reader Sdn.

in Malaysia, which operates a mobile-based

online fiction platform utilizing a pay-per-chapter microtransaction model for global readers.

As of March 31, 2026, KMFG’s revenue

contribution was not significant, and management does not currently present KMFG as a separate business line or reportable segment.

will continue to monitor KMFG’s operations, revenue contribution and business development and will reassess the related disclosure

and segment presentation as necessary in future periods.

of Subsidiaries and Discontinued Operations

the fiscal year ended March 31, 2026, we disposed of Dongguan Aotesi Garments Co., Ltd., a PRC company (“AOT”), and Dongguan

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

AOT was previously engaged in the garment manufacturing business and

was disposed of to the local management of AOT on May 6, 2025.

After the disposition, AOT became a third party to the Company.

carries on the garment manufacturing business through its remaining subsidiaries, and the disposition of AOT did not qualify as discontinued

HX was previously engaged in the property management and subleasing business and was disposed of to the local management

of HX on July 1, 2025.

After the disposition, HX became a third party to the Company.

Following the disposition, the Company no longer

conducts the property management and subleasing business through HX or any other subsidiary.

The property management and subleasing business

has been classified as discontinued operations in the Company’s consolidated financial statements.

AOT and HX were no longer subsidiaries

of the Company as of March 31, 2026 and as of the date of this annual report.

Manufacturing Business

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delivery and courier network in China.

As of March 31, 2025, we provide logistics services to over 44 cities in approximately 10 provinces

As of March 31, 2026, we provided logistics services to over 45 cities in approximately 10 provinces

and 2 municipalities.

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profit in the year 2026.

Management and Subleasing Business

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

and the Internet celebrity economy together to drive to increase the value of the stores in the area.

We conduct the business through

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

Services Business

business objective of our consulting service line is to provide advisory, referral, coordination and administrative support services

in connection with overseas insurance configuration, wealth management planning, identity planning, education planning and related cross-border

service needs.

We intend to develop this business as an asset-light service business with an emphasis on high-value consulting services,

digital tools and private-domain customer management.

Manufacturing Business

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

Management and Subleasing Business

is no significant seasonality in our business.

Services Business

expects relatively stronger customer activity during June to September, October to December, holidays and weekends, while January to

March is generally expected to be a traditional slower season due to the Chinese New Year period.

Actual seasonality may vary based on

customer demand, market conditions, regulatory developments and the availability of third-party service providers.

manufacturing Business

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our receipt of packages.

management and subleasing business

property management and subleasing business, we generally collect rental and management fees of the following month each month in advance.

Services Business

consulting services, the credit period is generally 30 to 60 days, depending on the service arrangement, customer relationship, settlement

cycle with third-party service providers and internal credit review.

We do not directly collect customer insurance premiums.

must be paid by customers directly to the relevant insurance company’s designated bank account or official payment gateway.

business is dependent on consumer demand for our products and services.

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us to execute our strategy for long-term sustainable growth in revenue, net income and operating cash flow.

of Critical Accounting Policies

have identified critical accounting policies that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying

accounting standards and operation involved could result in material changes to our financial position or results of operations under

different conditions or using different assumptions.

and Assumptions

regularly evaluate the accounting estimates that we use to prepare our financial statements.

In general, management’s estimates

are based on historical experience, on information from third party professionals, and on various other assumptions that are believed

to be reasonable under the facts and circumstances.

Actual results could differ from those estimates made by management.

is generated through sale of goods and delivery services.

Revenue is recognized when a customer obtains control of promised goods or

services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods

In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising

from contracts with customers.

The amount of revenue that is recorded reflects the consideration that the Company expects to receive

in exchange for those goods and services.

The Company applies the following five-step model in order to determine this amount:

identification

of the promised goods and services in the contract;

determination

of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the

of the transaction price, including the constraint on variable consideration;

of the transaction price to the performance obligations;

of revenue when (or as) the Company satisfies each performance obligation.

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

to in exchange for the goods or services it transfers to the customer.

Once a contract is determined to be within the scope of ASC 606

at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which

of these performance obligations are distinct.

The Company recognizes as revenues the amount of the transaction price that is allocated

to the respective performance obligation when the performance obligation is satisfied or as it is satisfied.

Generally, the Company’s

performance obligations are transferred to customers at a point in time, typically upon delivery.

all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product and service revenue

contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.

Company determines if an arrangement is a lease at inception.

Operating leases are included in operating lease right-of-use (“ROU”)

assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets.

Finance leases are included in

property and equipment, other current liabilities, and other long-term liabilities in the consolidated balance sheets.

assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease

payments arising from the lease.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present

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

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

The operating lease ROU asset also includes any lease payments made and excludes lease incentives.

Lease expense for lease payments

is recognized on a straight-line basis over the lease term.

a lessor, the Company’s leases are classified as operating leases under ASC 842.

Leases, in which the Company is the lessor, are

substantially all accounted for as operating leases and the lease components and non-lease components are accounted for separately.

income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

Initial direct costs incurred

in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line

basis over the lease term.

receivable, net

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

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

Account receivables are recognized when the Company

becomes a party to the contractual provisions of the receivables.

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

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

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

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

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

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

The Company determines

the expected credit losses provisions based on ASU No.

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

Measurement of

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

a material impact on the opening balance of accumulated deficit.

To determine expected credit losses on account receivables, the Company

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

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

where appropriate.

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

An impairment gain or loss is recognized

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

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

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

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

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

Any recoveries made are recognized in profit or loss.

issued and adopted accounting pronouncements

for Convertible Instruments:

In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s

Own Equity (ASU 2020-06), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards

while maintaining or improving the usefulness of the information provided to users of financial statements.

Among other changes, the

new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and

equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued

at a substantial premium.

As a result, after adopting the guidance, entities will no longer separately present such embedded conversion

features in equity and will instead account for the convertible debt wholly as debt.

The new guidance also requires use of the “if-converted”

method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current

accounting treatment under the current guidance.

The guidance is effective for financial statements issued for fiscal years beginning

after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the

Company reviews new accounting standards as issued.

Management has not identified any other new standards that it believes will have

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

Accounting Estimates

preparation of our 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, revenues and expenses, and related disclosures in the consolidated financial

statements and accompanying notes.

Management evaluates its estimates on an ongoing basis based on historical experience, current conditions

and other assumptions that management believes are reasonable under the circumstances.

Actual results could differ from those estimates.

believes that the following accounting estimates involve a significant level of judgment or estimation uncertainty and are important

to an understanding of our financial condition and results of operations.

Management has discussed significant audit matters, including

accounting estimates and related financial statement disclosures, with the Audit Committee in connection with the annual audit process.

and Impairment Assessment

a result of the acquisition of KMFG during the fiscal year ended March 31, 2026, the Company recognized goodwill in its consolidated

financial statements.

Goodwill represents the excess of the purchase consideration over the estimated fair value of identifiable net

assets acquired and liabilities assumed in a business combination.

The determination of goodwill requires management to make judgments

and assumptions regarding the fair value of assets acquired and liabilities assumed, including assumptions related to future cash flows,

discount rates, useful lives, market conditions and other valuation inputs.

Company evaluates goodwill for impairment at least annually, and more frequently if events or changes in circumstances indicate that

the carrying amount of goodwill may not be recoverable.

The impairment assessment requires management to make estimates and assumptions

regarding future operating results, cash flows, discount rates, market conditions and the Company’s ability to execute its business

If actual results are lower than management’s expectations, or if there are adverse changes in business, market or economic

conditions, the Company may be required to recognize impairment charges, which could materially affect the Company’s results of

operations and financial condition.

Concern Assessment

Company has incurred net losses and has used cash in operating activities.

Management evaluates whether there are conditions or events,

considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one

year after the date that the consolidated financial statements are issued.

This assessment requires management to consider the Company’s

liquidity, working capital, operating results, cash flows, debt obligations, available financing sources and management’s plans

to mitigate adverse conditions.

going concern assessment involves significant judgment, including assumptions regarding the Company’s ability to improve operating

results, manage operating costs, collect receivables, obtain additional financing if necessary, and execute its business plans.

in these assumptions or the Company’s ability to execute its plans could affect management’s going concern assessment and

related disclosures.

of Operations for the years ended March 31, 2026 and 2025

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should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere in this report.

Changes in 2025 compared to 2024

dollars, except for percentages)

Cost of revenues

Gross profit (loss)

Operating expenses

Loss from operations

Other income, net

Fair value gain or loss

Net finance cost

Income tax expense

profit (loss)

from operations

value gain or loss

from continuing operations

$ (4,937,020 )

$ (5,094,198 )

revenue for the year ended March 31, 2025 significantly decreased by approximately $1.0 million, or approximately 18.9%, as compared

from discontinued operations

revenue for the year ended March 31, 2026 significantly increased by approximately $1.2 million, or approximately 28.6%, as compared

with the year ended March 31, 2025.

The decrease was mainly due to the decrease of revenue from the logistics services business.

The increase was mainly due to revenue generated from the newly established business segment of consulting

generated from our garment manufacturing business contributed approximately $0.04 million, or approximately 0.8%, of our total revenue

2 unchanged sentences

of our total revenue for the year ended March 31, 2025.

The low amount of sales was mainly due to insufficient customer volume, we cannot

receive as large order quantity from remaining customers as before while new developed customer still at the start stage.

The relatively low level of sales was mainly due to insufficient customer base.

In addition, order volumes from the remaining customers were lower than in prior periods, while newly developed customers remained in

the early stages of business development and had not yet generated significant sales.

generated from our logistics services business contributed approximately $3.2 million, or approximately 59.1%, of our total revenue for

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our total revenue for the year ended March 31, 2025.

The decrease of approximately $1.3 million was mainly due to market volatility.

generated from our property management and subleasing business contributed approximately $0.9 million, or approximately 21.0%, of our

total revenue for the year ended March 31, 2025.

Revenue generated from our property management and subleasing business contributed approximately

$0.6 million, or approximately 11.3%, of our total revenue for the year ended March 31, 2024.

The increase of approximately $0.3 million

was mainly due to improved rental rate.

Increase (decrease) in 2025 compared to 2024

The increase of approximately $0.2 million was mainly due to market volatility.

generated from our property management and subleasing business was Nil for the year ended March 31, 2026.

The segment was disposed of

on July 1, 2025.

The revenue from this segment before disposal has been reclassified as discontinued operations.

Revenue generated from

our property management and subleasing business contributed approximately $0.9 million, or approximately 21.0%, of our total revenue

for the year ended March 31, 2025.

generated from our newly established business segment of consulting service contributed approximately $2.2 million, or 40.1% of our total

revenue for the year ended March 31, 2026.

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 (loss) Profit for property management and subleasing

Net revenue for corporate and others

Other and Overhead

Total cost of revenue for corporate and others

Gross profit for corporate and others

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

revenue for property management and subleasing

cost of revenue for property management and subleasing

(loss) Profit for property management and subleasing

revenue for consulting

cost of consulting

profit for consulting

cost of revenue

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

1 unchanged sentence

the year ended March 31, 2026, as compared with approximately 49.6% in the year ended March 31, 2025.

The increase in raw materials cost

for our garment manufacturing business was mainly due to increase of manufacturing during the year.

The decrease in percentage was

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

This decrease was driven by our shift to purchasing finished garments amid

lower order volumes during the year ended March 31, 2026.

At smaller scale, direct sourcing is more cost-efficient than in-house manufacturing.

Additionally, our small-batch, diversified product mix resulted in lower average unit costs, which reduced the overall ratio.

costs for our garment manufacturing business were approximately 20.0% of our total garment manufacturing business revenue in the year

ended March 31, 2026, as compared with 25.5% in the year ended March 31, 2025.

The decrease in labor costs for our garment manufacturing

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

We maintained a sustainable level in wages.

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 3.0% and 5.8% of our total garment manufacturing

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7.2% and 5.2% of total cost of revenues for our logistics services segment for the years ended March 31, 2026 and 2025, respectively.

The decrease in subcontracting fee to the largest contractor was mainly to decrease use of subcontractors.

We have not experienced any

disputes with our subcontractors and we believe we maintain good relationships with our contract logistic service provider.

The increase in subcontracting fees paid to the largest contractor was mainly due to the Company’s increased utilization of subcontractors.

We have not experienced any disputes with our subcontractors and we believe we maintain good relationships with our contract logistic

service provider.

toll and other costs for our logistics business for the year ended March 31, 2026 was approximately $2.2 million, as compared with $1.8

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Subcontracting

fees for our logistics business for the year ended March 31, 2025 decreased to approximately $0.2 million from $1.5 million for the year

ended March 31, 2024, representing an decrease of approximately 89.0%.

Subcontracting fees accounted for 5.5% and 34.9% of our total

logistics business revenue in the years ended March 31, 2025 and 2024, respectively.

fees for our logistics business for the year ended March 31, 2026 increased to approximately $0.3 million from $0.2 million for the year

ended March 31, 2025, representing an increase of approximately 72.3%.

Subcontracting fees accounted for 9.0% and 5.5% of our total logistics

business revenue in the years ended March 31, 2026 and 2025, respectively.

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

The cost of revenue for property management and subleasing business for the year ended March 31, 2025 was $1.3 million, approximately

153.5% of our total property management and subleasing business revenue, as compared with $0.5 million, approximately 81.4% of total

property management and subleasing business revenue for the year ended March 31, 2024.

The cost of revenue for property management and subleasing business for the year ended March 31, 2026 was $Nil as the business

segment was disposed of on July 1, 2025.

The revenue from this segment has been reclassified as discontinued operations.

the revenue was $1.3 million, approximately 153.5% of total property management and subleasing business revenue for the year ended March

consulting service business, the cost of revenue was mainly attributable to referral fees, channel service fees and other service fulfillment

costs paid or payable to third-party referral partners and cooperating service providers.

The cost of revenue for consulting service

for the year ended March 31, 2026 was $2.1 million, representing approximately 99.3% of total consulting service revenue.

profit of garment manufacturing business for the year ended March 31, 2026 was approximately $11,260, as compared with approximately

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was approximately 34.8%.

The increase in the gross profit ratio was mainly because less subcontractor used

loss of our property management and subleasing business for the year ended March 31, 2025 was approximately $0.5 million, representing

approximately (53.5)% of our total property management and subleasing business revenue.

Gross profit in our property management and subleasing

business for the year ended March 31, 2024 was $0.1 million, or 18.6% of our total property management and subleasing business revenue.

Changes in 2025

compared to 2024

The decrease in 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, despite year-over-year revenue growth in the 2026 period.

profit of our consulting service business for the year ended March 31, 2026 was $14,794, and gross profit ratio was approximately 0.7%.

Cost of revenue for consulting service represented approximately 99.3% of consulting service revenue for the year ended March 31, 2026.

The relatively low gross profit ratio was primarily due to referral fees, channel service fees and other service fulfillment costs paid

or payable to third-party referral partners and cooperating service providers in connection with the Company’s consulting service

arrangements during the initial stage of operation of the consulting service business.

profit of our property management and subleasing business for the year ended March 31, 2026 was reclassified to discontinued operations

as it was disposed of on July 1, 2025.

Gross loss in our property management and subleasing business for the year ended March 31, 2025

was $0.5 million, or (53.5)% of our total property management and subleasing business revenue.

dollars, except for percentages)

Operating expenses:

Selling expenses

General and administrative expenses

and administrative expenses

$ (2,286,825 )

$ (2,451,227 )

Loss from operations

from operations

$ (1,529,220 )

1 unchanged sentence

General and administrative expenses

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

It was $264,270 for property management and

subleasing business and $128,956 for garments manufacturing business for the year ended March 31, 2025.

It was approximately $83,987

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

expenses consist primarily of local transportation, unloading charges and product inspection charges.

selling expenses were mainly incurred for our garments manufacturing business.

It was $23,729 for garments manufacturing business for

the year ended March 31, 2026.

It was approximately $264,270 for property management and subleasing business and $128,956 for garments

manufacturing business for the year ended March 31, 2025.

Selling expenses consist primarily of local transportation, unloading charges

and product inspection charges.

general and administrative expenses in our garment manufacturing segment for the years ended March 31, 2026 and 2025 were approximately

2 unchanged sentences

31, 2026 and 2025 was approximately $695,013 and $800,820, respectively.

The general and administrative expenses in our property management

and subleasing business were approximately $220,021 and $310,134 for the years ended March 31, 2025 and 2024.

Our general and administrative

expenses in our corporate office for the years ended March 31, 2025 and 2024 were approximately $1,011,522 and $961,771, respectively.

General and administrative expenses consist 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 year ended March 31, 2025 decreased approximately 2.7% to approximately $2.06 million from

The general and administrative expenses in our consulting business

were approximately $81,228 and $Nil for the years ended March 31, 2026 and 2025.

Our general and administrative expenses in our corporate

office for the years ended March 31, 2026 and 2025 were approximately $1,449,880 and $1,011,522, respectively.

General and administrative

expenses consist 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 year ended March 31, 2026 increased approximately 9.9% to approximately $2.26 million from

approximately $2.06 million for the year ended March 31, 2025.

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segment for the years ended March 31, 2065 and 2025, respectively.

Loss from operations of $954,448 and $201,746 was attributed from

our property management and subleasing business for the years ended March 31, 2025 and 2024.

We incurred general and administrative expenses

in corporate office of approximately $1,010,967 and approximately $965,028 for the years ended March 31, 2025 and 2024, respectively.

Loss from operations of $66,434 was attributed from our

consulting business for the years ended March 31, 2026.

Loss from operations from our corporate office for the years ended March 31,

2026 and 2026 was $1,449,880 and $1,010,967, respectively.

tax expense for the years ended March 31, 2026 and 2025 was $4,106 and $4,649, respectively.

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tax returns in the PRC jurisdictions.

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

is not subject to income taxes.

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 tax rate of 16.5%.

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cash flows information for the years ended March 31, 2025 and 2024 is as follows:

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

Net cash (used in) provided by investing activities

Net cash (used in) provided by financing activities

Net cash provided by (used in) financing activities

$ (1,102,141 )

cash provided by operating activities in the year ended March 31, 2025 increased by approximately $1.1 million compared with that of

cash provided by operating activities in the year ended March 31, 2026 decreased by approximately $1.4 million compared with that of

the year ended March 31, 2025.

2 unchanged sentences

The movement of operating

assets and liabilities of the year ended March 31, 2025 resulted in cash inflow of approximately $0.8 million compared to cash inflow

of approximately $0.3 million in the movement of operating assets and liabilities of the year ended March 31, 2024.

assets and liabilities of the year ended March 31, 2026 resulted in cash outflow of approximately $0.4 million compared to cash inflow

of approximately $0.8 million in the movement of operating assets and liabilities for the year ended March 31, 2025.

We aim to improve

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inventory for more than ninety days, as we typically manufacture upon customers’ order.

cash used in investing activities for the year ended March 31, 2025 was approximately $0.3 million more than cash used in investing

activities for the year ended March 31, 2024.

It was mainly because in the year ended March 31, 2024, there was $0.2 million cash

from newly acquired subsidiary.

cash used in financing activities for the year ended March 31, 2025 was approximately $1.6 million more than the year ended March 31,

In the year ended March 31 2025, the Company had receipt the proceeds of $0.6 million from issuance of Common Stock, payment

of $0.5 million for redemption of convertible debt, net cash advance of $1.4 million to related parties and net cash from bank loans

of $0.2 million.

During the year ended March 31, 2024, the Company had receipt of $4.5 million cash released from restricted cash, net

cash inflow of $0.3 million from bank loans, payment of $0.4 million of issuance cost of convertible debts, and net cash advance to related

parties of $3.9 million.

cash used in investing activities increased by approximately $0.1 million for the year ended March 31, 2026, compared to the year ended

March 31, 2025.

The increase was mainly due to the net effect of the disposals of AOT and HX, including cash deconsolidated upon the

disposals, partially offset by the reduction of investing cash outflows from the disposed subsidiaries after the disposal dates and cash

acquired from KMFG upon acquisition.

cash provided by financing activities increased by approximately $2.2 million for the year ended March 31, 2026 compared to the year

ended March 31, 2025.

In the year ended March 31 2026, the Company paid $1.2 million net cash advance to related parties, paid $0.4 million

for redemption of convertible debt, and received cash of $2.7 million from released restricted cash.

In the year ended March 31 2025,

the Company received the proceeds of $0.6 million from issuance of Common Stock, payment of $0.5 million for redemption of convertible

debt, net cash advance of $1.4 million to related parties and net cash from bank loans of $0.2 million.

Condition, Liquidity and Capital Resources

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We presently finance our operations primarily

from cash flows from revenue, fund raising from our IPO proceeds and capital contributions from our chief executive officer, Mr.

Zhida (the “CEO”).

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

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

through cash flows from revenue, existing cash resources, capital contributions or financial support from our chief executive officer,

Hong Zhida, and, if necessary, potential future financing activities, including equity financing, debt financing, private placements

or other financing arrangements.

There can be no assurance that additional financing will be available to us on commercially acceptable

terms, or at all.

Currency Translation Risk

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

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

of volatility in foreign exchange rates between the U.S.

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

As of March 31, 2025, the market foreign exchange rate had decreased to RMB7.26

As of March 31, 2026, the market foreign exchange rate had increased to RMB6.91

Our financial statements are translated into U.S.

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

The foreign currency translation gain for the years ended March 31, 2025 and 2024 was $48,135 and $82,490, respectively.

The foreign currency translation gain (loss) for the years ended March 31, 2026 and 2025 was $(171,577) and $48,134,

respectively.

Sheet Arrangements

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis