ADDENTAX GROUP CORP. 10-K

Item 8. Financial Statements and Supplementary Data ADDENTAX GROUP CORP. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 7100 ) F-1 Consolidated Balance sheets as of March 31, 2026 and 2025 F-2 Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended March 31, 2026 and 2025 F-3 Consolidated Statements of Changes in Equity for the years ended March 31, 2026 and 2025 F-5 Consolidated Statements of Cash Flows for the years ended March 31, 2026 and 2025 F-6 Notes to Consolidated Financial Statements for the years ended March 31, 2026 and 2025 F-7 – F-25 53 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Addentax Group Corp.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Addentax Group Corp. and its subsidiaries (collectively referred to as the “ Company ” ) as of March 31, 2026, and the related consolidated statement of loss and comprehensive income (loss), changes in equity, and cash flow for the year ended March 31, 2026, and the related notes (collectively referred to as the “ financial statements ” ). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2026, and the result of its operations and its cash flow for year then ended March 31, 2026, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) Substantial Doubt About the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2(b) to the financial statements, the Company has incurred a net loss of approximately $4.47 million during the period, which raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2(b) in the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of the critical audit matter does not alter in any way our opinion on the financial statements taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. Acquisition of Keemo Fashion Group Limited – Recognition and Impairment Assessment of Goodwill Description of the Matter As described in Note 5 to the consolidated financial statements, the Company completed the acquisition of a controlling interest in Keemo Fashion Group Limited (“KMFG”) on March 30, 2026 and recognized goodwill of approximately $5.68 million. The acquisition was accounted for under ASC 805, Business Combinations. Auditing the acquisition accounting involved especially challenging and subjective auditor judgment due to the complexity of applying ASC 805, including evaluating the assets acquired, liabilities assumed, purchase consideration transferred, noncontrolling interest and the resulting goodwill recognized. The determination of the preliminary acquisition accounting required management to evaluate the net assets acquired and the allocation of the purchase consideration. In addition, evaluating management’s goodwill impairment assessment required significant auditor judgment due to the estimation uncertainty in determining the recoverable amount of the reporting unit. How we Addressed the Matter in Our Audit Our principal audit procedures included, among others: ● Evaluating the acquisition agreement and other relevant supporting documentation to assess the acquisition date and the accounting treatment under ASC 805; ● Assessing management’s determination that the transaction should be accounted for as a business combination under ASC 805; ● Testing the completeness and accuracy of the identifiable assets acquired, liabilities assumed and purchase consideration transferred, and evaluating management’s preliminary purchase price allocation and the resulting goodwill recognized; ● Assessing the reasonableness of the significant assumptions used by management in determining the recoverable amount of the reporting unit and testing the mathematical accuracy of the valuation model supporting management’s goodwill impairment assessment; ● Tested the acquisition-date consolidation entries, including the recognition of non-controlling interest and elimination adjustments; and ● Evaluating the adequacy of the related disclosures in Note 5 to the consolidated financial statements. We determined that there were no other critical audit matters /s/ HML PLT Chartered Accountants We have served as the Company’s auditor since 2026 Kuala Lumpur, Malaysia June 29, 2026 F- 1 ADDENTAX GROUP CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In U.S. Dollars, except share data or otherwise stated) March 31, 2026 March 31, 2025 (Restated) ASSETS CURRENT ASSETS Cash and cash equivalents $ 574,267 $ 324,953 Restricted cash 10,756 2,750,000 Accounts receivables 773,792 929,817 Debt securities held-to-maturity 12,000,000 17,500,000 Inventories 180,977 166,874 Prepayments, Deposits and Other receivables 3,502,833 3,638,347 Advances to suppliers 246,908 198,494 Amount due from related party 5,618,872 4,283,129 Total current assets 22,908,405 29,791,614 NON-CURRENT ASSETS Plant and equipment, net 340,840 387,997 Goodwill 5,988,194 - Operating lease right of use asset - 18,722,277 Long-term prepayment 14,658 265,449 Total non-current assets 6,343,692 19,375,723 TOTAL ASSETS $ 29,252,097 $ 49,167,337 LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loan $ 671,824 $ 640,878 Accounts payable 734,480 53,199 Related party borrowings 1,081,480 161,594 Advances from customers 110,642 332,492 Accrued expenses and other payables 421,115 1,858,198 Lease liabilities, current portion - 905,958 Deferred Revenue 45,255 - Total current liabilities 3,064,796 3,952,319 NON-CURRENT LIABILITIES Convertible debts - 2,900,160 Derivative liabilities 4,501,062 2,772,350 Lease liability, net of current portion - 17,810,700 Total non-current liabilities 4,501,062 23,483,210 TOTAL LIABILITIES 7,565,858 27,435,529 EQUITY Common stock ($ 0.001 par value, 250,000,000 shares authorized, 781,256 and 402,918 shares issued and outstanding as of March 31, 2026 and March 31, 2025, respectively (1) $ 781 $ 403 Additional paid-in capital 39,959,837 35,246,622 Statutory reserve 37,422 37,422 Accumulated deficits ( 18,132,849 ) ( 13,663,790 ) Accumulated other comprehensive income ( 60,426 ) 111,151 Total equity attributable to equity holders of ADDENTAX GROUP CORP. 21,804,765 21,731,808 Non-controlling interests ( 118,526 ) - Total equity 21,686,239 21,731,808 TOTAL LIABILITIES AND EQUITY $ 29,252,097 $ 49,167,337 (1) Prior period results have been adjusted to reflect the 1 to 15 reverse stock split effected in the form of a stock combination in March 30, 2026. See Note 3(o), Reverse Stock Split , for details. See accompanying notes to the consolidated financial statements. F- 2 ADDENTAX GROUP CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF LOSS (In U.S. Dollars, except share data or otherwise stated) FOR THE YEARS ENDED MARCH 31, 2026 AND 2025 2026 2025 REVENUES $ 5,371,183 $ 4,180,914 COST OF REVENUES ( 4,613,578 ) ( 3,546,657 ) GROSS PROFIT $ 757,605 $ 634,257 OPERATING EXPENSES Selling and marketing ( 24,433 ) ( 393,226 ) General and administrative ( 2,262,392 ) ( 2,058,001 ) Total operating expenses $ ( 2,286,825 ) $ ( 2,451,227 ) LOSS FROM OPERATIONS ( 1,529,220 ) ( 1,816,970 ) Change in fair value of warrants and embedded conversion feature ( 3,309,419 ) ( 2,339,448 ) Interest income 1,157 1,321 Interest expenses ( 614,799 ) ( 1,146,843 ) Other income (expenses), net 519,367 212,391 LOSS BEFORE INCOME TAX EXPENSE $ ( 4,932,914 ) $ ( 5,089,549 ) Income tax expense ( 4,106 ) ( 4,649 ) LOSS FROM CONTINUING OPERATIONS, NET OF INCOME TAXES ( 4,937,020 ) ( 5,094,198 ) Income on discontinued operations 467,855 - NET LOSS $ ( 4,469,165 ) $ ( 5,094,198 ) ATTRIBUTABLE TO: Equity holders of the Company ( 4,469,059 ) ( 5,094,198 ) Non-controlling interests ( 106 ) - NET LOSS $ ( 4,469,165 ) $ ( 5,094,198 ) LOSS PER SHARE Loss per share from continuing operations – Basic and diluted (1) $ ( 6.92 ) $ ( 12.75 ) Earning per share from discontinued operations – basic and diluted (1) 0.66 - $ ( 6.27 ) $ ( 12.75 ) Weighted average number of shares outstanding – Basic and diluted (1) 713,142 399,543 (1) Prior period results have been adjusted to reflect the 1 to 15 reverse stock split effected in the form of a stock combination in March 30, 2026. See Note 3(o), Reverse Stock Split , for details. See accompanying notes to the consolidated financial statements. F- 3 ADDENTAX GROUP CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In U.S. Dollars, except share data or otherwise stated) FOR THE YEARS ENDED MARCH 31, 2026 AND 2025 NET LOSS ( 4,469,165 ) ( 5,094,198 ) OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX Foreign currency translation (loss) gain ( 171,577 ) 48,134 TOTAL COMPREHENSIVE LOSS $ ( 4,640,742 ) $ ( 5,046,064 ) ATTRIBUTABLE TO: Equity holders of the Company ( 4,640,636 ) ( 5,046,064 ) Non-controlling interests ( 106 ) - TOTAL COMPREHENSIVE LOSS $ ( 4,640,742 ) $ ( 5,046,064 ) See accompanying notes to the consolidated financial statements. F- 4 ADDENTAX GROUP CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In U.S. Dollars, except share data or otherwise stated) FOR THE YEARS ENDED MARCH 31, 2026 AND 2025 Shares Amount paid-in capital Unrestricted Statutory reserve comprehensive loss Sub- total controlling Interests Equity (Deficit) Common Stock Additional Retained earnings Accumulated other Non- Total Shares Amount paid-in capital Unrestricted Statutory reserve comprehensive loss Sub- total controlling Interests Equity (Deficit) BALANCE AT MARCH 31, 2024 (1) 358,918 359 34,515,894 ( 8,569,190 ) 37,020 63,017 26,047,100 - 26,047,100 Issuance of new shares 44,000 44 646,756 - - - 646,800 - 646,800 Additional paid-in capital from conversion of convertible debts - - 83,972 - - - 83,972 - 83,972 Appropriation of Statutory reserve - - - ( 402 ) 402 - - - - Foreign currency translation - - - - - 48,134 48,134 - 48,134 Net income for the year - - - ( 5,094,198 ) - - ( 5,094,198 ) - ( 5,094,198 ) BALANCE AT MARCH 31, 2025 (1) 402,918 $ 403 $ 35,246,622 $ ( 13,663,790 ) $ 37,422 $ 111,151 $ 21,731,808 $ - $ 21,731,808 BALANCE 402,918 $ 403 $ 35,246,622 $ ( 13,663,790 ) $ 37,422 $ 111,151 $ 21,731,808 $ - $ 21,731,808 Issuance of new shares 378,105 378 69,623 - - - 70,001 - 70,001 Reverse stock split - - - - - - New shares for round up of fragmental shares 233 0 0 - - - - - Additional paid-in capital from conversion of convertible debts - - 4,643,592 - - - 4,643,592 - 4,643,592 Noncontrolling interest through acquisition of KEEMO - ( 118,420 ) ( 118,420 ) Foreign currency translation - - - - - ( 171,577 ) ( 171,577 ) - ( 171,577 ) Net income for the year - - - ( 4,469,059 ) - - ( 4,469,059 ) ( 106 ) ( 4,469,165 ) BALANCE AT MARCH 31, 2026 781,256 $ 781 $ 39,959,837 $ ( 18,132,849 ) $ 37,422 $ ( 60,426 ) 21,804,765 ( 118,526 ) $ 21,686,239 BALANCE 781,256 $ 781 $ 39,959,837 $ ( 18,132,849 ) $ 37,422 $ ( 60,426 ) 21,804,765 ( 118,526 ) $ 21,686,239 (1) Prior period results have been adjusted to reflect the 1 to 15 reverse stock split effected in the form of a stock combination in March 30, 2026. See Note 3(o), Reverse Stock Split , for details. See accompanying notes to the consolidated financial statements. F- 5 ADDENTAX GROUP CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. Dollars, except share data or otherwise stated) FOR THE YEARS ENDED MARCH 31, 2026 AND 2025 2026 2025 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 4,469,165 ) $ ( 5,094,198 ) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 557,860 1,671,157 Amortization of debt discount 572,449 1,092,871 Stock-Based Compensation Expense 70,001 - Investment income ( 364,583 ) ( 330,000 ) Fair value (gain) or loss 3,309,430 2,339,448 (Gain)/Loss on debts extinguishment ( 8,979 ) ( 62,200 ) (Gain)/Loss from sale of property and equipment ( 23,586 ) 73,236 Loss on disposal of subsidiary 12,358 334,135 Changes in operating assets and liabilities: Accounts receivable 118,248 767,233 Inventories ( 14,103 ) ( 112,228 ) Advances to suppliers ( 79,884 ) 72,234 Other receivables ( 568,705 ) 1,129,468 Accounts payables 695,799 ( 306,289 ) Accrued expenses and other payables ( 559,246 ) ( 888,791 ) Advances from customers 148,503 129,925 Net cash (used in) provided by operating activities $ ( 603,603 ) $ 816,001 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of plant and equipment ( 180,894 ) ( 197,592 ) Cash acquired from subsidiary 15,667 - Proceeds from sale of property and equipment and intangible assets 23,938 - Cash decreased in disposal of subsidiaries ( 155,563 ) ( 8,219 ) Net cash used in by investing activities $ ( 296,852 ) $ ( 205,811 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from related party borrowings 845,654 169,158 Repayment of related party borrowings ( 431,827 ) ( 301,522 ) Cash advance to related parties ( 4,089,025 ) ( 3,817,099 ) Repayment from related parties 2,481,500 2,568,167 Proceeds from bank borrowings 513,533 1,016,440 Repayment of bank borrowings ( 514,824 ) ( 797,795 ) Release of restricted cash 2,739,244 - Payment for redemption of convertible debts ( 390,000 ) ( 586,290 ) Proceeds from issuance of common stocks - 646,800 Net cash provided by (used in) financing activities $ 1,154,255 $ ( 1,102,141 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 253,800 ( 491,951 ) Effect of exchange rate changes on cash and cash equivalents ( 4,486 ) 718 Cash and cash equivalents, beginning of year 324,953 816,186 CASH AND CASH EQUIVALENTS, END OF YEAR $ 574,267 $ 324,953 Supplemental disclosure of cash flow information: Cash paid during the year for interest 41,017 52,617 Cash paid during the year for income tax 4,106 4,649 See accompanying notes to the consolidated financial statements. F- 6 ADDENTAX GROUP CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2026 AND 2025 1. ORGANIZATION AND BUSINESS ACQUISITIONS Addentax Group Corp. (the “Company”), through its subsidiaries, is engaged in garment manufacturing, logistics services and consulting service. The Company conducts its garment manufacturing and logistics services businesses primarily through its PRC operating subsidiaries and conducts its consulting service through Yingxi Industrial Chain Investment Co., Ltd., or Yingxi HK, its Hong Kong subsidiary. During the fiscal year ended March 31, 2026, the Company disposed of its property management and subleasing business, and the results of such business have been classified as discontinued operations. See Note 4, Disposition of Subsidiaries and Discontinued Operations , for details. As of March 31, 2026, the Company’s principal subsidiaries consisted of the following entities: SCHEDULE OF PRINCIPAL SUBSIDIARIES ENTITIES Name of entity Place of incorporation Principal activities Immediate holding company % of effective ownership interest held by the Group in 2026 % of effective ownership interest held by the Group in 2025 Yingxi Industrial Chain Group Co., Ltd. (“Yingxi Seychelles”) Republic of Seychelles Investment holding Addentax Group Corp. 100 % 100 % Yingxi Industrial Chain Investment Co., Ltd. (“Yingxi HK”) Hong Kong SAR Investment holding Yingxi Industrial Chain Group Co., Ltd. 100 % 100 % Yingxi Textile & Garments Co., Ltd. (“WFOE”) (f/k/a Qianhai Yingxi Textile & Garments Co., Ltd.) P. R. China Investment holding Yingxi Industrial Chain Investment Co., Ltd. 100 % 100 % Shenzhen Yingxi Industrial Chain Services Co., Ltd. (“YX”) (f/k/a Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd.) P. R. China Investment holding & Garment Manufacturing Yingxi Textile & Garments Co., Ltd. (f/k/a Qianhai Yingxi Textile & Garments Co., Ltd.) 100 % 100 % Dongguan Heng Sheng Wei Garments Co., Ltd. (“HSW”) P. R. China Garment Manufacturing Shenzhen Yingxi Industrial Chain Services Co., Ltd. (f/k/a Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd.) 100 % 100 % Dongguan Yushang Clothing Co., Ltd. (“YS”) P. R. China Garment Manufacturing Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd. 100 % 100 % Shenzhen Xin Kuai Jie Transportation Co., Ltd. (“XKJ”) P. R. China Logistics Services Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd. 100 % 100 % Shenzhen Yingxi Peng Fa Logistic Co., Ltd. (“PF”) P. R. China Logistics Services Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd. 100 % 100 % Keemo Fashion Group Limited (“KMFG”) Nevada, the United States Investment holding & Acquired operations Addentax Group Corp. 62.18 % Nil% KMFG was acquired near the end of the fiscal year ended March 31, 2026. 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. F- 7 2. BASIS OF PRESENTATION (a) Basis of Accounting The accompanying consolidated financial statements of the Company and its subsidiaries are prepared pursuant to the rules and regulations of the U.S Securities and Exchanges Commission (“SEC”) and in conformity with generally accepted accounting principles in the U.S. (“US GAAP”). All material inter-company accounts and transactions have been eliminated in consolidation. (b) Going Concern The Company has a history of net losses. The Company incurred net losses of $ 4,469,165 and $ 5,094,198 for the years ended March 31, 2026 and 2025, respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. The Company’s ability to continue as a going concern is dependent upon management’s ability to successfully implement its business plans, improve operating results, manage operating costs, collect accounts receivable, and obtain additional financing when necessary. Management’s plans include, among other things, continuing to develop the Company’s garment manufacturing, logistics services and consulting service businesses, improving operating efficiency, controlling general and administrative expenses, and seeking additional financing through public or private equity or debt financing if required. There can be no assurance that the Company will be successful in achieving these plans or that additional financing will be available on acceptable terms, or at all. The accompanying consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Use of Estimates The preparation of the consolidated financial statements in conformity with US 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. (b) Principles of Consolidation The consolidated financial statements include the accounts of the Company and all subsidiaries, as discussed above. A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting powers; or has the power to appoint or remove the majority of the members of the board of directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. All significant intercompany balances and transactions have been eliminated in consolidation. (c) Business Combinations and Goodwill The Company accounts for business combinations in accordance with ASC 805, Business Combinations, using the acquisition method of accounting. The Company first evaluates whether an acquired set of activities and assets constitutes a business, including whether the acquired set includes inputs and substantive processes that together significantly contribute to the ability to create outputs. The Company also considers whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, as applicable. F- 8 For acquisitions that are accounted for as business combinations, the Company recognizes, separately from goodwill, the identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree at their estimated acquisition-date fair values. The purchase consideration transferred is measured at fair value as of the acquisition date. The excess of the purchase consideration transferred and the fair value of any noncontrolling interest in the acquiree over the fair value of the identifiable net assets acquired and liabilities assumed is recorded as goodwill. If the fair value of the identifiable net assets acquired exceeds the purchase consideration transferred and the fair value of any noncontrolling interest, the Company recognizes a bargain purchase gain after reassessing whether all assets acquired and liabilities assumed have been properly identified and measured. Acquisition-related costs, including legal, accounting, valuation and other professional fees, are expensed as incurred and included in general and administrative expenses. When the initial accounting for a business combination is incomplete by the end of the reporting period in which the acquisition occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. During the measurement period, which shall not exceed one year from the acquisition date, the Company adjusts the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. Goodwill represents the excess of the purchase consideration transferred and the fair value of any noncontrolling interest over the estimated fair value of identifiable net assets acquired and liabilities assumed in a business combination. Goodwill is not amortized, but is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. The Company evaluates goodwill for impairment at the reporting unit level. The Company may first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment indicates that it is more likely than not that the carrying amount exceeds fair value, or if the Company elects to bypass the qualitative assessment, the Company performs a quantitative impairment test. An impairment loss is recognized to the extent that the carrying amount of the reporting unit exceeds its fair value, limited to the carrying amount of goodwill allocated to that reporting unit. (d) Fair Value Measurement ASC 820, Fair Value Measurement, defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. The statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset. This ASC establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). The Company has derivative liabilities, embedded conversion feature and warrants that are not traded in an active market with readily observable quoted prices, and therefore the Company used significant unobservable inputs (Level 3) to measure the fair value of these options and derivative liabilities at inception and at each subsequent balance sheet date. The change in fair value is recognized in the consolidated statement of operations and comprehensive loss during the year ended March 31, 2026. The Company’s financial instruments include cash, accounts receivable, advances to suppliers, other receivables, accounts payable, other payables, taxes payables and related party receivables or payables. Management estimates that the carrying amounts of financial instruments approximate their fair values due to their short-term nature. The fair value of amounts with related parties is not practicable to estimate due to the related party nature of the underlying transactions. (e) Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. All cash and cash equivalents relate to cash on hand and cash at bank at March 31, 2026 and 2025. The Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Company is permitted to exchange Renminbi for foreign currencies through banks that are authorized to conduct foreign exchange business. F- 9 (f) Accounts Receivable, net Accounts receivable, net are stated at the historical carrying amount net of allowance for doubtful accounts. Accounts receivable are classified as financial assets subsequently measured at amortized cost. Accounts receivable 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. A 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 accounts receivable, 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. The 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. Allowance for doubtful accounts was $ 51,629 and 49,457 for the years ended March 31, 2026 and 2025. Receivables 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. Receivables written off may still be subject to enforcement activities under the Company’s recovery procedures, considering legal advice where appropriate. Any recoveries made are recognized in profit or loss. There is no change in the accounting policies for the year ended March 31, 2026. (g) Inventories Manufacturing segment inventories consist of raw materials, work in progress and finished goods and are stated at the lower of cost, determined on a weighted average basis, or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale. When inventories are sold, their carrying amount is charged to expense in the period in which the revenue is recognized. Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the period the impairment or loss occurs. No inventory write-downs were recognized during the years ended March 31, 2026 and 2025. (h) Plant and Equipment Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over the assets’ estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows: SCHEDULE OF PLANT AND EQUIPMENT USEFUL LIVES Production plant 5 - 10 years Motor vehicles 10 - 15 years Office equipment 5 - 10 years The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of loss and comprehensive loss. The cost of maintenance and repairs is charged to the statement of income as incurred, whereas significant renewals and betterments are capitalized. F- 10 (i) Accounting for the Impairment of Long-Lived Assets Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There was no impairment of long-lived assets as of March 31, 2026 and 2025. (j) Revenue Recognition Revenue from continuing operations is generated primarily from garment manufacturing, logistics services and consulting services. The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company applies the following five-step model to recognize revenue from contracts with customers: (i) identification of the contract with the customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when, or as, the Company satisfies the performance obligations. The following table summarizes the Company’s major revenue streams for the years ended March 31, 2026 and 2025: SCHEDULE OF MAJOR REVENUE STREAMS Type of Revenue Amount for the year ended March 31, 2026 Amount for the year ended March 31, 2025 Principal/Agent Assessment Timing of Revenue Recognition Garment Manufacturing Business $ 40,911 $ 283,042 Principal Point in time Logistics Service $ 3,176,711 $ 3,018,325 Principal Point in time Consulting Services $ 2,153,501 $ Nil Agent Point in time Property Management Business $   Nil / Discontinued operation $ 879,547 Principal Overtime Total $ 5,371,183 $ 4,180,914 Revenue $ 5,371,183 $ 4,180,914 For the garment manufacturing business, revenue is generated primarily from the sale of garments and related products to customers based on purchase orders or sales contracts. The Company generally recognizes revenue at a point in time when control of the products is transferred to the customer, which typically occurs upon delivery of the products to the customer or other delivery point specified in the relevant customer arrangement. At that time, the customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the products. Revenue is measured based on the transaction price specified in the customer contract or purchase order, net of applicable discounts, returns, allowances or other variable consideration, if any. The Company did not have any material discounts, returns, allowances or other variable consideration related to garment manufacturing revenue during the year ended March 31, 2026. For the logistics services business, revenue is generated primarily from the provision of delivery, transportation and related logistics services. The Company generally recognizes revenue at a point in time when the related logistics service has been completed in accordance with the customer arrangement. The Company’s performance obligation is typically satisfied when the goods have been delivered to the agreed destination or when the relevant delivery or logistics service has otherwise been completed and accepted by the customer. Revenue is measured based on the agreed service fee specified in the customer contract, delivery order, settlement statement or other relevant arrangement. The Company did not have any material rebates, credits or other variable consideration related to logistics services revenue during the year ended March 31, 2026. For the consulting services business, revenue is generated through Yingxi HK, the Company’s Hong Kong subsidiary. The consulting services primarily includes customer consultation, appointment coordination, referral and liaison with third-party insurance brokers or other service providers, and related administrative support. The Company generally recognizes revenue when the agreed consulting, referral, coordination or administrative support services have been completed and the Company’s right to consideration has been established. If the consideration is contingent upon the successful completion or effectiveness of a customer arrangement with a third-party service provider, the Company recognizes revenue only when the contingency is resolved and it is probable that a significant reversal of revenue will not occur. The Company did not have any material refunds, clawbacks or other variable consideration related to consulting services revenue during the year ended March 31, 2026. The Company evaluates whether it acts as a principal or an agent in each consulting services arrangement. To the extent the Company acts as an agent and does not control the underlying insurance products or other third-party services before they are provided to customers, the Company recognizes revenue on a net basis for the consulting, referral or coordination fee to which it expects to be entitled, and does not recognize the gross amount of insurance premiums or other amounts charged by third-party service providers. The Company’s property management and subleasing business was disposed of during the fiscal year ended March 31, 2026 and has been classified as discontinued operations. Accordingly, the revenue recognition policies described above relate to the Company’s continuing operations. The Company’s contracts generally do not include a significant financing component, as the period between the transfer of the promised goods or services and payment is generally one year or less. Accounts receivable are recorded when the Company has an unconditional right to consideration. Amounts received from customers before the Company satisfies its performance obligations are recorded as contract liabilities or deferred revenue and are recognized as revenue when the related performance obligations are satisfied. Contract Balances and Variable Consideration Contract liabilities primarily consist of deferred revenue related to payments or consideration received before the Company satisfies its performance obligations. Deferred revenue is recognized as revenue when the related performance obligations are satisfied. As of March 31, 2026 and 2025, the Company’s contract liabilities, presented as deferred revenue, were approximately $ 45,255 and $ 0 , respectively. Revenue recognized during the year ended March 31, 2026 from amounts included in contract liabilities at the beginning of the fiscal year was $ 0 . The deferred revenue balance as of March 31, 2026 was primarily related to the digital publishing business acquired through KMFG near the end of the fiscal year. The Company did not have material refund, rebate, discount, credit or other variable consideration arrangements during the year ended March 31, 2026. The Company also did not identify any other material contract asset, contract liability or variable consideration disclosure required under ASC Topic 606. F- 11 (k) Earnings Per Share The Company reports earnings (loss) per share in accordance with ASC 260 “Earnings Per Share”, which requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the reporting period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. Further, if the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of a basic and diluted earnings per share shall be adjusted retroactively for all periods presented to reflect that change in capital structure. Diluted earnings (loss) per share is calculated by dividing net earnings (loss) attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of unvested restricted shares, Common Stock issuable upon the exercise of outstanding share options using the treasury stock method, and Common Stock issuable upon the conversion of convertible note, option and preferred shares using the if converted method. Ordinary equivalent shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive. (l) Income Taxes The Company accounts for income taxes using the asset and liability method prescribed by ASC 740, Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial reporting and tax bases of assets and liabilities using enacted tax rates expected to be in effect in the periods in which the temporary differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income or loss in the period that includes the enactment date. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In evaluating the realizability of deferred tax assets, management considers all available evidence, including historical operating results, expected future taxable income, tax planning strategies and the nature of temporary differences. Due to the Company’s history of losses and the uncertainty of generating sufficient future taxable income, the Company has recorded a valuation allowance against deferred tax assets to the extent management determined that realization of such deferred tax assets was not more likely than not. The Company and its subsidiaries are subject to income taxes in the jurisdictions in which they are incorporated or conduct business, including the United States, the PRC and Hong Kong. The Company’s PRC subsidiaries are generally subject to PRC Enterprise Income Tax at the statutory rate of 25 %, unless preferential tax rates or other tax incentives are available and applicable. Yingxi HK is incorporated in Hong Kong and is subject to Hong Kong profits tax. The standard Hong Kong profits tax rate for corporations is 16.5 %, subject to the applicable two-tiered profits tax rates regime where applicable. The Company’s parent entity, Addentax Group Corp., and KMFG are U.S. entities and are subject to U.S. federal income tax at the applicable federal corporate income tax rate. The Company evaluates uncertain tax positions in accordance with ASC 740. Interest and penalties related to uncertain tax positions, if any, are recognized as a component of income tax expense. The Company did not have any material unrecognized tax benefits, accrued interest or penalties related to uncertain tax positions for the years ended March 31, 2026 and 2025. The Company does not expect that its unrecognized tax positions will materially change within the next 12 months. No provision for U.S. federal income taxes has been made for the years ended March 31, 2026 and 2025 because the relevant U.S. entities did not generate taxable income during the respective periods. No provision for Hong Kong profits tax has been made for the years ended March 31, 2026 and 2025 because Yingxi HK did not generate taxable income during the respective periods. Income tax expense recognized for the years ended March 31, 2026 and 2025 was primarily attributable to the Company’s PRC subsidiaries. F- 12 (m) Leases Lessee The 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. ROU 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 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 date. 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. Lessor As 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. Rental 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. (n) Related parties Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related party transactions. (o) Reverse Stock Split On March 30, 2026, the Company effected a reverse stock split of its outstanding shares of common stock at a ratio of one-for-fifteen. As a result of the reverse stock split, every fifteen shares of common stock outstanding immediately prior to the effective time were reclassified and combined into one share of common stock, without any change in the par value of $ 0.001 per share or the total number of authorized shares. No fractional shares were issued in connection with the reverse stock split, and stockholders who would otherwise have been entitled to receive a fractional share received one whole share of common stock in lieu of such fractional share. All share counts, weighted-average shares outstanding, basic and diluted net loss per share, share-based awards, warrants and convertible preferred stock conversion amounts for all periods presented in these consolidated financial statements have been retrospectively adjusted to reflect the reverse stock split to maintain period-to-period comparability. Total stockholders’ equity was not affected by the reverse stock split. (p) Recently issued and adopted accounting pronouncements The Company reviews new accounting standards as issued by the Financial Accounting Standards Board, or FASB, and evaluates the potential impact of such standards on the Company’s consolidated financial statements and related disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires enhanced disclosures about significant segment expenses and other segment items and applies to all public entities, including entities with a single reportable segment. The Company adopted ASU 2023-07 for the fiscal year ended March 31, 2026. The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows, but resulted in enhanced segment-related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires enhanced income tax disclosures, including additional disaggregation of information in the rate reconciliation and income taxes paid by jurisdiction. The Company adopted ASU 2023-09 for the fiscal year ended March 31, 2026. The adoption of ASU 2023-09 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows, but resulted in enhanced income tax-related disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. ASU 2024-03 requires public business entities to provide additional disclosures about certain categories of expenses included in relevant income statement captions. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statement disclosures. In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. ASU 2024-04 clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as induced conversions. ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. Management has not identified any other recently issued accounting standards that are expected to have a material impact on the Company’s consolidated financial statements or related disclosures. F- 13 4. DISPOSITION OF SUBSIDIARIES AND DISCONTINUED OPERATIONS Disposition of AOT The Company disposed of its subsidiary Dongguan Aotesi Garments Co., Ltd., (“AOT”) a PRC company, a manufacturing company in the garment manufacturing segment, in May 2025 to the local management of AOT. After the disposition, AOT became a third party to the Company. The Company does not conduct any business with AOT. The Company carries on the garment manufacturing segment business through other subsidiaries. The disposition of AOT did not qualify as discontinued operations. Financial position of AOT 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. The difference between AOT’s net assets of $ 26,179 and the consideration received was $ 12,350 , which was reduced by the related foreign currency translation difference of $ 213 . Disposition of HX The Company disposed of its subsidiary Dongguan Hongxiang Commercial Co., Ltd., (“HX”) a PRC company, a company engaged in property management and subleasing business, on July 1, 2025 to the local management of HX. After the disposition, HX became a third party to the Company. The Company does not conduct any business with HX. The Company no longer carries on the property management and subleasing business through HX or any other subsidiary. The disposition of HX qualified as discontinued operations. Financial position of HX at disposal date and gain on disposal: Property management 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 liabilities $ ( 6,972 ) The consideration was $ 13,829 , resulting in a gain of $ 20,801 recognized on the disposal. Disposition of YBY The Company disposed of its subsidiary Shantou Yi Bai Yi Garment Co., Ltd, a PRC Company (“YBY”), a manufacturing company in garment manufacturing segment at end of August 2024 to the local management of YBY. After disposition, YBY became third party to the Company. The Company does not conduct any businesses with YBY. The Company carries on the garment manufacturing segment business through other subsidiaries. The disposition of YBY did not qualify as discontinued operations. Financial position of the entities at disposal date and gain or loss on disposal: Garment Manufacturing Segment Financial position of YBY August 31, 2024, date of disposal Current assets $ 1,165,329 Noncurrent assets 134 Current liabilities ( 863,205 ) Net assets $ 302,258 The consideration was Nil , with the reversal of related foreign currency translation reserve brought forward, resulting in a loss of $ 334,135 recognized on the disposal. The difference between YBY’s net assets of $ 302,258 and the consideration received was $ 302,258 , which was increased by the related foreign currency translation difference of $ 31,877 . F- 14 5. BUSINESS COMBINATION On March 30, 2026, the Company completed the acquisition of 34,200,000 Shares of KMFG, a Nevada-incorporated company headquartered in Shenzhen, People’s Republic of 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; and (ii) a digital publishing business conducted through its wholly owned subsidiary, GW Reader Sdn. Bhd. in Malaysia, which operates a mobile-based online fiction platform utilizing a pay-per-chapter microtransaction model for global readers. The aggregate purchase price for the acquisition was approximately $ 5.5 million, which was satisfied through the transfer of a portion of an existing bond held by the Company. In connection with the consummation of the acquisition, the Company transferred a portion of such bond at closing, in the principal amount of approximately $ 5.5 million, to the Seller (or its designated counterparty) as consideration for the Shares. Following the completion of the acquisition, the Company holds approximately 62.18 % of the voting rights of the issued and outstanding shares of Keemo Fashion, on a fully diluted basis, and Keemo Fashion has become a controlled subsidiary of the Company. The Company recognized goodwill of $ 5,694,696 on this acquisition. The acquisition has been accounted for under the acquisition method of accounting in accordance with ASC 805, “Business Combinations”. The results of KMFG’s operations have been included in the consolidated financial statements since its acquisition date. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the date of acquisition. This table represents the initial accounting for the acquisition. These provisional amounts may be adjusted in the measurement period (that will not exceed one year from the acquisition): SCHEDULE OF PURCHASE PRICE ALLOCATION As of March 30, 2026 Cash in bank $ 15,657 Trade receivable 39 Other receivables 5,132 Goodwill 293,499 Accrued liabilities, other payables and deposits received ( 27,949 ) Deferred Revenue ( 45,017 ) Amount due to related parties ( 554,478 ) Noncontrolling interest 118,421 Net book value at acquisition date ( 194,696 ) Goodwill at acquisition 5,694,696 Purchase consideration $ 5,500,000 Unaudited Pro Forma Condensed Combined Statement of Operations The following unaudited pro forma condensed combined statement of operations presents the results of operations of the Company for the year ended March 31, 2026 as if the acquisition of KMFG had occurred on April 1, 2025, the beginning of the fiscal year. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the actual results of operations that would have occurred had the acquisition been completed on April 1, 2025, nor are they indicative of future operating results. F- 15 The unaudited pro forma condensed combined statement of operations for the fiscal year ended March 31, 2026 give effect to the Acquisition as if it had occurred on April 1, 2025 (the beginning of the fiscal year). Addentax Group Corp. Keemo Fashion Group Limited Pro Forma Adjustments Pro Forma Combined Historical Addentax Group Corp. Keemo Fashion Group Limited Pro Forma Adjustments Pro Forma Combined REVENUE $ 5,371,183 $ - $ - $ 5,371,183 LOSS FROM OPERATIONS $ ( 1,529,220 ) ( 67,368 ) - ( 1,596,308 ) NET LOSS $ ( 4,468,885 ) ( 67,368 ) - ( 4,536,253 ) Less: Net loss attribute to Non-control Interest ( 37.82 %) - - 25,479 25,479 Net loss attribute to equity holders of ADDENTAX GROUP CORP. ( 4,468,885 ) ( 67,368 ) 25,479 ( 4,510,774 ) NET LOSS $ ( 4,468,885 ) ( 67,368 ) - ( 4,536,253 ) FOREIGN CURRENCY TRANSLATION LOSS ( 166,913 ) ( 11,261 ) ( 178,174 ) TOTAL COMPREHENSIVE LOSS ( 4,635,798 ) ( 78,629 ) ( 4,714,427 ) Less: Other comprehensive loss attribute to Non-control Interest ( 37.82 %) 4,259 4,259 Total comprehensive loss attribute to equity holders of ADDENTAX GROUP CORP. ( 4,635,798 ) ( 78,629 ) 29,738 ( 4,710,167 ) Total comprehensive loss attribute to Non-control Interest ( 37.82 %) - ( 29,738 ) ( 29,738 ) NET LOSS PER SHARE, BASIC AND DILUTED ( 6.27 ) - - ( 6.36 ) Weighted average number of common shares outstanding, basic and diluted 713,142 55,000,000 ( 55,000,000 ) 713,142 The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable under the circumstances. 1) Basis of Presentation The accompanying unaudited pro forma condensed combined statement of operations gives effect to the Company’s acquisition of a 62.18 % controlling interest in KMFG (“Target”) (the “Acquisition”). The Acquisition was signed on February 17, 2026 and consummated on March 30, 2026. The unaudited pro forma condensed combined statement of comprehensive loss is presented to illustrate the effect of the Acquisition as if it had been completed on April 1, 2025. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have actually occurred had the Acquisition been completed at the beginning of the periods presented, nor is it necessarily indicative of future consolidated results of operations. 2) Principles of Consolidation and Noncontrolling Interest The Company consolidates Target in the pro forma statement of operations because the Acquisition results in the Company holding a 62.18 % controlling voting interest in Target. Accordingly, the Company reflects 100% of Target’s revenues and expenses in the pro forma combined statement of operations. Net income and total comprehensive income are allocated between the controlling interest and noncontrolling interest based on their respective ownership percentages of 62.18 % and 37.82 %, respectively. 3) Significant Pro Forma Adjustments The material pro forma adjustments included in the accompanying unaudited pro forma condensed combined statement of operations are as follows: (a) To record the total purchase consideration of $ 5,500,000 transferred to acquire the 62.18 % controlling interest in Target, and to record preliminary fair value adjustments to identifiable assets acquired and liabilities assumed, with the excess recorded as goodwill. F- 16 (b) To reflect the allocation of net loss and comprehensive loss between the controlling interest and the 37.82 % noncontrolling interest. (c) To eliminate intercompany transactions between the Company and Target. (d) To recognize income tax effects associated with the pro forma adjustments, based on enacted statutory tax rates. (e) No pro forma adjustments were made for new or refinanced indebtedness, as no new debt was incurred in connection with the Acquisition. 4) Allocation of Net Income and Comprehensive Income Consolidated net income reflects the total results of the combined group. Net income attributable to the noncontrolling interest ( 37.82 %) is deducted from consolidated net income to arrive at net income attributable to the Company’s stockholders. Similarly, total comprehensive income is presented for the consolidated group, and comprehensive income attributable to noncontrolling interest ( 37.82 %) is separately disclosed to derive total comprehensive income attributable to the Company’s stockholders. 5) Limitations of Pro Forma Information The pro forma financial information does not reflect: ● any expected operating synergies, cost savings, or revenue enhancements; ● any one-time transaction, integration, or restructuring costs; ● any changes in operations, capital expenditures, or other anticipated events. Accordingly, the pro forma condensed combined financial information is not intended to represent or be indicative of the actual results of operations that would have occurred had the Acquisition been completed on April 1, 2025, nor is it indicative of future operating results. 6. 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 XKJ Jinlong Huang Management of HSW Yinping Ding Management of HSW & YS Wu Rui and Riches Affiliated Parties (1) Mr. Wu Rui is the Chief Operating Officer of the Company. The Riches Affiliated Parties are affiliated with Mr. Wu Rui and were involved in the Company’s related-party share exchange transaction. KMFG’s related parties KMFG’s shareholders, directors and related parties (1) For purposes of this section, “Riches Affiliated Parties” refers to Riches FO Holdings Limited, Riches Family Office Limited and Riches Elite Technology (Shenzhen) Co., Ltd. Riches FO Holdings Limited is controlled by Mr. Wu Rui, the Company’s Chief Operating Officer, and was the seller in the Company’s related-party share exchange transaction involving Riches Family Office Limited. Riches Elite Technology (Shenzhen) Co., Ltd. is the operating subsidiary of Riches Family Office Limited. The Company leases Shenzhen XKJ office rent-free from Bihua Yang. Hongye Financial Consulting (Shenzhen) Co., Ltd. provided guarantee to the consideration receivable of transfer of a debt security to a third party. On May 15, 2026, the Company entered into a Share Exchange Agreement with Yingxi Industrial Chain Investment Co., Ltd., Riches Family Office Limited, Riches FO Holdings Limited and Mr. Wu Rui, the Company’s Chief Operating Officer and sole shareholder of Riches FO Holdings Limited. Pursuant to the agreement, Yingxi HK agreed to acquire 41.67 % of the issued and outstanding equity interests of Riches Family Office Limited from Riches FO Holdings Limited in exchange for the issuance by the Company of 33,500 shares of Common Stock to Mr. Wu Rui. The transaction constitutes a related-party transaction and was approved by the Audit Committee and the Board of Directors on May 15, 2026. F- 17 The Company had the following related party balances at the end of the years: SCHEDULE OF RELATED PARTY BALANCES Amount due from related party 2026 2025 Hong Zhida (1) 3,626,417 2,856,262 Bihua Yang (2) 1,369,355 1,426,867 Riches affiliated companies 623,100 - Amount due from related party $ 5,618,872 $ 4,283,129 Related party borrowings 2026 2025 Hongye Financial Consulting (Shenzhen) Co., Ltd. $ 101,322 $ 39,174 Jinlong Huang 118,734 122,420 Riches’ affiliated companies 306,946 - Keemo’s related parties 554,478 - Related party borrowings $ 1,081,480 $ 161,594 (1) The increase of related party from Hong Zhida was short term loan to Hong Zhida, which is interest free and would be repaid in one year. (2) The decrease of related party debt from Yang Bihua was mainly due to repayment from Yang Bihua. The borrowing balances of related parties are unsecured, non-interest bearing and repayable on demand. 7. RESTRICTED CASH The proceeds from issuance of the convertible note and warrants were deposited in a Holder Master Restricted Account with East West Bank controlled by the holders of the convertible note and warrants. The restricted cash will be released, over the period from the issuance date to the maturity date of the convertible note, when control account release events occur, which includes: (i) the Company’s receipt of a notice by the Holder electing to voluntarily effect a release of cash to the Company; (ii) the shareholder approval and registration of the new authorized shares according to the Securities Purchase Agreement; and (iii) any conversion of the convertible note. During the year ended March 31, 2026, substantially all of the restricted cash was released following the occurrence of contractual release events, primarily in connection with the conversion and settlement of the Company’s outstanding convertible notes. Accordingly, restricted cash decreased from $ 2,750,000 as of March 31, 2025 to $ 10,756 as of March 31, 2026. The release of approximately $ 2.7 million of restricted cash is presented as a financing cash inflow in the accompanying consolidated statements of cash flows. 8. DEBT SECURITIES HELD-TO-MATURITY SCHEDULE OF DEBT SECURITIES HELD TO MATURITY March 31, 2026 March 31, 2025 Debt securities held-to-maturity $ 12,000,000 $ 17,500,000 The Company purchased a note issued by a third-party investment company on August 24, 2022 with a principal amount of $ 17.5 million. The note bears interest at 2.5 % per annum and is renewable on an annual basis. The debt is guaranteed by Hongye Financial Consulting (Shenzhen) Co., Ltd., a company controlled by the Company’s CEO, Mr. Hong Zhida. As of March 31, 2026 and 2025, accrued coupon interest receivable amounted to $ 437,500 and $ 437,500 , respectively. On March 30, 2026, the Company completed the acquisition of 62.18 % of the outstanding ordinary shares of Keemo Fashion Group Limited (“Keemo Fashion”) (Note 5). As consideration for the acquisition, the Company transferred a portion of the note with a principal amount of approximately $ 5.5 million to the seller. Following the transfer, the remaining principal balance of the debt security held by the Company was $ 12.0 million as of March 31, 2026. 9. INVENTORIES Inventories consist of the following as of March 31, 2026 and 2025: SCHEDULE OF INVENTORIES 2026 2025 Raw materials $ 11,116 $ 10,623 Finished goods 169,861 156,251 Total inventories $ 180,977 $ 166,874 10. ADVANCES TO SUPPLIERS The Company makes advances to third-party suppliers and service providers in the ordinary course of business. These advances primarily relate to deposits and prepayments made in connection with logistics and transportation services, as well as advances for the procurement of inventory used in the garment trading business. Such advances are made to secure service capacity, facilitate the timely provision of services or delivery of goods, and in certain cases to obtain favorable commercial terms. The Company evaluates the creditworthiness and financial condition of its suppliers and service providers before making advance payments. If the Company determines that the recoverability of any advance becomes doubtful due to a supplier’s inability to fulfill its contractual obligations or repay the advance, an allowance for expected credit losses is recognized in accordance with the Company’s accounting policy. F- 18 11. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES Prepayments, deposits and other receivables consist of the following as of March 31, 2026 and 2025: SCHEDULE OF PREPAYMENTS DEPOSITS AND OTHER RECEIVABLES 2026 2025 Prepayments 52,620 50,590 Deposits 37,492 722,035 Receivable of consideration on disposal of subsidiaries 14,466 - Coupon receivable of matured debt security (Note a) 437,500 - Loan to third party (Note b) 2,500,000 2,500,000 Other receivables 460,755 365,722 Prepayments and other receivables $ 3,502,833 $ 3,638,347 Note a: The coupon receivable represents accrued interest income arising from the debt security held-to-maturity. The debt security is guaranteed by Hongye Financial Consulting (Shenzhen) Co., Ltd., a company controlled by our CEO, Mr. Hong Zhida (Note 8). Note b: The Company entered into a loan agreement with an independent third party in September 2022. The principal amount of the loan to the borrower is $ 2.5 million. The loan is interest-free and the maturity date has been extended to August 2026 . 12. PLANT AND EQUIPMENT Plant and equipment consist of the following as of March 31, 2026 and 2025: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT 2026 2025 Production plant $ 65,906 $ 103,242 Motor vehicles 795,306 734,990 Office equipment 36,197 52,194 Total Cost 897,409 890,426 Property, plant and equipment gross 897,409 890,426 Less: accumulated depreciation ( 556,569 ) ( 502,429 ) Plant and equipment, net $ 340,840 $ 387,997 Depreciation expense for the years ended March 31, 2026 and 2025 was $ 77,728 and $ 119,187 , respectively. 13. 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 $ 137,729 (RMB 1,000,000 ) for daily operations. The loans are guaranteed at no cost by the legal representative of HSW. As of March 31, 2026, the Company has borrowed $ 136,593 (RMB 944,255 ) (March 31, 2025: $ 130,051 (RMB 944,255 )) 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 $ 1,301,914 (RMB 9,000,000 ) for daily operations, with Loan Prime Rate of the day prior to the draw down day. As of March 31, 2026, the Company has borrowed $ 535,231 (RMB 3,700,000 ) (March 31, 2025: $ 406,300 (RMB2,950,000)) under this line of credit with annual interest rate of 3.9 %. The revolving credit facility was renewed in November 2025 and the new expiration date will be November 25, 2028 . In December 2023, 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 $ 72,329 (RMB 500,000 ) for daily operations with annual interest rate of 6.72 %, to be expired on December 26, 2025 . The Company has fully repaid this loan facility in September 2025. As of March 31, 2026, the outstanding balance of this loan facility was Nil (March 31, 2025: $ 25,824 (RMB 187,500 )). 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 $ 144,657 (RMB 1,000,000 ) for daily operations, with annual interest rate of 8.244 %. The loan facility was expired on March 22, 2026 . The Company has fully repaid this loan facility when expired. As of March 31, 2026, the outstanding balance of this loan facility was Nil (March 31, 2025: $ 78,702 (RMB 571,429 )). 14. TAXATION (a) Enterprise Income Tax (“EIT”) The Company operates in multiple jurisdictions, including the People’s Republic of China (“PRC”), Hong Kong, Seychelles and the United States, and is subject to the applicable tax laws in those jurisdictions. Yingxi Seychelles was incorporated in the Republic of Seychelles and, under the current laws of Seychelles, is not subject to income taxes. Yingxi HK is subject to Hong Kong Profits Tax. Under the two-tiered profits tax regime, the first HK$ 2 million of assessable profits is taxed at 8.25 %, with the remaining assessable profits taxed at 16.5 %. No provision for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the years ended March 31, 2026 and 2025. F- 19 YX was incorporated in the PRC and is subject to an EIT tax rate of 25 %. No provision for income taxes in the PRC has been made as YX had no taxable income for the years ended March 31, 2026 and 2025. The Company’s PRC operating subsidiaries are subject to the EIT Law of the PRC. The applicable statutory EIT rate is 25 %. Income taxes of the PRC subsidiaries were $ 4,106 and $ 4,649 for the years ended March 31, 2026 and 2025, respectively. The Company’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 United States taxable income for the years ended March 31, 2026 and 2025. The reconciliation of income taxes computed at the applicable PRC statutory enterprise income tax rate to income tax expense is as follows: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION 2026 2025 PRC statutory tax rate 25 % 25 % Computed expected (expenses) benefits $ ( 1,233,228 ) $ ( 1,189,972 ) Temporary differences 944,486 101,036 Permanent differences 227,252 43,506 Changes in valuation allowance 65,596 1,050,079 Reported income tax expenses $ 4,106 $ 4,649 As of March 31, 2026, the accumulated tax losses in China amounting to $ 1.7 million (2025: $ 2.5 million) will expire in five years. As of March 31, 2026, the accumulated net operating loss carried forward in the US entity was $ 14.9 million (2025: $ 10.5 million). Deferred tax assets have not been recognized in respect of any potential tax benefit that may be derived from net operating loss carryforwards and temporary differences related to 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. 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 applicable VAT category for logistics companies, except for PF Branch, which was entitled to a preferential VAT rate of 3 % during the years ended March 31, 2026 and 2025. The Company is 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. The Company’s consulting service is conducted through Yingxi HK, the Company’s Hong Kong subsidiary. Hong Kong does not impose value-added tax, goods and services tax or sales tax. Accordingly, the consulting service conducted through Yingxi HK is not subject to VAT in Hong Kong. F- 20 15. CONSOLIDATED SEGMENT DATA Segment information is consistent with how management 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 three segments: (a) Garment manufacturing . Including manufacturing and distribution of garments; (b) Logistics services . Providing logistic services; (c) Consulting. Providing consulting and advisory services, including insurance consulting and related customer service support. The property management and subleasing business was disposed of during the year and was not included as a continuing operating segment in the current year segment assessment. The Company also provides general corporate services to its segments and these costs are reported as “Corporate and other”. Selected information in the segment structure is presented in the following tables: SCHEDULE OF SEGMENT REPORTING FOR REVENUE Revenues from external customers 2026 2025 Year ended March 31, Revenues from external customers 2026 2025 Garments manufacturing segment 40,911 283,042 Logistics services segment 3,176,771 3,018,325 Consulting 2,153,501 - Others - - Property management and subleasing - 879,547 Total of reportable segments 5,371,183 4,180,914 Corporate and other - - Total consolidated revenue $ 5,371,183 $ 4,180,914 Income (loss) from operations by segment for year ended March 31, 2026 and 2025 are as follows: SCHEDULE OF SEGMENT REPORTING FOR INCOME FROM OPERATION 2026 2025 Year ended March 31, 2026 2025 Garments manufacturing segment ( 48,459 ) ( 100,715 ) Logistics services segment 35,833 249,160 Consulting ( 66,434 ) - Others ( 280 ) - Property management and subleasing - ( 954,448 ) Total of reportable segments $ ( 79,340 ) ( 806,003 ) Corporate and other ( 1,449,880 ) ( 1,010,967 ) Total consolidated loss from operations ( 1,529,220 ) ( 1,816,970 ) Depreciation by segment for year ended March 31, 2026 and 2025 are as follows: SCHEDULE OF SEGMENT REPORTING FOR DEPRECIATION AND AMORTIZATION 2026 2025 Year ended March 31, 2026 2025 Garments manufacturing segment 6,085 6,754 Logistics services segment 69,489 101,888 Consulting - - Others - - Property management and subleasing - 9,214 Total of reportable segments $ 75,574 117,856 Corporate and other 2,154 1,331 Total consolidated depreciation and amortization $ 77,728 119,187 Financial cost by segment for year ended March 31, 2026 and 2025 are as follows: SCHEDULE OF SEGMENT REPORTING FOR FINANCIAL COST 2026 2025 Year ended March 31, 2026 2025 Garments manufacturing segment 20 78 Logistics services segment 41,923 53,066 Consulting 6 - Others - - Property management and subleasing - 152 Total of reportable segments $ 41,949 53,296 Corporate and other 572,850 1,093,547 Total consolidated financial cost $ 614,799 1,146,843 Total assets by segment as of March 31, 2026 and March 31, 2025 are as follows: SCHEDULE OF SEGMENT REPORTING FOR ASSETS Total assets March 31, 2026 March 31, 2025 Garment manufacturing segment $ 171,717 $ 238,981 Logistics services segment 3,059,748 3,167,653 Consulting 1,899,665 - Others 314,316 - Property management and subleasing - 19,855,305 Total of reportable segments 5,445,446 23,261,939 Corporate and other 23,806,651 25,905,398 Consolidated total assets $ 29,252,097 $ 49,167,337 F- 21 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 2026 2025 Year ended March 31, 2026 2025 Revenues Mainland China 3,217,682 4,180,914 Hong Kong 2,153,501 - Total 5,371,183 4,180,914 Revenues 5,371,183 4,180,914 March 31, 2026 March 31, 2025 Long-Lived Assets Mainland China 6,343,692 19,375,723 Long-Lived Assets 6,343,692 19,375,723 16. ACCRUED EXPENSES AND OTHER PAYABLES Accrued expenses and other payables consist of the following as of March 31, 2026 and 2025: SCHEDULE OF ACCRUED EXPENSES AND OTHER PAYABLES 2026 2025 Accrued wages and welfare 85,088 56,479 Accrued expenses 145,895 84,573 Other tax payable 7,873 20,781 Rental payable 25,575 26,072 Interest payable 33,007 31,426 Customers’ deposits - 395,181 Other payables 123,677 1,243,686 Accrued expenses and other payables $ 421,115 $ 1,858,198 17. 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 interest rate of 5 % per annum (the “Convertible Notes”); The Convertible Notes shall be matured on July 4, 2024 . The conversion price is $ 1.25 , subject to adjustment under several conditions. ● 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 Warrant is considered a freestanding instrument issued together with the Convertible Note and measured at its issuance date fair value. Proceeds received were first allocated to the Warrant based on its initial fair value. The initial fair value of the Warrant was $ 3.9 million. The Warrant 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 March 31, 2026, the balance of the Warrant was approximately $ 4.1 million. (March 31, 2025: $ 1.0 million) The Convertible Note is 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 is 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 March 31, 2026, 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 Note or do not meet the definition of a derivative. The total proceeds of the Convertible Note and the Warrants, net of issuance cost, of $ 15.0 million was 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 Note 9,893,979 $ 15,000,000 In January 2023, the Company also granted the placement agent a warrant as partial of agent fee to purchase 0.7 million shares of common stock of the Company. The warrant is matured in five years with an exercise price of $ 1.25 subject to adjustments under different conditions. The warrant was recognized as derivative liability and the initial fair value was $ 0.168 million. The movement of the Company’s convertible notes obligations were as the following for the year ended March 31, 2026 and 2025: SCHEDULE OF CONVERTIBLE NOTES OBLIGATION 2026 2025 Year ended March 31, 2026 2025 Carrying value – beginning balance $ 2,900,160 $ 2,684,697 Converted to Common Stock ( 3,054,240 ) ( 82,642 ) Redemption ( 400,756 ) ( 544,706 ) Amortization of debt discount 484,732 823,058 Deferred debt discount and cost of issuance - ( 250,061 ) Interest charge 70,104 269,814 Carrying value – ending balance $ Nil $ 2,900,160 F- 22 On July 13, 2023, the Company entered into a Waiver and Ratification Agreement with one of the holders of the Convertible Note. According to the agreement, the holder redeemed the full amount of $ 7.5 million for the Convertible Note and irrevocably waives any past, present or future claims, rights and obligations under the Convertible Note. On July 3, 2024, the Company and the investor to the outstanding Note entered into an amendment to the Note, whereby the Note’s maturity date has been extended to July 4, 2025. No other provision of the Note was amended and the Note continues in full force and effect. During the year ended March 31 2026 and 2025, approximately $ 3.1 million and $ 82,642 of the convertible notes was converted into approximately 5.7 million and 132,994 Common Stock, with average effective conversion price of $ 0.5327 and $ 0.6214 per share, respectively. As at March 31, 2026, the Convertible Note was fully redeemed or converted. The Company’s derivative liabilities were as the following for the year ended March 31, 2026 and 2025: SCHEDULE OF DERIVATIVE LIABILITIES 2026 2025 Year ended March 31, 2026 2025 Derivative liabilities –Warrants $ $ Beginning balance 989,852 251,657 Marked to the market 3,511,210 738,195 Ending fair value 4,501,062 989,852 Derivative liabilities – Embedded conversion feature Beginning balance 1,782,498 36,298 Converted to Common Stock ( 1,589,352 ) ( 1,330 ) Remeasurement on change of convertible price 17,625 248,217 Redemption ( 8,979 ) ( 103,786 ) Marked to the market ( 201,792 ) 1,603,098 Ending fair value Nil 1,782,498 Total Derivative fair value at end of period $ 4,501,062 $ 2,772,350 18. LEASES As a lessee Right-of-use asset and lease liabilities The Company implemented ASC 842, Leases, on April 1, 2019 using the modified retrospective approach and did not restate comparative periods. Under ASC 842, lease liabilities are recognized at the present value of future lease payments, with a corresponding right-of-use asset recognized for leases other than short-term leases. A single lease cost is recognized over the lease term on a generally straight-line basis. Cash payments for operating leases are classified as operating activities in the consolidated statements of cash flows. Prior to the disposal of HX on July 1, 2025, the Company leased its head office, plant, and dormitory under operating lease arrangements. The Company also leased several floors in a commercial building for its subleasing and property management services business. Certain leases included options to extend the lease term. The following table summarizes the components of lease expense: SCHEDULE OF LEASE EXPENSES 2026 2025 Operating lease cost 339,428 993,600 Short-term lease cost 126,419 131,520 Lease Cost 465,847 1,125,120 The following table summarizes supplemental information related to leases: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES 2026 2025 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow used in operating leases $ 465,847 $ 1,125,120 Right-of-use assets obtained in exchange for new operating leases liabilities - Weighted average remaining lease term - Operating leases (years) - 13.5 Weighted average discount rate - Operating leases - % 4.90 % As a result of the disposal of HX on July 1, 2025, the Company had no operating lease liabilities as of March 31, 2026. As a lessor Prior to the disposal of HX on July 1, 2025, the Company subleased its leased commercial building to third-party garment wholesalers and retailers under operating lease arrangements. These leases were negotiated for terms ranging from one to five years and generally included provisions for annual rental adjustments based on prevailing market conditions. Rental income from subleasing is disclosed in Note 15, Segment Data. Following the disposal of HX on July 1, 2025, the Company no longer generates rental income from subleasing activities. F- 23 19. SHARE CAPITAL AND RESERVE Common Stock In August 2022, the Company completed its IPO and 5,000,000 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 were issued upon cashless exercise of Underwriter Warrants. On February 3, 2023, 3,370,000 shares were issued as pre-delivery shares to the placement agents. In January 2023, the Company increased its authorized share capital to 250,000,000 shares of common stock with a par value of $ 0.001 per share. On June 26, 2023, the Company effected a 1-for-10 reverse stock split of its outstanding common stock. As a result, the number of issued and outstanding shares was reduced by 33,655,839 shares. Following the reverse stock split, the Company issued 1,644,188 shares of common stock with a par value of $ 0.001 per share. On April 29, 2024, the Company entered into two Private Placement Agreements (the “Agreement”) 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 (the “Common Stock”), resulting in aggregate gross proceeds to the Company of $ 646,800 , which closed on the same day. Pursuant to the Agreement, the Company issued an aggregate of 660,000 unregistered shares of common stock to the Investors. On August 11, 2025, the Company issued and granted 161,665 shares of Common Stock to directors and executive officers pursuant to the Company’s 2024 Equity Incentive Plan. These incentive shares vested immediately. The stock-based compensation expense recognized in connection with these shares was $ 70,001 . On March 30, 2026, the Company effected a reverse stock split of its outstanding shares of common stock at a ratio of one-for-fifteen. As a result of the reverse stock split, every fifteen shares of common stock outstanding immediately prior to the effective time were reclassified and combined into one share of common stock, without any change in the par value of $ 0.001 per share or the total number of authorized shares. No fractional shares were issued in connection with the reverse stock split, and stockholders who would otherwise have been entitled to receive a fractional share received one whole share of common stock in lieu of such fractional share. In accordance with ASC 260-10-55-12, all share and per share amounts for all periods presented in the accompanying consolidated financial statements, including the consolidated statements of changes in stockholders’ equity, have been retroactively adjusted to reflect the reverse stock split for comparative purposes. Specifically, the number of shares of common stock outstanding at the beginning and end of each period, as well as all share issuances and repurchases occurring during the periods presented in the prior year’s statement of changes in stockholders’ equity, have been restated to reflect the reduced number of shares outstanding as if the reverse stock split had occurred at the beginning of the earliest period presented. All share counts, weighted-average shares outstanding, basic and diluted net loss per share, share-based awards, warrants, convertible preferred stock conversion amounts and other share-related information for all periods presented in these consolidated financial statements have been retrospectively adjusted to reflect the reverse stock split and to maintain period-to-period comparability. The reverse stock split did not affect the Company’s total stockholders’ equity. There were 781,256 and 402,918 shares of common stock issued and outstanding as of March 31, 2026 and 2025, respectively, after giving retrospective effect to the reverse stock split. Statutory reserve In accordance with the relevant laws and regulations of the PRC, the 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 years ended March 31, 2026 and 2025 were $ Nil and $ 402 , respectively. The balance of paid-up statutory reserve was $ 37,422 as of both March 31, 2026 and 2025. 20. OTHER INCOME (EXPENSES), NET SCHEDULE OF OTHER INCOME NET 2026 2025 Investment income $ 495,192 $ 437,500 Gain/(Loss) on debts extinguishment 8,979 62,200 Loss on disposal of PPA 23,586 ( 73,236 ) Loss on disposal of subsidiary ( 12,358 ) ( 334,135 ) Penalty income from customers’ defaults - 113,275 Subsidy from government 1,071 5,023 Other 2,897 1,764 Other income, net $ 519,367 $ 212,391 21. 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 are 6.91 and 7.26 at March 31, 2026 and March 31, 2025, respectively. Revenue and expenses are translated at the average yearly exchange rates, which are 7.10 and 7.22 for the two years ended March 31, 2026 and 2025, respectively. The 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- 24 (c) Concentration Risks The following are the percentages of accounts receivable balance of the top five customers over accounts receivable for each segment as of March 31, 2026 and 2025. Garment manufacturing segment SCHEDULE OF CONCENTRATION RISKS March 31, 2026 March 31, 2025 Customer A 100.0 % 100.0 % The high concentration as of March 31, 2026 was mainly due to business development of a large distributor of garments. Logistics services segment March 31, 2026 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 % Consulting services segment March 31, 2026 March 31, 2025 Customer A 98.5 % - Customer B 1.1 % - Customer C 0.4 % - The Company did not generate consulting service revenue during the year ended March 31, 2025 and had no accounts receivable for the consulting service segment as of March 31, 2025. Property management and subleasing There was no account receivable for Property management and subleasing segment as of March 31, 2026 and 2025. Concentration on customers For the year ended March 31, 2026, four customers accounted for more than 10% of total consolidated revenue of the Company, representing approximately 21.0 %, 13.7 %, 12.4 % and 10.6 % of total consolidated revenue, respectively. These customers were from the consulting service segment and logistics services segment. For the year ended March 31, 2025, two customers accounted for more than 10% of total consolidated revenue of the Company, representing approximately 15.9 % and 15.5 % of total consolidated revenue, respectively. Concentration on suppliers The following tables summarized the percentages of purchases from five largest suppliers of each of the reportable segment purchase for the years ended March 31, 2026 and 2025. SCHEDULE OF PURCHASES FROM SUPPLIERS Year ended March 31, 2026 2025 Garment manufacturing segment 100.0 % 41.8 % Logistics services segment 50.3 % 100.0 % Property management and subleasing - % 100.0 % Consulting service segment 61.5 % - Two and Nil suppliers provided more than 10% of our raw materials purchases for the years ended March 31, 2026 and 2025, respectively. Two suppliers provided more than 10% of purchases of our logistics services segment for the years ended March 31, 2026 and 2025. Two suppliers provided more than 10% of services purchases of our Consulting service segment for the year ended March 31, 2026. (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 March 31, 2026, the total outstanding borrowings amounted to $ 671,824 (RMB 4.6 million) with various interest rate from 4.34 % to 8.244 % p.a.(Note 13). F- 25 22. SUBSEQUENT EVENTS The Company evaluated subsequent events through June 29, 2026 , the date on which the consolidated financial statements were available to be issued. Equity Incentive Awards On March 24, 2026, the Compensation Committee approved fully vested share awards under the Company’s 2024 Equity Incentive Plan to certain executive officers. The grant date for the awards was April 8, 2026, and the awards were fully vested and non-forfeitable as of such date. After giving effect to the Company’s one-for-fifteen reverse stock split that became effective on March 30, 2026, the awards consisted of 66,667 shares of Common Stock to Wu Rui, the Company’s Chief Operating Officer, and 12,222 shares of Common Stock to Hong Zhida, the Company’s President, Chief Executive Officer, Secretary and Director. Acquisition of Time Is Loan Limited On April 22, 2026, Yingxi Industrial Chain Investment Co., Ltd. (“Yingxi HK”), the Company’s wholly owned Hong Kong subsidiary, entered into a Share Exchange Agreement with the sole shareholder of Time Is Loan Limited (“Time Is Loan”), a Hong Kong company, to acquire 100 % of the equity interests in Time Is Loan. As consideration, the Company agreed to issue 137,790 shares of its common stock to the seller. On May 15, 2026, the acquisition was completed. As of the date these consolidated financial statements were available to be issued, the Company is evaluating the accounting impact of the acquisition, and accordingly, the financial effects of the acquisition have not yet been determined. Related Party Share Exchange Agreement On May 15, 2026, the Company entered into a Share Exchange Agreement with Yingxi Industrial Chain Investment Co., Ltd., Riches Family Office Limited, Riches FO Holdings Limited and Wu Rui, the Company’s Chief Operating Officer and the sole shareholder of Riches FO Holdings Limited. Pursuant to the agreement, Yingxi Industrial Chain Investment Co., Ltd. agreed to acquire 41.67 % of the issued and outstanding equity interests of Riches Family Office Limited from Riches FO Holdings Limited in exchange for the issuance of 33,500 shares of the Company’s common stock to Wu Rui. The transaction is a related party transaction and was completed on June 15, 2026. Other Subsequent Events Except as disclosed above, management is not aware of any other subsequent events that would require recognition or disclosure in the consolidated financial statements. F- 26 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure On March 25, 2026, the Company dismissed its former independent registered public accounting firm and engaged HML PLT as its new independent registered public accounting firm. The change in accountants was previously reported in the Company’s Current Report on Form 8-K filed with the SEC on March 25, 2026. As disclosed in such Form 8-K, there were no disagreements with the former independent registered public accounting firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, nor were there any reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.