What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-14 compared with 2026-02-13 · 534 added, 462 removed, 103 unchanged (91% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

following discussion and analysis of our financial condition and results of operations for the three and nine months ended December 31,

2025 and 2024 should be read in conjunction with the Financial Statements and corresponding notes included in this Report on Form 10-Q.

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

plans, objectives, expectations, and intentions.

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

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

Note Regarding Forward-Looking Statements in this report.

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

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

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

expressions to identify forward-looking statements.

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

We conduct substantially all

of our operations through our operating companies established in the PRC, primarily YX, our wholly-owned subsidiary and its subsidiaries.

following discussion and analysis of our financial condition and results of operations for the three months ended June 30, 2026 and 2025

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

Our discussion

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

expectations, and intentions.

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

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

Statements in this report.

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

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

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

identify forward-looking statements.

are a Nevada holding company with no material operations of our own.

We conduct substantially all of our operations through our operating

companies established in the PRC, primarily YX, our wholly-owned subsidiary and its subsidiaries.

We are not a Chinese operating company.

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

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

Our holding company structure involves

unique risks to investors.

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

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

decline or become worthless.

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

We classify our businesses into three main segments:

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

the context otherwise requires, all references in this quarter report to “ Addentax ” refer to Addentax Group Corp.,

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

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

Group Corp., our Nevada holding company, is the entity in which our investors are investing.

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

(ii) Yingxi Industrial Chain

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

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

(iv) ShenzhenYingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng Wei Garments Co.,

Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”), (vii) Shenzhen

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

(viii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC

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

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

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

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

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

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

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

wholly owned by Addentax Group Corp.

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

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

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

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

Therefore, our investors will not directly

hold any equity interests in our operating companies.

Our holding company structure involves unique risks to investors.

Chinese regulatory

authorities could disallow our operating structure, which would likely result in a material change in our operations and/or the value

of our Common Stock, including that it could cause the value of such securities to significantly decline or become worthless.

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

As of three months ended

June 30, 2026, our continuing operations primarily consisted of garment manufacturing, logistics services, consulting services and financing

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

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and delivery requirements for our customers.

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

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

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

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

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

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

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

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

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

province, China.

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

retailers in the garment market.

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

space to clients.

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

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

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

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

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

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

related cross-border service support.

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

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

We conduct our consulting service

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

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

KMFG operates two core

business segments:

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

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

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

in Malaysia, which operates a mobile-based

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

As of June 30, 2026, KMFG’s revenue

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

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

and segment presentation as necessary in future periods.

May 15, 2026, the Company completed the acquisition of 100% of the equity interests of Time Is Loan Limited (“Time Is Loan”),

a Hong Kong company and licensed money lender.

Time Is Loan is principally engaged in providing consumer and commercial financing services

in Hong Kong, primarily through short-term personal loans and other financing arrangements.

Its customers are primarily sourced through

online advertising, social media, mobile applications and telephone marketing.

Before approving and disbursing financing, Time Is Loan

performs customer identification, credit assessment and sanctions screening in accordance with its internal credit and compliance procedures.

The results of Time Is Loan have been included in the Company’s consolidated financial statements from the acquisition date.

Manufacturing Business

believe the strength of our garment manufacturing business is mainly due to our consistent emphasis on exceptional quality and timely

delivery of our products.

The primary business objective for our garment manufacturing segment is to expand our customer base and improve

The primary business objective for our garment manufacturing segment is to expand our customer base and improve our profit.

Services Business

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delivery and courier network in China.

As of December 31, 2025, we provide logistics services to over 44 cities in 10 provinces and 2

municipalities.

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

in the year 2026.

Management and Subleasing Business

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

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

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

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

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

As of June 30, 2026, we provided logistics services to over 45 cities in approximately 10 provinces

and 2 municipalities.

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

profit in the year 2027.

Services Business

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

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

service needs.

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

digital tools and private-domain customer management.

Services Business

business objective of our financing services business is to provide consumer and commercial financing services in Hong Kong.

to expand our customer base through digital and other marketing channels while maintaining prudent credit assessment, regulatory compliance

and effective risk management.

We expect to continue developing this business and improve its contribution to the Company’s future

Manufacturing Business

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

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

Services Business

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

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

Management and Subleasing Business

is no significant seasonality in our business.

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

Services Business

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

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

Actual seasonality may vary based on

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

Services Business

expects customer demand for our financing services business to vary based on seasonal consumer spending patterns, short-term liquidity

needs, marketing activities and general economic conditions in Hong Kong.

Customer application activity may increase before holidays

and during periods of higher consumer spending.

Actual seasonality may vary depending on market conditions, borrower demand, competition,

regulatory developments and our credit risk management considerations.

manufacturing Business

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For our long-term and established customers

with good payment track records, we generally provide payment terms between 30 to 180 days following their acknowledgement of receipt

with good payment track records, we generally provide payment terms between 30 to 180 days following the delivery of finished goods.

Services Business

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our receipt of packages.

management and subleasing business

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

Services Business

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

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

We do not directly collect customer insurance premiums.

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

Services Business

financing services, borrowers are required to repay principal and interest in accordance with the repayment schedule set out in the applicable

loan agreement.

Loan terms generally range from approximately half a month to 12 months.

Before approving and disbursing financing, we

perform customer identification, credit assessment and sanctions screening in accordance with our internal credit and compliance procedures.

We monitor repayments on an ongoing basis, and past-due balances are subject to follow-up and collection procedures in accordance with

our internal policies.

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

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

of Critical Accounting Policies

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

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

different conditions or using different assumptions.

and Assumptions

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

In general, management’s estimates

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

to be reasonable under the facts and circumstances.

Actual results could differ from those estimates made by management.

is generated through sale of goods and delivery services.

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

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

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

from contracts with customers.

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

in exchange for those goods and services.

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

identification

of the promised goods and services in the contract;

determination

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

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

of the transaction price to the performance obligations;

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

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

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

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

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

of these performance obligations are distinct.

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

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

Generally, the Company’s

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

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

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

Accounting Estimates

preparation of our consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the consolidated financial

statements and accompanying notes.

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

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

Actual results could differ from those estimates.

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

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

Management has discussed significant audit matters, including

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

Goodwill and Impairment Assessment

As a result of the acquisition of KMFG during the fiscal year ended March

31, 2026, the Company recognized goodwill in its consolidated financial statements.

Goodwill represents the excess of the purchase consideration

over the estimated fair value of identifiable net assets acquired and liabilities assumed in a business combination.

The determination

of goodwill requires management to make judgments and assumptions regarding the fair value of assets acquired and liabilities assumed,

including assumptions related to future cash flows, discount rates, useful lives, market conditions and other valuation inputs.

The Company evaluates goodwill for impairment at least annually and more

frequently if events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable.

During the three

months ended June 30, 2026, management considered whether any events or changes in circumstances indicated potential impairment of goodwill,

including the Company’s operating results, financial performance and other relevant business and market conditions.

No impairment of goodwill

was identified during the three months ended June 30, 2026.

Going Concern Assessment

The Company has a history of net losses and operating losses and has used

cash in operating activities, which have raised substantial doubt about its ability to continue as a going concern.

During the three months

ended June 30, 2026, the Company reported net income, primarily as a result of a non-cash fair value gain on derivative liabilities;

the Company continued to incur a loss from operations and negative cash flows from operating activities.

Management evaluates whether conditions or events, considered in the aggregate,

raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements

This assessment requires management to consider the Company’s liquidity, working capital, operating results, cash flows, debt

obligations, available financing sources and management’s plans to mitigate adverse conditions.

Management’s going concern assessment involves significant judgment, including

assumptions regarding the Company’s ability to improve operating results, manage operating costs, collect receivables, develop its consulting

and financing services businesses and obtain additional financing when necessary.

Changes in these assumptions or the Company’s ability

to execute its plans could affect management’s going concern assessment and related disclosures.

from continuing operations is generated primarily from garment manufacturing, logistics services, consulting services and financing services.

Revenue from contracts with customers relating to garment manufacturing, logistics services and consulting services is recognized 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

Interest income generated from the Company’s financing services is not within the scope of ASC Topic 606 and is recognized

over the contractual term of the underlying financing based on the outstanding principal and the applicable contractual interest rate

or effective yield, as appropriate.

revenue streams within the scope of ASC Topic 606, 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.

following table summarizes the Company’s major revenue streams for the three months ended June 30, 2026 and 2025:

Type of Revenue

June 30, 2026

June 30, 2025

Principal/Agent

Timing of Revenue

Garment Manufacturing Business

Point in time

Logistics Service

Point in time

Consulting Services

Point in time

Financing Service

Over the contractual financing term

Point in time

Property Management Business (discontinued operations;

excluded from total)

$ Nil/ Discontinued operation

$ Discontinued operation

Total revenue from continuing operations

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 three months ended June 30, 2026.

the logistics services business, revenue is generated primarily from the provision of delivery, transportation and related logistics

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 three months ended June 30, 2026.

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 three months ended June 30, 2026.

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 financing services business, the Company provides consumer and commercial financing services through Time Is Loan, the Company’s

wholly owned Hong Kong subsidiary and a licensed money lender.

The financing services business primarily generates interest income from

short-term personal loans and other financing arrangements.

Interest income is not within the scope of ASC Topic 606 and is recognized

over the contractual term of the underlying financing based on the outstanding principal and the applicable contractual interest rate

or effective yield, as appropriate.

Principal repayments are applied against the related loans receivable and are not recognized as income.

Loans receivable are carried at amortized cost, net of an allowance for expected credit losses.

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 only to the Company’s

continuing operations.

contracts with customers within the scope of ASC Topic 606, the Company generally does not have 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 related

to such contracts 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.

The foregoing treatment does not apply to the Company’s financing services

business, for which loans receivable and related interest income are accounted for under the applicable financial instrument and credit

loss guidance.

Company determines if an arrangement is a lease at inception.

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

Finance leases are included in

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

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

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basis over the lease term.

receivable, net

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

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

Account receivables are recognized when the Company

becomes a party to the contractual provisions of the receivables.

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

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

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

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

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

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

The Company determines

the expected credit losses provisions based on ASU No.

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

Measurement of

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

a material impact on the opening balance of accumulated deficit.

To determine expected credit losses on account receivables, the Company

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

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

where appropriate.

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

An impairment gain or loss is recognized

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

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

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

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

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

Any recoveries made are recognized in profit or loss.

issued accounting pronouncements

for Convertible Instruments:

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

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

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

Among other changes, the

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

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

at a substantial premium.

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

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

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

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

accounting treatment under the current guidance.

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

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

Company reviews new accounting standards as issued.

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

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

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

following table summarizes our results of operations for the three months ended December 31, 2025 and 2024.

Receivable and Loan Receivables, Net

receivable are classified as financial assets measured at amortized cost and are stated at their historical carrying amounts, net of

an allowance for expected credit losses.

Accounts receivable are recognized when the Company has an unconditional right to consideration.

The amortized cost represents the amount recognized on initial recognition, adjusted for subsequent collections, amortization, if applicable,

and any allowance for expected credit losses.

Company recognizes an allowance for expected credit losses on accounts receivable in accordance with ASC Topic 326, Financial Instruments—Credit

Losses (“ASC 326”).

In estimating expected credit losses, the Company considers historical credit loss experience, customer

payment history, aging of receivables, debtor-specific factors, current economic conditions and reasonable and supportable forecasts

of future conditions, where appropriate.

Receivables that share similar risk characteristics are generally evaluated on a collective

basis, while receivables that do not share similar risk characteristics are evaluated individually.

are written off when available information indicates that the counterparty is experiencing severe financial difficulty and there is no

reasonable expectation of recovery, including, where applicable, when the counterparty has entered into liquidation or bankruptcy proceedings.

Receivables written off may remain subject to collection or enforcement activities where appropriate.

Any subsequent recoveries are recognized

in profit or loss.

the acquisition of Time Is Loan Limited (“Time Is Loan”) on May 15, 2026, the Company also has loan receivables arising from

its financing services business.

Loan receivables are measured at amortized cost, net of an allowance for expected credit losses.

income is recognized over the contractual term of the underlying financing based on the outstanding principal and the applicable contractual

interest rate or effective yield, as appropriate.

Principal repayments are applied against the related loan receivables and are not recognized

allowance for expected credit losses on loan receivables represents management’s estimate of credit losses expected over the contractual

life of the loans.

In estimating expected credit losses, management considers relevant information including historical loss experience,

borrower credit profiles, delinquency status, repayment history, collateral values, if applicable, current portfolio and economic conditions,

and reasonable and supportable forecasts.

Loans with similar risk characteristics are evaluated on a collective basis, while loans that

no longer share similar risk characteristics are evaluated individually.

of June 30, 2026 and March 31, 2026, the allowance for expected credit losses related to trade and other receivables was approximately

$52,515 and $51,629, respectively.

for the addition of accounting policies related to loan receivables, interest income and the related allowance for expected credit

losses following the acquisition of Time Is Loan, there were no material changes to the Company’s accounting policies during

the three months ended June 30, 2026.

than the changes described above, there is no change in the accounting policies for the three months ended June 30, 2026.

issued and adopted accounting pronouncements

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.

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

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.

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

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.

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.

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.

of Operations for the three months ended June 30, 2026 and 2025

following table summarizes our results of operations for the three months ended June 30, 2026 and 2025.

The table and the discussion

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

Three Months Ended December 31,

Three Months Ended June 30,

Changes in 2026

4 unchanged sentences

Loss from operations

Share of net loss of equity method investee

Other income, net

2 unchanged sentences

Income tax expense

Loss from continuing operations

Income (loss) from discontinued operations

$ (4,196,222 )

$ (1,085,721 )

$ (3,110,501 )

revenue for the three months ended December 31, 2025 increased by approximately $0.1 million, or 12.8%, as compared with the three months

ended December 31, 2024.

The increase was mainly due to the increase of $0.2 million in logistics services revenue.

generated from our garment manufacturing business contributed approximately $0.01 million, or 0.5%, of our total revenue for the three

months ended December 31, 2025.

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

or 1.6% of our total revenue for the three months ended December 31, 2024.

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

volume and fierce market competition.

generated from our logistics services business contributed approximately $1.0 million, or 99.5%, of our total revenue for the three months

ended December 31, 2025.

By comparison, revenue generated from our logistic business contributed approximately $0.8 million or 98.4%

of our total revenue for the three months ended December 31, 2024.

months ended December 31,

(decrease) in

compared to 2024

dollars, except for percentages)

revenue for garment manufacturing

cost of revenue for garment manufacturing

profit for garment manufacturing

revenue for logistics services

toll and other cost of logistics services

Subcontracting

cost of revenue for logistics services

profit for logistics services

cost of revenue

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

material costs for our garment manufacturing business were approximately 93.9% of our total garment manufacturing business revenue

for the three months ended December 31, 2025, as compared with 35.3% for the three months ended December 31, 2024.

The increase in

percentage was mainly because there was no production thus no labor cost in the quarter ended December 31, 2025 as we procured products from external

manufacturers for resale instead of manufacturing.

costs for our garment manufacturing business was nil for the three months ended December 31, 2025, as compared with 38.1% for the three

months ended December 31, 2024.

There was no production during the three months ended December 31, 2025 as we procured products from

external manufacturers for resale instead of manufacturing.

and other expenses for our garment manufacturing business was nil for the three months ended December 31, 2025, as compared with 10.0%

of total garment business revenue for the three months ended December 31, 2024.

There was no production during the three months ended

December 31, 2025.

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

We relied on a few contractors, and the contracting

fees to our largest contractor represented approximately 12.8% ($0.09 million) and 18.2% of total cost of revenues for our service segment

for the three months ended December 31, 2025 and 2024, respectively.

The decrease was attributed to less use of contractors.

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

toll and other costs for our logistics services business for the three months ended December 31, 2025 were approximately $0.6 million

as compared with $0.5 million for the three months ended December 31, 2024.

Fuel, toll and other costs for our logistics services business

accounted for approximately 58.1% of our total service revenue for the three months ended December 31, 2025, as compared with 63.6% for

the three months ended December 31, 2024.

The decrease in percentage was primarily attributable to decreased prices of fuel, toll and

other costs during the quarter.

manufacturing business gross profit for the three months ended December 31, 2025 was $290, as compared with $5,620 for the three months

ended December 31, 2024.

Gross profit accounted for 6.1% of our total garment manufacturing business revenue for the three months ended

December 31, 2025, as compared to 16.6% for the three months ended December 30, 2024.

The decrease in gross profit ratio was mainly due

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

of fixed and variable costs across operations.

profit in our logistics services business for the three months ended December 31, 2025 was $294,623 and gross margin was 30.3%.

profit in our logistics services business for the three months ended December 31, 2024 was $184,545 and gross margin was 22.2%.

in gross profit ratio was mainly due to optimized logistics routes and integrated transportation of goods.

months ended December 31,

(decrease) in

compared to 2024

dollars, except for percentages)

and administrative expenses

Income from operations

General and administrative expenses

selling expenses for our garment manufacturing business for the three months ended December 31, 2025 and 2024 were $9,109 and $28,819,

respectively.

The decrease in selling expenses was primarily due to strategic adjustments within the garment manufacturing segment, which

led to a reduction in advertising and marketing-related expenditures.

Our logistics services segment had no selling expenses

for the three months ended December 31, 2005 and 2024.

Selling expenses consisted primarily of advertisement, local transportation, unloading

charges and product inspection charges.

general and administrative expenses in our garment manufacturing business segment for the three months ended December 31, 2025 and 2024

were $2,739 and $8,021, respectively.

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

ended December 31, 2025 and 2024 were $151,967 and $175,837, respectively.

Our general and administrative expenses of our corporate office

for the three months ended December 31, 2025 and 2024 were $199,891 and $127,522, respectively.

Total general and administrative expenses

for the three months ended December 31, 2025 increased by approximately 13.9% to $354,597 from $311,383 for the three months ended December

The increase was primarily attributable to higher general operating maintenance expenses.

General and administrative expenses

consisted primarily of administrative salaries, office expense, certain depreciation and amortization charges, repairs and maintenance,

legal and professional fees, warehousing costs and other expenses that are not directly attributable to our revenues.

from operations

from operations for the three months ended December 31, 2025 and 2024 was $68,793 and $381,054, respectively.

Loss from operations in

our garment manufacturing segments was $10,859 and $31,220 for the three months ended December 31, 2025 and 2024, respectively.

The reduction in operating loss was primarily

attributable to strategic adjustments implemented in the garment manufacturing segment, which resulted in lower marketing and operating

expenses during the current period.

Income from operations in our logistics services segment was $141,921 and $8,707

for the three months ended December 31, 2025 and 2024, respectively.

The increase in income was mainly due to increased sales and gross

tax expense for the three months ended December 31, 2025 and 2024 was $248 and $3,116, respectively.

YX primarily operates in the PRC

and files tax returns in the PRC.

Industrial Chain Group Co., Ltd is incorporated in the Republic of Seychelles and, under the current laws of Seychelles, is not subject

to income taxes.

HK is incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive tax rate of 16.5%.

No provision for income taxes

in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended December 31, 2025 and 2024.

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

No provision for income taxes

in the PRC has been made as QYTG and YX had no taxable income for the three months ended December 31, 2025 and 2024.

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

All YX’s operating companies are subject to progressive

EIT rates from 5% to 15% in 2025.

The preferential tax rates will expire at end of 2026.

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

No provision for income taxes in the United States

has been made as Addentax Group Corp.

had no United States taxable income for the three months ended December 31, 2025 and 2024.

incurred net loss of approximately $4.2 million and net loss of approximately $1.1million for the three months ended December 31,

2025 and 2024, respectively.

The net loss for the three months ended December 31, 2005 was mainly due to $4.1 million loss from

fair value evaluation from derivative liabilities.

The net loss for the three months ended December 31, 2024 was mainly due to $0.2

million loss from operations, $0.7 million fair value loss, $0.1 million financial cost, and $0.2 million loss from discontinued

Our basic and diluted loss per share was $0.45 and $0.19 for the three months ended December 31, 2025 and

2024, respectively.

of Operations for the nine months ended December 31, 2025 and 2024

following table summarizes our results of operations for the nine months ended December 31, 2025 and 2024.

The table and the discussion

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

Months Ended December 31,

dollars, except for percentages)

from operations

value gain or loss

from continuing operations

Income (loss) from continuing operations

Loss from discontinued operations

$ (4,691,497 )

$ (3,028,364 )

$ (1,663,133 )

revenue for the nine months ended December 31, 2025 increased by $71,985, or 2.8%, as compared with the nine months ended December

The increase was mainly due to the increase of $0.30 million in logistics services revenue, offset by a decrease of $0.23

million in garment manufacturing revenue.

generated from our garment manufacturing business contributed $37,595, or 1.4%, of our total revenue for the nine months ended

December 31, 2025.

By comparison, revenue generated from garment manufacturing business contributed approximately $0.3 million or

8.3% of our total revenue for the nine months ended December 31, 2024.

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

volume as a result of fierce market competition.

generated from our logistics services business contributed approximately $2.6 million, or 98.6%, of our total revenue for the nine months

ended December 31, 2025.

By comparison, revenue generated from our logistic business contributed approximately $2.3 million or 70.2%

of our total revenue for the nine months ended December 31, 2024.

months ended December 31,

(decrease) in

Net income (loss)

for the three months ended June 30, 2026 was approximately $3.4 million.

The increase compared with the corresponding period in 2025

was primarily attributable to approximately $2.5 million of consulting services revenue and approximately $0.17 million of financing

services revenue following the acquisition of Time Is Loan, partially offset by lower logistics services revenue and the continued contraction

of the garment manufacturing business.

Company did not generate garment manufacturing revenue during the three months ended June 30, 2026, compared with approximately $19,896

during the corresponding period in 2025.

The decrease primarily reflected the continued scaling down of the garment manufacturing business

and lower customer order volume.

from logistics services was approximately $721,196 for the three months ended June 30, 2026, compared with approximately $806,458 for

the corresponding period in 2025, representing a decrease of approximately $85,000, or 10.6%.

The decrease primarily reflected lower

delivery volume and customer demand.

The decrease in logistics services as a percentage of total revenue also reflected the significant

contribution from consulting and financing services during the current period.

generated from our consulting services business was approximately $2.5 million, or 74.0% of our total revenue, for the three months ended

June 30, 2026.

The increase primarily reflected the continued development and expansion of our consulting services business during the

The Company did not generate consulting services revenue during the three months ended June 30, 2025.

generated from our financing services business was approximately $0.2 million, or 5.0% of our total revenue, for the three months ended

June 30, 2026.

The financing services business was added following the Company’s acquisition of Time Is Loan Limited on May 15,

2026, and its results have been included in the Company’s consolidated results from the acquisition date.

Accordingly, the Company

did not generate financing services revenue during the three months ended June 30, 2025.

results of the property management and subleasing business for the comparative period have been classified as discontinued operations

following the disposal of HX.

Three months ended June 30,

Increase (decrease) in

2026 compared to 2025

1 unchanged sentence

revenue for garment manufacturing

Raw materials

cost of revenue for garment manufacturing

profit for garment manufacturing

revenue for logistics services

for logistics services

toll and other cost of logistics services

2 unchanged sentences

Profit for logistics services

cost of revenue

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

material costs for our garment manufacturing business were approximately 47.6% of our total garment manufacturing business revenue for

the nine months ended December 31, 2025, as compared with 50.9% for the nine months ended December 31, 2024.

The decrease in percentage

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

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

lower order volumes in the nine months ended December 31, 2025.

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

manufacturing.

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

costs for our garment manufacturing business were approximately 21.7% of our total garment manufacturing business revenue for the nine

months ended December 31, 2025, as compared with 25.1% for the nine months ended December 31, 2024.

We maintained a sustainable level

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

and other expenses for our garment manufacturing business accounted for approximately 3.3% of our total garment business revenue for

the nine months ended December 31, 2025, as compared with 5.2% of total garment business revenue for the nine months ended December 31,

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

We relied on a few contractors, and the contracting

fees to our largest contractor represented approximately 9.6% ($0.2 million) and nil% of total cost of revenues for our service segment

for the nine months ended December 31, 2025 and 2024, respectively.

The increase was attributed to the use of contractors.

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

toll and other costs for our logistics services business for the nine months ended December 31, 2025 were approximately $1.6 million

as compared with $1.3 million for the nine months ended December 31, 2024.

Fuel, toll and other costs for our logistics services

business accounted for approximately 63.4% of our total service revenue for the nine months ended December 31, 2025, as compared

with 56.5% for the nine months ended December 31, 2024.

The increase was primarily attributable to increased revenue during the

nine months ended December 31, 2025.

manufacturing business gross profit for the nine months ended December 31, 2025 was $10,304, as compared with $50,562 for the nine

months ended December 31, 2024.

Gross profit accounted for 27.4% of our total garment manufacturing business revenue for the nine

months ended December 31, 2025, as compared to 18.8% for the nine months ended December 31, 2024.

The increase in gross profit ratio

was mainly due to the procurement of products from external manufacturers for resale instead of manufacturing for the nine months ended December 31, 2025.

profit in our logistics services business for the nine months ended December 31, 2025 was $700,710 and gross margin was 27.1%.

profit in our logistics services business for the nine months ended December 31, 2024 was $875,162 and gross margin was 38.4%.

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

significantly higher toll expenses;

and a competitive

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

revenue growth in the 2025 period.

months ended December 31,

(decrease) in

for consulting service

cost of revenue for consulting service

Profit for consulting service

for financing service

cost of revenue for financing service

Profit for financing service

cost of revenue for other

Profit for other

cost of revenue from continuing operations

profit from continuing operations

our garment manufacturing business, we did not generate revenue for the three months ended June 30, 2026.

Accordingly, no material cost

of revenue was incurred in connection with the garment manufacturing business during the period.

Subcontracting

fees for our logistics services business were approximately $100,574 for the three months ended June 30, 2026, compared with approximately

$48,485 for the corresponding period in 2025, representing an increase of approximately $52,089, or 107.4%.

Subcontracting fees represented

approximately 13.9% and 6.0% of logistics services revenue for the respective periods.

The increase primarily reflected greater utilization

of third-party contractors during the current period.

toll and other transportation-related costs for our logistics services business were approximately $0.5 million for the three months

ended June 30, 2026, compared with approximately $0.6 million for the three months ended June 30, 2025.

Such costs represented approximately

71.4% and 70.8% of the revenue generated from our logistics services business for the three months ended June 30, 2026 and 2025, respectively.

The increase in such costs as a percentage of logistics services revenue was primarily attributable to lower logistics revenue during

the current period and the increased use of third-party contractors.

Company continued to develop its consulting services business during the three months ended June 30, 2026.

Cost of revenue related to

the consulting services business was approximately $2.3 million, representing approximately 92.4% of consulting services revenue for

Such costs primarily consisted of service fees and other amounts payable to third-party service providers and cooperation

partners in connection with the delivery of consulting and coordination services.

May 15, 2026, the Company completed the acquisition of Time Is Loan Limited, a Hong Kong company and licensed money lender, and commenced

consolidating its financing services business from the acquisition date.

Cost of revenue related to the financing services business was

approximately $56,837 for the three months ended June 30, 2026, representing approximately 33.0% of financing services revenue for the

garment manufacturing business did not generate gross profit for the three months ended June 30, 2026, as no revenue was generated from

this business during the period.

By comparison, gross profit from our garment manufacturing business was approximately $3,524 for the

three months ended June 30, 2025, representing a gross margin of approximately 17.7%.

The decrease was primarily attributable to the

continued scaling down of our garment manufacturing business and a significant reduction in customer orders, which resulted in no material

garment manufacturing revenue being recognized during the three months ended June 30, 2026.

profit from our logistics services business for the three months ended June 30, 2026 was approximately $105,709, representing a gross

margin of approximately 14.7%, compared with approximately $186,890 and a gross margin of approximately 23.2% for the three months ended

June 30, 2025.

The decrease in gross profit and gross margin was primarily attributable to lower logistics services revenue during the

current period, together with increased utilization of third-party contractors and relatively higher transportation and other operating

costs as a percentage of revenue.

profit from our consulting services business for the three months ended June 30, 2026 was approximately $193,162, representing a gross

margin of approximately 7.6%.

The relatively low gross margin primarily reflected the significant service fees and other amounts payable

to third-party service providers and cooperation partners in connection with the delivery of consulting and coordination services.

profit from our financing services business for the three months ended June 30, 2026 was approximately $115,348, representing a gross

margin of approximately 67.0%.

The financing services business was included in the Company’s consolidated results following the

acquisition of Time Is Loan Limited on May 15, 2026.

The gross margin primarily reflected interest income generated from the financing

portfolio, net of costs directly associated with the operation of the financing services business.

Three months ended June 30,

Increase (decrease) in

2026 compared to 2025

dollars, except for percentages)

and administrative expenses

$ (1,583,990 )

$ (1,416,299 )

Income from operations

Operating expenses:

Selling expenses

General and administrative expenses

selling expenses for our garment manufacturing business for the nine months ended December 31, 2025 and 2024 were $19,714 and $124,821,

respectively.

Selling expenses consisted primarily of advertisement, local transportation, unloading charges and product inspection charges.

general and administrative expenses in our garment manufacturing business segment for the nine months ended December 31, 2025 and 2024

were $33,758 and $18,984, respectively.

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

ended December 31, 2025 and 2024 were $507,736 and $615,462, respectively.

Our general and administrative expenses for our corporate office

for the nine months ended December 31, 2025 and 2024 were $1,022,083 and $657,032, respectively.

Loss from operations

General and administrative expenses

consisted primarily of administrative salaries, office expense, certain depreciation and amortization charges, repairs and maintenance,

legal and professional fees, warehousing costs and other expenses that are not directly attributable to our revenues.

general and administrative expenses for the nine months ended December 31, 2025 increased by approximately 21.1% to $1.6 million

from $1.3 million for the nine months ended December 31, 2024.

expenses from continuing operations were approximately $99,458 for the three months ended June 30, 2026, compared with approximately

$6,661 for the three months ended June 30, 2025, representing an increase of approximately $92,797, or 1,393.1%.

The increase was primarily

attributable to selling and marketing expenses incurred by our newly acquired financing services business.

Selling expenses attributable

to the financing services business were approximately $95,079 for the three months ended June 30, 2026, primarily consisting of advertising

and customer acquisition-related expenses.

Other selling expenses mainly consisted of local transportation, unloading and product inspection

expenses associated with the Company’s other continuing operations.

and administrative expenses of our garment manufacturing business were approximately $1,654 and $26,450 for the three months ended June

30, 2026 and 2025, respectively.

The decrease was consistent with the continued scaling down of our garment manufacturing operations

during the current period.

and administrative expenses of our logistics services business were approximately $176,571 and $200,372 for the three months ended June

30, 2026 and 2025, respectively.

Company disposed of its property management and subleasing business in July 2025.

General and administrative expenses attributable to

that business for the three months ended June 30, 2025 were approximately $41,131 and are included in discontinued operations rather

than in general and administrative expenses from continuing operations.

and administrative expenses of our consulting services business were approximately $99,738 for the three months ended June 30, 2026.

and administrative expenses of our financing services business were approximately $94,306 for the three months ended June 30, 2026.

financing services business was included in the Company’s consolidated operations following the acquisition of Time Is Loan Limited

on May 15, 2026.

and administrative expenses classified as other were approximately $19,097 for the three months ended June 30, 2026, primarily representing

expenses incurred by Keemo Fashion Group Limited and its subsidiaries.

and administrative expenses of our corporate office were approximately $148,627 and $311,806 for the three months ended June 30, 2026

and 2025, respectively.

General and administrative expenses primarily consisted of administrative salaries, office expenses, depreciation

and amortization, repairs and maintenance, legal and professional fees and other expenses that were not directly attributable to revenue-generating

and administrative expenses increased during the three months ended June 30, 2026 compared with the corresponding period in 2025.

increase was primarily attributable to approximately $0.45 million of stock-based compensation expense recognized in connection with

fully vested equity awards granted on April 8, 2026, together with expenses associated with the consulting services and financing services

businesses and KMFG, partially offset by lower recurring corporate and logistics-related expenses.

from operations

from operations for the nine months ended December 31, 2025 and 2024 was $873,516 and $490,574, respectively.

Loss from operations

in our garment manufacturing segments was $43,169 and $93,243 for the nine months ended December 31, 2025 and 2024, respectively.

The reduction in operating loss was primarily attributable to strategic adjustments implemented in the garment manufacturing

segment, which resulted in lower marketing and operating expenses during the current period.

Income (loss) from operations in our

logistics services segment was $191,698 and $259,144 for the nine months ended December 31, 2025 and 2024, respectively.

decrease in income was mainly due to increase in cost of fuel, toll and other costs.

tax expense for the nine months ended December 30, 2025 and 2024 was $1,082 and $4,643, respectively.

YX primarily operates in the PRC

and files tax returns in the PRC.

Industrial Chain Group Co., Ltd is incorporated in the Republic of Seychelles and, under the current laws of Seychelles, is not subject

to income taxes.

HK is incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive tax rate of 16.5%.

Loss from continuing operations before non-operating items for the three

months ended June 30, 2026 and 2025 was approximately $676,071 and $354,875, respectively, representing an increase of approximately $321,196,

from operations attributable to our garment manufacturing business was approximately $1,654 and $29,587 for the three months ended June

30, 2026 and 2025, respectively.

Loss from operations attributable to our logistics services business was approximately $70,862 and $13,481

for the three months ended June 30, 2026 and 2025, respectively.

Income from operations attributable to our consulting services business

was approximately $93,425 for the three months ended June 30, 2026.

Loss from operations attributable to our financing services business

was approximately $74,037 for the three months ended June 30, 2026.

Other operating loss was approximately $19,097, primarily attributable

to Keemo Fashion Group Limited and its subsidiaries.

Corporate operating expenses were approximately $603,843 and $311,807 for the three

months ended June 30, 2026 and 2025, respectively.

The increase in overall loss from operations was primarily attributable

to higher corporate operating expenses and the operating contribution from our consulting services business, and increased losses from

our logistics services business and expenses associated with our financing services business and Keemo Fashion Group Limited.

tax expense for the three months ended June 30, 2026 and 2025 was approximately $2 and $764, respectively.

YX primarily operates in the

PRC and files tax returns in the PRC jurisdictions.

Yingxi Seychelles

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

HK was incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive tax rate of 16.5%.

No provision for income taxes

in Hong Kong has been made as Yingxi HK had no taxable income for the nine months ended December 31, 2025 and 2024.

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

in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended June 30, 2026 and 2025.

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

No provision for income taxes

in the PRC has been made as QYTG and YX had no taxable income for the nine months ended December 31, 2025 and 2024.

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

All YX’s operating companies are subject to progressive

EIT rates from 5% to 15% in 2025.

in the PRC has been made as WFOE and YX had no taxable income for the three months ended June 30, 2026 and 2025.

operating companies are governed by the Income Tax Laws of the PRC.

All YX’s operating companies are subject to progressive EIT

rates from 5% to 15% in 2026.

The preferential tax rates will expire at end of year 2026.

2 unchanged sentences

has been made as Addentax Group Corp.

had no United States taxable income for the nine months ended December 31, 2025 and 2024.

incurred net loss of approximately $4.7 million and net loss of $3.0 million for the nine months ended December 31, 2025 and 2024,

had no United States taxable income for the three months ended June 30, 2026 and 2025.

Income (Loss)

reported net income of approximately $2.4 million for the three months ended June 30, 2026 and net loss of approximately $0.4 million

for the three months ended June 30, 2025.

Income from continuing operations for the 2026 period was approximately $2.4 million, while

loss from continuing operations and loss from discontinued operations for the 2025 period were approximately $0.1 million and $0.3 million,

respectively.

Our basic and diluted loss per share were $0.50 and $0.53 for the nine months ended December 31, 2025 and 2024, respectively.

Basic and diluted income (loss) per share from continuing operations was $2.93 and ($0.30) for the 2026 and 2025 periods,

respectively;

loss per share from discontinued operations was nil and ($0.61), respectively;

and total basic and diluted income (loss)

per share was $2.93 and ($0.91), respectively.

of cash flows

cash flows information for the nine months ended December 31, 2025 and 2024 is as follow:

months ended December 31,

cash (used in) provided by operating activities

$ (1,082,373 )

cash used in investing activities

cash provided by (used in) financing activities

cash used in operating activities in the nine months ended December 31, 2025 was approximately $1.1 million as compared to cash of

$0.8 million provided by operating activities in the nine months ended December 31, 2024, which was approximately $1.9 million less

than that of the nine months ended December 31, 2024.

The difference in cash flow between the two periods was mainly because of the

movement of operating assets and liabilities in the nine months ended December 31, 2025, resulted in cash outflow of approximately

$1.3 million, while the movement of operating assets and liabilities in the nine months ended December 31, 2024 resulted in cash inflow of approximately

$0.6 million.

cash used in investing activities for the nine months ended December 31, 2025 was approximately $0.28 million, which was $0.13 million

more than the nine months ended December 31, 2024.

The cash outflow was mainly due to purchase of property, plant and equipment of $0.15

million and cash decrease of $0.15 million in disposal of subsidiaries.

cash provided by financing activities for the nine months ended December 31, 2025 was approximately $1.3 million as compared to cash

used in financing activities of $1.0 million in the nine months ended December 31, 2024, which was approximately $0.34 million less

than the nine months ended December 31, 2025.

The difference in cash flow between the two periods was mainly because in the nine

months ended December 31, 2025, the Company released of $2.7 million of restricted cash from the issuance and conversion of certain convertible notes, paid net cash advance

of $2.6 million to related parties, and paid $0.39 million for the redemption of convertible notes not converted.

By comparison, in

the nine months ended December 31, 2024, the Company did not have released restricted cash, paid $1.1 million net cash advance to

related parties, and received net proceeds from bank loans of $0.2 million.

cash flow information for the three months ended June 30, 2026 and 2025 is as follows:

Three months ended June 30,

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

cash used in operating activities in the three months ended June 30, 2026 decreased by approximately $0.43 million compared with that

of the three months ended June 30, 2025.

The decrease was because (i) net loss adjusted to operating cash flow for the three months

ended June 30, 2026 was $0.1 million less than that of the three months ended June 30, 2025;

(ii) the movement of operating assets and

liabilities in the three months ended June 30, 2026 resulted in cash inflow of approximately $0.1 million, which was $0.2 million more

than that of the corresponding period in 2025.

cash used in investing activities for the three months ended June 30, 2026 was approximately $0.4 million more than that of 2025.

It was mainly due to payment of approximately $0.6 million for long-term loans in our financing service business and cash inflow of $0.2

million from acquired subsidiary by transfer of common stock of the Company.

cash provided by financing activities for the three months ended June 30, 2026 increased by approximately $0.1 million, compared to the

three months ended June 30, 2025.

The increase was mainly because in the three months ended June 30, 2026, the related parties repaid

$0.2 million to the Company, and received proceeds from loan payable of $0.4 million.

While in the three months ended June 30, 2025,

the Company had release of restricted cash of $1.3 million, paid net cash advance of $0.9 million to related parties, and received net

proceeds from bank loans of $0.1 million.

Condition, Liquidity and Capital Resources

of December 31, 2025, we had cash on hand of approximately $0.2 million, total current assets of approximately $27.9 million and current

of June 30, 2026, we had cash on hand of approximately $0.8 million, total current assets of approximately $27.4 million and current

liabilities of approximately $7.4 million.

We expect to fund our operations through revenue generated by our business, proceeds from prior fundraising activities,

and capital contributions from our chief executive officer, Mr.

We presently finance our operations primarily through cash flows from revenue,

existing cash resources, capital contributions or financial support from our chief executive officer, Mr.

Hong Zhida, and, if

necessary, potential future financing activities, including equity financing, debt financing, private placements or other financing

arrangements.

There can be no assurance that additional financing will be available to us on commercially acceptable terms, or at

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

as well as to achieve our strategic objectives, Mr.

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

Hong has indicated his intention and willingness to provide additional equity financing,

if necessary.

Currency Translation Risk

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

in foreign exchange rates between the U.S.

dollar and the Chinese Renminbi (“RMB”).

All of our sales are in RMB.

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

As of December 31, 2025, the market foreign exchange rate was RMB 7.02 to

Our financial statements are translated into U.S.

Our operations are located primarily in China and Hong Kong, which may give

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

and the Chinese Renminbi (“RMB”) and Hong Kong dollar (“HKD”).

Our sales are primarily denominated in RMB, while

sales generated by our Hong Kong operations are denominated in HKD.

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

As of June 30, 2026, the market foreign exchange rates were RMB 6.80 and HKD 7.84 to one U.S.

dollar, respectively.

Our financial statements

are translated into U.S.

dollars using the closing rate method.

The balance sheet items are

translated into U.S.

dollars using the exchange rates at the respective balance sheet dates.

The capital and various reserves are translated

at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average

exchange rate for the period.

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

The foreign currency translation gain (loss) for the nine months ended December 31, 2025 and 2024 was approximately $(0.12) million

and $0.06 million, respectively.

The balance sheet items are translated into U.S.

dollars using the exchange

rates at the respective balance sheet dates.

The capital and various reserves are translated at historical exchange rates prevailing at

the time of the transactions while income and expenses items are translated at the average exchange rate for the period.

All translation

adjustments are included in accumulated other comprehensive income in the statement of equity.

The foreign currency translation (loss)

for the three months ended June 30, 2026 and 2025 was approximately $(0.06) million and ($0.04) million, respectively.

Sheet Arrangements

have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of December 31, 2025 that

have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues

or expenses, results of operations, liquidity, capital expenditures or capital resources.

have no off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) as of June 30, 2026 that have

or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses,

results of operations, liquidity, capital expenditures or capital resources.

Quantitative and Qualitative Disclosures About Market Risk

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Item 2. Management’s Discussion and Analysis