ADDENTAX GROUP CORP. 10-K

Item 8. Financial Statements and Supplementary Data ADDENTAX GROUP CORP. FINANCIAL STATEMENTS Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 6255) F-1 Consolidated Balance sheets as of March 31, 2025 and 2024 F-2 Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended March 31, 20254 and 2024 F-3 Consolidated Statements of Changes in Equity for the years ended March 31, 2025 and 2024 F-4 Consolidated Statements of Cash Flows for the years ended March 31, 2025 and 2024 F-5 Notes to Consolidated Financial Statements for the years ended March 31, 2025 and 2024 F-6 – F-21 56 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. (the “Company”) as of March 31, 2025, and 2024, and the related consolidated statement of operations and comprehensive income (loss), changes in equity, and cash flow for the year ended March 31, 2025, and 2024, 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, 2025, and 2024, and the result of its operations and its cash flow for year then ended March 31, 2025, and 2024, in conformity with accounting principles generally accepted in the United States. Explanatory Paragraph – Going Concern The accompanying consolidated 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 consolidated financial statements, the Company has incurred operating losses for the past two financial years, which raises concerns about the Company’s ability to continue as a going concern. These conditions indicate that a material uncertainty exists that raise substantial doubt on the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note2(b) in the consolidated financial statements. The consolidated 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. Going concern Description of the Matter As described in Note 2(b) to consolidated financial statements, the Company has a history of operating losses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Historically, the Company has relied principally on both operational sources of cash and non-operational sources of equity and debt financing to fund its operations and business development. The Company’s ability to continue as a going concern depends on management’s ability to successfully execute its business plan which includes increasing the utilization rate of existing staff and potential financing from public market or private placement. However, there is no assurance that the measures above can be achieved as planned. This significant unusual situation is a critical audit matter as it relates to a material disclosure of going concern and involved complex estimation by management. How we Addressed the Matter in Our Audit Our principal audit procedures included, among others: ● Obtaining an understanding, and evaluating management’s assessment on whether there are conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern for a reasonable period of time; ● Assessing the management’s plans and obtaining sufficient appropriate audit evidence to determine whether or not substantial doubt can be alleviated or still exists; ● Reviewing the relevant disclosures to the consolidated financial statements. /s/ Pan-China Singapore PAC ( 6255 ) Chartered Accountants Singapore June 30, 2025 F- 1 ADDENTAX GROUP CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In U.S. Dollars, except share data or otherwise stated) March 31, 2025 March 31, 2024 ASSETS CURRENT ASSETS Cash and cash equivalents $ 324,953 $ 816,186 Restricted cash 2,750,000 2,750,000 Accounts receivables 929,817 2,106,451 Debt securities held-to-maturity 17,500,000 17,500,000 Inventories 166,874 63,505 Other receivables 3,638,347 1,922,996 Advances to suppliers 198,494 1,009,362 Amount due from related party 4,283,129 3,012,892 Total current assets 29,791,614 29,181,392 NON-CURRENT ASSETS Plant and equipment, net 387,997 568,854 Operating lease right of use asset 18,722,277 19,796,564 Long-term prepayment 265,449 291,938 Long-term receivables - 2,500,000 Total non-current assets 19,375,723 23,157,356 TOTAL ASSETS $ 49,167,337 $ 52,338,748 LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loan $ 640,878 $ 440,671 Accounts payable 53,199 359,488 Related party borrowings 161,594 1,146,745 Advances from customers 332,492 202,567 Accrued expenses and other payables 1,858,198 1,372,962 Lease liabilities, current portion 905,958 1,059,497 Total current liabilities 3,952,319 4,581,930 NON-CURRENT LIABILITIES Convertible debts 2,900,160 2,684,697 Derivative liabilities 2,772,350 287,955 Lease liability, net of current portion 17,810,700 18,737,066 Total non-current liabilities 23,483,210 21,709,718 TOTAL LIABILITIES 27,435,529 26,291,648 EQUITY Common stock ($ 0.001 par value, 250,000,000 shares authorized, 6,043,769 and 5,383,769 shares issued and outstanding as of March 31, 2025 and 2024, respectively) $ 6,044 $ 5,384 Additional paid-in capital 35,240,981 34,510,869 Statutory reserve 37,422 37,020 Accumulated deficits ( 13,663,790 ) ( 8,569,190 ) Accumulated other comprehensive income 111,151 63,017 Total equity 21,731,808 26,047,100 TOTAL LIABILITIES AND EQUITY $ 49,167,337 $ 52,338,748 See accompanying notes to the consolidated financial statements. F- 2 ADDENTAX GROUP CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (In U.S. Dollars, except share data or otherwise stated) FOR THE YEARS ENDED MARCH 31, 2025 AND 2024 2025 2024 REVENUES $ 4,180,914 $ 5,153,753 COST OF REVENUES ( 3,546,657 ) ( 4,038,668 ) GROSS PROFIT $ 634,257 $ 1,115,085 OPERATING EXPENSES Selling and marketing ( 393,226 ) ( 130,603 ) General and administrative ( 2,058,001 ) ( 2,115,678 ) Total operating expenses $ ( 2,451,227 ) $ ( 2,246,281 ) LOSS FROM OPERATIONS ( 1,816,970 ) ( 1,131,196 ) Change in fair value of warrants and embedded conversion feature ( 2,339,448 ) 1,986,886 Interest income 1,321 6,877 Interest expenses ( 1,146,843 ) ( 3,652,803 ) Other income (expenses), net 212,391 ( 307,577 ) LOSS BEFORE INCOME TAX EXPENSE $ ( 5,089,549 ) $ ( 3,097,813 Income tax expense ( 4,649 ) ( 11,605 ) NET LOSS ( 5,094,198 ) ( 3,109,418 ) Foreign currency translation gain 48,133 82,490 TOTAL COMPREHENSIVE LOSS $ ( 5,046,065 ) $ ( 3,026,928 ) EARNING PER SHARE Basic and diluted $ ( 0.85 ) $ ( 0.71 ) Weighted average number of shares outstanding – Basic and diluted 5,993,139 4,387,187 See accompanying notes to the consolidated financial statements. F- 3 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, 2025 AND 2024 Shares Amount paid-in capital Unrestricted Statutory reserve comprehensive loss Equity (Deficit) Common Stock Additional Retained earnings Accumulated other Total Shares Amount paid-in capital Unrestricted Statutory reserve comprehensive loss Equity (Deficit) BALANCE AT MARCH 31, 2023 35,454,670 $ 35,455 $ 29,528,564 $ ( 5,451,209 ) $ 28,457 $ ( 19,473 ) $ 24,121,794 Issuance of common stocks before reversed split 1,940,750 1,941 ( 1,941 ) - - - - Reverse stock split ( 33,655,878 ) ( 33,656 ) 33,656 New shares for round up of fragmental shares 39 0 0 - - - - Issuance of new shares after reversed split 1,644,188 1,644 ( 1,644 ) - - - - Additional paid-in capital from conversion of convertible debts - - 4,952,234 - - - 4,952,234 Appropriation of Statutory reserve - - - ( 8,563 ) 8,563 - - Foreign currency translation - - - - - 82,490 82,490 Net income for the year - - - ( 3,109,418 ) - - ( 3,109,418 ) BALANCE AT MARCH 31, 2024 5,383,769 $ 5,384 $ 34,510,869 $ ( 8,569,190 ) $ 37,020 $ 63,017 $ 26,047,100 Balance 5,383,769 $ 5,384 $ 34,510,869 $ ( 8,569,190 ) $ 37,020 $ 63,017 $ 26,047,100 Issuance of new shares 660,000 660 646,140 - - - 646,800 Additional paid-in capital from conversion of convertible debts - - 83,972 - - - 83,972 Appropriation of Statutory reserve - - - ( 402 ) 402 - - Foreign currency translation - - - - - 48,134 48,134 Net income for the year - - - ( 5,094,198 ) - - ( 5,094,198 ) BALANCE AT MARCH 31, 2025 6,043,769 $ 6,044 $ 35,240,981 $ ( 13,663,790 ) $ 37,422 $ 111,151 $ 21,731,808 Balance 6,043,769 $ 6,044 $ 35,240,981 $ ( 13,663,790 ) $ 37,422 $ 111,151 $ 21,731,808 See accompanying notes to the consolidated financial statements. F- 4 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, 2025 AND 2024 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ ( 5,094,198 ) $ ( 3,109,418 ) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 1,671,157 951,646 Amortization of debt discount 1,092,871 3,616,952 Investment income ( 330,000 ) ( 218,750 ) Fair value (gain) or loss 2,339,448 ( 1,986,886 ) (Gain)/Loss on debts extinguishment ( 62,200 ) 697,318 Gain on bargain purchase - ( 996 ) Loss from sale of property and equipment 73,236 - Loss on disposal of subsidiary 334,135 - Changes in operating assets and liabilities: Accounts receivable 767,233 ) ( 247,562 ) Inventories ( 112,228 ) 222,023 Advances to suppliers 72,234 271,713 Other receivables 1,129,468 ( 259,260 ) Accounts payables ( 306,289 ) 91,987 Accrued expenses and other payables ( 888,791 ) ( 551,039 ) Advances from customers 129,925 110,799 Net cash provided by (used in) operating activities $ 816,001 $ ( 411,473 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of plant and equipment ( 197,592 ) ( 135,431 ) Cash acquired from subsidiary - 226,162 Cash decreased in disposal of subsidiaries ( 8,219 ) - Net cash (used in) provided by investing activities $ ( 205,811 ) $ 90,731 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from related party borrowings 169,158 2,968,654 Repayment of related party borrowings ( 301,522 ) ( 4,689,583 ) Cash advance to related parties ( 3,817,099 ) ( 2,154,759 ) Repayment from related parties 2,568,167 - Proceeds from bank borrowings 1,016,440 662,026 Repayment of bank borrowings ( 797,795 ) ( 352,134 ) Restricted cash - 4,500,000 Payment of issuance cost of convertible notes - ( 412,500 ) Payment for redemption of convertible debts ( 586,290 ) - Proceeds from issuance of common stocks 646,800 - Net cash (used in) provided by financing activities $ ( 1,102,141 ) $ 521,704 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 491,951 ) 200,962 Effect of exchange rate changes on cash and cash equivalents 718 52,513 Cash and cash equivalents, beginning of year 816,186 562,711 CASH AND CASH EQUIVALENTS, END OF YEAR $ 324,953 $ 816,186 Supplemental disclosure of cash flow information: Cash paid during the year for interest 52,617 25,562 Cash paid during the year for income tax 4,649 11,605 Supplemental disclosure of non-cash investing and financing activities: Right-of-use assets obtained in exchange for operating lease obligations - 20,146,774 See accompanying notes to the consolidated financial statements. F- 5 ADDENTAX GROUP CORP. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED MARCH 31, 2025 AND 2024 1. ORGANIZATION AND BUSINESS ACQUISITIONS ATXG and its subsidiaries (the “Company”) are engaged in the business of garments manufacturing, providing logistic services, property leasing and management service in the People’s Republic of China (“PRC” or “China”). As of March 31, 2025, 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 2025 % of effective ownership interest held by the Group in 2024 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 % Qianhai Yingxi Textile & Garments Co., Ltd. (“WFOE”) P. R. China Investment holding Yingxi Industrial Chain Investment Co., Ltd. 100 % 100 % Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd. (“YX”) P. R. China Investment holding Qianhai Yingxi Textile & Garments Co., Ltd. 100 % 100 % Dongguan Heng Sheng Wei Garments Co., Ltd. (“HSW”) P. R. China Garment Manufacturing 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 % Dongguan Aotesi Garments Co.,Ltd. (“AOT”) 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 % Dongguan Hongxiang Commercial Co., Ltd. (“HX”) P. R. China Property Management & Subleasing Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd. 100 % 100 % F- 6 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 Group has a history of operating losses, $ 5,094,198 and $ 3,109,418 and for the years ended March 31, 2025 and 2024. These conditions raise substantial doubt about the Group’s ability to continue as a going concern. Historically, the Group has relied principally on both operational sources of cash and non-operational sources of equity and debt financing to fund its operations and business development. The Group’s ability to continue as a going concern depends on management’s ability to successfully execute its business plan which includes increasing the utilization rate of existing staff and potential financing from public market or private placement. However, there is no assurance that the measures above can be achieved as planned. Nevertheless, management prepared the consolidated financial statements assuming the Group will continue as a going concern. The consolidated financial statements 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) Fair Value Measurement Accounting Standards Codification (“ASC”) 820 “ Fair Value Measurements and Disclosures “, which defines fair value, establishes a framework for measuring fair value and expands 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, 2025. 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. (d) 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, 2025 and 2024. 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- 7 (e) Accounts Receivable, net Accounts receivable, net are stated at the historical carrying amount net of allowance for doubtful accounts. Account 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. 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 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. 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 $ 49,457 and Nil for the years ended March 31, 2025 and 2024. 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, 2025. (f) 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 write-downs for obsolete finished goods for the years ended March 31, 2025 and 2024. (g) 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- 8 (h) 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, 2025 and 2024. (i) Revenue Recognition Revenue is generated through sale of goods, delivery services, and provision of property management and subleasing. 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 or services. 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: (i) identification of the promised goods and services in the contract; (ii) determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The 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 of the good or service. F- 9 Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Cost of revenues for garment manufacturing segment includes the direct raw material cost, direct labor cost, manufacturing overheads including depreciation of production equipment and rent. Cost of revenue for logistics services segment includes gasoline and diesel fuel, toll charges and subcontracting fees. Cost of revenue of property management and subleasing business was mainly the amortization of right-of-used assets for the subleasing business. (j) 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. (k) 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 difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the years in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company has a history of tax losses and there is no convincing evidence that sufficient taxable income will be available against which the deferred tax asset can be utilized, therefore, the Company does not recognize any tax benefits for the year ended March 31, 2025 and 2024. The Company’s Chinese subsidiaries are governed by the Income Tax Laws of the PRC. The PRC federal statutory tax rate is 25 %. The Company files income tax returns with the relevant government authorities in the PRC. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the years ended March 31, 2025 and 2024. The Company’s effective tax rate differs from the PRC federal statutory rate primarily due to non-deductible expenses, temporary differences and preferential tax treatments. F- 10 The U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21 % for taxable years beginning after December 31, 2017 ; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transaction tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump-sum payment. The Company measured the current and deferred taxes based on the provisions of the Tax legislation. After the Company’s measurement, no deferred tax benefit nor expense was recorded relating to the Tax Act changes for the years ended March 31, 2025 and 2024. (l) 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 use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement 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. (m) 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 party 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 he Company may deal with if one party control 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. (n) Recently issued and adopted accounting pronouncements Accounting for Convertible Instruments: In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s consolidated financial statements. F- 11 4. DISPOSITION OF SUBSIDIARIES 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 will not have any businesses with YBY. The Company will carry 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 SCHEDULE OF FINANCIAL POSITION OF ENTITIES AND GAIN OR LOSS ON DISPOSAL 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. 5. RELATED PARTY TRANSACTIONS SCHEDULE OF RELATED PARTIES RELATIONSHIP WITH COMPANY Name of Related Parties Relationship with the Company Zhida Hong President, CEO, and a director of the Company Hongye Financial Consulting (Shenzhen) Co., Ltd. A company controlled by CEO, Mr. Zhida Hong Bihua Yang A legal representative of XKJ Dewu Huang A legal representative of YBY, ceased to be related party at August 31, 2024 when YBY was disposed of. Jinlong Huang Management of HSW 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. F- 12 The Company had the following related party balances at the end of the years: SCHEDULE OF RELATED PARTY BALANCES Amount due from related party 2025 2024 Hong Zhida (1) 2,856,262 2,154,759 Bihua Yang (2) 1,426,867 858,133 Amount due from related party $ 4,283,129 $ 3,012,892 Related party borrowings 2025 2024 Hongye Financial Consulting (Shenzhen) Co., Ltd. $ 39,174 $ 170,967 Dewu Huang (3) - 864,599 Jinlong Huang 122,420 111,179 Related party borrowings $ 161,594 $ 1,146,745 (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 increase of related party debt from Yang Bihua was mainly due to the cash paid in advance to Yang Bihua. During year ended March 31, 2025, the Company received financial support of approximately $ 0.8 million from Yang Bihua and provided a short term loan of approximately $ 1.3 million to Yang Bihua. (3) The Company received financial support from Huang Dewu to fund company’s daily operation. The decrease is because YBY was disposed of in August 2024. The borrowing balances of related parties are unsecured, non-interest bearing and repayable on demand. 6. 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. 7. DEBT SECURITIES HELD-TO-MATURITY SCHEDULE OF DEBT SECURITIES HELD TO MATURITY March 31, 2025 March 31, 2024 Debt securities held-to-maturity $ 17,500,000 $ 17,500,000 The Company purchased a note issued by a third-party investment company on August 24, 2022. The principal amount of the note is $ 17,500,000 . The note is renewable with one-year tenor on August 23, 2023 and 2.5 % p.a. coupon. As of March 31, 2025 and 2024, the coupon receivable is $ 437,500 and $ 437,500 , respectively. On August 23, 2024, the Company entered into an agreement to transfer the principal and coupon receivable to a third party. The debt is guaranteed by Hongye Financial Consulting (Shenzhen) Co., Ltd., the company controlled by our CEO, Mr. Hong Zhida. 8. INVENTORIES Inventories consist of the following as of March 31, 2025 and 2024: SCHEDULE OF INVENTORIES 2025 2024 Raw materials $ 10,623 $ 20,947 Finished goods 156,251 42,558 Total inventories $ 166,874 $ 63,505 9. ADVANCES TO SUPPLIERS The Company has made advances to third-party suppliers in advance of receiving inventory parts. These advances are generally made to expedite the delivery of required inventory when needed and to help to ensure priority and preferential pricing on such inventory. The amounts advanced to suppliers are fully refundable on demand. The Company reviews a supplier’s credit history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would recognize bad debt expense in the period they are considered unlikely to be collected. F- 13 10. PREPAYMENTS AND OTHER RECEIVABLES Prepayments and other receivables consist of the following as of March 31, 2025 and 2024: SCHEDULE OF PREPAYMENTS AND OTHER RECEIVABLES 2025 2024 Prepayment 50,590 34,693 Deposit 722,035 741,465 Receivable of consideration on disposal of subsidiaries - 152,882 Coupon receivable of matured debt security (Note) - 437,500 Other receivables 365,722 556,456 Prepayments and other receivables $ 1,138,347 $ 1,922,996 Note: The coupon receivable of the debt security held-to-maturity was transferred together with the principal to a third party. It is guaranteed by Hongye Financial Consulting (Shenzhen) Co., Ltd., a company controlled by our CEO, Mr. Hong Zhida (Note 7). 11. PLANT AND EQUIPMENT Plant and equipment consist of the following as of March 31, 2025 and 2024: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT 2025 2024 Production plant $ 103,242 $ 105,738 Motor vehicles 734,990 1,047,121 Office equipment 52,194 52,486 Property, plant and equipment gross 890,426 1,205,345 Less: accumulated depreciation ( 502,429 ) ( 636,491 ) Plant and equipment, net $ 387,997 $ 568,854 Depreciation expense for the years ended March 31, 2025 and 2024 was $ 119,187 and $ 114,539 , respectively. 12. LONG-TERM RECEIVABLES The Company entered into a long-term loan agreement with an independent third party in September 2022. The principal to the borrower is $ 2.5 million. The loan is interest free and will be expired in August 2025 . It was reclassified to Other Receivables at March 31, 2025. 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, 2025, the Company has borrowed $ 130,051 (RMB 944,255 ) (March 31, 2024: $ 130,779 , or 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 $ 1,239,561 (RMB 9,000,000 ) for daily operations, with Loan Prime Rate of the day prior to the draw down day. As of March 31, 2025, the Company has borrowed $ 406,300 (RMB 2,950,000 ) (March 31, 2024: $ 110,799 ) under this line of credit with annual interest rate of 3.9 %. The revolving credit facility will be expired on February 1, 2026. 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 $ 68,864 (RMB 500,000 ) for daily operations. As of March 31, 2025, the Company has borrowed $ 25,824 (RMB 187,500 ) (March 31, 2024: RMB 437,500 ) under this line of credit with annual interest rate of 6.72 %. The loan facility will be expired on December 26, 2025 . 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 $ 137,729 (RMB 1,000,000 ) for daily operations. As of March 31, 2025, the Company has borrowed $ 78,702 (RMB 571,429 ) (March 31, 2024: $ 138,500 ) under this line of credit with annual interest rate of 8.244 %. The loan facility will be expired on March 22, 2026 . 14. TAXATION (a) Enterprise Income Tax (“EIT”) The Company operates in the PRC and files tax returns in the PRC jurisdictions. Yingxi Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of the British Virgin Islands, is not subject to income taxes. Yingxi HK was incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive rate of 16.5 %. No provision for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the years ended March 31, 2025 and 2024. F- 14 YX were 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, 2025 and 2024. All Yingxi’s operating companies were governed by the Income Tax Laws of the PRC and subject to progressive EIT rates from 5 % to 15 % in 2025 and 2024. The preferential tax rate will be expired at end of year 2025 and the EIT rate will be 25% from year 2025. Income taxes of the PRC companies were $ 4,649 and $ 11,605 for the year ended March 31, 2025 and 2024, 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, 2025 and 2024. The reconciliation of income taxes computed at the PRC federal statutory tax rate applicable to the PRC, to income tax expenses are as follows: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION 2025 2024 PRC statutory tax rate 25 % 25 % Computed expected (expenses) benefits $ ( 1,189,972 ) $ ( 774,454 ) Temporary differences 101,036 74,805 Permanent difference 43,506 34,726 Changes in valuation allowance 1,050,079 676,528 Reported income tax expense $ 4,649 $ 11,605 As of March 31, 2025, the accumulated tax losses in China amounting to $ 2.5 million (2024: $ 2.3 million) will expire in five years. As of March 31, 2025, the accumulated net operating loss carried forward in the US entity was $ 10.5 million (2024: $ 6.9 million). Deferred tax assets had not been recognized in respect of any potential tax benefit that may be derived from non-capital loss carry forward and property and equipment due to past negative evidence of previous cumulative net losses and uncertainty upon restructuring. The management will continue to assess at each reporting period to determine the realizability of deferred tax assets. (b) Value Added Tax (“VAT”) In accordance with the relevant taxation laws in the PRC, the normal VAT rate for domestic sales is 13 %, which is levied on the invoiced value of sales and is payable by the purchaser. The subsidiaries HSW, AOT and YS enjoyed preferential VAT rate of 13 %. Companies are required to remit the VAT they collect to the tax authority. A credit is available whereby VAT paid on purchases can be used to offset the VAT due on sales. For services, the applicable VAT rate is 9 % under the relevant tax category for logistic company, except the branch of PF enjoyed the preferential VAT rate of 3 % in 2025 and 2024. 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. F- 15 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) Property management and subleasing. Providing shops subleasing and property management services for garment wholesalers and retailers in garment market. 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 Year ended March 31, Revenues from external customers 2025 2024 Garments manufacturing segment 283,042 229,539 Logistics services segment 3,018,325 4,342,326 Property management and subleasing 879,547 581,888 Total of reportable segments 4,180,914 5,153,753 Corporate and other - - Total consolidated revenue $ 4,180,914 $ 5,153,753 Income (loss) from operations by segment for year ended March 31, 2025 and 2024 are as follows: SCHEDULE OF SEGMENT REPORTING FOR INCOME FROM OPERATION Year ended March 31, 2025 2024 Garments manufacturing segment ( 100,715 ) ( 143,872 ) Logistics services segment 249,160 179,450 Property management and subleasing ( 954,448 ) ( 201,746 ) Total of reportable segments $ ( 806,003 ) ( 166,168 ) Corporate and other ( 1,010,967 ) ( 965,028 ) Total consolidated loss from operations ( 1,816,970 ) ( 1,131,196 ) Depreciation and amortization by segment for year ended March 31, 2025 and 2024 are as follows: SCHEDULE OF SEGMENT REPORTING FOR DEPRECIATION AND AMORTIZATION Year ended March 31, 2025 2024 Garments manufacturing segment 6,754 1,575 Logistics services segment 101,888 315,657 Property management and subleasing 9,214 5,421 Total of reportable segments $ 117,856 322,653 Corporate and other 1,331 6,294 Total consolidated depreciation and amortization $ 119,187 328,947 Financial cost by segment for year ended March 31, 2025 and 2024 are as follows: SCHEDULE OF SEGMENT REPORTING FOR FINANCIAL COST Year ended March 31, 2025 2024 Garments manufacturing segment 78 6,822 Logistics services segment 53,066 28,728 Property management and subleasing 152 19 Total of reportable segments $ 53,296 35,569 Corporate and other 1,093,547 3,617,234 Total consolidated financial cost $ 1,146,843 3,652,803 Total assets by segment as of March 31, 2025 and March 31, 2024 are as follows: SCHEDULE OF SEGMENT REPORTING FOR ASSETS Total assets March 31, 2025 March 31, 2024 Garment manufacturing segment $ 238,981 $ 1,357,761 Logistics services segment 3,167,654 3,231,492 Property management and subleasing 19,855,305 20,931,431 Total of reportable segments 23,261,939 25,520,684 Corporate and other 25,905,398 26,818,064 Consolidated total assets $ 49,167,337 $ 52,338,748 F- 16 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 Year ended March 31, 2025 2024 Revenues - - China 4,180,914 5,153,753 March 31, 2025 March 31, 2024 Long-Lived Assets China 19,375,723 23,157,356 16. ACCRUED EXPENSES AND OTHER PAYABLES Accrued expenses and other payables consist of the following as of March 31, 2025 and 2024: SCHEDULE OF ACCRUED EXPENSES AND OTHER PAYABLES 2025 2024 Accrued wages and welfare 56,479 92,658 Accrued expenses 84,573 84,627 Other tax payable 20,781 26,232 Rental payable 26,072 24,487 Interest payable 31,426 31,602 Customers’ deposits 395,181 498,346 Other payables 1,243,686 615,010 Accrued expenses and other payables $ 1,858,198 $ 1,372,962 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, 2025, the balance of the Warrant was approximately $ 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, 2025, the fair value of the conversion option was $ 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, 2025 and 2024: SCHEDULE OF CONVERTIBLE NOTES OBLIGATION Year ended March 31, 2025 2024 Carrying value – beginning balance $ 2,684,697 $ 11,219,519 Converted to Common Stock ( 82,642 ) ( 4,233,356 ) Redemption ( 544,706 ) ( 5,687,055 ) Amortization of debt discount 823,058 2,746,796 Deferred debt discount and cost of issuance ( 250,061 ) ( 2,231,363 ) Interest charge 269,814 870,156 Carrying value – ending balance $ 2,900,160 $ 2,684,697 During the year ended March 31 2025 and 2024, approximately $ 82,642 and 5.2 of the convertible notes was converted into approximately 132,994 and 3.7 Common Stock, with average effective conversion price of $ 0.6214 and $ 1.4044 per share, respectively. 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. F- 17 The Company’s derivative liabilities were as the following for the year ended March 31, 2025 and 2024: SCHEDULE OF DERIVATIVE LIABILITIES Year ended March 31, 2025 2024 Derivative liabilities –Warrants $ $ Beginning balance 251,657 2,013,261 Marked to the market 738,195 ( 1,761,604 ) Ending fair value 989,852 251,657 Derivative liabilities – Embedded conversion feature Beginning balance 36,298 277,222 Converted to Common Stock ( 1,330 ) ( 718,879 ) Remeasurement on change of convertible price 248,217 1,818,864 Redemption ( 103,786 ) ( 1,115,627 ) Marked to the market 1,603,098 ( 225,282 ) Ending fair value 1,782,498 36,298 Total Derivative fair value at end of period $ 2,772,350 $ 287,955 18. LEASES As a lessee Right-of-use asset and lease liabilities The Company implemented a new accounting policy according to the ASC 842, Leases, on April 1, 2019 on a modified retrospective basis and did not restate comparative periods. Under the new policy, the Company recognized approximately $ 0.06 million lease liability as well as right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. Lease liabilities are measured at present value of the sum of remaining rental payments as of March 31, 2025, with discounted rate of 4.9 %. A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are classified within operating activities in the statement of cash flows. The Company leases its head office. The lease period is 5 years with an option to extend the lease. The Company leases its plant and dormitory for 4.5 years with an option to extend the lease. The Company leased several floors in a commercial building for its sublease and property management services business for 16 years with an option to extend the lease. The following table summarizes the components of lease expense: SCHEDULE OF LEASE EXPENSES 2025 2024 Operating lease cost 993,600 699,998 Short-term lease cost 131,520 131,679 Lease Cost 1,125,120 831,677 The following table summarizes supplemental information related to leases: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES 2025 2024 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow used in operating leases $ 1,125,120 $ 831,677 Right-of-use assets obtained in exchange for new operating leases liabilities - 20,146,774 Weighted average remaining lease term - Operating leases (years) 13.5 14.4 Weighted average discount rate - Operating leases 4.90 % 4.90 % The following table summarizes the maturity of operating lease liabilities: SCHEDULE OF MATURITY OF OPERATING LEASE LIABILITY Years ending March 31 Lease cost 2026 $ 996,533 2027 996,533 2028 1,481,082 2029 2,062,089 2030 and there after 22,887,269 Total lease payments 28,423,506 Less: Interest ( 9,706,848 ) Total $ 18,716,658 As a lessor The Company subleased its leased commercial building by entering into operating leases to third party garment wholesalers and retailers. These leases are negotiated for terms ranging from one to five years. All leases include the term to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. Rental income form from subleasing is disclosed in Note 16 segment data. The future minimum rental receivable under non-cancellable operating leases contracted for the reporting period are as follows: SCHEDULE OF FUTURE MINIMUM RENT RECEIVABLE Years ending March 31 Lease income 2026 $ 206,803 2027 262,770 2028 200,390 2029 - 2030 and there after - Total $ 669,963 F- 18 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 and the authorized share capital is US$ 250,000 divided into 250,000,000 Common Stock with par value of US$ 0.001 per share. The Company effected the amendment and combination to the outstanding shares of its common stock into a lesser number of outstanding shares (the “Reverse Stock Split Amendment”) on a ratio of one-for-ten, with effected date on June 26, 2023. Through the reversed split, the number of shares was reduced by 33,655,839 shares. After the reversed split, the Company issued 1,644,188 Common Stock with par value of US$ 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 investor 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. There were 6,043,769 and 5,383,769 Common Stock issued and outstanding at March 31, 2025 and 2024, respectively. 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, 2025 and 2024 were $ 402 and $ 8,563 , respectively. The balance of paid-up statutory reserve was $ 37,422 and $ 37,020 as of March 31, 2025 and 2024, respectively. 20. OTHER INCOME (EXPENSES), NET SCHEDULE OF OTHER INCOME NET 2025 2024 Investment income $ 437,500 $ 218,750 Gain/(Loss) on debts extinguishment 62,200 ( 697,318 ) Loss on disposal of PPA ( 73,236 ) - Loss on disposal of subsidiary ( 334,135 ) - Gain on bargain purchase - 996 Penalty income from customers’ defaults 113,275 106,543 Subsidy from government 5,023 29,044 Other 1,764 34,408 Other income, net $ 212,391 $ ( 307,577 ) 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 7.26 and 7.22 at March 31, 2025 and March 31, 2024, respectively. Revenue and expenses are translated at the average yearly exchange rates, which are 7.22 and 7.15 for the two years ended March 31, 2025 and 2024, 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- 19 (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, 2025 and 2024. Garment manufacturing segment SCHEDULE OF CONCENTRATION RISKS March 31, 2025 March 31, 2024 Customer A 50.5 % Nil % Customer B 49.5 % 100.0 % The high concentration as of March 31, 2025 was mainly due to business development of a large distributor of garments. Logistics services segment March 31, 2025 March 31, 2024 Customer A 20.2 % 16.2 % Customer B 17.6 % 23.3 % Customer C 17.6 % 15.9 % Customer D 5.9 % 8.9 % Customer E 5.4 % Nil % Property management and subleasing There is no account receivable for Property management and subleasing segment as for March 31, 2025. For the year ended March 31, 2025, two customers from logistics services segment provided more than 10 % of total consolidated revenue of the Company, representing 31.0 % of total revenue of the Company. 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, 2025 and 2024. SCHEDULE OF PURCHASES FROM SUPPLIERS Year ended March 31, 2025 2024 Garment manufacturing segment 41.39 % Nil % Logistics services segment 100.0 % 100.0 % Property management and subleasing 100.0 % 100.0 % No supplier provided more than 10% of our raw materials purchases for the years ended March 31, 2025 and 2024. (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, 2025, the total outstanding borrowings amounted to $ 640,878 (RMB 4.7 million) with various interest rate from 4.34 % to 8.24 % p.a.(Note 13) . F- 20 22. SUBSEQUENT EVENTS The Company received a letter dated April 9, 2025 from the Listings Qualifications Department (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that the minimum bid price per share of its common stock was below $ 1.00 for a period of 30 consecutive business days and that the Company did not meet the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”). The Nasdaq letter does not result in the immediate delisting of the Company’s shares of common stock, and the shares will continue to trade uninterrupted under the symbol “ATXG.” Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of one hundred eighty (180) calendar days, or until October 6, 2025 (the “Compliance Period”), to regain compliance with the Minimum Bid Price Rule. If at any time during the Compliance Period, the closing bid price per share of the Company’s common stock is at least $ 1.00 for a minimum of ten (10) consecutive business days, Nasdaq will provide the Company a written confirmation of compliance and the matter will be closed. In the event the Company does not regain compliance by the end of the Compliance Period, the Company may be eligible for an additional 180 calendar day grace period. To qualify, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and will need to provide written notice of its intention to cure the deficiency during the second compliance period, including by effecting a reverse stock split, if necessary. If the Company chooses to implement a reverse stock split, it must complete the split no later than ten (10) business days prior to the end of the Compliance Period, or the end of the second compliance period if granted. In May 2025, the Company disposed of the subsidiary ATO to a related party with a loss of approximately $ 8,604 . There are no other subsequent events have occurred that would require recognition or disclosure in the financial statements. F- 21 Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure None.