What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-02-14 · 240 added, 408 removed, 216 unchanged (75% 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 months ended December 31, 2024 and

following discussion and analysis of our financial condition and results of operations for the three months ended June 30, 2025 and 2024

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

11 unchanged sentences

We conduct substantially all of our operations

through our operating companies established in the People’s Republic of China, or the PRC, primarily Shenzhen Qianhai Yingxi Industrial

Chain Service Co., Ltd.

(“YX”), our wholly owned subsidiary and its subsidiaries.

We are not a Chinese operating company.

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

Chinese operating company.

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

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 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”.

1 unchanged sentence

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

The Company previously engaged in the provision of epidemic prevention supplies, which included manufacturing, distribution and trading

of epidemic prevention supplies.

As the COVID-19 pandemic is near an endemic, the Company ceased to operate in this business in the first

quarter of 2023.

The remaining assets of this business segment were reclassified into the “Corporate and others” segment.

The corresponding items of segment information for the earlier periods were restated to reflect the change of the new segment structure.

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

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 ”,

1 unchanged sentence

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”);

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

(ii) Yingxi Industrial Chain Investment

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

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

(iv) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd,

a PRC company (“YX”), (v) Dongguan Heng Sheng Wei Garments Co., Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang

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

(viii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (ix) Dongguan Au Te Si Garments Co., Ltd., a

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

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

(ii) Shenzhen Qianhai Yingxi Industrial

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

Clothing Co., Ltd (“YS”);

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

(vi) Shenzhen

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

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

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

by Addentax Group Corp.

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

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

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

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

(viii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”),

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

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

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

indirectly wholly owned by Addentax Group Corp.

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

We have our own manufacturing facilities,

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

and timely meet the delivery requirements for our customers.

and delivery requirements for our customers.

We conduct our garment manufacturing operations through five wholly owned

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

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

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.

logistics business consists of delivery and courier services covering 44 cities in 10 provinces and 2 municipalities in China.

2 unchanged sentences

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 Shenzhen Xin Kuai Jie Transportation Co., Ltd

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

property management and subleasing business provides shops subleasing and property management services for 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

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

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

focus on the core businesses of the Group, the Company dissolved one of its subsidiaries, Shenzhen Yingxi Tongda Logistic Co., Ltd, in

April 2024 and received approval from RPC authorities.

Company dissolved another subsidiary, Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd

(“ZHJ”), in August 2024 and received approval from RPC authorities.

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

Our property management and subleasing

business provides subleasing of shops and property management services to garment wholesalers and retailers in the garment market.

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

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.

As of date of disposal, the net assets

of HX was approximately $6,972.

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

Manufacturing Business

3 unchanged sentences

Services Business

business objective and future plan for our logistics services segment is to establish an efficient logistic system and to build a nationwide

delivery and courier network in China.

As of December 31, 2024, we provide logistics services to over 44 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 for the remainder of 2024.

Management and Subleasing Business

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

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

The Company conduct the business

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

The business objective and future plan for our logistics

services segment is to establish an efficient logistics system and to build a nationwide delivery and courier network in China.

June 30, 2024, we provide logistics services to over 44 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 2025.

Property Management and Subleasing Business

The business objective of our property management

and subleasing segment was to integrate resources in a shopping mall, develop develop e-commerce and the Internet celebrity economy increase

the value of the stores in that area.

The 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.

Manufacturing Business

133 unchanged sentences

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

of Operations for the three months ended December 31, 2024 and 2023

following table summarize our results of operations for the three months ended December 31, 2024 and 2023.

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,

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

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

Three Months Ended June 30,

Changes in 2025

compared to 2024

dollars, except for percentages)

7 unchanged sentences

$ (1,221,111 )

$ (2,607,662 )

revenue for the three months ended December 31, 2024 decreased by approximately $0.4 million, or 27.9%, as compared with the three months

ended December 31, 2023.

The decrease was mainly due to the decrease of $0.4 million in logistics services business.

generated from our garment manufacturing business contributed approximately $0.03 million, or 3.2%, of our total revenue for the three

months ended December 31, 2024.

Revenue generated from garment manufacturing business contributed approximately $0.03 million or 1.8%

of our total revenue for the three months ended December 31, 2023, respectively.

The low level of sales was mainly due to factory facilities

renewal and repairs, and the remaining factories cannot provide the same capacity as previously.

We estimate the capacity will recover

at the fiscal year ending 2025.

generated from our logistics services business contributed approximately $0.8 million, or 78.5%, of our total revenue for the three months

ended December 31, 2024.

Revenue generated from our logistic business contributed approximately $1.2 million or 81.0% of our total revenue

for the three months ended December 31, 2023.

generated from our property management and subleasing business was 0.2 million, or 18.4%, of our total revenue for the three months ended

December 31, 2024.

The revenue from this business segment was $0.3 million or 17.2% of our total revenue for the three months ended December

months ended December 31,

(decrease) in

Total revenue for the three months ended June 30,

2025 increased by approximately $0.1 million, or 15.3%, as compared with the three months ended June 30, 2024.

The increase was mainly

due to the increase of $0.3 million in logistics services revenue.

Revenue generated from our garment manufacturing business contributed approximately

$0.02 million, or 2.0%, of our total revenue for the three months ended June 30, 2025.

By comparison, revenue generated from garment manufacturing

business contributed approximately $0.09 million or 10.2% of our total revenue for the three months ended June 30, 2024.

The low level

of sales was mainly due to a decrease in order volume and fierce market competition

Revenue generated from our logistics services business contributed approximately

$0.8 million, or 82.2%, of our total revenue for the three months ended June 30, 2025.

By comparison, revenue generated from our logistic

business contributed approximately $0.5 million or 57.2% of our total revenue for the three months ended June 30, 2024.

Revenue generated from our property management and subleasing business

was $0.15 million, or 15.8%, of our total revenue for the three months ended June 30, 2025.

The revenue from this business segment was

$0.3 million, or 32.7% for the three months ended June 30, 2024.

Three months ended June 30,

Increase (decrease) in

2025 compared to 2024

13 unchanged sentences

Gross Profit for property management and subleasing

Net revenue for corporate and others

Merchandise/Finished goods/Raw materials

Total cost of revenue for corporate and others

Gross (loss) income for corporate and others

Total 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 35.3% of our total garment manufacturing business revenue for

the three months ended December 31, 2024, as compared with 15.7% for the three months ended December 31, 2023.

The increase in percentage

was mainly due to increased orders received.

costs for our garment manufacturing business was approximately 38.1% of our total garment manufacturing business revenue for the three

months ended December 31, 2024, as compared with 25.8% for the three months ended December 30, 2023.

We maintained a sustainable level

in wages, the decrease in portion of labor cost was mainly due to the increased in revenue.

and other expenses for our garment manufacturing business accounted for approximately 10.0% of our total garment business revenue for

the three months ended December 31, 2024, as compared with (4.8)% of total garment business revenue for the three months ended December

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

We relied on a few subcontractors, of which the subcontracting

fees to our largest contractor represented approximately % and 53.1% of total cost of revenues for our service segment for the three

months ended December 31, 2024 and 2023, respectively.

The decrease was attributed to an increase in usage of our own logistics as compared

to the subcontractor.

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

our contract logistics services providers.

toll and other costs for our service business for the three months ended December 31, 2024 were approximately $0.5 million as compared

with $0.5 million for the three months ended December 31, 2023.

Fuel, toll and other costs for our service business accounted for approximately

63.6% of our total service revenue for the three months ended December 31, 2024, as compared with 41.6% for the three months ended December

The increase was primarily attributable to a decrease of usage of subcontractors during the quarter.

Subcontracting

fees for our service business for the three months ended December 31, 2024 decreased approximately 79.0% to $0.1 from $0.6 million for

the three months ended December 31, 2023.

Subcontracting fees accounted for 14.2% and 47.2% of our total service business revenue in

the three months ended December 31, 2024 and 2023, respectively.

The decrease was primarily attributable to a decrease of usage of subcontractors

during the quarter.

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

The cost of revenue for property management and subleasing business for the three months ended December 31, 2024 was $301,834,

approximately 155.2% of our total property management and subleasing business revenue, as compared with $236,291, or 93.6% of the total

property management and subleasing business revenue for the three months ended December 31, 2023.

manufacturing business gross profit for the three months ended December 31, 2024 was $5,620, as compared with $17,113 for the three months

ended December 31, 2023.

Raw material costs for our garment manufacturing business were approximately

35.3% of our total garment manufacturing business revenue for the three months ended June 30, 2025, as compared with 43.5% for the three

months ended June 30, 2024.

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

Labor costs for our garment manufacturing business

was approximately 40.8% of our total garment manufacturing business revenue for the three months ended June 30, 2025, as compared with

20.9% for the three months ended June 30, 2024.

We maintained a sustainable level in wages.

The increase in portion of labor cost against

revenue was mainly due to the decrease in revenue.

Overhead and other expenses for our garment manufacturing

business accounted for approximately 6.2% of our total garment business revenue for the three months ended June 30, 2025, as compared

with 4.1% of total garment business revenue for the three months ended June 30, 2024.

For 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 6.0% ($0.05 million) and nil% of total cost of revenues for our service segment for the three months ended June 30, 2025

and 2024, respectively.

The increase was attributed to the use of contractors.

We have not experienced any disputes with our contractors

and we believe we maintain good relationships with our contract logistics services providers.

Fuel, toll and other costs for our logistics services

business for the three months ended June 30, 2025 were approximately $0.6 million as compared with $0.2 million for the three months ended

June 30, 2024.

Fuel, toll and other costs for our logistics services business accounted for approximately 70.8% of our total service revenue

for the three months ended June 30, 2025, as compared with 51.2% for the three months ended June 30, 2024.

The increase was primarily

attributable to a increased use of contractors during the quarter.

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

assets for the subleasing business.

The cost of revenue for property management and subleasing business for the three months ended June

30, 2025 was $0.3 million, approximately (219.2)% of our total property management and subleasing business revenue, as compared with $0.3

million, or (122.3)% for the three months ended June 30, 2024.

manufacturing business gross profit for the three months ended June 30, 2025 was $3,523, as compared with $27,267 for the three months

ended June 30, 2024.

Gross profit accounted for 17.7% of our total garment manufacturing business revenue for the three months ended

December 31, 2024, as compared to 63.3% for the three months ended December 31, 2023.

The decrease of gross profit ratio was mainly due

to the increased raw material costs.

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

Gross profit in our logistics services business for the three months ended December 31, 2023 was approximately $132,917 and gross

margin was 11.2%.

The increase of gross profit ratio was mainly because the Company re-allocated the orders received and reduced fuel

loss in our property management and subleasing business for the three months ended December 31, 2024 was $107,346.

Gross profit was $16,186

for the three months ended December 31, 2023.

Gross loss accounted for (55.2)% of our total property management and subleasing business

revenue for the three months ended December 31, 2024, as compared to 6.4% for the three months ended December 31, 2023.

of gross profit ratio was mainly because the property management and subleasing business are still in preliminary stage.

Three months ended December 31,

June 30, 2025, as compared to 31.5% for the three months ended June 30, 2024.

The decrease of 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 June 30, 2025 was approximately $186,891 and gross margin was 23.2%.

Gross profit in our logistics services business for the three months ended June 30, 2024 was approximately $237,211 and gross margin

The decrease of 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.

Gross loss in our property management and subleasing business for the three

months ended June 30, 2025 was $(184,354).

Gross loss was $(61,883) for the three months ended June 30, 2024.

Gross loss accounted for

(119.2)% of our total property management and subleasing business revenue for the three months ended June 30, 2025, as compared to 22.3%

for the three months ended June 30, 2024.

The decrease of gross profit ratio was mainly because the property management and subleasing

business was still in its preliminary stages and centered around a new building.

In order to incentivize tenants, rental rates were reduced but are expected to improve over time.

Three months ended June 30,

Increase (decrease) in

6 unchanged sentences

General and administrative expenses

selling expenses for our garment manufacturing business for the three months ended December 31, 2024 and 2023 was approximately $28,818

and $13,504, respectively.

The selling expenses for property management and subleasing business for the three months ended December 31,

2024 and 2023 was approximately $83,127 and $81,817, 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 three months ended December 31, 2024 and 2023

was approximately $8,021 and $34,007, respectively.

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

three months ended December 31, 2024 and 2023 was approximately $175,837 and $174,618, respectively.

The general and administrative expenses

in our property management and subleasing business was approximately $43,790 and $132,336for the three months ended December 31, 2024

selling expenses for our garment manufacturing business for the three months ended June 30, 2025 and 2024 was approximately $6,661

and $82,603, respectively.

Our general and administrative expenses in our corporate office for the three months ended December 31, 2024

The selling expenses for property management and subleasing business for the three months ended June 30,

2025 and 2024 was approximately $46,846 and $56,757, respectively.

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 three months ended December 31, 2024 decreased by approximately 31.9% to $0.4 million from

$0.5 million for the three months ended December 31, 2023.

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 June 30, 2025 and 2024 were

approximately $26,450 and $8,310, respectively.

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

months ended June 30, 2025 and 2024 were approximately $200,372 and $216,250, respectively.

The general and administrative expenses in our property management and subleasing business were approximately $41,131

and $ 85,793 for the three months ended June 30, 2025 and 2024,

respectively.

Our general and administrative expenses in

our corporate office for the three months ended June 30, 2025 and 2024 were approximately $311,806 and $257,898, respectively.

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

general and administrative expenses for the three months ended June 30, 2025 increased by approximately 2.0% to $579,759 from $568,251

for the three months ended June 30, 2024.

from operations

from operations for the three months ended December 31, 2024 and 2023 was approximately $381,054 and $449,592, respectively.

operations of approximately $31,220 and loss from operation of $30,398 for the three months ended December 31, 2024 and 2023, respectively,

which was attributed from our garment manufacturing segment.

Income from operations of approximately $8,707 and loss from operation of

$41,699 was attributed from our logistics services segment for the three months ended December 31, 2024 and 2023, respectively.

from operations of approximately $234,264 and $168,012 for the three months ended December 31, 2024 and 2023, respectively, which was

attributed from our property management and subleasing business.

We incurred expenses from operations in corporate office of approximately

$124,277 and $209,483 for the three months ended December 31, 2024 and 2023, respectively.

tax expense for the three months ended December 31, 2024 and 2023 was approximately $3,116 and $3,225, respectively.

Yingxi primarily

operates in the PRC and files tax returns in the PRC jurisdictions.

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

is not subject to income taxes.

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 three months ended December 31, 2024 and 2023.

and YX were incorporated in the PRC and is subject to the PRC Enterprise Income Tax (EIT) rate is 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, 2024 and 2023.

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

All Yingxi’s operating companies are subject to progressive

EIT rates from 5% to 15% in 2024.

The preferential tax rates will be expired at end of year 2025.

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, 2024 and 2023.

incurred net loss of approximately $1.1 million and $2.6 million for the three months ended December 31, 2024 and 2023, respectively.

Our basic and diluted earnings per share were ($0.19) and ($0.66) for the three months ended December 31, 2024 and 2023, respectively.

of Operations for the nine months ended December 31, 2024 and 2023

following table summarize our results of operations for the nine months ended December 31, 2024 and 2023.

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)

Cost of revenues

Operating expenses

Loss from operations

Other income, net

Fair value gain or loss

Net finance cost

Income tax expense

$ (3,028,364 )

$ (3,973,983 )

revenue for the nine months ended December 31, 2024 decreased by approximately $0.6 million, or 15.7%, as compared with the nine months

ended December 31, 2023.

The decrease was mainly due to the decrease of $1.1 million in logistics services, decrease of $0.1 million

in garment manufacturing business and increase of $0.4 million in property management and subleasing business.

generated from our garment manufacturing business contributed approximately $0.3 million, or 8.3%, of our total revenue for the nine

months ended December 31, 2024.

Revenue generated from garment manufacturing business contributed approximately $0.2 million or 4.5%

of our total revenue for the nine months ended December 31, 2023, respectively.

The low level of sales was mainly due to factory facilities

renewal and repairs, and the remaining factories cannot provide the same capacity as previously.

We estimate the capacity will recover

at the fiscal year ending 2025.

generated from our logistics services business contributed approximately $2.3 million, or 70.2%, of our total revenue for the nine months

ended December 31, 2024.

Revenue generated from our logistic business contributed approximately $3.4 million or 87.5% of our total revenue

for the nine months ended December 31, 2023.

generated from our property management and subleasing business was 0.7 million, or 21.6%, of our total revenue for the nine months ended

December 31, 2024.

The revenue from this business segment was $0.3 million or 8.1% of our total revenue for the nine months ended December

months ended December 31,

(decrease) in

compared to 2023

dollars, except for percentages)

Net revenue for garment manufacturing

Raw materials

Other and Overhead

Total cost of revenue for garment manufacturing

Gross profit for garment manufacturing

Net revenue for logistics services

Fuel, toll and other cost of logistics services

Subcontracting fees

Total cost of revenue for logistics services

Gross Profit for logistics services

Net revenue for property management and subleasing

Total cost of revenue for property management and subleasing

Gross Profit for property management and subleasing

Net revenue for supplies corporate and others

Other and Overhead

Total cost of revenue for corporate and others

Gross (loss) income for corporate and others

Total 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 50.9% of our total garment manufacturing business revenue for

the nine months ended December 31, 2024, as compared with 17.5% for the nine months ended December 31, 2023.

The increase in percentage

was mainly due to the increased order received.

costs for our garment manufacturing business was approximately 25.1% of our total garment manufacturing business revenue for the nine

months ended December 31, 2024, as compared with 58.2% for the nine months ended December 31, 2023.

We maintained a sustainable level

in wages, the decrease in portion of labor cost was mainly due to the increased in revenue.

and other expenses for our garment manufacturing business accounted for approximately 5.2% of our total garment business revenue for

the nine months ended December 31, 2024, as compared with 0.8% of total garment business revenue for the nine months ended December 31,

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

We relied on a few subcontractors, which the subcontracting

fees to our largest contractor represented approximately nil% and 36.1% of total cost of revenues for our service segment for the nine

months ended December 31, 2024 and 2023, respectively.

The decrease was attributed to an increase in usage of our own logistics as compared

to the subcontractor.

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

our contract logistics services providers.

toll and other costs for our service business for the nine months ended December 31, 2024 were approximately $1.3 million as compared

with $1.5 million for the nine months ended December 31, 2023.

Fuel, toll and other costs for our service business accounted for approximately

56.5% of our total service revenue for the nine months ended December 31, 2024, as compared with 44.4% for the nine months ended December

The increase was primarily attributable to a decrease of usage of subcontractors during the quarter.

Subcontracting

fees for our service business for the nine months ended December 31, 2024 decreased approximately 90.0% to $0.1 million from $1.2 million

for the nine months ended December 31, 2023.

Subcontracting fees accounted for 5.2% and 35.0% of our total service business revenue in

the nine months ended December 31, 2024 and 2023, respectively.

The decrease was primarily attributable to a decrease of usage of subcontractors

during the quarter.

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

The cost of revenue for property management and subleasing business for the nine months ended December 31, 2024 was $1.0 million,

approximately 144.5% of our total property management and subleasing business revenue, as compared with $0.2 million, approximately 77.6%

of our total property managemet for the nine months ended December 31, 2023.

manufacturing business gross profit for the nine months ended December 31, 2024 was $50,562, as compared with $40,433 for the nine months

ended December 31, 2023.

Gross profit accounted for 18.8% of our total garment manufacturing business revenue for the nine months ended

December 31, 2024, as compared to 23.5% for the nine months ended December 31, 2023.

The increase of gross profit ratio was mainly due

to increased sales.

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

Gross profit in our logistics services business for the nine months ended December 31, 2023 was approximately $695,940 and gross

margin was 20.6%.

The increase of gross profit ratio was mainly because the Company re-allocated the orders received and reduced fuel

loss in our property management and subleasing business for the nine months ended December 31, 2024 was $311,669.

Gross profit was $69,639

for the nine months ended December 31, 2023.

Gross loss accounted for (44.5)% of our total property management and subleasing business

revenue for the nine months ended December 31, 2024, as compared to gross profit of 22.4% for the nine months ended December 31, 2023.

The decrease was due to disposal of DY.

Nine months ended December 31,

Increase (decrease) in

2024 compared to 2023

dollars, except for percentages)

Operating expenses:

Selling expenses

General and administrative expenses

$ (1,745,191 )

$ (1,817,596 )

(Loss) Income from operations

$ (1,131,136 )

$ (1,015,473 )

General and administrative expenses

selling expenses for our garment manufacturing business for the nine months ended December 31, 2024 and 2023 was approximately $124,821

Loss from operations for the three months

ended June 30, 2025 and 2024 was approximately $627,207 and $505,016, respectively.

Loss from operations in our garment

manufacturing segments was $29,587 and $63,645 for the three months ended June 30, 2025 and 2024, respectively.

The decrease in

losses was mainly due to implementing operational cost-saving measures.

Income (loss) from operations in our logistics services

segment was approximately $(13,481) and $20,879 for the three months ended June 30, 2025 and 2024, respectively.

The increase in

income was mainly due to increased sales.

Loss from operations in our property management and subleasing business was $272,331 and

$204,433 for the three months ended June 30, 2025 and 2024, respectively.

The increase in loss was mainly due to the decreased rental rates.

incurred expenses from operations in corporate office of approximately $311,807 and $257,817 for the three months ended June 30,

2025 and 2024, respectively.

The selling expenses for property management and subleasing business for the nine months ended December 31,

Income tax expense for the three months ended June

30, 2025 and 2024 was approximately $764 and $465, 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, 2024 and 2023

was approximately $18,984 and $98,117, respectively.

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

nine months ended December 31, 2024 and 2023 was approximately $615,462 and $562,696, respectively.

The general and administrative expenses

in our property management and subleasing business was approximately $180,056 and $132,336 for the nine months ended December 31, 2024

and 2023, respectively.

Our general and administrative expenses in our corporate office for the nine months ended December 31, 2024 and

2023 was approximately $657,032 and $891,914, respectively.

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, 2024 decreased by approximately 12.7% to $1.5 million from

$1.7 million for the nine months ended December 31, 2023.

from operations

from operations for the nine months ended December 31, 2024 and 2023 was approximately $1.1 and $1.0, respectively.

Loss from operations

of approximately $93,243 and $71,541 for the nine months ended December 31, 2024 and 2023, respectively, which was attributed from our

garment manufacturing segment.

Income from operations of approximately $259,144 and $132,530 was attributed from our logistics services

segment for the nine months ended December 31, 2024 and 2023, respectively.

Loss from operations of approximately $640,562 and $181,372

for the nine months ended December 31, 2024 and 2023, respectively, which was attributed from our property management and subleasing

We incurred expenses from operations in corporate office of approximately $656,475 and $895,090 for the nine months ended December

31, 2024 and 2023, respectively.

tax expense for the nine months ended December 31, 2024 and 2023 was approximately $4,662 and $7,726, respectively.

Yingxi primarily

operates in the PRC and files tax returns in the PRC jurisdictions.

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

is not subject to income taxes.

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, 2024 and 2023.

and YX were incorporated in the PRC and is subject to the PRC Enterprise Income Tax (EIT) rate is 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, 2024 and 2023.

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

All Yingxi’s operating companies are subject to progressive

EIT rates from 5% to 15% in 2024.

The preferential tax rates will be expired at end of year 2025.

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 nine months ended December 31, 2024 and 2023.

incurred net loss of approximately $3.0 million and $4.0 million for the nine months ended December 31, 2024 and 2023, respectively.

Our basic and diluted earnings per share were ($0.53) and ($1.0) for the nine months ended December 31, 2024 and 2023, respectively.

YX primarily 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 Seychelles, is not subject to income taxes.

Yingxi 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 three months ended June 30, 2025 and 2024.

QYTG 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 three months ended June 30, 2025 and 2024.

The 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 year 2025.

Addentax Group Corp.

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.

no United States taxable income for the three months ended June 30, 2025 and 2024.

We incurred net income of approximately $0.4 million

and net loss of approximately $1.2 $ million for the three months ended June 30, 2025 and 2024, respectively.

Our basic and diluted loss

per share were ($0.06) and ($0.25) for the three months ended June 30, 2025 and 2024, respectively.

of cash flows

cash flows information for the three months ended December 31, 2024 and 2023 is as follow:

Nine months ended

Net cash provided by (used in) operating activities

$ (1,521,802 )

cash flows information for the three months ended June 30, 2025 and 2024 is as follow:

months ended June 30,

Net cash used in operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

cash provided by operating activities in the nine months ended December 31, 2024 was approximately $0.8 million as compared to net cash

used in operating activities of $1.5 million in the nine months ended December 31, 2023, which was approximately $2.3 million more than

that of the nine months ended December 31, 2023.

The increase was mainly due to (i) net loss adjusted to operating cash flow for the

nine months ended December 31, 2024 was $0.6 million less than that of the nine months ended December 31, 2023;

(ii) the movement of

operating assets and liabilities of the three months ended December 31, 2024 resulted in cash outflow of approximately $0.1 million,

which was $1.1 million less than that of 2023;.

cash used in investing activities for the nine months ended December 31, 2024 was approximately $0.2 million, which was $0.3 million

less than the nine months ended December 31, 2023.

cash used in financing activities for the three months ended December 31, 2024 was approximately $1.0 million as compared to cash provided

by financing activities of $1.3 million in the three months ended December 31, 2023.

In the nine months ended December 31, 2024, the

Company received proceeds of $0.2 million from bank borrowings, $0.6 million of proceeds from issue of ordinary shares, loan to related

parties of $1.3 million, payment for redemption of convertible debts, and proceeds of $0.7 million from a private placement, while the

Company had release of restricted cash of $3.85 million in the nine months ended December 31, 2023.

Condition, Liquidity and Capital Resources

of December 31, 2024, we had cash on hand of approximately $0.5 million, total current assets of approximately $27.8 million and current

liabilities of approximately $3.2 million.

We currently finance our operations from revenue, fund raising from public offering and private

placement proceeds and capital contributions from our chief executive officer, Mr.

Hong Zhida (the “CEO”).

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

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

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”).

Net cash provided by financing activities

Net cash used in operating activities in the three

months ended June 30, 2025 was approximately $0.3 million as compared to $0.2 million in the three months ended June 30, 2024, which was

approximately $0.1 million less than that of the three months ended June 30, 2024.

The decrease was mainly due to (i) net income adjusted

to operating cash flow for the three months ended June 30, 2025 was $0.3 million more than that of the three months ended June 30, 2024;

(ii) the movement of operating assets and liabilities in the three months ended June 30, 2025 resulted in cash outflow of approximately

$0.5 million, which was $0.4 million less than that of the corresponding period in 2024;.

Net cash used in investing activities for the three

months ended June 30, 2025 was approximately $0.08 million, which was mainly due to purchase of property, plant and equipment and disposal

of subsidiaries.

Net cash provided

by financing activities for the three months ended June 30, 2025 was approximately $0.6 million as compared to $0.3 million in the

three months ended June 30, 2024, which was approximately $0.3 million less than the three months ended June 30, 2025.

was mainly because 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.

While in the three

months ended June 30, 2024, the Company received proceeds from a private placement of $0.7 million, paid $0.5 million net cash

advance to related parties, and received net proceeds from bank loans of $0.1 million.

Financial Condition, Liquidity and Capital Resources

As of June 30, 2025, we had cash on hand of approximately

$0.5 million, total current assets of approximately $30.0 million and current liabilities of approximately $4.9 million.

finance our operations from revenue, fund raising from our initial public offering and private placement proceeds and capital contributions

from our chief executive officer, Mr.

In 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,

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

Foreign Currency Translation Risk

Our 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.

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, 2024, the market foreign exchange rate was RMB 7.30 to

Our financial statements are translated into U.S.

In the past years, RMB continued to appreciate against the

As of June 30, 2025, the market foreign exchange rate was RMB 7.17 to one U.S.

Our financial statements are translated

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, 2024 and 2023 was approximately $0.06 million

and $0.05 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, 2024 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.

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 gain (loss) for the

three months ended June 30, 2025 and 2024 was approximately $(0.04) million and $0.01 million, respectively.

Off-Balance Sheet Arrangements

We 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, 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.

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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What changed 10-Q

Item 2. Management’s Discussion and Analysis