ADDENTAX GROUP CORP. 10-Q

Item 1. Financial Statements. ADDENTAX GROUP CORP. FINANCIAL STATEMENTS For the three months ended June 30, 2025 and 2024 TABLE OF CONTENTS Condensed Consolidated Balance sheets as of June 30, 2025 and March 31, 2025 (unaudited) F-2 Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended June 30, 2025 and 2024 (unaudited) F-3 Condensed Consolidated Statements of Changes in Equity for the three months ended June 30, 2025 and 2024 (unaudited) F-4 Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2025 and 2024 (unaudited) F-5 Notes to Condensed Consolidated Financial Statements for the three months ended June 30, 2025 and 2024 (unaudited) F-6 – F-15 F- 1 ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In U.S. Dollars, except share data or otherwise stated) (UNAUDITED) June 30, 2025 March 31, 2025 ASSETS CURRENT ASSETS Cash and cash equivalents $ 490,716 $ 324,953 Restricted cash 1,424,395 2,750,000 Accounts receivables, net 824,573 929,817 Debt securities held-to-maturity 17,500,000 17,500,000 Inventories 171,867 166,874 Prepayments and other receivables 4,069,658 3,638,347 Advances to suppliers 375,296 198,494 Amount due from related party 5,094,315 4,283,129 Total current assets 29,950,820 29,791,614 NON-CURRENT ASSETS Plant and equipment, net 426,685 387,997 Operating lease right of use asset 18,364,534 18,722,277 Long-term prepayments 242,352 265,449 Total non-current assets 19,033,571 19,375,723 TOTAL ASSETS $ 48,984,391 $ 49,167,337 LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loan $ 728,212 $ 640,878 Accounts payable 136,704 53,199 Amount due to related parties 157,837 161,594 Advances from customers 389,504 332,492 Accrued expenses and other payables 2,125,317 1,858,198 Operating lease liability current portion 1,355,288 905,958 Total current liabilities 4,892,862 3,952,319 NON-CURRENT LIABILITIES Convertible debts 1,162,203 2,900,160 Derivative liabilities 766,120 2,772,350 Operating lease liability 17,003,627 17,810,700 Total non-current liabilities 18,931,950 23,483,210 TOTAL LIABILITIES $ 23,824,812 $ 27,435,529 EQUITY Common stock ($ 0.001 par value, 250,000,000 shares authorized, 10,090,963 and 6,043,769 shares issued and outstanding at June 30 and March 31, 2025, respectively) $ 10,091 $ 6,044 Additional paid-in capital 39,099,581 35,240,981 Accumulated Deficit ( 14,056,228 ) ( 13,663,790 ) Statutory reserve 37,020 37,422 Accumulated other comprehensive loss 69,115 111,151 Total equity 25,159,579 21,731,808 TOTAL LIABILITIES AND EQUITY $ 48,984,391 $ 49,167,337 See accompanying notes to the unaudited condensed consolidated financial statements. F- 2 ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In U.S. Dollars, except share data or otherwise stated) 2025 2024 Three months ended June 30, 2025 2024 REVENUES $ 980,954 $ 851,033 COST OF REVENUES ( 974,895 ) ( 648,438 ) GROSS PROFIT 6,059 202,595 OPERATING EXPENSES Selling and marketing ( 53,507 ) ( 139,360 ) General and administrative ( 579,759 ) ( 568,251 ) Total operating expenses ( 633,266 ) ( 707,611 ) (LOSS) INCOME FROM OPERATIONS ( 627,207 ) ( 505,016 ) Fair value gain or loss 453,448 134,217 Interest income 287 368 Interest expenses ( 583,144 ) ( 847,682 ) Other income (expense), net 364,940 ( 2,514 ) (LOSS) INCOME BEFORE INCOME TAX EXPENSE ( 391,674 ) ( 1,220,627 ) INCOME TAX EXPENSE ( 764 ) ( 484 ) NET (LOSS) INCOME ( 392,438 ) ( 1,221,111 ) Foreign currency translation gain (loss) ( 42,036 ) 14,410 TOTAL COMPREHENSIVE (LOSS) INCOME $ ( 434,474 ) $ ( 1,206,701 ) EARNINGS (LOSS) PER SHARE Net Loss per share – basic and diluted ( 0.06 ) ( 0.25 ) Weighted average number of shares outstanding – Basic and diluted 6,465,730 4,822,421 See accompanying notes to the unaudited condensed consolidated financial statements. F- 3 ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In U.S. Dollars, except share data or otherwise stated) Shares Amount capital Unrestricted reserve loss Total Equity Retained earnings Accumulated Additional (accumulated deficit) other Common Stock paid-in Statutory comprehensive Shares Amount capital Unrestricted reserve loss Total Equity BALANCE AT MARCH 31, 2024 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 Foreign currency translation - - - - - 14,410 14,410 Net income for the period - - - ( 1,221,111 ) - - ( 1,221,111 ) BALANCE AT JUNE 30, 2024 6,043,769 $ 6,044 $ 35,157,009 $ ( 9,790,301 ) $ 37,020 $ ( 77,427 ) $ 25,487,199 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 Issuance of new shares 4,047,194 4,047 ( 4,047 ) - - - - Additional paid-in capital from conversion of convertible debts - - 3,862,647 - - - 3,862,647 Adjustment of Statutory reserve - - - - ( 402 ) - ( 402 ) Foreign currency translation - - - - ( 42,036 ) ( 42,036 ) Net income for the period - - - ( 392,438 ) - - ( 392,438 ) BALANCE AT JUNE 30, 2025 10,090,963 $ 10,091 $ 39,099,581 $ ( 14,056,228 ) $ 37,020 $ 69,115 $ 25,159,579 Balance 10,090,963 $ 10,091 $ 39,099,581 $ ( 14,056,228 ) $ 37,020 $ 69,115 $ 25,159,579 See accompanying notes to the unaudited condensed consolidated financial statements. F- 4 ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. Dollars, except share data or otherwise stated) 2025 2024 Three Months Ended June 30 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 392,438 ) $ ( 1,221,111 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 408,503 431,299 Non-cash financial cost 571,909 834,041 Investment income ( 364,583 ) - Fair value gain or loss ( 453,448 ) ( 134,217 ) Loss from sale of property and equipment - 20,784 Loss on disposal of subsidiaries 27,865 - Changes in operating assets and liabilities Accounts receivable 67,428 817,414 Inventories ( 4,993 ) ( 107,450 ) Advances to suppliers ( 180,041 ) ( 61,838 ) Other receivables ( 95,447 ) ( 228,436 ) Accounts payables 86,386 ( 226,787 ) Accrued expenses and other payables ( 34,228 ) ( 296,695 ) Advances from customers 57,012 ( 20,189 ) Net cash used in operating activities $ ( 306,075 ) $ ( 193,185 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment and intangible assets ( 77,856 ) ( 27,364 ) Cash decreased in disposal of subsidiaries ( 1,599 ) - Net cash used in investing activities $ ( 79,455 ) $ ( 27,364 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from related party borrowings 8,124 113,827 Repayment of related party borrowings ( 13,829 ) ( 179,247 ) Proceeds from bank borrowings 139,429 334,372 Repayment of bank borrowings ( 46,061 ) ( 198,490 ) Cash advance to related parties ( 1,194,987 ) ( 1,148,824 ) Repayment from related parties 335,541 738,023 Proceeds from issue of ordinary shares - 646,800 Release of restricted cash 1,325,605 - Net cash provided by financing activities $ 553,822 $ 306,461 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 168,292 85,912 Effect of exchange rate changes on cash and cash equivalents ( 2,529 ) 2,073 Cash and cash equivalents, beginning of the period 324,953 816,186 CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 490,716 $ 904,171 Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 10,676 $ 13,311 Cash paid during the period for income tax $ 764 $ 484 See accompanying notes to the unaudited condensed consolidated financial statements. F- 5 ADDENTAX GROUP CORP. AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND BUSINESS ACQUISITIONS Addentax Group Corp. and its subsidiaries (“ATXG” or the “Company”) are engaged in the business of garment manufacturing, providing logistic services, property leasing and management services in the People’s Republic of China (“PRC” or “China”). 2. BASIS OF PRESENTATION In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. All significant intercompany transactions and balances are eliminated in consolidation. However, the results of operations included in such financial statements may not necessarily be indicative of annual results. The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on June 30 2025 (“2024 Form 10-K”). 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities 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. There is no change in the accounting policies for the three months ended June 30, 2025. Recently issued 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- 6 4. DISPOSITION OF SUBSIDIARIES In May 2025, the Company disposed of Dongguan Aotesi Garments Co., Ltd., (“AOT”). The Company will carry on the garment manufacturing segment business through other subsidiaries. The disposition of AOT 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 AOT May 6, 2025, date of disposal Current assets $ 71,373 Current liabilities ( 45,194 ) Net assets $ 26,179 The consideration was $ 13,829 , resulting in a loss of $ 12,137 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 Shenzhen Xin Kuai Jie Transportation (“ XKJ”) Jinlong Huang Management of Dongguan Heng Sheng Wei Garments Co., Ltd (“ HSW”) The Company leases XKJ’s office rent-free from Bihua Yang. Hongye Financial Consulting (Shenzhen) Co., Ltd. provided a guarantee to the consideration receivable for the transfer of a debt security to a third party. The Company had the following related party balances as of June 30, 2025 and March 31, 2025: SCHEDULE OF RELATED PARTY BALANCES Amount due from related party June 30, 2025 March 31, 2025 Zhida Hong ( 1 ) $ 3,545,376 $ 2,856,262 Bihua Yang ( 2 ) 1,548,939 1,426,867 Amount due from related party $ 5,094,315 $ 4,283,129 Related party borrowings June 30, 2025 March 31, 2025 Hongye Financial Consulting (Shenzhen) Co., Ltd. 46,628 39,174 Jinlong Huang 111,208 122,420 Amount due to related party $ 157,837 $ 161,594 (1) The increase of related party from Zhida Hong was short term loan to Zhida Hong, which is interest-free and would be repaid in one year. (2) The increase of related party debt from Bihua Yang was mainly due to the cash paid in advance to Bihua Yang. During the quarter ended June 30, 2025, the Company provided a short term loan of approximately $ 0.23 million to Bihua Yang and received repayment of approximately $ 0.1 3 million from him. The borrowing balances with related parties are unsecured, non-interest bearing and repayable on demand. F- 7 6. DEBT SECURITIES HELD-TO-MATURITY SCHEDULE OF DEBT SECURITIES HELD TO MATURITY June 30, 2025 March 31, 2025 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 was $ 17,500,000 . The note was renewable with a one-year term on August 23, 2023 and it was a 2.5 % p.a. coupon. On August 23, 2023, 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. Zhida Hong. On August 24, 2024, a Supplemental Agreement to the note was signed to extend the maturity date to August 24, 2025. As of June 30, and March 31, 2025, the coupon receivable was approximately $ 255,000 and $ 365,000 . 7. INVENTORIES Inventories consist of the following as of June 30, and March 31, 2025: SCHEDULE OF INVENTORIES June 30, 2025 March 31, 2025 Raw materials $ 10,949 $ 10,623 Work in progress 1,133 - Finished goods 159,785 156,251 Total inventories $ 171,867 $ 166,874 8. 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. 9. PREPAYMENTS AND OTHER RECEIVABLES Prepayments and other receivables consist of the following as of June 30 and March 31, 2025: SCHEDULE OF PREPAYMENTS AND OTHER RECEIVABLES June 30, 2025 March 31, 2025 Prepayment 859,529 50,590 Deposit 31,677 722,035 Receivable of consideration on disposal of subsidiaries 13,943 - Coupon receivable of debt security held-to-maturity 364,583 - Loan to third party 2,500,000 2,500,000 Other receivables 299,926 365,722 Prepayments and other receivables $ 4,069,658 $ 3,638,347 10. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following as of June 30 and March 31, 2025: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT June 30, 2025 March 31, 2025 Production plant $ 104,516 $ 103,242 Motor vehicles 798,498 734,990 Office equipment 52,837 52,194 Property, plant and equipment gross 955,851 890,426 Less: accumulated depreciation ( 529,166 ) ( 502,429 ) Plant and equipment, net $ 426,685 $ 387,997 Depreciation expense for the three months ended June 30, 2025 and 2024 was $ 20,304 and $ 48,977 , respectively. F- 8 11. 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 $ 153,172 (RMB 1,000,000 ) for daily operations. The loans are guaranteed at no cost by the legal representative of HSW. As of June 30, 2025, the Company has borrowed $ 131,656 (RMB 944,255 ) (March 31, 2025: $ 130,051 ) 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 $ 1,254,858 (RMB 9,000,000 ) for daily operations, with Loan Prime Rate of the day prior to the draw down day. The loans are guaranteed by the legal representative of XKJ at no cost. As of June 30, 2025, the Company has borrowed $ 536,800 (RMB 3,850,000 ) (March 31, 2025: $ 406,300 ) under this line of credit with annual interest rate of 3.9 %. The revolving credit facility will expire on February 1, 2026. In December 2023, Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“ 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 $ 69,714 (RMB 500,000 ) for daily operations. The annual interest rate of this line of credit is 16.2 %. The loan facility will expire on December 26, 2025. As of June 30, 2025, the Company has fully repaid this loan facility (March 31, 2025: $ 25,824 ) 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 $ 139,429 (RMB 1,000,000 ) for daily operations. As of June 30, 2025, the Company has borrowed $ 59,755 (RMB 428,571 ) (March 31, 2025: $ 78,702 ) under this line of credit with annual interest rate of 8.244 %. The loan facility will expire on March 22, 2026. 12. TAXATION (a) Enterprise Income Tax (“EIT”) The Company operates in the PRC and files tax returns in the PRC. 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. It is a wholly owned subsidiary of Addentax Group Corp. Yingxi HK (Yingxi Industrial Chain Investment Co., Ltd.) was incorporated in Hong Kong which is indirectly wholly owned by Addentax Group Corp., 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 three months ended June 30, 2025 and 2024. Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“ YX”), our wholly-owned subsidiary, was incorporated in the PRC and is subject to the EIT tax rate of 25 %. No provision for income taxes in the PRC has been made as YX had no taxable income for the three months ended June 30, 2025 and 2024. YX is governed by the Income Tax Laws of the PRC. All YX’s operating companies were subject to progressive EIT rates from 5 % to 15 % in 2025 and 2024. The preferential tax rate will expire at end of year 2025 and the EIT rate will be 25% from year 2026. YX’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 U.S. taxable income for the three months ended June 30, 2025 and 2024. F- 9 The reconciliation of income taxes computed at the PRC statutory tax rate applicable to the PRC, to income tax expenses are as follows: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION 2025 2024 Three months ended June 30, 2025 2024 PRC statutory tax rate 25 % 25 % Computed expected benefits (expense) ( 97,918 ) ( 305,157 ) Temporary differences 98,917 24,191 Permanent difference ( 256 ) 32,612 Changes in valuation allowance 21 248,838 Income tax expense $ 764 $ 484 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 %. The 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 a logistics company, except that PF enjoys the preferential VAT rate of 3 % in 2025 and 2024. XKJ and PF are 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. 13. CONSOLIDATED SEGMENT DATA Segment information is consistent with how chief operating decision maker 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; and (c) Property management and subleasing. Providing subleasing of shops 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 others”. F- 10 Selected information in the segment structure is presented in the following tables: Revenues by segment for the three months ended June 30, 2025 and 2024 are as follows: SCHEDULE OF SEGMENT REPORTING FOR REVENUE Revenues from external customers 2025 2024 Three months ended June 30, Revenues from external customers 2025 2024 Garments manufacturing segment $ 19,896 $ 86,602 Logistics services segment 806,458 486,507 Property management and subleasing 154,600 277,924 Total of reportable segments 980,954 851,033 Corporate and other - - Total of reportable segments and consolidated revenue $ 980,954 $ 851,033 Intersegment revenue Garments manufacturing segment - - Loss from operations by segment for the three ended June 30, 2025 and 2024 are as follows: SCHEDULE OF SEGMENT REPORTING FOR INCOME FROM OPERATION 2025 2024 Three months ended June 30, 2025 2024 Garment manufacturing segment $ ( 29,587 ) $ ( 63,645 ) Logistics services segment ( 13,481 ) 20,879 Property management and subleasing ( 272,331 ) ( 204,433 ) Total of reportable segments ( 315,399 ) ( 247,199 ) Corporate and other ( 311,808 ) ( 257,817 ) Total consolidated income from operations $ ( 627,207 ) $ ( 505,016 ) Total assets by segment as of June 30 and March 31, 2025 are as follows: SCHEDULE OF SEGMENT REPORTING FOR ASSETS Total assets June 30, 2025 March 31, 2025 Garment manufacturing segment $ 175,970 $ 238,981 Logistics services segment 3,288,312 3,167,654 Property management and subleasing 19,642,890 19,855,305 Total of reportable segments 23,107,172 23,261,939 Corporate and other 25,877,219 25,905,398 Consolidated total assets $ 48,984,391 $ 49,167,337 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 Three months ended June 30, 2025 2024 Revenues - China 980,954 851,033 June 30, 2025 March 31, 2025 Long-Lived Assets China 19,033,571 19,375,723 F- 11 14. 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 an interest rate of 5 % per annum (the “Convertible Notes”); The Convertible Notes matured on July 4, 2024 . The conversion price is $ 1.25 , subject to adjustment under several conditions. ● warrants (“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 Warrants are considered a freestanding instrument issued together with the Convertible Notes and measured at their issuance date fair value. Proceeds received were first allocated to the Warrants based on their initial fair value. The initial fair value of the Warrants was $ 3.9 million. The Warrants 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 June 30, 2025, the balance of the Warrants was approximately $ 0.8 million (March 31, 2025: $ 1.0 million). The Convertible Notes are 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 should be 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 June 30, 2025, the fair value of the conversion option was $ 0.03 million (March 31, 2025: $ 1.4 million). The Company determined that the other embedded features do not require bifurcation as they either are clearly and closely related to the Convertible Notes or do not meet the definition of a derivative. The total proceeds of the Convertible Notes and the Warrants, net of issuance cost, of $ 15.0 million were 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 s 9,893,979 $ 15,000,000 In January 2023, the Company also granted to the placement agent a warrant as partial payment of an agency fee to purchase 0.7 million shares of Common Stock of the Company. The warrant matures in five years with an exercise price of $ 1.25 subject to adjustments under different conditions. The warrant was recognized as a derivative liability with an initial fair value of $ 0.168 million. The Company’s Convertible Notes’ obligations were as the following for the three months ended June 30, 2025 and 2024: SCHEDULE OF CONVERTIBLE NOTES OBLIGATION 2025 2024 Three months ended June 30, 2025 2024 Carrying value – beginning balance $ 2,900,160 $ 2,684,697 Converted to ordinary shares ( 2,290,408 ) - Amortization of debt discount 66,222 682,648 Deferred debt discount and cost of issuance 416,667 261 Interest charge 69,563 151,393 Carrying value – ending balance $ 1,162,204 $ 3,518,999 During the three months ended June 30, 2025, $ 2.3 million of Convertible Notes was converted into approximately 4.3 million shares of Common Stock, with an average effective conversion price of $ 0.5363 per share. During the three months ended June 30, 2024, no Convertible Notes was converted into shares of Common Stock. F- 12 The Company’s derivative liabilities were as the following for the three months ended March 31, 2025 and 2024: SCHEDULE OF DERIVATIVE LIABILITIES 2025 2024 Three months ended June 30, 2025 2024 Derivative liabilities –Warrants $ $ - Beginning balance 989,852 251,657 Marked to the market ( 251,657 ) ( 134,217 ) Ending fair value 738,195 117,440 Derivative liabilities – Embedded conversion feature Beginning balance 1,782,498 36,298 Converted to ordinary shares ( 1,572,238 ) - Remeasurement on change of convertible price 19,457 ( 261 ) Marked to the market ( 201,792 ) - Ending fair value 27,925 36,037 Total Derivative fair value at end of period $ 766,120 $ 153,477 15. LEASE As a lessee Right-of-use asset and lease liabilities The Company recognized right-of-use asset as well as lease liability according to the ASC 842, Leases (with the exception of short-term leases). Lease liabilities are measured at present value of the sum of remaining rental payments as of June 30, 2025, with a 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 subleasing 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 Three months ended June 30, 2025 2024 Operating lease cost 339,428 259,082 Short-term lease cost 31,219 36,463 Lease Cost $ 370,647 $ 295,545 The following table summarizes supplemental information related to leases: SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES 2025 2024 Three months ended June 30, 2025 2024 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow used in operating leases $ 370,647 $ 295,545 Weighted average remaining lease term - Operating leases (years) 13.3 14.2 Weighted average discount rate - Operating leases 4.9 % 4.9 % There are no operating lease liabilities for the following five years and the years after due to disposal of the subsidiary, HX, on July 1, 2025. As a lessor The Company subleased its leased commercial building by entering into operating leases with 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 from subleasing is disclosed in Note 13 segment data. There will be no future rental income as HX, the subsidiary conducting the subleasing and property management services business was disposed of on July 1, 2025. F- 13 16. 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 $ 250,000 divided into 250,000,000 shares of 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 fewer number of outstanding shares (the “Reverse Stock Split Amendment”) at a ratio of one-for-ten, with effect on June 26, 2023. As a result, the number of shares was reduced by 33,655,839 shares. After the Reverse Stock Split Amendment, the Company issued 1,644,188 shares of Common Stock with par value of US$ 0.001 per share. On April 29, 2024, the Company entered into two private placement agreements (the “Agreements”) with certain individual investors (the “Investors”) who are independent third parties, pursuant to which the Company issued to each of the Investors 330,000 shares of its Common Stock, par value $ 0.001 per share, at a price of $ 0.98 per share, resulting in aggregate gross proceeds to the Company of $ 646,800 , which closed on the same day. Pursuant to the Agreements, the Company issued an aggregate of 660,000 unregistered shares of Common Stock to the Investors. There are 10,090,963 and 6,043,769 shares of Common Stock issued and outstanding at June 30, 2025 and March 31, 2025, respectively. Statutory reserve In accordance with the relevant laws and regulations of the PRC, a 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 was $ 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. 17. 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 was 7.17 and 7.26 as of June 30, 2025 and March 31, 2025, respectively. Revenue and expenses are translated at the average yearly exchange rates, which was 7.231 and 7.004 for the three months ended June 30, 2025 and 2024, respectively. 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- 14 (c) Concentration Risks The followings are the percentages of accounts receivable balance of the top customers over accounts receivable for each segment as of June 30, 2025 and March 31, 2025. Garment manufacturing segment SCHEDULE OF CONCENTRATION RISKS June 30, 2025 March 31, 2025 Customer A 100.0 % 100.0 % The high concentration as of June 30, 2025 was mainly due to business development of a large distributor of garments. Logistics services segment June 30, 2025 March 31, 2025 Customer A 21.7 % 20.2 % Customer B 16.3 % 17.6 % Customer C 12.0 % 17.6 % Customer D 6.0 % 5.4 % Customer E 5.5 % 5.9 % Property management and subleasing segment There was no account receivable for the property management and subleasing segment as of June 30, 2025 and March 31, 2025. Concentration on customers For the three months ended June 30, 2025, three customer from the logistics services segment provided more than 10% of total revenue of the Company, representing 45.4 % of total revenue of the Company for the three months. For the three months ended June 30, 2024, one customer from the logistics services segment provided more than 10% of total revenue of the Company, representing 16.1 % of total revenue of the Company for the three months. Concentration on suppliers The following tables summarized the purchases from five largest suppliers of each of the reportable segments for the three months ended June 30, 2025 and 2024. SCHEDULE OF PURCHASES FROM SUPPLIERS Three months ended June 30, 2025 2024 Garment manufacturing segment 100 % Nil % Logistics services segment 100.0 % 100.0 % Property management and subleasing Nil % Nil % (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 June 30, 2025, the total outstanding borrowings amounted to $ 728,212 (RMB 5,222,826 ) with various interest rate from 4.34 % to 16.2 % p.a. (Note 12) F- 15 18. SUBSEQUENT EVENTS On August 11, 2025, the board of directors of the Company, after a performance evaluation and upon recommendation of the compensation committee, approved an increase of Company’s Chief Executive Officer, Zhida Hong’s annual salary from $ 17,229 to $ 200,000 , effective immediately. On August 11, 2025, the Company filed a registration statement on Form S-8 (the “Registration Statement”) to register 161,665 shares of Common Stock issued pursuant to its 2024 Equity Incentive Plan (the “Plan”) to six of its executive officers and directors (the “Selling Stockholders”) at a price of $ 0.433 per share (which was the last reported sale price of the shares of Common Stock as reported on Nasdaq on August 8, 2025). 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. In July 2025, approximately $ 0.8 million of convertible notes including principal and related accrued interest were converted into approximately 1.46 million shares of Common Stock. The effective average conversion price was $ 0.5222 per share. The remaining balance of principal and interest, approximately amounted to $ 0.4 million, were redeemed by cash before the expiration of the convertible note. In July, 2025, the Company entered into a non-binding term sheet with a substantial and independent Bitcoin holder to acquire up to 12,000 Bitcoins. Based on prevailing market prices, the proposed acquisition represents an aggregate market value of approximately US$ 1.3 billion. If completed, the transaction would be settled through the issuance of newly issued shares of the Company’s Common Stock. 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. There are no other subsequent events have occurred that would require recognition or disclosure in the financial statements. F- 16