Quarterly report
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _________________ Commission File No. 001-41478 ADDENTAX GROUP CORP. (Exact name of registrant as specified in its charter) Nevada 35-2521028 (State or other jurisdiction of (I.R.S. Employer incorporation or formation) Identification Number) Kingkey 100, Block A, Room 4805, Luohu District, Shenzhen City, China 518000 (Address of principal executive offices) (Zip Code) + (86) 755 86961 405 (Registrant’s telephone number) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock ATXG Nasdaq Capital Markets Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
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Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of November 13 2025 , there were 11,715,348 shares outstanding of the registrant’s shares of common stock issued and outstanding.
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TABLE OF CONTENTS PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) F-1 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 Item 4. Controls and Procedures 15 PART II – OTHER INFORMATION Item 1. Legal Proceedings 16 Item 1A. Risk Factors 16 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 16 Item 3. Defaults Upon Senior Securities 16 Item 4. Mine Safety Disclosures 16 Item 5. Other Information 16 Item 6. Exhibits 16 2
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PART I – FINANCIAL INFORMATION Item 1. Financial Statements. ADDENTAX GROUP CORP. FINANCIAL STATEMENTS For the six months ended September 30, 2025 and 2024 TABLE OF CONTENTS Condensed Consolidated Balance sheets as of September 30, 2025 and March 31, 2025 (unaudited) F-2 Condensed Consolidated Statements of Income and Comprehensive Income for the six months ended September 30, 2025 and 2024 (unaudited) F-3 Condensed Consolidated Statements of Changes in Equity for the six months ended September 30, 2025 and 2024 (unaudited) F-4 Condensed Consolidated Statements of Cash Flows for the six months ended September 30, 2025 and 2024 (unaudited) F-5 Notes to Condensed Consolidated Financial Statements for the six months ended September 30, 2025 and 2024 (unaudited) F-6 – F-15 F-1
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ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In U.S. Dollars, except share data or otherwise stated) (UNAUDITED) September 30, 2025 March 31, 2025 ASSETS CURRENT ASSETS Cash and cash equivalents $ 445,726 $ 324,953 Restricted cash 10,756 2,750,000 Accounts receivables, net 776,559 929,817 Debt securities held-to-maturity 17,500,000 17,500,000 Inventories 172,386 166,874 Prepayments and other receivables 3,494,701 3,638,347 Advances to suppliers 227,202 198,494 Amount due from related party 5,186,933 4,283,129 Total current assets 27,814,263 29,791,614 NON-CURRENT ASSETS Plant and equipment, net 367,424 387,997 Operating lease right of use asset - 18,722,277 Long-term prepayments 25,288 265,449 Total non-current assets 392,712 19,375,723 TOTAL ASSETS $ 28,206,975 $ 49,167,337 LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loan $ 643,194 $ 640,878 Accounts payable 36,547 53,199 Amount due to related parties 159,286 161,594 Advances from customers 36,590 332,492 Accrued expenses and other payables 267,278 1,858,198 Operating lease liability current portion - 905,958 Total current liabilities 1,142,895 3,952,319 NON-CURRENT LIABILITIES Convertible debts - 2,900,160 Derivative liabilities 1,191,178 2,772,350 Operating lease liability - 17,810,700 Total non-current liabilities 1,191,178 23,483,210 TOTAL LIABILITIES $ 2,334,073 $ 27,435,529 EQUITY Common stock ($0.001 par value, 250,000,000 shares authorized, 11,715,348 and 6,043,769 shares issued and outstanding at September 30 and March 31, 2025, respectively) $ 11,715 $ 6,044 Additional paid-in capital 39,948,903 35,240,981 Accumulated Deficit (14,159,065) (13,663,790) Statutory reserve 37,020 37,422 Accumulated other comprehensive loss 34,329 111,151 Total equity 25,872,902 21,731,808 TOTAL LIABILITIES AND EQUITY $ 28,206,975 $ 49,167,337 See accompanying notes to the unaudited condensed consolidated financial statements. F-2
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ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In U.S. Dollars, except share data or otherwise stated) Three months ended September 30, Six months ended September 30, 2025 2024 2025 2024 REVENUES $ 820,692 $ 1,112,899 $ 1,647,046 $ 1,686,008 COST OF REVENUES (595,545) (641,819) (1,231,485) (950,450) GROSS PROFIT 225,147 471,080 415,561 735,558 OPERATING EXPENSES Selling and marketing (4,643) (13,399) (11,304) (96,002) General and administrative (670,352) (499,193) (1,208,980) (980,095) Total operating expenses (674,995) (512,592) (1,220,284) (1,076,097) INCOME (LOSS) FROM OPERATIONS (449,848) (41,512) (804,723) (340,539) Fair value gain or loss (452,983) (531,614) 465 (397,397) Interest income 285 309 572 677 Interest expenses (12,074) (57,905) (595,093) (905,601) Other income, net 82,832 84,137 436,483 66,096 (LOSS) INCOME BEFORE INCOME TAX EXPENSE (831,788) (546,585) (962,296) (1,576,764) INCOME TAX EXPENSE (70) (1,062) (834) (1,527) LOSS FROM CONTINUING OPERATIONS, NET OF INCOME TAXES (831,858) (547,647) (963,130) (1,578,291) Income (loss) on discontinued operations 729,021 (173,885) 467,855 (364,352) NET (LOSS) INCOME (102,837) (721,532) (495,275) (1,942,643) Foreign currency translation gain (34,786) (59,460) (76,822) (45,050) TOTAL COMPREHENSIVE INCOME (LOSS) $ (137,623) $ (780,992) $ (572,097) $ (1,987,693) LOSS PER SHARE FROM CONTINUING OPERATIONS - Basic and diluted (0.11) (0.10) (0.12) (0.29) EARNINGS (LOSS) PER SHARE FROM DISCONTINUED OPERATIONS - Basic and diluted 0.09 (0.03- 0.06 (0.07) Weighted average number of shares outstanding – Basic and diluted 7,869,104 5,360,143 7,869,104 5,360,143 See accompanying notes to the unaudited condensed consolidated financial statements. F-3
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ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In U.S. Dollars, except share data or otherwise stated) Retained earnings Accumulated Additional (accumulated deficit) other Common Stock paid-in Statutory comprehensive Total Shares Amount capital Unrestricted reserve loss Equity BALANCE AT JULY 1, 2024 6,043,769 $ 6,044 $35,157,009 $ (9,790,301) $ 37,020 $ 77,427 $25,487,199 Additional paid-in capital from conversion of convertible debts - - 83,972 - - - 83,972 Foreign currency translation - - - - - (59,460) (59,460) Net income for the period - - - (721,532) - - (721,532) BALANCE AT SEPTEMBER 30, 2024 6,043,769 $ 6,044 $35,240,981 $(10,511,833) $ 37,020 $ 17,967 $24,790,179 BALANCE AT JULY 1, 2025 10,090,963 $ 10,091 $39,099,581 $(14,056,228) $ 37,020 $ 69,115 $25,159,579 Issuance of new shares 1,624,385 1,624 68,377 - - - 70,001- Additional paid-in capital from conversion of convertible debts - - 780,945 - - - 780,945 Foreign currency translation - - - - - (34,786) (34,786) Net income for the period - - - (102,837) - - (102,837) BALANCE AT SEPTEMBER 30, 2025 11,715,348 $ 11,715 $39,948,903 $(14,159,065) $ 37,020 $ 34,329 $25,872,902 BALANCE AT APRIL 1, 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 Additional paid-in capital from conversion of convertible debts - - 83,972 - - - 83,972 Foreign currency translation - - - - - (45,050) (45,050) Net income for the period - - - (1,942,643) - - (1,942,643) BALANCE AT SEPTEMBER 30, 2024 6,043,769 $ 6,044 $35,240,981 $(10,511,833) $ 37,020 $ 17,967 $24,790,179 BALANCE AT APRIL 1, 2025 6,043,769 $ 6,044 $35,240,981 $(13,663,790) $ 37,422 $ 111,151 $21,731,808 Issuance of new shares 5,671,579 5,671 - - - Additional paid-in capital from conversion of convertible debts - - 4,643,592 - - - 4,643,592 Apropriation for Statutory reserve - - - - (402) - (402) Foreign currency translation - - - - - (76,822) (76,822) Net income for the period - - - (495,275) - - (495,275) BALANCE AT SEPTEMBER 30, 2025 11,715,348 $ 11,715 $39,948,903 $(14,159,065) $ 37,020 $ 34,329 $25,872,902 See accompanying notes to the unaudited condensed consolidated financial statements. F-4
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ADDENTAX GROUP CORP. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In U.S. Dollars, except share data or otherwise stated) Six Months Ended September 30 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (495,275) $ (1,942,643) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 451,653 365,733 Non-cash financial cost 572,449 878,228 Stock-Based Compensation Expense 70,001 - Investment income (364,583) 330,000 Fair value gain or loss (454) 397,398) Gain on debts extinguishment (8,979) - Loss from sale of property and equipment - 43,081 Loss on disposal of subsidiaries 18,004 334,135 Changes in operating assets and liabilities Accounts receivable 115,442 489,599 Inventories (5,512) (137,062) Advances to suppliers (60,178) (50,236) Other receivables (565,684) (74,993) Accounts payables (2,134) (280,124) Accrued expenses and other payables (766,719) 134,732) Advances from customers 74,451 41,150) Net cash used in operating activities $ (967,518) $ 528,998) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment and intangible assets (116,446) (107,432) Cash decreased in disposal of subsidiaries (155,563) (8,219 Net cash used in investing activities $ (272,009) $ (115,651) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from related party borrowings 16,228 151,574 Repayment of related party borrowings (21,625) (273,632) Proceeds from bank borrowings 386,200 695,343 Repayment of bank borrowings (382,438) (683,638) Cash advance to related parties (2,160,313) (2,962,753) Repayment from related parties 1,177,098 2,010,740 Proceeds from issue of ordinary shares - 646,800 Redemption of convertible debt (390,000) - Release of restricted cash 2,739,244 - Net cash provided by financing activities $ 1,364,394 $ (415,566 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 124,867 (2,219 Effect of exchange rate changes on cash and cash equivalents (4,094) (3,422 Cash and cash equivalents, beginning of the period 324,953 816,186 CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 445,726 $ 810,545 Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 21,882 $ 26,731 Cash paid during the period for income tax $ 834 $ 1,546 See accompanying notes to the unaudited condensed consolidated financial statements. F-5
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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. Stock-Based Compensation The compensation expense for all share-based payment awards made to employees and directors, including stock options and restricted stock units (“RSUs”) is measured and recognized based on the fair value of the awards on the date of grant. The compensation expense, net of estimated forfeitures, is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award. The fair value of RSUs is determined based on the closing market price of our common stock on the date of grant. There is no change in the accounting policies for the six months ended September 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
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4. DISPOSITION OF SUBSIDIARIES AND DISCONTINUED OPERATIONS 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 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. At end of June 2025, the Company disposed of Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”) to the management of the subsidiary. The property management and subleasing business was then classified as discontinued operation. Comparative period amounts have been restated retrospectively. Financial position of the entities at disposal date and gain or loss on disposal: Property Management and Subleasing Business Segment Financial position of HX July 1, 2025, date of disposal Current assets $ 1,227,389 Noncurrent assets 354,622 Current liabilities (1,588,983) Net assets $ 6,972 The consideration was $13,829, with the reversal of over-accrual of lease payment, resulting in an income of $6,857 recognized on the disposal. 5. RELATED PARTY TRANSACTIONS 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 September 30, 2025 and March 31, 2025: Amount due from related party September 30, 2025 March 31, 2025 Zhida Hong (1) $ 3,934,476 $ 2,856,262 Bihua Yang (2) 1,252,457 1,426,867 $ 5,186,933 $ 4,283,129 Related party borrowings September 30, 2025 March 31, 2025 Hongye Financial Consulting (Shenzhen) Co., Ltd. 46,965 39,174 Jinlong Huang 112,321 122,420 $ 159,286 $ 161,594
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(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 decrease of related party debt from Bihua Yang was mainly due to the repayment from Bihua Yang. During the quarter ended September 30, 2025, the Company provided a short term loan of approximately $0.3 million to Bihua Yang and received repayment of approximately $0.6 million from him. During the six months ended September 30, 2025, the Company provided a short term loan of approximately $0.5 million to Bihua Yang and received repayment of approximately $0.7 million from him. The borrowing balances with related parties are unsecured, non-interest bearing and repayable on demand. F-7
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6. DEBT SECURITIES HELD-TO-MATURITY September 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 September 30, and March 31, 2025, the coupon receivable was $437,500 and $ 365,000. 7. INVENTORIES Inventories consist of the following as of September 30, and March 31, 2025: September 30, 2025 March 31, 2025 Raw materials $ 10,574 $ 10,623 Finished goods 161,812 156,251 Total inventories $ 172,386 $ 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 September 30 and March 31, 2025: September 30, 2025 March 31, 2025 Prepayment 51,900 50,590 Deposit 31,906 722,035 Receivable of consideration on disposal of subsidiaries 14,044 - Coupon receivable of debt security held-to-maturity 437,500 - Loan to third party 2,500,000 2,500,000 Other receivables 459,351 365,722 $ 3,494,701 $ 3,638,347 10. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following as of September 30 and March 31, 2025: September 30, 2025 March 31, 2025 Production plant $ 63,983 $ 103,242 Motor vehicles 804,269 734,990 Office equipment 31,922 52,194 900,174 890,426 Less: accumulated depreciation (532,750) (502,429) Plant and equipment, net $ 367,424 $ 387,997 Depreciation expense for the three and six months ended September 30, 2025 and 2024 was $17,429 and $26,942, $37,733 and $75,919, respectively. F-8
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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 (RMB1,000,000) for daily operations. The loans are guaranteed at no cost by the legal representative of HSW. As of September 30, 2025, the Company has borrowed $132,608 (RMB944,255) (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 (RMB9,000,000) 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 September 30, 2025, the Company has borrowed $470,462 (RMB3,350,000) (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 (RMB500,000) 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 September 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 (RMB1,000,000) for daily operations. As of September 30, 2025, the Company has borrowed $40,125 (RMB285,714) (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, 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 six months ended September 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 six months ended September 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 six months ended September 30, 2025 and 2024. F-9
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The reconciliation of income taxes computed at the PRC statutory tax rate applicable to the PRC, to income tax expenses are as follows: Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 PRC statutory tax rate 25% 25% 25% 25% Computed expected benefits (expense) (190,447) (180,118) (223,074) (394,191) Temporary differences 160,908 (30,436) 194,533 (46,207) Permanent difference 29,609 (78,809) 29,354 (46,196) Changes in valuation allowance - 290,425 21 488,121 Income tax expense $ 70 $ 1,062 834 1,527 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 six 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. At end of June 2025, the Company disposed of HX to the management of the subsidiary. The property management and subleasing business was then classified as discontinued operation. The Company also provides general corporate services to its segments and these costs are reported as “Corporate and others”. F-10
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Selected information in the segment structure is presented in the following tables: Revenues by segment for the three and six months ended September 30, 2025 and 2024 are as follows: Three months ended Six months ended September 30, September 30, Revenues from external customers 2025 2024 2025 2024 Garments manufacturing segment 12,935 148,470 32,831 235,072 Logistics services segment 807,757 964,429 1,614,215 1,450,936 Total of reportable segments and consolidated revenue $ 820,692 $ 1,112,899 $ 1,647,046 $ 1,686,008 Intersegment revenue Garments manufacturing segment - - - - Loss from operations by segment for the three and six ended September 30, 2025 and 2024 is as follows: Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 Garments manufacturing segment (2,723) 1,622 (32,310) (62,023) Logistics services segment 63,258 229,558 49,777 250,437 Total of reportable segments $ 60,535 $ 231,180 $ 17,467 $ 188,414 Corporate and other (510,383) (272,692) (822,190) (528,953) Total consolidated income (loss) from operations (449,848) (41,512) (804,723) (340,539) Total assets by segment as of September 30 and March 31, 2025 are as follows: Total assets September 30, 2025 March 31, 2025 Garment manufacturing segment $ 169,341 $ 238,981 Logistics services segment 2,978,511 3,167,654 Property management and subleasing - 19,855,305 Total of reportable segments 3,147,852 23,261,939 Corporate and other 25,059,123 25,905,398 Consolidated total assets $ 28,206,975 $ 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 Three months ended September 30, Six months ended September 30, 2025 2024 2025 2024 Revenues China 820,692 1,112,899 1,647,046 1,686,008 September 30, 2025 March 31, 2025 Long-Lived Assets China 392,712 19,375,723 F-11
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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 September 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 September 30, 2025, the fair value of the conversion option was $Nil (March 31, 2025: $1.4 million). The Company determined that the other embedded features do not require bifurcation as they either are clearly and closely related to the Convertible 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: As of January 4, 2023 Derivative liabilities – Fair value of the Warrants $ 3,858,521 Derivative liabilities – Embedded conversion feature 1,247,500 Convertible Notes 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 and six months ended September 30, 2025 and 2024: Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 Carrying value – beginning balance $ 1,162,204 $ 3,518,999 $ 2,900,160 $ 2,684,697 Converted to ordinary shares (763,832) (82,642) (3,054,240) (82,642) Redemption (400,756) - (334,534) - Amortization of debt discount 1,843 - 418,510 682,648 Deferred debt discount and cost of issuance - (264,186) (263,925) Interest charge 541 44,187 70,104 195,580 Carrying value – ending balance $ Nil $ 3,216,358 $ Nil $ 3,216,358 During the three months ended September 30, 2025, $0.8 million of Convertible Notes was converted into approximately 1.5 million shares of Common Stock, with an average effective conversion price of $0.5222 per share. During the six months ended September 30, 2025, approximately $3.1 million of the Convertible Notes was converted into approximately 5.7 million shares of Common Stock, with an average effective conversion price of $0.5327 per share.
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During the three and six months ended September 30, 2024, $82,642 of the Convertible Notes was converted into 132,994 shares of Common Stock, with average effective conversion price of $0.6214 per share. F-12
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The Company’s derivative liabilities were as the following for the three and six months ended September 30, 2025 and 2024: Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 Derivative liabilities –Warrants $ $ $ $ Beginning balance 738,195 117,440 989,852 251,657 Marked to the market 452,983 184,549 201,326 50,332 Ending fair value 1,191,178 301,989 1,191,178 301,989 Derivative liabilities – Embedded conversion feature Beginning balance 27,925 36,036 1,782,498 36,298 Converted to shares of Common Stock (17,114) (1,330) (1,589,352) (1,330) Remeasurement on change of convertible price (1,832) 264,186 17,625 263,925 Redemption (8,979) - (8,979) - Marked to the market - 347,065 (201,792) 347,064 Ending fair value Nil 645,957 Nil 645,957 Total Derivative fair value at end of period $ 1,191,178 $ 947,946 $ 1,191,178 $ 947,946 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 September 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: Three months ended September 30, Six months ended September 30, 2025 2024 2025 2024 Operating lease cost 339,428 265,894 339,428 524,976 Short-term lease cost 31,219 32,408 31,219 68,871 $ 370,647 $ 298,302 $ 370,647 $ 593,847 The following table summarizes supplemental information related to leases: Three months ended September 30, Six months ended September 30, 2025 2024 2025 2024 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow from operating leases $ 370,647 $ 298,302 593,847 Right-of-use assets obtained in exchange for new operating leases liabilities - 1,096,683 - 1,233,672 Weighted average remaining lease term - Operating leases (years) 13.3 13.9 13.3 13.9 Weighted average discount rate - Operating leases 4.90% 4.90% 4.90% 4.90% 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
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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
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16. SHARE CAPITAL AND RESERVE Common Stock In August 2022, the Company completed its IPO and 5,000,000 shares of 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 of Common Stock were issued upon cashless exercise of Underwriter Warrants. On February 3, 2023, 3,370,000 shares of Common Stock 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 September 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 11,715,348 and 6,043,769 shares of Common Stock issued and outstanding at September 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 six months ended September 30, 2025 and 2024 was $402 and $Nil, respectively. The balance of paid-up statutory reserve was $37,020 as of both September 30, 2025 and 2024. 17. 2024 EQUITY INCENTIVE PLAN On August 11, 2025, 161,665 shares of Common Stock were issued and granted to the directors and executive officers pursuant to the 2024 Equity Incentive Plan. These incentive shares were vested immediately. The stock-based payment was measured at fair value using closing market price of the day prior to the grant date. The fair value was charged to income statement when the common stocks were granted. During the three months ended September 30, 2025, the stock-based payment expense was $70,001 (2024: Nil). 18. 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 7.12 and 7.26 as
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of September 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, 7.194 and 7.20 for the three and six months ended September 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
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(c) Concentration Risks The followings are the percentages of accounts receivable balance of the top customers over accounts receivable for each segment as of September 30, 2025 and March 31, 2025. Garment manufacturing segment September 30, 2025 March 31, 2025 Customer A 100.0% 100.0% The high concentration as of September 30, 2025 was mainly due to business development of a large distributor of garments. Logistics services segment September 30, 2025 March 31, 2025 Customer A 23.4% 20.2% Customer B 23.1% 17.6% Customer C 6.6% 3.4% Customer D 6.0% 5.4% Customer E 5.9% 5.9% Property management and subleasing segment There was no account receivable for the property management and subleasing segment as of September 30, 2025 and March 31, 2025. Concentration on customers For the three months ended September 30, 2025, three customers from the logistics services segment provided more than 10% of total revenue of the Company, representing 63.5% of total revenue of the Company for that period. For the six months ended September 30, 2025, three customers from the logistics services segment provided more than 10% of total revenue of the Company, representing 53.8% of total revenue of the Company for that period . For the three months ended September 30, 2024, three customers from the logistics services segment provided more than 10% of total revenue of the Company, representing 48.6% of total revenue of the Company for that period. For the six months ended September 30, 2024, two customers from logistics services segment provided more than 10% of total revenue of the Company, representing 36.5% of total revenue of the Company for that period. Concentration on suppliers The following tables summarize the purchases from five largest suppliers of each of the reportable segments for the three and six months ended September 30, 2025 and 2024. Three months ended Six months ended September 30, September 30, 2025 2024 2025 2024 Garment manufacturing segment Nil% 60.6% 100% 41.8% Logistics services segment 100% 100% 100% 100% (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 September 30, 2025, the total outstanding borrowings amounted to $643,194 (RMB4,579,969) with various interest rate from 4.34% to 16.2% p.a. (Note 12) 19. SUBSEQUENT EVENTS There are no other subsequent events have occurred that would require recognition or disclosure in the financial statements. F-15
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations for the three and six months ended September 30, 2025 and 2024 should be read in conjunction with the Financial Statements and corresponding notes included in this Report on Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Special Note Regarding Forward-Looking Statements in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “target”, “forecast” and similar expressions to identify forward-looking statements. Overview Our Business We (“Addentax Group Corp.”) are a Nevada holding company with no material operations of our own. We conduct substantially all of our operations through our operating companies established in the PRC, primarily YX, our wholly-owned subsidiary and its subsidiaries. We are not a Chinese operating company. We are a holding company and do not directly own any substantive business operations in China. Therefore, our investors will not directly hold any equity interests in our operating companies. Our holding company structure involves unique risks to investors. Chinese regulatory authorities could disallow our operating structure, which would likely result in a material change in our operations and/or the value of our common stock, including that it could cause the value of such securities to significantly decline or become worthless. Our holding company, Addentax Group Corp., is listed on the Nasdaq Capital Market under the symbol of “ATXG”. We classify our businesses into three main segments: garment manufacturing, logistics services, and property management and subleasing. Unless the context otherwise requires, all references in this quarter report to “Addentax” refer to Addentax Group Corp., a holding company, and references to “we,” “us,” “our,” the “Registrant”, the “Company,” or “our company” refer to Addentax and/or its consolidated subsidiaries. Addentax Group Corp., our Nevada holding company, is the entity in which our investors are investing. Our 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) ShenzhenYingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng Wei Garments Co., Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”), (vii) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”); (viii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (ix) Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”), (x) Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”). Effective July 2025, Shenzhen Yingxi Industrial Chain Services Co., Ltd, previously known as Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd, changed its name to Shenzhen Yingxi Industrial Chain Services Co., Ltd due to a relocation of its registered address. The name change did not result in any material change to the subsidiary’s operations, financial position, or results. “PRC Subsidiaries” refers to, collectively, YX, HSW, YS, PF, XKJ, AOT and HX. “WFOE” refers to Yingxi Textile & Garments Co., Ltd or “QYTG”, a wholly foreign-owned enterprise in China, which is indirectly wholly owned by Addentax Group Corp. Effective August 2025, Yingxi Textile & Garments Co., Ltd, previously known as Qianhai Yingxi Textile & Garments Co., Ltd, changed its name to Yingxi Textile & Garments Co., Ltd due to a relocation of its registered address. The name change did not result in any material change to the subsidiary’s operations, financial position, or results. Our 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 delivery requirements for our customers. We conduct our garment manufacturing operations through three wholly-owned subsidiaries, namely HSW, YS and AOT , which are located in the Guangdong province, China. In May 2025, the Company disposed of AOT to the management of AOT. Our logistics business consists of delivery and courier services covering 44 cities in 10 provinces and 2 municipalities in China. Although we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors. We believe outsourcing allows us to maximize our capacity and maintain flexibility while reducing capital expenditures and the costs of keeping drivers during slow seasons. 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. We currently have an aggregate of 56,238 square meters floor space and provide approximately 1,300 shop space to clients. We conduct our property management and subleasing operation through a wholly-owned
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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 $6,972. The consideration was $13,829, resulting in an income of $6,857 from disposal. 3
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Business Objectives Garment Manufacturing Business We believe the strength of our garment manufacturing business is mainly due to our consistent emphasis on exceptional quality and timely delivery of our products. The primary business objective for our garment manufacturing segment is to expand our customer base and improve our profit. Logistics Services Business 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. As of September 30, 2024, we provide logistics services to over 44 cities in 10 provinces and 2 municipalities. We expect to develop 20 additional logistics routes in existing serving cities and improve the Company’s profit in the year 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 e- commerce and the Internet celebrity economy and 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. Seasonality of Business Garment Manufacturing Business We generally receive more purchase orders during our second and third quarters and fewer manufacturing orders during May and June. Logistics Services Business We generally receive more delivery orders in our third and fourth quarters and are more vulnerable to shipping delays in the PRC during the Chinese New Year due to traffic and port congestion, border crossing delays and customs clearance issues. Property Management and Subleasing Business There is no significant seasonality in our business. Collection Policy Garment manufacturing business For our new customers, we generally require orders placed to be backed by advances or deposits. For our long-term and established customers with good payment track records, we generally provide payment terms between 30 to 180 days following their acknowledgement of receipt of goods. Logistics services business For logistics services, we generally receive payments from the customers between 30 to 90 days following the date of the registration of our receipt of packages. Property management and subleasing business For property management and subleasing business, we generally collect rental and management fees of the following month each month in advance. 4
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Economic Uncertainty Our business is dependent on consumer demand for our products and services. We believe that the significant uncertainty in the economy in China has increased our clients’ sensitivity to the cost of our products and services. We have experienced continued pricing pressure. If the economic environment becomes weak, the economic conditions could have a negative impact on our sales growth and operating margins, cash position and collection of accounts receivable. Additionally, business credit and liquidity have tightened in China. Some of our suppliers and customers may face credit issues and could experience cash flow problems and other financial hardships. These factors currently have not had an impact on the timeliness of receivable collections from our customers. We cannot predict at this time how this situation will develop and whether accounts receivable may need to be allowed for or written off in the coming quarters. Despite the various risks and uncertainties associated with the current economy in China, we believe our core strengths will continue to allow us to execute our strategy for long-term sustainable growth in revenue, net income and operating cash flow. Summary of Critical Accounting Policies We have identified critical accounting policies that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operation involved could result in material changes to our financial position or results of operations under different conditions or using different assumptions. Estimates and Assumptions We regularly evaluate the accounting estimates that we use to prepare our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management. Revenue Recognition Revenue is generated through sale of goods and delivery services. Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods and services. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods and services in the contract; (ii) determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. 5
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The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery. For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product and service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules. Leases Lessee The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in the consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the leases do not provide an implicit rate, the Company generally uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lessor As a lessor, the Company’s leases are classified as operating leases under ASC 842. Leases, in which the Company is the lessor, are substantially all accounted for as operating leases and the lease components and non-lease components are accounted for separately. Rental income from operating leases is recognized on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight line basis over the lease term. Accounts receivable, net Accounts receivable, net are stated at the historical carrying amount net of allowance for doubtful accounts. Account receivables are classified as financial assets subsequently measured at amortized cost. Account receivables are recognized when the Company becomes a party to the contractual provisions of the receivables. They are measured, at initial recognition, at fair value plus transaction costs, if any and are subsequently measured at amortized cost. The amortized cost is the amount recognized on the receivable initially, minus principal repayments, plus cumulative amortization (interest) using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance. A loss allowance for expected credit losses is recognized on account receivables and is updated at each reporting date. The Company determines the expected credit losses provisions based on ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (‘‘ASC 326’’) using a modified retrospective approach which did not have a material impact on the opening balance of accumulated deficit. To determine expected credit losses on account receivables, the Company will consider the historic credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions, and an assessment of both the current and forecasted direction of conditions at the reporting date, including the time value of money, where appropriate. The loss allowance is calculated on a collective basis for all trade and other receivables in totality. An impairment gain or loss is recognized in profit or loss with a corresponding adjustment to the carrying amount of account receivables, through use of a loss allowance account. The impairment loss is included in operating expenses as a movement in credit loss allowance. Receivables are written off when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g., when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Receivables written off may still be subject to enforcement activities under the Company’s recovery procedures, considering legal advice where appropriate. Any recoveries made are recognized in profit or loss. 6
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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. Results of Operations for the three months ended September 30, 2025 and 2024 The following table summarizes our results of operations for the three months ended September 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 September 30, Changes in 2025 2025 2024 compared to 2024 (In U.S. dollars, except for percentages) Revenue $ 820,692 100.0% $ 1,112,899 100% $ (292,207) (26.3)% Cost of revenues (595,545) (72.6)% (641,819) (57.7)% 46,274 (7.2)% Gross profit 225,147 27.4% 471,080 42.3% (245,933) (52.2)% Operating expenses (674,995) (82.2)% (512,592) (46.1)% (162,403) 31.7% Loss from operations (449,848) (54.8)% (41,512) (3.7)% (408,336) 983.7% Other income, net 82,832 10.1% 84,137) 7.6% (1,305) (1.6)% Fair value gain or loss (452,983) (55.2)% (531,614) (47.8)% 78,631 (14.8)% Net finance cost (11,789) (1.4)% (57,596) (5.2)% 45,807 (79.5)% Income tax expense (70) (0.0)% (1,062) (0.1)% 992 (93.4)% Loss from continuing operations (831,858) (101.4)% (547,647) (49.2)% (284,211) 51.9% Income (loss) from discontinued operations 729,021 88.8)% (173,885) (15.6)% 902,906 (519.3)% Net loss $ (102,837) (12.5)% $ (721,532) (64.8)% $ 618,695 (85.7)% Revenue Total revenue for the three months ended September 30, 2025 decreased by approximately $0.3 million, or 26.3%, as compared with the three months ended September 30, 2024. The decrease was mainly due to the decrease of $0.1 million in garment manufacturing business revenue and decrease of $0.2 million in logistics services revenue. Revenue generated from our garment manufacturing business contributed approximately $0.01 million, or 1.6%, of our total revenue for the three months ended September 30, 2025. By comparison, revenue generated from garment manufacturing business contributed approximately $0.1 million or 11.1% of our total revenue for the three months ended September 30, 2024. The low level of sales was mainly due to a decrease in order volume and fierce market competition. 7
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Revenue generated from our logistics services business contributed approximately $0.8 million, or 98.4%, of our total revenue for the three months ended September 30, 2025. By comparison, revenue generated from our logistic business contributed approximately $1.0 million or 71.9% of our total revenue for the three months ended September 30, 2024. Cost of revenue Three months ended September 30, Increase (decrease) in 2025 2024 2025 compared to 2024 (In U.S. dollars, except for percentages) Net revenue for garment manufacturing $ 12,935 100.0% $ 148,470 100% $ (135,535) (91.3)% Raw materials 6,444 49.8% 87,273 58.8% (80,829) (92.6)% Labor - -% 36,428 24.5% (36,428) (100.0)% Other and Overhead - -% 7,094 4.8% (7,094) (100.0)% Total cost of revenue for garment manufacturing 6,444 49.8% 130,795 88.1% (124,351) (95.1)% Gross profit for garment manufacturing 6,491 50.2% 17,675 11.9% (11,184) (63.3)% Net revenue for logistics services 807,757 100.0% 964,429 100.0% (156,672) (16.2)% Fuel, toll and other cost of logistics services 504,265 62.4% 511,024 53.0% (6,759) (1.3)% Subcontracting fees 84,835 10.5% - -% 84,835 - Total cost of revenue for logistics services 589,100 72.9% 511,024 53.0% 78,077 15.3% Gross profit for logistics services 218,657 27.1% 453,405 47.0% (234,749) (51.8)% Total cost of revenue $ 595,544 72.6% $ 641,819 57.7% $ (46,275) (7.2)% Gross profit $ 225,147 27.4% $ 471,080 42.3% $ (245,933) (52.2)% For our garment manufacturing business, we purchase the majority of our raw materials directly from numerous local fabric and accessories suppliers. Raw material costs for our garment manufacturing business were approximately 49.8% of our total garment manufacturing business revenue for the three months ended September 30, 2025, as compared with 58.8% for the three months ended September 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 nil for the three months ended September 30, 2025, as compared with 24.5% for the three months ended September 30, 2024. There was no production during the three months ended September 30, 2025 as we procured products from external manufacturers for resale instead of manufacturing. Overhead and other expenses for our garment manufacturing business was nil for the three months ended September 30, 2025, as compared with 4.8% of total garment business revenue for the three months ended September 30, 2024. There was no production during the three months ended September 30, 2025. 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 16.0% ($0.09 million) and nil% of total cost of revenues for our service segment for the three months ended September 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 September 30, 2025 were approximately $0.5 million as compared with $0.5 million for the three months ended September 30, 2024. Fuel, toll and other costs for our logistics services business accounted for approximately 62.4% of our total service revenue for the three months ended September 30, 2025, as compared with 53.0% for the three months ended September 30, 2024. The increase in percentage was primarily attributable to an increased use of contractors during the quarter. 8
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Gross profit Garment manufacturing business gross profit for the three months ended September 30, 2025 was $6,491, as compared with $17,679 for the three months ended September 30, 2024. Gross profit accounted for 50.2% of our total garment manufacturing business revenue for the three months ended September 30, 2025, as compared to 47.0% for the three months ended September 30, 2024. The increase of gross profit ratio was mainly due to the procurement of products from external manufacturers for resale instead of manufacturing. Gross profit in our logistics services business for the three months ended September 30, 2025 was $218,656 and gross margin was 27.1%. Gross profit in our logistics services business for the three months ended September 30, 2024 was $453,406 and gross margin was 47.0%. 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. Three months ended September 30, Increase (decrease) in 2025 2024 2025 compared to 2024 (In U.S. dollars, except for percentages) Gross profit $ 225,147 100% $ 471,080 100% (245,933) (52.2% Operating expenses: Selling expenses (4,643) (2.1)% (13,399) (2.8)% 8,756 (65.3)% General and administrative expenses (670,352) (297.7)% (499,193) (106.0)% (171,159) 34.3% Total $ (674,995) (299.8)% $ (512,592) (108.8)% (162,403) 31.7% (Loss) Income from operations $ (449,848) (199.8)% $ (41,512) (8.8)% (408,336) 983.7% Selling, General and administrative expenses Our selling expenses for our garment manufacturing business for the three months ended September 30, 2025 and 2024 were $4,643 and $13,400, respectively. Selling expenses consisted primarily of advertisement, local transportation, unloading charges and product inspection charges. Our general and administrative expenses in our garment manufacturing business segment for the three months ended September 30, 2025 and 2024 were $4,569 and $2,653, respectively. Our general and administrative expenses in our logistics services segment for the three months ended September 30, 2025 and 2024 were $155,397 and $223,375, respectively. Our general and administrative expenses in our corporate office for the three months ended September 30, 2025 and 2024 were $510,384 and $274,855, 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. Total general and administrative expenses for the three months ended September 30, 2025 increased by approximately 34.3% to $670,352 from $499,193 for the three months ended September 30, 2024. 9
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Loss from operations Loss from operations for the three months ended September 30, 2025 and 2024 was $449,848 and $245,066, respectively. Loss from operations in our garment manufacturing segments was $2,723 and income from operation of $1,622 for the three months ended September 30, 2025 and 2024, respectively. The increase in losses was mainly due to the decrease in revenue. Income (loss) from operations in our logistics services segment was $63,258 and $229,558 for the three months ended September 30, 2025 and 2024, respectively. The decrease in income was mainly due to decreased sales. We incurred expenses from operations in corporate office of $510,383 and $274,381 for the three months ended September 30, 2025 and 2024, respectively. Income Tax Expenses Income tax expense for the three months ended September 30, 2025 and 2024 was $70 and $1,062, 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 September 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 September 30, 2025 and 2024. The majority of our subsidiaries are governed by the Income Tax L aws 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. is a U.S. entity and is subject to the United States federal income tax. No provision for income taxes in the United States has been made as Addentax Group Corp. had no United States taxable income for the three months ended September 30, 2025 and 2024. Net Loss We incurred net loss of approximately $0.1 million and net loss of approximately $0.7million for the three months ended September 30, 2025 and 2024, respectively. Our basic and diluted loss per share were ($0.01) and ($0.13) for the three months ended September 30, 2025 and 2024, respectively. Results of Operations for the six months ended September 30, 2025 and 2024 The following table summarizes our results of operations for the six months ended September 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. Six Months Ended September 30, Changes in 2025 2025 2024 compared to 2024 (In U.S. dollars, except for percentages) Revenue $ 1,647,046 100.0% $ 1,686,008 100% $ (38,962) (2.3)% Cost of revenues (1,231,485) (74.8)% (950,450) (56.4)% (281,035) 29.6% Gross profit 415,561 25.2% 735,558 43.6% (319,997) (43.5)% Operating expenses (1,220,284) (74.1)% (1,076,097) (63.8)% (144,187) 13.4% Loss from operations (804,723) (48.9)% (340,539) (20.2)% (464,184) 136.3% Other income, net 436,483 26.5% 66,096 3.9% 370,387 560.4% Fair value gain or loss 465 0.0% (397,397) (23.6)% 397,862 (100.1)% Net finance cost (594,521) (36.1)% (904,924) (53.7)% 310,403 (34.3)% Income tax expense (834) (0.1)% (1,527) (0.1)% 693 (45.4)% Loss from continuing operations (963,130) (58.5)% (1,578,291) (93.6)% 615,161 (39.0)% Income (loss) from discontinued operations 467,855 28.4% (364,352) (21.6)% 832,207 (228.4)% Net loss $ (495,275) (30.1)% $(1,942,643) (115.2)% $ 1,447,368 (74.5)% Revenue Total revenue for the six months ended September 30, 2025 decreased by $38,962, or 2.3%, as compared with the six months ended September 30, 2024. The decrease was mainly due to the increase of $0.16 million in logistics services revenue and a decrease of $0.20 million in garment manufacturingrevenue.
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Revenue generated from our garment manufacturing business contributed $32,831, or 2.0%, of our total revenue for the six months ended September 30, 2025. By comparison, revenue generated from garment manufacturing business contributed approximately $0.2 million or 10.7% of our total revenue for the six months ended September 30, 2024. The low level of sales was mainly due to a decrease in order volume and fierce market competition. 10
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Revenue generated from our logistics services business contributed approximately $1.6 million, or 98.0%, of our total revenue for the six months ended September 30, 2025. By comparison, revenue generated from our logistic business contributed approximately $1.5 million or 66.2% of our total revenue for the six months ended September 30, 2024. Cost of revenue Six months ended September 30, Increase (decrease) in 2025 2024 2025 compared to 2024 (In U.S. dollars, except for percentages) Net revenue for garment manufacturing $ 32,831 100.0% $ 235,072 100% $ (202,241) (86.0)% Raw materials 13,418 40.9% 124,959 53.2% (111,541) (89.3)% Labor 8,162 24.8% 54,524 23.2% (46,362) (85.0)% Other and Overhead 1,237 3.8% 10,648 4.5% (9,411) (88.4)% Total cost of revenue for garment manufacturing 22,817 69.5% 190,131 80.9% (167,314) (88.0)% Gross profit for garment manufacturing 10,014 30.5% 44,941 19.1% (34,927) (77.7)% Net revenue for logistics services 1,614,215 100.0% 1,450,936 100.0% 163,279 11.3% Fuel, toll and other cost of logistics services 1,075,348 66.6% 760,319 52.4% 315,029 41.4% Subcontracting fees 133,320 8.3% - - 133,320 - Total cost of revenue for logistics services 1,208,668 74.9% 760,319 52.4% 448,349 59.0% Gross profit for logistics services 405,547 25.1% 690,617 47.6% (285,070) (41.3)% Total cost of revenue $ 1,231,485 74.8% $ 950,450 56.4% $ 281,035 29.6% Gross profit $ 415,561 25.2% $ 735,558 43.6% $ (319,997) (43.5)% For our garment manufacturing business, we purchase the majority of our raw materials directly from numerous local fabric and accessories suppliers. Raw material costs for our garment manufacturing business were approximately 40.9% of our total garment manufacturing business revenue for the six months ended September 30, 2025, as compared with 53.2% for the six months ended September 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 24.8% of our total garment manufacturing business revenue for the six months ended September 30, 2025, as compared with 23.2% for the six months ended September 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 3.8% of our total garment business revenue for the six months ended September 30, 2025, as compared with 4.5% of total garment business revenue for the six months ended September 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 7.8% ($0.09 million) and nil% of total cost of revenues for our service segment for the six months ended September 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 six months ended September 30, 2025 were approximately $1.1 million as compared with $0.8 million for the six months ended September 30, 2024. Fuel, toll and other costs for our logistics services business accounted for approximately 66.6% of our total service revenue for the six months ended September 30, 2025, as compared with 52.4% for the six months ended September 30, 2024. The increase was primarily attributable to an increased use of contractors during the quarter ended September 30, 2025. 11
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Gross profit Garment manufacturing business gross profit for the six months ended September 30, 2025 was $10,014, as compared with $44,942 for the six months ended September 30, 2024. Gross profit accounted for 30.5% of our total garment manufacturing business revenue for the six months ended September 30, 2025, as compared to 19.1% for the six months ended September 30, 2024. The increase of gross profit ratio was mainly due to the procurement of products from external manufacturers for resale instead of manufacturing. Gross profit in our logistics services business for the six months ended September 30, 2025 was $405,547 and gross margin was 25.1%. Gross profit in our logistics services business for the six months ended September 30, 2024 was $690,617 and gross margin was 47.6%. 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. Six months ended September 30, Increase (decrease) in 2025 2024 2025 compared to 2024 (In U.S. dollars, except for percentages) Gross profit $ 415,561 100.0% $ 735,558 100% (319,997) (43.5)% Operating expenses: Selling expenses (11,304) (2.7)% (96,002) (13.1)% 84,698 (88.2)% General and administrative expenses (1,208,980) (290.9)% (980,095) (133.2)% (228,885) 23.4% Total $(1,220,284) (293.6)% $(1,076,097) (146.3)% (144,187) 13.4% (Loss) Income from operations $ (804,723) (193.6)% $ (340,539) (46.3)% (464,184) 136.3% Selling, General and administrative expenses Our selling expenses for our garment manufacturing business for the six months ended September 30, 2025 and 2024 were $11,304 and $96,002, respectively. Selling expenses consisted primarily of advertisement, local transportation, unloading charges and product inspection charges. Our general and administrative expenses in our garment manufacturing business segment for the six months ended September 30, 2025 and 2024 were $31,019 and $10,963, respectively. Our general and administrative expenses in our logistics services segment for the six months ended September 30, 2025 and 2024 were $355,769 and $439,625, respectively. Our general and administrative expenses in our corporate office for the six months ended September 30, 2025 and 2024 were $822,192 and $532,753, 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. Total general and administrative expenses for the six months ended September 30, 2025 increased by approximately 23.4% to $1.2 million from $1.0 million for the six months ended September 30, 2024. 12
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Loss from operations Loss from operations for the six months ended September 30, 2025 and 2024 was $804,723 and $750,082, respectively. Loss from operations in our garment manufacturing segments was $32,310 and $62,023 for the six months ended September 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 $49,777 and $250,437 for the six months ended September 30, 2025 and 2024, respectively. The decrease in income was mainly due to decreased sales. We incurred expenses from operations in corporate office of $822,190and $532,198 for the six months ended September 30, 2025 and 2024, respectively. Income Tax Expenses Addentax incorporated in the US is dormant ( No income, no expenses except for listing/ administrative expenses). Addentax has no current US tax. All the taxable income are generated by the foreign subsidiaries and the income tax computation is disclosed in Note 12 Income tax expense for the six months ended September 30, 2025 and 2024 was $834 and $1,527, 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 six months ended September 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 six months ended September 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. is a U.S. entity and is subject to the United States federal income tax. No provision for income taxes in the United States has been made as Addentax Group Corp. had no United States taxable income for the six months ended September 30, 2025 and 2024. Net Loss We incurred net loss of approximately $0.5 million and $1.9 million for the six months ended September 30, 2025 and 2024, respectively. Our basic and diluted loss per share were ($0.06) and ($0.36) for the six months ended September 30, 2025 and 2024, respectively. 13
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Summary of cash flows Summary cash flows information for the six months ended September 30, 2025 and 2024 is as follow: Six months ended September 30, 2025 2024 (In U.S. dollars) Net cash (used in) provided by operating activities $ (967,518) $ 528,998 Net cash used in investing activities (272,009) (115,651) Net cash provided by (used in) financing activities $ 1,364,394 $ (415,566) Net cash used in operating activities in the six months ended September 30, 2025 was approximately $0.9 million as compared to cash of $0.5 million provided by operating activities in the six months ended September 30, 2024, which was approximately $1.5 million less than that of the six months ended September 30, 2024. The decrease was mainly due to (i) net income adjusted to operating cash flow for the six months ended September 30, 2025 was $0.4 million more than that of the six months ended September 30, 2024; (ii) the movement of operating assets and liabilities in the six months ended September 30, 2025 resulted in cash outflow of approximately $1.2 million, which was $1.1 million more than that of the corresponding period in 2024;. Net cash used in investing activities for the six months ended September 30, 2025 was approximately $0.27 million, which was $0.15 million more than the six months ended September 30, 2024. The cash outflow was mainly due to purchase of property, plant and equipment of $0.12 million and cash decrease of $0.16 million in disposal of subsidiaries. Net cash provided by financing activities for the six months ended September 30, 2025 was approximately $1.4 million as compared to cash used in financing activities of $0.4 million in the six months ended September 30, 2024, which was approximately $1.8 million less than the six months ended September 30, 2025. The increase was mainly because in the six months ended September 30, 2025, the Company had release of restricted cash of $2.7 million, paid net cash advance of $1.0 million to related parties, and payment of $0.39 million for redemption of convertible notes. While in the six months ended September 30, 2024, the Company released restricted cash of $1.3 million, paid $0.9 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 September 30, 2025, we had cash on hand of approximately $0.4 million, total current assets of approximately $27.8 million and current liabilities of approximately $1.1 million. We currently 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. Zhida Hong. 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, Mr. 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. dollar and the Chinese Renminbi (“RMB”). All of our sales are in RMB. In the past years, RMB continued to appreciate against the U.S. dollar. As of September 30, 2025, the market foreign exchange rate was RMB 7.12 to one U.S. dollar. Our financial statements are translated into U.S. dollars using the closing rate method. The balance sheet items are translated into U.S. dollars using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the period. All translation adjustments are included in accumulated other comprehensive income in the statement of equity. The foreign currency translation gain (loss) for the six months ended September 30, 2025 and 2024 was approximately $(0.08) million and $(0.05) 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 September 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. 14
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Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable to smaller reporting companies. Item 4. Controls and Procedures Disclosure Controls and Procedures We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 30, 2025. Based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective . Changes in Internal Controls over Financial Reporting In response to the previously identified internal control weaknesses, the Company has implemented improvements to its internal controls, including: 1. hiring a reporting manager (“Internal Finance Manager”) who has the requisite relevant U.S. GAAP and SEC reporting experience and qualifications; 2. making an overall assessment of the current finance and accounting resources and hiring additional accounting members with appropriate levels of accounting knowledge and experience; 3. streamlining our accounting department structure and enhancing our staff’s U.S. GAAP and SEC reporting requirements on a continuous basis through internal training provided by our Internal Finance Manager; 4. participating in trainings and seminars provided by professional services firms on a regular basis to gain knowledge on regular U.S. GAAP /SEC reporting requirements updates. As a result of these actions, we believe we have successfully remediated the identified weaknesses, and internal controls over financial reporting are now considered effective. 15
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PART II - OTHER INFORMATION Item 1. Legal Proceedings From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that in the opinion of our management, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows. Item 1A. Risk Factors As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not Applicable. Item 5. Other Information There is no other information required to be disclosed under this item, which was not previously disclosed. Item 6. Exhibits Exhibit Number Description (31) Rule 13a-14 (d)/15d-14d) Certifications 31.1* Section 302 Certification by the Principal Executive Officer 31.2* Section 302 Certification by the Principal Financial Officer and Principal Accounting Officer (32) Section 1350 Certifications 32.1* Section 906 Certification by the Principal Executive Officer 32.2* Section 906 Certification by the Principal Financial Officer and Principal Accounting Officer 101* Interactive Data File 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) *Filed herewith. 16
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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Addentax Group Corp. Date: November 14, 2025 By:/s/ Zhida Hong Zhida Hong President, Chief Executive Officer and Director, (Principal Executive Officer) Date: November 14, 2025 By:/s/ Chao Huang Chao Huang Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) 17
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Exhibit 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Hong Zhida, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Addentax Group Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: November 14, 2025 /s/ Hong Zhida Hong Zhida President, Chief Executive Officer, Secretary and Director (Principal Executive Officer)
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Exhibit 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Huang Chao, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Addentax Group Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; 5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: November 14, 2025 /s/ Huang Chao Huang Chao Chief Financial Officer and Treasurer (Principal Financial Officer)
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Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, Hong Zhida, Chief Executive Officer, of Addentax Group Corp., hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the quarterly report on Form 10-Q of Addentax Group Corp. for the period ended September 30, 2025(the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Addentax Group Corp. Dated: November 14, 2025 /s/ Hong Zhida Hong Zhida President, Chief Executive Officer, Secretary and Director (Principal Executive Officer) A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Addentax Group Corp. and will be retained by Addentax Group Corp. and furnished to the Securities and Exchange Commission or its staff upon request.
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Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, Huang Chao, Chief Financial Officer, of Addentax Group Corp., hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) the quarterly report on Form 10-Q of Addentax Group Corp. for the period ended September 30, 2025 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Addentax Group Corp. Dated: November 14, 2025 /s/ Huang Chao Huang Chao Chief Financial Officer, Treasurer (Principal Financial Officer) A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Addentax Group Corp. and will be retained by Addentax Group Corp. and furnished to the Securities and Exchange Commission or its staff upon request.