Luohu District, Shenzhen City, China 518000

(Address of principal executive offices)

+ (86) 755 86961 405

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

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).

[X] 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.

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)

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS. [  ] Yes [X] No

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d)As of the Exchange Act after the distribution of securities under a plan confirmed by a court.

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number ofFebruary 14, 2020, there were 25,346,004 shares outstanding of each of the issuer’s classes ofregistrant’s common stock, as of the latest practicable date. 506,920,000 common shares, par value $0.001, issued and outstanding as of November 20, 2017.stock.

TABLE OF CONTENTS

PART I -– FINANCIAL INFORMATION

Index to the interim Unaudited Condensed Consolidated Financial Statements and Supplementary Data

ADDENTAX GROUP CORP.

Condensed Consolidated Balance Sheets

(Unaudited)FINANCIAL STATEMENTS

For the quarterly period ended December 31, 2019 and 2018

The accompanying notes are an integral part of these unaudited condensed financial statements.TABLE OF CONTENTS

See accompany notes to the consolidated financial statements.

ADDENTAX GROUP CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2019 AND 2018 (UNAUDITED)

(In U.S. Dollars, except share data or otherwise stated)

See accompany notes to the consolidated financial statements.

ADDENTAX GROUP CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED DECEMBER 31, 2019 AND 2018 (UNAUDITED)

(In U.S. Dollars, except share data or otherwise stated)

See accompany notes to the consolidated financial statements.

ADDENTAX GROUP CORP. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive LossCONSOLIDATED STATEMENTS OF CHANGE OF EQUITY

(Unaudited)FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2019 AND 2018 (UNAUDITED)

(In U.S. Dollars, except share data or otherwise stated)

The accompanying notes are an integral part of these unaudited condensed financial statements.

ADDENTAX GROUP CORP. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash FlowsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2019 AND 2018

The accompanying notes are an integral part of these unaudited condensed financial statements

ADDENTAX GROUP CORP.

Notes to the Condensed Consolidated Financial Statements

September 30, 2017

(Unaudited)

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

Addentax Group Corp. (“the Company”, “we”, “us” or “our”ATXG”) was incorporated in Nevada on October 28, 2014, and before the Company wastransaction described below, ATXG is engaged in the field of producing images on multiple surfaces using heat transfer technology.

During the reporting period, the Company was mainly engaged in textile and garment manufacturing and providing logistics services to its customers. The Company also provides business consultancy to their customers in assisting them to identify weaknesses in their operation in order to optimize their efficiency. The Company also assists their customers in improving their supply chain management which involves the movement and storage of raw materials, of work in progress inventory, and of finished goods from point of origin to point of consumption.

Share Exchange and Reorganization

AsOn December 28, 2016, ATXG acquired 250,000,000 shares of the Effective Dateissued and pursuant to a Securities Purchase Agreement dated September 25, 2017, the Company andoutstanding stock of Yingxi Industrial Chain Group Co., Ltd.(“Yingxi”), have determined that all conditions necessary to close. The 250,000,000 shares of Yingxi were acquired from the Share Exchange Agreement have been satisfiedmembers of Yingxi in a share exchange transaction in return for the issuance of 500,000,000 shares of common stock of ATXG. The 250,000,000 shares of Yingxi constitute 100% of its issued and thereforeoutstanding stock, and as a result of the date hereof, the Share Exchange Agreement was closed and as suchtransaction, Yingxi has becomebecame a wholly-owned subsidiary of ATXG. And following the Company. As perconsummation of the Share Exchange Agreement,reverse acquisition effective on September 25, 2017, and giving effect to the Company acquired 250,000,000 sharessecurities exchanged in the offering, the members of Yingxi representing 100%will beneficially own approximately ninty-nine percent (99%) of the issued and outstanding equitycommon stock of Yingxi, from the Yingxi shareholders and in exchange the Company issued to Yingxi an aggregate of 500,000,000 shares of common stock.

Recapitalization

ATXG. For financial accounting purposes, this transactionthe Company was treated as an acquiree and Yingxi as an acquirer, as a reverse acquisition by Yingxi,result, the business and resultedfinancial information contained in a recapitalization with Yingxi beingthis report is that of the accounting acquirer and Addentax Group Corp. as the acquired company. The consummation of this reverse acquisition resulted in a change of control. Accordingly, the historical financial statements prior to the acquisition are thoseconsummation date and that of the accounting acquirer,combined entity after that date.

Yingxi was incorporated in the Republic of Seychelles on August 4, 2016. ATXG, together with Yingxi and have been prepared to give retroactive effect toits subsidiaries (the “Company”) operates primarily in the reverse acquisition completed on September 25, 2017,People’s Republic of China (“PRC” or “China”) and representis engaged in the operationsbusiness of Yingxi. The consolidated financial statements aftergarments manufacturing and providing logistic services.

On December 15, 2016, Yingxi entered into an equity transfer agreement with the acquisition date, September 25, 2017 include the balance sheets of both companies at historical cost, the historical resultsshareholder of Yingxi and the resultsIndustrial Chain Investment Co., Ltd (“Yingxi HK”) under which Yingxi agreed to pay total consideration of RMB21,008,886 (approximately $3,048,936) in cash in exchange for a 100% ownership interest in Yingxi HK. Yingxi HK was incorporated in Hong Kong in 2016. Yingxi HK is a holding company with no assets other than a 100% equity interest of the Company fromfollowing subsidiaries:

Qianhai Yingxi Textile & Garments Co., Ltd (“QYTG”), a wholly-owned subsidiary of Yingxi HK, was incorporated in the acquisition date. All share and per share informationPRC in 2016.

Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), a wholly-owned subsidiary of QYTG, was incorporated in the PRC in 2016.

Xin Kuai Jie Transport Co., Ltd (“XKJ”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2001. XKJ is engaged in the provision of logistic services.

Shenzhen Hua Peng Fa Logistics Co., Ltd (“HPF”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2006. HPF is engaged in the provision of logistic services.

Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2009. HSW is a garment manufacturer.

Shantou Chenghai Dai Tou Garments Co., Ltd (“DT”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2009. DT is a garment manufacturer.

Dongguan Yingxi Daying Commercial Co., Ltd (“DY”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2019. DY is a property management company for the garment manufacturing industry.

Dongguan Yushang Clothing Co., Ltd (“YS”), a wholly-owned subsidiary of YX, was incorporated in the PRC in 2019. YS is a garment manufacturer.

Shantou Yi Bai Yi Garments Co., Ltd (“YBY”), a wholly-owned subsidiary of YX, was incorporated in PRC in 2019, YBY is a garment manufacturer.

The accompanying consolidated financial statements of the Company and footnotes hasits subsidiaries are prepared pursuant to the rules and regulations of the U.S Securities and Exchanges Commission (“SEC”) and in conformity with generally accepted accounting principles in the U.S. (“US GAAP”). All material inter-company accounts and transactions have been retroactively restated to reflect the recapitalization.

NOTE 2 - GOING CONCERN

eliminated in consolidation.

The accompanying unaudited interimconsolidated financial statements have been prepared assumingare presented on the basis that the Company will continue asis a going concern. The going concern whichassumption contemplates the realization of assets and the liquidationsatisfaction of liabilities in the normal course of business. For

The Company incurred net loss of $(258,212), $(544,977) for the 6three months ended September 30, 2017,December 31, 2019 and 2018, respectively, and $(947,485), $(569,586) for the nine months ended December 31, 2019 and 2018, respectively. As of December 31, 2019 and March 31, 2019, the Company has sufferedhad net current liability of $4,189,643 and $2,871,981, respectively, and a loss from operationsdeficit on total equity of $119,669. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital$2,591,316 and other cash requirements for the year ended March 31, 2018.

$1,702,547, respectively.

The ability of the Company to emerge from an early stagecontinue as a going concern is dependent upon among other things,the Company’s profit generating operations in the future and/or obtaining additionalthe necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company expects to finance operations primarily through cash flow from revenue and developmentcapital contributions from the CEO. During the period, the CEO has provided financial support for the operations of its business plan.the Company. In responsethe event that the Company requires additional funding to these problems, management intendsfinance the growth of the Company’s current and expected future operations as well as to raiseachieve our strategic objectives, the CEO has indicated the intent and ability to provide additional funds through public or private placement offerings.equity financing.

These factors, among others,conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited interimCompany’s continuation as a going concern is dependent on the Company’s ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, or if at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BasisThe Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of Presentationoperations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principlesCompany’s operations in the United StatesPRC 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 America for interim financial information and with the instructions to Regulation S-X.taxation.

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the consolidated financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

Basis of Consolidation

These consolidated financial statements include the accounts of Yingxi Industrial Chain Group Co., Ltd and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation.

Principal of subsidiaries

The detailsCompany’s reporting currency is the U.S. dollar. The functional currency of the principal subsidiariesparent company is the U.S. dollar and the functional currency of the CompanyCompany’s operating subsidiaries is the Chinese Renminbi (“RMB”). For the subsidiaries whose functional currencies are set out as follows:the RMB, all assets and liabilities are translated at exchange rates at the balance sheet date and revenue and expenses are translated at the average yearly exchange rates and 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.

Use of Estimates

The preparation of the consolidated financial statements is in conformity with theUS GAAP that requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires theliabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amountamounts of revenues and expenses during the reporting period. Actualperiods. 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.

Foreign Currency Translation

The Company’s reporting currency is the U.S. Dollars (“USD”). The functional currency of the Company and its subsidiaries is Chinese Yuan Renminbi (“RMB”). All transactions initiated in RMB are translated into USD in accordance with ASC 830,“Foreign Currency Matters,”as follows:

Adjustments arising from such translations are includedAccounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures”, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The statement clarifies that the exchange price is the price in accumulated other comprehensive incomean orderly transaction between market participants to sell the asset or transfer the liability in shareholders’ equity.the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. It also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and that market participant assumptions include assumptions about risk and effect of a restriction on the sale or use of an asset.

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Accounts ReceivableLevel 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

At December 31, 2019, the Company has no financial assets or liabilities subject to recurring fair value measurements.

The Company’s financial instruments include cash, accounts receivable, consistsadvances to suppliers, other receivables, accounts payable, other payables, taxes payables and related party receivables or payables. Management estimates that the carrying amounts of trade receivablesfinancial instruments approximate their fair values due to their short-term nature. The fair value of amounts with related parties is not practicable to estimate due to the related party nature of the underlying transactions.

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. All cash and cash equivalents relate to cash on hand and cash at bank at December 31, 2019 and March 31, 2019.

The Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Company is permitted to exchange Renminbi for foreign currencies through banks that are authorized to conduct foreign exchange business.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company extends credit to its customers in the normal course of business and generally does not require collateral. The Company’s credit terms are dependent upon the segment, and the customer. The Company assesses the probability of collection from customers. Theeach customer at the outset of the arrangement based on a number of factors, including the customer’s payment history and its current creditworthiness. If in management’s judgment collection is not probable, the Company does not record revenue until the uncertainty is removed.

Management performs ongoing credit evaluations, and the Company maintains an allowance for potential credit losses based upon its loss history and its aging analysis. The allowance for doubtful accounts is the Company’s best estimate of the amount of credit losses in existing accounts receivable. Management reviews the allowance for doubtful accounts each reporting period based on a detailed analysis of trade receivables. In the Company’s assessmentanalysis, management primarily considers the age of collectabilitythe customer’s receivable, and also considers the creditworthiness of the customer, receivable. The Company analyzes pastthe economic conditions of the customer’s industry, general economic conditions and trends, and the business relationship and history with a customer, customer credit, collection history, and financial condition when evaluatingits customers, among other factors. If any of these factors change, the Company may also change its original estimates, which could impact the level of the Company’s future allowance for doubtful accounts. If judgments regarding the collectability of customer accounts. Uncollectible accounts are charged offreceivables were incorrect, adjustments to the allowance when it is deemed probable that the receivable will notmay be recovered.

For the concentration risk disclosure, please refer to Note 10.required, which would reduce profitability.

Financial InstrumentsAccounts receivable are recognized and carried at the original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful accounts receivable is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. No allowance for doubtful accounts was made for the three and nine months ended December 31, 2019 and 2018.

The Company’s consolidated financial instruments consist primarily of cash,following customers had an accounts receivable prepaid expenses, inventorybalance greater than 10% of total accounts receivable at December 31, 2019 and other assets, accounts payable and accrued expenses and other payables. The carrying amounts of such financial instruments approximate their respective estimated fair value due to their short-term maturities.March 31, 2019.

Concentrations of Credit Risks

The Company’s exposure to concentrationsManufacturing segment inventories consist of credit risk primarily related to its cashraw materials, work in progress and cash equivalents. The Company places its cashfinished goods and cash equivalents with financial institutions of high credit worthiness. The Company’s management assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.

Inventory

Inventory is stated at the lower of cost, (weighted average)determined on a weighted average basis, or net realizable value. TheNet realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated costs necessary to make the sale. When inventories are sold, their carrying amount is charged to expense in the period in which the revenue is recognized. Write-downs for declines in net realizable value or for losses of inventories are recognized as an expense in the period the impairment or loss occurs. No allowance for obsolete finished goods for both three and nine months ended December 31, 2019 and 2018.

During the three and nine months ended December 31, 2019 and 2018, approximately 99%, 91%, 76% and 51% of total inventory purchases were from the Company’s inventory is constantly monitored for obsolescence. This is based onfive largest suppliers, respectively. Management believes that should the management’s estimates and they have taken into considerations factors such as turnover, technical obsolescence, rightCompany lose any one of return statusits major suppliers, other suppliers are available that could provide similar products to suppliers and price protection offered by suppliers. These estimates are necessarily subject to a degree of measurement uncertainty. Reserves for slow-moving and obsolete inventory at September 30, 2017 were $0 and at March 31, 2017were $0.the Company.

Related Parties

The Company follows ASC 850,“Related Party Disclosures,”for the identification of related parties and disclosure of related party transactions see Note 9.

Property and Equipment

PropertyPlant and equipment are carried at cost less accumulated depreciation. Cost includes all direct costs necessary to acquireDepreciation is provided over the assets’ estimated useful lives, using the straight-line method. Estimated useful lives of the plant and prepare assets for use.equipment are as follows:

The costs of repairs and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the productive capacity or extend the useful life of an asset are capitalized. When assets are retired or sold, the asset’s cost and related accumulated depreciation of assets sold or otherwise retired are eliminated withfrom the accounts and any remaining gain or loss recognizedis included in net earnings.

Depreciationthe statement of plantincome. The cost of maintenance and equipment,repairs is recorded oncharged to the straight-line method over estimated useful lives, generallystatement of income as follows:incurred, whereas significant renewals and betterments are capitalized.

ImpairmentGoodwill represents the excess of long-livedthe purchase price over the net fair value of the identifiable tangible and intangible assets acquired and the fair value of liabilities assumed in acquisitions. ASC350-30-50 “Goodwill and Other Intangible Assets”, requires the testing of goodwill and indefinite-lived intangible assets for impairment at least annually. The Company tests goodwill for impairment in the fourth quarter of each years.

We evaluate carryingUnder applicable accounting guidance, the goodwill impairment analysis is a two-step test. The first step of the goodwill impairment test involves comparing the fair value of long-livedeach reporting unit with its carrying amount including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit exceeds its fair value, the second step must be performed to measure potential impairment.

The second step involves calculating an implied fair value of goodwill for each reporting unit for which the first step indicated possible impairment. If the implied fair value of goodwill exceeds the goodwill assigned to the reporting unit, there is no impairment. If the goodwill assigned to a reporting unit exceeds the implied fair value of goodwill, an impairment charge is recorded for the excess.

The Company tested goodwill for impairment as of March 31, 2019 and it was determined that recoverable amount of one of the Company’s reporting units was higher than the carrying amount of the goodwill recorded. Therefore it was concluded that no impairment for goodwill is required. As of December 31, 2019 and March 31, 2019, no carrying amount of goodwill was impaired.

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances would indicate that itthe carrying amount of assets may not be recoverable. It is more likely than not their carrying values may exceed their realizable values,reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and records impairment charges when considered necessary.

When circumstances indicate that impairment may have occurred, the Company tests such assets for recoverabilityused is by comparing the estimatedcarrying amount of an asset to future net undiscounted future cash flows expected to result frombe generated by the use ofassets. If such assets and their eventual dispositionare considered to their carrying amount. In estimating these future cash flows, assets and liabilities are grouped at a lowest level forbe impaired, the impairment to be recognized is measured by the amount by which there are identifiable cash flows that are largely independent of the cash flows generated by other such groups. If the undiscounted future cash flows are less than the carrying amount of the asset, an impairment loss, measured asassets exceeds the excessfair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

There was no impairment of long-lived assets as of December 31, 2019 and March 31, 2019.

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 asset over its estimated fair value, is recognized. Fair values are determined based on discountednature, amount, timing, and uncertainty of revenue and cash flows quoted market values or external appraisals as applicable.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:

Revenue Recognition(i) identification of the promised goods and services in the contract;

(ii) determination of whether the promised goods and services are performance obligations, including whether they are distinct in the context of the contract;

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance obligations; and

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

The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes revenue only when allas revenues the amount of the following criteria have been met: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

Cost of revenues for manufacturing segment includes the direct raw material cost, direct labor cost, manufacturing overheads including depreciation of production equipment and rent. Cost of for service segment includes gasoline and diesel fuel, toll charges and subcontracting fees.

Deferred RevenueThe Company reports earnings per share in accordance with ASC 260 “Earnings Per Share”, which requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the reporting period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. Further, if the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of a basic and diluted earnings per share shall be adjusted retroactively for all periods presented to reflect that change in capital structure.

Deferred revenue are services billedThe Company’s basic earnings per share is computed by dividing the net income available to customers for whichholders by the servicesweighted average number of the Company’s ordinary shares outstanding. Diluted earnings per share reflects the amount of net income available to each ordinary share outstanding during the period plus the number of additional shares that would have not been fully performed. Asoutstanding if potentially dilutive securities had been issued. The Company had no potentially dilutive ordinary shares as of September 30, 2017December 31, 2019 and March 31, 2017, deferred revenue were $492,553 and $290,099, respectively.2019.

Income Taxes

The Company accounts for income taxes using the asset and liability method in accordance withprescribed by ASC 740“Accounting for Income Taxes.” The asset and liability “Income Taxes”. Under this method, provides that deferred tax assets and liabilities are recognized fordetermined based on the expected future tax consequences of temporary differencesdifference between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect whenin the years in which the differences are expected to reverse. The Company records a valuation allowance to reduceoffset deferred tax assets toif based on the amountweight of available evidence, it is more-likely-than-not that is believed more likely thansome portion, or all, of the deferred tax assets will not to be realized.

Uncertain Tax Positions

The Company follows guidance issued by the FASB regarding accounting for uncertaintyeffect on deferred taxes of a change in tax rates is recognized as income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognizedor loss in the financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than notperiod that includes the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement.

The Company records income tax related interest and penalties as a component of the provision for income tax expense. As of September 30, 2017 and March 31, 2017, the Company determined there were no uncertain tax provisions.

Earnings (Loss) Per Share

The Company has adopted ASC 260,“Earnings Per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying consolidated statements of operations and comprehensive loss, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.

The Company had no potentially dilutive securities, such as convertible debt, options or warrants, issued and outstanding during the six months ended September 30, 2017 and 2016.

Recent Accounting Pronouncementsenactment date.

The Company has reviewed all other recently issued, buta history of tax losses and there is no convincing evidence that sufficient taxable income will be available against which the deferred tax asset can be utilised, therefore, the Company does not yet effective, accounting pronouncementsrecognize any tax benefits for the three and nine months ended December 31, 2019 and 2018.

The Company is governed by the Income Tax Laws of the PRC. The PRC federal statutory tax rate is 25%. The Company files income tax returns with the relevant government authorities in the PRC. The Company does not believe there will be any material changes in its unrecognized tax positions over the futurenext 12 months.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company does not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the three and nine months ended December 31, 2019 and 2018. The Company’s effective tax rate differs from the PRC federal statutory rate primarily due to non-deductible expenses, temporary differences and preferential tax treatments.

New U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transaction tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump-sum payment. The Company measured the current and deferred taxes based on the provisions of the Tax legislation. After the Company’s measurement, no deferred tax benefit nor expense were recorded relating to the Tax Act changes for the three and nine months ended December 31, 2019 and 2018.

A related party is generally defined as:

(i) any person that holds the Company’s securities including such person’s immediate families,

(ii) the Company’s management,

(iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or

(iv) anyone who can significantly influence the financial and operating decisions of the Company.

A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Our 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 December 31, 2019, our total outstanding borrowings amounted to $359,038 (RMB2,500,000) with various interest rates from 4.84% to 6.96%. (Note 10)

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 use the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

In November 2016, the FASB issued ASU 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update do not provide a definition of restricted cash or restricted cash equivalents. The amendments in this ASU on update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this Update should be applied using a retrospective transition method each period presented. The Company adopted this ASU on April 1, 2018 and determined it had no impact on its consolidated financial statements as of December 31, 2019.

In August 2018, the FASB issued ASU 2018-13,Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement to ASC Topic 820, Fair Value Measurement (“ASC 820”). ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, and/or adding certain disclosures. ASU 2018-13 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2019. An entity is permitted to early adopt by modifying existing disclosures and delay adoption of any such pronouncements may be expectedthe additional disclosures until the effective date. The Company is evaluating the effect that adoption of this guidance will have on its consolidated financial statements and related disclosures.

In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments allow a reclassification from accumulated other comprehensive income to causeretained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. This standard was effective for the Company on September 1, 2018. The adoption of this standard did not have a material impact on ourthe Company’s consolidated financial position, results of operations or cash flows.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This standard requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. This standard will be effective for the Company on December 15, 2019. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

In September 2017,January 2016, the FASB has issued Accounting Standards Update (ASU) No. 2017-13,ASU 2016-01, “Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities(“ASU 2016-01”)”. The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company evaluated the impact of adopting the new standard and concluded that there was no material impact to its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02,“Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and LeasesLease (Topic 842): Amendments”,which amends recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. Under the new guidance, lessees will be required to SEC Paragraphs Pursuant torecognize a lease liability and a right-of-use asset for all leases (with the Staff Announcementexception of short-term leases) at the July 20, 2017 EITF Meetingcommencement date. This standard takes effect for fiscal years, and Rescissioninterim periods within those fiscal years, beginning after December 15, 2018. According to this new standard, the Company recorded both right-of-use asset and lease liability of Prior SEC Staff Announcements$1.9 million on its consolidated financial statements for the period ended December 31, 2019.

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.

The receivables and Observer Comments.”allowance balances at December 31, 2019 and March 31 2019 are as follows:

No allowance for doubtful accounts was made for the three and nine months ended December 31, 2019 and 2018.

Other receivables primarily represent rental deposit; refundable security deposits to customers for quality assurance on the provision of logistic service; and unsecured and non-interest bearing short-term advances that the Company makes from time-to-time to employees. These advances are unsecured and due on demand.

The amendments in ASU No. 2017-13 amendsCompany leases Shenzhen XKJ office rent-free from Bihua Yang.

The Company had the early adoption date option for certain companiesfollowing related to the adoptionparty balances as of ASU No. 2014-09December 31, 2019 and ASU No. 2016-02. BothMarch 31, 2019:

The balances with related parties are unsecured, non-interest bearing and repayable on demand.

Inventories consist of the below entities may still adopt usingfollowing as of December 31, 2019 and March 31, 2019:

There is no inventory allowance for the public company adoption guidancethree and nine months ended December 31, 2019 and 2018.

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 related ASUs,period they are considered unlikely to be collected.

Plant and equipment consists of the following as amended. The effective date is the same as the effective dateof December 31, 2019 and transition requirementsMarch 31, 2019:

Depreciation expense for the amendmentsthree and nine months ended December 31, 2019 and 2018 was $27,648 and $84,277, $28,391 and $88,434, respectively.