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: ~~December 31, 2021~~September 30, 2022

☐	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. 333-206097

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)

+ (86) 755 ~~8233 0336~~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		~~OTC Markets~~Nasdaq Capital Market

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 ☒

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

As of, ~~February 14,~~ 2022, there were ~~26,693,004~~ 31,093,004shares outstanding of the registrant’s common stock.

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	~~F-1~~F-3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 3.	Defaults Upon Senior Securities	17

Item 4.	~~Controls and Procedures~~	17

	~~PART II – OTHER INFORMATION~~

~~Item 1.~~	~~Legal Proceedings~~	18

~~Item 1A.~~	~~Risk Factors~~	18

~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	18

~~Item 3.~~	~~Defaults Upon Senior Securities~~	18

~~Item 4.~~	Mine Safety Disclosures	1817

Item 5.	Other Information	1817

Item 6.	Exhibits	1817

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data

ADDENTAX GROUP CORP.

FINANCIAL STATEMENTS

For the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~

TABLE OF CONTENTS

Condensed Consolidated Balance sheets as of ~~December 31, 2021~~September 30, 2022 and March 31, ~~2021~~2022 (unaudited)	~~F-2~~F-4
Condensed Consolidated Statements of Income and Comprehensive Income for the ~~Nine~~Six months ended ~~December 31,~~June 30, 2022 and 2021 ~~and 2020~~ (unaudited)	~~F-3~~F-5
Condensed Consolidated Statements of Changes in Equity for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ (unaudited)	~~F-4~~F-6
Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ (unaudited)	~~F-5~~F-7
Notes to Condensed Consolidated Financial Statements for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ (unaudited)	~~F-6~~F-8 – ~~F-14~~F-16

~~F-1~~F-3

ADDENTAX GROUP CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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

(UNAUDITED)


	December 31, 2021			March 31, 2021			September 30, 2022			March 31, 2022

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	506,342		$	1,845,077		$	2,034,410		$	1,390,644
Accounts receivables, net		1,718,991			4,757,518			1,895,213			2,164,970
Debt securities held-to-maturity								17,500,000			-
Inventories		298,196			270,434			247,335			266,596
Prepayments and other receivables		610,621			684,161			4,561,827			575,210
Advances to suppliers		1,522,370			355,454			1,158,364			1,181,466
Amount due from related party		171,364			84,838			36,122			110,242
Total current assets		4,827,884			7,997,482			27,433,271			5,689,128

NON-CURRENT ASSETS
Plant and equipment, net		869,603			793,977			684,949			836,419
Long-term prepayments		9,348			-			122,138			31,496
Operating lease right of use asset		7,307,883			9,632,625			4,221,393			6,530,017
Total non-current assets		8,186,834			10,426,602			5,028,480			7,397,932
TOTAL ASSETS	$	13,014,718		$	18,424,084		$	32,461,751		$	13,087,060

LIABILITIES AND EQUITY

CURRENT LIABILITIES
Short-term loan	$	157,354		$	152,607		$	134,245		$	151,090
Accounts payable		1,221,731			3,121,373			114,598			1,334,483
Amount due to related parties		3,536,615			4,913,964			2,469,127			3,694,989
Advances from customers		34,683			3,029			2,538			2,375
Accrued expenses and other payables		778,260			681,984			2,486,643			1,445,473
Operating lease liability current portion		3,701,925			3,555,458			3,343,271			3,763,931
Total current liabilities		9,430,568			12,428,415			8,550,422			10,392,341

NON-CURRENT LIABILITIES
Operating lease liability		3,605,958			6,077,167			878,123			2,766,086
TOTAL LIABILITIES	$	13,036,526		$	18,505,582		$	9,428,545		$	13,158,427

EQUITY (deficit)
Common stock ($0.001 par value, 50,000,000 shares authorized, 26,693,004 shares issued and outstanding at December 31, 2021 and March 31, 2021)	$	26,693		$	26,693
Common stock ($0.001 par value, 50,000,000 shares authorized, 31,693,004 shares and 26,693,004 shares issued and outstanding at September 30 and March 31, 2022, respectively)							$	31,693		$	26,693
Additional paid-in capital		6,815,333			6,815,333			29,532,326			6,815,333
Accumulated Deficit		(6,711,641	)		(6,834,228	)		(6,576,342	)		(6,756,230	)
Statutory reserve		13,821			13,821			13,821			13,821
Accumulated other comprehensive loss		(166,014	)		(103,117	)		31,708			(170,984	)
Total deficit		(21,808	)		(81,498	)
Total equity (deficit)								23,033,206			(71,367	)
TOTAL LIABILITIES AND EQUITY	$	13,014,718		$	18,424,084		$	32,461,751		$	13,087,060

See accompany notes to the unaudited condensed consolidated financial statements.

~~F-2~~F-4

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
December 31, Nine months ended
December 31,
2021 2020 2021 2020

REVENUES $ 2,791,470 $ 3,411,552 $ 9,835,733 $ 21,014,064

COST OF REVENUES (2,323,716 ) (2,950,124 ) (8,314,149 ) (22,776,087 )

GROSS PROFIT (LOSS) 467,754 461,428 1,521,584 (1,762,023 )

OPERATING EXPENSES
Selling and marketing (43,118 ) (217,942 ) (135,310 ) (376,975 )
General and administrative (452,312 ) (532,012 ) (1,375,513 ) (1,454,017 )
Total operating expenses (495,430 ) (749,954 ) (1,510,823 ) (1,830,992 )

(LOSS) INCOME FROM OPERATIONS (27,676 ) (288,526 ) 10,761 (3,593,015 )

Interest income 72 102 2,135 102
Interest expenses (2,526 ) (646 ) (5,375 ) (6,586 )
Other income (expense), net 43,958 1,273 132,959 62,489

INCOME (LOSS) BEFORE INCOME TAX EXPENSE 13,828 (287,797 ) 140,480 (3,537,010 )
INCOME TAX EXPENSE (2,209 ) (15,784 ) (17,893 ) (23,196 )

NET INCOME (LOSS) 11,619 (303,581 ) 122,587 (3,560,206 )
Foreign currency translation loss (28,755 ) (85,728 ) (62,897 ) (173,879 )
TOTAL COMPREHENSIVE INCOME (LOSS) $ (17,136 ) $ (389,309 ) $ 59,690 $ (3,734,085 )

EARNINGS (LOSS) PER SHARE
Basic and diluted 0.00 (0.01 ) 0.00 (0.14 )
Weighted average number of shares outstanding – Basic and diluted 26,556,566 25,712,713 26,556,566 25,712,713

~~See accompany notes to the unaudited condensed consolidated financial statements.~~

~~F-3~~

~~ADDENTAX GROUP CORP. AND SUBSIDIARIES~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

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

Shares Amount paid-in
capital Unrestricted Statutory reserve comprehensive loss Total Equity
Common Stock Additional Retained earnings
(accumulated deficit) Accumulated other
Shares Amount paid-in
capital Unrestricted Statutory reserve comprehensive loss Total Equity
BALANCE AT OCTOBER 31, 2020 25,346,004 $ 26,093 $ 3,795,303 $ (6,489,747 ) $ 23,514 $ (31,663 ) $ (2,676,500 )
Paid in capital
Paid in capital, shares
Movement of Statutory reserve - - 20,630 (10,779 ) (9,851 ) - -
Foreign currency translation - - - - - (85,728 ) (85,728 )
Net income for the period - - - (303,581 ) - - (303,581 )
BALANCE AT DECEMBER 31, 2020 26,093,004 $ 26,093 $ 3,815,933 $ (6,804,107 ) $ 13,663 $ (117,391 ) $ (3,065,809 )

BALANCE AT OCTOBER 31, 2021 26,693,004 $ 26,093 $ 6,815,333 $ (6,723,260 ) $ 13,821 $ (137,259 ) $ (4,672 )
Foreign currency translation (28,755 ) (28,755 )
Net income for the period - - - 11,619 - - 11,619
BALANCE AT DECEMBER 31, 2021 26,693,004 $ 26,693 $ 6,815,333 $ (6,711,641 ) $ 13,821 $ (166,014 ) $ (21,808 )

BALANCE AT MARCH 31, 2020 25,346,004 $ 25,346 $ 61,050 (3,233,122 ) 23,514 56,488 (3,066,724 )
Paid in capital 747,000 747 3,734,253 - - - 3,735,000
Movement of Statutory reserve - - 20,630 (10,779 ) (9,851 ) - -
Foreign currency translation - - - - - (173,879 ) (173,879 )
Net income for the period - - - (3,560,206 ) - - (3,560,206 )
BALANCE AT DECEMBER 31, 2020 26,093,004 26,093 3,815,933 (6,804,107 ) 13,663 (117,391 ) (3,065,809 )

BALANCE AT MARCH 31, 2021 26,693,004 $ 26,693 $ 6,815,333 $ (6,834,228 ) $ 13,821 $ (103,117 ) $ (81,498 )
Foreign currency translation - - - - - (62,897 ) (62,897 )
Net income for the period - - - 122,587 - - 122,587
BALANCE AT DECEMBER 31, 2021 26,693,004 $ 26,693 $ 6,815,333 $ (6,711,641 ) $ 13,821 $ (166,014 ) $ (21,808 )

~~See accompany notes to the unaudited condensed consolidated financial statements.~~

~~F-4~~

~~ADDENTAX GROUP CORP. AND SUBSIDIARIES~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

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

2021 2020
Nine Months Ended December 31
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 122,587 $ (3,560,206 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation 115,561 83,210
Loss on disposal of plant and equipment - 1,472
Changes in operating assets and liabilities
Accounts receivable 3,038,527 1,367,371
Inventories (27,762 ) 174,487
Advances to suppliers (1,166,916 ) (320,771 )
Other receivables 73,540 (65,150 )
Accounts payables (1,899,642 ) (1,688,272 )
Accrued expenses and other payables 96,276 173,582
Advances from customers 31,654 52,161
Net cash provided by (used in) operating activities $ 383,825 $ (3,782,116 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment and other assets (176,268 ) (392,108 )
Proceeds from sale of property and equipment - 2,243
Cash decreased in disposal of subsidiaries - (704,479 )
Net cash used in investing activities $ (176,268 ) $ (1,094,344 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stocks - 3,735,000
Proceeds from related party borrowings 3,797,473 7,697,827
Repayment of related party borrowings (5,341,046 ) (6,605,044 )
Proceeds from bank borrowings - 86,886
Repayment of bank borrowings - (196,456 )
Net cash (used in) provided by financing activities $ (1,543,573 ) $ 4,718,213

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,336,016 ) (158,247 )
Effect of exchange rate changes on cash and cash equivalents (2,719 ) (16,706 )
Cash and cash equivalents, beginning of the period 1,845,077 531,681
CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 506,342 $ 356,728

Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ - $ 4,523
Cash paid during the year for income tax $ 17,893 $ 23,196
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease obligations $ 342,457 $ 10,404,962
Net assets of subsidiaries disposed of recorded as Other Receivables $ - $ 118,454


	Three months ended September 30,						Six months ended September 30,
	2022			2021			2022			2021

REVENUES	$	2,144,019		$	2,757,832		$	4,530,403		$	7,044,263

COST OF REVENUES		(1,578,858	)		(2,287,407	)		(3,508,558	)		(5,990,433	)

GROSS PROFIT		565,161			470,425			1,021,845			1,053,830

OPERATING EXPENSES
Selling and marketing		(30,002	)		(45,802	)		(35,644	)		(92,192	)
General and administrative		(465,007	)		(462,886	)		(869,947	)		(923,201	)
Total operating expenses		(495,009	)		(508,688	)		(905,591	)		(1,015,393	)

INCOME (LOSS) FROM OPERATIONS		70,152			(38,263	)		116,254			38,437

Interest income		1,762			96			5,000			2,063
Interest expenses		(2,209	)		(617	)		(4,667	)		(2,849	)
Other income, net		22,973			75,764			74,056			89,001

INCOME BEFORE INCOME TAX EXPENSE		92,678			36,980			190,643			126,652
INCOME TAX EXPENSE		(9,461	)		(4,959	)		(10,755	)		(15,684	)

NET INCOME		83,217			32,021			179,888			110,968
Foreign currency translation gain (loss)		97,543			(3,626	)		202,692			(34,142	)
TOTAL COMPREHENSIVE INCOME	$	180,760		$	28,395		$	382,580		$	76,826

EARNINGS PER SHARE
Basic and diluted		0.00			0.00			0.01			0.00
Weighted average number of shares outstanding – Basic and diluted		27,117,662			26,405,333			27,117,662			26,405,333

See accompany notes to the unaudited condensed consolidated financial statements.

F-5

ADDENTAX GROUP CORP. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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


	Common Stock				Additional		Retained earnings (accumulated deficit)					Accumulated other
		Shares		Amount		paid-in capital		Unrestricted			Statutory reserve		comprehensive loss			Total Equity
BALANCE AT JUNE 30, 2021		26,693,004	$	26,093	$	6,815,333	$	(6,755,281	)	$	13,821	$	(133,633	)	$	(33,067	)
Foreign currency translation		-		-		-		-			-		(3,626	)		(3,626	)
Net income for the period		-		-		-		32,021			-		-			32,021
BALANCE AT SEPTEMBER 30, 2021		26,693,004	$	26,693	$	6,815,333	$	(6,723,260	)	$	13,821	$	(137,259	)	$	(4,672	)

BALANCE AT JUNE 30, 2022		26,693,004	$	26,693	$	6,815,333	$	(6,659,559	)	$	13,821	$	(65,835	)	$	130,453
Paid in capital		5,000,000		5,000		22,716,993		-			-		-			22,721,993
Foreign currency translation		-		-		-		-			-		97,543			97,543
Net income for the period		-		-		-		83,217			-		-			83,217
BALANCE AT SEPTEMBER 30, 2022		31,693,004	$	31,693	$	29,532,326	$	(6,576,342	)	$	13,821	$	31,708		$	23,033,206

BALANCE AT MARCH 31, 2021		26,693,004	$	26,093	$	6,815,333	$	(6,834,228	)	$	13,821	$	(103,117	)	$	(81,498	)
Foreign currency translation		-		-		-		-			-		(34,142	)		(34,142	)
Net income for the period		-		-		-		110,968			-		-			110,968
BALANCE AT SEPTEMBER 30, 2021		26,693,004	$	26,693	$	6,815,333	$	(6,723,260	)	$	13,821	$	(137,259	)	$	(4,672	)

BALANCE AT MARCH 31, 2022		26,693,004	$	26,693	$	6,815,333	$	(6,756,230	)	$	13,821	$	(170,984	)	$	(71,367	)
Paid in capital		5,000,000		5,000		22,716,993		-			-		-			22,721,993
Foreign currency translation		-		-		-		-			-		202,692			202,692
Net income for the period		-		-		-		179,888			-		-			179,888
BALANCE AT SEPTEMBER 30, 2022		31,693,004	$	31,693	$	29,532,326	$	(6,576,342	)	$	13,821	$	31,708		$	23,033,206

See accompany notes to the unaudited condensed consolidated financial statements.

F-6

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
		2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	179,888		$	110,968
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		171,493			71,398
Changes in operating assets and liabilities
Accounts receivable		269,757			3,216,556
Inventories		19,261			(30,372	)
Advances to suppliers		23,102			(1,114,244	)
Other receivables		(1,561,056	)		(399,257	)
Accounts payables		(1,347,677	)		(1,801,257	)
Accrued expenses and other payables		718,539			44,382
Advances from customers		163			52,308
Net cash provided by (used in) operating activities	$	(1,526,530	)	$	150,482

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment and other assets		-			(142,922	)
Purchase of debt securities		(17,500,000	)		-
Net cash used in investing activities	$	(17,500,000	)	$	(142,922	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issue of ordinary shares		20,221,993			-
Proceeds from related party borrowings		2,231,376			1,623,725
Repayment of related party borrowings		(2,803,515	)		(2,762,272	)
Repayment of bank borrowings		(416	)		-
Net cash provided by financing activities	$	19,649,438		$	(1,138,547	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		622,908			(1,130,987	)
Effect of exchange rate changes on cash and cash equivalents		20,858			(3,421	)
Cash and cash equivalents, beginning of the period		1,390,644			1,845,077
CASH AND CASH EQUIVALENTS, END OF THE PERIOD	$	2,034,410		$	710,669

Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$	-		$	1,935
Cash paid during the year for income tax	$	10,755		$	15,684
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease obligations	$	-		$	345,847

See accompany notes to the unaudited condensed consolidated financial statements.

F-7

ADDENTAX GROUP CORP. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	~~ORGANIZATION AND BUSINESS ACQUISITIONS~~

1. ORGANIZATION AND BUSINESS ACQUISITIONS

ATXG and its subsidiaries (the “Company”) are engaged in the business of garments manufacturing, providing logistic services, property leasing and management service in the People’s Republic of China (“PRC” or “China”) and epidemic prevention supplies manufacturing and distribution both in China and overseas markets.

2.	~~BASIS OF PRESENTATION~~

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 necessary 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, ~~2021~~2022 filed with the Securities and Exchange Commission (“SEC”) on June ~~29, 2021~~23, 2022 (“~~2020~~2022 Form ~~10-K.”~~10-K”).

~~GOING CONCERN UNCERTAINTY~~

The accompanying unaudited condensed consolidated financial statements are presented on the basis that the Company is a going concern. The going concern assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

~~F-6~~F-8

~~The Company incurred net income of $~~3. ~~11,619~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ~~and net loss of $303,581~~ ~~for the three months ended December 31, 2021 and 2020, respectively, and net income of $122,587~~ ~~and net loss of $3,560,206~~ ~~for the nine months ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and March 31, 2021, the Company had net current liability of $4,602,684~~ ~~and $4,430,933, respectively, and a deficit on total equity of $21,808~~ ~~and $81,498, respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.~~

The ability to continue as a going concern is dependent upon the Company’s profit generating operations in the future and/or obtaining the 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 capital contributions from the CEO. During the year, the CEO has provided financial support for the operations of the Company. 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, the CEO has indicated the intent and ability to provide additional equity financing.

3.	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

Use of Estimates

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates.

There is no change on the accounting policies for the three months ended ~~December 31, 2021.~~September 30, 2022.

Recently issued accounting pronouncements

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 April 1, 2023. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

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-7~~F-9

4.	~~RELATED PARTY TRANSACTIONS~~

4. RELATED PARTY TRANSACTIONS

SCHEDULE OF RELATED PARTIES RELATIONSHIP WITH THE COMPANY

Name of Related Parties		Relationship with the Company
Zhida Hong		President, CEO, and a director of the Company
~~Zhongpeng Chen~~Hongye Financial Consulting (Shenzhen) Co., Ltd.		A ~~legal representative of HPF, became not a related party when HPF was disposed of in November, 2020~~company controlled by CEO, Mr. Zhida Hong
Bihua Yang		A legal representative of ~~XKJ~~
~~Zhiyong Zhou~~		~~General Manager~~Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”), a wholly subsidiary of ~~XKJ~~our Company
Dewu Huang		A legal representative of ~~YBY~~Shantou Yi Bai Yi Garments Co., Ltd (“YBY”), a wholly-owned subsidiary of our Company
Jinlong Huang		A spouse of legal representative of ~~HSW~~Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), a wholly owned subsidiary of our Company
Huilin Chen		A legal representative of Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”), a wholly-owned subsidiary of our Company

The Company leases Shenzhen XKJ office rent-free from Bihua Yang.

The Company had the following related party balances as of ~~December 31, 2021~~September 30, 2022 and March 31, ~~2021:~~2022:

SCHEDULE OF RELATED ~~PARTY TRANSACTION~~PARTIES

Amount due from related party	December 31, 2021		March 31, 2021			September 30, 2022		March 31, 2022
Hongye Financial Consulting (Shenzhen) Co., Ltd.	$	154,210	$	84,838	$	36,122	$	110,242
Zhiyong Zhou (1)		17,154		-
	$	171,364	$	84,838	$	36,122	$	110,242

Related party borrowings December 31, 2021 March 31, 2021
Zhida Hong (2) $ 3,208,463 $ 3,727,371
Bihua Yang (3) - 370,523
Dewu Huang (4) 177,755 712,064
Jinlong Huang 150,397 104,006
$ 3,536,615 $ 4,913,964

Related party borrowings		September 30, 2022		March 31, 2022
Zhida Hong (1)	$	1,334,995	$	3,297,951
Huilin Chen		702		-
Bihua Yang (2)		18,433		31,738
Dewu Huang		1,012,052		212,290
Jinlong Huang		102,945		153,010
	$	2,469,127	$	3,694,989

	(1)	Being ~~cash advance~~interest free loan as financial support from Zhida Hong to ~~Zhiyong Zhou to pay for~~ daily ~~operating expenditures~~operation of ~~XKJ.~~the Company.

	(2)	~~The decrease was due to net repayment of debt due to Zhida Hong. During the three and nine months ended December 31, 2021, the Company received financial support of $0.03~~ ~~million and~~ ~~0.27~~ ~~million from Zhida Hong and repaid $0.3~~ ~~million and $0.9~~ ~~million of debts due to him.~~

	~~(3)~~	Being financial support from Bihua Yang for XKJ’s daily operation.

	~~(4)~~(3)	~~The decrease was due to net repayment of debt due to Dewu Huang. During the nine months ended December 31, 2021, the company received~~Being interest free advanced loan as financial support ~~of approximately $1.5~~ ~~million~~ from ~~Dewu Huang and repaid approximately $2.0~~ ~~million of debts due to him. The related party debt was additional financial support provided by~~ Dewu Huang for YBY’s daily operation.

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

5.	~~INVENTORIES~~

5. DEBT SECURITIES HELD-TO-MATURITY

SCHEDULE OF DEBT SECURITIES HELD-TO-MATURITY

	September 30, 2022		March 31, 2022

Debt securities held-to-maturity	$	17,500,000	$	-

The Company purchased a note issued by a third-party investment company in August 24, 2022. The principal amount of the note is $17,500,000. The note was renewable with one-year tenor and 2.5% p.a. coupon.

6. INVENTORIES

Inventories consist of the following as of ~~December 31, 2021~~September 30, 2022 and March 31, ~~2021:~~2022:

SCHEDULE OF INVENTORIES

December 31, 2021 March 31, 2021
Raw materials $ 242,644 $ 234,870
Work in progress 3,916 -
Finished goods 51,636 35,564
Total inventories $ 298,196 $ 270,434

~~There is no inventory write-off for the three and nine months ended December 31, 2021 and 2020.~~

		September 30, 2022		March 31, 2022
Raw materials	$	9,048	$	184,498
Work in progress		125,568		1,327
Finished goods		112,719		80,771
Total inventories	$	247,335	$	266,596

~~F-8~~F-10

6.	~~ADVANCES TO SUPPLIERS~~

7. 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.

7.	~~PREPAYMENTS AND OTHER RECEIVABLES~~

8. PREPAYMENTS AND OTHER RECEIVABLES

Prepayments and other receivables consist of the following as of ~~December 31, 2021~~September 30, 2022 and March 31, ~~2021:~~2022:

SCHEDULE OF PREPAYMENTS AND OTHER RECEIVABLES

December 31, 2021 March 31, 2021
Prepayment 34,248 -
Deposit 79,447 155,830
Receivable of consideration on disposal of subsidiaries 269,057 258,929
Other receivables 227,869 269,402
Total Prepayment $ 610,621 $ 684,161

		September 30, 2022		March 31, 2022
Prepayment		18,179		14,046
Deposit		1,233,591		64,653
Receivable of consideration on disposal of subsidiaries		233,162		269,798
Other receivables		3,076,895		226,713
Total prepayments and other receivables	$	4,561,827	$	575,210

8.	~~PROPERTY, PLANT AND EQUIPMENT~~

9. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following as of ~~December 31, 2021~~September 30, 2022 and March 31, ~~2021:~~2022:

SCHEDULE OF PROPERTY PLANT AND EQUIPMENT

December 31, 2021 March 31, 2021
Production plant $ 73,871 $ 71,642
Motor vehicles 1,189,673 1,020,893
Office equipment 28,129 14,073
1,291,673 1,106,608
Less: accumulated depreciation (422,070 ) (312,631 )
Plant and equipment, net $ 869,603 $ 793,977

~~F-9~~

		September 30, 2022			March 31, 2022
Production plant	$	65,972		$	74,034
Motor vehicles		1,062,472			1,192,296
Office equipment		25,122			28,191
Plant and equipment, gross		1,153,566			1,294,521
Less: accumulated depreciation		(468,617	)		(458,102	)
Plant and equipment, net	$	684,949		$	836,419

Depreciation expense for the three and ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ was $~~44,164~~32,948 and $~~32,051~~42,008, $~~115,561~~68,832 and $~~83,210~~71,397, respectively.

9.	~~SHORT-TERM BANK LOAN~~F-11

10. 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 ~~December 31, 2021,~~September 30, 2022, the Company has borrowed $~~157,354~~134,245 (RMB~~1,000,000~~955,281) (March 31, ~~2021:~~2022: $~~152,607~~151,090) under this line of credit with various annual interest rates from 4.84% to 4.9%. The outstanding loan balance was due on September 30, ~~2021.~~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 January 2022, Ding Yinping, underwriter of the loan, partly repaid $6,596~~ ~~(RMB41,921) on behalf of the Company.~~

~~10.~~

~~INCOME TAXES~~

11. INCOME TAXES

(a)	Enterprise Income Tax (“EIT”)

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

Yingxi Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of the British Virgin Islands, and is not subject to income taxes. It’s wholly owned subsidiary of Addentax Group Corp.

Yingxi HK (Yingxi Industrial Chain Investment Co., Ltd.) was incorporated in Hong Kong which is indirectly wholly owned by Addentax Group Corp., and is subject to Hong Kong income tax at a progressive rate of 16.5%. No provision for income taxes in Hong Kong ~~has~~have been made as Yingxi HK had no taxable income for the three and ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021.

YX, our wholly owned subsidiary, were incorporated in the PRC and is subject to the EIT tax rate of 25%. No provision for income taxes in the PRC ~~has~~have been made as YX had no taxable income for the three and ~~nine~~six months ended ~~December 31, 2021~~Septermber 30, 2022 and ~~2020.~~2021.

The Company is governed by the Income Tax Laws of the PRC. All Yingxi’s operating companies were subject to progressive EIT rates from 5% to 15% in ~~2021~~2022 and ~~2020.~~2021. The preferential tax rate will be expired at end of year 2022 and the EIT rate will be 25% from year ~~2023~~2023..

The Company’s parent entity, Addentax Group Corp. is a U.S entity and is subject to the United States federal income tax. No provision for income taxes in the United States ~~has~~have been made as Addentax Group Corp. had no United States taxable income for the three and ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021.

~~F-10~~F-12

The reconciliation of income taxes computed at the PRC statutory tax rate applicable to the PRC, to income tax expenses are as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

	Three months ended						Nine months ended						Three months ended						Six months ended
	December 31,						December 31,						September 30,						September 30,
	2021			2020			2021			2020				2022			2021			2022		2021
PRC statutory tax rate		25	%		25	%		25	%		25	%		25	%		25	%		25	%	25	%
Computed expected benefits (expense)		3,457			(71,949	)		35,120			(884,253	)
Computed expected benefits														23,170			9,245			47,661		31,663
Temporary differences		(30,951	)		29,440			(87,797	)		629,954			(53,206	)		(17,388	)		(93,771	)	(56,847	)
Permanent difference		1,444			6,640			1,691			131,595			5,587			(1,230	)		3,026		248
Changes in valuation allowance		28,259			51,654			68,879			145,900			33,910			14,332			53,839		40,620
Income tax expense	$	2,209		$	(15,784	)		17,893			23,196		$	9,461		$	4,959			10,755		15,684

(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, DTYBY 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 logistic company, except the branch of ~~HPF~~YXPF enjoyed the preferential VAT rate of 3% in ~~2021~~2022 and ~~2020.~~2021. The Company is required to pay the full amount of VAT calculated at the applicable VAT rate of the invoiced value of sales as required. A credit is available whereby VAT paid on gasoline and toll charges can be used to offset the VAT due on service income.

~~11.~~

~~CONSOLIDATED SEGMENT DATA~~

12. 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 4four segments:

	(a)	Garment manufacturing. Including manufacturing and distribution of garments;

	(b)	Logistics services. Providing logistic services; and


	(c)	Epidemic prevention supplies. Including manufacturing, distribution and trading of epidemic prevention supplies.


	(d)	Property management and subleasing. Providing shops subleasing and property management services for garment wholesalers and retailers in garment market.

The Company also provides general corporate services to its segments and these costs are reported as “Corporate and others”.

F-13

Selected information ~~for period ended December 31, 2021~~ in the segment structure is presented in the following tables:

Revenues by segment for the three and six months ended September, 2022 and 2021 are as follows:

SCHEDULE OF SEGMENT REPORTING FOR REVENUE

~~F-11~~

		1		2		3		4
	Three months ended				Six months ended
	September 31,				September 31,
Revenues from external customers		2022		2021		2022		2021
Garments manufacturing segment		861		393,391		41,287		2,462,532
Logistics services segment		1,221,658		1,317,360		2,612,540		2,425,402
Property management and subleasing		920,201		1,047,081		1,875,036		2,156,329
Epidemic prevention supplies segment		1,299		-		1,540		-
Total of reportable segments and consolidated revenue	$	2,144,019	$	2,757,832	$	4,530,403	$	7,044,263

Intersegment revenue
Garments manufacturing segment		-		-		-		2,415

Garment Logistics Services Property management and leasing Epidemic prevention supplies Corporate and other Totals
Revenue from external customers 2,488,173 4,144,604 3,202,956 - - 9,835,733
Intersegment revenue - - - - - -
Interest income 1,925 63 140 - 6 2,135
Interest expense 4,181 506 456 - 232 5,375
Depreciation and amortization 1,981 90,655 18,443 4,482 - 115,561
Operating income (loss) 96,275 210,878 47,935 - (344,327 ) 10,761
Segment assets 1,833,807 2,433,062 7,770,529 87,597 947,253 13,072,248
Expenditures for segment assets - 148,604 27,664 - - 176,268

Income (loss) from operations by segment for the three and six months ended September 30, 2022 and 2021 are as follows:

SCHEDULE OF SEGMENT REPORTING FOR INCOME FROM OPERATION

		1			2			3			4
	Three months ended						Six months ended
	September 30,						September 30,
		2022			2021			2022			2021
Garments manufacturing segment		(28,088	)		1,119			(56,744	)		124,748
Logistics services segment		152,381			105,246			272,422			110,109
Property management and subleasing		89,624			(24,120	)		123,721			33,091
Epidemic prevention supplies segment		(974	)		-			(974	)		-
Total of reportable segments	$	212,943		$	82,245		$	338,425		$	267,948
Corporate and other		(142,791	)		(120,508	)		(222,171	)		(229,511	)
Total consolidated income (loss) from operations		70,152			(38,263	)		116,254			38,437

Total assets by segment as at September 30, 2022 and March 31, 2022 are as follows:

SCHEDULE OF SEGMENT REPORTING FOR ASSETS

		1		2
Total assets		September 30, 2022		March 31, 2022
Garment manufacturing segment	$	1,611,781	$	1,784,020
Logistics services segment		2,662,834		2,610,469
Property management and subleasing		6,277,133		7,608,997
Epidemic prevention supplies		43,345		64,885
Total of reportable segments		10,595,093		12,068,371
Corporate and other		21,866,658		1,018,689
Consolidated total assets	$	32,461,751	$	13,087,060

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.

SCHEDULE OF GEOGRAPHICAL INFORMATION

Geographic Information

	Three months ended December 31,				Nine months ended December 31,				Three months ended September 30,			Six months ended September 30,
	2021		2020		2021		2020			2022	2021		2022	2021
Revenues
United States		-		4,787		-		11,868,854
China		2,791,470		3,406,766		9,835,733		9,145,210		2,144,019	2,757,832		4,530,403	7,044,263
Total		2,791,470		3,411,552		9,835,733		21,014,064		2,144,019	2,757,832		4,530,403	7,044,263

	December 31, 2021		March 31, 2020		September 30, 2022	March 31, 2022
Long-Lived Assets
China		8,186,834		10,426,602	5,028,480	7,397,932

~~F-12~~F-14

~~12.~~

~~LEASE RIGHT-OF-USE ASSET AND LEASE LIABILITIES~~

13. LEASE 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 ~~December 31, 2021,~~September 30, 2022, with discounted rate of 4.75%. A single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are classified within operating activities in the statement of cash flows.

The Company leases its head office. The lease period is 5 years with an option to extend the lease. The Company leases its plant and dormitory for 4.5 years with an option to extend the lease. The Company leased several floors in a commercial building for its sublease business for 3 years with an option to extend the lease.

The Following table summarizes the components of lease expense:

SCHEDULE OF LEASE COST

	2021		2020		2021		2020			1		2		3		4
	Three months ended December 31,				Nine months ended December 31,				Three months ended September 30,				Six months ended September 30,
	2021		2020		2021		2020			2022		2021		2022		2021
Operating lease cost		968,170		444,162		2,878,730		668,883		876,509		975,894		1,821,058		1,910,560
Short-term lease cost		20,955		-		62,799		-		18,971		41,883		39,416		62,785
Lease Cost	$	989,125	$	444,162		2,941,529		668,883
Total									$	895,480	$	1,017,777	$	1,860,474	$	1,973,345

The following table summarizes supplemental information related to leases:

SCHEDULE OF SUPPLEMENTAL INFORMATION RELATED TO LEASES

	2021			2020			2021			2020
	Three months ended December 31,						Nine months ended December 31,						Three months ended September 30,						Six months ended September 30,
	2021			2020			2021			2020				2022			2021			2022		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flow from operating leases	$	989,170		$	444,162			2,941,529			668,883		$	895,480		$	1,017,777			1,860,474		1,973,345
Right-of-use assets obtained in exchange for new operating leases liabilities		(3,390	)		10,378,042			3,42,457			10,404,962			-			167,658			-		345,847
Weighted average remaining lease term - Operating leases (years)		2.0			3.1			2.0			3.1			1.3			2.3			1.3		2.3
Weighted average discount rate - Operating leases		4.75	%		4.35	%		4.75	%		4.35	%		4.75	%		4.75	%		4.75	%	4.75	%

The following table summarizes the maturity of operating lease liabilities:

SCHEDULE OF OPERATING LEASE LIABILITY

Years ending December 31 Lease cost
2022 $ 3,877,767
2023 3,857,516
2024 103,853

Total lease payments 7,839,136
Less: Interest (531,253 )
Total $ 7,307,883

		1
Years ending September 30	Lease cost
2023	$	3,502,076
2024		963,525

Total lease payments		4,465,601
Less: Interest		(244,208	)
Total	$	4,221,393

~~13.~~

~~RISKS AND UNCERTAINTIES~~

14. 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 ~~6.355~~7.116 and ~~6.553~~6.341 as of ~~December 31, 2021~~September 30, 2022 and March 31, ~~2021,~~2022, respectively. Revenue and expenses are translated at the average yearly exchange rates, which was ~~6.442~~6.723 and ~~6.779~~6.466 for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ 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.

(c)

Concentration Risks

The followings are the percentages of accounts receivable balance of the top customers over accounts receivable for each segment as of ~~December 31, 2021~~September 30, 2022 and March 31, ~~2021.~~2022.

SCHEDULE OF CONCENTRATION RISKS

~~F-13~~F-15

Garment manufacturing segment

	December 31, 2021			March 31, 2021			September 30, 2022		March 31, 2022
Customer A		87.0	%		98.4	%	89.0	%	85.3	%
Customer B		13.0	%		1.6	%	10.7	%	11.4	%
Customer C							0.3	%	Nil

The high concentration as of ~~December 31, 2021~~September 30, 2022 was mainly due to business development of a large distributor of garments. Management believes that should the Company lose any one of its major customers, it was able to sell similar products to other customers.

Logistics services segment

December 31, 2021 March 31, 2021
Customer A 12.2 % 16.6 %
Customer B 11.0 % Nil %
Customer C 10.0 % 30.2 %
Customer D 7.3 % Nil %
Customer E 6.5 % 12.7 %

	September 30, 2022		March 31, 2022
Customer A	19.1	%	19.1	%
Customer B	10.1	%	3.9	%
Customer C	9.2	%	Nil	%
Customer D	8.7	%	0.1	%
Customer E	6.5	%	8.2	%

Property management and subleasing segment

~~No accounts receivables in this segment.~~There is no account receivable for Property management and subleasing segment as of both September 30, 2022 and March 31, 2022.

Epidemic prevention supplies segment

NoThe accounts ~~receivables in this segment.~~receivable of Epidemic prevention supplies segment, as at both September 30, 2022 and March 31, 2022, was from one customer only.

For the three months ended ~~December 31, 2021, there was~~September 30, 2022, no ~~single~~ customer provided more than 10% of total revenue of the Company. For ~~nine~~the six months ended ~~December 31,~~September 30, 2022, one customer from garment segment provided more than 10% of total revenue of the Company, represented 10.5% of total revenue of the Company for the six months. For the three and six months ended September 30, 2021, one customer from garment segment provided more than 10%10% of total revenue of the Company, represented ~~24.8% for the nine months. For the three months ended December 31, 2020, there was no customer provided more than~~ 10~~% of total revenue of the Company. For nine months ended December 31, 2020, one customer from garment segment and one customer from epidemic prevention supplies segment provided more than~~ ~~10%~~14.0% of total revenue of the ~~Company.~~Company for the three months and 34.5% for the six months.

~~The high concentration in nine months ended December 31, 2021 was mainly due to concentration of distributors in garment segment.~~ Management believes that should the Company lose any one of its major customers, it was able to sell similar products to other customers.

The following tables summarized the purchases from five largest suppliers of each of the reportable segment for the three ~~and nine~~ months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021.

SCHEDULE OF PURCHASES FROM SUPPLIERS

Three months ended Nine months ended
December 31, December 31,
2021 2020 2021 2020
Garment manufacturing segment 100.0 % 100.0 % 99.8 % 97.7 %
Logistics services segment 100.0 % 79.1 % 92.2 % 99.7 %
Property management and subleasing 100.0 % 100.0 % 100.0 % 100.0 %
Epidemic prevention supplies Nil % 100.0 % Nil % 100 %

	Three months ended					Six months ended
	September 30,					September 30,
		2022		2021			2022		2021
Garment manufacturing segment		Nil	%	100.0	%		Nil %		99.8	%
Logistics services segment		100.0	%	100.0	%		100.0	%	90.4	%
Property management and subleasing		100.0	%	100.0	%		100.0	%	100.0	%
Epidemic prevention supplies		Nil	%	Nil	%		Nil	%	Nil	%

(d)

Interest Rate Risk

The Company’s exposure to interest rate risk primarily relates to the interest expenses on our outstanding bank borrowings and the interest income generated by cash invested in cash deposits and liquid investments. As of ~~December 31, 2021,~~September 30, 2022, the total outstanding borrowings amounted to $~~157,354~~134,245 (RMB~~1,000,000~~955,281) with various interest rate from 4.84% to 6.96% p.a. (Note 10)

(e)

COVID-19

The Coronavirus Disease (COVID-19) outbreak and the measures taken to contain the spread of the pandemic have created a high level of uncertainty to global economic prospects and this has impacted the Company’s operations and its financial performance in the last three quarters of the financial year and subsequent to the financial year end.

As the situation continues to evolve with significant level of uncertainty, the Company is unable to reasonably estimate the full financial impact of the COVID-19 outbreak. The Company is monitoring the situation closely and to mitigate the financial impact, it is conscientiously managing its cost by adopting an operating cost reduction strategy and conserving liquidity by working with major creditors to align repayment obligations with receivable collections.

~~F-14~~F-16

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 ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ 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 are a garment manufacturer and logistics services provider based in China. We are listed on the ~~OTCQB~~Nasdaq Capital Market under the symbol of “ATXG”. We classify our businesses into four segments: Garment manufacturing, Logistics services, Property management and subleasing, and Epidemic prevention supplies.

Our garment manufacturing business consists of sales made principally to wholesaler located in the People’s Republic of China (“PRC”). We have our own manufacturing facilities, with sufficient production capacity and skilled workers on production lines to ensure that we meet our high quality control standards and timely delivery requirement for our customers. We conduct our garment manufacturing operations through ~~five~~three wholly owned subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”~~), Shantou Chenghai Dai Tou Garments Co., Ltd (“DT”~~), Dongguan Yushang Clothing Co., Ltd (“YS”), and Shantou Yi Bai Yi Garments Co., Ltd (“YBY”) which are located in the Guangdong province, China. ~~In October 2020, the Company disposed of DT to a third party at fair value, which was also its carrying value as of September 30, 2020.~~

Our logistic business consists of delivery and courier services covering approximately 79 cities in approximately seven provinces and two 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 ~~logistics services~~logistic operations through ~~four~~three wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”), Shenzhen Yingxi Peng Fa Logistic Co., ~~Ltd., which was incorporated in November 2020, and Shenzhen Hua Peng Fa Logistic Co.,~~ Ltd (“~~HPF”~~PF”), and Shenzhen Yingxi Tongda Logistic Co., Ltd (“TD”), which are located in the Guangdong province, China. ~~In November 2020, the Company disposed of HPF to a third party at fair value, which was also its carrying value as of November 30, 2020.~~

~~The business operations, customers and suppliers of DT and HPF were retained by the Company; therefore, the disposition of the two subsidiaries did not qualify as discontinued operations.~~

Our property management and subleasing provides shops subleasing and property management services for garment wholesalers and retailers in garment market. We conduct our property management and subleasing operation through a wholly owned subsidiary, namely Dongguan Yingxi Daying Commercial Co., Ltd (“DY”).

Our epidemic prevention supplies business consists of manufacturing and distribution of epidemic prevention products and resale of epidemic prevention supplies purchased from third party in both domestic and overseas markets. We conduct our manufacturing of the epidemic prevention products in Dongguan Yushang Clothing Co., Ltd (“YS”). We conduct the trading of epidemic prevention suppliers through Addentax Group Corp. (“ATXG”) and Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), a wholly owned subsidiary of the Company.

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 logistic system and to build a nationwide delivery and courier network in China. As of ~~December 31, 2021,~~September 30, 2022, we provide logistics services to over 79 cities in approximately seven provinces and two municipalities. We expect to develop an additional 20 logistics points in existing serving cities and improve the Company’s profit in the year end of ~~2022.~~2023.

Property Management and Subleasing Business

The business objective of our property management and subleasing segment is to integrate resources in shopping mall, develop e-commerce bases and the Internet celebrity economy together to drive to increase the value of the stores in the area. The short-term goal for the year is to increase the occupancy rate of stores in the mall to more than 70%.

Epidemic Prevention Supplies Business

The primary objective of our epidemic prevention supplies business is to take the advantage of our resource in supply chain from the garment manufacturing business segment to facilitate and maximize the production, distribution and resale of epidemic prevention supplies, in order to increase our revenue base and improve our net profit.

Seasonality of Business

Our business is affected by seasonal trends, with higher levels of garment sales in our second and third quarters and higher logistics services revenue in our third and fourth quarters. These trends primarily result from the timing of seasonal garment manufacturing shipments and holiday periods in the logistics services segment.

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.

Epidemic prevention supplies business

For Epidemic prevention supplies business, we generally receive payment from the customers within 30 days following the delivery of finished goods. We would also give our long-term customers with a 12 months long credit term policy to maintain a good business relationship.

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.

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

Lessor

As a lessor, the Company’s leases are classified as operating leases under ASC 842. Leases, in which the Company is the lessor, are substantially all accounted for as operating leases and the lease components and non-lease components are accounted for separately. Rental income from operating leases is recognized on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight line basis over the lease term.

Recently issued accounting pronouncements

Results of Operations for the three months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~

The following tables summarize our results of operations for the three months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021. 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 December 31,										Changes in 2021					Three Months Ended September 30,										Changes in 2022
	2021					2020					compared to 2020					2022					2021					compared to 2021
	(In U.S. dollars, except for percentages)															(In U.S. dollars, except for percentages)
Revenue	$	2,791,470		100.0	%	$	3,411,552		100	%	$	(620,082	)	(18.2	)%	$	2,144,019		100.0	%	$	2,757,832		100	%	$	(613,813	)	(22.3	)%
Cost of revenues		(2,323,716	)	(83.2	)%		(2,950,124	)	(86.5	)%		626,408		21.2	%		(1,578,858	)	(73.6	)%		(2,287,407	)	(82.9	)%		708,549		31.0	%
Gross profit (loss)		467,754		16.8	%		461,428		13.5	%		6,326		1.4	%
Gross profit																	565,161		26.4	%		470,425		17.1	%		94,736		20.1	%
Operating expenses		(495,430	)	(17.8	)%		(749,954	)	(22.0	)%		254,524	)	33.9	%		(495,009	)	(23.1	)%		(508,688	)	(18.4	)%		13,679		(2.7	)%
Loss from operations		(27,676	)	(1.0	)%		(288,526	)	(8.5	)%		260,850		90.4	%
Income from operations																	70,152		3.3	%		(38,263	)	(1.4	)%		108.415		(283.3	)%
Other income, net		43,958		1.6	%		1,273		0.0	%		42,685		3,353.4	%		22,973		1.1	%		75,764		2.7	%		(52,791	)	(69.7	)%
Net finance cost		(2,454	)	(0.1	)%		(544	)	(0.0	)%		1,910		262.0	%		(447	)	(0.0	)%		(521	)	(0.0	)%		74		(14.2	)%
Income tax expense		(2,209	)	(0.1	)%		(15,784	)	(0.4	)%		13,575		86.0	%		(9,461	)	(0.4	)%		(4,959	)	(0.2	)%		(4,502	)	90.8	%
Net income (loss)	$	11,619		0.4	%	$	(303,581	)	(8.9	)%	$	315,200		103.8	%	$	83,217		3.9	%	$	32,021		1.2	%	$	51,196		159.9	%

Revenue

Total revenue for the three months ended ~~December 31, 2021~~September 30, 2022 decreased by approximately $0.6 million, or ~~18.2%~~22.3%, as compared with the three months ended ~~December 31, 2020.~~September 30, 2021. The ~~significant~~ decrease was mainly ~~because~~due to a decrease of ~~the decrease~~approximately $0.4 million in garment manufacturing, ~~business offset by increases~~a decrease of approximately $0.1 million in logistics services business, and a decrease of approximately $0.1 million in property management and ~~leasing~~subleasing business.

~~Revenue~~There was nearly no revenue generated from our garment manufacturing business ~~contributed~~for the three months ended September 30, 2022. The revenue generated from the segment was $0.4 million, or approximately ~~$0.03 million (0.9%) and $2.3 million (67.1%)~~14.3%, of total revenue for the three months ended ~~December 31, 2021 and 2021, respectively.~~September 30, 2021. The decrease of ~~$2.3~~approximately $0.4 million was mainly due to factory ~~re-decoration,~~facilities renewal and repair, remaining factories cannot provide as much capacity as ~~before, we~~previously. We estimate the capacity will appear to recover in ~~early 2022.~~the third quarter of FY2023.

Revenue generated from our logistics services business contributed approximately ~~$1.7~~$1.2 million, or ~~61.6%~~57.0%, of our total revenue for the three months ended ~~December 31, 2021.~~September 30, 2022. Revenue generated from our logistic business contributed approximately ~~$0.8~~$1.3 million, or ~~24.2%~~47.8%, of our total revenue for the three months ended ~~December 31, 2020. YXPF, the new subsidiary has developed the business to replace the business of HPF, which was disposed of in~~ September ~~2020.~~30, 2021.

Revenue generated from our property management and subleasing business contributed approximately ~~$1.0~~$0.9 million, or ~~37.5%~~42.9%, of our total revenue for the three months ended ~~December 31, 2021. This is a new~~September 30, 2022. The revenue from this business segment ~~developed in current period. Revenue of the segment contributed approximately $0.3~~was $1.0 million, or ~~8.6%~~38.0%, of our total revenue of this business for the three months ended ~~December 31, 2020.~~September 30, 2021.

There was ~~no revenue~~only $1,299 generated from our epidemic prevention supplies business for the three months ended ~~December 31, 2021~~September 30, 2022 because no other orders were obtained in the quarter. The Company accepted sales orders very cautiously to make sure the sales orders can be matched with stable suppliers to secure profitability of each order. ~~Revenue~~There was no revenue generated from ~~our epidemic prevention supplies~~this business ~~contributed approximately $0.01 million, or 0.1% of our total revenue~~ for the three months ended ~~December 31, 2020.~~September 30, 2021.

Cost of revenue

Three months ended December 31,
Increase
(decrease) in

2021 2020
2021 compared
to 2020

(In U.S. dollars, except for percentages)
Net revenue for garment manufacturing $ 25,641 100.0 % $ 2,287,981 100 % $ (2,262,340 ) (98.9 )%
Raw materials 8,829 34.4 % 1,620,775 70.8 % (1,611,946 ) (99.5 )%
Labor 12,783 49.9 % 467,478 20.5 % (454,695 ) (97.3 )%
Other and Overhead 6,306 24.6 % 16,747 0.7 % (10,441 ) (62.3 )%
Total cost of revenue for garment manufacturing 27,918 108.9 % 2,105,000 92.0 % (2,077,082 ) (98.7 )%
Gross profit for garment manufacturing (2,277 ) (8.9 )% 182,981 8.0 % (185,258 ) (101.2 )%

Net revenue for logistics services 1,719,202 100.0 % 824,025 100.0 % 895,177 108.6 %
Fuel, toll and other cost of logistics services 568,726 33.1 % 482,568 58.6 % 86,158 ) 17.9 %
Subcontracting fees 842,510 49.0 % 85,766 10.4 % 756,744 882.3 %
Total cost of revenue for logistics services 1,411,236 82.1 % 568,334 69.0 % 842,902 148.3 %
Gross Profit for logistics services 307,967 17.9 % 255,691 31.0 % 52,276 20.4 %

Net revenue for property management and subleasing 1,046,627 100.0 % 294,759 100.0 % 751,868 255.1 %
Total cost of revenue for property management and subleasing 884,556 84.5 % 272,759 92.5 % 611,797 224.3 %
Gross Profit for property management and subleasing 162,071 15.5 % 22,000 7.5 % 140,071 636.7 %

Net revenue for epidemic prevention supplies $ - $ 4,786 100.0 % (4,786 ) (100.0 )%
Merchandise/Finished goods/Raw materials 6 4,030 84.2 % (4,024 ) (99.9 )%
Total cost of revenue for epidemic prevention supplies 6 4,030 84.2 % (4,024 ) (99.9 )%
Gross (loss) income for epidemic prevention supplies (6 ) 756 15.8 % (762 ) (100.8 )%
Total cost of revenue $ 2,323,716 83.2 % $ 2,950,123 86.5 % $ (626,407 ) (21.2 )%
Gross profit $ 467,754 16.8 % $ 461,428 13.5 % $ 6,326 1.4 %

	Three months ended September 30,									Increase (decrease) in
	2022					2021				2022 compared to 2021
	(In U.S. dollars, except for percentages)
Net revenue for garment manufacturing	$	861		100.0	%	$	393,391	100	%	$	(392,530	)	(99.8	)%
Raw materials		-		-	%		269,258	68.4	%		(263,580	)	(100.0	)%
Labor		779		90.5	%		86,044	21.9	%		(85,265	)	(99.1	)%
Other and Overhead		584		67.8	%		6,420	0.5	%		(5,836	)	(90.9	)%
Total cost of revenue for garment manufacturing		1,363		158.3	%		361,722	91.9	%		(360,359	)	(99.6	)%
Gross profit (loss) for garment manufacturing		(502	)	(58.3	)%		31,670	8.1	%		(32,171	)	(101.6	)%

Net revenue for logistics services		1,221,658		100.0	%		1,317,360	100.0	%		(95,702	)	(7.3	)%
Fuel, toll and other cost of logistics services		665,401		54.4	%		448,355	34.1	%		217,046		48.4	%
Subcontracting fees		196,105		16.1	%		539,417	40.9	%		(343,312	)	(63.6	)%
Total cost of revenue for logistics services		861,506		70.5	%		987,772	75.0	%		(126,266	)	(12.8	)%
Gross Profit for logistics services		360,152		29.5	%		329,588	25.0	%		30,564		9.3	%

Net revenue for property management and subleasing		920,201		100.0	%		1,047,081	100.0	%		(126,880	)	(12.1	)%
Total cost of revenue for property management and subleasing		713,868		77.6	%		937,915	89.6	%		(224,047	)	(23.9	)%
Gross Profit for property management and subleasing		206,333		22.4	%		109,165	10.4	%		97,168		89.0	%

Net revenue for epidemic prevention supplies	$	1,299		100.0	%	$	-				1,299
Merchandise/Finished goods/Raw materials		2,120		163.2	%		-				2,120
Total cost of revenue for epidemic prevention supplies		2,120		163.2	%		-				2,120
Gross (loss) income for epidemic prevention supplies		(821	)	(63.2	)%		-				(821	)
Total cost of revenue	$	1,578,858		73.6	%	$	2,287,407	82.9	%	$	(708,549	)	(31.0	)%
Gross profit	$	565,161		26.4	%	$	470,425	17.1	%	$	94,736		20.1	%

For our garment manufacturing business, we ~~purchase~~purchased the majority of our raw materials directly from numerous local fabric and accessories suppliers.

Raw material costs for our garment manufacturing business ~~were 34.4%~~was nil in the three months ended September 30, 2022, as compared with approximately $0.3 million in the three months ended September 30, 2021.

Labor costs for our garment manufacturing business was approximately 90.5% of our total garment manufacturing business revenue in the three months ended ~~December 31, 2021,~~September 30, 2022, as compared with ~~70.8%~~approximately 21.9% in the three months ended ~~December 31, 2020.~~September 30, 2021. The ~~decreased in percentages was mainly due to the purchase cost of the raw materials dropped.~~

Labor costs for our garment manufacturing business were 49.9% of our total garment manufacturing business revenue in the three months ended December 31, 2021, compared with 20.5% in the three months ended December 31, 2020. The increase ~~in percentages~~ was mainly due to the rising wages in the PRC.

Overhead and other expenses for our garment manufacturing business accounted for ~~24.6%~~approximately 67.8% of our total garment business revenue for the three months ended ~~December 31, 2021,~~September 30, 2022, compared with ~~0.7%~~approximately 0.5% of total garment business revenue for the three months ended ~~December 31, 2020.~~September 30, 2021.

For our logistic business, we outsource some of the business to our contractors. The Company relied on a few subcontractors, in which the subcontracting fees to our largest contractor represented approximately ~~29.9%~~26.7% and ~~10.4%~~35.6% of total cost of revenues for our service segment for the three months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. The ~~percentage increased as we used more subcontractors than~~decrease was mainly due to our usage of our own logistics ~~when~~more than the subcontractors during the COVID-19 ~~epidemic was under controlled and aggregated subcontracting service to the largest supplier.~~epidemic. We have not experienced any disputes with our ~~subcontractor~~subcontractors and we believe we maintain good relationships with our contract logistics services provider.

Fuel, toll and other costs for our service business for the three months ended ~~December 31, 2021~~September 30, 2022 were approximately ~~$0.6~~$0.7 million as compared with ~~$0.5~~$0.4 million for the three months ended ~~December 31, 2020.~~September 30, 2021. Fuel, toll and other costs for our service business accounted for ~~33.1%~~approximately 54.4% of our total service revenue for the three months ended ~~December 31, 2021,~~September 30, 2022, as compared with ~~58.6%~~approximately 34.1% for the three months ended ~~December 31, 2020.~~September 30, 2021. The ~~decrease in percentages~~increase was primarily attributable to a decrease ofin the use of ~~our own logistics.~~subcontractors under the COVID-19 epidemic circumstance.

Subcontracting fees for our service business for the three months ended ~~December 31, 2021 increased 8.8 times~~September 30, 2022 decreased significantly by approximately 63.6% to approximately ~~$0.8~~$0.2 million from ~~$0.1~~$0.5 million for the three months ended ~~December 31, 2020.~~September 30, 2021. Subcontracting fees accounted for ~~49.0%~~approximately 16.1% and ~~10.4%~~40.9% of our total service business revenue in the three months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. The ~~significant increase in percentages~~decrease was primarily ~~because~~due to the Company used ~~more~~less subcontractors ~~when~~under the COVID-19 epidemic ~~was getting controlled.~~circumstance.

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

For epidemic prevention supplies business, we have trading and own ~~production.~~production segments. The cost of revenue ~~included~~was predominately the cost of merchandise and cost of our own products. ~~The other cost of the quarter represented depreciation of machinery.~~

Gross profit

Garment manufacturing business gross loss for the three months ended ~~December 31, 2021~~September 30, 2022 was approximately ~~$0.002 million, or -8.9% of our total Garment manufacturing business revenue,~~$502, as compared with a gross profit of approximately ~~$0.2 million, or 8.0%~~$31,670 for the three months ended September 30, 2021. Gross loss accounted for -58.3% of our total Garment manufacturing business revenue for the three months ended ~~December 31, 2020. The~~September 30, 2022, as compared with a gross ~~margin was 16.9% lower due to higher raw material cost in~~profit of 8.1% for the ~~quarter~~three months ended ~~December 31,~~September 30, 2021.

Gross profit in our logistics services business for the three months ended ~~December 31, 2021~~September 30, 2022 was approximately ~~$0.3~~$0.4 million and gross margin was ~~17.9%~~29.5%. Gross profit in our logistics services business for the three months ended ~~December 31, 2020~~September 30, 2021 was approximately $0.3 million and gross margin was ~~31.0%~~25.0%. The ~~decrease~~increase of gross profit ~~ratio~~margin was mainly ~~because~~attributable to a decrease of ~~the increased cost~~operating expenses due to replacement of ~~subcontractors in recent period.~~old vehicles and shifting our strategic focus on high margin customers.

Gross profit in our property management and subleasing business for the three months ended ~~December 31, 2021~~September 30, 2022 was approximately $0.2 million, or ~~15.5%~~22.4% of our total property management and subleasing business revenue. ~~Gross profit of the segment~~It was approximately $0.1 million, or 10.4% for the three months ended ~~December 31, 2020 was approximately $0.02 million, or 7.5% of the revenue of the segment.~~September 30, 2021.

Three months ended December 31,
Increase
(decrease) in

2021 2020
2021 compared
to 2020

(In U.S. dollars, except for percentages)
Gross profit $ 467,754 100 % $ 461,428 100 % 6,326 1.4 %
Operating expenses:
Selling expenses (43,118 ) (9.2 )% (217,942 ) (47.2 )% 174,824 80.2 %
General and administrative expenses (452,312 ) (96.7 )% (532,012 ) (115.3 )% 79,700 15.0 %
Total $ (495,430 ) (105.9 )% $ (749,954 ) (162.5 )% 254,524 33.9 %
Loss from operations $ (27,676 ) (5.9 )% $ (288,526 ) (62.5 )% 260,850 90.4 %

	Three months ended September 30,										Increase (decrease) in
	2022					2021					2022 compared to 2021
	(In U.S. dollars, except for percentages)
Gross profit	$	565,161		100	%	$	470,425		100	%		94,736		20.1	%
Operating expenses:
Selling expenses		(30,002	)	(5.3	)%		(45,802	)	(9.7	)%		15,800		34.5	%
General and administrative expenses		(465,007	)	(82.3	)%		(462,886	)	(98.4	)%		(2,121	)	(0.5	)%
Total	$	(495,009	)	(87.6	)%	$	(508,688	)	(108.1	)%		13,679		2.7	%
Income from operations	$	70,152		12.4	%	$	(38,263	)	(8.1	)%		108,415		283.3	%

Selling, General and administrative expenses

Our selling expenses ~~in our Garment manufacturing business segment~~were mainly incurred for the three months ended December 31, 2021 and 2020 was approximately $0.001 million and $0.001 million, respectively. Our selling expenses in our logistics services segment was nil for the three months ended December 31, 2021 and 2020, respectively. Selling expenses in our property management and subleasing ~~business~~business. It was approximately ~~$0.04~~$0.03 million and ~~$0.02~~$0.07 million for the three months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020, respectively. Selling expenses in our epidemic prevention supplies segment was nil and approximately $0.2 million for the three months ended December 31, 2021 and 2020,~~ respectively. Selling expenses consist primarily of advertisement, local transportation, unloading charges and product inspection charges. Total selling expenses for the three months ended December 31, 2021 decreased 80.2% to approximately $0.04 million from $0.2 million for the three months ended December 31, 2020. It was mainly due to decrease of marketing expenses of epidemic prevention supplies business.

Our general and administrative expenses in our Garment manufacturing business segment for the three months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ was both approximately $0.03 ~~million and $0.08 million, respectively.~~million. Our general and administrative expenses in our logistics services segment, for the three months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ was both approximately $0.2 million. The general and administrative expenses in our property management and subleasing business ~~was~~remained stable at approximately ~~$0.1 million and $0.001~~$0.09 million for the three months ended ~~December 31, 2021~~September 30, 2022 and ~~2020, respectively.~~2021. Our general and administrative expenses in our epidemic prevention supplies segment was both nil ~~and approximately $0.001 million~~ for the three months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. Our general and administrative expenses in our corporate office for the three months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020 was~~remained stable at approximately $0.1 ~~million and $0.2 million, respectively.~~million. General and administrative expenses consist 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 ~~December 31, 2021 decreased~~September 30, 2022 increased by ~~15.0%~~approximately 0.5% to approximately ~~$0.45~~$0.47 million from ~~$0.53~~$0.46 million for the three months ended ~~December 31, 2020.~~September 30, 2021.

~~Loss~~Income (Loss) from operations

~~Loss~~Income (loss) from operations for the three months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ was approximately ~~$0.03~~$0.07 million and ~~$0.3~~($0.04) million, respectively. ~~Loss~~(Loss) Income from operations of approximately ~~$0.03 million~~($28,088) and ~~income of $0.1 million~~$1,119 was attributed from our garment manufacturing segment for the three months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. Income from operations of approximately ~~$0.1~~$0.15 million and ~~$0.06~~$0.1 million was attributed from our logistics services segment for the three months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. Income from operations of approximately ~~$0.01~~$0.09 million and ~~$0.006~~$0.02 million was attributed from our ~~newly developed~~ property management and subleasing business for the three months ended ~~December 31,~~September 30, 2022 and 2021, respectively. There was a loss of approximately $974 and ~~2020, respectively. Income (loss)~~nil from operations ~~of nil and approximately ($0.2) million was~~ attributed from our epidemic prevention supplies segment for the three months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. We incurred a loss from operations in corporate office of approximately $0.1 million and ~~$0.2~~$0.1 million for both the three months ended ~~December 31, 2021~~September 30, 2022 and ~~2020, respectively.~~2021. The loss from our corporate office was mainly due to increase in legal and professional fees to comply with the SEC accounting, disclosure and reporting requirements.

Income Tax Expenses

Income tax expense for the three months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ was approximately ~~$0.002~~$0.009 million and ~~$0.016~~$0.005 million, ~~respectively, 86.0% decrease compared to 2020.~~respectively. The Company operates in the PRC and files tax returns in the PRC jurisdictions.

Yingxi Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of the British Virgin Islands, and 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~~have been made as Yingxi HK had no taxable income for the three months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021.

QYTG and YX were incorporated in the PRC and is subject to the PRC Enterprise Income Tax ~~(EIT)~~(“EIT”) rate is 25%. No provision for income taxes in the PRC ~~has~~have been made as QYTG and YX had no taxable income for the three months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021.

The Company is governed by the Income Tax Laws of the PRC. All Yingxi’s operating companies are subject to progressive EIT rates from 5% to 15% in ~~2021.~~2022. The preferential tax rates will be expired at end of year 2022 and the EIT rate will be 25% from year 2023.

The Company’s parent entity, Addentax Group Corp. is a U.S entity and is subject to the United States federal income tax. No provision for income taxes in the United States ~~has~~have been made as Addentax Group Corp. had no United States taxable income for the three months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021.

Net Income (Loss)

We incurred a net income of approximately ~~$0.01~~$0.08 million and ~~a net loss of $0.3~~$0.03 million for the three months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. Our basic and diluted earnings per share were $0.00 and ~~($0.01)~~$0.00 for the three months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively.

Results of Operations for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~

The following tables summarize our results of operations for the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021. 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.

	Nine months Ended December 31,										Changes in 2021					Six months Ended September 30,										Changes in 2022
	2021					2020					compared to 2020					2022					2021					compared to 2021
	(In U.S. dollars, except for percentages)															(In U.S. dollars, except for percentages)
Revenue	$	9,835,733		100.0	%	$	21,014,064		100.0	%	$	(11,178,331	)	(53.2	)%	$	4,530,403		100.0	%	$	7,044,263		100.0	%	$	(2,513,860	)	(35.7	)%
Cost of revenues		(8,314,149	)	(84.5	)%		(22,776,087	)	(108.4	)%		14,461,938		63.5	%		(3,508,558	)	(77.4	)%		(5,990,433	)	(85.0	)%		2,481,875		41.4	%
Gross profit (loss)		1,521,584		15.5	%		(1,762,023	)	(8.4	)%		3,283,607		(186.4	)%
Gross profit																	1,021,845		22.6	%		1,053,830		15.0	%		(31,985	)	(3.0	)%
Operating expenses		(1,510,823	)	(15.4	)%		(1,830,992	)	(8.7	)%		320,169		17.5	%		(905,591	)	(20.0	)%		(1,015,393	)	(14.4	)%		109,802		10.8	%
Income (loss) from operations		10,761		0.1	%		(3,593,015	)	(17.1	)%		3,603,776		100.3	%
Income from operations																	116,254		2.6	%		38,437		0.6	%		77,817		(202.5	)%
Other income, net		132,959		1.3	%		62,489		0.3	%		70,470		112.8	%		74,056		1.6	%		89,001		1.3	%		(14,945	)	(16.8	)%
Net finance cost		(3,240	)	(0.0	)%		(6,484	)	0.0	%		3,244		50.0	%		333		(0.0	)%		(786	)	(0.0	)%		1,119		142.4	%
Income tax expense		(17,893	)	(0.2	)%		(23,196	)	(0.1	)%		5,303	)	22.9	%		(10,755	)	(0.2	)%		(15,684	)	(0.2	)%		4,929		31.4	%
Net income (loss)	$	122,587		1.2	%	$	(3,560,206	)	(16.9	)%	$	3,682,793		103.4	%
Net income																$	179,888		4.0	%	$	110,968		1.6	%	$	68,920		62.1	%

Revenue

Total revenue for the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 decreased by approximately ~~$11.2~~$2.5 million, or ~~53.2%~~35.7%, as compared with the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021. The ~~significant~~ decrease was mainly ~~because of~~due to the significant decrease of ~~epidemic supply business and garment manufacturing business offset by increases in logistics services business and property management and leasing business.~~Garment Manufacturing Business.

~~Revenue~~Losses generated from our garment manufacturing business contributed approximately $0.04 million (0.9%) and $2.5 million ~~(25.3%) and $5.2 million (24.7%~~(35.0%) of total ~~revenue~~losses for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. The decrease ~~of approximately $2.7 million~~ mainly due to factory ~~re-decoration which caused a~~facilities renewal and repair, remaining factories cannot provide as much capacity ~~decrease.~~as previously. We estimate the capacity will appear to recover in the ~~first~~third quarter of ~~2022.~~FY2023.

Revenue generated from our logistics services business contributed approximately ~~$4.1~~$2.6 million, or ~~42.1%~~57.7%, of our total revenue for the ~~nine~~six months ended ~~December 31, 2021.~~September 30, 2022. Revenue generated from our logistic business contributed approximately ~~$3.7~~$2.4 million, or ~~17.4%~~34.4%, of our total revenue for the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021. The increase of ~~$0.4~~$0.2 million was ~~because YXPF,~~due to XKJ’s sales were $0.3 million higher than the ~~new subsidiary was developing the business to replace the business of HPF, which was disposed of in~~six months ended September ~~2020.~~30, 2021.

Revenue generated from our property management and subleasing business contributed approximately ~~$3.2~~$1.9 million, or ~~32.6%~~41.4%, of our total revenue for the ~~nine~~six months ended ~~December 31,~~September 30, 2022. Revenue generated from our property management and subleasing business contributed approximately $2.2 million, or 30.6%, of our total revenue for the six months ended September 30, 2021.

There was only a minor sale of $1,540 of epidemic prevention supplies products for the six months ended September 30, 2022. There was no revenue generated from our epidemic prevention supplies business for the ~~nine~~six months ended ~~December 31,~~September 30, 2021 because no profitable orders were obtained in the ~~period.~~quarter. The Company accepted sales orders very cautiously to ~~make sure~~ensure the sales orders can be matched with stable suppliers to secure profitability of each order. ~~Revenue generated from our epidemic prevention supplies business contributed approximately $11.9 million, or 56.5% of our total revenue for the nine months ended December 31, 2020.~~

Cost of revenue

Nine months ended December 31,
Increase
(decrease) in

2021 2020
2021 compared
to 2020

(In U.S. dollars, except for percentages)
Net revenue for garment manufacturing $ 2,488,173 100.0 % $ 5,186,042 100.0 % $ (2,697,869 ) (52.0 )%
Raw materials 1,719,420 69.1 % 3,709,275 71.5 % (1,989,855 ) (53.6 )%
Labor 542,118 21.8 % 1,030,350 19.9 % (488,232 ) (47.4 )%
Other and Overhead 23,124 0.9 % 30,918 0.6 % (7,794 ) (25.2 )%
Total cost of revenue for garment manufacturing 2,284,662 91.8 % 4,770,543 92.0 % (2,485,881 ) (52.1 )%
Gross profit for garment manufacturing 203,511 8.2 % 415,499 8.0 % (211,988 ) (51.0 )%

Net revenue for logistics services 4,144,604 100.0 % 3,664,409 100.0 % 480,195 13.1 %
Fuel, toll and other cost of logistics services 1,410,231 34.0 % 1,367,753 37.3 % 42,478 3.1 %
Subcontracting fees 1,868,648 45.1 % 1,576,228 43.0 % 292,420 18.6 %
Total cost of revenue for logistics services 3,278,879 79.1 % 2,943,981 80.3 % 334,898 11.4 %
Gross Profit for logistics services 865,725 20.9 % 720,428 19.7 % 145,297 20.2 %

Net revenue for property management and subleasing 3,202,956 100.0 % 294,759 100 % 2,908,197 986.6 %
Total cost of revenue for property management and subleasing 2,749,114 85.8 % 272,759 92.5 % 2,476,355 907.9 %
Gross Profit for property management and subleasing 453,842 14.2 % 22,000 7.5 % 431,842 1,962.9 %

Net revenue for epidemic prevention supplies $ - $ 11,868,854 100.0 % (11,868,854 ) (100.0 )%
Merchandise/Finished goods/Raw materials - 14,684,284 123.7 % (14,684,284 ) (100.0 )%
Labor - 64,946 0.5 % (64,946 ) (100.0 )%
Other and Overhead 1,494 39,574 0.3 % (38,080 ) (96.2 )%
Total cost of revenue for epidemic prevention supplies 1,494 14,788,804 124.6 % (14,787,310 ) (100.0 )%
Gross loss for epidemic prevention supplies (1,494 ) (2,919,950 ) (24.6 )% 2,918,456 (99.9 )%
Total cost of revenue $ 8,314,149 84.5 % $ 22,776,087 108.4 % $ (14,461,938 ) (63.5 )%
Gross profit $ 1,521,584 15.5 % $ (1,762,023 ) (8.4 )% $ 3,283,607 186.4 %

	Six months ended September 30,									Increase (decrease) in
	2022					2021				2022 compared to 2021
	(In U.S. dollars, except for percentages)
Net revenue for garment manufacturing	$	41,287		100.0	%	$	2,462,532	100.0	%	$	(2,421,245	)	(98.3	)%
Raw materials		27,551		66.7	%		1,710,591	69.5	%		(1,683,040	)	(98.4	)%
Labor		9,268		22.4	%		529,335	21.5	%		(520,067	)	(98.2	)%
Other and Overhead		1,619		3.9	%		16,818	0.7	%		(15,199	)	(90.4	)%
Total cost of revenue for garment manufacturing		38,438		93.1	%		2,256,744	91.6	%		(2,218,306	)	(98.3	)%
Gross profit for garment manufacturing		2,849		6.9	%		205,789	8.4	%		(202,940	)	(98.6	)%

Net revenue for logistics services		2,612,540		100.0	%		2,425,402	100.0	%		187,138		7.7	%
Fuel, toll and other cost of logistics services		1,267,987		48.5	%		841,505	34.7	%		426,482		50.7	%
Subcontracting fees		637,301		24.4	%		1,026,138	42.3	%		(388,837	)	(37.9	)%
Total cost of revenue for logistics services		1,905,288		72.9	%		1,867,643	77.0	%		37,645		2.0	%
Gross Profit for logistics services		707,253		27.1	%		557,758	23.0	%		149,495		26.8	%

Net revenue for property management and subleasing		1,875,036		100.0	%		2,156,329	100.0			(281,293	)	(13.0	)%
Total cost of revenue for property management and subleasing		1,562,318		83.3	%		1,864,557	86.5			(302,239	)	(16.2	)%
Gross Profit for property management and subleasing		312,718		16.7	%		291,771	13.5			20,947		7.2	%

Net revenue for epidemic prevention supplies	$	1,540		100.0	%	$	-	%			1,540
Merchandise/Finished goods/Raw materials		2,514		163.2	%		-	%			2,514
Total cost of revenue for epidemic prevention supplies		2,514		163.2	%		-	%			2,514
Gross loss for epidemic prevention supplies		(974	)	(63.2	)%		-	%			(974	)
Total cost of revenue	$	3,508,558		77.6	%	$	5,990,433	85.0	%	$	(2,481,875	)	(41.4	)%
Gross profit	$	1,021,845		22.4	%	$	1,053,830	15.0	%	$	(31,985	)	(3.0	)%

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 ~~69.1%~~approximately66.7% of our total garment manufacturing business revenue in the ~~nine~~six months ended ~~December 31, 2021,~~September 30, 2022, as compared with ~~71.5%~~69.5% in the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021. The ~~decreased in percentages~~decrease was mainly due to the decrease of the average purchase cost of the raw ~~materials dropped.~~materials.

Labor costs for our garment manufacturing business were ~~21.8%~~approximately 22.4% of our total garment manufacturing business revenue in the ~~nine~~six months ended ~~December 31, 2021,~~September 30, 2022, as compared with ~~19.9%~~21.5% in the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021. The increase ~~in percentages~~ was mainly due to the rising wages in the PRC.

Overhead and other expenses for our garment manufacturing business accounted for ~~8.2%~~approximately 3.9% of our total garment business revenue for the ~~nine~~six months ended ~~December 31, 2021,~~September 30, 2022, as compared with ~~8.0%~~0.7% of total garment business revenue for the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021.

For our logistic business, we ~~outsource~~outsourced some of the business to our contractors. The Company relied on a few subcontractors, in which the subcontracting fees to our largest ~~contractor~~subcontractor represented approximately ~~30.3%~~24.4% and ~~43.0%~~18.8% of total cost of revenues for our service segment for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. The percentage decreased ~~as we used~~due to the usage of our own logistics more than usage of the subcontractors under COVID-19 epidemic. We have not experienced any disputes with our ~~subcontractor~~subcontractors and we believe we maintain good relationships with our contract logistics services ~~provider.~~providers.

Fuel, toll and other costs for our service business for the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 were approximately ~~$1.4~~$1.3 million compared with ~~$1.4~~$0.8 million for the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021. Fuel, toll and other costs for our service business accounted for ~~34.0%~~approximately 48.5% of our total service revenue for the ~~nine~~six months ended ~~December 31, 2021,~~September 30, 2022, as compared with ~~37.3%~~34.7% for the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021. The increase was primarily attributable to decrease of use of subcontractors under the epidemic circumstance.

Subcontracting fees for our service business for the ~~nine~~six months ended ~~December 31, 2021 increased 18.6%~~September 30, 2022 decreased approximately 37.9% to approximately ~~$1.9~~$0.6 million from ~~$1.6~~$1.0 million for the ~~nine~~six months ended ~~December 31, 2020.~~September 30, 2021. Subcontracting fees accounted for ~~45.1%~~approximately 24.4% and ~~43.0%~~42.3% of our total service business revenue in the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. This decrease was primarily because the Company used less subcontractors under the epidemic circumstance.

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

For epidemic prevention supplies business, we have trading and own production. The cost of revenue included cost of merchandise and cost of our own products. ~~The other cost of the quarter represented depreciation of machinery.~~

Gross profit

Garment manufacturing business generated a gross profit of approximately $2,849 for the six months ended September 30, 2022. There was approximately $0.2 million gross profit for the six months ended September 30, 2021. Gross profit accounted for ~~8.2%~~6.9% of our total Garment manufacturing business revenue for the ~~nine~~six months ended ~~December 31, 2021 and approximately $0.4 million, accounted for 8.0%~~September 30, 2022, as compared with a gross profit of ~~our total Garment manufacturing business revenue~~8.4% for the ~~nine~~six months ended ~~December 31, 2020. The gross margin was 0.2% higher due to lower raw material cost in the months ended December 31,~~September 30, 2021.

Gross profit in our logistics services business for the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 was approximately ~~$0.9~~$0.7 million and ~~accounted for 20.9% of our total Logistics services business revenue.~~gross margin was 27.1%. Gross profit in our logistics services business for the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 was approximately ~~$0.7~~$0.6 million and ~~accounted for 19.7% of our total Logistics services business revenue.~~gross margin was 23.0%. The increase of gross profit ratio was mainly ~~because~~attributable to a decrease of subcontracting fees under the COVID-19 epidemic circumstances and a decrease of operating expenses due to replacement of old vehicles and shifting our strategic focus on high margin customers.

Gross profit in our property management and subleasing business for the ~~nine~~six months ended ~~December 31, 2021 was~~September 30, 2022 and 2021was both approximately ~~$0.5 million, or 14.2%~~$0.3 million. It accounted for approximately 16.7% and 13.5% of our total property management and subleasing business ~~revenue. Gross profit in our property management and subleasing business~~revenue for the ~~nine~~six months ended ~~December 31, 2020 was $0.02 million, or 7.5% of our total property management~~September 30, 2022 and ~~subleasing business revenue.~~2021, respectively.

	Nine months ended December 31,										Increase (decrease) in					Six months ended September 30,										Increase (decrease) in
	2021					2020					2021 compared to 2020					2022					2021					2022 compared to 2021
	(In U.S. dollars, except for percentages)															(In U.S. dollars, except for percentages)
Gross profit	$	1,521,584		100	%	$	(1,762,023	)	(100	)%		3,283,607		186.4	%	$	1,021,845		100	%	$	1,053,830		100	%		(31,985	)	(3.0	)%
Operating expenses:
Selling expenses		(135,310	)	(8.9	)%		(376,975	)	(21.4	)%		241,665		64.1	%		(35,644	)	(3.5	)%		(92,192	)	(8.7	)%		56,548		61.3	%
General and administrative expenses		(1,375,513	)	(90.4	)%		(1,454,017	)	(82.5	)%		78,504	)	5.4	%		(869,947	)	(85.7	)%		(923,201	)	(87.6	)%		53,254		5.8	%
Total	$	(1,510,823	)	(99.3	)%	$	(1,830,992	)	(103.9	)%		320,169		17.5	%	$	(905,591	)	(89.2	)%	$	(1,015,393	)	(96.4	)%		109,802		10.8	%
Income from operations	$	10,761		(0.7	)%	$	(3,593,015	)	(203.9	)%		3,603,776		100.3	%	$	116,254		10.8	%	$	38,437		3.6	%		77,817		202.5	%

Selling, General and administrative expenses

Our selling expenses in our Garment manufacturing business segment for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ was ~~$0.0003 million~~nil and approximately ~~$0.003~~$0.001 million, respectively. Our selling expenses in our logistics services segment was nil for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. Selling expenses in our property management and subleasing business was ~~$0.1~~$0.04 million and $0.09 million for the ~~nine~~six months ended ~~December 31, 2021.~~September 30, 2022 and 2021, respectively. Selling expenses in our epidemic prevention supplies segment was nil ~~and approximately $0.4 million~~ for both the ~~nine~~six months ended ~~December 31,~~September 30, 2021 and ~~2020, respectively.~~2020. Selling expenses consist primarily of advertisement, local transportation, unloading charges and product inspection charges. Total selling expenses for the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 decreased ~~64.1%~~approximately 61.3% to ~~$0.1~~$0.04 million from ~~$0.4~~$0.09 million for the ~~nine~~six months ended ~~December 31, 2020. It was mainly due to decrease of marketing expenses of epidemic prevention supplies business.~~September 30, 2021.

Our general and administrative expenses in our Garment manufacturing business segment was approximately $0.06 million and $0.08 million for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020 was approximately $0.1 million and $0.2 million,~~ respectively. Our general and administrative expenses in our logistics services segment, for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ was both approximately ~~$0.7 million and $0.6~~$0.4 million. The general and administrative expenses in our property management and subleasing business was approximately ~~$0.3 million and $0.001~~$0.2 million for both the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 and ~~2020, respectively.~~2021. Our general and administrative expenses in our epidemic prevention supplies segment was nil ~~and approximately $0.02 million~~ for both the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 and ~~2020, respectively.~~2021. Our general and administrative expenses in our corporate office for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ was both approximately ~~$0.3 million and $0.6 million, respectively.~~$0.2 million. General and administrative expenses consist 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 ~~nine~~six months ended ~~December 31, 2021 and 2020~~September 30, 2022 was ~~approximately $1.4 million and $1.5 million, respectively.~~nearly the same as that for the six months ended September 30, 2021.

Income (loss) from operations

Income from operations was approximately $0.1 million and $0.04 million for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~was approximately $0.01 million and loss from operations for the nine months ended December 31, 2020 was approximately $3.6 million. Income~~respectively. Loss from operations of approximately ~~$0.1 million and $0.2~~$0.06 million was attributed from our garment manufacturing segment for the ~~nine~~six months ended ~~December 31, 2021 and 2020, respectively.~~September 30, 2022. Income from operations of approximately ~~$0.2~~$0.1 million was attributed from our garment manufacturing segment for the six months ended September 30, 2021. Income from operations of approximately $0.3 million and $0.1 million was attributed from our logistics services segment for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. ~~Income from operations of approximately $0.05 million and $0.006 million was attributed from our~~Our property management and subleasing business segment generated approximately $0.1 million income from operations and approximately $0.03 million loss from operations for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. ~~Income (loss)~~Loss from operations of ~~nil~~$974 and ~~approximately ($3.3) million~~nil was attributed from our epidemic prevention supplies segment for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. We incurred a loss from operations in corporate office of approximately ~~$0.3 million and $0.6~~$0.2 million for both the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 and ~~2020, respectively.~~2021. The loss from our corporate office was mainly due to an increase in legal and professional fees to comply with the SEC accounting, disclosure and reporting requirements.

Income Tax Expenses

Income tax expense for the ~~nine~~six months ended ~~December 10,~~September 30, 2022 and 2021 ~~and 2020~~ was approximately ~~$0.018 million~~$10,755 and ~~$0.023 million, respectively, 22.9% decrease compared to 2020.~~$15,684, respectively. The Company operates in the PRC and files tax returns in the PRC jurisdictions.

Yingxi Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of the British Virgin Islands, and 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~~have been made as Yingxi HK had no taxable income for the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021.

QYTG and YX were incorporated in the PRC and is subject to the PRC Enterprise Income Tax (EIT) rate is 25%. No provision for income taxes in the PRC ~~has~~have been made as QYTG and YX had no taxable income for the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021.

The Company’s parent entity, Addentax Group Corp. is a U.S entity and is subject to the United States federal income tax. No provision for income taxes in the United States ~~has~~have been made as Addentax ~~Group~~aGroup Corp. had no United States taxable income for the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 and ~~2020.~~2021.

Net Income (Loss)

We incurred a net income of approximately ~~$0.1~~$0.2 million and ~~a net loss of $3.6~~$0.1 million for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively. Our basic and diluted earnings per share were ~~$0.00~~$0.01 and ~~($0.14)~~$0.00 for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021, ~~and 2020,~~ respectively.

Summary of cash flows

Summary cash flows information for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ is as follow:

Nine months ended December 31,
2021 2020
(In U.S. dollars)
Net cash provided by (used in) operating activities $ 383,825 $ (3,782,116 )
Net cash used in investing activities $ (176,268 ) $ (1,094,344 )
Net cash (used in) provided by financing activities $ (1,543,573 ) $ 4,718,213

	Six months ended September 30,
	2022			2021
		(In U.S. dollars)
Net cash (used in) provided by operating activities	$	(1,526,530	)	$	150,482
Net cash used in investing activities	$	(17,500,000	)	$	(142,922	)
Net cash provided by (used in) financing activities	$	19,649,438		$	(1,138,547	)

Net cash ~~used in~~provided by operating activities in the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 was approximately ~~$4.2~~$1.7 million ~~more~~less than that of the ~~nine~~six months ended ~~December 31, 2020. It was~~September 30, 2021. The decrease mainly because the ~~net income of the nine months ended December 31, 2021 was approximately $0.1 million while it was a net loss of approximately $3.6 million for the nine months ended December 31, 2020. The~~ movement of operating assets and liabilities of the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 resulted in cash ~~inflow~~outflow of approximately ~~$0.1~~$1.9 million, while the movement of operating assets and liabilities of the ~~nine~~six months ended ~~December 31, 2020~~September 30, 2021 resulted in cash ~~outflow~~inflow of approximately ~~$0.3~~$0.5 million. We will continue to improve our operating cash flow by closely monitoring the timely collection of accounts and other receivables. We generally do not hold any significant inventory for more than ninety days, as we typically manufacture upon customers’ order.

Net cash used in investing activities for the ~~nine~~six months ended ~~December 31, 2021~~September 30, 2022 was approximately ~~$0.9~~$17.5 million, ~~less~~approximately $17.4 million more than that of the ~~nine~~six months ended December 31, 2020. It was mainly because the purchase of plant and equipment and other assets in the nine months ended December 31, 2021 was approximately $0.2 million less than the purchase of plant and equipment in the nine months ended December 31, 2020. Moreover, there was a cash decrease of approximately $0.7 million due to disposal of two subsidiaries in the nine months ended December 31, 2020.

~~Net cash of financing activities for the nine months ended December 31, 2021 was approximately $6.2 million less than the nine months ended December 31, 2020. It~~September 30, 2021. The increase was mainly because there was ~~proceeds~~a purchase of ~~$3.7 million from issue of ordinary shares~~debt securities in the ~~nine~~six months ended ~~December 31, 2020;~~September 30, 2022.

Net cash provided by financing activities for the six months ended September 30, 2022 was approximately $20.8 million more than the six months ended September 30, 2021. The increase was mainly because the Company received approximately $20.2 million proceeds from its public offering, and the net cash repayment of related party borrowings in current period was approximately ~~$2.6~~$1.1 million ~~more~~less than that of the ~~nine~~six months ended ~~December 31, 2020; and there was repayment of bank borrowing of $0.1 million in the nine months ended December 31, 2020.~~September 30, 2021.

Financial Condition, Liquidity and Capital Resources

As of ~~December 31, 2021,~~September 30, 2022, we had cash on hand of approximately ~~$0.5~~$2.0 million, total current assets of approximately ~~$4.8~~$27.4 million and current liabilities of approximately ~~$9.5~~$8.6 million. We presently finance our operations by using the cash flows borrowed from related parties and third parties. We aim to improve our operating cash flows and anticipate that cash flows from our operations and borrowings from related parties and third parties will continue to be our primary source of funds to finance our short-term cash needs. The Company’s financial conditions raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company’s profit generating operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. The Company expects to finance operations primarily through cash flow from revenue, fund raising from IPO proceedings and capital contributions from the CEO. ~~During the year, the CEO has provided financial support for the operations of the Company.~~ 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, the CEO has indicated the intent and ability to provide additional equity financing.

The growth and development of our business will require a significant amount of additional working capital. We currently have limited financial resources and based on our current operating plan, we will need to raise additional capital in order to continue as a going concern. We currently do not have adequate cash to meet our short or long-term objectives. In the event additional capital is raised, it may have a dilutive effect on our existing stockholders.

We are subject to all the substantial risks inherent in the development of a new business enterprise within an extremely competitive industry. Due to the absence of a long standing operating history and the emerging nature of the markets in which we compete, we anticipate operating losses until we can successfully implement our business strategy, which includes all associated revenue streams. Our revenue model is new and evolving, and we cannot be certain that it will be successful. The potential profitability of this business model is unproven. We may never ever achieve profitable operations. Our future operating results depend on many factors, including demand for our services, the level of competition, and the ability of our officers to manage our business and growth. As a result of the emerging nature of the market in which we compete, we may incur operating losses until such time as we can develop a substantial and stable revenue base. Additional development expenses may delay or negatively impact the ability of the Company to generate profits. Accordingly, we cannot assure you that our business model will be successful or that we can sustain revenue growth, achieve or sustain profitability, or continue as a going concern.

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 ~~December 31, 2021,~~September 30, 2022, the market foreign exchange rate was RMB ~~6.355~~7.116 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 ~~loss~~gain (loss) for the ~~nine~~six months ended ~~December 31,~~September 30, 2022 and 2021 ~~and 2020~~ was approximately ~~$0.06~~$0.2 million and ~~$0.2~~$(0.03) 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 ~~December 31, 2021~~September 30, 2022 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.

1615

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 ~~December 31, 2021.~~June 30, 2022. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

Changes in Internal Controls over Financial Reporting

There was no change in the Company’s internal control over financial reporting period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

1716

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.

1817

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: ~~February~~November 14, 2022	By:	/s/ Hong Zhida
		Hong Zhida
		President, Chief Executive Officer and Director,
		(Principal Executive Officer)

Date: ~~February~~November 14, 2022	By:	/s/ Huang Chao
		Huang Chao
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

1918

	2021			2020
	Nine Months Ended December 31
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	122,587		$	(3,560,206	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		115,561			83,210
Loss on disposal of plant and equipment		-			1,472
Changes in operating assets and liabilities
Accounts receivable		3,038,527			1,367,371
Inventories		(27,762	)		174,487
Advances to suppliers		(1,166,916	)		(320,771	)
Other receivables		73,540			(65,150	)
Accounts payables		(1,899,642	)		(1,688,272	)
Accrued expenses and other payables		96,276			173,582
Advances from customers		31,654			52,161
Net cash provided by (used in) operating activities	$	383,825		$	(3,782,116	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment and other assets		(176,268	)		(392,108	)
Proceeds from sale of property and equipment		-			2,243
Cash decreased in disposal of subsidiaries		-			(704,479	)
Net cash used in investing activities	$	(176,268	)	$	(1,094,344	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stocks		-			3,735,000
Proceeds from related party borrowings		3,797,473			7,697,827
Repayment of related party borrowings		(5,341,046	)		(6,605,044	)
Proceeds from bank borrowings		-			86,886
Repayment of bank borrowings		-			(196,456	)
Net cash (used in) provided by financing activities	$	(1,543,573	)	$	4,718,213

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(1,336,016	)		(158,247	)
Effect of exchange rate changes on cash and cash equivalents		(2,719	)		(16,706	)
Cash and cash equivalents, beginning of the period		1,845,077			531,681
CASH AND CASH EQUIVALENTS, END OF THE PERIOD	$	506,342		$	356,728

Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$	-		$	4,523
Cash paid during the year for income tax	$	17,893		$	23,196
Supplemental disclosure of non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease obligations	$	342,457		$	10,404,962
Net assets of subsidiaries disposed of recorded as Other Receivables	$	-		$	118,454

	Garment		Logistics Services		Property management and leasing		Epidemic prevention supplies		Corporate and other			Totals
Revenue from external customers		2,488,173		4,144,604		3,202,956		-		-			9,835,733
Intersegment revenue		-		-		-		-		-			-
Interest income		1,925		63		140		-		6			2,135
Interest expense		4,181		506		456		-		232			5,375
Depreciation and amortization		1,981		90,655		18,443		4,482		-			115,561
Operating income (loss)		96,275		210,878		47,935		-		(344,327	)		10,761
Segment assets		1,833,807		2,433,062		7,770,529		87,597		947,253			13,072,248
Expenditures for segment assets		-		148,604		27,664		-		-			176,268

Years ending December 31	Lease cost
2022	$	3,877,767
2023		3,857,516
2024		103,853

Total lease payments		7,839,136
Less: Interest		(531,253	)
Total	$	7,307,883

	Three months ended December 31,									Increase (decrease) in
	2021					2020				2021 compared to 2020
	(In U.S. dollars, except for percentages)
Net revenue for garment manufacturing	$	25,641		100.0	%	$	2,287,981	100	%	$	(2,262,340	)	(98.9	)%
Raw materials		8,829		34.4	%		1,620,775	70.8	%		(1,611,946	)	(99.5	)%
Labor		12,783		49.9	%		467,478	20.5	%		(454,695	)	(97.3	)%
Other and Overhead		6,306		24.6	%		16,747	0.7	%		(10,441	)	(62.3	)%
Total cost of revenue for garment manufacturing		27,918		108.9	%		2,105,000	92.0	%		(2,077,082	)	(98.7	)%
Gross profit for garment manufacturing		(2,277	)	(8.9	)%		182,981	8.0	%		(185,258	)	(101.2	)%

Net revenue for logistics services		1,719,202		100.0	%		824,025	100.0	%		895,177		108.6	%
Fuel, toll and other cost of logistics services		568,726		33.1	%		482,568	58.6	%		86,158	)	17.9	%
Subcontracting fees		842,510		49.0	%		85,766	10.4	%		756,744		882.3	%
Total cost of revenue for logistics services		1,411,236		82.1	%		568,334	69.0	%		842,902		148.3	%
Gross Profit for logistics services		307,967		17.9	%		255,691	31.0	%		52,276		20.4	%

Net revenue for property management and subleasing		1,046,627		100.0	%		294,759	100.0	%		751,868		255.1	%
Total cost of revenue for property management and subleasing		884,556		84.5	%		272,759	92.5	%		611,797		224.3	%
Gross Profit for property management and subleasing		162,071		15.5	%		22,000	7.5	%		140,071		636.7	%

Net revenue for epidemic prevention supplies	$	-				$	4,786	100.0	%		(4,786	)	(100.0	)%
Merchandise/Finished goods/Raw materials		6					4,030	84.2	%		(4,024	)	(99.9	)%
Total cost of revenue for epidemic prevention supplies		6					4,030	84.2	%		(4,024	)	(99.9	)%
Gross (loss) income for epidemic prevention supplies		(6	)				756	15.8	%		(762	)	(100.8	)%
Total cost of revenue	$	2,323,716		83.2	%	$	2,950,123	86.5	%	$	(626,407	)	(21.2	)%
Gross profit	$	467,754		16.8	%	$	461,428	13.5	%	$	6,326		1.4	%