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What changed in ADDENTAX GROUP CORP.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ADDENTAX GROUP CORP.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+288 added−244 removedSource: 10-K (2023-06-29) vs 10-K (2022-06-23)

Top changes in ADDENTAX GROUP CORP.'s 2023 10-K

288 paragraphs added · 244 removed · 160 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

41 edited+35 added−16 removed44 unchanged
Biggest change“ PRC Subsidiaries ” refer to, collectively, (i) Qianhai Yingxi Textile & Garments Co., Ltd.; (ii) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), (iii) Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), (iv) Dongguan Yushang Clothing Co., Ltd (“YS”); (v) Shantou Yi Bai Yi Garment Co., Ltd (“YBY”); (vi) Shantou Chenghai Dai Tou Garments Co., Ltd (“DT”); (vii) Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”); (viii) Shenzhen Hua Peng Fa Logistic Co., Ltd (“HPF”); (ix) Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”).; (x) Shenzhen Yingxi Tongda Logistic Co., Ltd (“TD”); and (xi) Dongguan Yingxi Daying Commercial Co., Ltd (“DY”).
Biggest change“ PRC Subsidiaries ” refer to, collectively, (i) Qianhai Yingxi Textile & Garments Co., Ltd.; (ii) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), (iii) Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), (iv) Dongguan Yushang Clothing Co., Ltd (“YS”); (v) Shantou Yi Bai Yi Garment Co., Ltd (“YBY”); (vi) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”); (vii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (viii) Shenzhen Yingxi Tongda Logistic Co., Ltd, a PRC company (“TD”), (ix) Dongguan Yingxi Daying Commercial Co., Ltd., a PRC company (“DY”), (x) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and (xi) Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”).
Our property management and subleasing business 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”), which is located in the Guangdong province, China.
Our property management and subleasing business provides shops subleasing and property management services for garment wholesalers and retailers in the garment market. We conduct our property management and subleasing operation through a wholly owned subsidiary, namely Dongguan Yingxi Daying Commercial Co., Ltd. (“DY”), which is located in the Guangdong province, China.
Our internal management Our management in logistics business is responsible for setting out business strategies and managing the daily operation. Specifically, they have regular meetings with different departments, conduct inspection and supervise the finance department, operation department and administration department.
Our internal management Our management in the logistics business is responsible for setting out business strategies and managing the daily operation. Specifically, they have regular meetings with different departments, conduct inspection and supervise the finance department, operation department and administration department.
Credit period We generally require payments from the customers between 30 to 90 days following their acknowledgement of receipt of goods. Customers and Suppliers Customers Our customer base is diverse. Our customers in garment manufacturing business are mainly garment wholesalers and retailers and our customers in logistics business are mainly trading companies and logistic companies.
Credit period We generally require payments from the customers between 30 to 90 days following their acknowledgement of receipt of goods. Customers and Suppliers Customers Our customer base is diverse. Our customers in the garment manufacturing business are mainly garment wholesalers and retailers and our customers in logistics business are mainly trading companies and logistic companies.
PRC Limitation on Overseas Listing and Share Issuances We nor our subsidiaries are currently required to obtain approval from Chinese authorities, including the China Securities Regulatory Commission, or CSRC, or Cybersecurity Administration Committee, or CAC, to list on U.S. exchanges or issue securities to foreign investors, however, if our subsidiaries or the holding company were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.
PRC Limitation on Overseas Listing and Share Issuances Neither we nor our subsidiaries are currently required to obtain approval from Chinese authorities, including the China Securities Regulatory Commission, or CSRC, or Cybersecurity Administration Committee, or CAC, to list on U.S. exchanges or issue securities to foreign investors, however, if our subsidiaries or the holding company were required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.
Moreover, if trading in our securities is prohibited under the HFCAA in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, an exchange may determine to delist our securities. Furthermore, on June 22, 2021, the U.S.
Moreover, if trading in our securities is prohibited under the HFCAA in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such a future time, an exchange may determine to delist our securities. Furthermore, on June 22, 2021, the U.S.
Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. 14 The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC.
Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. 15 The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC.
Our garment production team is responsible for produce garments based on the raw materials we source. The major stages involved in garment production include: (i) paper patterning; (ii) fabric cutting; (iii) sewing; (iv) interim quality inspection; (v) trimming; (vi) washing; and (vii) ironing.
Our garment production team is responsible for producing garments based on the raw materials we source. The major stages involved in garment production include: (i) paper patterning; (ii) fabric cutting; (iii) sewing; (iv) interim quality inspection; (v) trimming; (vi) washing; and (vii) ironing.
Our product and technical team is mainly responsible for development samples of products, preparing structural and production guidance of products as well as producing paper patterns for our garment production team. Upon order confirmation from our customers, our customer relationship team informs our fabric team to carry out raw material sourcing.
Our product and technical team are mainly responsible for development samples of products, preparing structural and production guidance of products as well as producing paper patterns for our garment production team. Upon order confirmation from our customers, our customer relationship team informs our fabric team to carry out raw material sourcing.
Chinese regulatory authorities could disallow our operating structure, which would likely result in a material change in our operations and/or the value of our common stock, including that it could cause the value of such securities to significantly decline or become worthless. Our holding company, Addentax Group Corp., is listed on the OTCQB under the symbol of “ATXG”.
Chinese regulatory authorities could disallow our operating structure, which would likely result in a material change in our operations and/or the value of our common stock, including that it could cause the value of such securities to significantly decline or become worthless. Our holding company, Addentax Group Corp., is listed on the Nasdaq Capital Market under the symbol of “ATXG”.
As of March 31, 2022, we had seven employees in the production department that are responsible for conducting our quality control process. We implement a stringent quality control process which monitors various stages of our garment manufacturing business, including sampling checks of semi-finished products and finished products.
Stringent quality control process. As of March 31, 2023, we had 6 employees in the production department that are responsible for conducting our quality control process. We implement a stringent quality control process which monitors various stages of our garment manufacturing business, including sampling checks of semi-finished products and finished products.
Our design team works closely with our customers to understand their needs and make recommendations to them. Our design team also conducts market research and attends industry exhibitions to understand the latest market trends. As of March 31, 2022, our design team consisted of five members. 9 Extensive delivery network.
Our design team works closely with our customers to understand their needs and make recommendations to them. Our design team also conducts market research and attends industry exhibitions to understand the latest market trends. As of March 31, 2023, our design team consisted of 4 members. 9 Extensive delivery network.
For our new customers, we generally require advances or deposits to be made when placing orders. Our logistics business We pack products and provide logistics service to our customers through our wholly-owned subsidiaries, XKJ and PF which are located in Guangdong province, the PRC. Our in-house logistics teams deliver to approximately seven provinces and two municipalities in the PRC.
For our new customers, we generally require advances or deposits to be made when placing orders. Our logistics business We pack products and provide logistics service to our customers through our wholly-owned subsidiaries, XKJ, PF and TD which are located in Guangdong province, the PRC. Our in-house logistics teams deliver to approximately 11 provinces and three municipalities in the PRC.
We conduct our logistic operations through four wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”), Shenzhen Hua Peng Fa Logistic Co., Ltd (“HPF”), Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”) and Shenzhen Yingxi Tongda Logistic Co., Ltd (“TD”), which are located in the Guangdong province, China.
We conduct our logistic operations through three wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”), Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”) and Shenzhen Yingxi Tongda Logistic Co., Ltd (“TD”), which are located in the Guangdong province, China.
The principal competitive factors in the garment manufacturing market include: ● brand awareness and focus; ● breadth of product offerings; and ● quality control. The principal competitive factors in the logistics market include: ● delivery time; and ● network coverage.
The principal competitive factors in the garment manufacturing market include: ● brand awareness and focus; ● breadth of product offerings; and ● quality control. The principal competitive factors in the logistics market include: ● delivery time; and ● network coverage. The principal competitive factors in the property management and subleasing market include: ● Cost control; and ● network coverage.
We expect to develop 20 additional logistics routes in existing serving cities and improve the Company’s profits in the year of 2023. Develop international logistics services and warehousing services. We intend to develop international logistics services for customers located all over the world and international warehousing services. Development of international trading.
We expect to develop 20 additional logistics routes in existing serving cities and improve the Company’s profits in the year 2023. Develop international logistics services and warehousing services. We intend to develop international logistics services for customers located all over the world and international warehousing services. Develop E-commerce business.
As of the date of this annual report, other than the response we recently received from the CSRC confirming that our offering does not require the examination and approval of the CSRC in accordance with the existing PRC legislation and regulations (for more details about this response from the CSRC, see “ Risk Factors – General Risks Associated with Business Operation in China - While the approval of the China Securities Regulatory Commission is not currently required for our offerings, it may be required in the future in connection with our offerings under the M&A Rules and, if required, we cannot predict whether we will be able to obtain such approval ”), we have not received any inquiry, notice, warning, sanctions or regulatory objection to our offerings from the CSRC, CAC or any other PRC governmental authorities, and we believe our PRC Subsidiaries have obtained all requisite permissions from PRC governmental authorities to operate our business as currently conducted under relevant PRC laws and regulations.
As of the date of this prospectus, other than the response we recently received from the CSRC confirming that our offering under this prospectus does not require the examination and approval of the CSRC in accordance with the existing PRC legislation and regulations (for more details about this response from the CSRC, see “ Risk Factors – General Risks Associated with Business Operation in China - While the approval of the China Securities Regulatory Commission is not currently required for our offerings, it may be required in the future in connection with our offerings under the M&A Rules and, if required, we cannot predict whether we will be able to obtain such approval ”), we have not received any inquiry, notice, warning, sanctions or regulatory objection to our offerings from the CSRC, CAC or any other PRC governmental authorities, and we believe our PRC Subsidiaries have obtained all requisite permissions from PRC governmental authorities to operate our business as currently conducted under relevant PRC laws and regulations. 14 Currently, each of our PRC Subsidiaries holds and maintains a business license issued by the local market supervision and administration bureau, and has received all requisite permissions and approvals in order to conduct and operate our business.
Employees As of March 31, 2022, we had approximately 126 employees and there was no labor union established by our employees.
Employees As of March 31, 2023, we had approximately 96 employees and there was no labor union established by our employees.
In 2020, the Company disposed DT and HFP to a third party respectively. “ WFOE ” refers to Qianhai Yingxi Textile & Garments Co., Ltd, a wholly foreign owned enterprise in China, which is indirectly wholly owned by Addentax Group Corp. 8 Our garment manufacturing business consists of sales made principally to wholesaler located in the PRC.
In February 2023, the Company disposed DY to an independent third party. “ WFOE ” refers to Qianhai Yingxi Textile & Garments Co., Ltd, a wholly foreign owned enterprise in China, which is indirectly wholly owned by Addentax Group Corp. 8 Our garment manufacturing business consists of sales made principally to wholesaler located in the PRC.
Our subsidiaries include (i) Yingxi Industrial Chain Group Co., Ltd., a Republic of Seychelles company; (ii) Yingxi Industrial Chain Investment Co., Ltd., a Hong Kong company (“Yingxi HK”); (iii) Qianhai Yingxi Textile & Garments Co., Ltd., a PRC company; (iv) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng Wei Garments Co., Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”), (vii) Shantou Yi Bai Yi Garment Co., Ltd, a PRC company (“YBY”), (viii) Shantou Chenghai Dai Tou Garments Co., Ltd, a PRC company (“DT”); (ix) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (x) Shenzhen Hua Peng Fa Logistic Co., Ltd, a PRC company (“HPF”), (xi) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”), (xii) Shenzhen Yingxi Tongda Logistic Co., Ltd, a PRC company (“TD”) and (xiii) Dongguan Yingxi Daying Commercial Co., Ltd., a PRC company (“DY”).
Our subsidiaries include (i) Yingxi Industrial Chain Group Co., Ltd., a Republic of Seychelles company; (ii) Yingxi Industrial Chain Investment Co., Ltd., a Hong Kong company (“Yingxi HK”); (iii) Qianhai Yingxi Textile & Garments Co., Ltd., a PRC company; (iv) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng Wei Garments Co., Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”), (vii) Shantou Yi Bai Yi Garment Co., Ltd, a PRC company (“YBY”), (viii) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”); (ix) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (x) Shenzhen Yingxi Tongda Logistic Co., Ltd, a PRC company (“TD”), (xi) Dongguan Yingxi Daying Commercial Co., Ltd., a PRC company (“DY”), (xii) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and (xiii) Dongguan Au Te Si Garments Co., Ltd., a PRC company (“AOT”).
We plan to distribute our products in different channels, including our own retailers, co-operative retailers and franchisees. Expand our delivery network. As of March 31, 2022, we provided logistics services to over 79 cities in seven provinces and two municipalities in the PRC.
We plan to distribute our products in different channels, including our own retailers, co-operative retailers and franchisees. Expand our delivery network. As of March 31, 2023, we provided logistics services to over 86 cities in 11 provinces and three municipalities in the PRC.
We also provide customs declaration and tax clearance service to our customers who export goods to overseas. Our network We have 758 logistics points and they are located in seven provinces and two municipalities which cover 79 cities in the PRC.
We also provide customs declaration and tax clearance service to our customers who export goods to overseas. Our network We have 848 logistics points and they are located in 11 provinces and three municipalities which cover 86 cities in the PRC.
Our fabric team may also suggest alternative fabrics to our customers. Our fabric team works with our research and development team to understand fabric types and aims to identify different fabric we source and improve the quality and comfort of the fabric we produce.
Our fabric team works with our research and development team to understand fabric types and aims to identify different fabric we source and improve the quality and comfort of the fabric we produce.
Suppliers We procured our garments through various textile companies in our garment manufacturing business. In our logistics business, we procured from packing companies and transportation companies. No single supplier accounted for more than 30% of our total costs for the years ended March 31, 2021 and 2022. Inventory Garment manufacturing business .
No single customers accounted for more than 30% of our net sales for the years ended March 31, 2022 and 2023 Suppliers We procured our garments through various textile companies in our garment manufacturing business. In our logistics business, we procured from packing companies and transportation companies.
The following table sets out a breakdown of the number of employees by function as of March 31, 2022: Function Number of employees Administration 15 Finance 9 Logistics 2 Marketing 15 Operation 68 Logistics 17 Total 126 13 According to PRC regulations, we must participate in various employee social security plans organized by local governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance.
The following table sets out a breakdown of the number of employees by function as of March 31, 2023: Function Number of employees Administration 22 Finance 8 Logistics 3 Marketing 4 Operation 32 Productive 27 Total 96 13 According to PRC regulations, we must participate in various employee social security plans organized by local governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance.
We produce garments in our own production facilities and employ our in-house transport teams to deliver garments to our customers. This one-stop service optimizes production efficiency and saves costs by lowering the cost per unit, thereby achieving economies of scale. Stringent quality control process.
Competitive Strengths We believe we have the following competitive strengths: Cost-effective production. We have adopted a vertical integration production process. We produce garments in our own production facilities and employ our in-house transport teams to deliver garments to our customers. This one-stop service optimizes production efficiency and saves costs by lowering the cost per unit, thereby achieving economies of scale.
As of the date hereof, no transfers, dividends, or distributions have been made to our investors. Holding Foreign Company Accountable Act Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act, or the HFCAA, if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) determines that it cannot inspect or investigate completely our auditor.
Holding Foreign Company Accountable Act Trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act, or the HFCAA, if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) determines that it cannot inspect or investigate completely our auditor.
We conduct our garment manufacturing operations through four wholly owned subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), Dongguan Yushang Clothing Co., Ltd (“YS”), Shantou Yi Bai Yi Garment Co., Ltd (“YBY”), and Shantou Chenghai Dai Tou Garments Co., Ltd (“DT”), which are located in the Guangdong province, China.
We conduct our garment manufacturing operations through five wholly owned subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), Dongguan Yushang Clothing Co., Ltd (“YS”), Shantou Yi Bai Yi Garment Co., Ltd (“YBY”), Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd (“ZHJ”), and Dongguan Aotesi Garments Co., Ltd., (“AOT”) , which are located in the Guangdong province, 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 believe outsourcing allows us to maximize our capacity and maintain flexibility while reducing capital expenditures and the costs of keeping drivers during slow seasons.
As of the date hereof, we have had no transactions that involved the transfer of cash or assets throughout our corporate structure. The PRC Subsidiaries have not transferred cash or other assets to Addentax, including by way of dividends. Addentax does not currently plan or anticipate transferring cash or other assets from our operations in China to any non-Chinese entity.
As of the date hereof, we have had no transactions that involved the transfer of cash or assets throughout our corporate structure. The PRC Subsidiaries have not transferred cash or other assets to Addentax, including by way of dividends.
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.
In February 2023, the Company disposed of DY to an independent third party at fair value, which was also its carrying value as of February 28, 2023. The business operations, customers and suppliers of DY were retained by the Company; therefore, the disposition of the subsidiary did not qualify as discontinued operations.
We sold HPF to another third party in November 2020, for consideration of $173,170, equal to the carrying amount of its net assets. Where a customer is located in an area not covered by our delivery fleet or where our in-house logistics teams are fully engaged, we will outsource delivery to third-party contractors.
Where a customer is located in an area not covered by our delivery fleet or where our in-house logistics teams are fully engaged, we will outsource delivery to third-party contractors.
Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate. 15 Our auditor, BF Borgers CPA PC, is an independent registered public accounting firm with the PCAOB, and as an auditor of publicly traded companies in the U.S., is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate. 16 Our auditor, Pan-China Singapore, the independent registered public accounting firm that issued the audit report included in this Annual Report, is subject to PCAOB inspections.
Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which, if enacted, would amend the HFCAA and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.
On December 23, 2022 the AHFCAA was enacted, which amended the HFCAA by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three and such act was signed into law on December 29, 2022.
We are in the process of registering trademarks and copyright in relation to our garment manufacturing business pending approval from the PRC government. 12 Competition While the PRC is still the world’s largest clothing manufacturer with enormous production capacity, oversupply, increasing labor costs and rising local protectionism have eroded its competitiveness.
Intellectual Property The Company, through its subsidiary Shenzhen Qianhai Industrial Chain Co.Ltd., herein referred as “YX,” received the approval of the trademarks below in relation to its business from PRC government. 12 Competition While the PRC is still the world’s largest clothing manufacturer with enormous production capacity, oversupply, increasing labor costs and rising local protectionism have eroded its competitiveness.
We maintain our raw materials in our storage facilities. We review our inventory levels in order to identify slow-moving materials and broken assortments. Logistics business . Since we deliver products as soon as we receive orders from customers, we do not operate distribution centers and hence do not need to carry a significant amount of inventory.
Since we deliver products as soon as we receive orders from customers, we do not operate distribution centers and hence do not need to carry a significant amount of inventory. Our property management and subleasing business. We do not need to carry a significant amount of inventory due to the nature of the business.
As of the date of this annual report, none of our PRC Subsidiaries has been denied or punished by relevant governmental authorities due to its business qualifications. Transfers of Cash to and from our Subsidiaries We (Addentax Group Corp.) are a Nevada holding company with no material operations of our own.
As of the date of this prospectus, none of our PRC Subsidiaries has been denied or punished by relevant governmental authorities due to its business qualifications. In addition, we (Addentax Group Corp.) and our non-PRC subsidiaries have also received all requisite permissions and approvals in order to conduct and operate our business.
Our design team works closely with our customer relationship team to understand our customers’ needs and make recommendations to them based on their designs. Our fabric team leverages our experience in fabric sourcing as well as our understanding in fabric features to recommend the types of fabric to be used in our customers’ products.
Our fabric team leverages our experience in fabric sourcing as well as our understanding of fabric features to recommend the types of fabric to be used in our customers’ products. Our fabric team may also suggest alternative fabrics to our customers.
Currently, we are focusing on the civil mask market in China and provide cost-effective masks to customers. We will improve our product quality constantly and develop oversee markets. 10 Our garment manufacturing business We manufacture garments for various high-end fashion brands through our wholly-owned subsidiaries, HSW, YS, and YBY, which are located in Guangdong, the PRC.
We integrated resources in shopping mall, intend to develop e-commerce bases and the internet celebrity economy together to drive to increase the value of the stores in the area. 10 Our garment manufacturing business We manufacture garments for various high-end fashion brands through our wholly-owned subsidiaries, HSW, YS, YBY, ZHJ, AOT, which are located in Guangdong, the PRC.
Should the PCAOB be unable to fully conduct inspection of our auditor’s work papers in China, it will make it difficult to evaluate the effectiveness of our auditor’s audit procedures or equity control procedures. Investors may consequently lose confidence in our reported financial information and procedures or quality of the financial statements, which would adversely affect us and our securities.
The inability of the PCAOB to conduct inspections of our auditors’ work papers in China would make it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections.
We classify our businesses into four segments: garment manufacturing, logistics services, property management and subleasing, and epidemic prevention supplies.
We classify our businesses into three segments: garment manufacturing, logistics services, and property management and subleasing. The Company previously engaged in the provision of epidemic prevention supplies, which included manufacturing, distribution and trading of epidemic prevention supplies. As the COVID-19 pandemic is near an endemic, the Company ceased to operate in this business in the first quarter of 2023.
Removed
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 logistics business consists of delivery and courier services covering 79 cities in seven provinces and two municipalities in China.
Added
The remaining assets of this business segment were reclassified into the “Corporate and others” segment. The corresponding items of segment information for the earlier periods were restated to reflect the change of the new segment structure.
Removed
Our epidemic prevention supplies business consists of manufacturing and distribution of epidemic prevention products and resale of epidemic prevention supplies purchased from third parties in both domestic and overseas markets. We conduct our manufacturing of the epidemic prevention products in Dongguan Yushang Clothing Co., Ltd (“YS”).
Added
Our logistics business consists of delivery and courier services covering 86 cities in 11 provinces and three municipalities in China. Although we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors.
Removed
We conduct the trading of epidemic prevention suppliers through Addentax and Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), a wholly owned subsidiary of the Company, which is located in the Guangdong province in China. Competitive Strengths We believe we have the following competitive strengths: Cost-effective production. We have adopted a vertical integration production process.
Added
Our logistics business has nine routes and covers 86 cities in 11 provinces and 3 municipalities in the PRC. Business Strategies Key elements of our business and growth strategies include the following: Sales of raw materials.
Removed
Our logistics business has nine routes and covers 79 cities in seven provinces and two municipalities in the PRC. Stable Production Supply Chain. We integrated various epidemic prevention suppliers located in China & Malaysia and established strategic cooperation relationship with them, which can help us to purchase the epidemic prevention products in competitive lower price and stable supply.
Added
Operations Our customer relationship team is responsible for cultivating and maintaining our relationship with customers. Our design team works closely with our customer relationship team to understand our customers’ needs and make recommendations to them based on their designs.
Removed
We also received mask production license from relevant governance and some of the products we manufactured passed the inspection of quality inspection agency. Business Strategies Key elements of our business and growth strategies include the following: Sales of raw materials.
Added
No single supplier accounted for more than 30% of our total costs for the years ended March 31, 2022 and 2023. Inventory Garment manufacturing business . We maintain our raw materials in our storage facilities. We review our inventory levels in order to identify slow-moving materials and broken assortments. Logistics business .
Removed
We developed our international trading during the global epidemic situation of Covid-19 to import and export diverse epidemic protection products including medical masks, latex gloves etc. Develop E-commerce business. We integrated resources in shopping mall, intend to develop e-commerce bases and the internet celebrity economy together to drive to increase the value of the stores in the area.
Added
Based on our understanding of the PRC laws and regulations, our PRC businesses only require business licenses issued and approved from the relevant local authorities and do not require any other permissions or approvals to operate their PRC business operations.
Removed
Develop our epidemic prevention supply chain. We intend to develop our own epidemic prevention supply chain as we see the potential and opportunity of medical and health industry. We expect to establish a one-step epidemic prevention supply chain from product manufacturing line establishment to sales networking construction.
Added
Further, we have not relied upon an opinion of a PRC counsel in drawing such conclusion in the current registration statement for the following reasons: (i) during our IPO process which was closed on September 2, 2022, we previously engaged a local PRC counsel, Hiways Law Firm (Shenzhen), to assist with the PRC disclosures in the IPO registration statement on Form S-1 and Hiways Law Firm (Shenzhen) confirmed such conclusion; (ii) the time period between the IPO and the submission of the current registration statement on January 25, 2023 is not substantial; (iii) no material changes occurred with respect to our PRC business operations since the IPO; and (iv) the expenses of engaging Hiway Law Firm or another PRC counsel for the current registration statement will be unduly burdensome on the Company; and thus, the Company has not sought out to engage a PRC counsel to obtain an additional opinion for the current registration statement.
Removed
We sold DT to another third party in October 2020, for consideration of $604,773, equal to the carrying amount of its net assets. Operations Our customer relationship team is responsible for cultivating and maintaining our relationship with customers.
Added
In order to promote domestic enterprises to carry out overseas capital market activities in accordance with law and compliance, the CSRC issued the “Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies” and five supporting guidelines (collectively referred to as the Overseas Listing Filing Rules) on February 17, 2023, and took effect on March 31, 2023.
Removed
For the year ended March 31, 2021, there was one customer accounted for more than 30% of net sales which was 35.4% out of total net sales. For the year ended March 31, 2022, there was no customer accounted for more than 30% of our net sales.
Added
The Overseas Listing Filing Rules clarify the relevant rules of the Chinese government on the management of overseas issuance, including but not limited to (i) Initial public offerings or listings in overseas markets shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas.
Removed
Our property management and subleasing business. We do not need to carry a significant amount of inventory due to the nature of the business. Epidemic prevention supplies business. Since we procured and manufactured epidemic prevention supplies on order basis, we maintain low level of inventories and do not have slow-moving items.
Added
Subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within 3 working days after the offering is completed.
Removed
Intellectual Property We currently do not own any intellectual property rights.
Added
Subsequent securities offerings and listings of an issuer in other overseas markets than where it has offered and listed shall be filed as Initial public offerings; (ii) A negative list that prohibits overseas offering and listing; (iii) The reporting obligations of the issuer after filing, such as the change of control, voluntary or mandatory delisting and other major changes after overseas issuance or listing, the issuer should bare the obligation to report to the CSRC; (iv) Legal liability, such as failure to fulfill the filing procedures, or violation of relevant regulations in overseas listing, the CSRC shall order rectification, issue warnings to such domestic company, and impose a fine of between RMB 1,000,000 yuan and RMB 10,000,000 yuan.
Removed
The principal competitive factors in the epidemic prevention supply market include: ● delivery time; ● cost control; and ● quality control The principal competitive factors in the property management and subleasing market include: ● Cost control; and ● network coverage.
Added
Directly liable persons-in-charge and other directly liable persons shall be warned and each imposed a fine of between RMB 500,000 yuan and RMB 5,000,000 yuan. Specifically, under the Overseas Listing Filing Rules, our Company, as an enterprise already listed on the Nasdaq Capital Market before March 31, 2023, and is not required to make immediate filings for its listing.
Removed
Currently, each of our PRC Subsidiaries holds and maintains a business license issued by the local market supervision and administration bureau, and has received all requisite permissions in order to conduct and operate our business.
Added
However, if we issue subsequent offering on the Nasdaq Capital Market or list in other overseas markets in the future, we shall file with the CSRC in accordance with the Overseas Listing Filing Rules; In case of major changes, it is also necessary to report the specific situation to the CSRC. Otherwise, the Company shall bear corresponding legal responsibilities.
Removed
BF Borgers CPA PC is based in the United States and has been inspected by the PCAOB on a regular basis, with the last inspection in November and December of 2021.
Added
As the Overseas Listing Filing Rules are newly issued, there is still uncertainty about their interpretations and implementations. As a result, we cannot assure you that we will be able to complete any documents for our future issuance in a timely manner and fully comply with the relevant new rules.
Removed
BF Borgers CPA PC, is not headquartered in mainland China or Hong Kong and was not identified as a firm subject to the determinations announced by the PCAOB on December 16, 2021.
Added
In addition, we cannot guarantee that we will not be subject to tightened regulatory review and subsequent interference by the Chinese government. Transfers of Cash to and from our Subsidiaries We (Addentax Group Corp.) are a Nevada holding company with no material operations of our own.
Removed
If the AHFCAA is enacted, and if we are subject to it, it would decrease the number of “non-inspection years” from three years to two years, and thus, would reduce the time before our securities may be prohibited from trading or delisted.
Added
However, to the extent cash in the business is in the PRC/Hong Kong or is in our PRC or Hong Kong subsidiaries, there can be no assurance that the PRC government will not intervene or impose restrictions or limitations on the ability of Addentax or Addentax’s subsidiaries to transfer cash.
Added
As a result, such funds may not be available to fund operations or for other use outside of the PRC or Hong Kong. Addentax does not currently plan or anticipate transferring cash or other assets from our operations in China to any non-Chinese entity.
Added
We intend to retain most, if not all, of available funds and any future earnings after this offering to the development and growth of our business in China. As of the date hereof, no transfers, dividends, or distributions have been made to our investors. Further, our management is directly supervising cash management.
Added
Our finance department is responsible for establishing the cash management policies and procedures among our departments and the operating entities.
Added
Each department or operating entity initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to designated management members of our Company, based on the amount and the use of cash requested.
Added
The designated management member examines and approves the allocation of cash based on the sources of cash and the priorities of the needs, and submits it to the cashier specialists of our finance department for a second review.
Added
Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred nor a written policy that addresses how we will handle any limitations on cash transfers due to PRC law. .
Added
Pan-China Singapore is headquartered in Singapore and there are no limitations in Singapore on PCAOB inspections.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. 26 General Risks Associated with Business Operations in China The PRC government has significant oversight and discretion over the conduct of a PRC company’s business operations or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, and may intervene with or influence our operations , may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless, as the government deems appropriate to further regulatory, political and societal goals The PRC government may intervene or influence our operations at any time, which could result in a material change in our operations and/or the value of our common stock.
Biggest changeIf some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. 26 General Risks Associated with Business Operations in China The PRC government may intervene or influence our business operations at any time or may exert more control over offerings conducted overseas and foreign investment in China based issuers, which could result in a material change in our business operations and/or the value of our securities.
We endeavor to engage third-party companies with a strong reputation and track record, high performance reliability and adequate financial resources. However, any such third-party contractor may still fail to provide satisfactory logistics services at the level of quality or within the timeframe required by us or our customers.
We endeavor to engage third-party companies with a strong reputation and track record, high performance reliability and adequate financial resources. However, any such third-party contractor may still fail to provide satisfactory logistics services at a level of quality or within the timeframe required by us or our customers.
Since 2016, PRC governmental authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny over “irrational” overseas investments for certain industries, as well as over four kinds of “abnormal” offshore investments, which are: ● investments through enterprises established for only a few months without substantive operation; ● investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance shown on financial statements; ● investments in targets which are unrelated to onshore parent’s main business; and ● investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of underground banking. 33 On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which tightened the authenticity and compliance verification of cross-border transactions and cross-border capital flow, including requiring banks to verify board resolutions, tax filing forms and audited financial statements before wiring foreign invested enterprises’ foreign exchange dividend distribution of over US$50,000.
Since 2016, PRC governmental authorities have imposed more stringent restrictions on outbound capital flows, including heightened scrutiny over “irrational” overseas investments for certain industries, as well as over four kinds of “abnormal” offshore investments, which are: ● investments through enterprises established for only a few months without substantive operation; ● investments with amounts far exceeding the registered capital of onshore parent and not supported by its business performance shown on financial statements; ● investments in targets which are unrelated to onshore parent’s main business; and ● investments with abnormal sources of Renminbi funding suspected to be involved in illegal transfer of assets or illegal operation of underground banking. 35 On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which tightened the authenticity and compliance verification of cross-border transactions and cross-border capital flow, including requiring banks to verify board resolutions, tax filing forms and audited financial statements before wiring foreign invested enterprises’ foreign exchange dividend distribution of over US$50,000.
In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated. 35 PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
In addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated. 37 PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Meanwhile, the Implementation Regulation of the Foreign Investment Law and the Measures for Reporting of Information on Foreign Investment came into effect as of January 1, 2020, which clarified and elaborated the relevant provisions of the Foreign Investment Law . 34 The Foreign Investment Law sets out the basic regulatory framework for foreign investments and proposes to implement a system of pre-entry national treatment with a negative list for foreign investments, pursuant to which (i) foreign entities and individuals are prohibited from investing in the areas that are not open to foreign investments, (ii) foreign investments in the restricted industries must satisfy certain requirements under the law, and (iii) foreign investments in business sectors outside of the negative list will be treated equally with domestic investments.
Meanwhile, the Implementation Regulation of the Foreign Investment Law and the Measures for Reporting of Information on Foreign Investment came into effect as of January 1, 2020, which clarified and elaborated the relevant provisions of the Foreign Investment Law . 36 The Foreign Investment Law sets out the basic regulatory framework for foreign investments and proposes to implement a system of pre-entry national treatment with a negative list for foreign investments, pursuant to which (i) foreign entities and individuals are prohibited from investing in the areas that are not open to foreign investments, (ii) foreign investments in the restricted industries must satisfy certain requirements under the law, and (iii) foreign investments in business sectors outside of the negative list will be treated equally with domestic investments.
Given such uncertainty, we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could materially and adversely affect our business, financial condition, and results of operations. 31 PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC Subsidiaries to liability or penalties, limit our ability to inject capital into our PRC Subsidiaries or limit our PRC Subsidiaries’ ability to increase their registered capital or distribute profits.
Given such uncertainty, we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could materially and adversely affect our business, financial condition, and results of operations. 33 PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC Subsidiaries to liability or penalties, limit our ability to inject capital into our PRC Subsidiaries or limit our PRC Subsidiaries’ ability to increase their registered capital or distribute profits.
Our utilization of these delivery services for shipments is subject to risks, including increases in labor costs and fuel prices, which would increase our shipping costs, and associate strikes and inclement weather, which may impact our transportation providers’ ability to provide delivery services that adequately meet our shipping needs. 17 Future price increases in raw materials or changes in the supply of raw materials may materially and adversely affect our business, financial condition and results of operations.
Our utilization of these delivery services for shipments is subject to risks, including increases in labor costs and fuel prices, which would increase our shipping costs, and associate strikes and inclement weather, which may impact our transportation providers’ ability to provide delivery services that adequately meet our shipping needs. 18 Future price increases in raw materials or changes in the supply of raw materials may materially and adversely affect our business, financial condition and results of operations.
The violation of labor, environmental or other laws by third-party vendors used by us, or the divergence of a third-party vendor’s or partner’s labor or environmental practices from those generally accepted as ethical or appropriate, could interrupt or otherwise disrupt the shipment of finished products to us or damage our reputation. 19 Large and similar sized competitors could steal our market share by offering lower prices.
The violation of labor, environmental or other laws by third-party vendors used by us, or the divergence of a third-party vendor’s or partner’s labor or environmental practices from those generally accepted as ethical or appropriate, could interrupt or otherwise disrupt the shipment of finished products to us or damage our reputation. 20 Large and similar sized competitors could steal our market share by offering lower prices.
We are a holding company and do not directly own any substantive business operations in the China. Substantially all of our revenue is denominated in Renminbi.
We are a holding company and do not directly own any substantive business operations in China. Substantially all of our revenue is denominated in Renminbi.
The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. 28 In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general.
The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. 31 In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the shares. 36 We may never be able to pay dividends and are unlikely to do so.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the shares. 38 We may never be able to pay dividends and are unlikely to do so.
Our business, financial condition, results of operations and growth prospects may be materially and adversely affected if our future expansion plans fail to achieve positive results. 16 If we are unable to create brand influence, we may face difficulties in attracting new business partners and clients. Our brand is still being nurtured.
Our business, financial condition, results of operations and growth prospects may be materially and adversely affected if our future expansion plans fail to achieve positive results. 17 If we are unable to create brand influence, we may face difficulties in attracting new business partners and clients. Our brand is still being nurtured.
Our heavy reliance on our largest suppliers for the supply of our products will have significant impact on our business and results of operation in the event of any shortage of, or delay in the supply. 18 Any labor shortages, increased labor costs or other factors affecting labor supply for our production materials may materially and adversely affect our business operations.
Our heavy reliance on our largest suppliers for the supply of our products will have significant impact on our business and results of operation in the event of any shortage of, or delay in the supply. 19 Any labor shortages, increased labor costs or other factors affecting labor supply for our production materials may materially and adversely affect our business operations.
Risks Associated with Our Company Our success depends on our customer’s ability to market and sell their products manufactured by us. All of our customers in our garment manufacturing business are garment wholesalers and retailers. Consequently, our business and results of operations are directly affected by the demand of their end customers for their products supplied by us.
Risks Associated with Our Company Our success depends on our customers’ ability to market and sell their products manufactured by us. All of our customers in our garment manufacturing business are garment wholesalers and retailers. Consequently, our business and results of operations are directly affected by the demand of their end customers for their products supplied by us.
If we are unable to control the reliance of subcontractors efficiently and effectively, our business prospects and results of operations may be materially and adversely affected. 20 Our insurance may not be sufficient. We carry insurance that we consider adequate in regard to the nature of the covered risks and the costs of coverage.
If we are unable to control the reliance of subcontractors efficiently and effectively, our business prospects and results of operations may be materially and adversely affected. 21 Our insurance may not be sufficient. We carry insurance that we consider adequate in regard to the nature of the covered risks and the costs of coverage.
Therefore, foreign exchange fluctuations may influence our business in unpredictable ways. 27 The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government.
Therefore, foreign exchange fluctuations may influence our business in unpredictable ways. 30 The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government.
These risks may have a material adverse effect on our business, financial condition and results of operations. 32 We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.
These risks may have a material adverse effect on our business, financial condition and results of operations. 34 We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.
This could cause our results of operations to be materially adversely effected, reduce our revenues and cause the value of our securities to decline in value. 25 We may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing when needed.
This could cause our results of operations to be materially adversely affected, reduce our revenues and cause the value of our securities to decline in value. 25 We may require additional financing in the future and our operations could be curtailed if we are unable to obtain required additional financing when needed.
As confirmed by our PRC counsel, we are not be subject to the cybersecurity review by the CAC for overseas public offerings of our securities to foreign investors, given that: (i) our products and services are offered not directly to individual users but through our institutional customers; (ii) we do not possess a large amount of personal information in our business operations; and (iii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities.
As confirmed by our PRC counsel at the date of September 2, 2022, we are not be subject to the cybersecurity review by the CAC for overseas public offerings of our securities to foreign investors, given that: (i) our products and services are offered not directly to individual users but through our institutional customers; (ii) we do not possess a large amount of personal information in our business operations; and (iii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities.
As confirmed by our PRC counsel, we are not subject to cybersecurity review with the Cyberspace Administration of China, or CAC, given that: (i) our products and services are offered not directly to individual users but through our institutional customers; (ii) we do not possess a large amount of personal information in our business operations; and (iii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities.
As confirmed by our PRC counsel at the date of September 2, 2022, the business of our subsidiaries until our registration are not subject to cybersecurity review with the Cyberspace Administration of China, or CAC, given that: (i) our products and services are offered not directly to individual users but through our institutional customers; (ii) we do not possess a large amount of personal information in our business operations; and (iii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities.
During the years ended March 31, 2022 and 2021, approximately 99.3% and 98.7% of total inventory purchases were from the Company’s five largest suppliers, respectively. Our business, financial condition and operating results depend on the continuous supply of products from our largest suppliers and our continuous supplier-customer relationship with them.
During the years ended March 31, 2023 and 2022, approximately 100.0% and 99.3% of total inventory purchases were from the Company’s five largest suppliers, respectively. Our business, financial condition and operating results depend on the continuous supply of products from our largest suppliers and our continuous supplier-customer relationship with them.
Any significant disruption resulting from this or similar epidemics on a large scale or over a prolonged period of time could cause significant disruption to our business until we would be able to resume normal business operations, negatively affecting our business, results of operations and financial condition.
Any significant disruption resulting from this or similar epidemics on a large scale or over a prolonged period of time could cause significant disruption to our business until we would be able to resume normal business operations, negatively affecting our business, results of operations and financial condition. Our business depends on the continued contributions made by Mr.
The Company relied on a few subcontractors for our logistic business, in which the subcontracting fees to our largest contractor represented approximately 14.8% and 7.6% of total cost of revenues for our service segment for the years ended March 31, 2022 and 2021, respectively.
The Company relied on a few subcontractors for our logistic business, in which the subcontracting fees to our largest contractor represented approximately 25.2% and 14.8% of total cost of revenues for our logistics service segment for the years ended March 31, 2023 and 2022, respectively.
Therefore, it is uncertain whether the future regulatory changes would impose additional restrictions on our business The Data Security Law also sets forth the data security protection obligations for entities and individuals handling personal data, including that no entity or individual may acquire such data by stealing or other illegal means, and the collection and use of such data should not exceed the necessary limits The costs of compliance with, and other burdens imposed by, PRC Cybersecurity Law and any other cybersecurity and related laws may limit the use and adoption of our products and services and could have an adverse impact on our business.
The Data Security Law also sets forth the data security protection obligations for entities and individuals handling personal data, including that no entity or individual may acquire such data by stealing or other illegal means, and the collection and use of such data should not exceed the necessary limits The costs of compliance with, and other burdens imposed by, PRC Cybersecurity Law and any other cybersecurity and related laws may limit the use and adoption of our products and services and could have an adverse impact on our business.
In 2016 and 2017, the value of the Renminbi depreciated approximately 7.2% and appreciated 6.3% against the U.S. dollar, respectively. From April 2020 through the end of March 2021, the value of the Renminbi appreciated by approximately 7.4% against the U.S. dollar.
In 2016 and 2017, the value of the Renminbi depreciated approximately 7.2% and appreciated 6.3% against the U.S. dollar, respectively. From April 2022 through the end of March 2023, the value of the Renminbi depreciated by approximately 8.3% against the U.S. dollar.
However, there remains uncertainty as to how the Draft Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Draft Measures.
Further, we believe our newly established companies and our business plan will not change the above conclusion. However, there remains uncertainty as to how the Draft Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Draft Measures.
Under the M&A Rules, the approval of MOFCOM must be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire domestic companies affiliated with such PRC enterprises or residents. Applicable PRC laws, rules and regulations also require certain merger and acquisition transactions to be subject to security review.
Under the M&A Rules, the approval of MOFCOM must be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire domestic companies affiliated with such PRC enterprises or residents.
We cannot currently assess the likely outcome of such suits, but if the outcome were negative, it could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.
Further, potential claimants may be encouraged to bring lawsuits based on a settlement from us or adverse court decisions against us. We cannot currently assess the likely outcome of such suits, but if the outcome were negative, it could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.
Subcontracting fees for our logistics business for the year ended March 31, 2022 increased to approximately $2.3 million from $1.8 million for the year ended March 31, 2021, representing an increase of approximately 25.7%. Subcontracting fees accounted for 42.9% and 39.5% of our total logistics business revenue in the years ended March 31, 2022 and 2021, respectively.
Subcontracting fees for our logistics business for the year ended March 31, 2023 decreased to approximately $1.1 million from $2.3 million for the year ended March 31, 2022, representing a decrease of approximately 53.0%. Subcontracting fees accounted for 23.24% and 42.9% of our total logistics business revenue in the years ended March 31, 2023 and 2022, respectively.
Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.
Any future action by the PRC government and companies whose foreign securities offerings are subject to review by the CSRC or the CAC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.
For the year ended March 31, 2021, two customers accounted for approximately 75.4% and 14.6% of the total revenue of the segment. However, our top customers are not obligated in any way to continue to provide us with new businesses in the future at a level similar to that in the past or at all.
However, our top customers are not obligated in any way to continue to provide us with new businesses in the future at a level similar to that in the past or at all.
For the year ended March 31, 2021, two customers accounted for approximately 76.2% and 13.5% of the Company’s total garment manufacturing revenues. For the year ended March 31, 2022, one customer accounted for approximately 14.4% of the Company’s total logistic services revenues.
For the year ended March 31, 2023, one customer accounted for approximately 20.39% of the Company’s total logistic services revenues. For the year ended March 31, 2022, one customer accounted for approximately 14.4% of the Company’s total logistic services revenues.
Our success is dependent upon the continued contributions made by our CEO and President, Mr. Hong Zhida. We rely on his expertise in business operations when we are developing new products and services. The Company has no “Key Man” insurance to cover the resulting losses in the event that any of our officer or directors should die or resign.
Hong Zhida, as our key executive officer, the loss of whom may result in a severe impediment to our business. Our success is dependent upon the continued contributions made by our CEO and President, Mr. Hong Zhida. We rely on his expertise in business operations when we are developing new products and services.
Our top customers accounted for a major portion of our total revenue for the years ended March 31, 2022 and 2021 and may materially adversely affect our financial condition and results of operations. For the year ended March 31, 2022, one customer accounted for approximately 96.9% of the Company’s total garment manufacturing revenues.
Future price increases in raw materials or changes in the supply of raw materials may materially and adversely affect our business, financial condition and results of operations. Our top customers accounted for a major portion of our total revenue for the years ended March 31, 2023 and 2022 and may materially adversely affect our financial condition and results of operations.
We may fail to continue our growth or maintain our historical growth rates or profitability. You should not consider our historical growth and profitability as indicative of our future financial performance. Natural disasters, public health crises or other catastrophic events may significantly limit our ability to conduct business as normal, disrupt our business operation and materially affect our financial condition.
We are not fully insured against all possible risks, nor are all such risks insurable. Natural disasters, public health crises or other catastrophic events may significantly limit our ability to conduct business as normal, disrupt our business operation and materially affect our financial condition.
Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over securities offerings and other capital markets activities that are conducted overseas and foreign investment in China-based companies.
Recent statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers.
There are uncertainties under the PRC Securities Law relating to the procedures and requisite timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory of the PRC. On December 28, 2019, the newly amended Securities Law of the PRC (the “PRC Securities Law”) was promulgated, which became effective on March 1, 2020.
On December 28, 2019, the newly amended Securities Law of the PRC (the “PRC Securities Law”) was promulgated, which became effective on March 1, 2020.
We may be adversely impacted by certain compliance or legal matters. We, along with third parties we do business with, are subject to complex compliance and litigation risks. Actions filed against us from time to time include commercial, tort, intellectual property, customer, employment, wage and hour, data privacy, securities, anti-corruption and other claims, including purported class action lawsuits.
Actions filed against us from time to time include commercial, tort, intellectual property, customer, employment, wage and hour, data privacy, securities, anti-corruption and other claims, including purported class action lawsuits. The cost of defending against these types of claims against us or the ultimate resolution of such claims, whether by settlement or adverse court decision, may harm our business.
If Mr. Hong Zhida cannot serve the Company or is no longer willing to do so, the Company may not be able to find alternatives in a timely manner or at all. This would likely result in a severe damage to our business operations and would have an adverse material impact on our financial position and operational results.
This would likely result in severe damage to our business operations and would have an adverse material impact on our financial position and operational results. To continue as a viable operation, the Company may have to recruit and train replacement personnel at a higher cost. Additionally, if Mr.
Should the PCAOB be unable to fully conduct inspection of our auditor’s work papers in China, it will make it difficult to evaluate the effectiveness of our auditor’s audit procedures or equity control procedures. Investors may consequently lose confidence in our reported financial information and procedures or quality of the financial statements, which would adversely affect us and our securities.
Investors may consequently lose confidence in our reported financial information and procedures and the quality of our financial statements, which would adversely affect us.
Our future success depends on our ability to attract and retain qualified long-term staff to fill management, technology, sales, marketing, and customer services positions. We have a great need for qualified talent, but we may not be successful in attracting, hiring, developing, and retaining the talent required for our success.
Hong Zhida joins our competitors or develops similar businesses that are in competition with our Company, our business may also be negatively impacted. Our future success depends on our ability to attract and retain qualified long-term staff to fill management, technology, sales, marketing, and customer services positions.
Consequently, the price of the stock is often volatile and you may not be able to buy or sell the stock when you want to.
Consequently, the price of the stock is often volatile and you may not be able to buy or sell the stock when you want to. 39 The issuances of our Common Stock to the Selling Stockholders or the Placement Agent upon conversion of Warrants or exercise of the Notes, as the case may be, will cause dilution to our existing stockholders, and the sale of the shares of Common Stock acquired by the Selling Stockholders or the Placement Agent, or the perception that such sales may occur, could cause the price of our Common Stock to fall.
For the year ended March 31, 2021, three customers accounted for approximately 13.6%, 13.2% and 10.5% of the Company’s total logistic services revenues. For epidemic prevention supplies business, one customer accounted for approximately 98.8% of the total revenue of the segment for the year ended March 31, 2022.
For the year ended March 31, 2023, two customers accounted for approximately 41.23% and 17.23% of the Company’s total garment manufacturing revenues. For the year ended March 31, 2022, one customer accounted for approximately 96.9% of the Company’s total garment manufacturing revenues.
Currently, these statements and regulatory actions have had no impact on our daily business operation, the ability to accept foreign investments and list our securities on an U.S. or other foreign exchange.
As of the date of this prospectus, these new laws and guidelines have not impacted the Company’s ability to conduct its business, accept foreign investments, or list and trade on a U.S. or other foreign exchange.
Our auditor, BF Borgers CPA PC, is an independent registered public accounting firm with the PCAOB, and as an auditor of publicly traded companies in the U.S., is subject to laws in the U.S. pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
As an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, our auditor is required by the laws of the United States to undergo regular inspections by the PCAOB. Our auditor is headquartered in Singapore and there are no limitations in Singapore on PCAOB inspections .
BF Borgers CPA PC, is not headquartered in mainland China or Hong Kong and was not identified as a firm subject to the determinations announced by the PCAOB on December 16, 2021.
On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by mainland China and Hong Kong authorities in those jurisdictions, and identifies the registered public accounting firms in mainland China and Hong Kong that are subject to such determinations.
As of the date of this annual report, none of our PRC Subsidiaries has been denied or punished by relevant governmental authorities due to its business qualifications. 30 Our business may be subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection.
Applicable PRC laws, rules and regulations also require certain merger and acquisition transactions to be subject to security review. 32 Our business may be subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection.
Removed
Future price increases in raw materials or changes in the supply of raw materials may materially and adversely affect our business, financial condition and results of operations. Future increases in cost of epidemic prevention supplies or changes in the demand and supply may materially and adversely affect our business, financial condition and results of operations.
Added
The Company has no “Key Man” insurance to cover the resulting losses in the event that any of our officer or directors should die or resign. If Mr. Hong Zhida cannot serve the Company or is no longer willing to do so, the Company may not be able to find alternatives in a timely manner or at all.
Removed
The purchase of epidemic prevention supplies accounted for a substantial amount of our total purchases for the fiscal year 2021. The price of finished face masks and nitrile gloves can be volatile and affected by factors such as COVID-19 outbreak condition, weather, industry demand and supply.
Added
We have a great need for qualified talent, but we may not be successful in attracting, hiring, developing, and retaining the talent required for our success. We may be adversely impacted by certain compliance or legal matters. We, along with third parties we do business with, are subject to complex compliance and litigation risks.
Removed
We cannot assure you that we can fully pass on the increased cost to our customers. Future increases in cost of epidemic prevention supplies or changes in the demand and supply may materially and adversely affect our business, financial condition and results of operations.
Added
Our auditor, Pan-China Singapore, the independent registered public accounting firm that issued the audit report included in this Annual Report, is subject to PCAOB inspections. Pan-China Singapore is headquartered in Singapore and there are no limitations in Singapore on PCAOB inspections.
Removed
The company’s revenue increased in the first nine months of fiscal 2021 due to a new business segment of epidemic prevention supplies business. The company made a significant net loss despite of its overall revenue increase and the addition of a new business segment.
Added
Therefore, we believe that, as of the date of this Annual Report, our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021 relating to the PCAOB’s inability to inspect or investigate completely registered public accounting firms headquartered in the PRC or Hong Kong because of a position taken by one or more authorities in the PRC or Hong Kong.
Removed
During first nine months of fiscal 2021, we accepted a nitrile glove purchase order from a customer. However, due to significant price increase in nitrile glove due to the COVID-19 driven demand surge and the shortage of raw materials, the Company incurred a significant loss during this period.
Added
However, to the extent that our auditor’s work papers may, in the future, become located in China, such work papers will not be subject to inspection by the PCAOB because the PCAOB is currently unable to conduct inspections without the approval of the Chinese authorities.
Removed
We are not fully insured against all possible risks, nor are all such risks insurable. We have a limited operating history for the new business segment of property management and subleasing, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
Added
Inspections of certain other firms that the PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality.
Removed
In addition, our historical growth rates and profitability may not be indicative of our future growth and profitability. We have a limited operating history for the new business segment of property management and subleasing, this is a new business segment we commenced developing in 2020.
Added
The inability of the PCAOB to conduct inspections of our auditors’ work papers in China would make it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections.
Removed
Our property management and subleasing business provides shops subleasing and property management services for garment wholesalers and retailers in garment market. We have experienced rapid growth in recent periods and may not develop or continue to grow as expected.
Added
As a result, our investors may be deprived of the benefits of the PCAOB’s oversight of our auditor through such inspections and they may lose confidence in our reported financial information and procedures and the quality of our financial statements. We cannot assure you whether Nasdaq or other regulatory authorities will apply additional or more stringent criteria to us.
Removed
Revenue generated from our property management and subleasing business contributed approximately $4.3 million, or approximately 33.6%, of our total revenue for the year ended March 31, 2022. Revenue generated from our property management and subleasing business contributed approximately $1.3 million, or approximately 5.2%, of our total revenue for the year ended March 31, 2021.
Added
Such uncertainty could cause the market price of our Ordinary Shares to be materially and adversely affected. There are uncertainties under the PRC Securities Law relating to the procedures and requisite timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory of the PRC.
Removed
We may not succeed in continuing to maintain, protect and strengthen our reputation, and any negative publicity about us, our business, our management, our business partners, may materially and adversely affect our reputation, business, results of operations and growth. Our property management and subleasing business provides shops subleasing and property management services for garment wholesalers and retailers in garment market.
Added
Additionally, the governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
Removed
We conduct our property management and subleasing operation through a wholly owned subsidiary, namely Dongguan Yingxi Daying Commercial Co., Ltd. We believe that the recognition and reputation of our Company’s image among our customers in general have significantly contributed to the success of our business. Continuing to maintain, protect and strengthen our Company’s image is critical to our market position.
Added
For example, the PRC has proposed new rules that would require companies collecting or holding large amounts of data to undergo a cybersecurity review prior to listing in foreign countries, a move that would significantly tighten oversight over China based internet giants.
Removed
Maintaining and strengthening our Company’s image will likely depend significantly on our ability to provide high-quality property management and subleasing services. We market our brands through word-of-mouth marketing. This effort may not always achieve the desired results.
Added
The Cybersecurity Review Measures that took effect from February 15, 2022 stipulates that an internet platform operator who possesses more than 1 million users’ personal information must report to the Office of Cybersecurity Review for a cybersecurity review when seeking listings in other nations.
Removed
If we fail to maintain a strong brand, our business, results of operations and prospects will be materially and adversely affected. 21 Our business depends on the continued contributions made by Mr. Hong Zhida, as our key executive officer, the loss of who may result in a severe impediment to our business.
Added
On April 2, 2022, the CSRC released the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), which provide that a domestic company that seeks to offer and list its securities in a overseas market shall strictly abide by applicable PRC laws and regulations, enhance legal awareness of keeping state secrets and strengthening archives administration, institute a sound confidentiality and archives administration system, and take necessary measures to fulfill confidentiality and archives administration obligations.
Removed
To continue as a viable operation, the Company may have to recruit and train replacement personnel at a higher cost. Additionally, if Mr. Hong Zhida joins our competitors or develops similar businesses that are in competition with our Company, our business may also be negatively impacted.
Added
In the event that the above proposed provisions and rules are enacted, the relevant filing procedures of the CSRC and other governmental authorities may be required in connection with this offering.
Removed
The cost of defending against these types of claims against us or the ultimate resolution of such claims, whether by settlement or adverse court decision, may harm our business. Further, potential claimants may be encouraged to bring lawsuits based on a settlement from us or adverse court decisions against us.
Added
On July 7, 2022, CAC promulgated the Measures for the Security Assessment of Data Cross-border Transfer, effective on September 1, 2022, which requires the data processors to apply for data cross-border security assessment coordinated by the CAC under the following circumstances: (i) any data processor transfers important data to overseas; (ii) any critical information infrastructure operator or data processor who processes personal information of over 1 million people provides personal information to overseas; (iii) any data processor who provides personal information to overseas and has already provided personal information of more than 100,000 people or sensitive personal information of more than 10,000 people to overseas since January 1st of the previous year; and (iv) other circumstances under which the data cross-border transfer security assessment is required as prescribed by the CAC.
Removed
BF Borgers CPA PC is based in the United States and has been inspected by the PCAOB on a regular basis, with the last inspection in November and December 2021.
Added
Since the majority of our operations are located in the PRC, our business may be subject to PRC laws relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data.
Removed
Moreover, if trading in our securities is prohibited under the HFCAA in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, an exchange may determine to delist our securities.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth a summary of certain information regarding our leased properties: Property Type Address Monthly Rental (RMB) Size (Square Meter) Expiration date Manufacturing factory Room 501, No. 5 Luotang Road, Dongcheng District, Dongguan, Guangdong, PRC 4,000 600 December 31, 2023 Principal Office Kingkey 100, Block A, Room 4805, Luohu District, Shenzhen, Guangdong, China 82,000 303 July 31, 2024 Additional office No. 41-46, Building D, Block B, Jinpeng Distribution Center, No. 536, Sha Ping North Rd, Danping Committee, Nanwan St, Longgang, Shenzhen, Guangdong, PRC 45,000 720 January 31, 2023 Warehouse and additional office No. 3 Ping’an Avenue, Pinghu Street, Longgang District, Shenzhen, Guangdong, PRC 30,000 605 May 31, 2023 Commercial building for subleasing Floor 2-6, 7 & 8, Tiaan Building, Huangjin Zhou, Yinlong Road, Humen Town, Dongguan City, Guangdong, PRC 1,963,000 62,026 December 31, 2023 We also have 758 logistics points and they are located in seven provinces and two municipalities in the PRC.
Biggest changeThe following table sets forth a summary of certain information regarding our leased properties: Property Type Address Monthly Rental (RMB) Size (Square Meter) Expiration date Manufacturing factory Room 501, No. 5 Luotang Road, Dongcheng District, Dongguan, Guangdong, PRC 4,400 600 December 31, 2024 Principal Office Kingkey 100, Block A, Room 4805, Luohu District, Shenzhen, Guangdong, China 82,000 303 July 31, 2025 Additional office No. 41-46, Building D, Block B, Jinpeng Distribution Center, No. 536, Sha Ping North Rd, Danping Committee, Nanwan St, Longgang, Shenzhen, Guangdong, PRC 45,000 720 January 31, 2024 Warehouse and additional office No. 3 Ping’an Avenue, Pinghu Street, Longgang District, Shenzhen, Guangdong, PRC 30,000 605 May 31, 2024 We also have 848 logistics points and they are located in 11 provinces and three municipalities in the PRC.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe 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 4. Mine Safety Disclosures Not applicable. 38 PART II
Biggest changeWe 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 4. Mine Safety Disclosures Not applicable. 42 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Our Common Stock 26,693,004 shares of common stock were issued and outstanding as of June 23, 2022. They were held by a total of 555 shareholders of record. The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders.
Biggest changeHolders of Our Common Stock 37,395,420 shares of common stock were issued and outstanding as of June 30, 2023. They were held by a total of 550 shareholders of record. The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchasers of Equity Securities Market Information Our common stock is currently quoted on the OTCQB under the symbol “ATXG.” Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchasers of Equity Securities Market Information Our common stock is currently quoted on the Nasdaq under the symbol “ATXG.” Trading in stocks quoted on the Nasdaq is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects.
The transfer agent’s address is 512 SE Salmon St., Portland, OR 97214, and its telephone number is +1 (503) 227-2950. Dividends No cash dividends were paid on our shares of common stock during the fiscal year ended March 31, 2022 and March 31, 2021.
The transfer agent’s address is 512 SE Salmon St., Portland, OR 97214, and its telephone number is +1 (503) 227-2950. Dividends No cash dividends were paid on our shares of common stock during the fiscal year ended March 31, 2023 and March 31, 2022.
We have not paid any cash dividends since October 28, 2014 (inception) and do not foresee declaring any cash dividends on our common stock in the foreseeable future. 39 Securities Authorized for Issuance under Equity Compensation Plans We do not have in effect any compensation plans under which our equity securities are authorized for issuance.
We have not paid any cash dividends since October 28, 2014 (inception) and do not foresee declaring any cash dividends on our common stock in the foreseeable future. 43 Securities Authorized for Issuance under Equity Compensation Plans We do not have in effect any compensation plans under which our equity securities are authorized for issuance.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

66 edited+10 added−25 removed27 unchanged
Biggest changeThe Company accepted sales orders very cautiously to make sure the sales orders can be matched with stable suppliers to secure profitability of each order. 45 Cost of revenue 2022 2021 Increase (decrease) in 2022 compared to 2021 (In U.S. dollars, except for percentages) Net revenue for garment manufacturing $ 2,525,440 100.0 % $ 6,896,410 100.0 % $ (4,370,970 ) (63.4 )% Raw materials 1,746,174 69.1 % 4,892,837 70.9 % (3,146,663 ) (64.3 )% Labor 547,695 21.7 % 1,388,069 20.1 % (840,374 ) (60.5 )% Other and Overhead 21,800 0.9 % 58,417 0.9 % (36,617 ) (62.7 )% Total cost of revenue for garment manufacturing 2,315,669 91.7 % 6,339,323 91.9 % (4,023,654 ) (63.5 )% Gross profit for garment manufacturing 209,771 8.3 % 557,087 8.1 % (347,316 ) (62.3 )% Net revenue for logistics services 5,332,291 100.0 % 4,580,733 100.0 % 751,558 16.4 % Fuel, toll and other cost of logistics services 1,915,305 35.9 % 1,763,441 38.5 % 151,864 8.6 % Subcontracting fees 2,285,530 42.9 % 1,817,975 39.5 % 467,555 25.7 % Total cost of revenue for logistics services 4,200,835 78.8 % 3,581,416 78.0 % 619,419 17.3 % Gross Profit for logistics services 1,131,456 21.2 % 999,317 22.0 % 132,139 13.2 % Net revenue for property management and subleasing 4,265,218 100.0 % 1,278,517 100.0 % 2,986,701 233.6 % Total cost of revenue for property management and subleasing 3,588,811 84.1 % 1,120,632 87.3 % 2,468,179 220.2 % Gross Profit for property management and subleasing 676,407 15.9 % 157,885 12.7 % 518,522 328.4 % Net revenue for epidemic prevention supplies 567,684 100.0 % 11,979,099 100.0 % (11,411,415 ) (95.3 )% Merchandise/Finished goods/Raw materials 516,068 90.9 % 14,771,316 123.3 % (14,255,248 ) (96.5 )% Labor - - 67,885 0.6 % (67,885 ) - Other and Overhead 5,997 1.1 % 41,364 0.3 % (35,367 ) (85.5 )% Total cost of revenue for epidemic prevention supplies 522,065 92.0 % 14,880,565 124.2 % (14,358,500 ) (96.5 )% Gross profit for epidemic prevention supplies 45,619 8.0 % (2,901,466 ) (24.2 )% 2,947,085 101.6 % Total cost of revenue $ 10,627,380 83.7 % $ 25,921,936 104.9 % $ (15,294,557 ) (59.0 )% Gross profit $ 2,063,253 16.3 % $ (1,187,177 ) (4.7 )% $ 3,250,431 273.8 % 46 For our garment manufacturing business, we purchased the majority of our raw materials directly from numerous local fabric and accessories suppliers.
Biggest changeThe decrease of approximately $1.2 million was mainly due to the increase in sub-leasing rate of the property. 49 Cost of revenue 2023 2022 Increase (decrease) in 2023 compared to 2022 (In U.S. dollars, except for percentages) Net revenue for garment manufacturing $ 177,549 100.0 % $ 2,525,440 100.0 % $ (2,347,891 ) (93.0 )% Raw materials 28,333 16.0 % 1,746,174 69.1 % (1,717,841 ) (98.4 )% Labor 97,065 54.7 % 547,695 21.7 % (450,630 ) (82.3 )% Other and Overhead 6,942 3.9 % 21,800 0.9 % (14,858 ) (68.2 )% Total cost of revenue for garment manufacturing 132,340 74.5 % 2,315,669 91.7 % (2,183,329 ) (94.3 )% Gross profit for garment manufacturing 45,209 25.5 % 209,771 8.3 % (164,562 ) (78.4 )% Net revenue for logistics services 4,621,125 100.0 % 5,332,291 100.0 % (711,166 ) (13.3 )% Fuel, toll and other cost of logistics services 2,428,462 52.6 % 1,915,305 35.9 % 513,157 26.8 % Subcontracting fees 1,074,846 23.2 % 2,285,530 42.9 % (1,210,684 ) (53.0 )% Total cost of revenue for logistics services 3,503,308 75.8 % 4,200,835 78.8 % (697,527 ) (16.6 )% Gross Profit for logistics services 1,117,817 24.2 % 1,131,456 21.2 % (13,639 ) (1.2 )% Net revenue for property management and subleasing 3,096,914 100.0 % 4,265,218 100.0 % (1,168,304 ) (27.4 )% Total cost of revenue for property management and subleasing 2,444,962 78.9 % 3,588,811 84.1 % (1,143,849 ) (31.9 )% Gross Profit for property management and subleasing 651,952 21.1 % 676,407 15.9 % (24,455 ) (3.6 )% Net revenue for corporate and others 48,583 100.0 % 567,684 100.0 % (519,101 ) (91.4 )% Other and Overhead 22,500 46.3 % 522,065 92.0 % (499,565 ) (95.7 )% Total cost of revenue for corporate and others 22,500 46.3 % 522,065 92.0 % (499,565 ) (95.7 )% Gross profit for corporate and others 26,083 53.7 % 45,619 8.0 % (19,536 ) (42.8 )% Total cost of revenue $ 6,103,110 76.8 % $ 10,627,380 83.7 % $ (4,524,270 ) (42.6 )% Gross profit $ 1,841,061 23.2 % $ 2,063,253 16.3 % $ (222,192 ) (10.8 )% 50 For our garment manufacturing business, we purchased the majority of our raw materials directly from numerous local fabric and accessories suppliers.
Foreign Currency Translation Risk Our operations are located in the 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.
Foreign Currency Translation Risk Our operations are located in the mainland 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.
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. 43 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.
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. 47 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.
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 March 31, 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.
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 March 31, 2023 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.
Item 7. 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 years ended March 31, 2022 and 2021 should be read in conjunction with the Financial Statements and corresponding notes included in this Annual Report on Form 10-K.
Item 7. 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 years ended March 31, 2023 and 2022 should be read in conjunction with the Financial Statements and corresponding notes included in this Annual Report on Form 10-K.
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. 42 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.
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. 46 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.
No provision for income taxes in the PRC has been made as WFOE and YX had no taxable income for the years ended March 31, 2022 and 2021. 49 The Company is governed by the Income Tax Laws of the PRC. Yingxi’s operating companiesare subject to progressive EIT rate from 5% to 15% in year ended March 31, 2022.
No provision for income taxes in the PRC has been made as WFOE and YX had no taxable income for the years ended March 31, 2023 and 2022. The Company is governed by the Income Tax Laws of the PRC. Yingxi’s operating companiesare subject to progressive EIT rate from 5% to 15% in year ended March 31, 2023.
No provision for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the years ended March 31, 2022 and 2021. WFOE 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 Hong Kong has been made as Yingxi HK had no taxable income for the years ended March 31, 2023 and 2022. WFOE and YX were incorporated in the PRC and are subject to the PRC Enterprise Income Tax (EIT) rate is 25%.
We shall try 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.
We aim 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.
Chinese regulatory authorities could disallow our operating structure, which would likely result in a material change in our operations and/or the value of our common stock, including that it could cause the value of such securities to significantly decline or become worthless. Our holding company, Addentax Group Corp., is listed on the OTCQB under the symbol of “ATXG”.
Chinese regulatory authorities could disallow our operating structure, which would likely result in a material change in our operations and/or the value of our common stock, including that it could cause the value of such securities to significantly decline or become worthless. Our holding company, Addentax Group Corp., is listed on the Nasdaq Capital Market under the symbol of “ATXG”.
We 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 have our own manufacturing facilities, with sufficient production capacity and skilled workers on production lines to ensure that we meet our high quality control standards and timely meet the delivery requirements for our customers.
We conduct our logistic operations through three wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”),Shenzhen Hua Peng Fa Logistic Co., Ltd (“HPF”), and Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”) which are located in the Guangdong province, China.
We conduct our logistic operations through three wholly owned subsidiaries, namely Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”), Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”) and Shenzhen Yingxi Tongda Logistic Co., Ltd (“TD”), which are located in the Guangdong province, China.
No provision for income taxes in the United States has been made as Addentax Group Corp. had no United States taxable income for the years ended March 31, 2022 and 2021. Net Profit We incurred a net profit of approximately $0.08 million and a net loss of $3.59 million for the years ended March 31, 2022 and 2021, respectively.
No provision for income taxes in the United States has been made as Addentax Group Corp. had no United States taxable income for the years ended March 31, 2023 and 2022. Net Profit We incurred a net profit of approximately $1.3 million and $0.08 million for the years ended March 31, 2023 and 2022, respectively.
Revenue generated from our property management and subleasing business contributed approximately $4.3 million, or approximately 33.6%, of our total revenue for the year ended March 31, 2022. Revenue generated from our property management and subleasing business contributed approximately $1.3 million, or approximately 5.2%, of our total revenue for the year ended March 31, 2021.
Revenue generated from our property management and subleasing business contributed approximately $4.3 million, or approximately 33.6%, of our total revenue for the year ended March 31, 2022.
Gross profit of our property management and subleasing business for the year ended March 31, 2022 was approximately $0.7 million, representing approximately 15.9% of our total property management and subleasing business revenue.
Gross profit in our property management and subleasing business for the year ended March 31, 2022 was $0.7 million, or 15.9% of our total property management and subleasing business revenue.
The foreign currency translation loss for the years ended March 31, 2022 and 2021 was $0.1 million and $0.2 million, respectively.
The foreign currency translation gain (loss) for the years ended March 31, 2023 and 2022 was $0.2 million and $(0.1) million, respectively.
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.
The preferential tax rates will be expired at the end of 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.
We classify our businesses into four segments: garment manufacturing, logistics services, property management and subleasing, and epidemic prevention supplies. 40 Unless the context otherwise requires, all references in this annual report to “ Addentax ” refer to Addentax Group Corp., a holding company, and references to “ we, ” “ us, ” “ our, ” the “ Registrant ”, the “ Company, ” or “ our company ” refer to Addentax and/or its consolidated subsidiaries.
We classify our businesses into three segments: garment manufacturing, logistics services, property management and subleasing, and . 44 Unless the context otherwise requires, all references in this annual report to “ Addentax ” refer to Addentax Group Corp., a holding company, and references to “ we, ” “ us, ” “ our, ” the “ Registrant ”, the “ Company, ” or “ our company ” refer to Addentax and/or its consolidated subsidiaries.
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.
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.
Our subsidiaries include (i) Yingxi Industrial Chain Group Co., Ltd., a Republic of Seychelles company; (ii) Yingxi Industrial Chain Investment Co., Ltd., a Hong Kong company (“Yingxi HK”); (iii) Qianhai Yingxi Textile & Garments Co., Ltd., a PRC company; (iv) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng Wei Garments Co., Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”), (vii) Shantou Yi Bai Yi Garment Co., Ltd, a PRC company (“YBY”), (viii) Shantou Chenghai Dai Tou Garments Co., Ltd, a PRC company (“DT”); (ix) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (x) Shenzhen Hua Peng Fa Logistic Co., Ltd, a PRC company (“HPF”), (xi) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”), (xii) Shenzhen Yingxi Tongda Logistic Co., Ltd, a PRC company (“TD”) and (xiii) Dongguan Yingxi Daying Commercial Co., Ltd., a PRC company (“DY”).
Our subsidiaries include (i) Yingxi Industrial Chain Group Co., Ltd., a Republic of Seychelles company; (ii) Yingxi Industrial Chain Investment Co., Ltd., a Hong Kong company (“Yingxi HK”); (iii) Qianhai Yingxi Textile & Garments Co., Ltd., a PRC company; (iv) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng Wei Garments Co., Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”), (vii) Shantou Yi Bai Yi Garment Co., Ltd, a PRC company (“YBY”), (viii) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”); (ix) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (x) Shenzhen Yingxi Tongda Logistic Co., Ltd, a PRC company (“TD”), (xi) Dongguan Yingxi Daying Commercial Co., Ltd., a PRC company (“DY”), (xii) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and (xiii) Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”).
As of March 31, 2022, the market foreign exchange rate had decreased to RMB 6.34 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.
As of March 31, 2023, the market foreign exchange rate had decreased to RMB6.87 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.
Gross profit ratio was approximately 8.3% of revenue of the segment, as compared with approximately 8.1% for the year ended March 31, 2021. Gross profit of our logistics services business for the year ended March 31, 2022 was approximately $1.1 million and gross profit ratio was approximately 21.2%.
Gross profit ratio was approximately 25.5% of revenue of the segment, as compared with approximately 8.3% for the year ended March 31, 2022. Gross profit of our logistics services business for the year ended March 31, 2023 was approximately $1.1 million and gross profit ratio was approximately 24.2%.
Our general and administrative expenses in our logistics services segment for the year ended March 31, 2022 and 2021 was approximately $0.89 million and $0.81 million, respectively. The general and administrative expenses in our property management and subleasing business was approximately $0.37 million and $0.10 million for the years ended March 31, 2022 and 2021.
Our general and administrative expenses in our logistics services segment for the year ended March 31, 2023 and 2022 was approximately $0.83 million and $0.89 million, respectively. The general and administrative expenses in our property management and subleasing business were approximately $0.31 million and $0.37 million for the years ended March 31, 2023 and 2022.
Our property management and subleasing business 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 property management and subleasing business provides shops subleasing and property management services for garment wholesalers and retailers in the garment market. We conduct our property management and subleasing operation through a wholly owned subsidiary, namely Dongguan Yingxi Daying Commercial Co., Ltd. (“DY”), which is located in the Guangdong province, China.
Fuel, toll and other costs for our logistics business accounted for approximately 35.9% of our total service revenue for the year ended March 31, 2022, as compared with approximately 38.5% for the year ended March 31, 2021.
Fuel, toll and other costs for our logistics business accounted for approximately 52.6% of our total service revenue for the year ended March 31, 2023, as compared with approximately 35.9% for the year ended March 31, 2022.
As of March 31, 2022, we provide logistic service to over 79 cities in approximately seven provinces and two municipalities. We expect to develop 20 additional logistics routes in existing serving cities and improve the Company’s profit in the year of 2023.
As of March 31, 2023, we provide logistic service to over 86 cities in approximately eleven provinces and three municipalities. We expect to develop 20 additional logistics routes in existing serving cities and improve the Company’s profit in the year 2024.
Income from operations of approximately $0.08 million and $0.33 million was attributed from our garment manufacturing segment for the years ended March 31, 2022 and 2021, respectively. Income from operations of approximately $0.24 million and $0.19 million was attributed from our logistics services segment for the years ended March 31, 2022 and 2021, respectively.
Loss from operations of approximately $0.07 million and $0.08 million was attributed from our garment manufacturing segment for the years ended March 31, 2023 and 2022, respectively. Income from operations of approximately $0.28 million and $0.24 million was attributed from our logistics services segment for the years ended March 31, 2023 and 2022, respectively.
“ PRC Subsidiaries ” refer to, collectively, (i) Qianhai Yingxi Textile & Garments Co., Ltd.; (ii) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), (iii) Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), (iv) Dongguan Yushang Clothing Co., Ltd (“YS”); (v) Shantou Yi Bai Yi Garment Co., Ltd (“YBY”); (vi) Shantou Chenghai Dai Tou Garments Co., Ltd (“DT”); (vii) Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”); (viii) Shenzhen Hua Peng Fa Logistic Co., Ltd (“HPF”); (ix) Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”).; (x) Shenzhen Yingxi Tongda Logistic Co., Ltd (“TD”); and (xi) Dongguan Yingxi Daying Commercial Co., Ltd (“DY”).
“ PRC Subsidiaries ” refer to, collectively, (i) Qianhai Yingxi Textile & Garments Co., Ltd.; (ii) Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), (iii) Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), (iv) Dongguan Yushang Clothing Co., Ltd (“YS”); (v) Shantou Yi Bai Yi Garment Co., Ltd (“YBY”); (vi) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”); (vii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (viii) Shenzhen Yingxi Tongda Logistic Co., Ltd, a PRC company (“TD”), (ix) Dongguan Yingxi Daying Commercial Co., Ltd., a PRC company (“DY”), (x) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and (xi) Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”).
In 2020, the Company disposed DT and HFP to a third party respectively. “ WFOE ” refers to Qianhai Yingxi Textile & Garments Co., Ltd, a wholly foreign owned enterprise in China, which is indirectly wholly owned by Addentax Group Corp. Our garment manufacturing business consists of sales made principally to wholesaler located in the People’s Republic of China (“PRC”).
In February 2023, the Company disposed DY to an independent third party respectively. “ WFOE ” refers to Qianhai Yingxi Textile & Garments Co., Ltd, a wholly foreign owned enterprise in China, which is indirectly wholly owned by Addentax Group Corp. Our garment manufacturing business consists of sales made principally to wholesaler located in the PRC.
Total general and administrative expenses for the year ended March 31, 2022 decreased approximately 4.6% to approximately $1.9 million from approximately $2.0 million for the year ended March 31, 2021. Loss from operations Loss from operations for the years ended March 31, 2022 and 2021 was approximately $0.06 million and $3.61 million, respectively.
Total general and administrative expenses for the year ended March 31, 2023 increased approximately 16.3% to approximately $2.2 million from approximately $1.9 million for the year ended March 31, 2022. Loss from operations Loss from operations for the years ended March 31, 2023 and 2022 was approximately $0.5 million and $0.06 million, respectively.
We conduct our garment manufacturing operations through four 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.
We conduct our garment manufacturing operations through five wholly owned subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), Dongguan Yushang Clothing Co., Ltd (“YS”), Shantou Yi Bai Yi Garment Co., Ltd (“YBY”), Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd (“ZHJ”), and Dongguan Aotesi Garments Co., Ltd., (“AOT”) , which are located in the Guangdong province, China.
Gross profit of the segment for the year ended March 31, 2021 was approximately $1.0 million and gross profit ratio was approximately 22.0%. The decrease of gross profit ratio was mainly because of an increase of subcontracting fees.
Gross profit of the segment for the year ended March 31, 2022 was approximately $1.1 million and gross profit ratio was approximately 21.2%. The increase in the gross profit ratio was mainly because of a decrease of subcontracting fees.
The significant decrease was mainly due to the decrease of revenue from the epidemic prevention supplies business in the year ended March 31, 2022. Revenue generated from our garment manufacturing business contributed approximately $2.5 million, or approximately 19.9%, of our total revenue for the year ended March 31, 2022.
The decrease was mainly due to the decrease of revenue from the garment manufacturing business. Revenue generated from our garment manufacturing business contributed approximately $0.2 million, or approximately 2.2%, of our total revenue for the year ended March 31, 2023.
Income Tax Expenses Income tax expense for the years ended March 31, 2022 and 2021 was $0.02 million and $0.03 million, respectively, a 9.2% decrease compared to 2021. The Company operates in the PRC and files tax returns in the PRC jurisdictions.
Income Tax Expenses Income tax expense for the years ended March 31, 2023 and 2022 was both $0.02 million. The Company operates in the PRC and files tax returns in the PRC jurisdictions.
Revenue generated from the segment contributed approximately $6.9 million, or approximately 27.9%, of our total revenue for the year ended March 31, 2021. The decrease of approximately $4.4 million was mainly due to factory facilities renewal and repair , remaining factories cannot provide as much capacity as before.
Revenue generated from the segment contributed approximately $2.5 million, or approximately 19.9%, of our total revenue for the year ended March 31, 2022. The decrease of approximately $2.3 million was mainly due to factory facilities renewal and repair, remaining factories cannot provide as much capacity as before. We estimate the capacity will appear to recover at second quarter of FY2024.
Subcontracting fees for our logistics business for the year ended March 31, 2022 increased to approximately $2.3 million from $1.8 million for the year ended March 31, 2021, representing an increase of approximately 25.7%. Subcontracting fees accounted for 42.9% and 39.5% of our total logistics business revenue in the years ended March 31, 2022 and 2021, respectively.
Subcontracting fees for our logistics business for the year ended March 31, 2023 decreased to approximately $1.1 million from $2.3 million for the year ended March 31, 2022, representing a decrease of approximately 53.0%. Subcontracting fees accounted for 23.2% and 42.9% of our total logistics business revenue in the years ended March 31, 2023 and 2022, respectively.
The decrease in raw materials cost for our garment manufacturing business was mainly due to the purchase cost of the raw materials dropped. Labor costs for our garment manufacturing business was approximately 21.7% of our total garment manufacturing business revenue in the year ended March 31, 2022, as compared with 20.1% in the year ended March 31, 2021.
Raw materials cost for our garment manufacturing business was approximately 16.0% of our total garment manufacturing business revenue in the year ended March 31, 2023, as compared with approximately 69.1% in the year ended March 31, 2022. The decrease in raw materials cost for our garment manufacturing business was mainly due to decrease of manufacturing during renovation of the factory.
Revenue generated from the segment contributed approximately $4.6 million, or approximately 18.5%, of our total revenue for the year ended March 31, 2021. The increase of approximately $0.7 million was mainly due to development of company’s business.
The increase of approximately $0.7 million was mainly due to development of company’s business. Revenue generated from our property management and subleasing business contributed approximately $3.1 million, or approximately 39.0%, of our total revenue for the year ended March 31, 2023.
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 the delivery of finished goods.
For our long-term and established customers with good payment track records, we generally provide payment terms between 30 to 180 days following the delivery of finished goods.
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.
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.
The general and administrative expenses in our epidemic prevention supplies business segment was nil and $0.02 million for the years ended March 31, 2022 and 2021. Our general and administrative expenses in our corporate office for the years ended March 31, 2022 and 2021 was approximately $0.52 million and $0.85 million, respectively.
Our general and administrative expenses in our corporate office for the years ended March 31, 2023 and 2022 were approximately $0.97 million and $0.52 million, respectively.
For our logistic business, we outsource some of the business to our subcontractors. Our subcontractors are contract logistic service provides. The Company relied on a few subcontractors, which the subcontracting fees to our largest contractor represented approximately 14.8% and 7.6% of total cost of revenues for our service segment for the years ended March 31, 2022 and 2021, respectively.
The Company relied on a few subcontractors, which the subcontracting fees to our largest contractor represented approximately 25.2% and 14.8% of total cost of revenues for our service segment for the years ended March 31, 2023 and 2022, respectively. The increase in subcontracting fee to the largest contractor was mainly to optimize resources and cost efficiencies.
We estimate the capacity will appear to recover at second quarter of FY2023. Revenue generated from our logistics services business contributed approximately $5.3 million, or approximately 42.0%, of our total revenue for the year ended March 31, 2022.
Revenue generated from our logistics services business contributed approximately $4.6 million, or approximately 58.2%, of our total revenue for the year ended March 31, 2023. Revenue generated from the segment contributed approximately $5.3 million, or approximately 42.0%, of our total revenue for the year ended March 31, 2022.
Gross profit in our property management and subleasing business for the year ended March 31, 2021 was $0.2 million, or 12.7% of our total property management and subleasing business revenue. Gross profit of our epidemic prevention supplies business for the year ended March 31, 2022 was approximately $0.05 million and gross margin was approximately 8.0%.
Gross profit of our property management and subleasing business for the year ended March 31, 2023 was approximately $0.7 million, representing approximately 21.1% of our total property management and subleasing business revenue.
The cost of revenue included cost of merchandise and cost of our own products. 47 Gross profit Gross profit of garment manufacturing business for the year ended March 31, 2022 was approximately $0.2 million, as compared with approximately $0.6 million for the year ended March 31, 2021.
The cost of revenue for property management and subleasing business for the year ended March 31, 2023 was $2.4 million, approximately 78.9% of our total property management and subleasing business revenue, as compared with $3.6 million, approximately 84.1% of total property management and subleasing business revenue for the year ended March 31, 2022. 51 Gross profit Gross profit of garment manufacturing business for the year ended March 31, 2023 was approximately $0.05 million, as compared with approximately $0.2 million for the year ended March 31, 2022.
Loss from operations of approximately $3.28 million was attributed from our epidemic prevention supplies business segment for the year ended March 31, 2021. We incurred general and administrative expenses in corporate office of approximately $0.52 million and approximately $0.85 million for the years ended March 31, 2022 and 2021, respectively.
Income from operations of $0.27 million and $0.1 million was attributed from our property management and subleasing business for the years ended March 31, 2023 and 2022. We incurred general and administrative expenses in corporate office of approximately $0.9 million and approximately $0.5 million for the years ended March 31, 2023 and 2022, respectively.
Selling expenses in our epidemic prevention supplies business segment was approximately $nil and 0.36 million for the year ended March 31, 2022 and 2021. Selling expenses consist primarily of local transportation, unloading charges and product inspection charges.
It was $0.1 million and $0.2 million for the year ended March 31, 2023 and 2022, respectively. Selling expenses consist primarily of local transportation, unloading charges and product inspection charges. 52 Our general and administrative expenses in our garment manufacturing segment for the years ended March 31, 2023 and 2022 were approximately $0.11 million and $0.13 million, respectively.
Net cash used in investing activities for the year ended March 31, 2022 was approximately $0.3 million less than that of the year ended March 31, 2021. It was mainly because the purchase of plant and equipment in the year ended March 31, 2022 was approximately $0.2 million less than the purchase of plant and equipment in prior year.
It was mainly because the net profit adjusted to cash provided (used in) operating activities of fiscal year ended March 31, 2023 was approximately $0.3 million less than the amount of the fiscal year ended March 31, 2022.
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.
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.
Fuel, toll and other costs for our logistics business for the year ended March 31, 2022 was approximately $1.9 million, as compared with $1.8 million for the year ended March 31, 2021.
We have not experienced any disputes with our subcontractors and we believe we maintain good relationships with our contract logistic service provider. Fuel, toll and other costs for our logistics business for the year ended March 31, 2023 was approximately $2.4 million, as compared with $1.9 million for the year ended March 31, 2022.
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.
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.
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 only resale of goods of other brands for the year ended March 31, 2022.
For property management and subleasing business, the cost of revenue was mainly the amortization of operating lease assets for the subleasing business.
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. 2022 2021 Changes in 2022 compared to 2021 (In U.S. dollars, except for percentages) Revenue $ 12,690,633 100.0 % $ 24,734,759 100 % $ (12,044,126 ) (48.7 )% Cost of revenues (10,627,379 ) (83.7 )% (25,921,936 ) (104.8 )% 15,294,557 59.0 % Gross profit (loss) 2,063,254 16.3 % (1,187,177 ) (4.8 )% 3,250,431 273.8 % Operating expenses (2,120,259 ) (16.7 )% (2,420,997 ) (9.8 )% 300,738 12.4 % Loss from operations (57,005 ) (0.4 )% (3,608,174 ) (14.6 )% 3,551,169 98.4 % Other income, net 160,570 1.3 % 62,784 0.3 % 97,786 155.7 % Net finance cost (2,073 ) (0.0 )% (18,912 ) (0.1 ) 16,839 89.0 % Income tax expense (23,494 ) (0.2 )% (25,867 ) (0.1 )% 2,373 9.2 % Net loss $ 77,998 0.6 % $ (3,590,169 ) (14.5 )% $ 3,668,167 100.3 % Revenue Total revenue for the year ended March 31, 2022 significantly decreased by approximately $12.0 million, or approximately 48.7%, as compared with the year ended March 31, 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. 2023 2022 Changes in 2023 compared to 2022 (In U.S. dollars, except for percentages) Revenue $ 7,944,171 100.0 % $ 12,690,633 100 % $ (4,746,462 ) (37.4 )% Cost of revenues (6,103,110 ) (76.8 )% (10,627,379 ) (83.7 )% 4,524,269 42.6 % Gross profit (loss) 1,841,061 23.2 % 2,063,254 16.3 % (222,193 ) (10.8 )% Operating expenses (2,303,976 ) (29.0 )% (2,120,259 ) (16.7 )% (183,717 ) (8.7 )% Loss from operations (462,915 ) (5.8 )% (57,005 ) (0.4 )% (405,910 ) (712.1 )% Other income, net 320,556 4.0 % 160,570 1.3 % 159,986 99.6 % Fair value gain or loss 2,983,538 37.6 % - - 2,983,538 100 % Net finance cost (1,499,379 ) (18.9 )% (2,073 ) (0.0 ) (1,497,306 ) 15,152.8 % Income tax expense (22,143 ) (0.3 )% (23,494 ) (0.2 )% 1,351 5.8 % Net income $ 1,319,657 16.6 % $ 77,998 0.6 % $ 1,241,659 1,591.9 % Revenue Total revenue for the year ended March 31, 2023 significantly decreased by approximately $4.7 million, or approximately 37.4%, as compared with the year ended March 31, 2022.
In October, the Company disposed of DT to a third party at fair value, which was also its carrying value as of September 30, 2020. Our logistics business consists of delivery and courier services covering approximately seven provinces in China. Although we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors.
Our logistics business consists of delivery and courier services covering 86 cities in 11 provinces and 3 municipalities in China. Although we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors.
Summary of cash flows Summary cash flows information for the years ended March 31, 2022 and 2021 is as follow: 2022 2021 (In U.S. dollars) Net cash provided by (used in) operating activities $ 1,090,872 $ (4,223,008 ) Net cash used in investing activities $ (198,122 ) $ (563,052 ) Net cash used in (provided by) financing activities $ (1,372,803 ) $ 6,099,656 Net cash provided by operating activities in the year ended March 31, 2022 was approximately $5.3 million more than that of the year ended March 31, 2021.
Our basic and diluted earnings per share were $0.04 and $0.00 for the year ended March 31, 2023 and 2022, respectively. 53 Summary of cash flows Summary cash flows information for the years ended March 31, 2023 and 2022 is as follow: 2023 2022 (In U.S. dollars) Net cash provided by (used in) operating activities $ (1,569,159 ) $ 1,090,872 Net cash used in investing activities $ (21,168,153 ) $ (198,122 ) Net cash provided by (used in) financing activities $ 21,845,838 $ (1,372,803 ) Net cash provided by operating activities in the year ended March 31, 2023 decreased by approximately $2.7 million compared with that of the year ended March 31, 2022.
The increase in labor costs for our garment manufacturing business was mainly due to the continued rising labor costs in the PRC. Overhead and other expenses for our garment manufacturing business accounted for approximately 0.9% of our total garment manufacturing business revenue for both the years ended March 31, 2022 and 2021.
Overhead and other expenses for our garment manufacturing business accounted for approximately 3.9% and 0.9% of our total garment manufacturing business revenue for the years ended March 31, 2023 and 2022, respectively. For our logistic business, we outsource some of the business to our subcontractors. Our subcontractors are contract logistic service providers.
Financial Condition, Liquidity and Capital Resources As of March 31, 2022, we had cash on hand of approximately $1.4 million, total current assets of approximately $5.7 million and current liabilities of approximately $10.4 million. We presently finance our operations primarily from cash flows from borrowings from related parties and third parties.
Financial Condition, Liquidity and Capital Resources As of March 31, 2023, we had cash on hand of approximately $0.6 million and restricted cash of approximately $14.8 million, total current assets of approximately $37.8 million and current liabilities of approximately $3.5 million.
The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements. 44 The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s consolidated financial statements.
The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements.
Seasonality of Business Our business is affected by seasonal trends, with higher levels of garment sales in our second and third quarters and higher logistic service revenue in our third and fourth quarters. These trends primarily result from the timing of seasonal garment manufacturing shipments and holiday periods in the logistic segment.
In February 2023, the Company disposed of DY to an independent third party at fair value, which was also its carrying value as of February 28, 2023. Seasonality of Business Our business is affected by seasonal trends, with higher levels of garment sales in our second and third quarters and higher logistic service revenue in our third and fourth quarters.
(“ATXG”) and Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd (“YX”), an indirect wholly owned subsidiary of the Company. 41 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.
The business operations, customers and suppliers of DY were retained by the Company; therefore, the disposition of the subsidiary did not qualify as discontinued operations. 45 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.
Net cash provided by financing activities for the year ended March 31, 2022 was approximately $7.5 million less than the year ended March 31, 2021.
Net cash used in investing activities for the year ended March 31, 2023 was approximately $21.0 million more as compared to the year ended March 31, 2022.
The increase of approximately $3 million was mainly due to the increase in sub-leasing rate of the property. Revenue generated from our epidemic prevention supplies business contributed approximately $0.6 million, or approximately 4.5%, of our total revenue for the year ended March 31, 2022.
Labor costs for our garment manufacturing business were approximately 54.7% of our total garment manufacturing business revenue in the year ended March 31, 2023, as compared with 21.7% in the year ended March 31, 2022. The increase in labor costs for our garment manufacturing business was mainly due to the increase of sub-contracting business in AOT.
The movement of operating assets and liabilities of the year ended March 31, 2022 resulted in cash inflow of approximately $0.9 million, while the movement of operating assets and liabilities of the year ended March 31, 2021 resulted in negative cash flow of approximately $0.8 million.
The movement of operating assets and liabilities of the year ended March 31, 2023 resulted in cash outflow of approximately $2.4 million mainly due to cash inflow from decrease of account receivable in prior year was $2.3 million more than that in current year.
Results of Operations for the years ended March 31, 2022 and 2021 The following tables summarize our results of operations for the years ended March 31, 2022 and 2021.
Management has not identified any other new standards that it believes will have a significant impact on the Company’s consolidated financial statements. Results of Operations for the years ended March 31, 2023 and 2022 The following tables summarize our results of operations for the years ended March 31, 2023 and 2022.
Changes in 2022 2022 2021 compared to 2021 (In U.S. dollars, except for percentages) Gross profit (loss) $ 2,063,254 100 % $ (1,187,177 ) 100 % 3,250,431 273.8 % Operating expenses: Selling expenses (206,251 ) (10.5 )% (413,654 ) 34.5 % 207,403 50.1 % General and administrative expenses (1,914,008 ) (97.7 )% (2,007,343 ) 165.3 % 93,335 4.6 % Total $ (2,120,259 ) (108.2 )% $ (2,420,997 ) 199.8 % 300,738 12.4 % Loss from operations $ (57,005 ) (8.2 )% $ (3,608,174 ) 299.8 % 3,551,169 98.4 % Selling, General and administrative expenses Our selling expenses in our garment manufacturing segment for the years ended March 31, 2022 and 2021 was $0.001 million and $0.04 million, respectively.
Changes in 2023 2023 2022 compared to 2022 (In U.S. dollars, except for percentages) Gross profit $ 1,841,061 100 % $ 2,063,254 100 % (222,193 ) (10.8 )% Operating expenses: Selling expenses (78,769 ) (4.3 )% (206,251 ) (10.5 )% 127,482 61.8 % General and administrative expenses (2,225,207 ) (120.9 )% (1,914,008 ) (97.7 )% (311,199 ) (16.3 )% Total $ (2,303,976 ) (125.1 )% $ (2,120,259 ) (108.2 )% (183,717 ) (8.7 )% Loss from operations $ (462,915 ) (25.1 )% $ (57,005 ) (8.2 )% (405,910 ) (712.1 )% Selling, General and administrative expenses We have selling expenses mainly in our property management and subleasing business.
In November, 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.
In February 2023, the Company disposed of DY to an independent third party at fair value, which was also its carrying value as of February 28, 2023.
Removed
Our epidemic prevention supplies business consists of manufacturing and distribution of epidemic prevention products and reselling of epidemic prevention supplies purchased from third parties in both domestic and overseas markets. We conduct our manufacturing of the epidemic prevention products in YS. We conduct the trading of epidemic prevention suppliers through Addentax Group Corp.
Added
These trends primarily result from the timing of seasonal garment manufacturing shipments and holiday periods in the logistic segment. Collection Policy Garment manufacturing business For our new customers, we generally require orders placed to be backed by advances or deposits.
Removed
The short-term goal for the year is to increase the occupancy rate of stores in the mall to more than 70%.
Added
Accounting for Convertible Instruments: In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements.
Removed
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.
Added
Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium.
Removed
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.
Added
As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt.
Removed
Revenue generated from our epidemic prevention supplies business contributed approximately $12.0 million, or approximately 48.4%, of our total revenue for the year ended March 31, 2021. It included revenue from trading of merchandise of epidemic prevention supplies. The significant decrease mainly because no profitable orders were obtained during the year.
Added
The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance.
Removed
Aggregate purchases from our five largest raw material suppliers represented approximately 99.3% and 98.7% of raw materials purchases for the years ended March 31, 2022 and 2021, respectively. One and Two suppliers provided more than 10% of our raw materials purchases for the years ended March 31, 2022 and 2021, respectively.
Added
The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. 48 The Company reviews new accounting standards as issued.
Removed
We have not experienced difficulty in obtaining raw materials essential to our business, and we believe we maintain good relationships with our suppliers. Raw materials cost for our garment manufacturing business was approximately 69.1% of our total garment manufacturing business revenue in the year ended March 31, 202, as compared with approximately 70.9% in the year ended March 31, 2021.
Added
It was mainly due to the purchase of debt securities of $17.5 million in the year ended March 31, 2023, payment of long-term loan of $2.5 million to an independent third party, and the purchase of plant and equipment in the year ended March 31, 2023 was approximately $0.2 million less than the purchase of plant and equipment in prior year.

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