10q10k10q10k.net

What changed in ADDENTAX GROUP CORP.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of ADDENTAX GROUP CORP.'s 2023 and 2024 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 2024 report.

+201 added−163 removedSource: 10-K (2024-07-15) vs 10-K (2023-06-29)

Top changes in ADDENTAX GROUP CORP.'s 2024 10-K

201 paragraphs added · 163 removed · 138 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

35 edited+22 added−13 removed72 unchanged
Biggest changeOur 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.
Biggest changeWe conduct our property management and subleasing operation through a wholly owned subsidiary acquired in September 2023, namely Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”), which is located in the Guangdong province, China. Competitive Strengths We believe we have the following competitive strengths: Cost-effective production. We have adopted a vertical integration production process.
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.
Intellectual Property The Company, through its subsidiary Shenzhen Qianhai Industrial Chain Co.Ltd., herein referred to 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.
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.
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 bear 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.
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.
As of the date of this report, 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 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”).
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) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and (xii) Dongguan Au Te Si Garments Co., Ltd., a PRC company (“AOT” ), (xiii) Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).
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.
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, 2024, our design team consisted of 4 members. 9 Extensive delivery network.
“ 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”).
“ 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) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and (x) Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”), (xi) Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).
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.
We expect to develop 20 additional logistics routes in existing serving cities and improve the Company’s profits in the year 2024. 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.
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.
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 10 provinces and 2 municipalities in the PRC.
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.
As of March 31, 2024, we had 10 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 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.
Our logistics business consists of delivery and courier services covering 44 cities in 10 provinces and 2 municipalities in China. Although we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors.
Employees As of March 31, 2023, we had approximately 96 employees and there was no labor union established by our employees.
Employees As of March 31, 2024, we had approximately 112 employees and there was no labor union established by our employees.
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.
“ 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.
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 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, 2024, we provided logistics services to over 44 cities in 10 provinces and 2 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 848 logistics points and they are located in 11 provinces and three municipalities which cover 86 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 121 logistics points and they are located in 10 provinces and 2 municipalities which cover 44 cities in the PRC.
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.
Based on our understanding of the PRC laws and regulations, our PRC businesses hold all the business licenses issued and approved from the relevant local authorities and other administrative license required by its business, and do not require any other permissions or approvals to operate their PRC business operations.
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 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.
The PRC government encourages small to medium-sized companies in traditional industries, such as garment manufacturing, to modernize their business models with technological updates in order to sharpen their competitive edge in global markets.
Please see the section on “Risk Factors” for further details. The PRC government encourages small to medium-sized companies in traditional industries, such as garment manufacturing, to modernize their business models with technological updates in order to sharpen their competitive edge in global markets.
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.
The following table sets out a breakdown of the number of employees by function as of March 31, 2024: Function Number of employees Administration 35 Finance 12 Logistics 21 Marketing 6 Operation 28 Productive 10 Total 112 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.
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.
There were two and one customers accounted for more than 10% of our net sales for the years ended March 31, 2024 and 2023, respectively . Suppliers We procured our garments through various textile companies in our garment manufacturing business. For our logistics business, we procured from packing companies and transportation companies.
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.
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.
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.
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.
We conduct substantially all of our operations through the operating companies established in the PRC, primarily Shenzhen Qianhai Yingxi Industrial Chain Service Co., Ltd. (“YX”), our wholly owned subsidiary and its subsidiaries. We are not a Chinese operating company. We are a holding company and do not directly own any substantive business operations in China.
Transfers of Cash to and from our Subsidiaries We (Addentax Group Corp.) are a Nevada holding company with no material operations of our own. We conduct substantially all of our operations through the operating companies established in the PRC, primarily Shenzhen Qianhai Yingxi Industrial Chain Service Co., Ltd. (“YX”), our wholly owned subsidiary and its subsidiaries.
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.
We classify our businesses into three main 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.
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.
As the COVID-19 pandemic is near an endemic, the Company ceased to operate in this business in the first quarter of 2023. 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.
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.
Our property management and subleasing business. We do not need to carry a significant amount of inventory due to the nature of the business.
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.
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. 14 According to the Overseas Listing Filing Rules, the company, as an enterprise that has been listed on the Nasdaq Capital Market before the new regulations come into effect, does not need to apply to the CSRC for filing immediately.
The delisting or the cessation of trading of our Ordinary Shares, or the threat of their being delisted or prohibited from being traded, may materially and adversely affect the value of your investment.
The delisting or the cessation of trading of our Ordinary Shares, or the threat of their being delisted or prohibited from being traded, may materially and adversely affect the value of your investment. The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and has resumed regular inspections since March 2023.
The PRC government may, however, from time to time institute rules and regulations on such businesses which makes it difficult or impossible for us to operate successfully, if at all, in the PRC. Please see the section on “Risk Factors” for further details.
Our PRC subsidiaries currently comply with these regulatory requirements and have not received any action from industry regulators for conduct of their business. The PRC government may, however, from time to time institute rules and regulations on such businesses which makes it difficult or impossible for us to operate successfully, if at all, in the PRC.
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.
As a result, we cannot assure you that we will be able to complete all requirement for our future issuance in a timely manner and fully comply with the relevant new rules, if any. In addition, we cannot guarantee that we will not be subject to greater regulatory scrutiny or subsequent interference by the Chinese government.
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.
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 of fabric features to recommend the types of fabric to be used in our customers’ products.
According to the PCAOB, its December 2021 determinations under the HFCAA remain in effect. On December 15, 2022, the PCAOB secures complete access to inspect, investigate audit firms based in mainland China and Hong Kong.
According to the PCAOB, its December 2021 determinations under the HFCAA remain in effect.
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.
Exceptional customer service will help build strong relationships with tenants and improve overall satisfaction. 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 province, the PRC. Operations Our customer relationship team is responsible for cultivating and maintaining our relationship with customers.
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 .
For our property management and subleasing business, our suppliers are property owners. There was one supplier accounted for more than 10% of our total cost for the year ended March 31, 2024, and no single supplier accounted for more than 10% of our total costs for the years ended March 31, 2023. Inventory Garment manufacturing business .
We believe that we maintain a good working relationship with our employees, and to date we have not experienced any significant labor disputes. Government Regulations Currently, apart from customary business laws and regulations, the PRC government does not regulate the garment manufacturing business and logistics business.
We believe that we maintain a good working relationship with our employees, and to date we have not experienced any significant labor disputes. Recent Developments AI Logistics System Development On March 20, 2024, we signed a memorandum of understanding (MOU) with Dezhong Xinghui Information Technology Co., Ltd. to develop an AI logistics system.
Removed
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.
Added
Our property management and subleasing business provides shops subleasing and property management services for garment wholesalers and retailers in the garment market. We currently have an aggregate of 56,238 square meters floor space and provide approximately 1,300 shop space to clients. In February 2023, the Company disposed of DY to an independent third party at fair value in February, 2023.
Removed
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.
Added
Our logistics business has nine routes and covers 44 cities in 10 provinces and 2 municipalities in the PRC. Strategic location and infrastructure. Our property management and subleasing business operates through Dongguan Hongxiang Commercial Co., Ltd. (HX), located in Guangdong province, China, is a key area for the garment market.
Removed
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.
Added
By securing a prime location and developing a well-maintained infrastructure, we provide attractive and convenient spaces for garment wholesalers and retailers, enhancing their operational efficiency and appeal to customers. Comprehensive property services. We provide a wide range of property management services, including security, maintenance, and customer support, to ensure a high standard of service for our tenants.
Removed
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.
Added
This comprehensive solution helps to foster a favorable business environment for garment wholesalers and retailers, enhancing tenant satisfaction and retentions. Business Strategies Key elements of our business and growth strategies include the following: Sales of raw materials.
Removed
It is uncertain when and whether the Company will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded.
Added
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. Enhance tenant experience through value-added services. We aim to offer a range of value-added services to our tenants, including property maintenance, marketing support, and business consulting.
Removed
Although the Company is currently not required to obtain permission from any of the PRC central or local government to obtain such permission and has not received any denial to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry; if we inadvertently conclude that such approvals are not required when they are, or applicable laws, regulations, or interpretations change and we are required to obtain approval in the future.
Added
These services are designed to help tenants improve their business operations, attract more customers, and increase their profitability, thereby enhancing tenant retention and satisfaction. Develop digital solutions for property management. We plan to implement advanced digital solutions to streamline our property management processes. This includes the use of property management software for lease administration, tenant communication, and maintenance scheduling.
Removed
On December 24, 2021, the China Securities Regulatory Commission, or the CSRC, issued Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) (the “Administration Provisions”), and the Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (the “Measures”), which were open for public comments by January 23, 2022.
Added
By leveraging technology, we aim to improve operational efficiency and provide a seamless experience for our tenants. Leverage data analytics for informed decision-making. We plan to utilize data analytics to gain insights into market trends, tenant preferences, and property performance.
Removed
The Administration Provisions and Measures for overseas listings lay out specific requirements for filing documents and include unified regulation management, strengthening regulatory coordination, and cross-border regulatory cooperation. Domestic companies seeking to list abroad must carry out relevant security screening procedures if their businesses involve supervisions such as foreign investment security and cyber security reviews.
Added
By analyzing this data, we can make informed decisions on property acquisitions, rental pricing, and tenant services, ultimately optimizing our property management and subleasing operations. Enhance customer service and support. We intend to improve our customer service and support by providing dedicated tenant support teams and implementing tenant feedback mechanisms.
Removed
Companies endangering national security are among those off-limits for overseas listings. As the Administration Provisions and Measures have not yet come into effect, we are currently unaffected by them. However, it is uncertain when the Administration Provision and the Measures will take effect or if they will take effect as currently drafted.
Added
Our customers are as follows: (i) in the garment manufacturing business are mainly garment wholesalers and retailers, (ii)our customers in logistics business are mainly trading companies and logistic companies, and (iii) our customers in property management and subleasing business are manufacturing companies and e-commerce companies.
Removed
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.
Added
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.
Removed
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.
Added
This system aims to optimize vehicle dispatching, monitor real-time inventory, enable intelligent sorting and delivery, and operate seamlessly, significantly reducing labor costs and errors while enhancing efficiency and quality in logistics operations. Activewear Production Collaboration On March 5, 2024, we entered into a collaboration agreement with Regina Miracle International (Holdings) Limited to produce high-quality, functional, and fashionable activewear.
Removed
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.
Added
This partnership leverages our manufacturing capabilities and comprehensive industry chain services with Regina’s advanced R&D technology in sportswear, aiming to elevate product quality, streamline delivery timelines, and fortify market competitiveness in the sportswear industry.
Removed
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.
Added
Tourism-As-A-Service Platform On February 6, 2024, we signed an MOU with Shenzhen Tamir Cultural Tourism Development Co., Ltd. to launch a “Tourism-As-A-Service” platform utilizing AI and blockchain tools. This initiative aims to incubate local and overseas pan-entertainment and tourism services, enhancing efficiency and effectiveness in full-chain tourism services.
Added
Comprehensive Supply Chain Services On December 22, 2023, we signed an MOU with Zhongjiu Yihe (Shenzhen) Brand Development Co., Ltd. to establish comprehensive brand, product, and marketing supply chain services in China. This collaboration aims to enhance our market reach and commitment to innovative partnerships.
Added
AI Content Creation Research and Development On October 18, 2023, we entered into an R&D agreement with Xi’an University of Electronic Science and Technology. This partnership aims to advance AI content creation for the pan-entertainment industry, focusing on developing AI technology for translation, content extraction, and creation management systems.
Added
This collaboration enhances our capabilities and diversifies its business lines within the AI technology realm. Government Regulations The PRC government has corresponding industrial regulatory measures and policies for garment manufacturing business, logistics business and property management and subleasing business.
Added
PRC Limitation on Overseas Listing and Share Issuances Based on the opinion of our PRC counsel, 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.
Added
If it is issued and listed in other overseas markets, it shall be filed in accordance with relevant regulations. The Company entered into two private placement agreements with certain individual investors for 330,000 common Shares each at a unit price of $0.98 per share and for a total of $646,800.
Added
After the transactions, we shall be filed with the CSRC within three working days after the issuance of shares is completed. According to the Legal Opinion provided by the Allbright Law Offices, the Company has submitted the filing application to the China Securities Regulatory Commission . As of July 4, 2024, the application is still pending.
Added
Accordingly, the Company’s overseas issuances and subsequent additional issuances comply with the relevant provisions of the overseas listing filing regulation. As the overseas listing filing process has not yet been completed, the outcome and subsequent requirements remain uncertain.
Added
We are not a Chinese operating company. We are a holding company and do not directly own any substantive business operations in China.
Added
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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

41 edited+26 added−4 removed291 unchanged
Biggest changeOn December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things, an identical provision to AHFCAA and 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. 29 Should the PCAOB be unable to fully conduct inspections of our auditors’ work papers in the PRC, it will make it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures and you may be deprived of the benefits of such inspection, which could result in limitation or restriction to our access to the U.S. capital markets, and our securities may be delisted or prohibited from trading if the PCAOB determines that it cannot inspect or investigate completely our auditor under the HFCAA.
Biggest changeShould the PCAOB be unable to fully conduct inspections of our auditors’ work papers in the PRC, it will make it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures and you may be deprived of the benefits of such inspection, which could result in limitation or restriction to our access to the U.S. capital markets, and our securities may be delisted or prohibited from trading if the PCAOB determines that it cannot inspect or investigate completely our auditor under the HFCAA.
The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction.
The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in a foreign jurisdiction.
If any such new laws, regulations, rules, or implementation and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us.
If any such new laws, regulations, rules, or implementation and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us.
In the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all.
In the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all.
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.
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. 37 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. 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.
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. 39 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.
If we are subject to late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. 22 A recent joint statement by the SEC and the Public Company Accounting Oversight Board (United States), or the “PCAOB,” proposed rule changes submitted by Nasdaq, and the newly enacted “Holding Foreign Companies Accountable Act” all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
If we are subject to late fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected. 24 A recent joint statement by the SEC and the Public Company Accounting Oversight Board (United States), or the “PCAOB,” proposed rule changes submitted by Nasdaq, and the newly enacted “Holding Foreign Companies Accountable Act” all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
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.
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 . 38 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.
However, there is no assurance that the U.S. securities regulatory agencies will succeed in establishing such cross-border cooperation in this particular case and/or establish such cooperation in a timely manner. 24 Furthermore, as Article 177 is a recently promulgated provision and, as the date of this annual report, there have not been implementing rules or regulations regarding the application of Article 177, it remains unclear as to how it will be interpreted, implemented or applied by the Chinese Securities Regulatory Commission or other relevant government authorities.
However, there is no assurance that the U.S. securities regulatory agencies will succeed in establishing such cross-border cooperation in this particular case and/or establish such cooperation in a timely manner. 26 Furthermore, as Article 177 is a recently promulgated provision and, as the date of this annual report, there have not been implementing rules or regulations regarding the application of Article 177, it remains unclear as to how it will be interpreted, implemented or applied by the Chinese Securities Regulatory Commission or other relevant government authorities.
If 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.
If 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. 28 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.
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.
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. 35 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.
Furthermore, if the PCAOB is unable to inspect the issuer’s public accounting firm for three consecutive years, the issuer’s securities are banned from trade on a national exchange or through other methods. On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCAA.
Furthermore, if the PCAOB is unable to inspect the issuer’s public accounting firm for three consecutive years, the issuer’s securities are banned from trading on a national exchange or through other methods. On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCAA.
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.
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. 41 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.
If we do not obtain any such additional financing, it may be difficult to effectively realize our long-term strategic goals and objectives. 40 Any additional capital raised through the sale of equity or equity-backed securities may dilute our stockholders’ ownership percentages and could also result in a decrease in the market value of our equity securities.
If we do not obtain any such additional financing, it may be difficult to effectively realize our long-term strategic goals and objectives. 42 Any additional capital raised through the sale of equity or equity-backed securities may dilute our stockholders’ ownership percentages and could also result in a decrease in the market value of our equity securities.
Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future. 23 The PCAOB is currently unable to conduct inspections in China without the approval of Chinese government authorities.
Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future. 25 The PCAOB is currently unable to conduct inspections in China without the approval of Chinese government authorities.
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.
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. 33 In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general.
The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. As of March 31, 2022, we have made adequate employee benefit payments in strict compliance with the relevant PRC regulations for and on behalf of our employees.
The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. As of March 31, 2024, we have made adequate employee benefit payments in strict compliance with the relevant PRC regulations for and on behalf of our employees.
Any non-compliance could result in penalties or other significant legal liabilities. 27 We cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws.
Any non-compliance could result in penalties or other significant legal liabilities. 29 We cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws.
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.
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. 40 We may never be able to pay dividends and are unlikely to do so.
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.
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, 2024 and 2023 and may materially adversely affect our financial condition and results of operations.
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.
Therefore, foreign exchange fluctuations may influence our business in unpredictable ways. 32 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. 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.
These risks may have a material adverse effect on our business, financial condition and results of operations. 36 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 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.
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. 27 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.
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.
Applicable PRC laws, rules and regulations also require certain merger and acquisition transactions to be subject to security review. 34 Our business may be subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection.
The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. 28 Furthermore, on June 22, 2021, the U.S.
The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. 30 Furthermore, on June 22, 2021, the U.S.
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.
During the years ended March 31, 2024 and 2023, approximately 100.0% and 100.0% 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.
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.
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 2023 through the end of March 2024, the value of the Renminbi depreciated by approximately 4.6% against the U.S. dollar.
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.
The Company relied on a few subcontractors for our logistic business, in which the subcontracting fees to our largest contractor represented approximately 42.0% and 25.2% of total cost of revenues for our logistics service segment for the years ended March 31, 2024 and 2023, respectively.
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.
For the year ended March 31, 2024, one customer accounted for approximately 19.95% 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.
Our common stocks were first offered publicly in our IPO in August 2022 at a price of $5.00 per share, and our common stocks have subsequently traded as high as $656.54 per share and as low as $0.647 per share through June 23, 2023.
Our common stocks were first offered publicly in our IPO in August 2022 at a price of $5.00 per share, and our common stocks have subsequently traded as high as $656.54 per share and as low as $0.78 per share as of the date of this Annual Report.
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.
Subcontracting fees for our logistics business for the year ended March 31, 2024 increased to approximately $1.5 million from $1.1 million for the year ended March 31, 2023, representing an increase of approximately 33.0%. Subcontracting fees accounted for 34.9% and 23.24% of our total logistics business revenue in the years ended March 31, 2024 and 2023, respectively.
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.
For the year ended March 31, 2024, two customers accounted for approximately 73.88% and 22.13% of the Company’s total garment manufacturing revenues. For the year ended March 31, 2023, two customers accounted for approximately 41.23% and 17.23%, respectively, of the Company’s total garment manufacturing revenues.
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.
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.
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.
Such tenant-related risks could impact our cash flow and 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.
During the outbreak, we had to temporarily close our office facilities, restrict employee travel, switch to online virtual meetings or even cancel meetings with partners.
During the outbreak, we had to temporarily close our office facilities, restrict employee travel, switch to online virtual meetings or even cancel meetings with partners. By the end of 2022, the control measures for the COVID-19 epidemic prevention gradually liberalized in the PRC.
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.
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. 22 In our property management and subleasing segment, disruptions from natural disasters or health crises could lead to tenant defaults, lease terminations, or reduced occupancy rates.
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 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.
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.
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.
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.
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 severe damage to our business operations and would have an adverse material impact on our financial position and operational results.
On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary.
On December 15, 2022, the PCAOB announced that it has completed a test inspection of two selected auditing firms in mainland China and Hong Kong and has voted to vacate its previous Determination Report, which concluded in December 2021 that the PCAOB could not inspect or investigate completely registered public accounting firms based in mainland China or Hong Kong.
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.
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.
Removed
There continue to be significant uncertainties associated with the coronavirus, including with respect to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, and actions that may be taken by Chinese or other governmental authorities to contain the coronavirus or to treat its impact.
Added
We are not fully insured against all possible risks, nor are all such risks insurable. Competition for tenants could impact our occupancy rates. Our property management and subleasing operations face significant competition for tenants within the garment market. Competitive factors include rental rates, property location, lease terms, and the quality of properties offered.
Removed
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.
Added
We compete directly with other landlords and property operators offering similar leasing opportunities in our targeted areas. The presence of newer or better-located properties could adversely affect our ability to attract tenants and the rental rates we can achieve.
Removed
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.
Added
Our performance depends on our ability to collect rent from tenants, including anchor tenants, our tenants’ financial condition and our tenants maintaining leases for our properties. Our property management and subleasing operations rely heavily on our ability to collect rent from tenants, including anchor tenants, to maintain financial stability.
Removed
However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination.
Added
The financial condition of our tenants directly impacts their ability to meet lease obligations. Economic downturns or adverse market conditions, such as inflation, labor shortages, supply chain disruptions, and changes in consumer spending habits, may weaken tenants’ financial positions. This could lead to delays in lease commencements, non-renewals, or defaults on rental payments.
Added
In some cases, tenants may choose to close stores or declare bankruptcy, resulting in the termination of leases and loss of rental income. Enforcing lease terms in case of default may incur delays and costs, potentially affecting our cash flow and financial performance.
Added
A tenant filing for bankruptcy protection could prevent us from collecting pre-bankruptcy debts or recovering losses related to unpaid rent or damages. The rejection of leases in bankruptcy proceedings would leave us with general unsecured claims, likely resulting in partial or no recovery of outstanding balances.
Added
Multiple lease terminations or failures of tenants to occupy premises could lead to lease terminations or reduced rents for remaining tenants under certain lease terms. In such scenarios, re-leasing vacant spaces at competitive rates may be challenging, potentially reducing overall rental income and impacting financial results.
Added
The occurrence of these situations, particularly involving significant tenants with leases across multiple locations, could materially affect our financial condition, operational results, and cash flow. Subleasing to smaller and growth-oriented businesses could adversely affect our cash flow and results of operations. A portion of our tenant base consists of smaller, growth-oriented businesses in the garment industry.
Added
These tenants may have less financial stability compared to larger corporations, increasing the risk of tenant defaults, turnover, or bankruptcies. Smaller businesses are more susceptible to economic downturns or changes in market conditions, which could lead to challenges in rent payments, lease renewals, or the need for alternative office spaces.
Added
These events may necessitate property closures, temporary halts in rental income, or challenges in attracting and retaining tenants, amplifying the adverse impact on our financial performance and overall business stability. Our business depends on the continued contributions made by Mr. Hong Zhida, as our key executive officer, the loss of whom may result in a severe impediment to our business.
Added
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
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
Unauthorized disclosure, destruction or modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability, protracted and costly litigation and damage our reputation. Our business involves the collection, storage, processing and transmission of customers’ business data.
Added
An increasing number of organizations, including large merchants and businesses, other large technology companies, financial institutions and government institutions, have disclosed breaches of their information technology, or IT, systems, some of which have involved sophisticated and highly targeted cybersecurity attacks, including on portions of their websites or infrastructure. We may also be subjected to breaches of cybersecurity by hackers.
Added
Threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Concerns about cybersecurity are increased when we transmit information. Electronic transmissions can also be subjected to cybersecurity attacks, interception or loss.
Added
Also, computer viruses and malware can be distributed and spread rapidly over the internet and could infiltrate our systems or those of our associated participants, which can impact the confidentiality, integrity and availability of information, and the integrity and availability of our products, services and systems, among other effects.
Added
Denial of service or other cybersecurity attacks could be targeted against us for a variety of purposes, including interfering with our products and services or creating a diversion for other malicious activities.
Added
These types of actions and attacks could disrupt our delivery of products and services or make them unavailable, which could damage our reputation, force us to incur significant expenses in remediating the resulting impacts, expose us to uninsured liabilities, subject us to lawsuits, fines or sanctions, distract our management or increase our costs of doing business. 23 Our encryption of data and other protective measures may not prevent unauthorized access or use of sensitive data.
Added
A breach of our system or that of one of our associated participants may subject us to material losses or liability. A misuse of such data or a cybersecurity breach could harm our reputation and deter customers from using our products and services, thus reducing our revenue.
Added
In addition, any such misuse or breach could cause us to incur costs to correct the breaches or failures, expose us to uninsured liabilities, increase our risk of regulatory scrutiny, subject us to lawsuits, result in the imposition of material penalties and fines under applying laws or regulations.
Added
We cannot assure that there are written agreements in place with every associated participant or that such written agreements will prevent the unauthorized use, modification, destruction or disclosure of data or enable us or our customers to obtain reimbursement in the event we should suffer incidents resulting in unauthorized use, modification, destruction or disclosure of data.
Added
Any unauthorized use, modification, destruction or disclosure of data could result in protracted and costly litigation, which could have a material and adverse effect on our business, financial condition and results of operations.
Added
Cybersecurity attack incidents are increasing in frequency and evolving in nature and include, but are not limited to, installation of malicious software, unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and the corruption of data.
Added
Given the unpredictability of the timing, nature and scope of information technology disruptions, there can be no assurance that the procedures and controls we employ will be sufficient to prevent security breaches from occurring and we could be subject to manipulation or improper use of our systems and networks or financial losses from remedial actions, any of which could have a material and adverse effect on our business, financial condition and results of operations.
Added
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.
Added
On December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden, which contained, among other things, an identical provision to AHFCAA and 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. 31 The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and has resumed regular inspections since March 2023.

Item 2. Properties

Properties — owned and leased real estate

1 edited+1 added−0 removed2 unchanged
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.
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 Kingkey 100, Block D, Room 1628, Luohu District, Shenzhen, Guangdong, China 12,760 116 July 18, 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, 2025 Warehouse and additional office No. 3 Ping’an Avenue, Pinghu Street, Longgang District, Shenzhen, Guangdong, PRC 30,000 605 May 31, 2024 (1) (1) The Company has been negotiating on the renewal of the lease agreement for the property, and is currently continuing to use this property after expiry of the previous lease agreement.
Added
We also have 121 logistics points and they are located in 10 provinces and 2 municipalities in the PRC.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
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
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. 44 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+2 added−0 removed6 unchanged
Biggest changeWe 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.
Biggest changeWe 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. 45 Securities Authorized for Issuance under Equity Compensation Plans On May 28, 2024 , our Board adopted our 2024 Equity Incentive Plan (the “2024 Equity Incentive Plan”), which was approved by our shareholders at our annual shareholders meeting on June 28, 2024.
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.
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, 2024 and March 31, 2023.
Holders 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.
Holders of Our Common Stock 6,043,769 shares of common stock were issued and outstanding as of July 15, 2024. They were held by a total of 488 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.
Added
The 2024 Equity Incentive Plan gives us the ability to grant stock options, stock appreciation rights (SARs), restricted stock and other stock-based awards to officers, directors (including independent directors), employees or consultants of our company or of any subsidiary of our company and to non-employee members of our advisory board or our Board or the board of directors of any of our subsidiaries.
Added
The shares covered by the 2024 Equity Incentive Plan are 1,345,000 shares. As of June 30, 2024, there were no outstanding options to purchase any shares of common stock granted under the Plans. Options granted in the future under the Plans are within the discretion of our Board or our compensation committee.

Item 7. Management's Discussion & Analysis

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

57 edited+12 added−8 removed38 unchanged
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.
Biggest changeThe decrease of approximately $2.5 million was mainly due to the disposal of DY. 51 Cost of revenue 2024 2023 Increase (decrease) in 2024 compared to 2023 % Change (In U.S. dollars, except for percentages) Net revenue for garment manufacturing $ 229,539 100.0 % $ 177,549 100.0 % $ 51,990 29.3 % Raw materials 33,466 14.6 % 28,333 16.0 % 5,133 18.1 % Labor 130,231 56.7 % 97,065 54.7 % 33,166 34.2 % Other and Overhead 2,298 1.0 % 6,942 3.9 % (4,644 ) (66.9 )% Total cost of revenue for garment manufacturing 165,995 72.3 % 132,340 74.5 % 33,655 25.4 % Gross profit for garment manufacturing 63,544 27.7 % 45,209 25.5 % 18,335 40.6 % Net revenue for logistics services 4,342,326 100.0 % 4,621,125 100.0 % (278,799 ) (6.0 )% Fuel, toll and other cost of logistics services 1,881,755 43.3 % 2,428,462 52.6 % (546,707 ) (22.5 )% Subcontracting fees 1,513,533 34.9 % 1,074,846 23.2 % 438,687 40.8 % Total cost of revenue for logistics services 3,395,288 78.2 % 3,503,308 75.8 % (108,020 ) (3.1 )% Gross Profit for logistics services 947,038 21.8 % 1,117,817 24.2 % (170,779 ) (15.3 )% Net revenue for property management and subleasing 581,888 100.0 % 3,096,914 100.0 % (2,515,026 ) (81.2 )% Total cost of revenue for property management and subleasing 473,500 81.4 % 2,444,962 78.9 % (1,971,462 ) (80.6 )% Gross Profit for property management and subleasing 108,388 18.6 % 651,952 21.1 % (543,564 ) (83.4 )% Net revenue for corporate and others - 48,583 100.0 % (48,583 ) (100.0 )% Other and Overhead 3,885 22,500 46.3 % (18,615 ) (82.7 )% Total cost of revenue for corporate and others 3,885 22,500 46.3 % (18,615 ) (82.7 )% Gross profit for corporate and others (3,885 ) 26,083 53.7 % (29,968 ) (114.9 )% Total cost of revenue $ 4,038,668 78.4 % $ 6,103,110 76.8 % $ 2,064,442 33.8 % Gross profit $ 1,115,085 21.6 % $ 1,841,061 23.2 % $ (725,976 ) (39.4 )% 52 For our garment manufacturing business, we purchased the majority of our raw materials directly from numerous local fabric and accessories suppliers.
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.
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. 49 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, 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.
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, 2024 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.
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 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, 2024 was approximately $1.9 million, as compared with $2.4 million for the year ended March 31, 2023.
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.
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, 2024 and 2023 should be read in conjunction with the Financial Statements and corresponding notes included in this Annual Report on Form 10-K.
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%.
No provision for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the years ended March 31, 2024 and 2023. WFOE and YX were incorporated in the PRC and are subject to the PRC Enterprise Income Tax (EIT) rate is 25%.
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”).
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) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and (xii) Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”), (xiii) Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).
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.
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, 2024 and 2023 The following tables summarize our results of operations for the years ended March 31, 2024 and 2023.
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.
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. 50 The Company reviews new accounting standards as issued.
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.
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. 48 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.
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.
We classify our businesses into three main segments: garment manufacturing, logistics services, and property management and subleasing. 46 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.
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.
Recently issued and adopted accounting pronouncements Accounting for Convertible Instruments: In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements.
“ 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”).
“ 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) Zhuang Hao Jia (Dongguan) Decoration Engineering Co.,Ltd, a PRC company (“ZHJ”), and (x) Dongguan Aotesi Garments Co., Ltd.,, a PRC company (“AOT”), (xiii) Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).
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 foreign currency translation gain (loss) for the years ended March 31, 2024 and 2023 was $0.1 million and $0.2 million, respectively.
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.
Overhead and other expenses for our garment manufacturing business accounted for approximately 1.0% and 3.9% of our total garment manufacturing business revenue for the years ended March 31, 2024 and 2023, respectively. For our logistic services business, we outsource some of the business to our subcontractors. Our subcontractors are contract logistic service providers.
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.
Labor costs for our garment manufacturing business were approximately 56.7% of our total garment manufacturing business revenue in the year ended March 31, 2024, as compared with 54.7% in the year ended March 31, 2023. The increase in labor costs for our garment manufacturing business was mainly due to the increase of sub-contracting business in AOT.
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.
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, 2024 and 2023. Net Profit We incurred a net loss of approximately $3.1 million and a net profit of approximately $1.3 million for the years ended March 31, 2024 and 2023, respectively.
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.
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 4.5%, of our total revenue for the year ended March 31, 2024.
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.
Gross profit in our property management and subleasing business for the year ended March 31, 2023 was $0.7 million, or 21.1% of our total property management and subleasing business revenue.
It was mainly because the Company received the proceeds of $22.7 million from its initial public offering (“IPO”), the proceeds of $15.0 million from issuance of the Notes and warrants and deposit of $14.75 million to the restricted cash account pursuant to the PIPE Securities Purchase Agreement.
It was mainly because in the year ended March 31 2023, the Company received the proceeds of $22.7 million from its initial public offering (“IPO”), the proceeds of $15.0 million from issuance of the Notes and warrants and deposit of $14.75 million to the restricted cash account pursuant to the PIPE Securities Purchase Agreement.
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.
As of March 31, 2024, the market foreign exchange rate had decreased to RMB7.22 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.
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 the PRC has been made as WFOE and YX had no taxable income for the years ended March 31, 2024 and 2023. Yingxi’s operating companies are governed by the Income Tax Laws of the PRC and subject to progressive EIT rate from 5% to 15% in year ended March 31, 2024.
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.
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 last year, RMB depreciated against the U.S. dollar.
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.
Raw materials cost for our garment manufacturing business was approximately 14.6% of our total garment manufacturing business revenue in the year ended March 31, 2024, as compared with approximately 16.0% in the year ended March 31, 2023. The decrease in raw materials cost for our garment manufacturing business was mainly due to decrease of manufacturing during renovation of the factory.
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.
Our logistics business consists of delivery and courier services covering 44 cities in 10 provinces and 2 municipalities in China. Although we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors.
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.
It was mainly because the net loss adjusted to cash provided (used in) operating activities of fiscal year ended March 31, 2024 was approximately $0.8 million less than the amount of the fiscal year ended March 31, 2023.
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.
The Company relied on a few subcontractors, which the subcontracting fees to our largest contractor represented approximately 42.0% and 25.2% of total cost of revenues for our logistics services segment for the years ended March 31, 2024 and 2023, respectively. The increase in subcontracting fee to the largest contractor was mainly to optimize resources and cost efficiencies.
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.
Fuel, toll and other costs for our logistics business accounted for approximately 43.3% of our total service revenue for the year ended March 31, 2024, as compared with approximately 52.6% for the year ended March 31, 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.
As of March 31, 2024, we provide logistic service to over 44 cities in approximately 10 provinces and 2 municipalities. We expect to develop 20 additional logistics routes in existing serving cities and improve the Company’s profit in the year 2024.
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.
“ 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, 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.
Total general and administrative expenses for the year ended March 31, 2024 decreased approximately 4.9% to approximately $2.1 million from approximately $2.2 million for the year ended March 31, 2023. Loss from operations Loss from operations for the years ended March 31, 2024 and 2023 was approximately $1.1 million and $0.5 million, respectively.
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.
Financial Condition, Liquidity and Capital Resources As of March 31, 2024, we had cash on hand of approximately $0.8 million and restricted cash of approximately $2.8 million, total current assets of approximately $29.2 million and current liabilities of approximately $4.6 million.
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 $0.6 million, or approximately 11.3%, of our total revenue for the year ended March 31, 2024. 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.
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.
Our basic and diluted (loss) earnings per share were $(0.71) and $0.04 for the year ended March 31, 2024 and 2023, respectively. 55 Summary of cash flows Summary cash flows information for the years ended March 31, 2024 and 2023 is as follow: 2024 2023 (In U.S. dollars) Net cash used in operating activities $ (411,473 ) $ (1,569,159 ) Net cash provided by (used in) investing activities $ 90,731 $ (21,168,153 ) Net cash provided by (used in) financing activities $ 521,704 $ 21,845,838 Net cash used in operating activities in the year ended March 31, 2024 decreased by approximately $1.1 million compared with that of the year ended March 31, 2023.
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.
The cost of revenue for property management and subleasing business for the year ended March 31, 2024 was $0.5 million, approximately 81.4% of our total property management and subleasing business revenue, as compared with $2.4 million, approximately 78.9% of total property management and subleasing business revenue for the year ended March 31, 2023. 53 Gross profit Gross profit of garment manufacturing business for the year ended March 31, 2024 was approximately $63,544, as compared with approximately $0.2 million for the year ended March 31, 2023.
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%.
Gross profit ratio was approximately 27.7% of revenue of the segment, as compared with approximately 25.5% for the year ended March 31, 2023. Gross profit of our logistics services business for the year ended March 31, 2024 was approximately $0.9 million and gross profit ratio was approximately 21.8%.
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.
Revenue generated from our logistics services business contributed approximately $4.3 million, or approximately 84.3%, of our total revenue for the year ended March 31, 2024. Revenue generated from the segment contributed approximately $4.6 million, or approximately 58.2%, of our total revenue for the year ended March 31, 2023. The decrease of approximately $0.3 million was mainly due to market volatility.
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.
Net cash provided by investing activities for the year ended March 31, 2024 was approximately $0.09 million, compared to cash used of $21.2 million in investing activities for the year ended March 31, 2023.
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.
Subcontracting fees for our logistics business for the year ended March 31, 2024 increased to approximately $1.5 million from $1.1 million for the year ended March 31, 2023, representing an increase of approximately 33.0%. Subcontracting fees accounted for 34.9% and 23.2% of our total logistics business revenue in the years ended March 31, 2024 and 2023, respectively.
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.
The preferential tax rates will be expired at the end of year 2025. Income taxes of the PRC companies were $11,605 and $22,143 for the year ended March 31, 2024 and 2023, respectively. The Company’s parent entity, Addentax Group Corp. is a U.S. entity and is subject to the United States federal income tax.
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.
Income Tax Expenses Income tax expense for the years ended March 31, 2024 and 2023 was $11,605 and $22,143, respectively. The Company operates in the PRC and files tax returns in the PRC jurisdictions.
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.
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.
General and administrative expenses consist primarily of administrative salaries, office expense, certain depreciation and amortization charges, repairs and maintenance, legal and professional fees, warehousing costs and other expenses that are not directly attributable to our revenues.
Our general and administrative expenses in our corporate office for the years ended March 31, 2024 and 2023 were approximately $961,771 and $973,237, respectively. General and administrative expenses consist primarily of administrative salaries, office expense, certain depreciation and amortization charges, repairs and maintenance, legal and professional fees, warehousing costs and other expenses that are not directly attributable to our revenues.
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.
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 a cash decrease of approximately $1.2 million in disposal of one subsidiary in property management and subleasing segment.
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.
Selling expenses consist primarily of local transportation, unloading charges and product inspection charges. 54 Our general and administrative expenses in our garment manufacturing segment for the years ended March 31, 2024 and 2023 were approximately $160,800 and $113,208, 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.
(Loss) / Income from operations of $(201,746) and $267,359 was attributed from our property management and subleasing business for the years ended March 31, 2024 and 2023. We incurred general and administrative expenses in corporate office of approximately $965,028 and approximately $946,970 for the years ended March 31, 2024 and 2023, respectively.
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.
Gross profit of our property management and subleasing business for the year ended March 31, 2024 was approximately $0.1 million, representing approximately 18.6% of our total property management and subleasing business revenue.
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 general and administrative expenses in our logistics services segment for the year ended March 31, 2024 and 2023 was approximately $766,960 and $832,722, respectively. The general and administrative expenses in our property management and subleasing business were approximately $310,134 and $306,040 for the years ended March 31, 2024 and 2023.
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.
Loss from operations of approximately $143,872 and $68,215 was attributed from our garment manufacturing segment for the years ended March 31, 2024 and 2023, respectively. Income from operations of approximately $179,450 and $284,911 was attributed from our logistics services segment for the years ended March 31, 2024 and 2023, respectively.
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.
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. 2024 2023 Changes in 2024 compared to 2023 % Change (In U.S. dollars, except for percentages) Revenue $ 5,153,753 100.0 % $ 7,944,171 100 % $ (2,790,418 ) (35.1 )% Cost of revenues (4,038,668 ) (78.4 )% (6,103,110 ) (76.8 )% 2,064,442 33.8 % Gross profit (loss) 1,115,085 21.6 % 1,841,061 23.2 % (725,976 ) (39.4 )% Operating expenses (2,246,281 ) (43.6 )% (2,303,976 ) (29.0 )% 57,695 2.5 % Loss from operations (1,131,196 ) (21.9 )% (462,915 ) (5.8 )% (668,281 ) (144.4 )% Other income, net (307,577 ) (6.0 )% 320,556 4.0 % (628,133 ) (196.0 )% Fair value gain or loss 1,986,886 38.6 % 2,983,538 37.6 (996,653 ) 33.4 % Net finance cost (3,645,926 ) (70.7 )% (1,499,379 ) (18.9 ) (2,146,547 ) 143.2 % Income tax expense (11,605 ) (0.2 )% (22,143 ) (0.3 )% 10,538 47.6 % Net income $ (3,109,418 ) (60.3 )% $ 1,319,657 16.6 % $ (4,429,075 ) 335.6 % Revenue Total revenue for the year ended March 31, 2024 significantly decreased by approximately $2.8 million, or approximately 35.1%, as compared with the year ended March 31, 2023.
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.
Changes in 2024 2024 2023 compared to 2023 (In U.S. dollars, except for percentages) Gross profit $ 1,115,085 100 % $ 1,841,061 100 % (725,976 ) (39.4 )% Operating expenses: Selling expenses (130,603 ) (4.3 )% (78,769 ) (4.3 )% (51,834 ) (65.8 )% General and administrative expenses (2,115,678 ) (120.9 )% (2,225,207 ) (120.9 )% 109,529 4.9 % Total $ (2,246,281 ) (125.1 )% $ (2,303,976 ) (125.1 )% 57,695 2.5 % Loss from operations $ (1,131,196 ) (25.1 )% $ (462,915 ) (25.1 )% (668,281 ) (144.4 )% Selling, General and administrative expenses Our selling expenses were mainly incurred for our property management and subleasing business.
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.
The movement of operating assets and liabilities of the year ended March 31, 2024 resulted in cash inflow of approximately $0.5 million compared to cash outflow of approximately $1.5 million in the movement of operating assets and liabilities of the year ended March 31, 2023.
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.
Gross profit of the segment for the year ended March 31, 2023 was approximately $1.1 million and gross profit ratio was approximately 24.2%. The decrease in the gross profit ratio was mainly because we did not have enough delivery orders to fill the trucks every time which increased our cost.
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.
We conduct our property management and subleasing operation through a wholly owned subsidiary acquired in September 2023, namely Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”), which is located in the Guangdong province, China. 47 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.
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.
Our property management and subleasing business provides shops subleasing and property management services for garment wholesalers and retailers in the garment market. business provides shops subleasing and property management services for garment wholesalers and retailers in the garment market. In February 2023, the Company disposed of DY to an independent third party at fair value in February, 2023.
For the year ended March 31, 2023, the Company also had a cash decrease of approximately $1.2 million in disposal of one subsidiary in property management and subleasing segment. Net cash provided by financing activities for the year ended March 31, 2023 was approximately $23.2 million more than the year ended March 31, 2022.
Net cash provided by financing activities for the year ended March 31, 2024 was approximately $21.3 million less than the year ended March 31, 2023.
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.
Revenue generated from the segment contributed approximately $0.2 million, or approximately 2.2%, of our total revenue for the year ended March 31, 2023. The low amount of sales was mainly due to insufficient customer volume, we cannot receive as large order quantity from remaining customers as before while new developed customer still at the start stage.
Removed
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.
Added
In February 2023, the Company disposed of DY to an independent third party at fair value and conduct the business through a wholly owned subsidiary acquired in September 2023, namely Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).
Removed
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.
Added
Seasonality of Business Garment Manufacturing Business We generally receive more purchase orders during our second and third quarters and fewer manufacture orders during May and June.
Removed
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.
Added
Logistics Services Business We generally receive more delivery orders in our third and fourth quarters and are more vulnerable to shipping delays in the PRC during Chinese New Year due to traffic and port congestion, border crossing delays and customs clearance issues. Property Management and Subleasing Business There is no significant seasonality in our business.
Removed
Recently issued and adopted accounting pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This standard requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.
Added
Accounts receivable, net Accounts receivable, net are stated at the historical carrying amount net of allowance for doubtful accounts. Account receivables are classified as financial assets subsequently measured at amortized cost. Account receivables are recognized when the Company becomes a party to the contractual provisions of the receivables.
Removed
The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. This standard will be effective for the Company on April 1, 2023.
Added
They are measured, at initial recognition, at fair value plus transaction costs, if any and are subsequently measured at amortized cost. The amortized cost is the amount recognized on the receivable initially, minus principal repayments, plus cumulative amortization (interest) using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.
Removed
The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements.
Added
A loss allowance for expected credit losses is recognized on account receivables and is updated at each reporting date.
Removed
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.
Added
The Company determines the expected credit losses provisions based on ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (‘‘ASC 326’’) using a modified retrospective approach which did not have a material impact on the opening balance of accumulated deficit.
Removed
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.
Added
To determine expected credit losses on account receivables, the Company will consider the historic credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions, and an assessment of both the current and forecasted direction of conditions at the reporting date, including the time value of money, where appropriate.
Added
The loss allowance is calculated on a collective basis for all trade and other receivables in totality. An impairment gain or loss is recognized in profit or loss with a corresponding adjustment to the carrying amount of account receivables, through use of a loss allowance account.
Added
The impairment loss is included in operating expenses as a movement in credit loss allowance. Receivables are written off when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g., when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings.
Added
Receivables written off may still be subject to enforcement activities under the Company’s recovery procedures, considering legal advice where appropriate. Any recoveries made are recognized in profit or loss.
Added
It was $83,987 for property management and subleasing business and $46,617 for garments manufacturing business for the year ended March 31, 2024. It was approximately $78,769 for property management and subleasing business for the year ended March 31, 2023.

Other ATXG 10-K year-over-year comparisons