ADDENTAX GROUP CORP.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
ATXG$2.73+9.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-02-13.
0001493152-26-006571
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001493152-26-038442
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 136 previous paragraphs and 128 current paragraphs.
33 unchanged; 22 reworded; 73 added; 74 removed; 7 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (73)
Current report
We provide business consulting and coordination services to customers seeking overseas wealth planning, insurance-related information and related cross-border service support. Our services primarily include customer consultation, appointment coordination, referral and liaison with third-party insurance brokers or other service providers, and related administrative support. We conduct our consulting service business through our wholly owned subsidiary, Yingxi HK, which is located in Hong Kong, China.
Current report
On March 30, 2026, we completed the acquisition of KMFG, a Nevada corporation with headquarters in Shenzhen, China. KMFG operates two core business segments: (i) an apparel and garment trading business focused on the wholesale distribution of men’s and women’s apparel to distributors primarily in China, sourcing directly from manufacturers without maintaining its own production facilities; and (ii) a digital publishing business conducted through its wholly owned subsidiary, GW Reader Sdn. Bhd. in Malaysia, which operates a mobile-based online fiction platform utilizing a pay-per-chapter microtransaction model for global readers. As of June 30, 2026, KMFG’s revenue contribution was not significant, and management does not currently present KMFG as a separate business line or reportable segment. Management will continue to monitor KMFG’s operations, revenue contribution and business development and will reassess the related disclosure and segment presentation as necessary in future periods.
Current report
On May 15, 2026, the Company completed the acquisition of 100% of the equity interests of Time Is Loan Limited (“Time Is Loan”), a Hong Kong company and licensed money lender. Time Is Loan is principally engaged in providing consumer and commercial financing services in Hong Kong, primarily through short-term personal loans and other financing arrangements. Its customers are primarily sourced through online advertising, social media, mobile applications and telephone marketing. Before approving and disbursing financing, Time Is Loan performs customer identification, credit assessment and sanctions screening in accordance with its internal credit and compliance procedures. The results of Time Is Loan have been included in the Company’s consolidated financial statements from the acquisition date.
Current report
The business objective of our consulting service line is to provide advisory, referral, coordination and administrative support services in connection with overseas insurance configuration, wealth management planning, identity planning, education planning and related cross-border service needs. We intend to develop this business as an asset-light service business with an emphasis on high-value consulting services, digital tools and private-domain customer management.
Current report
The business objective of our financing services business is to provide consumer and commercial financing services in Hong Kong. We intend to expand our customer base through digital and other marketing channels while maintaining prudent credit assessment, regulatory compliance and effective risk management. We expect to continue developing this business and improve its contribution to the Company’s future growth.
Current report
Management expects relatively stronger customer activity during June to September, October to December, holidays and weekends, while January to March is generally expected to be a traditional slower season due to the Chinese New Year period. Actual seasonality may vary based on customer demand, market conditions, regulatory developments and the availability of third-party service providers.
Current report
Management expects customer demand for our financing services business to vary based on seasonal consumer spending patterns, short-term liquidity needs, marketing activities and general economic conditions in Hong Kong. Customer application activity may increase before holidays and during periods of higher consumer spending. Actual seasonality may vary depending on market conditions, borrower demand, competition, regulatory developments and our credit risk management considerations.
Current report
For consulting services, the credit period is generally 30 to 60 days, depending on the service arrangement, customer relationship, settlement cycle with third-party service providers and internal credit review. We do not directly collect customer insurance premiums. Premiums must be paid by customers directly to the relevant insurance company’s designated bank account or official payment gateway.
Current report
For financing services, borrowers are required to repay principal and interest in accordance with the repayment schedule set out in the applicable loan agreement. Loan terms generally range from approximately half a month to 12 months. Before approving and disbursing financing, we perform customer identification, credit assessment and sanctions screening in accordance with our internal credit and compliance procedures. We monitor repayments on an ongoing basis, and past-due balances are subject to follow-up and collection procedures in accordance with our internal policies.
Current report
Critical Accounting Estimates
Current report
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the consolidated financial statements and accompanying notes. Management evaluates its estimates on an ongoing basis based on historical experience, current conditions and other assumptions that management believes are reasonable under the circumstances. Actual results could differ from those estimates.
Current report
Management believes that the following accounting estimates involve a significant level of judgment or estimation uncertainty and are important to an understanding of our financial condition and results of operations. Management has discussed significant audit matters, including accounting estimates and related financial statement disclosures, with the Audit Committee in connection with the annual audit process.
Current report
Goodwill and Impairment Assessment
Current report
As a result of the acquisition of KMFG during the fiscal year ended March 31, 2026, the Company recognized goodwill in its consolidated financial statements. Goodwill represents the excess of the purchase consideration over the estimated fair value of identifiable net assets acquired and liabilities assumed in a business combination. The determination of goodwill requires management to make judgments and assumptions regarding the fair value of assets acquired and liabilities assumed, including assumptions related to future cash flows, discount rates, useful lives, market conditions and other valuation inputs.
Current report
The Company evaluates goodwill for impairment at least annually and more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may not be recoverable. During the three months ended June 30, 2026, management considered whether any events or changes in circumstances indicated potential impairment of goodwill, including the Company’s operating results, financial performance and other relevant business and market conditions. No impairment of goodwill was identified during the three months ended June 30, 2026.
Current report
Going Concern Assessment
Current report
The Company has a history of net losses and operating losses and has used cash in operating activities, which have raised substantial doubt about its ability to continue as a going concern. During the three months ended June 30, 2026, the Company reported net income, primarily as a result of a non-cash fair value gain on derivative liabilities; however, the Company continued to incur a loss from operations and negative cash flows from operating activities.
Current report
Management evaluates whether conditions or events, considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This assessment requires management to consider the Company’s liquidity, working capital, operating results, cash flows, debt obligations, available financing sources and management’s plans to mitigate adverse conditions.
Current report
Management’s going concern assessment involves significant judgment, including assumptions regarding the Company’s ability to improve operating results, manage operating costs, collect receivables, develop its consulting and financing services businesses and obtain additional financing when necessary. Changes in these assumptions or the Company’s ability to execute its plans could affect management’s going concern assessment and related disclosures.
Current report
Revenue from continuing operations is generated primarily from garment manufacturing, logistics services, consulting services and financing services. Revenue from contracts with customers relating to garment manufacturing, logistics services and consulting services is recognized in accordance with ASC Topic 606, Revenue from Contracts with Customers, when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Interest income generated from the Company’s financing services is not within the scope of ASC Topic 606 and is recognized over the contractual term of the underlying financing based on the outstanding principal and the applicable contractual interest rate or effective yield, as appropriate.
Current report
For revenue streams within the scope of ASC Topic 606, the Company applies the following five-step model to recognize revenue from contracts with customers: (i) identification of the contract with the customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when, or as, the Company satisfies the performance obligations.
Current report
The following table summarizes the Company’s major revenue streams for the three months ended June 30, 2026 and 2025:
Current report
For the garment manufacturing business, revenue is generated primarily from the sale of garments and related products to customers based on purchase orders or sales contracts. The Company generally recognizes revenue at a point in time when control of the products is transferred to the customer, which typically occurs upon delivery of the products to the customer or other delivery point specified in the relevant customer arrangement. At that time, the customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the products. Revenue is measured based on the transaction price specified in the customer contract or purchase order, net of applicable discounts, returns, allowances or other variable consideration, if any. The Company did not have any material discounts, returns, allowances or other variable consideration related to garment manufacturing revenue during the three months ended June 30, 2026.
Current report
For the logistics services business, revenue is generated primarily from the provision of delivery, transportation and related logistics services. The Company generally recognizes revenue at a point in time when the related logistics service has been completed in accordance with the customer arrangement. The Company’s performance obligation is typically satisfied when the goods have been delivered to the agreed destination or when the relevant delivery or logistics service has otherwise been completed and accepted by the customer. Revenue is measured based on the agreed service fee specified in the customer contract, delivery order, settlement statement or other relevant arrangement. The Company did not have any material rebates, credits or other variable consideration related to logistics services revenue during three months ended June 30, 2026.
Current report
For the consulting services business, revenue is generated through Yingxi HK, the Company’s Hong Kong subsidiary. The consulting services primarily includes customer consultation, appointment coordination, referral and liaison with third-party insurance brokers or other service providers, and related administrative support. The Company generally recognizes revenue when the agreed consulting, referral, coordination or administrative support services have been completed and the Company’s right to consideration has been established. If the consideration is contingent upon the successful completion or effectiveness of a customer arrangement with a third-party service provider, the Company recognizes revenue only when the contingency is resolved and it is probable that a significant reversal of revenue will not occur. The Company did not have any material refunds, clawbacks or other variable consideration related to consulting services revenue during the three months ended June 30, 2026.
Current report
The Company evaluates whether it acts as a principal or an agent in each consulting services arrangement. To the extent the Company acts as an agent and does not control the underlying insurance products or other third-party services before they are provided to customers, the Company recognizes revenue on a net basis for the consulting, referral or coordination fee to which it expects to be entitled, and does not recognize the gross amount of insurance premiums or other amounts charged by third-party service providers.
Current report
For the financing services business, the Company provides consumer and commercial financing services through Time Is Loan, the Company’s wholly owned Hong Kong subsidiary and a licensed money lender. The financing services business primarily generates interest income from short-term personal loans and other financing arrangements. Interest income is not within the scope of ASC Topic 606 and is recognized over the contractual term of the underlying financing based on the outstanding principal and the applicable contractual interest rate or effective yield, as appropriate. Principal repayments are applied against the related loans receivable and are not recognized as income. Loans receivable are carried at amortized cost, net of an allowance for expected credit losses.
Current report
The Company’s property management and subleasing business was disposed of during the fiscal year ended March 31, 2026 and has been classified as discontinued operations. Accordingly, the revenue recognition policies described above relate only to the Company’s continuing operations.
Current report
For contracts with customers within the scope of ASC Topic 606, the Company generally does not have a significant financing component, as the period between the transfer of the promised goods or services and payment is generally one year or less. Accounts receivable related to such contracts are recorded when the Company has an unconditional right to consideration. Amounts received from customers before the Company satisfies its performance obligations are recorded as contract liabilities or deferred revenue and are recognized as revenue when the related performance obligations are satisfied. The foregoing treatment does not apply to the Company’s financing services business, for which loans receivable and related interest income are accounted for under the applicable financial instrument and credit loss guidance.
Current report
Accounts Receivable and Loan Receivables, Net
Current report
Accounts receivable are classified as financial assets measured at amortized cost and are stated at their historical carrying amounts, net of an allowance for expected credit losses. Accounts receivable are recognized when the Company has an unconditional right to consideration. The amortized cost represents the amount recognized on initial recognition, adjusted for subsequent collections, amortization, if applicable, and any allowance for expected credit losses.
Current report
The Company recognizes an allowance for expected credit losses on accounts receivable in accordance with ASC Topic 326, Financial Instruments—Credit Losses (“ASC 326”). In estimating expected credit losses, the Company considers historical credit loss experience, customer payment history, aging of receivables, debtor-specific factors, current economic conditions and reasonable and supportable forecasts of future conditions, where appropriate. Receivables that share similar risk characteristics are generally evaluated on a collective basis, while receivables that do not share similar risk characteristics are evaluated individually.
Current report
Following the acquisition of Time Is Loan Limited (“Time Is Loan”) on May 15, 2026, the Company also has loan receivables arising from its financing services business. Loan receivables are measured at amortized cost, net of an allowance for expected credit losses. Interest income is recognized over the contractual term of the underlying financing based on the outstanding principal and the applicable contractual interest rate or effective yield, as appropriate. Principal repayments are applied against the related loan receivables and are not recognized as income.
Current report
The allowance for expected credit losses on loan receivables represents management’s estimate of credit losses expected over the contractual life of the loans. In estimating expected credit losses, management considers relevant information including historical loss experience, borrower credit profiles, delinquency status, repayment history, collateral values, if applicable, current portfolio and economic conditions, and reasonable and supportable forecasts. Loans with similar risk characteristics are evaluated on a collective basis, while loans that no longer share similar risk characteristics are evaluated individually.
Current report
As of June 30, 2026 and March 31, 2026, the allowance for expected credit losses related to trade and other receivables was approximately $52,515 and $51,629, respectively.
Current report
Except for the addition of accounting policies related to loan receivables, interest income and the related allowance for expected credit losses following the acquisition of Time Is Loan, there were no material changes to the Company’s accounting policies during the three months ended June 30, 2026. Other than the changes described above, there is no change in the accounting policies for the three months ended June 30, 2026.
Current report
Recently issued and adopted accounting pronouncements
Current report
The Company reviews new accounting standards as issued by the Financial Accounting Standards Board, or FASB, and evaluates the potential impact of such standards on the Company’s consolidated financial statements and related disclosures.
Current report
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires enhanced disclosures about significant segment expenses and other segment items and applies to all public entities, including entities with a single reportable segment. The Company adopted ASU 2023-07 for the fiscal year ended March 31, 2026. The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows, but resulted in enhanced segment-related disclosures.
Current report
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires enhanced income tax disclosures, including additional disaggregation of information in the rate reconciliation and income taxes paid by jurisdiction. The Company adopted ASU 2023-09 for the fiscal year ended March 31, 2026. The adoption of ASU 2023-09 did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows, but resulted in enhanced income tax-related disclosures.
Showing the first 40 of 73 passages. Open the source sections for the rest.
Removed paragraphs (74)
Previous report
Unless the context otherwise requires, all references in this quarter report to “Addentax” refer to Addentax Group Corp., a holding company, and references to “we,” “us,” “our,” the “Registrant”, the “Company,” or “our company” refer to Addentax and/or its consolidated subsidiaries. Addentax Group Corp., our Nevada holding company, is the entity in which our investors are investing.
Previous report
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) Yingxi Textile & Garments Co., Ltd., a PRC company; (iv) ShenzhenYingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng Wei Garments Co., Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”), (vii) Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”); (viii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a PRC company (“XKJ”), (ix) Dongguan Aotesi Garments Co., Ltd., a PRC company (“AOT”), and (x) Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).
Previous report
Effective July 2025, Shenzhen Yingxi Industrial Chain Services Co., Ltd, previously known as Shenzhen Qianhai Yingxi Industrial Chain Services Co., Ltd, changed its name to Shenzhen Yingxi Industrial Chain Services Co., Ltd due to a relocation of its registered address. The name change did not result in any material change to the subsidiary’s operations, financial position, or results.
Previous report
“PRC Subsidiaries” refers to, collectively, YX, HSW, YS, PF, XKJ, AOT and HX.
Previous report
“WFOE” refers to Yingxi Textile & Garments Co., Ltd or “QYTG”, a wholly foreign-owned enterprise in China, which is indirectly wholly owned by Addentax Group Corp.
Previous report
Effective August 2025, Yingxi Textile & Garments Co., Ltd, previously known as Qianhai Yingxi Textile & Garments Co., Ltd, changed its name to Yingxi Textile & Garments Co., Ltddue to a relocation of its registered address. The name change did not result in any material change to the subsidiary’s operations, financial position, or results.
Previous report
In May 2025, the Company disposed of AOT to the management of AOT.
Previous report
Our property management and subleasing business provides subleasing of shops and property management services to garment wholesalers and retailers in the garment market. We currently have an aggregate of 56,238 square meters floor space and provide approximately 1,300 shop space to clients. We conduct our property management and subleasing operation through a wholly-owned subsidiary acquired in September 2023, HX, which is located in the Guangdong province, China. On July 1, 2025, the Company disposed of HX to its management. As of date of disposal, the net assets of HX was $6,972. The consideration was $13,829, resulting in an income of $6,857 from disposal.
Previous report
Logistics Services Business
Previous report
Property Management and Subleasing Business
Previous report
The business objective of our property management and subleasing segment was to integrate resources in a shopping mall, develop e-commerce and the Internet celebrity economy and increase the value of the stores in that area.
Previous report
The Company conducted the business through a wholly-owned subsidiary, HX. In July 2025, the Company disposed of HX to the management of HX. The property management and subleasing business was then classified as discontinued operation.
Previous report
Logistics Services Business
Previous report
Property Management and Subleasing Business
Previous report
There is no significant seasonality in our business.
Previous report
Logistics services business
Previous report
Property management and subleasing business
Previous report
For property management and subleasing business, we generally collect rental and management fees for the following month each month in advance.
Previous report
Summary of Critical Accounting Policies
Previous report
We have identified critical accounting policies that, as a result of judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operation involved could result in material changes to our financial position or results of operations under different conditions or using different assumptions.
Previous report
Estimates and Assumptions
Previous report
We regularly evaluate the accounting estimates that we use to prepare our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Previous report
Revenue is generated through sale of goods and delivery services. Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods and services. The Company applies the following five-step model in order to determine this amount:
Previous report
The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery.
Previous report
For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all product and service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.
Previous report
Accounts receivable, net
Previous report
Accounts receivable, net are stated at the historical carrying amount net of allowance for doubtful accounts.
Previous report
Account receivables are classified as financial assets subsequently measured at amortized cost. Account receivables are recognized when the Company becomes a party to the contractual provisions of the receivables. They are measured, at initial recognition, at fair value plus transaction costs, if any and are subsequently measured at amortized cost. The amortized cost is the amount recognized on the receivable initially, minus principal repayments, plus cumulative amortization (interest) using the effective interest method of any difference between the initial amount and the maturity amount, adjusted for any loss allowance.
Previous report
A loss allowance for expected credit losses is recognized on account receivables and is updated at each reporting date. The Company determines the expected credit losses provisions based on ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (‘‘ASC 326’’) using a modified retrospective approach which did not have a material impact on the opening balance of accumulated deficit. To determine expected credit losses on account receivables, the Company will consider the historic credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions, and an assessment of both the current and forecasted direction of conditions at the reporting date, including the time value of money, where appropriate.
Previous report
The loss allowance is calculated on a collective basis for all trade and other receivables in totality. An impairment gain or loss is recognized in profit or loss with a corresponding adjustment to the carrying amount of account receivables, through use of a loss allowance account. The impairment loss is included in operating expenses as a movement in credit loss allowance.
Previous report
Recently issued accounting pronouncements
Previous report
Accounting for Convertible Instruments: In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year.
Previous report
Total revenue for the three months ended December 31, 2025 increased by approximately $0.1 million, or 12.8%, as compared with the three months ended December 31, 2024. The increase was mainly due to the increase of $0.2 million in logistics services revenue.
Previous report
Revenue generated from our garment manufacturing business contributed approximately $0.01 million, or 0.5%, of our total revenue for the three months ended December 31, 2025. By comparison, revenue generated from garment manufacturing business contributed approximately $0.1 million or 1.6% of our total revenue for the three months ended December 31, 2024. The low level of sales was mainly due to a decrease in order volume and fierce market competition.
Previous report
Revenue generated from our logistics services business contributed approximately $1.0 million, or 99.5%, of our total revenue for the three months ended December 31, 2025. By comparison, revenue generated from our logistic business contributed approximately $0.8 million or 98.4% of our total revenue for the three months ended December 31, 2024.
Previous report
For our garment manufacturing business, we purchase the majority of our raw materials directly from numerous local fabric and accessories suppliers.
Previous report
Raw material costs for our garment manufacturing business were approximately 93.9% of our total garment manufacturing business revenue for the three months ended December 31, 2025, as compared with 35.3% for the three months ended December 31, 2024. The increase in percentage was mainly because there was no production thus no labor cost in the quarter ended December 31, 2025 as we procured products from external manufacturers for resale instead of manufacturing.
Previous report
Labor costs for our garment manufacturing business was nil for the three months ended December 31, 2025, as compared with 38.1% for the three months ended December 31, 2024. There was no production during the three months ended December 31, 2025 as we procured products from external manufacturers for resale instead of manufacturing.
Previous report
Overhead and other expenses for our garment manufacturing business was nil for the three months ended December 31, 2025, as compared with 10.0% of total garment business revenue for the three months ended December 31, 2024. There was no production during the three months ended December 31, 2025.
Previous report
For our logistic services business, we outsourced some of the business to our contractors. We relied on a few contractors, and the contracting fees to our largest contractor represented approximately 12.8% ($0.09 million) and 18.2% of total cost of revenues for our service segment for the three months ended December 31, 2025 and 2024, respectively. The decrease was attributed to less use of contractors. We have not experienced any disputes with our contractors and we believe we maintain good relationships with our contract logistics services providers.
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Reworded paragraphs (22)
Previous wording
The following discussion and analysis of our financial condition and results of operations for the three and nine months ended December 31, 2025 and 2024 should be read in conjunction with the Financial Statements and corresponding notes included in this Report on Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Special Note Regarding Forward-Looking Statements in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “target”, “forecast” and similar expressions to identify forward-looking statements.
Current wording
The following discussion and analysis of our financial condition and results of operations for the three months ended June 30, 2026 and 2025 should be read in conjunction with the Financial Statements and corresponding notes included in this Report on Form 10-Q. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations, and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors and Special Note Regarding Forward-Looking Statements in this report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “target”, “forecast” and similar expressions to identify forward-looking statements.
Previous wording
We (“Addentax Group Corp.”) are a Nevada holding company with no material operations of our own. We conduct substantially all of our operations through our operating companies established in the PRC, primarily YX, our wholly-owned subsidiary and its subsidiaries. We are not a Chinese operating company. We are a holding company and do not directly own any substantive business operations in China. Therefore, our investors will not directly hold any equity interests in our operating companies. Our holding company structure involves unique risks to investors. Chinese regulatory authorities could disallow our operating structure, which would likely result in a material change in our operations and/or the value of our common stock, including that it could cause the value of such securities to significantly decline or become worthless. Our holding company, Addentax Group Corp., is listed on the Nasdaq Capital Market under the symbol of “ATXG”. We classify our businesses into three main segments: garment manufacturing, logistics services, and property management and subleasing.
Current wording
We are a Nevada holding company with no material operations of our own. We conduct substantially all of our operations through our operating companies established in the PRC, primarily YX, our wholly-owned subsidiary and its subsidiaries. We are not a Chinese operating company. We are a holding company and do not directly own any substantive business operations in China. Therefore, our investors will not directly hold any equity interests in our operating companies. Our holding company structure involves unique risks to investors. Chinese regulatory authorities could disallow our operating structure, which would likely result in a material change in our operations and/or the value of our Common Stock, including that it could cause the value of such securities to significantly decline or become worthless. Our holding company, Addentax Group Corp., is listed on the Nasdaq Capital Market under the symbol of “ATXG”. As of three months ended June 30, 2026, our continuing operations primarily consisted of garment manufacturing, logistics services, consulting services and financing services.
Previous wording
Our garment manufacturing business consists of sales made principally to wholesalers located in the PRC. We have our own manufacturing facilities, with sufficient production capacity and skilled workers on production lines to ensure that we meet our high quality control standards and delivery requirements for our customers. We conduct our garment manufacturing operations through three wholly-owned subsidiaries, namely HSW, YS and AOT, which are located in the Guangdong province, China.
Current wording
Our garment manufacturing business consists of sales made principally to wholesalers located in the PRC. We have our own manufacturing facilities, with sufficient production capacity and skilled workers on production lines to ensure that we meet our high quality control standards and delivery requirements for our customers. We conduct our garment manufacturing operations through two wholly-owned subsidiaries, namely YX and YS, which are located in Guangdong province, China.
Previous wording
Our logistics business consists of delivery and courier services covering 44 cities in 10 provinces and 2 municipalities in China. Although we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors. We believe outsourcing allows us to maximize our capacity and maintain flexibility while reducing capital expenditures and the costs of keeping drivers during slow seasons. We conduct our logistic operations through two wholly-owned subsidiaries, namely XKJ and PF, which are located in the Guangdong province, China.
Current wording
Our logistics business consists of delivery and courier services covering 45 cities in 10 provinces and 2 municipalities in China. Although we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors. We believe outsourcing allows us to maximize our capacity and maintain flexibility while reducing capital expenditures and the costs of keeping drivers during slow seasons. We conduct our logistic operations through two wholly-owned subsidiaries, namely XKJ and PF, which are located in Guangdong province, China.
Previous wording
We believe the strength of our garment manufacturing business is mainly due to our consistent emphasis on exceptional quality and timely delivery of our products. The primary business objective for our garment manufacturing segment is to expand our customer base and improve our profit.
Current wording
We believe the strength of our garment manufacturing business is mainly due to our consistent emphasis on exceptional quality and timely delivery. The primary business objective for our garment manufacturing segment is to expand our customer base and improve our profit.
Previous wording
The business objective and future plan for our logistics services segment is to establish an efficient logistics system and to build a nationwide delivery and courier network in China. As of December 31, 2025, we provide logistics services to over 44 cities in 10 provinces and 2 municipalities. We expect to develop 20 additional logistics routes in existing serving cities and improve the Company’s profit in the year 2026.
Current wording
The business objective and future plan for our logistics services segment is to establish an efficient logistics system and to build a nationwide delivery and courier network in China. As of June 30, 2026, we provided logistics services to over 45 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 2027.
Previous wording
We generally receive more purchase orders during our second and third quarters and fewer manufacturing orders during May and June.
Current wording
We generally receive more purchase orders during our second and third quarters and fewer manufacture orders during May and June.
Previous wording
We generally receive more delivery orders in our third and fourth quarters and are more vulnerable to shipping delays in the PRC during the Chinese New Year due to traffic and port congestion, border crossing delays and customs clearance issues.
Current wording
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.
Previous wording
For our new customers, we generally require orders placed to be backed by advances or deposits. For our long-term and established customers with good payment track records, we generally provide payment terms between 30 to 180 days following their acknowledgement of receipt of goods.
Current wording
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.
Previous wording
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in the consolidated balance sheets.
Current wording
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets.
Previous wording
Receivables are written off when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, e.g., when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings. Receivables written off may still be subject to enforcement activities under the Company’s recovery procedures, considering legal advice where appropriate. Any recoveries made are recognized in profit or loss.
Current wording
Receivables are written off when available information indicates that the counterparty is experiencing severe financial difficulty and there is no reasonable expectation of recovery, including, where applicable, when the counterparty has entered into liquidation or bankruptcy proceedings. Receivables written off may remain subject to collection or enforcement activities where appropriate. Any subsequent recoveries are recognized in profit or loss.
Previous wording
The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s consolidated financial statements.
Current wording
Management has not identified any other recently issued accounting standards that are expected to have a material impact on the Company’s consolidated financial statements or related disclosures.
Previous wording
Income tax expense for the three months ended December 31, 2025 and 2024 was $248 and $3,116, respectively. YX primarily operates in the PRC and files tax returns in the PRC.
Current wording
Income tax expense for the three months ended June 30, 2026 and 2025 was approximately $2 and $764, respectively. YX primarily operates in the PRC and files tax returns in the PRC jurisdictions.
Previous wording
Yingxi Industrial Chain Group Co., Ltd is incorporated in the Republic of Seychelles and, under the current laws of Seychelles, is not subject to income taxes.
Current wording
Yingxi Seychelles was incorporated in the Republic of Seychelles and, under the current laws of Seychelles, is not subject to income taxes.
Previous wording
Yingxi HK is incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive tax rate of 16.5%. No provision for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended December 31, 2025 and 2024.
Current wording
Yingxi HK was incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive tax rate of 16.5%. No provision for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the three months ended June 30, 2026 and 2025.
Previous wording
QYTG and YX are incorporated in the PRC and are subject to PRC Enterprise Income Tax (EIT) rate of 25%. No provision for income taxes in the PRC has been made as QYTG and YX had no taxable income for the three months ended December 31, 2025 and 2024.
Current wording
WFOE and YX were incorporated in the PRC and is subject to the PRC Enterprise Income Tax (EIT) rate of 25%. No provision for income taxes in the PRC has been made as WFOE and YX had no taxable income for the three months ended June 30, 2026 and 2025.
Previous wording
The majority of our subsidiaries are governed by the Income Tax Laws of the PRC. All YX’s operating companies are subject to progressive EIT rates from 5% to 15% in 2025. The preferential tax rates will expire at end of year 2026.
Current wording
PRC operating companies are governed by the Income Tax Laws of the PRC. All YX’s operating companies are subject to progressive EIT rates from 5% to 15% in 2026. The preferential tax rates will expire at end of year 2026.
Previous wording
Summary cash flows information for the nine months ended December 31, 2025 and 2024 is as follow:
Current wording
Summary cash flow information for the three months ended June 30, 2026 and 2025 is as follows:
Previous wording
Net cash used in operating activities in the nine months ended December 31, 2025 was approximately $1.1 million as compared to cash of $0.8 million provided by operating activities in the nine months ended December 31, 2024, which was approximately $1.9 million less than that of the nine months ended December 31, 2024. The difference in cash flow between the two periods was mainly because of the movement of operating assets and liabilities in the nine months ended December 31, 2025, resulted in cash outflow of approximately $1.3 million, while the movement of operating assets and liabilities in the nine months ended December 31, 2024 resulted in cash inflow of approximately $0.6 million.
Current wording
Net cash used in operating activities in the three months ended June 30, 2026 decreased by approximately $0.43 million compared with that of the three months ended June 30, 2025. The decrease was because (i) net loss adjusted to operating cash flow for the three months ended June 30, 2026 was $0.1 million less than that of the three months ended June 30, 2025; (ii) the movement of operating assets and liabilities in the three months ended June 30, 2026 resulted in cash inflow of approximately $0.1 million, which was $0.2 million more than that of the corresponding period in 2025.
Previous wording
Net cash provided by financing activities for the nine months ended December 31, 2025 was approximately $1.3 million as compared to cash used in financing activities of $1.0 million in the nine months ended December 31, 2024, which was approximately $0.34 million less than the nine months ended December 31, 2025. The difference in cash flow between the two periods was mainly because in the nine months ended December 31, 2025, the Company released of $2.7 million of restricted cash from the issuance and conversion of certain convertible notes, paid net cash advance of $2.6 million to related parties, and paid $0.39 million for the redemption of convertible notes not converted. By comparison, in the nine months ended December 31, 2024, the Company did not have released restricted cash, paid $1.1 million net cash advance to related parties, and received net proceeds from bank loans of $0.2 million.
Current wording
Net cash provided by financing activities for the three months ended June 30, 2026 increased by approximately $0.1 million, compared to the three months ended June 30, 2025. The increase was mainly because in the three months ended June 30, 2026, the related parties repaid $0.2 million to the Company, and received proceeds from loan payable of $0.4 million. While in the three months ended June 30, 2025, the Company had release of restricted cash of $1.3 million, paid net cash advance of $0.9 million to related parties, and received net proceeds from bank loans of $0.1 million.
Previous wording
In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, Mr. Hong has indicated the intent and ability to provide additional equity financing.
Current wording
In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, Mr. Hong has indicated his intention and willingness to provide additional equity financing, if necessary.
Previous wording
Our operations are located in China, which may give rise to significant foreign currency risks from fluctuations and the degree of volatility in foreign exchange rates between the U.S. dollar and the Chinese Renminbi (“RMB”). All of our sales are in RMB. In the past years, RMB continued to appreciate against the U.S. dollar. As of December 31, 2025, the market foreign exchange rate was RMB 7.02 to one U.S. dollar. Our financial statements are translated into U.S. dollars using the closing rate method. The balance sheet items are translated into U.S. dollars using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the period. All translation adjustments are included in accumulated other comprehensive income in the statement of equity. The foreign currency translation gain (loss) for the nine months ended December 31, 2025 and 2024 was approximately $(0.12) million and $0.06 million, respectively.
Current wording
Our operations are located primarily in China and Hong Kong, 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”) and Hong Kong dollar (“HKD”). Our sales are primarily denominated in RMB, while sales generated by our Hong Kong operations are denominated in HKD. In the past years, RMB continued to appreciate against the U.S. dollar. As of June 30, 2026, the market foreign exchange rates were RMB 6.80 and HKD 7.84 to one U.S. dollar, respectively. Our financial statements are translated into U.S. dollars using the closing rate method. The balance sheet items are translated into U.S. dollars using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the period. All translation adjustments are included in accumulated other comprehensive income in the statement of equity. The foreign currency translation (loss) for the three months ended June 30, 2026 and 2025 was approximately $(0.06) million and ($0.04) million, respectively.
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
The majority of our subsidiaries are governed by the Income Tax Laws of the PRC. All YX’s operating companies are subject to progressive EIT rates from 5% to 15% in 2025. The preferential tax rates will expire at end of 2026.
Previous report — wording carried elsewhere
The following table summarizes our results of operations for the nine months ended December 31, 2025 and 2024. The table and the discussion below should be read in conjunction with our consolidated financial statements and the notes thereto appearing elsewhere in this report.
Previous report — wording carried elsewhere
Income tax expense for the nine months ended December 30, 2025 and 2024 was $1,082 and $4,643, respectively. YX primarily operates in the PRC and files tax returns in the PRC.
Previous report — wording carried elsewhere
Yingxi Industrial Chain Group Co., Ltd is incorporated in the Republic of Seychelles and, under the current laws of Seychelles, is not subject to income taxes.
Previous report — wording carried elsewhere
Yingxi HK is incorporated in Hong Kong and is subject to Hong Kong income tax at a progressive tax rate of 16.5%. No provision for income taxes in Hong Kong has been made as Yingxi HK had no taxable income for the nine months ended December 31, 2025 and 2024.
Previous report — wording carried elsewhere
QYTG and YX are incorporated in the PRC and are subject to PRC Enterprise Income Tax (EIT) rate of 25%. No provision for income taxes in the PRC has been made as QYTG and YX had no taxable income for the nine months ended December 31, 2025 and 2024.
Previous report — wording carried elsewhere
Addentax Group Corp. is a U.S. entity and is subject to the United States federal income tax. No provision for income taxes in the United States has been made as Addentax Group Corp. had no United States taxable income for the nine months ended December 31, 2025 and 2024.