ADDENTAX GROUP CORP.

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 People’s Republic of China, or 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. 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. 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. 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.

Current 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.

Previous wording

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. Addentax Group Corp., our Nevada holding company, is the entity in which our investors are investing.

Current wording

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 wording

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) 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 Au Te Si Garments Co., Ltd., a PRC company (“AOT”), (x) Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).

Current wording

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) 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”), (x) Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).

Previous wording

“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.

Current wording

“WFOE” refers to Qianhai Yingxi Textile & Garments Co., Ltd or “QYTG”, a wholly foreign owned enterprise in China, which is indirectly wholly owned by Addentax Group Corp.

Previous wording

Our garment manufacturing business consists of sales made principally to wholesaler 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 timely meet the delivery requirements for our customers. We conduct our garment manufacturing operations through five wholly owned subsidiaries, namely Dongguan Heng Sheng Wei Garments Co., Ltd (“HSW”), Dongguan Yushang Clothing Co., Ltd (“YS”)and Dongguan Aotesi Garments Co., Ltd., (“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 five wholly owned subsidiaries, namely HSW, YS and AOT, which are located in the 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 Shenzhen Xin Kuai Jie Transportation Co., Ltd (“XKJ”) and Shenzhen Yingxi Peng Fa Logistic Co., Ltd (“PF”), which are located in the Guangdong province, China.

Current 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.

Previous wording

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. 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.

Current wording

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 approximately $6,972. The consideration was $13,829, resulting in an income of $6,857 from disposal.

Previous wording

The business objective and future plan for our logistics services segment is to establish an efficient logistic system and to build a nationwide delivery and courier network in China. As of December 31, 2024, we provide logistics services 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 for the remainder of 2024.

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, 2024, we provide logistics services 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 2025.

Previous wording

The business objective of our property management and subleasing segment is to integrate resources in shopping mall, develop e-commerce bases and the Internet celebrity economy together to drive to increase the value of the stores in the area. The Company conduct the business through a wholly owned subsidiary acquired in December 2023, namely Dongguan Hongxiang Commercial Co., Ltd., a PRC company (“HX”).

Current wording

The business objective of our property management and subleasing segment was to integrate resources in a shopping mall, develop develop e-commerce and the Internet celebrity economy increase the value of the stores in that area.

Previous wording

The following table summarize our results of operations for the three months ended December 31, 2024 and 2023. 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.

Current wording

The following table summarizes our results of operations for the three months ended June 30, 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 wording

Total revenue for the three months ended December 31, 2024 decreased by approximately $0.4 million, or 27.9%, as compared with the three months ended December 31, 2023. The decrease was mainly due to the decrease of $0.4 million in logistics services business.

Current wording

Total revenue for the three months ended June 30, 2025 increased by approximately $0.1 million, or 15.3%, as compared with the three months ended June 30, 2024. The increase was mainly due to the increase of $0.3 million in logistics services revenue.

Previous wording

Revenue generated from our garment manufacturing business contributed approximately $0.03 million, or 3.2%, of our total revenue for the three months ended December 31, 2024. Revenue generated from garment manufacturing business contributed approximately $0.03 million or 1.8% of our total revenue for the three months ended December 31, 2023, respectively. The low level of sales was mainly due to factory facilities renewal and repairs, and the remaining factories cannot provide the same capacity as previously. We estimate the capacity will recover at the fiscal year ending 2025.

Current wording

Revenue generated from our garment manufacturing business contributed approximately $0.02 million, or 2.0%, of our total revenue for the three months ended June 30, 2025. By comparison, revenue generated from garment manufacturing business contributed approximately $0.09 million or 10.2% of our total revenue for the three months ended June 30, 2024. The low level of sales was mainly due to a decrease in order volume and fierce market competition

Previous wording

Revenue generated from our logistics services business contributed approximately $0.8 million, or 78.5%, of our total revenue for the three months ended December 31, 2024. Revenue generated from our logistic business contributed approximately $1.2 million or 81.0% of our total revenue for the three months ended December 31, 2023.

Current wording

Revenue generated from our logistics services business contributed approximately $0.8 million, or 82.2%, of our total revenue for the three months ended June 30, 2025. By comparison, revenue generated from our logistic business contributed approximately $0.5 million or 57.2% of our total revenue for the three months ended June 30, 2024.

Previous wording

Revenue generated from our property management and subleasing business was 0.2 million, or 18.4%, of our total revenue for the three months ended December 31, 2024. The revenue from this business segment was $0.3 million or 17.2% of our total revenue for the three months ended December 31, 2023.

Current wording

Revenue generated from our property management and subleasing business was $0.15 million, or 15.8%, of our total revenue for the three months ended June 30, 2025. The revenue from this business segment was $0.3 million, or 32.7% for the three months ended June 30, 2024.

Previous wording

Raw material costs for our garment manufacturing business were approximately 35.3% of our total garment manufacturing business revenue for the three months ended December 31, 2024, as compared with 15.7% for the three months ended December 31, 2023. The increase in percentage was mainly due to increased orders received.

Current wording

Raw material costs for our garment manufacturing business were approximately 35.3% of our total garment manufacturing business revenue for the three months ended June 30, 2025, as compared with 43.5% for the three months ended June 30, 2024. The decrease in percentage was mainly due to a reduction in the costs of the raw materials.

Previous wording

Labor costs for our garment manufacturing business was approximately 38.1% of our total garment manufacturing business revenue for the three months ended December 31, 2024, as compared with 25.8% for the three months ended December 30, 2023. We maintained a sustainable level in wages, the decrease in portion of labor cost was mainly due to the increased in revenue.

Current wording

Labor costs for our garment manufacturing business was approximately 40.8% of our total garment manufacturing business revenue for the three months ended June 30, 2025, as compared with 20.9% for the three months ended June 30, 2024. We maintained a sustainable level in wages. The increase in portion of labor cost against revenue was mainly due to the decrease in revenue.

Previous wording

Overhead and other expenses for our garment manufacturing business accounted for approximately 10.0% of our total garment business revenue for the three months ended December 31, 2024, as compared with (4.8)% of total garment business revenue for the three months ended December 31, 2023.

Current wording

Overhead and other expenses for our garment manufacturing business accounted for approximately 6.2% of our total garment business revenue for the three months ended June 30, 2025, as compared with 4.1% of total garment business revenue for the three months ended June 30, 2024.

Previous wording

For our logistic business, we outsourced some of the business to our contractors. We relied on a few subcontractors, of which the subcontracting fees to our largest contractor represented approximately % and 53.1% of total cost of revenues for our service segment for the three months ended December 31, 2024 and 2023, respectively. The decrease was attributed to an increase in usage of our own logistics as compared to the subcontractor. We have not experienced any disputes with our subcontractors and we believe we maintain good relationships with our contract logistics services providers.

Current wording

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 6.0% ($0.05 million) and nil% of total cost of revenues for our service segment for the three months ended June 30, 2025 and 2024, respectively. The increase was attributed to the 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.

Previous wording

Fuel, toll and other costs for our service business for the three months ended December 31, 2024 were approximately $0.5 million as compared with $0.5 million for the three months ended December 31, 2023. Fuel, toll and other costs for our service business accounted for approximately 63.6% of our total service revenue for the three months ended December 31, 2024, as compared with 41.6% for the three months ended December 31, 2023. The increase was primarily attributable to a decrease of usage of subcontractors during the quarter.

Current wording

Fuel, toll and other costs for our logistics services business for the three months ended June 30, 2025 were approximately $0.6 million as compared with $0.2 million for the three months ended June 30, 2024. Fuel, toll and other costs for our logistics services business accounted for approximately 70.8% of our total service revenue for the three months ended June 30, 2025, as compared with 51.2% for the three months ended June 30, 2024. The increase was primarily attributable to a increased use of contractors during the quarter.

Previous wording

For property management and subleasing business, the cost of revenue was mainly the amortization of operating lease assets for the subleasing business. The cost of revenue for property management and subleasing business for the three months ended December 31, 2024 was $301,834, approximately 155.2% of our total property management and subleasing business revenue, as compared with $236,291, or 93.6% of the total property management and subleasing business revenue for the three months ended December 31, 2023.

Current wording

For property management and subleasing business, the cost of revenue was mainly the amortization of operating lease assets for the subleasing business. The cost of revenue for property management and subleasing business for the three months ended June 30, 2025 was $0.3 million, approximately (219.2)% of our total property management and subleasing business revenue, as compared with $0.3 million, or (122.3)% for the three months ended June 30, 2024.

Previous wording

Garment manufacturing business gross profit for the three months ended December 31, 2024 was $5,620, as compared with $17,113 for the three months ended December 31, 2023. Gross profit accounted for 16.6% of our total garment manufacturing business revenue for the three months ended December 31, 2024, as compared to 63.3% for the three months ended December 31, 2023. The decrease of gross profit ratio was mainly due to the increased raw material costs.

Current wording

Garment manufacturing business gross profit for the three months ended June 30, 2025 was $3,523, as compared with $27,267 for the three months ended June 30, 2024. Gross profit accounted for 17.7% of our total garment manufacturing business revenue for the three months ended June 30, 2025, as compared to 31.5% for the three months ended June 30, 2024. The decrease of gross profit ratio was mainly due to a decline in segment revenue, primarily driven by reduced sales on the Taobao platform, which resulted in less efficient absorption of fixed and variable costs across operations.

Previous wording

Gross profit in our logistics services business for the three months ended December 31, 2024 was approximately $184,545 and gross margin was 22.2%. Gross profit in our logistics services business for the three months ended December 31, 2023 was approximately $132,917 and gross margin was 11.2%. The increase of gross profit ratio was mainly because the Company re-allocated the orders received and reduced fuel cost.

Current wording

Gross profit in our logistics services business for the three months ended June 30, 2025 was approximately $186,891 and gross margin was 23.2%. Gross profit in our logistics services business for the three months ended June 30, 2024 was approximately $237,211 and gross margin was 48.8%. The decrease of gross profit ratio was mainly due to a combination of cost and market factors: significantly higher toll expenses; and a competitive “low-margin, high-volume” pricing strategy adopted to maintain market share amid intense economic competition, despite year-over-year revenue growth in the 2025 period.

Previous wording

Gross loss in our property management and subleasing business for the three months ended December 31, 2024 was $107,346. Gross profit was $16,186 for the three months ended December 31, 2023. Gross loss accounted for (55.2)% of our total property management and subleasing business revenue for the three months ended December 31, 2024, as compared to 6.4% for the three months ended December 31, 2023. The decrease of gross profit ratio was mainly because the property management and subleasing business are still in preliminary stage.

Current wording

Gross loss in our property management and subleasing business for the three months ended June 30, 2025 was $(184,354). Gross loss was $(61,883) for the three months ended June 30, 2024. Gross loss accounted for (119.2)% of our total property management and subleasing business revenue for the three months ended June 30, 2025, as compared to 22.3% for the three months ended June 30, 2024. The decrease of gross profit ratio was mainly because the property management and subleasing business was still in its preliminary stages and centered around a new building. In order to incentivize tenants, rental rates were reduced but are expected to improve over time.

Previous wording

Our selling expenses for our garment manufacturing business for the three months ended December 31, 2024 and 2023 was approximately $28,818 and $13,504, respectively. The selling expenses for property management and subleasing business for the three months ended December 31, 2024 and 2023 was approximately $83,127 and $81,817, respectively. Selling expenses consisted primarily of advertisement, local transportation, unloading charges and product inspection charges.

Current wording

Our selling expenses for our garment manufacturing business for the three months ended June 30, 2025 and 2024 was approximately $6,661 and $82,603, respectively. The selling expenses for property management and subleasing business for the three months ended June 30, 2025 and 2024 was approximately $46,846 and $56,757, respectively. Selling expenses consisted primarily of advertisement, local transportation, unloading charges and product inspection charges.

Previous wording

Our general and administrative expenses in our garment manufacturing business segment for the three months ended December 31, 2024 and 2023 was approximately $8,021 and $34,007, respectively. Our general and administrative expenses in our logistics services segment for the three months ended December 31, 2024 and 2023 was approximately $175,837 and $174,618, respectively. The general and administrative expenses in our property management and subleasing business was approximately $43,790 and $132,336for the three months ended December 31, 2024 and 2023, respectively. Our general and administrative expenses in our corporate office for the three months ended December 31, 2024 and 2023 was approximately $124,279 and $175,636, respectively. General and administrative expenses consisted 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.

Current wording

Our general and administrative expenses in our garment manufacturing business segment for the three months ended June 30, 2025 and 2024 were approximately $26,450 and $8,310, respectively. Our general and administrative expenses in our logistics services segment for the three months ended June 30, 2025 and 2024 were approximately $200,372 and $216,250, respectively. The general and administrative expenses in our property management and subleasing business were approximately $41,131 and $85,793 for the three months ended June 30, 2025 and 2024, respectively. Our general and administrative expenses in our corporate office for the three months ended June 30, 2025 and 2024 were approximately $311,806 and $257,898, respectively. General and administrative expenses consisted 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.

Previous wording

Total general and administrative expenses for the three months ended December 31, 2024 decreased by approximately 31.9% to $0.4 million from $0.5 million for the three months ended December 31, 2023.

Current wording

Total general and administrative expenses for the three months ended June 30, 2025 increased by approximately 2.0% to $579,759 from $568,251 for the three months ended June 30, 2024.

Previous wording

Loss from operations for the three months ended December 31, 2024 and 2023 was approximately $381,054 and $449,592, respectively. Loss from operations of approximately $31,220 and loss from operation of $30,398 for the three months ended December 31, 2024 and 2023, respectively, which was attributed from our garment manufacturing segment. Income from operations of approximately $8,707 and loss from operation of $41,699 was attributed from our logistics services segment for the three months ended December 31, 2024 and 2023, respectively. Loss from operations of approximately $234,264 and $168,012 for the three months ended December 31, 2024 and 2023, respectively, which was attributed from our property management and subleasing business. We incurred expenses from operations in corporate office of approximately $124,277 and $209,483 for the three months ended December 31, 2024 and 2023, respectively.

Current wording

Loss from operations for the three months ended June 30, 2025 and 2024 was approximately $627,207 and $505,016, respectively. Loss from operations in our garment manufacturing segments was $29,587 and $63,645 for the three months ended June 30, 2025 and 2024, respectively. The decrease in losses was mainly due to implementing operational cost-saving measures. Income (loss) from operations in our logistics services segment was approximately $(13,481) and $20,879 for the three months ended June 30, 2025 and 2024, respectively. The increase in income was mainly due to increased sales. Loss from operations in our property management and subleasing business was $272,331 and $204,433 for the three months ended June 30, 2025 and 2024, respectively. The increase in loss was mainly due to the decreased rental rates. We incurred expenses from operations in corporate office of approximately $311,807 and $257,817 for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Income tax expense for the three months ended December 31, 2024 and 2023 was approximately $3,116 and $3,225, respectively. Yingxi primarily operates in the PRC and files tax returns in the PRC jurisdictions.

Current wording

Income tax expense for the three months ended June 30, 2025 and 2024 was approximately $764 and $465, respectively. YX primarily operates in the PRC and files tax returns in the PRC jurisdictions.

Previous wording

Yingxi Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of the British Virgin Islands, is not subject to income taxes.

Current wording

Yingxi Industrial Chain Group Co., Ltd was incorporated in the Republic of Seychelles and, under the current laws of Seychelles, is not subject to income taxes.

Previous wording

QYTG and YX were incorporated in the PRC and is subject to the PRC Enterprise Income Tax (EIT) rate is 25%. No provision for income taxes in the PRC has been made as QYTG and YX had no taxable income for the three months ended December 31, 2024 and 2023.

Current wording

QYTG 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 QYTG and YX had no taxable income for the three months ended June 30, 2025 and 2024.

Previous wording

The majority of our subsidiaries are governed by the Income Tax Laws of the PRC. All Yingxi’s operating companies are subject to progressive EIT rates from 5% to 15% in 2024. The preferential tax rates will be expired at end of year 2025.

Current 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 2025.

Previous wording

We incurred net loss of approximately $1.1 million and $2.6 million for the three months ended December 31, 2024 and 2023, respectively. Our basic and diluted earnings per share were ($0.19) and ($0.66) for the three months ended December 31, 2024 and 2023, respectively.

Current wording

We incurred net income of approximately $0.4 million and net loss of approximately $1.2 $ million for the three months ended June 30, 2025 and 2024, respectively. Our basic and diluted loss per share were ($0.06) and ($0.25) for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Net cash provided by operating activities in the nine months ended December 31, 2024 was approximately $0.8 million as compared to net cash used in operating activities of $1.5 million in the nine months ended December 31, 2023, which was approximately $2.3 million more than that of the nine months ended December 31, 2023. The increase was mainly due to (i) net loss adjusted to operating cash flow for the nine months ended December 31, 2024 was $0.6 million less than that of the nine months ended December 31, 2023; (ii) the movement of operating assets and liabilities of the three months ended December 31, 2024 resulted in cash outflow of approximately $0.1 million, which was $1.1 million less than that of 2023;.

Current wording

Net cash used in operating activities in the three months ended June 30, 2025 was approximately $0.3 million as compared to $0.2 million in the three months ended June 30, 2024, which was approximately $0.1 million less than that of the three months ended June 30, 2024. The decrease was mainly due to (i) net income adjusted to operating cash flow for the three months ended June 30, 2025 was $0.3 million more than that of the three months ended June 30, 2024; (ii) the movement of operating assets and liabilities in the three months ended June 30, 2025 resulted in cash outflow of approximately $0.5 million, which was $0.4 million less than that of the corresponding period in 2024;.

Previous wording

Net cash used in financing activities for the three months ended December 31, 2024 was approximately $1.0 million as compared to cash provided by financing activities of $1.3 million in the three months ended December 31, 2023. In the nine months ended December 31, 2024, the Company received proceeds of $0.2 million from bank borrowings, $0.6 million of proceeds from issue of ordinary shares, loan to related parties of $1.3 million, payment for redemption of convertible debts, and proceeds of $0.7 million from a private placement, while the Company had release of restricted cash of $3.85 million in the nine months ended December 31, 2023.

Current wording

Net cash provided by financing activities for the three months ended June 30, 2025 was approximately $0.6 million as compared to $0.3 million in the three months ended June 30, 2024, which was approximately $0.3 million less than the three months ended June 30, 2025. The increase was mainly because 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. While in the three months ended June 30, 2024, the Company received proceeds from a private placement of $0.7 million, paid $0.5 million net cash advance to related parties, and received net proceeds from bank loans of $0.1 million.

Previous wording

As of December 31, 2024, we had cash on hand of approximately $0.5 million, total current assets of approximately $27.8 million and current liabilities of approximately $3.2 million. We currently finance our operations from revenue, fund raising from public offering and private placement proceeds and capital contributions from our chief executive officer, Mr. Hong Zhida (the “CEO”).

Current wording

As of June 30, 2025, we had cash on hand of approximately $0.5 million, total current assets of approximately $30.0 million and current liabilities of approximately $4.9 million. We currently finance our operations from revenue, fund raising from our initial public offering and private placement proceeds and capital contributions from our chief executive officer, Mr. Zhida Hong.

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, the CEO has indicated the intent and ability to provide additional debt or 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 the intent and ability to provide additional equity financing.

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, 2024, the market foreign exchange rate was RMB 7.30 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, 2024 and 2023 was approximately $0.06 million and $0.05 million, respectively.

Current 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 June 30, 2025, the market foreign exchange rate was RMB 7.17 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 three months ended June 30, 2025 and 2024 was approximately $(0.04) million and $0.01 million, respectively.