ADDENTAX GROUP CORP.

Addentax Group Corp. operates through its PRC subsidiaries primarily in the garment manufacturing, logistics services, and consulting services industries. The garment manufacturing market in the PRC is characterized by increasing labor costs, excess production capacity in certain sectors, and trade barriers that have reduced the competitiveness of some PRC-based apparel manufacturers. The logistics market is competitive based on delivery time and network coverage. The consulting service market is competitive based on compliance capability, customer trust, access to high-net-worth customer resources, digital tools, and relationships with third-party service providers.

The Company competes favorably based on its market position, customer base, service coordination capability, and integrated cross-border service resources. Primary competitors in the consulting market include traditional insurance brokers and agents, banks, wealth management institutions, family offices, tax planning firms, immigration and education consulting firms, technology platforms, and other cross-border service providers. The Company's competitive strengths include cost-effective production through vertical integration, a stringent quality control process with seven employees in the production department as of March 31, 2026, strong design capabilities with a two-member design team, an extensive delivery network covering 45 cities in 10 provinces and 2 municipalities, an integrated cross-border service ecosystem, targeted access to high-net-worth customer groups, an experienced consulting team, and digital and private-domain operation capabilities.

The Company generates revenue through three primary segments: garment manufacturing, logistics services, and consulting services. Garment manufacturing revenue is derived from sales to wholesalers located in the PRC, with revenue generated through multiple sales channels including offline sales, product promotion/giveaway sales, Taobao platform sales, WeChat platform sales, accessory sales, and Douyin platform sales. Logistics services revenue comes from delivery and courier services covering 45 cities in 10 provinces and 2 municipalities in China, with some business outsourced to contractors. Consulting services revenue is generated from providing business consulting and coordination services to customers seeking overseas wealth planning, insurance-related information, and related cross-border service support, conducted through the Hong Kong subsidiary Yingxi HK.

The garment manufacturing business manufactures garments for various high-end fashion brands through wholly-owned subsidiaries YX and YS located in Guangdong province, China. The production process involves customer relationship management, design, fabric sourcing, product and technical development, and garment production. The fabric team requires four to six weeks to source raw materials from suppliers. The Company generally receives more purchase orders during the second and third quarters and fewer orders during May and June. For long-term established customers, payment terms are between 30 to 180 days following delivery; new customers generally require advances or deposits when placing orders.

The logistics business provides comprehensive services including storage, transportation, warehousing, handling, packaging, order processing, and customs declaration and tax clearance services for customers exporting goods overseas. The network has 114 logistics points located in 10 provinces and 2 municipalities covering 45 cities in the PRC. The Company generally receives more delivery orders in the third and fourth quarters and is more vulnerable to shipping delays during Chinese New Year. Payment terms for logistics customers are generally between 30 to 90 days following acknowledgement of receipt of goods. The consulting services business provides advisory, referral, coordination, and administrative support for overseas insurance configuration, wealth management planning, identity planning, education planning, and related cross-border service needs. The Company does not underwrite insurance products, issue policies, collect premiums, or assume underwriting risk. The credit period for consulting services is generally 30 to 60 days. The consulting service line commenced during the fiscal year ended March 31, 2026 and has a limited operating history.

During the fiscal year ended March 31, 2026, the Company disposed of Dongguan Aotesi Garments Co., Ltd. to local management on May 6, 2025, and Dongguan Hongxiang Commercial Co., Ltd. to local management on July 1, 2025, after which the property management and subleasing business was classified as discontinued operations. On March 30, 2026, the Company completed the acquisition of Keemo Fashion Group Limited for an aggregate purchase price of approximately $5.5 million satisfied through the transfer of a portion of an existing bond, acquiring approximately 62.18% of the voting rights on a fully diluted basis. On March 30, 2026, a 1-for-15 reverse stock split became effective. Subsequent to year-end, on May 15, 2026, the Company completed the acquisition of Time Is Loan Limited, a Hong Kong-based licensed money lender, through the issuance of 137,790 shares of Common Stock. On June 15, 2026, the Company completed the acquisition of 41.67% of Riches Family Office Limited through the issuance of 33,500 shares of Common Stock to Mr. Wu Rui.

For the fiscal year ended March 31, 2026, the Company incurred a net loss of approximately $4.0 million compared to a net loss of approximately $5.1 million for the fiscal year ended March 31, 2025. The Company's total revenue for the fiscal year ended March 31, 2026 was $23.486 billion compared to $20.985 billion for the prior year. The Company's ability to continue as a going concern is dependent on successfully executing its business plan, improving operating results, generating positive cash flows, managing costs, collecting accounts receivable, and obtaining additional financing.

The Company's business strategies include entering into exclusive agreements with textile and garment suppliers in Southeast China to be their exclusive agent, with plans to set up several retailers for sales to retail customers and supply exclusively to various high-end fashion brands. The Company expects to continue supplier discussions, customer development, and preliminary cooperation arrangements over the next 12 to 24 months. The Company intends to develop its own brands focusing on fast fashion with teenagers as primary target customers, adopting a low-cost strategy initially and improving quality after increasing market share. Trademark registration for the own brand has been completed, and the Company expects to continue developing its own brand strategy over the next 12 months, including product design, channel development, and marketing initiatives.

The Company expects to develop 20 additional logistics routes in existing serving cities and improve profits by the end of 2026. The Company also intends to develop international logistics services and warehousing services for customers worldwide. The consulting services business is intended to be developed as an asset-light service business focusing on overseas insurance configuration, wealth management planning, identity planning, education planning, and related cross-border service coordination. The Company intends to emphasize higher value-added consulting services rather than relying primarily on high upfront referral commissions, and to expand service-fee-based identity planning, education planning, and related advisory services to diversify revenue sources.

The Company intends to improve consultant efficiency through digital tools, CRM systems, and automated plan preparation tools, while maintaining high-net-worth customer relationships through private-domain customer management, offline seminars, education-related activities, and other customer engagement initiatives. The Company intends to build a one-stop ecosystem combining identity planning, education planning, overseas property resources, insurance-related coordination, and wealth management consulting to increase cross-service customer conversion and customer lifetime value. The consulting service line will be developed under a compliance-oriented approach including premium collection controls, referral fee settlement controls, documentation review, and internal approval procedures.

The Company's consulting service line is newly developed and may not generate sustainable revenue or profitability. The Company's ability to generate revenue from consulting services depends on attracting and retaining customers, maintaining service quality, retaining qualified personnel, coordinating effectively with third-party service providers, managing customer relationships, and complying with applicable laws and regulations. The revenue and cash flow of the consulting service line may be affected by changes in referral fee, commission payment, or settlement arrangements among insurance companies, insurance brokers, referral parties, and service providers.

The Company's future expansion plans require effective management of sales, procurement, new logistics points, and other aspects of operations. The implementation of these plans is subject to uncertainties including changes in ability to comply with local rules and regulations, delays or difficulties in obtaining necessary licenses and approvals from local governments, and other unexpected events or factors that may prevent achieving desirable and profitable results.

The Company faces risks from potential increases in raw material prices, which accounted for a substantial amount of total purchases, and may not be able to fully pass on increased costs to customers. The Company also faces risks from labor shortages, increased labor costs, and other factors affecting labor supply for production materials. The turnover rate in the textile industry is generally high, and competition for qualified individuals or changes in labor laws could require higher labor costs. The Company expects continued increases in labor costs in the PRC.

Substantial doubt exists regarding the Company's ability to continue as a going concern, as it incurred net losses of approximately $4.0 million and $5.1 million for the fiscal years ended March 31, 2026 and 2025, respectively. The Company's ability to continue depends on successfully executing its business plan, improving operating results, generating positive cash flows, managing costs, collecting accounts receivable, and obtaining additional financing. The Company faces significant customer concentration risk: for fiscal 2026, three customers accounted for approximately 34.6%, 30.7%, and 18.6% of garment manufacturing revenue, and three customers accounted for approximately 53.6%, 31.6%, and 13.4% of consulting service revenue. The Company also faces supplier concentration risk, with approximately 45.7% of total purchases and service procurement from the five largest suppliers in fiscal 2026. The consulting service line is newly developed with a limited operating history and may not generate sustainable revenue or profitability, and changes in commission structures or referral fee arrangements could reduce revenue and cash flows.

Management's message emphasizes the Company's transformation through the acquisition of Keemo Fashion Group Limited, which adds apparel trading and digital publishing capabilities, and the subsequent acquisitions of Time Is Loan Limited and Riches Family Office Limited, which expand into consumer and commercial lending and family office services. Management's strategic priorities include developing the consulting services business as an asset-light service line, expanding the logistics network by developing 20 additional routes by the end of 2026, developing international logistics and warehousing services, and building a one-stop cross-border service ecosystem. Management acknowledges the substantial doubt about the Company's ability to continue as a going concern and is pursuing initiatives to expand the garment manufacturing, logistics services, and consulting services businesses, improve operating efficiencies, and control costs.