Addentax(US:ATXG)2025-06-30 11:56Company Overview - Addentax Group Corp. operates primarily through its wholly owned subsidiary YX and other subsidiaries in China, focusing on garment manufacturing, logistics services, and property management[268]. - Addentax Group Corp. is listed on the Nasdaq Capital Market under the symbol "ATXG" and operates as a holding company without direct ownership of substantive business operations in China[268]. Business Segments - The logistics services segment currently covers 44 cities across 10 provinces and 2 municipalities in China, with plans to develop 20 additional logistics routes in 2025[278]. - The property management and subleasing segment aims to integrate resources in shopping malls and develop e-commerce bases to enhance store value, following the acquisition of Dongguan Hongxiang Commercial Co., Ltd. in September 2023[279]. - The garment manufacturing business emphasizes exceptional quality and timely delivery, with a goal to expand the customer base and improve profitability[277]. Financial Performance - Total revenue for the year ended March 31, 2025, decreased by approximately $1.0 million, or 18.9%, compared to the previous year, primarily due to a decline in revenue from the logistics services business[307]. - Revenue from the logistics services business contributed approximately $3.0 million, or 72.2%, of total revenue for the year ended March 31, 2025, down from $4.3 million, or 84.3%, in 2024, reflecting a decrease of approximately $1.3 million due to market volatility[309]. - Gross profit for the year ended March 31, 2025, was approximately $634,257, a decrease of 43.1% from $1,115,085 in 2024, with a gross profit margin of 15.2% compared to 21.6% in the previous year[306]. - Operating expenses increased by 9.1% to $2,451,227 for the year ended March 31, 2025, compared to $2,246,281 in 2024, leading to a loss from operations of $1,816,970, which is a 60.6% increase in loss compared to the previous year[322]. - Net loss was approximately $5.1 million for the year ended March 31, 2025, compared to a net loss of approximately $3.1 million for the year ended March 31, 2024[331]. Segment Performance - The garment manufacturing business generated approximately $0.3 million, or 6.8%, of total revenue for the year ended March 31, 2025, up from $0.2 million, or 4.5%, in 2024, attributed to insufficient customer volume[308]. - Gross profit for the logistics services business was approximately $1.1 million for the year ended March 31, 2025, with a gross profit margin of 34.8%, an increase from $0.9 million and 21.8% in 2024, mainly due to reduced subcontractor usage[321]. - The cost of revenue for property management and subleasing was approximately $1.3 million, or 153.5% of total revenue for that segment in 2025, compared to $0.5 million, or 81.4%, in 2024[319]. - Subcontracting fees for logistics services decreased by approximately 89.0% to $0.2 million in 2025 from $1.5 million in 2024, accounting for 5.5% of total logistics revenue compared to 34.9% in the previous year[318]. - Raw materials cost for the garment manufacturing business was approximately 49.6% of total revenue in 2025, significantly up from 14.6% in 2024, due to increased manufacturing activities[313]. - Selling expenses for property management and subleasing were $264,270 in 2025, compared to $83,987 in 2024, reflecting a significant increase in costs associated with this segment[323]. Cash Flow and Assets - Net cash provided by operating activities increased by approximately $1.1 million to $816,001 for the year ended March 31, 2025, compared to a cash outflow of $411,473 for the year ended March 31, 2024[332]. - Cash on hand as of March 31, 2025, was approximately $0.3 million, with total current assets of approximately $29.8 million and current liabilities of approximately $4.0 million[335]. - Net cash used in investing activities was approximately $205,811 for the year ended March 31, 2025, compared to a cash inflow of $90,731 for the year ended March 31, 2024[332]. - Net cash used in financing activities increased by approximately $1.6 million to $1,102,141 for the year ended March 31, 2025, compared to $521,704 for the year ended March 31, 2024[334]. Tax and Accounting - Income tax expense for the year ended March 31, 2025, was $4,649, a decrease from $11,605 for the year ended March 31, 2024[327]. - The company has identified critical accounting policies that could result in material changes to its financial position or results of operations under different conditions[288]. Economic and Operational Challenges - Economic uncertainty in China has led to increased pricing pressure, impacting sales growth and operating margins, although timely collections from customers have not yet been affected[286][287]. - The company has experienced a seasonal pattern in its garment manufacturing business, with higher purchase orders typically in the second and third quarters[280]. - The logistics services business is more vulnerable to shipping delays during the Chinese New Year due to congestion and customs issues[281]. - The company has a collection policy requiring advances or deposits from new customers and offers payment terms of 30 to 180 days for established customers[283]. Future Outlook - The CEO has indicated the intent and ability to provide additional equity financing if required for future operations[336].