Addentax(US:ATXG)2025-11-14 11:30Company Overview - Addentax Group Corp. operates primarily through its subsidiaries in China, focusing on garment manufacturing, logistics services, and property management[92]. Logistics Services - The logistics services segment covers 44 cities across 10 provinces and 2 municipalities, with plans to develop 20 additional logistics routes in 2025[103]. - As of September 30, 2024, the logistics services segment expects to improve profits in 2025 through the establishment of an efficient logistics system[103]. - Revenue from logistics services accounted for approximately $0.8 million, or 98.4%, of total revenue for Q3 2025, compared to $1.0 million, or 71.9%, in Q3 2024[132]. - Revenue from logistics services accounted for approximately $1.6 million, or 98.0% of total revenue for the six months ended September 30, 2025, compared to $1.5 million or 66.2% in 2024[156]. - The gross profit margin for logistics services decreased to 27.1% in Q3 2025 from 47.0% in Q3 2024, primarily due to increased toll expenses and a competitive pricing strategy[140]. - Gross profit margin for logistics services decreased to 25.1% for the six months ended September 30, 2025, down from 47.6% in 2024, attributed to higher toll expenses and competitive pricing strategies[164]. Garment Manufacturing - The garment manufacturing business aims to expand its customer base and improve profit, emphasizing exceptional quality and timely delivery[102]. - The company disposed of AOT in May 2025, indicating a strategic shift in its garment manufacturing operations[98]. - Revenue from the garment manufacturing business contributed approximately $0.01 million, or 1.6%, of total revenue for Q3 2025, down from $0.1 million, or 11.1%, in Q3 2024, attributed to decreased order volume and market competition[131]. - Revenue from garment manufacturing contributed $32,831, or 2.0% of total revenue for the six months ended September 30, 2025, down from approximately $0.2 million or 10.7% in 2024[155]. - The company incurred no labor costs in the garment manufacturing business for Q3 2025, as production was outsourced, compared to 24.5% of revenue in Q3 2024[135]. - Labor costs for garment manufacturing represented approximately 24.8% of total revenue for the six months ended September 30, 2025, compared to 23.2% in 2024, reflecting a decrease in revenue[159]. - Gross profit margin for garment manufacturing was 30.5% for the six months ended September 30, 2025, compared to 19.1% in 2024, mainly due to procurement from external manufacturers[163]. Financial Performance - Total revenue for the three months ended September 30, 2025, decreased by approximately $292,207, or 26.3%, compared to the same period in 2024, primarily due to declines in garment manufacturing and logistics services revenue[130]. - Gross profit for the three months ended September 30, 2025, was $225,147, a decrease of $245,933, or 52.2%, from $471,080 in Q3 2024[141]. - Loss from operations for Q3 2025 was $449,848, compared to a loss of $41,512 in Q3 2024, marking an increase in losses of $408,336, or 983.7%[146]. - Net loss for the three months ended September 30, 2025, was approximately $102,837, compared to a net loss of approximately $721,532 in the same period of 2024, reflecting an improvement of $618,695, or 85.7%[151]. - Basic and diluted loss per share for Q3 2025 was ($0.01), compared to ($0.13) for Q3 2024[151]. - Total revenue for the six months ended September 30, 2025, decreased by $38,962, or 2.3%, compared to the same period in 2024, primarily due to a decrease in garment manufacturing revenue[154]. - Gross profit for the six months ended September 30, 2025, was $415,561, a decrease of 43.5% from $735,558 in 2024[165]. - Loss from operations for the six months ended September 30, 2025, was $804,723, an increase of 136.3% compared to a loss of $340,539 in 2024[169]. - Net loss for the six months ended September 30, 2025, was approximately $495,275, a significant improvement from a net loss of $1,942,643 in 2024[174]. - General and administrative expenses increased by approximately 34.3% to $670,352 in Q3 2025 from $499,193 in Q3 2024[144]. - General and administrative expenses increased by approximately 23.4% to $1.2 million for the six months ended September 30, 2025, compared to $1.0 million in 2024[168]. Cash Flow and Financial Position - Net cash used in operating activities for the six months ended September 30, 2025, was approximately $0.97 million, a decrease of $1.5 million compared to the cash provided by operating activities of $0.53 million in the same period of 2024[175]. - Net cash used in investing activities for the six months ended September 30, 2025, was approximately $0.27 million, which was $0.15 million more than the $0.12 million used in the same period of 2024[176]. - Net cash provided by financing activities for the six months ended September 30, 2025, was approximately $1.36 million, an increase of $1.8 million compared to the cash used in financing activities of $0.4 million in the same period of 2024[177]. - As of September 30, 2025, the company had cash on hand of approximately $0.4 million, total current assets of approximately $27.8 million, and current liabilities of approximately $1.1 million[178]. Economic Environment - Economic uncertainty in China has led to increased pricing pressure, impacting sales growth and operating margins[111]. - The company has experienced continued pricing pressure due to significant economic uncertainty in China, affecting client sensitivity to costs[111]. Foreign Currency and Financing - The company is exposed to foreign currency risks due to operations in China, with all sales conducted in RMB, which has appreciated against the U.S. dollar[180]. - The foreign currency translation loss for the six months ended September 30, 2025, was approximately $(0.08) million, compared to a loss of $(0.05) million in the same period of 2024[180]. - The company plans to seek additional equity financing if required for future growth and strategic objectives, as indicated by the CEO[179]. - The company has no off-balance sheet arrangements that could affect its financial condition as of September 30, 2025[181].