Addentax(US:ATXG)2023-11-13 16:00Revenue Performance - For the three months ended September 30, 2023, the company reported a significant increase in revenue, reflecting a strong performance in its garment manufacturing segment [106]. - Total revenue for the three months ended September 30, 2023, decreased by approximately $0.8 million, or 37.7%, compared to the same period in 2022 [108]. - Revenue from the garment manufacturing business contributed approximately $0.1 million or 6.8% of total revenue for the three months ended September 30, 2023, down from $0.4 million or 14.3% in the same period of 2022 [109]. - Revenue from logistics services business accounted for approximately $1.2 million or 88.8% of total revenue for the three months ended September 30, 2023, compared to $1.2 million or 57.0% in the same period of 2022 [111]. - Total revenue for the six months ended September 30, 2023 decreased by approximately $2.1 million, or 47.3%, compared to the same period in 2022 [139]. - Revenue generated from logistics services contributed approximately $2.2 million or 91.5% of total revenue for the six months ended September 30, 2023 [141]. - Revenue from property management and subleasing business was $0.06 million for the six months ended September 30, 2023, a decrease of 96.9% compared to $1.9 million for the same period in 2022 [142]. Profitability and Costs - Cost of revenue for the garment manufacturing business was approximately 82.7% of total garment revenue for the three months ended September 30, 2023, compared to 100% in the same period of 2022 [113]. - Gross profit for the garment manufacturing business was approximately $15.8 thousand for the three months ended September 30, 2023, compared to a loss of approximately $0.5 thousand in the same period of 2022 [122]. - Gross profit in logistics services business for the three months ended September 30, 2023, was approximately $333,700 with a gross margin of 28.1%, down from $360,200 and 29.5% in the same period of 2022 [123]. - Gross profit for the three months ended September 30, 2023 was approximately $402,887, a decrease of 28.7% compared to $565,161 for the same period in 2022 [127]. - Gross profit for logistics services was $563,023 for the six months ended September 30, 2023, a decrease of 20.4% compared to $707,253 for the same period in 2022 [143]. - Gross profit for the garment manufacturing business was approximately $23,300 for the six months ended September 30, 2023, compared to approximately $2,800 for the same period in 2022, representing a gross margin increase from 6.9% to 16.1% [152]. - Gross profit in the logistics services business decreased to approximately $563,000 for the six months ended September 30, 2023, with a gross margin of 25.8%, down from approximately $707,300 and 27.1% in 2022 [153]. Expenses and Losses - General and administrative expenses in the corporate office for the three months ended September 30, 2023, were approximately $475,600, up from $142,800 in the same period of 2022 [126]. - Total general and administrative expenses increased by approximately 44.2% to $670,600 from $465,000 for the three months ended September 30, 2022 [129]. - The company incurred a net loss of approximately $1.4 million for the six months ended September 30, 2023, compared to a net income of approximately $0.2 million for the same period in 2022, resulting in basic and diluted earnings per share of ($0.37) and $0.00, respectively [165]. - Loss from operations for the three months ended September 30, 2023 was approximately $304,900, compared to income from operations of $70,200 for the same period in 2022, representing a decrease of 534.7% [130]. - Total general and administrative expenses increased by approximately 34.3% to $1.2 million for the six months ended September 30, 2023, compared to $0.9 million for the same period in 2022 [159]. Operational Developments - The logistics services segment currently operates in 86 cities across 11 provinces and 3 municipalities in China, with plans to develop an additional 20 logistics points in existing cities by 2024 [90]. - The company aims to increase the occupancy rate of its property management and subleasing segment to over 70% in the short term [91]. - The garment manufacturing business focuses on expanding its customer base and improving profit margins, emphasizing quality and timely delivery [89]. - The company disposed of its subsidiary Dongguan Yingxi Daying Commercial Co., Ltd. (DY) in February 2023 at fair value, which was also its carrying value [89]. - The company completed the acquisition of Dongguan Hongxiang Commercial Co., Ltd. (HX) in September 2023, enhancing its property management capabilities [91]. - The company has indicated the intent and ability to provide additional equity financing to support growth and strategic objectives [171]. Financial Position - Cash on hand as of September 30, 2023, was approximately $1.7 million, with total current assets of approximately $30.2 million and current liabilities of approximately $4.9 million [170]. - Net cash used in operating activities was approximately $1.58 million for the six months ended September 30, 2023, compared to $1.53 million for the same period in 2022 [168]. - The company incurred net finance costs of $1,893,117 for the six months ended September 30, 2023, a significant increase of 40,505.4% compared to $333 for the same period in 2022 [143]. Market Conditions - The company has experienced pricing pressure due to economic uncertainty in China, impacting sales growth and operating margins [94]. - The company’s business is affected by seasonal trends, with higher garment sales in the second and third quarters and increased logistics revenue in the third and fourth quarters [92]. - The foreign currency translation loss for the six months ended September 30, 2023, was approximately $0.09 million, compared to a loss of $0.2 million for the same period in 2022 [172].