Logistics Services - For the logistics services segment, the company provides services to over 86 cities across approximately 11 provinces and 3 municipalities in China, with plans to develop an additional 20 logistics points in existing cities in 2024[107]. - The logistics services revenue is expected to increase during the third and fourth quarters due to seasonal trends[109]. - Revenue from logistics services contributed approximately $1,189,004, or 81.0% of total revenue for the three months ended December 31, 2023, compared to $1,213,530, or 57.2% in the same period of 2022[126]. - Gross profit margin for logistics services decreased to 11.2% in the three months ended December 31, 2023, down from 25.6% in the same period of 2022[134]. - Subcontracting fees for logistics services increased by approximately 121.3% to $560,735 in the three months ended December 31, 2023, compared to $253,359 in 2022[131]. - Revenue from logistics services contributed approximately $3.4 million or 87.5% of total revenue for the nine months ended December 31, 2023[150]. - Gross profit in the logistics services business decreased to approximately $695,940 for the nine months ended December 31, 2023, with a gross margin of 20.6%, down from 26.6% in 2022[158]. Property Management - The company aims to increase the occupancy rate of stores in its property management segment to over 70%[108]. - The company disposed of its property management subsidiary, DY, at fair value in February 2023 and completed the acquisition of HX in September 2023[108]. - Revenue from property management and subleasing was $252,477, a decrease of $543,866, or 68.3%, compared to $796,343 in 2022[127]. Garment Manufacturing - The garment manufacturing business focuses on expanding the customer base and improving profit margins, emphasizing exceptional quality and timely delivery[107]. - The garment manufacturing segment is supported by sufficient production capacity and skilled workers to meet quality control standards[104]. - The garment manufacturing business reported a gross profit of approximately $17,112, or 63.3% of its revenue, down from $33,083, or 32.8% in 2022[134]. - Labor costs for the garment manufacturing business increased to approximately 58.2% of total revenue for the nine months ended December 31, 2023, compared to 51.7% for the same period in 2022[152]. - Gross profit for the garment manufacturing business was approximately $40,433 for the nine months ended December 31, 2023, representing a gross margin of 23.5%, down from 25.3% in 2022[158]. - Raw material costs for garment manufacturing accounted for approximately 15.7% of total revenue in the three months ended December 31, 2023, compared to 0.8% in 2022[128]. - Overhead and other expenses for the garment manufacturing business decreased to approximately 0.8% of total garment business revenue for the nine months ended December 31, 2023, down from 3.1% in the same period of 2022[153]. Financial Performance - Total revenue for the three months ended December 31, 2023 decreased by approximately $653,746, or 30.8%, compared to the same period in 2022, primarily due to declines in property management and garment manufacturing businesses[124]. - Gross profit for the three months ended December 31, 2023 was $162,327, a decrease of $445,135, or 73.3%, compared to $607,462 in 2022[136]. - Operating expenses for the three months ended December 31, 2023 were $611,919, a decrease of $88,510, or 12.6%, compared to $700,429 in 2022[136]. - Net loss for the three months ended December 31, 2023 was $(2,607,662), a significant increase in loss of $(2,525,444), or 3071.6%, compared to $(82,218) in 2022[124]. - Total revenue for the nine months ended December 31, 2023, decreased by approximately $2.8 million, or 42.0%, compared to the same period in 2022[148]. - The company incurred a net loss of approximately $4.0 million for the nine months ended December 31, 2023, compared to a net income of approximately $0.1 million for the same period in 2022[168]. - Total general and administrative expenses increased by approximately 9.0% to $1.7 million for the nine months ended December 31, 2023, from $1.5 million in 2022[164]. - Net cash used in operating activities was $1.5 million for the nine months ended December 31, 2023, nearly the same as the $1.5 million used in the same period of 2022[170]. Regulatory and Structural Risks - The company operates through a holding structure that presents unique risks to investors, particularly regarding regulatory changes in China[100]. - The company has no off-balance sheet arrangements that could materially affect its financial condition as of December 31, 2023[175]. Management and Compliance - The report was signed on February 14, 2024, by Hong Zhida, the President and CEO, and Huang Chao, the CFO and Treasurer[185]. - The certifications required under Section 302 and Section 906 were completed by the Principal Executive Officer and Principal Financial Officer[184].
Addentax(ATXG) - 2024 Q3 - Quarterly Report