NASDAQ: ATXG

5

Our
subsidiaries include (i) Yingxi Industrial Chain Group Co., Ltd., a Republic of Seychelles company (“YICG”); (ii) Yingxi
Industrial Chain Investment Co., Ltd., a Hong Kong company (“Yingxi HK”); (iii) Yingxi Textile & Garments Co., Ltd.,
a PRC company; (iv) ShenzhenYingxi Industrial Chain Services Co., Ltd, a PRC company (“YX”), (v) Dongguan Heng Sheng Wei
Garments Co., Ltd, a PRC company (“HSW”), (vi) Dongguan Yushang Clothing Co., Ltd, a PRC company (“YS”), (vii)
Shenzhen Yingxi Peng Fa Logistic Co., Ltd., a PRC company (“PF”); (viii) Shenzhen Xin Kuai Jie Transportation Co., Ltd, a
PRC company (“XKJ”) and (xi) Keemo Fashion Group Limited, a Nevada corporation (“KMFG”), and its subsidiaries.
KMFG’s subsidiaries include GW Reader Holding Limited, Willing Read Culture Technology Co., Limited and GW Reader Sdn. Bhd.

“PRC
Subsidiaries” refers to, collectively, YX, HSW, YS, PF and XKJ.

“WFOE”
refers to Yingxi Textile & Garments Co., Ltd or “QYTG”, a wholly foreign-owned enterprise in China, which is indirectly
wholly owned by Addentax Group Corp.

Effective
July 2025, Shenzhen Yingxi Industrial Chain Services Co., Ltd, previously known as Shenzhen Qianhai Yingxi Industrial Chain Services
Co., Ltd, changed its name to Shenzhen Yingxi Industrial Chain Services Co., Ltd due to a relocation of its registered address. The name
change did not result in any material change to the subsidiary’s operations, financial position, or results.

Effective
August 2025, Yingxi Textile & Garments Co., Ltd, previously known as Qianhai Yingxi Textile & Garments Co., Ltd, changed its
name to Yingxi Textile & Garments Co., Ltd due to a relocation of its registered address. The name change did not result in any material
change to the subsidiary’s operations, financial position, or results.

We
have a fiscal year-end of March 31. The business office is located at Kingkey 100, Block A, Room 4805, Luohu District, Shenzhen City,
China 518000. Our telephone number is +(86) 755 8233 0336.

Current
Business

We
are a Nevada holding company with no material operations of our own. We conduct substantially all of our operations through our operating
companies established in the PRC, primarily YX, our wholly-owned subsidiary and its subsidiaries. We are not a Chinese operating company.
We are a holding company and do not directly own any substantive business operations in China. Therefore, our investors will not directly
hold any equity interests in our operating companies. Our holding company structure involves unique risks to investors. Chinese regulatory
authorities could disallow our operating structure, which would likely result in a material change in our operations and/or the value
of our Common Stock, including that it could cause the value of such securities to significantly decline or become worthless. Our holding
company, Addentax Group Corp., is listed on the Nasdaq Capital Market under the symbol of “ATXG”. During the fiscal year
ended March 31, 2026, our continuing operations primarily consisted of garment manufacturing, logistics services and consulting services.

6

Our
garment manufacturing business consists of sales made principally to wholesalers located in the PRC. We have our own manufacturing facilities,
with sufficient production capacity and skilled workers on production lines to ensure that we meet our high quality control standards
and delivery requirements for our customers. We conduct our garment manufacturing operations through two wholly-owned subsidiaries, namely
YX and YS, which are located in Guangdong province, China.

Our
logistics business consists of delivery and courier services covering 45 cities in 10 provinces and 2 municipalities in China. Although
we have our own motor vehicles and drivers, we currently outsource some of the business to our contractors. We believe outsourcing allows
us to maximize our capacity and maintain flexibility while reducing capital expenditures and the costs of keeping drivers during slow
seasons. We conduct our logistic operations through two wholly-owned subsidiaries, namely XKJ and PF, which are located in Guangdong
province, China.

We
provide business consulting and coordination services to customers seeking overseas wealth planning, insurance-related information and
related cross-border service support. Our services primarily include customer consultation, appointment coordination, referral and liaison
with third-party insurance brokers or other service providers, and related administrative support. We conduct our consulting service
business through our wholly owned subsidiary, Yingxi HK, which is located in Hong Kong, China.

On
March 30, 2026, we completed the acquisition of Keemo Fashion Group Limited (“KMFG”), a Nevada corporation with headquarters
in Shenzhen, China. KMFG operates two core business segments: (i) an apparel and garment trading business focused on the wholesale distribution
of men’s and women’s apparel to distributors primarily in China, sourcing directly from manufacturers without maintaining
its own production facilities; and (ii) a digital publishing business conducted through its wholly owned subsidiary, GW Reader Sdn. Bhd.
in Malaysia, which operates a mobile-based online fiction platform utilizing a pay-per-chapter microtransaction model for global readers.
As of March 31, 2026, KMFG’s revenue contribution was not significant, and management does not currently present KMFG as a separate
business line or reportable segment. Management will continue to monitor KMFG’s operations, revenue contribution and business development
and will reassess the related disclosure and segment presentation as necessary in future periods.

Dispositions
of Subsidiaries and Discontinued Operations

During
the fiscal year ended March 31, 2026, we disposed of Dongguan Aotesi Garments Co., Ltd., a PRC company (“AOT”), and Dongguan
Hongxiang Commercial Co., Ltd., a PRC company (“HX”). AOT was previously engaged in the garment manufacturing business and
was disposed of to the local management of AOT on May 6, 2025. After the disposition, AOT became a third party to the Company. The Company
carries on the garment manufacturing business through its remaining subsidiaries, and the disposition of AOT did not qualify as discontinued
operations. HX was previously engaged in the property management and subleasing business and was disposed of to the local management
of HX on July 1, 2025. After the disposition, HX became a third party to the Company. Following the disposition, the Company no longer
conducts the property management and subleasing business through HX or any other subsidiary. The property management and subleasing business
has been classified as discontinued operations in the Company’s consolidated financial statements. AOT and HX were no longer subsidiaries
of the Company as of March 31, 2026 and as of the date of this annual report.

Competitive
Strengths

We
believe we have the following competitive strengths:

Cost-effective
production. We have adopted a vertical integration production process. We produce garments in our own production facilities and employ
our in-house transport teams to deliver garments to our customers. This one-stop service optimizes production efficiency and saves costs
by lowering the cost per unit, thereby achieving economies of scale.

Stringent
quality control process. As of March 31, 2026, we had seven employees in the production department that are responsible for conducting
our quality control process. We implement a stringent quality control process which monitors various stages of our garment manufacturing
business, including sampling checks of semi-finished products and finished products. We prepare inspection reports to address the quality
problems and make recommendations to improve the quality of our products. During final product inspection, we pay special attention to
the measurements, workmanship, ironing and packaging of our products to help best ensure that the quality of our products comply with
the specifications, standards and requirements of our customers.

Strong
design capabilities. Our design team works closely with our customers to understand their needs and make recommendations to them.
Our design team also conducts market research and attends industry exhibitions to understand the latest market trends. As of March 31,
2026, our design team consisted of two members.

7

Extensive
delivery network. Our logistics business has nine routes and covers 45 cities in 10 provinces and 2 municipalities in the PRC.

Integrated
cross-border service ecosystem. Our consulting services are designed around a broader ecosystem that combines identity planning,
children’s education planning, global real estate resources, insurance-related coordination and wealth management planning. This
integrated service model allows us to identify customer needs at an earlier stage and create cross-service customer stickiness.

Targeted
access to high-net-worth customer groups. Our consulting services focus on mainland China and Hong Kong middle-to-high income families,
customers seeking Hong Kong or overseas settlement, and cross-border business owners with global asset allocation needs. Through education
and identity planning services, we seek to reach customers with stronger payment capability and cross-border service needs.

Experienced
consulting team. Our business consulting management team includes personnel with years of insurance sales and service experience.
The team has experience in customer communication, overseas insurance configuration, wealth management planning, education planning and
related cross-border advisory scenarios.

Digital
and private-domain operation capabilities. We use digital tools, including CRM tools, order management tools and plan preparation
tools, to improve service efficiency. We also intend to use private-domain customer management, customer seminars and other customer
engagement activities to maintain long-term customer relationships.

Business
Strategies

Key
elements of our business and growth strategies include the following:

Sales
of raw materials. We intend to enter into exclusive agreements with textile and garment suppliers in Southeast China to be their
exclusive agent and supply their textiles and garments to our customers. To execute this plan, we intend to set up several retailers
for the sales of textiles and garments to retail customers and supply the textiles and garments exclusively to various high-end fashion
brands. We expect to continue supplier discussions, customer development and preliminary cooperation arrangements over the
next 12 to 24 months. The implementation of this initiative will depend on market demand, supplier terms, customer requirements and the
execution of definitive commercial arrangements.

Development
of our own brands. We intend to develop our own brands that focus on fast fashion with teenagers being our primary target customers.
We plan to adopt a low-cost strategy at the early stage and improve the quality of our products after increasing our market share. We
have completed trademark registration for our own brand and are currently advancing early-stage brand development, product planning and
preliminary marketing activities. We expect to continue developing our own brand strategy over the next 12 months, including product
design, channel development and marketing initiatives. The timing and scale of any commercial launch will depend on market response,
available operating resources and the development of suitable sales channels, including online platforms, cooperative retailers and other
distribution channels.

Expand
our delivery network. As of March 31, 2026, we provided logistics services to over 45 cities in 10 provinces and 2 municipalities
in the PRC. We expect to develop 20 additional logistics routes in existing serving cities and improve the Company’s profits by
the end of 2026.

Develop
international logistics services and warehousing services. We intend to develop international logistics services for customers located
all over the world and international warehousing services.

Develop
consulting services. We intend to develop our consulting services as an asset-light service business, focusing on overseas insurance
configuration, wealth management planning, identity planning, education planning and related cross-border service coordination.

Consulting-driven
transformation. In response to market and regulatory changes affecting insurance referral and commission arrangements, we intend
to emphasize higher value-added consulting services rather than relying primarily on high upfront referral commissions. We intend to
expand service-fee-based identity planning, education planning and related advisory services to diversify revenue sources.

Digital
tools and private-domain customer management. We intend to improve consultant efficiency through digital tools, CRM systems and automated
plan preparation tools. At the same time, we intend to maintain high-net-worth customer relationships through private-domain customer
management, offline seminars, education-related activities and other customer engagement initiatives.

Develop
integrated cross-border services. We intend to build a one-stop ecosystem combining identity planning, education planning, overseas
property resources, insurance-related coordination and wealth management consulting, with the goal of increasing cross-service customer
conversion and customer lifetime value.

Compliance-oriented
business development. We intend to develop the consulting service line under a compliance-oriented approach, including premium collection
controls, referral fee settlement controls, documentation review and internal approval procedures.

8

Our
garment manufacturing business

We
manufacture garments for various high-end fashion brands through our wholly-owned subsidiaries, YX and YS, which are located in Guangdong
province, the PRC.

Operations

Our
customer relationship team is responsible for cultivating and maintaining our relationship with customers. Our design team works closely
with our customer relationship team to understand our customers’ needs and make recommendations to them based on their designs.
Our fabric team leverages our experience in fabric sourcing as well as our understanding of fabric features to recommend the types of
fabric to be used in our customers’ products. Our fabric team may also suggest alternative fabrics to our customers. Our fabric
team works with our research and development team to understand fabric types and aims to identify different fabric we source and improve
the quality and comfort of the fabric we produce. Our product and technical team are mainly responsible for development samples of products,
preparing structural and production guidance of products as well as producing paper patterns for our garment production team. Upon order
confirmation from our customers, our customer relationship team informs our fabric team to carry out raw material sourcing.

We
source finished fabric and yarns from our suppliers for garment production. The procedures for fabric production are normally divided
into the following stages: (i) spinning; (ii) weaving or knitting; (iii) dyeing or printing; and (iv) finishing. Generally, our fabric
team requires four to six weeks to source raw materials from our suppliers.

Our
garment production team is responsible for producing garments based on the raw materials we source. The major stages involved in garment
production include: (i) paper patterning; (ii) fabric cutting; (iii) sewing; (iv) interim quality inspection; (v) trimming; (vi) washing;
and (vii) ironing.

Seasonality

We
generally receive more purchase orders during our second and third quarters and fewer manufacture orders during May and June.

Credit
period

For
our long-term and established customers with good payment track records, we generally provide payment terms between 30 to 180 days following
the delivery of finished goods. For our new customers, we generally require advances or deposits to be made when placing orders.

Our
logistics business

We
pack products and provide logistics service to our customers through our wholly-owned subsidiaries, XKJ and PF which are located in Guangdong
province, the PRC. Our in-house logistics teams deliver to approximately 10 provinces and 2 municipalities in the PRC. Where a customer
is located in an area not covered by our delivery fleet or where our in-house logistics teams are fully engaged, we will outsource delivery
to third-party contractors. We believe outsourcing allows us to maximize our delivery capacity and improve inventory flexibility while
minimizing capital expenditures, such as shipping costs and the costs of additional drivers during low seasons.

9

Our
logistics services

We
provide comprehensive logistics services to our customers, which include storage, transportation, warehousing, handling, packaging and
order processing. We also provide customs declaration and tax clearance services to our customers who export goods overseas.

Our
network

We
have 114 logistics points and they are located in 10 provinces and 2 municipalities which cover 45 cities in the PRC.

Our
internal management

Our
management in the logistics business is responsible for setting out business strategies and managing the daily operation. Specifically,
they have regular meetings with different departments, conduct inspections and supervise the finance department, operation department
and administration department.

Seasonality

We
generally receive more delivery orders in our third and fourth quarters and are more vulnerable to shipping delays in the PRC during
the Chinese New Year due to traffic and port congestion, border crossing delays and customs clearance issues.

Credit
period

We
generally require payments from the customers between 30 to 90 days following their acknowledgement of receipt of goods.

Our
consulting services

Our
consulting services are designed to provide customers with advisory, referral, coordination and administrative support in connection
with overseas insurance configuration, wealth management planning, identity planning, education planning and related cross-border service
needs. We do not underwrite insurance products, issue insurance policies, collect insurance premiums on behalf of insurance companies
or assume insurance underwriting risk.

Operations

Our
service process generally includes customer consultation, appointment arrangement, communication and coordination with third-party insurance
brokers or other service providers based on customer needs, coordination of the application process, communication of underwriting and
payment status information from the relevant insurance company or broker to the customer, and follow-up administrative support until
the relevant policy or service arrangement becomes effective.

Network
and digital tools

We
use internal CRM tools, order management systems and automated plan preparation tools to improve service efficiency and customer management.

Seasonality

Management
expects relatively stronger customer activity during June to September, October to December, holidays and weekends, while January to
March is generally expected to be a traditional slower season due to the Chinese New Year period. Actual seasonality may vary based on
customer demand, market conditions, regulatory developments and the availability of third-party service providers.

Credit
period

The
credit period for our consulting services is generally 30 to 60 days, depending on the service arrangement, customer relationship, settlement
cycle with third-party service providers and internal credit review.

10

Collection
policy

As
a referral and consulting service provider, we do not directly collect customer insurance premiums. Premiums must be paid by customers
directly to the relevant insurance company’s designated bank account or official payment gateway. Employees are prohibited from
privately collecting customer cash or receiving customer premium payments into personal accounts. Referral fee payments, where applicable,
are processed only after the Company receives the relevant settlement from the insurance broker or service provider and completes internal
review of policy status, compliance and applicable commission calculations.

Customers
and Suppliers

Customers

Our
customer base is diverse. Our customers are as follows: (i) our customers in the garment manufacturing business are mainly garment wholesalers
and retailers, (ii) our customers in the logistics business are mainly trading companies and logistic companies, and (iii) our customers
in the consulting service business primarily include mainland China and Hong Kong middle-to-high income families, individuals considering
Hong Kong or overseas settlement, customers with children’s education planning needs, and cross-border business owners seeking
global asset allocation and wealth management-related consulting services. For the fiscal year ended March 31, 2026, four customers accounted
for approximately 21.0%, approximately 13.7%, approximately 12.4% and approximately 10.6% of our total revenue, respectively. For the
years ended March 31, 2025, two customers accounted for approximately 15.9% and approximately 15.5% of our total revenue, respectively.
Other than the foregoing, no customer accounted for more than 10% of our total revenue during the periods presented.

Suppliers

We
procure our garments through various textile companies in our garment manufacturing business. For our logistics business, we procure
from packing companies and transportation companies. For our consulting service business, our third-party service providers and
cooperation partners include insurance companies, insurance brokers, immigration law firms, overseas real estate developers,
international schools and education consulting institutions. These parties may serve as service providers, referral partners or
cross-industry cooperation partners. We act as a consulting, referral and coordination service provider and do not assume the role
of insurer or underwriter. For the fiscal year ended March 31, 2026, two suppliers accounted for approximately 13.3% and
approximately 10.5% of our total cost, respectively. For the fiscal year ended March 31, 2025, one supplier accounted for
approximately 12.0% of our total cost. Other than the foregoing, no supplier accounted for more than 10% of our total costs during the periods presented.

Inventory

Garment
manufacturing business. We maintain our raw materials in our storage facilities. We review our inventory levels in order to identify
slow-moving materials and broken assortments.

Logistics
business. Since we deliver products as soon as we receive orders from customers, we do not operate distribution centers and hence
do not need to carry a significant amount of inventory.

Consulting
services. Our consulting service line is a service business and does not hold physical inventory.

Intellectual
Property

Our
intellectual property portfolio consists primarily of trademarks, copyrighted logo designs and domain names used in connection with our
business operations and corporate branding.

As
of the date of this annual report, we, through our subsidiary YX, own 36 trademark registrations in the PRC. These registrations primarily
protect the “Addentax” and “ATXG” brands, as well as related logo marks, across multiple classes of goods and
services associated with our business activities. We, through our subsidiary YX, also own registered copyrights relating to certain logo
designs and maintain domain names that support our business operations, marketing activities and online presence.

We
seek to protect our intellectual property through trademark and copyright registrations, contractual arrangements and applicable intellectual
property laws. We believe that our trademarks, logo designs and domain names support our brand recognition and business development efforts.

11

Competition

While
the PRC remains one of the world’s largest clothing manufacturers with significant production capacity, management believes that
increasing labor costs, excess production capacity in certain sectors, and trade barriers in certain jurisdictions have reduced the competitiveness
of some PRC-based apparel manufacturers.

The
principal competitive factors in the garment manufacturing market include:

●
brand
awareness and focus;

●
breadth
of product offerings; and

●
quality
control.

The
principal competitive factors in the logistics market include:

●
delivery
time; and

●
network
coverage.

The
principal competitive factors in the consulting service market include:

●
compliance
capability and ability to adapt to changes in referral fee and commission settlement arrangements;

●
customer
trust, professional advisory capability and service quality;

●
access
to high-net-worth customer resources and cross-border service ecosystems;

●
digital
service tools, customer management systems and operational efficiency; and

●
relationships
with third-party insurance brokers, insurance companies and other service providers.

We
believe we compete favorably with our competitors on the basis of our market position, customer base, service coordination capability
and integrated cross-border service resources. However, the business consulting and insurance referral market is highly competitive and
subject to changing regulatory and market conditions. We compete with 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.

Employees

As
of March 31, 2026, we had approximately 61 employees and there was no labor union established by our employees. The following table sets
out a breakdown of the number of employees by function as of March 31, 2026:

Function

Number
of employees

Administration
17

Finance
8

Marketing
5

Operation
24

Production
7

Total
61

12

According
to PRC regulations, we must participate in various employee social security plans organized by local governments, including pension,
unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance. We are also required
under PRC law to contribute to the Housing Provident Fund (“HPF”)
at specified percentages of the salaries, bonuses and certain allowances of our
employees, up to a maximum amount specified by competent local government authorities from time to time.

For
our employees in Hong Kong, we are required to participate in the Mandatory Provident Fund, or MPF, scheme in accordance with applicable
Hong Kong laws and regulations. Under the MPF system, both the employer and the eligible employee are generally required to make mandatory
contributions to an MPF scheme based on a prescribed percentage of the employee’s relevant income, subject to the applicable statutory
minimum and maximum relevant income levels. We make MPF contributions for our eligible Hong Kong employees in accordance with applicable
Hong Kong statutory requirements.

We
believe that we maintain a good working relationship with our employees, and to date we have not experienced any significant labor disputes.

Recent
Developments

Disposition
of Property Management and Subleasing Business

On
June 30, 2025, the Company disposed of its property management and subleasing business conducted through Dongguan Hongxiang Commercial
Co., Ltd. Following the disposition, the Company no longer conducts the property management and subleasing business as part of its continuing
operations. The results of the property management and subleasing business have been classified as discontinued operations in the Company’s
consolidated financial statements.

Acquisition
of Keemo Fashion Group Limited

On
February 17, 2026, the Company entered into a stock purchase agreement to acquire 34,200,000 shares of common stock of Keemo Fashion
Group Limited, or KMFG, from Guang Wen Global Limited. The aggregate purchase price for the acquisition was approximately $5.5 million
and was satisfied through the transfer of a portion of an existing bond held by the Company.

On
March 30, 2026, the Company completed the acquisition of KMFG. Following the completion of the acquisition, the Company holds approximately
62.18% of the voting rights of the issued and outstanding shares of KMFG on a fully diluted basis, and KMFG became a controlled subsidiary
of the Company. KMFG’s revenue contribution was not significant as of March 31, 2026, and management does not currently present
Keemo Fashion as a separate material operating segment.

Reverse
Stock Split

On
March 19, 2026, following stockholder approval at the Company’s 2025 annual meeting of stockholders held on January 30, 2026, the
Board of Directors approved a reverse stock split of the Company’s Common Stock at a ratio of 1-for-15. The Company filed a Certificate
of Amendment to its Articles of Incorporation with the Secretary of State of the State of Nevada on March 24, 2026. The reverse stock
split became effective at 12:01 a.m. Eastern Time on March 30, 2026, and the Company’s Common Stock began trading on the Nasdaq
Capital Market on a reverse-split adjusted basis under the same trading symbol, “ATXG,” on March 30, 2026.

Acquisition
of Time Is Loan Limited

On
May 15, 2026, we completed the transaction contemplated by a Share Exchange Agreement dated April 22, 2026 (the “First Share Exchange
Agreement”), by and among the Company, Yingxi HK, Time Is Loan Limited, a company incorporated under the laws of Hong
Kong, and Ms. OR Shan Shan. Pursuant to the First Share Exchange Agreement, Yingxi HK acquired 100% of the equity interests of Time Is
Loan Limited from Ms. OR Shan Shan in exchange for the issuance of 137,790 shares of Common Stock of the Company to Ms. OR Shan Shan.

13

Time
Is Loan Limited is a Hong Kong-based licensed money lender principally engaged in the provision of consumer and commercial lending services.

Acquisition
of Riches Family Office Limited

On
June 15, 2026 , we completed the transaction contemplated by a Share Exchange Agreement dated May 15, 2026 (the “Second
Share Exchange Agreement”), by and among the Company, Yingxi HK, Riches Family Office Limited, a company incorporated under the
laws of Hong Kong (“Riches Family”), Riches FO Holdings Limited (“Riches FO”), a company incorporated under the
laws of Hong Kong and the sole shareholder of Riches Family, and Mr. Wu Rui, our Chief Operating Officer and the sole shareholder of
Riches FO. Pursuant to the Second Share Exchange Agreement, Yingxi HK acquired 41.67% of the issued and outstanding equity interests
of Riches Family from Riches FO in exchange for the issuance by the Company of 33,500 shares of its Common Stock to Mr. Wu Rui.

Government
Regulations

Our
garment manufacturing and logistics services businesses are conducted primarily through our PRC operating subsidiaries and are
subject to relevant PRC laws, regulations and industry policies applicable to garment manufacturing, logistics services,
transportation, employment, taxation and other areas. On June 25, 2025, HSW had its business license revoked by the Dongguan Market Supervision and Administration Bureau
due to HSW’s failure to engage in business activities at its registered address for more than six consecutive months. As confirmed
by our PRC counsel, except for HSW, each of our PRC subsidiaries in operation holds and maintains a valid business license issued by the
local market supervision and administration bureau, and has received all requisite permissions and approvals in order to conduct and operate
our business. Based on our understanding of the PRC laws and regulations, our PRC businesses hold all the business licenses issued and
approved from the relevant local authorities and other administrative license required by its business, and do not require any other permissions
or approvals to operate their PRC business operations. As of the date of this annual
report, except as disclosed in this annual report, none of our PRC Subsidiaries has been denied or punished by relevant governmental authorities
due to its business qualifications. The PRC
government may, however, from time to time, adopt new laws, regulations, policies or implementation measures applicable to our PRC
operating businesses, which may increase our compliance costs or make it more difficult for us to operate successfully in the
PRC. Please see the section entitled “Risk Factors” for further details.

Our
consulting service business is conducted through Yingxi HK, our Hong Kong subsidiary. The consulting service business primarily involves
consulting, referral, coordination and administrative support services in connection with overseas wealth planning, insurance-related
information and related cross-border service support. To the extent our consulting service involves insurance, wealth management, immigration,
education or other regulated industries, we may be subject to applicable laws and regulations in Hong Kong and other relevant jurisdictions,
including requirements relating to insurance intermediary activities, referral arrangements, personal data protection, anti-money laundering,
customer due diligence and related compliance matters. We rely on third-party insurance brokers and other service providers, where applicable,
to provide regulated products or services to customers. Any changes in applicable laws and regulations, or any failure by us or our third-party
service providers to comply with such requirements, could adversely affect our consulting service business.

The
PRC government encourages small to medium-sized companies in traditional industries, such as garment manufacturing and logistics services,
to modernize their business models through technological upgrades and improved operational efficiency. We intend to continue monitoring
applicable regulatory developments in the PRC and Hong Kong and to adjust our business practices as necessary to comply with applicable
laws and regulations.

PRC
Limitation on Overseas Listing and Share Issuances

Currently,
each of our PRC Subsidiaries holds and maintains a business license issued by the local market supervision and administration bureau,
and has received all requisite permissions and approvals in order to conduct and operate our business. Based on our understanding of
the PRC laws and regulations, our PRC businesses hold all the business licenses issued and approved from the relevant local authorities
and other administrative license required by its business, and do not require any other permissions or approvals to operate their PRC
business operations. As of the date of this annual report, none of our PRC Subsidiaries has been denied or punished by relevant governmental
authorities due to its business qualifications. In addition, we and our non-PRC subsidiaries have also received all requisite permissions
and approvals in order to conduct and operate our business.

In
order to promote domestic enterprises to carry out overseas capital market activities in accordance with law and compliance, the CSRC
issued the “Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies” and five supporting
guidelines (collectively referred to as the Overseas Listing Filing Rules) on February 17, 2023, and took effect on March 31, 2023. The
Overseas Listing Filing Rules clarify the relevant rules of the Chinese government on the management of overseas issuance, including
but not limited to (i) Initial public offerings or listings in overseas markets shall be filed with the CSRC within 3 working days after
the relevant application is submitted overseas. Subsequent securities offerings of an issuer in the same overseas market where it has
previously offered and listed securities shall be filed with the CSRC within 3 working days after the offering is completed. Subsequent
securities offerings and listings of an issuer in other overseas markets than where it has offered and listed shall be filed as initial
public offerings; (ii) A negative list that prohibits overseas offering and listing; (iii) The reporting obligations of the issuer after
filing, such as the change of control, voluntary or mandatory delisting and other major changes after overseas issuance or listing, the
issuer should bear the obligation to report to the CSRC; (iv) Legal liability, such as failure to fulfill the filing procedures, or violation
of relevant regulations in overseas listing, the CSRC shall order rectification, issue warnings to such domestic company, and impose
a fine of between RMB 1,000,000 and RMB 10,000,000. Directly liable persons-in-charge and other directly liable persons shall be warned
and each imposed a fine of between RMB 500,000 and RMB 5,000,000.

14

According
to the Overseas Listing Filing Rules, the company, as an enterprise that has been listed on the Nasdaq Capital Market before the new
regulations come into effect, does not need to apply to the CSRC for filing immediately. If it is issued and listed in other overseas
markets, it shall be filed in accordance with relevant regulations. On April 29, 2024, the Company entered into two private placement
agreements with certain individual investors for 330,000 shares of Common Stock each at a unit price of $0.98 per share and for a total
of $646,800. After the transactions, we shall be filed with the CSRC within three working days after the issuance of shares is completed.
The Company has submitted the filing application to the China Securities Regulatory Commission. As of June 29, 2026, the application
is still pending. Accordingly, the Company’s overseas issuances and subsequent additional issuances comply with the
relevant provisions of the overseas listing filing regulation. As the overseas listing filing process has not yet been completed, the
outcome and subsequent requirements remain uncertain. As a result, we cannot assure you that we will be able to complete all requirement
for our future issuance in a timely manner and fully comply with the relevant new rules, if any. In addition, we cannot guarantee that
we will not be subject to greater regulatory scrutiny or subsequent interference by the Chinese government.

Transfers
of Cash to and from our Subsidiaries

We
are a Nevada holding company with no material operations of our own. We conduct substantially all of our operations through the operating
companies established in the PRC, primarily Shenzhen Yingxi Industrial Chain Service Co., Ltd. (“YX”), our wholly owned subsidiary
and its subsidiaries. We are not a Chinese operating company. We are a holding company and do not directly own any substantive business
operations in China. As a result, although other means are available for us to obtain financing at the holding company level, Addentax’s
ability to pay dividends to its shareholders and to service any debt it may incur may depend upon dividends paid by our PRC Subsidiaries.
If any of our subsidiaries incurs debt on its own in the future, the instruments governing such debt may restrict its ability to pay
dividends to Addentax. In addition, our PRC Subsidiaries are required to make appropriations to certain statutory reserve funds, which
are not distributable as cash dividends except in the event of a solvent liquidation of the companies.

Current
PRC regulations permit our PRC Subsidiaries to pay dividends to us through Yingxi HK, our intermediate holding subsidiary in Hong Kong,
only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition,
each of our PRC Subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve
until such reserve reaches 50% of its registered capital. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate
future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except
in the event of liquidation.

The
PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC.
Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency
for the payment of dividends from our profits, if any. Furthermore, if our PRC Subsidiaries incur debt on their own in the future, the
instruments governing the debt may restrict their ability to pay dividends or make other payments.

15

Cash
dividends, if any, on our Common Stock will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes,
any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding
tax at a rate of up to 10.0%.

In
order for us to pay dividends to our shareholders, we will rely on the distribution of dividends, through the WFOE, to Yingxi HK from
our PRC Subsidiaries. As of the date of this annual report, none of our PRC Subsidiaries has distributed any dividends to Yingxi HK.

Pursuant
to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax
Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident
enterprise owns no less than 25% of a PRC enterprise. However, the 5% withholding tax rate does not automatically apply and certain requirements
must be satisfied, including without limitation that (a) the Hong Kong enterprise must be the beneficial owner of the relevant dividends;
and (b) the Hong Kong enterprise must directly hold no less than 25% share ownership in the PRC enterprise during the 12 consecutive
months preceding its receipt of the dividends. In current practice, a Hong Kong enterprise must obtain a tax resident certificate from
the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax
resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the
relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect
to dividends to be paid by our WFOE to its immediate holding company, Yingxi HK. As of the date of this annual report, we have not applied
for the tax resident certificate from the relevant Hong Kong tax authority. Yingxi HK intends to apply for the tax resident certificate
when WFOE plans to declare and pay dividends to Yingxi HK.

As
of the date of this annual report, we have had no transactions that involved the transfer of cash or assets throughout our corporate
structure. The PRC Subsidiaries have not transferred cash or other assets to Addentax, including by way of dividends. However, to the
extent cash in the business is in the PRC/Hong Kong or is in our PRC or Hong Kong subsidiaries, there can be no assurance that the PRC
government will not intervene or impose restrictions or limitations on the ability of Addentax or Addentax’s subsidiaries to transfer
cash. As a result, such funds may not be available to fund operations or for other use outside of the PRC or Hong Kong. Addentax does
not currently plan or anticipate transferring cash or other assets from our operations in China to any non-Chinese entity. We intend
to retain most, if not all, of available funds and any future earnings after this offering to the development and growth of our business
in China. As of the date of this annual report, no transfers, dividends, or distributions have been made to our investors. Further, our
management is directly supervising cash management. Our finance department is responsible for establishing the cash management policies
and procedures among our departments and the operating entities. Each department or operating entity initiates a cash request by putting
forward a cash demand plan, which explains the specific amount and timing of cash requested, and submitting it to designated management
members of our Company, based on the amount and the use of cash requested. The designated management member examines and approves the
allocation of cash based on the sources of cash and the priorities of the needs, and submits it to the cashier specialists of our finance
department for a second review. Other than the above, we currently do not have other cash management policies or procedures that dictate
how funds are transferred nor a written policy that addresses how we will handle any limitations on cash transfers due to PRC law.

Holding
Foreign Company Accountable Act

Trading
in our securities may be prohibited under the Holding Foreign Companies Accountable Act, or the HFCAA, if the PCAOB determines that it
is unable to inspect or investigate completely our independent registered public accounting firm.

The
HFCAA and related regulations require the SEC to prohibit the trading of securities of an issuer if the issuer is identified as a “Commission-Identified
Issuer” for two consecutive years because the PCAOB is unable to inspect or investigate completely the issuer’s registered
public accounting firm due to a position taken by an authority in a foreign jurisdiction. If our securities were subject to a trading
prohibition under the HFCAA, Nasdaq may determine to delist our securities, and the market price and liquidity of our Common Stock could
be materially and adversely affected.

On
December 16, 2021, the PCAOB issued a determination that it was unable to inspect or investigate completely registered public accounting
firms headquartered in mainland China and Hong Kong because of positions taken by authorities in those jurisdictions. On December 15,
2022, the PCAOB announced that it had voted to vacate its previous determinations with respect to mainland China and Hong Kong. As of
the date of this annual report, the PCAOB has not issued any determination that would cause us to be identified as a Commission-Identified
Issuer under the HFCAA.

16

Our
independent registered public accounting firm for the fiscal year ended March 31, 2026 is HML PLT. HML PLT is headquartered in Malaysia
and is registered with the PCAOB. We do not believe that HML PLT is currently subject to any PCAOB determination regarding an inability
to inspect or investigate completely registered public accounting firms because of a position taken by an authority in a foreign jurisdiction.

However,
the PCAOB may in the future determine that it is unable to inspect or investigate completely registered public accounting firms in one
or more foreign jurisdictions, including if there are changes in applicable laws, regulations or governmental positions. If the PCAOB
were to determine in the future that it cannot inspect or investigate completely our auditor, or if we were to engage a registered public
accounting firm that is subject to such a determination, we could be identified as a Commission-Identified Issuer under the HFCAA. If
we were so identified for two consecutive years, our securities would be subject to a trading prohibition under the HFCAA, and Nasdaq
may determine to delist our securities. Any such trading prohibition or delisting, or the threat thereof, could materially and adversely
affect the value of your investment.