ATXG

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How ATXG rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

Text kept

53%

of sentences unchanged

Added

147

new sentences

Dropped

170

sentences removed

Length

−679

words, now 17,249

New in FY2026

Risk Factors You should carefully consider the risks described below and elsewhere in this annual report on Form 10-K, which could materially and adversely affect our business, results of operations or financial condition.
Our ability to adequately protect our trade names, trademarks, copyrights and domain names could adversely affect our brand images and ability to expand our business.
We believe that our trade names, trademarks, copyrighted logo designs and domain names are important assets and an element of our brand development strategy.
We have obtained trademark registrations and copyright registrations in China in connection with our business and maintain domain names for corporate, branding and business development purposes.
There can be no assurance that we will be able to adequately protect these intellectual property rights or prevent unauthorized use of our brands, logos, websites, domain names or other intellectual property by third parties.
Any infringement, misappropriation or other unauthorized use of our intellectual property could adversely affect our brand image, reputation and customer relationships, which could in turn have a material adverse effect on our business, results of operations, financial condition and cash flows.
A significant portion of our revenue is derived from major customers or sales channels, and the loss of any significant customer or sales channel may materially and adversely affect our financial condition and results of operations.
For the year ended March 31, 2026, our garment manufacturing revenue was generated through multiple sales channels.
Offline sales, product promotion/giveaway sales, Taobao platform sales, WeChat platform sales, accessory sales and Douyin platform sales accounted for approximately 50.2%, 30.4%, 12.2%, 5.4%, 1.1% and 0.6%, respectively, of the Company’s total garment manufacturing revenue.
Accordingly, the Company’s garment manufacturing revenue for the year ended March 31, 2026 was more diversified by sales channel and was not dependent on a single individual customer in the same manner as in prior periods.
For the year ended March 31, 2026, 3 customers accounted for approximately 34.6%, 30.7% and 18.6%, respectively, of the Company’s total garment manufacturing revenue.
For the year ended March 31, 2025, two customers accounted for approximately 73.9% and 22.1%, respectively, of the Company’s total garment manufacturing revenue.
For the year ended March 31, 2026, three customers accounted for approximately 22.7%, 17.6% and 12.4%, respectively, of the Company’s total logistics services revenue.
For the year ended March 31, 2025, two customers accounted for approximately 16.7% and 14.3%, respectively, of the Company’s total logistics services revenue.
For the year ended March 31, 2026, three customers accounted for approximately 53.6%, 31.6% and 13.4%, respectively, of the Company’s total consulting service revenue.
The Company did not generate consulting service revenue during the year ended March 31, 2025.
Our customers are not obligated to continue to purchase products or services from us at any specific level or at all.
If any of our significant customers reduce their orders, delay payments, terminate their business relationship with us, or if we are unable to obtain replacement customers or sales channels on commercially reasonable terms, our revenue, business operations and financial performance may be materially and adversely affected.
We are exposed to concentration risk due to reliance on major suppliers and service providers for the supply of our products and services, and any shortage, delay or disruption may significantly impact our business and results of operations.
During the years ended March 31, 2026 and 2025, approximately 45.7% and 41.4%, respectively, of the Company’s total purchases and service procurement were from the Company’s five largest suppliers and service providers.
Our business, financial condition and results of operations may depend on the continued supply of products or services from our largest suppliers and service providers and on our ability to maintain stable relationships with them.
Any significant disruption in supply, deterioration in supplier relationships, increase in supplier costs, or shortage or delay in the supply of materials or services may have a material adverse effect on our business and results of operations.
For consulting service, the Company may also rely on third-party referral partners, channel partners, insurance brokers or other cooperating service providers to support customer coordination and service fulfillment.
Any material disruption in these relationships, or any failure by such third parties to provide services in a timely and compliant manner, could adversely affect the Company’s consulting service business.
If we are unable to attract additional customers and clients to purchase our services or products (and future products we may develop or sell), it will have a negative effect on our ability to generate the revenue.
We rely on certain third-party contractors for portions of our logistics services, and any shortage, delay or disruption in subcontractor services may adversely affect our logistics operations.
The Company engages certain subcontractors to support its logistics business from time to time.
For the years ended March 31, 2026 and 2025, subcontracting fees paid or payable to our largest subcontractor represented approximately 7.3% and 5.2%, respectively, of total cost of revenues for our logistics services segment.
Based on these percentages, management does not believe that the Company was heavily reliant on any single subcontractor during these periods.
However, our logistics business may still be affected if subcontractors are unable or unwilling to provide services to us on commercially acceptable terms, or if there is any shortage, delay or disruption in subcontractor services.
We have not experienced any material disputes with our subcontractors, and we believe we maintain good relationships with our logistics service providers.
If we are unable to engage suitable subcontractors when needed or maintain stable relationships with our logistics service providers, our logistics business, results of operations and financial condition may be adversely affected.
We engage subcontractors to carry out certain logistics services.
Subcontracting fees for our logistics business accounted for approximately 8.9% and 5.5% of our total logistics services revenue for the years ended March 31, 2026 and 2025, respectively.
If any of our significant subcontractors are unable or unwilling to provide services to us on commercially acceptable terms, or if there is any shortage, delay or disruption in subcontractor services, our logistics business, results of operations and financial condition may be materially and adversely affected.
Our consulting service line is newly developed and may not generate sustainable revenue or profitability.
During the fiscal year ended March 31, 2026, we commenced a consulting service line.
This business has a limited operating history and remains subject to significant uncertainty.
Our ability to generate revenue from consulting services depends on our ability to attract and retain customers, maintain service quality, retain qualified personnel, coordinate effectively with third-party service providers, manage customer relationships and comply with applicable laws and regulations.
If we are unable to successfully develop this business, our results of operations, financial condition and business prospects may be materially and adversely affected.

and 107 more.

Gone since FY2025

Risk Factors You should carefully consider the risks described below and elsewhere in this Form 10-K, which could materially and adversely affect our business, results of operations or financial condition.
Our ability to adequately protect our trade names, trademarks and patents could have an impact on our brand images and ability to penetrate new markets.
We believe that our trade names, trademarks and patents are important assets and an essential element of our strategy.
We have applied the registration of these trade names, trademarks and patents in China and Hong Kong, and these registrations are currently pending approval from the corresponding departments.
There can be no assurance that we will obtain such registrations or that the registrations we obtain will prevent the imitation of our products or infringement of our intellectual property rights by others.
In particular, the laws of certain foreign countries may not protect proprietary rights to the same extent as the laws of the U.S.
If any third-party copies our products or our stores in a manner that projects lesser quality or carries a negative connotation, it could have a material adverse effect on our brand image and reputation as well as our results of operations, financial condition and cash flows.
Our top customers accounted for a major portion of our total revenue for the years ended March 31, 2025 and 2024 and may materially adversely affect our financial condition and results of operations.
For the year ended March 31, 2025, one customer accounted for approximately 54.1% of the Company’s total garment manufacturing revenues.
For the year ended March 31, 2024, two customers accounted for approximately 73.9% and 22.1%, respectively, of the Company’s total garment manufacturing revenues.
For the year ended March 31, 2025, two customers accounted for approximately 16.7% and 14.3% of the Company’s total logistic services revenues.
For the year ended March 31, 2024, one customer accounted for approximately 20.0% of the Company’s total logistic services revenues.
However, our top customers are not obligated in any way to continue to provide us with new business in the future at a level similar to that in the past or at all.
If any of our top customers reduce their orders with us or terminate their business relationship with our Group and if we are not able to secure orders of a comparable size from other customers as replacement, our business operations and financial performance may be materially and adversely affected.
We are exposed to concentration risk due to heavy reliance on our major supplier for the supply of our products, and any shortage of, or delay in, the supply may significantly impact our business and results of operation.
During the years ended March 31, 2025 and 2024, approximately 41.39% and 100.0% of total inventory purchases were from the Company’s five largest suppliers, respectively.
Our business, financial condition and operating results depend on the continuous supply of products from our largest suppliers and our continuous supplier-customer relationship with them.
Our heavy reliance on our largest suppliers for the supply of our products will have significant impact on our business and results of operation in the event of any shortage of, or delay in the supply.
If we are unable to attract additional customers and clients to purchase our services (and future products we may develop or sell), it will have a negative effect on our ability to generate the revenue.
We may be exposed to concentration risk due to heavy reliance on third-party contractors for our logistic business, and any shortage of third-party contractors may significantly impact our business and results of operation.
The Company relied on a few subcontractors for our logistic business, in which the subcontracting fees to our largest contractor represented approximately 5.2% and 42.0% of total cost of revenues for our logistics service segment for the years ended March 31, 2025 and 2024, respectively.
The decrease in subcontracting fee to the largest contractor was mainly due to decrease use of subcontractors.
We have not experienced any disputes with our subcontractors, and we believe we maintain good relationships with our contract logistic service provider.
We engaged subcontractors to carry out logistics services.
Subcontracting fees for our logistics business for the year ended March 31, 2025 decreased to approximately $0.2 million from $1.5 million for the year ended March 31, 2024, representing an decrease of approximately 89.0%.
Subcontracting fees accounted for 5.5% and 34.9% of our total logistics business revenue in the years ended March 31, 2025 and 2024, respectively.
If we are unable to control the reliance of subcontractors efficiently and effectively, our business prospects and results of operations may be materially and adversely affected.
Competition for tenants could impact our occupancy rates.
Our property management and subleasing operations face significant competition for tenants within the garment market.
Competitive factors include rental rates, property location, lease terms, and the quality of properties offered.
We compete directly with other landlords and property operators offering similar leasing opportunities in our targeted areas.
The presence of newer or better-located properties could adversely affect our ability to attract tenants and the rental rates we can achieve.
Our performance depends on our ability to collect rent from tenants, including anchor tenants, our tenants’ financial condition and our tenants maintaining leases for our properties.
Our property management and subleasing operations rely heavily on our ability to collect rent from tenants, including anchor tenants, to maintain financial stability.
The financial condition of our tenants directly impacts their ability to meet lease obligations.
Economic downturns or adverse market conditions, such as inflation, labor shortages, supply chain disruptions, and changes in consumer spending habits, may weaken tenants’ financial positions.
This could lead to delays in lease commencements, non-renewals, or defaults on rental payments.
In some cases, tenants may choose to close stores or declare bankruptcy, resulting in the termination of leases and loss of rental income.
Enforcing lease terms in case of default may incur delays and costs, potentially affecting our cash flow and financial performance.
A tenant filing for bankruptcy protection could prevent us from collecting pre-bankruptcy debts or recovering losses related to unpaid rent or damages.

and 130 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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