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Addentax Group - Fraud Is Prevalent

After conducting research on Addentax Group, Corp. (ATXG) there is internal fraud, mismanagement, and flaws in the corporation.

1. Lack of Transparency: Addentax Group, Corp. has not updated their site with press releases since 7/13/2021. They did release an investor presentation on 10/20/2022 with some questionable data. In the company overview it states, “Addentax Group, Corp. is an integrated service provider focusing on garment manufacturing, logistics service, property management and subleasing, and epidemic prevention supplies.” Yet, in their prospectus summary they state, “We (Addentax Group Corp.) are a Nevada holding company with no material operations of our own.”

Above it also states, “We are a holding company and do not directly own any substantive business operations in China.” Below, a different tone is stated. “The company operated predominantly in China.”

From this exhibit: it is interesting to see the rise of the scale’s change between millions and thousands to falsely demonstrate values.

From this exhibit: the business is declining ~50% YoY, and profits are increasing with declining revenues.

2. On June 29th, Addentax announces a 1-for-10 reverse stock split in order to boost the price of the stock. The company solely split stock to stay NASDAQ compliant as they had a closing bid price per share of less than $1.00 for ten (10) consecutive business days. They then proceed to announce an A.I. vertical of the business to substantiate growth. The release mainly states they are using A.I. and ChatGPT and integrating them into their business practice. There is nothing unique about the release, solely a way to draw attention to the stock.

3. The CEO, Hong Zhida, has a salary listed of only $17,200. For a 200M market cap company, yielding only 2M in revenue even these salaries seem preposterous. Also, not to mention the CEO, and the director are brothers. Also, the subsidiaries are owned by company directors as well.

4. In order to boost current assets, Addentax purchased $17,718,750 in debt securities held-to-maturity. The terms and repayment schedule of the long-term debts are not properly disclosed.

5. In order to boost current assets, Addentax purchased $17,718,750 of Debt securities held-to-maturity. Also, under their non-current assets had Restricted Cash of $14,750,000.

6. If you look at various companies that are assisted by Network 1 Financial Securities, shares of the stock leapt 6,000% percent on its Nasdaq IPO. These other companies are Starbox, Magic Empire, and Addentax. CEO of Network 1 Financial China has held a previous position at First Jersey Securities, INC. Moneyweek wrote an article titled “Great Frauds in History.” This article was regarding William Hunt's role at First Jersey Securities. Clearly, Network 1 has a habit pumping stocks 5000%+ then exiting their position.

Overall, from the above listed points, this company is conducting fraud. misrepresentation, and deception. Hydron Capital believes the company is worth less than $1 per share.

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