ADDENTAX GROUP CORP. Leases Disclosure
| 18. | LEASES |
As a lessee
Right-of-use asset and lease liabilities
The Company implemented ASC 842, Leases, on April 1, 2019 using the modified retrospective approach and did not restate comparative periods. Under ASC 842, lease liabilities are recognized at the present value of future lease payments, with a corresponding right-of-use asset recognized for leases other than short-term leases. A single lease cost is recognized over the lease term on a generally straight-line basis. Cash payments for operating leases are classified as operating activities in the consolidated statements of cash flows.
Prior to the disposal of HX on July 1, 2025, the Company leased its head office, plant, and dormitory under operating lease arrangements. The Company also leased several floors in a commercial building for its subleasing and property management services business. Certain leases included options to extend the lease term.
The following table summarizes the components of lease expense:
| 2026 | 2025 | |||||||
| Operating lease cost | 339,428 | 993,600 | ||||||
| Short-term lease cost | 126,419 | 131,520 | ||||||
| 465,847 | 1,125,120 | |||||||
The following table summarizes supplemental information related to leases:
| 2026 | 2025 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Operating cash flow used in operating leases | $ | 465,847 | $ | 1,125,120 | ||||
| Right-of-use assets obtained in exchange for new operating leases liabilities | ||||||||
| Weighted average remaining lease term - Operating leases (years) | - | 13.5 | ||||||
| Weighted average discount rate - Operating leases | % | 4.90 | % | |||||
As a result of the disposal of HX on July 1, 2025, the Company had no operating lease liabilities as of March 31, 2026.
As a lessor
Prior to the disposal of HX on July 1, 2025, the Company subleased its leased commercial building to third-party garment wholesalers and retailers under operating lease arrangements. These leases were negotiated for terms ranging from one to five years and generally included provisions for annual rental adjustments based on prevailing market conditions.
Rental income from subleasing is disclosed in Note 15, Segment Data.
Following the disposal of HX on July 1, 2025, the Company no longer generates rental income from subleasing activities.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Jun 29, 2026 | Showing above |
| 2025 | Jun 30, 2025 | |
| 2024 | Jul 15, 2024 | |
| 2023 | Jun 29, 2023 | |
| 2022 | Jun 23, 2022 | |
| 2021 | Jun 29, 2021 | |
| 2020 | Jun 29, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.