UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s 2025 ProxyStatement (as defined below) are incorporated by reference in Part III of this Annual Report on Form 10-K.
Table of Contents
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PART I
Item 1. Business.
Overview
Jerash Holdings (US), Inc. (“Jerash Holdings”),through its wholly owned operating subsidiaries (together, the “Group,” “we,” “us,” or “our”),is principally engaged in the manufacturing and exporting of customized, ready-made sportswear and outerwear from knitted fabric producedin its facilities in the Hashemite Kingdom of Jordan (“Jordan”). Our website address is http://www.jerashholdings.com. Informationavailable on our website is not a part of, and is not incorporated into, this Annual Report on Form 10-K.
We are a manufacturer for several well-known brands and retailers,such as VF Corporation (which owns brands such as The North Face, Timberland, and Vans), New Balance, G-III (which licenses brands suchas Calvin Klein, Tommy Hilfiger, DKNY, and Guess), Hugo Boss, American Eagle, and Skechers. Our production facilities include six factoriesand four warehouses and we currently employ approximately 6,000 people. The total annual capacity at our facilities was approximately24 million pieces (average for product categories including t-shirts, polo shirts, pants, shorts, and jackets) as of March 31, 2025.
Organizational Structure
Jerash Holdings is a holding company incorporatedin Delaware in January 2016. As of the date of this annual report, Jerash Holdings has the following wholly owned subsidiaries: (i) JerashGarments and Fashions Manufacturing Co., Ltd. (“Jerash Garments”), an entity formed under the laws of Jordan, (ii) TreasureSuccess International Limited (“Treasure Success”), an entity formed under the laws of Hong Kong Special Administrative Regionof the People’s Republic of China (“Hong Kong”), (iii) Chinese Garments and Fashions Manufacturing Co., Ltd. (“ChineseGarments”), an entity formed under the laws of Jordan and a wholly owned subsidiary of Jerash Garments, (iv) Jerash for IndustrialEmbroidery Co., Ltd. (“Jerash Embroidery”), an entity formed under the laws of Jordan and a wholly owned subsidiary of JerashGarments, (v) Al-Mutafaweq Co. for Garments Manufacturing Ltd. (“Paramount”), an entity formed under the laws of Jordan anda wholly owned subsidiary of Jerash Garments, (vi) Mustafa and Kamal Ashraf Trading Company (Jordan) for the Manufacture of Ready-MakeClothes LLC (“MK Garments”), an entity formed under the laws of Jordan and a wholly owned subsidiary of Jerash Garments; (vii)Jiangmen Treasure Success Business Consultancy Co., Ltd. (“Jiangmen Treasure Success”), an entity incorporated under the lawsof the People’s Republic of China (“China” or the “PRC”) and a wholly owned subsidiary of Treasure Success,(viii) Jerash The First Medical Supplies Manufacturing Company Limited (“Jerash The First”), an entity formed under the lawsof Jordan and a wholly owned subsidiary of Jerash Garments, (ix) Jerash Supplies, LLC (“Jerash Supplies”), an entity formedunder the laws of the State of Delaware, (x) Kawkab Venus Dowalyah Lisenaet Albesah (“Kawkab Venus”), a limited liabilitycompany established in Amman, Jordan, and (xi) Ever Winland Limited (“Ever Winland”), a limited liability company organizedin Hong Kong. As of the date of this annual report, Treasure Success owns 51% of the equity interests in J&B International Limited(“J&B”), a company with limited liability incorporated under the laws of Hong Kong. P. T. Eratex (Hong Kong) Limited (“Eratex”),a company formed in Hong Kong, owns the remaining 49%. To date, Treasure Success also owns 51% of the equity interests in Jerash Newtech(Hong Kong) Holdings Limited (“Jerash Newtech”), a company incorporated under the laws of Hong Kong with limited liability,and Newtech Textile (HK) Limited, a company incorporated in Hong Kong (“Newtech”), owns the remaining 49%.
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This chart reflects our organizational structure as of the date ofthis annual report:
Jerash Garments was established in Jordan on November26, 2000 and operates out of our factory in Al Tajamouat Industrial City, a Development Zone in Amman, Jordan. Jerash Garments’principal activities are to house management offices and to operate production lines and printing, sewing, ironing, packing, and qualitycontrol units, as well as house our trims and finished products warehouses. We also operate our factory in Al-Hasa County (as discussedbelow) under Jerash Garments.
Chinese Garments was established in Jordan onJune 13, 2013 and operates out of our factory in Al Tajamouat Industrial City. Chinese Garments’ principal activities are to houseadministration, human resources, finance, and management offices and to operate additional production lines and sewing, ironing, and packingunits, as well as house our trims warehouse.
Jerash Embroidery was established in Jordan onMarch 11, 2013 and operates out of our factory in Al Tajamouat Industrial City. Jerash Embroidery’s principal activities are toperform the cutting and embroidery for our products.
Paramount was established in Jordan on October24, 2004 and operates out of our factory in Al Tajamouat Industrial City. Paramount’s principal activities are to manufacture garmentsper customer orders.
MK Garments was established in Jordan on January23, 2003. On June 24, 2021, Jerash Garments and the sole shareholder of MK Garments entered into an agreement, pursuant to which JerashGarments acquired all of the outstanding stock of MK Garments. As of October 7, 2021, MK Garments became a subsidiary of Jerash Garments.MK Garments operates out of our factory in Al Tajamouat Industrial City. MK Garments’ principal activities are to manufacture garmentsper customer orders. The new facilities are an existing garment manufacturing operation adjacent to Jerash’s four largest manufacturingcenters. Jerash assumed ownership of all of the machinery and equipment owned by MK Garments through the acquisition.
Treasure Success was established in Hong Kongon July 5, 2016 and operates in Hong Kong. Treasure Success’s primary activities are sales of garments and to employ sales and merchandisingstaff and supporting personnel in Hong Kong to support the business of Jerash Garments and its subsidiaries.
Jiangmen Treasure Success was established in JiangmenCity of Guangdong Province in the PRC on August 28, 2019 and operates in the PRC. Jiangmen Treasure Success’s primary activitiesare to provide support in sales and marketing, sample development, merchandising, procurement, and other areas.
Jerash The First was established in Jordan onJuly 6, 2020 and operate out of our factory in Al-Hasa County. Jerash The First’s principal activities are to manufacture and tradepersonal protective equipment (“PPE”) products.
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Jerash Supplies was formed in Delaware on November20, 2020. Jerash Supplies is engaged in the trading of PPE products.
Kawkab Venus was established in Amman, Jordan,on January 15, 2015 with a declared capital of JOD 50,000. It holds land with factory premises, which are leased to MK Garments. On July14, 2021, Jerash Garments and the sole shareholder of Kawkab Venus entered into an agreement, pursuant to which Jerash Garments acquiredall of the outstanding stock of Kawkab Venus. Apart from the land and factory premises, Kawkab Venus had no other significant assets orliabilities and no operation activities or employees at the time of acquisition, so the acquisition was accounted for an asset acquisition.As of August 21, 2022, Kawkab Venus became a subsidiary of Jerash Garments.
Ever Winland was organized in Hong Kong on December3, 2020. It holds office premises, which are leased to Treasure Success. On June 22, 2022, Treasure Success and the shareholders of EverWinland entered into an agreement, pursuant to which Treasure Success acquired all of the outstanding stock of Ever Winland. Apart fromthe office premises used by Treasure Success, Ever Winland had no other significant assets or liabilities and no operating activitiesor employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of August 29, 2022, EverWinland became a subsidiary of Treasure Success.
J&B is a joint venture company establishedin Hong Kong on January 10, 2023. On March 20, 2023, Treasure Success and Eratex entered into a Joint Venture and Shareholders’Agreement, pursuant to which Treasure Success acquired 51% of the equity interests in J&B on April 11, 2023. J&B engages in thebusiness of garment trading and manufacturing for orders from customers.
Jerash Newtech is a joint venture company establishedin Hong Kong on November 3, 2023. On October 10, 2023, Treasure Success and Newtech entered into a Joint Venture and Shareholders’Agreement. Pursuant to this agreement, both parties agreed to form a joint venture company in Hong Kong named Jerash Newtech, of whichTreasure Success holds 51% of the equity interests and Newtech holds 49%. Jerash Newtech engages in the business of supplying fiber andfabric printed with Cooltrans technology, and may engage any other businesses in the future as both parties shall agree from time to time.
Products
As a garment manufacturing group, we specializein manufacturing sportswear and outerwear. Our sportswear and outerwear product offering consists of jackets, polo shirts, t-shirts, pants,and shorts. During fiscal 2025, our primary product offering was crew neck shirts, which accounted for approximately 37% of our totalshipped pieces. Our primary product offering in the fiscal year ended March 31, 2024 was shorts, pants, and vests, which accounted forapproximately 37% of our total shipped pieces.
Manufacturing and Production
Our production facilities are located in Al TajamouatIndustrial City and in Al-Hasa County in the Tafilah Governorate of Jordan.
Our production facilities in Al Tajamouat IndustrialCity comprise five factories and four warehouses. Effective as of January 1, 2019, the government of the Hashemite Kingdom of Jordan convertedAl Tajamouat Industrial City into a Development Zone. Following this change, we continued to operate under benefits similar to the QualifyingIndustrial Zone designation, but were subject to a 10% corporate income tax plus a 1% social contribution. Starting from January 1, 2020,the corporate income tax rate increased to 14% plus a 1% social contribution. On January 1, 2021, the corporate income tax rate increasedto 16% plus a 1% social contribution. On January 1, 2022, the corporate income tax rate increased to 18% or 20% plus a 1% social contribution.On January 1, 2023, the corporate income tax rate increased to 19% or 20% plus a 1% social contribution. Effective January 1, 2024, wehave been subject to a 20% corporate income tax rate plus a 1% social contribution. Currently, the first factory, which we own, employsapproximately 1,500 people. Its primary functions are to house our management offices, as well as production lines, trims warehouse, andprinting, sewing, ironing, and packaging units. The second factory, which we lease, employs approximately 1,650 people. Its primary functionis to house our administrative and human resources personnel, merchandising and accounting departments, embroidery, printing, additionalproduction lines, trims and finished products warehouses, and sewing, ironing, packing and quality control units. The third factory, whichwe lease, employs approximately 200 people. Its primary functions are to perform the cutting for our products. The fourth factory (underParamount), which we lease, currently employs approximately 1,300 people. Its primary functions are to house additional production lines.The fifth factory (under MK Garments) currently employs approximately 650 people. Its primary function is to manufacture garments fororders from customers.
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Our production facility in Al-Hasa County in theTafilah Governorate of Jordan comprises a factory, which currently employs approximately 500 people and its primary functions are to manufacturegarment products per customer orders. We commenced the construction of this factory in 2018 and we started operations in November 2019.This is a joint project with the Jordanian Ministry of Labor and the Jordanian Education and Training Department. According to our agreementwith these government agencies, we used this factory without paying rent through December 2022. We have continued to use the factory withoutpaying rent since January 2023 as new arrangements with the Jordanian Ministry of Labor are still being made. See “Item 2. Properties”below for more information regarding this factory.
In April 2021, we commenced construction on a195,000-square-foot housing facility for our multi-national workforce, situated on a 49,000-square-foot site owned by us, in Al TajamouatIndustrial City. In fiscal 2025, the construction completed and our workers have moved in. To meet increasing demand, we are also finalizingplans to construct an additional project on a nearby 133,000-square-foot parcel that we purchased in 2019 for $1.2 million. Two-thirdsof the land will be used for our seventh factory and the remaining one-third will be used for housing. As of the date of this annual report,we are working with engineering consultants on the architectural design of the building, taking into account the potential business growthbought about by the new business collaboration with Busana Apparel Group. We will carefully plan the construction investment to meet theprogress of business developments.
Total annual capacity at our existing facilities was approximately24 million pieces (average for product categories including t-shirts, polo shirts, pants, shorts, and jackets) as of March 31, 2025. Ourproduction flow begins in the cutting department of our factory. Then the product is sent to the embroidery department for embroideryif applicable. From there, the product moves to be processed by the sewing unit, finishing department, quality control, and finally theironing and packing units.
We do not have long-term supply contracts or arrangementswith our suppliers. Most of our ultimate suppliers for raw materials, such as fabric, zippers, and labels, are designated by customersand we purchase such materials on a purchase order basis.
Employees
As of March 31, 2025, we had an aggregate of approximately6,000 employees located in Jordan, Hong Kong, China, and the United States of America, all of which are full-time employees.
Customers
The following table outlines the dollar amountand percentage of total sales to our customers for the fiscal years ended March 31, 2025 (“fiscal 2025”) and March 31, 2024(“fiscal 2024”).
| Fiscal 2025 | Fiscal 2024 | |||||||||||||||
| Sales | Sales | |||||||||||||||
| (USD, in thousands) | % | (USD, in thousands) | % | |||||||||||||
| VF Corporation(1) | $ | 94,151 | 64.6 | % | $ | 78,912 | 67.3 | % | ||||||||
| New Balance | 17,872 | 12.2 | % | 13,931 | 11.9 | % | ||||||||||
| Suzhou Unitex | 5,696 | 3.9 | % | 916 | 0.8 | % | ||||||||||
| SWC Inc. | 5,049 | 3.5 | % | 671 | 0.6 | % | ||||||||||
| Tharanco | 4,673 | 3.2 | % | 244 | 0.2 | % | ||||||||||
| Hugo Boss | 4,018 | 2.8 | % | 2,920 | 2.5 | % | ||||||||||
| G-III | 2,352 | 1.6 | % | 5,773 | 4.9 | % | ||||||||||
| Others | 12,001 | 8.2 | % | 13,820 | 11.8 | % | ||||||||||
| Total | $ | 145,812 | 100.0 | % | $ | 117,187 | 100.0 | % | ||||||||
| (1) | A large portion of our products are sold under The North Face, Timberland, and Vans brands owned by VF Corporation. |
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In fiscal 2025 and 2024, we depended on a fewkey customers for our sales, and a large portion of our sales in fiscal 2025 and 2024 were to one customer, VF Corporation.
We started producing garments for VF Corporationin 2012. A large portion of the products we manufacture are sold under The North Face, Timberland, and Vans brands which are owned byVF Corporation. Currently, we manufacture primarily outerwear for The North Face. Approximately 65% and 67% of our sales in fiscal 2025and 2024 were derived from the sale of manufactured products to VF Corporation, respectively. We are not party to any long-term contractswith VF Corporation or our other customers, and our sales arrangements with our customers do not have minimum purchase requirements. Asis common in our industry, VF Corporation and our other customers place purchase orders with us after we complete detailed sample developmentand approval processes that we and our customers have agreed upon for their purchase of the relevant manufactured garments. It is throughthe sample development and approval processes that we and VF Corporation and our other customers agree on the purchase and manufactureof the garments. For fiscal 2025, VF Corporation issued approximately 14,700 purchase orders to us in amounts ranging from approximately$6 to $929,000. For fiscal 2024, VF Corporation issued approximately 3,400 purchase orders to us in amounts ranging from approximately$7 to $268,000.
Our customers are in the retail industry, whichis subject to substantial cyclical variations. Consequently, there can be no assurance that sales to current customers will continue atthe current rate or at all. In addition, our annual and quarterly results may vary, which may cause our profits and the market price ofour common stock to decline.
We continue to seek to expand and strengthen ourrelationship with our current customers and other brand names. However, we cannot assure you that these brands will continue to buy ourproducts in the same volumes or on the same terms as they did in the past or that we will be successful in expanding our relationshipwith other brand names.
Competition
The markets for the manufacturing of sportswearand outerwear are highly competitive. The competition in those markets is focused primarily on the price and quality of the product andthe level of customer service. Our products compete with products of other apparel manufacturers in Asia, Israel, Europe, the United States,and South and Central America.
Competition with other manufacturers in the clothingindustry focuses on reducing production costs, reducing supply lead time, design, product quality, and efficiency of supply to the customer.Since production costs depend to a large extent on labor costs, in recent years most production in the industry has been moved to countrieswhere labor costs are low. Some of our competitors have lower cost bases, longer operating histories, larger customer bases, and otheradvantages over us which allow them to compete with us. As described in more detail under “—Conditions in Jordan—TradeAgreements” below, we were able to sell our products manufactured at our facilities in Jordan to the United States free from customsduties and import quotas under certain conditions prior to April 5, 2025. These favorable terms enabled us to remain competitive on thebasis of price. Effective from April 5, 2025, the U.S. imposed a baseline tariff of 10% on imports from almost all countries, includingJordan. Then, effective from April 9, 2025, it had announced “reciprocal” tariffs of imports from specified countries, amongstthem Jordan with a prevailing rate of then 20%. These “reciprocal” tariffs are postponed for 90 days, whilst the 10% baselinetariff persists. Up to the date of this annual report, the 90 days postponement of the “reciprocal” tariff has not expired.
According to the Association Agreement betweenthe European Union (the “EU”) and Jordan, which came into force in May 2002, and the joint initiative on rules of origin reviewedand improved in December 2018 by the EU and Jordan, goods manufactured by us in Jordan that are subsequently shipped to EU countries areshipped free from customs duties.
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Conditions in Jordan
Our manufacturing facilities are located in Jordan.Accordingly, we are directly affected by political, security, and economic conditions in Jordan.
From time to time, Jordan has experienced instancesof civil unrest, terrorism, and hostilities among neighboring countries, including Syria and Israel. A peace agreement between Israeland Jordan was signed in 1994. Terrorist attacks, military activity, rioting, or civil or political unrest in the future could influencethe Jordanian economy and our operations by disrupting operations and communications and making travel within Jordan more difficult andless desirable. Political or social tensions also could create a greater perception that investments in companies with Jordanian operationsinvolve a high degree of risk, which could adversely affect the market and price for our common stock. Furthermore, the escalation ofconflicts such as Russia-Ukraine, Israel-Hamas, and Israel-Iran, as well as Houthi rebel attacks on commercial vessels in the Red Sea,may increase geopolitical tensions globally. These political or social tensions could disrupt international trade, industrial supply chains,and transportation, leading to market price volatility, and may adversely affect our business, increase operational costs, and limit ourability to secure foreign financing for our operations and capital expenditures. See “Item 1A. Risk Factors—Risks Relatedto Operations in Jordan—Our operations in Jordan may be adversely affected by social and political uncertainties or change, militaryactions, health-related risks, acts of terrorism or other geopolitical instability.”
Jordan is a constitutional monarchy, but the Kingholds wide executive and legislative powers. The ruling family has taken initiatives that support the economic growth of the country.However, there is no assurance that such initiatives will be successful or will continue. The rate of economic liberalization could change,and specific laws and policies affecting manufacturing companies, foreign investments, currency exchange rates, and other matters affectinginvestments in Jordan could change as well.
Trade Agreements
Because of the Association Agreement between theEU and Jordan, which came into force in May 2002, we are able to sell our products manufactured at our facilities in Jordan to EU countriesfree from customs duties.
Because of the United States-Jordan Free TradeAgreement, which came into force on December 17, 2001, and was implemented fully on January 1, 2010, we were able to sell our productsmanufactured at our facilities in Jordan to the U.S. free from customs duties and import quotas under certain conditions prior to April5, 2025.
Effective from April 5, 2025, the U.S. imposed a baseline tariff of10% on imports from almost all countries, including Jordan. Then, effective from April 9, 2025, it had announced “reciprocal”tariffs of imports from specified countries, amongst them Jordan with a prevailing rate of then 20%. These “reciprocal” tariffsare postponed for 90 days, whilst the 10% baseline tariff persists. Up to the date of this annual report, the 90 day postponement of the“reciprocal” tariff has not expired.
Income/Sales Tax Incentives
Effective January 1, 2019, Jordan’s governmentconverted the geographical area where Jerash Garments and its subsidiaries are located from a Free Zone to a Development Zone. DevelopmentZones are industrial parks that house manufacturing operations in Jordan. In accordance with applicable law, Jerash Garments and its subsidiarieswere subject to corporate income tax in Jordan at a rate of 19% or 20% plus a 1% social contribution between January 1, 2023 to December31, 2023. Effective January 1, 2024, the income tax rate increased to 20%, plus a 1% social contribution. For more information, see “Note2—Summary of Significant Accounting Policies—Income and Sales Taxes.”
In addition, Jerash Garments and its subsidiariesare subject to local sales tax of 16% on purchases. However, Jerash Garments was granted a sales tax exemption from the Jordanian InvestmentCommission for the period June 1, 2015 to June 1, 2018 that allowed Jerash Garments to make purchases with no sales tax charge. This exemptionwas extended to February 5, 2026.
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Government Regulation
Our manufacturing and other facilities in Jordanand our subsidiaries outside of Jordan are subject to various local regulations relating to the maintenance of safe working conditionsand manufacturing practices. Management believes that we are currently in compliance in all material respects with all such regulations.We are not subject to governmental approval of our products or manufacturing process.
Item 1A. Risk Factors.
The following are factors that could have a significantimpact on our operations and financial results and could cause actual results or outcomes to differ materially from those discussed inany forward-looking statements.
Risks Related to Our Business and Our Industry
We rely on one key customer for a largeportion of our revenue. We cannot assure you that this customer or any other customer will continue to buy our products in the same volumesor on the same terms.
Our sales to VF Corporation (which owns brandssuch as The North Face, Timberland, and Vans), directly and indirectly, accounted for approximately 65% and 67% of our total sales infiscal 2025 and 2024, respectively. From an accounting perspective, we are considered the principal in our arrangement with VF Corporation.We bear the inventory risk before the specified goods are transferred to a customer, and we have the right to determine the price andto change our product during the sample development process with customers in which we determine factors including material usage andmanufacturing costs before confirming orders. Therefore, we present the sales and related manufacturing activities on a gross basis.
We are not party to any long-term contracts withVF Corporation or our other customers, and our sales arrangements with our customers do not have minimum purchase requirements. As iscommon in our industry, VF Corporation and our other customers place purchase orders with us after we complete detailed sample developmentand approval processes. It is through these sample development and approval processes that we and VF Corporation agree on the purchaseand manufacture of the garments in question. In fiscal 2024, VF Corporation issued approximately 3,400 purchase orders to us in amountsranging from approximately $7 to $268,000. In fiscal 2025, VF Corporation issued approximately 14,700 purchase orders to us in amountsranging from approximately $6 to $929,000.
We cannot assure you that our customers will continueto buy our products at all or in the same volumes or on the same terms as they have in the past. The failure of VF Corporation to continueto buy our products in the same volumes and on the same terms as in the past may significantly reduce our sales and our earnings.
A material decrease in the quantity of sales madeto our principal customers, a material adverse change in the terms of such sales or a material adverse change in the financial conditionof our principal customers could significantly reduce our sales and our earnings.
We cannot assure you that VF Corporation willcontinue to purchase our merchandise at the same historical rate, or at all, in the future, or that we will be able to attract new customers.In addition, because of our reliance on VF Corporation as our key customer and their bargaining power with us, VF Corporation has theability to exert significant control over our business decisions, including prices.
Any adverse change in our relationship withVF Corporation and its owned brands, or with their strategies or reputation, would have a material adverse effect on our results of operations.
A large portion of our products are sold underThe North Face, Timberland, and Vans brands, which are owned by VF Corporation. Any adverse change in our relationship with VF Corporationwould have a material adverse effect on our results of operations. In addition, our sales of those products could be materially and adverselyaffected if the image, reputation, or popularity of either VF Corporation, The North Face, Timberland, or Vans were to be negatively impacted.
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If we lose our key customer and are unableto attract new customers, then our business, results of operations, and financial condition would be adversely affected.
If our key customer, VF Corporation, fails topurchase our merchandise at the same historical rate, or at all, we will need to attract new customers and we cannot assure you that wewill be able to do so. We do not currently invest significant resources in marketing our products, and we cannot assure you that any newinvestments in sales and marketing will lead to the acquisition of additional customers or increased sales or profitability consistentwith prior periods. If we are unable to attract new customers or customers that generate comparable profit margins to VF Corporation,then our results of operations and financial condition could be materially and adversely affected.
If we lose our larger brand name customers,or the customers fail to purchase our products at anticipated levels, our sales and operating results will be adversely affected.
Our results of operations depend to a significantextent upon the commercial success of our larger brand name customers. If we lose these customers, these customers fail to purchase ourproducts at anticipated levels, or our relationships with these customers or the brands and retailers they serve diminishes, it may havean adverse effect on our results and we may lose a primary source of revenue. In addition, we may not be able to recoup development andinventory costs associated with these customers and we may not be able to collect our receivables from them, which would negatively impactour financial condition and results of operations.
If the market share of our customers declines,our sales and earnings may decline.
Our sales can be adversely affected in the eventthat our direct and indirect customers do not successfully compete in the markets in which they operate. In the event that the sales ofone of our major customers decline for any reason, regardless of whether it is related to us or to our products, our sales to that customermay also decline, which could reduce our overall sales and our earnings.
A natural disaster, catastrophe, pandemic,or other unexpected events could adversely affect our financial conditions and business operations.
The occurrence of one or more unexpected events,including war, acts of terrorism or violence, civil unrest, epidemics or pandemics, fires, tornadoes, hurricanes, earthquakes, floods,and other forms of severe weather in the countries or regions in which we do business could adversely affect our operations and financialperformance.
We may require additional financing to fundour operations and capital expenditures.
As of March 31, 2025, we had cash of approximately$13.3 million and restricted cash of approximately $1.7 million. There can be no assurance that our available cash, together with resourcesfrom our operations, will be sufficient to fund our operations and capital expenditures. In addition, our cash position may decline inthe future, and we may not be successful in maintaining an adequate level of cash resources.
Pursuant to the DBS Bank (Hong Kong) Limited (“DBSHK”)facility letter dated January 12, 2022, DBSHK provided a bank facility of up to $5.0 million to Treasure Success, which was amended pursuantto a facility letter dated January 4, 2024. Pursuant to the amended agreement, DBSHK agreed to finance cargo receipt, trust receipt, accountpayable financing, and certain type of import and export invoice financing up to an aggregate of $5.0 million, with certain financialcovenants. The DBSHK facility bears interest at 1.5% per annum over Hong Kong Interbank Offered Rate (“HIBOR”) for Hong Kongdollar (“HKD”) bills and 1.1% to 1.3% per annum over DBSHK’s cost of funds for foreign currency bills. The facilityis guaranteed by Jerash Holdings and became available to the Company on June 17, 2022.
In addition, we may be required to seek additionaldebt or equity financing in order to support our growing operations. We may not be able to obtain additional financing on satisfactoryterms, or at all, and any new equity financing could have a substantial dilutive effect on our existing stockholders. If we cannot obtainadditional financing, we may not be able to achieve our desired sales growth, and our results of operations would be negatively affected.
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We may have conflicts of interest with ouraffiliates and related parties, and in the past we have engaged in transactions and entered into agreements with affiliates that werenot negotiated at arms’ length.
We have engaged, and may in the future engage,in transactions with affiliates and other related parties. These transactions may not have been, and may not be, on terms as favorableto us as they could have been if obtained from non-affiliated persons. While an effort has been made and will continue to be made to obtainservices from affiliated persons and other related parties at rates and on terms as favorable as would be charged by others, there willalways be an inherent conflict of interest between our interests and those of our affiliates and related parties. Through his wholly ownedentity Merlotte Enterprise Limited, Mr. Choi, our chairman, chief executive officer, president, treasurer, and a significant stockholder,has an indirect ownership interest in Jiangmen V-Apparel Manufacturing Limited, with which we have entered into, or in the future mayenter into, agreements or arrangements. See also “Note 11—Related Party Transactions.” If we engage in related partytransactions on unfavorable terms, our operating results will be negatively impacted.
We are dependent on a product segment comprisedof a limited number of products.
Presently, we generate revenue primarily frommanufacturing and exporting sportswear and outerwear. A shift in demand from such products may reduce the growth of new business for ourproducts, and reduce existing business in those products. If demand in sportswear and outerwear were to decline, we may endeavor to expandor transition our product offerings to other segments of the clothing retail industry. There can be no assurance that we would be ableto successfully make such an expansion or transition, or that our sales and margins would not decline in the event we made such an expansionor transition.
Our revenue and cash requirements are affectedby the seasonal nature of our business.
A significant portion of our revenue is receivedduring the first six months of our fiscal year, or from April through September. A majority of our VF Corporation orders are derived fromwinter season fashions, the sales of which occur in the spring and summer and are merchandized by VF Corporation during the autumn months(September through November). As such, the second half of our fiscal year traditionally reflect lower sales in anticipation of the springand summer seasons. In addition, due to the nature of our relationships with customers and our use of purchase orders to conduct our business,our revenue may vary from period to period.
Changes in our product mix and the geographicdestination of our products or source of our supplies may impact our cost of goods sold, net income, and financial position.
From time to time, we experience changes in theproduct mix and the geographic destination of our products. To the extent our product mix shifts from higher revenue items, such as jackets,to lower revenue items, such as pants, our cost of goods sold as a percentage of gross revenue will likely increase. In addition, if wesell a higher proportion of products in geographic regions where we do not benefit from free trade agreements or tax exemptions, our grossmargins will fall. If we are unable to sustain consistent product mix and geographic destinations for our products, we could experiencenegative impacts to our financial condition and results of operations.
Our direct and indirect customers are inthe clothing retail industry, which is subject to substantial cyclical variations and could have a material adverse effect on our resultsof operations.
Our direct and indirect customers are in the clothingretail industry, which is subject to substantial cyclical variations and is strongly affected by any downturn or slowdown in the generaleconomy. Factors in the clothing retail industry that may influence our operating results from quarter to quarter include:
| ● | the volume and timing of customer orders we receive during the quarter; |
| ● | the timing and magnitude of our customers’ marketing campaigns; |
| ● | the loss or addition of a major customer or of a major retailer nomination; |
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| ● | the availability and pricing of materials for our products; |
| ● | the increased expenses incurred in connection with introducing new products; |
| ● | currency fluctuations; |
| ● | political factors that may affect the expected flow of commerce; and |
| ● | delays caused by third parties. |
In addition, uncertainty over future economicprospects could have a material adverse effect on our results of operations. Many factors affect the level of consumer spending in theclothing retail industry, including, among others:
| ● | general business conditions; |
| ● | interest rates; |
| ● | the availability of consumer credit; |
| ● | taxation; and |
| ● | consumer confidence in future economic conditions. |
Consumer purchases of discretionary items, includingour products, may decline during recessionary periods and also may decline at other times when disposable income is lower. Consequently,our customers may have larger inventories of our products than expected, and to compensate for any downturn they may reduce the size oftheir orders, change the payment terms, limit their purchases to a lower price range, and try to change their purchase terms, all of whichmay have a material adverse effect on our financial condition and results of operations.
The clothing retail industry is subjectto changes in fashion preferences. If our customers misjudge a fashion trend or the price which consumers are willing to pay for our productsdecreases, our revenue could be adversely affected.
The clothing retail industry is subject to changesin fashion preferences. We design and manufacture products based on our customers’ judgment as to what products will appeal to consumersand what price consumers would be willing to pay for our products. Our customers may not be successful in accurately anticipating consumerpreferences and the prices that consumers would be willing to pay for our products. Our revenue will be reduced if our customers are notsuccessful, particularly if our customers reduce the volume of their purchases from us or require us to reduce the prices at which wesell our products.
If we experience product quality or latedelivery problems, or if we experience financial problems, our business will be negatively affected.
We may from time to time experience difficultiesin making timely delivery of products of acceptable quality. Such difficulties may result in cancellation of orders, customer refusalto accept deliveries, or reductions in purchase prices, any of which could have a material adverse effect on our financial condition andresults of operations. There can be no assurance that we will not experience difficulties with manufacturing our products.
We face intense competition in the worldwideapparel manufacturing industry.
We compete directly with a number of manufacturersof sportswear and outerwear. Some of these manufacturers have lower cost bases, longer operating histories, larger customer bases, greatergeographical proximity to customers, or greater financial and marketing resources than we do. Increased competition, direct or indirect,could reduce our revenue and profitability through pricing pressure, loss of market share, and other factors. We cannot assure you thatwe will be able to compete successfully with existing or new competitors, as the market for our products evolves and the level of competitionincreases. We believe that our business will depend upon our ability to provide apparel products of good quality and meeting our customers’pricing and delivery requirements, and our ability to maintain relationships with our major customers. There can be no assurance thatwe will be successful in this regard.
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We have entered into joint ventures withthird parties, and we may continue to do so in the future. This may subject us to various risks, including limited decision-making authority,reliance on our joint venture partners’ financial condition, the risk of disputes with our joint venture partners, and the riskof failing to achieve profitability through such business.
As of the date of this annual report, we haveentered into two joint ventures with third parties. Please refer to “Item 1. Business—Organizational structure” formore information. Once we enter into any joint ventures, we will have limited decision-making authority and we may face the risk of disputeswith our joint venture partners. This includes potential deadlocks in making major decisions and restrictions on our ability to exit thejoint venture. Any disputes that arise between us and any of our joint venture partners may result in litigation or arbitration. We mayalso face risks associated with the financial condition of our joint venture partners, including the risk of bankruptcy and/or failureto fund their share of required capital contributions. As a result, we may be exposed to liabilities that exceed our share of any jointventure. Our joint venture partners may also have business interests or goals that are inconsistent with ours and may be able to takeactions contrary to our policies or objectives. In specific circumstances, we may be liable for the actions of any joint venture partners.Any of these situations may have a material adverse effect on our business, financial condition, and results of operations.
Furthermore, we cannot assure that we may succeedin doing business through these two joint ventures or any future joint ventures. If the two joint ventures do not achieve expected levelsof production or profitability, we will not be able to adequately manage our growth following the establishment of such business, andour results of operations and financial condition would be adversely affected.
Our results of operations are subject to fluctuations in currencyexchange rates.
Exchange rate fluctuations between the U.S. dollarand Jordanian Dinar (“JOD”), Hong Kong dollar, or Chinese Yuan (“CNY”), as well as inflation in Jordan, Hong Kong,or the PRC, may negatively affect our earnings. A substantial majority of our revenue and a substantial portion of our expenses are denominatedin U.S. dollars. However, a significant portion of the expenses associated with our Jordanian, Hong Kong, or PRC operations, includingpersonnel and facilities-related expenses, are incurred in JOD, HKD, or CNY, respectively. Consequently, inflation in Jordan, Hong Kong,or the PRC will have the effect of increasing the dollar cost of our operations in Jordan, Hong Kong, or the PRC, respectively, unlessit is offset on a timely basis by a devaluation of JOD, HKD, or CNY, as applicable, relative to the U.S. dollar. We cannot predict anyfuture trends in the rate of inflation in Jordan, Hong Kong, or the PRC or the rate of devaluation of JOD, HKD, or CNY, as applicable,against the U.S. dollar. In addition, we are exposed to the risk of fluctuation in the value of JOD, HKD, CNY vis-a-vis the U.S. dollar.There can be no assurance that JOD or HKD will remain effectively pegged to the U.S. dollar. Any significant appreciation of JOD, HKD,or CNY against the U.S. dollar would cause an increase in our JOD, HKD, or CNY expenses, as applicable, as recorded in our U.S. dollardenominated financial reports, even though the expenses denominated in JOD, HKD, or CNY, as applicable, will remain unchanged. In addition,exchange rate fluctuations in currency exchange rates in countries other than Jordan where we operate and do business may also negativelyaffect our earnings.
We are subject to the risks of doing businessabroad.
Almost all of our products are manufactured outsidethe United States, at our subsidiaries’ production facilities in Jordan. Foreign manufacturing is subject to a number of risks,including work stoppages, transportation delays and interruptions, political instability, foreign currency fluctuations, economic disruptions,expropriation, nationalization, the imposition of tariffs and import and export controls, changes in governmental policies (includingU.S. policies towards Jordan), and other factors, which could have an adverse effect on our business. In addition, we may be subject torisks associated with the availability of and time required for the transportation of products from foreign countries. The occurrenceof certain of these factors may delay or prevent the delivery of goods ordered by customers, and such delay or inability to meet deliveryrequirements would have a severe adverse impact on our results of operations and could have an adverse effect on our relationships withour customers.
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Our ability to benefit from the lower labor costsin Jordan will depend on the political, social, and economic stability of Jordan and in the Middle East in general. We cannot assure youthat the political, economic, or social situation in Jordan or in the Middle East in general will not have a material adverse effect onour operations, especially in light of the potential for hostilities in the Middle East. See “—Risks Related to Operationsin Jordan—Our operations in Jordan may be adversely affected by social and political uncertainties or change, military actions,health-related risks, acts of terrorism or other geopolitical instability.” The success of the production facilities also will dependon the quality of the workmanship of laborers and our ability to maintain good relations with such laborers in these countries. We cannotguarantee that our operations in Jordan or any new locations outside of Jordan will be cost-efficient or successful.
Our business could suffer if we violatelabor laws or fail to conform to generally accepted labor standards or the ethical standards of our customers.
We are subject to labor laws issued by the JordanianMinistry of Labor for our facilities in Jordan. In addition, many of our customers require their manufacturing suppliers to meet theirstandards for working conditions and other matters. If we violate applicable labor laws or generally accepted labor standards or the ethicalstandards of our customers by, for example, using forced or indentured labor or child labor, failing to pay compensation in accordancewith local law, failing to operate our factories in compliance with local safety regulations, or diverging from other labor practicesgenerally accepted as ethical, we could suffer a loss of sales or customers. In addition, such actions could result in negative publicityand may damage our reputation and discourage retail customers and consumers from buying our products.
Our products may not comply with variousindustry and governmental regulations and our customers may incur losses in their products or operations as a consequence of our non-compliance.
Our products are produced under strict supervisionand controls to ensure that all materials and manufacturing processes comply with the industry and governmental regulations governingthe markets in which these products are sold. However, if our controls fail to detect or prevent non-compliant materials from enteringthe manufacturing process, our products could cause damages to our customers’ products or processes and could also result in finesbeing incurred. The possible damages, replacement costs, and fines could significantly exceed the value of our products and these risksmay not be covered by our insurance policies.
We depend on our suppliers for machineryand maintenance of machinery. We may experience delays or additional costs satisfying our production requirements due to our relianceon these suppliers.
We purchase machinery and equipment used in ourmanufacturing process from third-party suppliers. If our suppliers are not able to provide us with maintenance or additional machineryor equipment as needed, we might not be able to maintain or increase our production to meet any demand for our products, which would negativelyimpact our financial condition and results of operations.
We are a holding company and rely on dividends,distributions, and other payments, advances, and transfers of funds from our subsidiaries to meet our obligations.
We are a holding company that does not conductany business operations of our own. As a result, we rely on cash dividends and distributions and other transfers from our operating subsidiariesto meet our obligations. The deterioration of income from, or other available assets of, our operating subsidiaries for any reason couldlimit or impair their ability to pay dividends or other distributions to us, which in turn could adversely affect our financial conditionand results of operations.
Periods of sustained economic adversityand uncertainty could negatively affect our business, results of operations, and financial condition.
Disruptions in the financial markets, such aswhat occurred in the global markets in 2008, may adversely impact the availability and cost of credit for our customers and prospectivecustomers, which could result in the delay or cancellation of customer purchases. In addition, disruptions in the financial markets mayhave an adverse impact on regional and world economies and credit markets, which could negatively impact the availability and cost ofcapital for us and our customers. These conditions may reduce the willingness or ability of our customers and prospective customers tocommit funds to purchase our services or products, or their ability to pay for our services after purchase. These conditions could resultin bankruptcy or insolvency for some customers, which would impact our revenue and cash collections. These conditions could also resultin pricing pressure and less favorable financial terms to us and our ability to access capital to fund our operations.
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Risks Related to Operations in Jordan
We are affected by conditions to, and possiblereduction of, free trade agreements.
Because of the Association Agreement between theEU and Jordan, we are able to sell our products manufactured at our facilities in Jordan to EU countries free from customs duties. Ifthere is a change in such benefits or if such agreement were terminated, our profitability may be reduced.
Because of the United States-Jordan Free TradeAgreement, we were able to sell our products manufactured at our facilities in Jordan to the U.S. free from customs duties and importquotas under certain conditions prior to April 2025.
Effective from April 5, 2025, the U.S. imposeda baseline tariff of 10% on imports from almost all countries, including Jordan. Then, effective from April 9, 2025, it had announced“reciprocal” tariffs of imports from specified countries, amongst them Jordan with a prevailing rate of then 20%. These “reciprocal”tariffs are postponed for 90 days, whilst the 10% baseline tariff persists. Up to the date of this annual report, the 90 days postponementof the “reciprocal” tariff has not expired.
It remains unclear what specifically PresidentTrump would or would not do with respect to trade agreements, tariffs, and duties relating to products manufactured in Jordan during hiscurrent term. If President Trump takes action or publicly speaks out about the need to terminate or re-negotiate existing free trade agreementson which we rely, or in favor of restricting free trade or increasing tariffs and duties applicable to our products, such actions mayadversely affect our sales and have a material adverse impact on our business, results of operations, and cash flows.
Our results of operations would be materiallyand adversely affected in the event we are unable to operate our principal production facilities in Jordan.
All of our manufacturing process is performedin a complex of production facilities located in Jordan. We have no effective back-up for these operations and, in the event that we areunable to use the production facilities located in Jordan as a result of damage or for any other reason, our ability to manufacture amajor portion of our products and our relationships with customers could be significantly impaired, which would materially and adverselyaffect our results of operation.
Our operations in Jordan may be adverselyaffected by social and political uncertainties or change, military actions, health-related risks, acts of terrorism, or other geopoliticalinstability.
From time to time, Jordan has experienced instancesof civil unrest, terrorism, and hostilities among neighboring countries, including Syria and Israel. A peace agreement between Israeland Jordan was signed in 1994. Terrorist attacks, military activity, rioting, or civil or political unrest in the future could influencethe Jordanian economy and our operations by disrupting operations and communications and making travel within Jordan more difficult andless desirable. In late May 2018, protests about a proposed tax bill began throughout Jordan. On June 5, 2018, King Abdullah II of Jordanresponded to the protests by removing and replacing Jordan’s prime minister. If political uncertainty rises in Jordan, our business,financial condition, results of operations, and cash flows may be negatively impacted.
Political or social tensions also could createa greater perception that investments in companies with Jordanian operations involve a high degree of risk, which could adversely affectthe market price of our common stock. We do not have insurance for losses and interruptions caused by terrorist attacks, military conflicts,and wars, which could subject us to significant financial losses. The realization of any of these risks could cause a material adverseeffect on our business, financial condition, results of operations, and cash flows.
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Furthermore, global markets have recently experiencedvolatility and disruption following the escalation of geopolitical tensions, including the military conflict between Russia and Ukraineand the conflict in the Middle East. Specifically, Russian military forces initiated a full-scale invasion of Ukraine on February 24,2022, leading to sustained conflict and disruption. See “—Risk Factors Relating to our Securities—We are currently operatingin a period of economic uncertainty and capital market disruption, which has been significantly impacted by geopolitical instability dueto the ongoing military conflict between Russia and Ukraine and the confrontations in the Middle East, including conflicts between Israeland Hamas, and between Iran and Israel. Our business, financial condition, and results of operations could be materially adversely affectedby any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.”Additionally, on October 7, 2023, Hamas militants and members of other terrorist organizations infiltrated Israel’s southern borderfrom the Gaza Strip and conducted a series of terror attacks on civilian and military targets, leading to a declaration of war by Israel.Subsequently, there have been disruptions in the region. The intensity and duration of the current Israel-Hamas war and the larger regionalconflict are difficult to predict, as are the economic implications on our business and operations, the global supply chain, and globalgeopolitical stability.
Since November 2023, Yemen’s Iran-backedHouthi Rebels have intensified attacks on commercial vessels in the Red Sea, targeting ships from over 40 nations, including Jordan. TheRed Sea turmoil has led to higher logistic costs for us to import raw material. Furthermore, we have incurred extra production costs toadhere to customers’ delivery schedules and mitigate the impact of delayed arrivals of raw materials caused by the aforementionedlogistic disruption. If these attacks continue or escalate, we may be forced to reroute shipments around the Cape of Good Hope, whichwill result in higher shipping costs and delays. Additionally, these disruptions could lead to increased shipping insurance premiums andelevated global fuel prices, which will further drive up our transportation expenses.
Since June 2025, the conflict between Israel andIran has escalated. These direct military engagements, proxy activities, and broader regional tensions could have significant adverseeffects on Jordan’s political and economic environment, and consequently, on our business operations. Further intensification ofthe conflict could result in regional economic instability, potentially disrupting trade routes, supply chains, and cross-border commerce.Heightened military activity could also create security risks for our facilities, employees, and customers, potentially leading to businessinterruptions, increased operating costs, or damage to physical assets. In response to regional threats, the government of Jordan mayimplement new regulations, restrictions, or emergency measures, which could affect our ability to conduct business as usual.
While we do not have any employees, staff, consultants,operations, materials, or equipment located in Israel, Ukraine, Russia, or Belarus, all of our manufacturing processes are performed ina complex of production facilities located in Jordan. This situation could adversely affect our business or the services being providedto us due to concerns about conflict in the Palestinian territories. For example, when Hamas launched its attack on October 7, 2023, ithad an unfavorable impact on the Jordanian street and the country’s national security. Despite bilateral cooperation between Jordanand the United States that may contribute to assisting the conflicting parties in ultimately achieving peace and security, we cannot assurethat our business operations will not be adversely impacted by such disputes.
Any of the aforementioned factors could affectour business, prospects, financial condition, and operating results. The extent and duration of military action, sanctions, and resultingmarket disruptions are impossible to predict, but could be substantial.
We may face interruption of production andservices due to increased security measures in response to terrorism.
Our business depends on the free flow of productsand services through the channels of commerce. In response to terrorists’ activities and threats aimed at the United States, transportation,mail, financial, and other services may be slowed or stopped altogether. Extensive delays or stoppages in transportation, mail, financial,or other services could have a material adverse effect on our business, results of operations, and financial condition. Furthermore, wemay experience an increase in operating costs, such as costs for transportation, insurance, and security as a result of the activitiesand potential delays. We may also experience delays in receiving payments from payors that have been affected by the terrorist activities.The United States economy in general may be adversely affected by terrorist activities and any economic downturn could adversely impactour results of operations, impair our ability to raise capital, or otherwise adversely affect our ability to grow our business.
We are subject to regulatory and politicaluncertainties in Jordan.
We conduct substantially all of our business andoperations in Jordan. Consequently, government policies and regulations, including tax policies, in Jordan will impact our financial performanceand the market price of our common stock.
Jordan is a constitutional monarchy, but the Kingholds wide executive and legislative powers. The ruling family has taken initiatives that support the economic growth of the country.However, there is no assurance that such initiatives will be successful or will continue. The rate of economic liberalization could change,and specific laws and policies affecting manufacturing companies, foreign investments, currency exchange rates, and other matters affectinginvestments in Jordan could change as well. A significant change in Jordan’s economic policy or any social or political uncertaintiesthat impact economic policy in Jordan could adversely affect business and economic conditions in Jordan generally and our business andprospects.
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If we violate applicable anti-corruptionlaws or our internal policies designed to ensure ethical business practices, we could face financial penalties and reputational harm thatwould negatively impact our financial condition and results of operations.
We are subject to anti-corruption and anti-briberylaws in the United States and Jordan. Jordan’s reputation for potential corruption and the challenges presented by Jordan’scomplex business environment, including high levels of bureaucracy, red tape, and vague regulations, may increase our risk of violatingapplicable anti-corruption laws. We face the risk that we, our employees, or any third parties such as our sales agents and distributorsthat we engage to do work on our behalf may take action determined to be in violation of anti-corruption laws in any jurisdiction in whichwe conduct business, including the Foreign Corrupt Practices Act of 1977 (the “FCPA”). Any violation of the FCPA or any similaranti-corruption law or regulation could result in substantial fines, sanctions, civil or criminal penalties, and curtailment of operationsthat might harm our business, financial condition, or results of operations.
Our stockholders may face difficulties inprotecting their interests and exercising their rights as a stockholder of ours because we conduct substantially all of our operationsin Jordan and certain of our officers and directors reside outside of the United States.
Certain of our officers and directors reside outsidethe United States. Therefore, our stockholders may experience difficulties in effecting service of legal process, enforcing foreign judgments,or bringing original actions in any of these jurisdictions based upon U.S. laws, including the federal securities laws or other foreignlaws against us, our officers, and directors. Furthermore, we conduct substantially all of our operations in Jordan through our operatingsubsidiaries. Because the majority of our assets are located outside the United States, any judgment obtained in the United States againstus or certain of our directors and officers may not be collectible within the United States.
Risk Factors Relating to Our Securities
If we fail to comply with the continuinglisting standards of the Nasdaq, our common stock could be delisted from the exchange.
If we were unable to meet the continued listingrequirements of the Nasdaq Stock Market (“Nasdaq”), our common stock could be delisted from the Nasdaq. Any such delistingof our common stock could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock,not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactionsand less coverage of us by securities analysts, if any. Also, if in the future we were to determine that we need to seek additional equitycapital, being delisted from Nasdaq could have an adverse effect on our ability to raise capital in the public or private equity markets.
Future sales and issuances of our commonstock or rights to purchase common stock could result in additional dilution of the percentage ownership of our stockholders and couldcause the market price of our common stock to decline.
We may issue additional securities in the future.Pursuant to our amended and restated 2018 Stock Incentive Plan, we may issue up to 1,784,250 shares of common stock to certain membersof our management and key employees. As of the date of this annual report, 117,710 shares of common stock remain available for issuanceunder our amended and restated 2018 Stock Incentive Plan.
Future sales and issuances of our common stockor rights to purchase our common stock could result in substantial dilution to our existing stockholders. We may sell common stock, convertiblesecurities, and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time. Ifwe sell any such securities, our stockholders may be materially diluted. New investors in any future transactions could gain rights, preferences,and privileges senior to those of holders of our common stock.
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If securities or industry analysts do notpublish research or reports about us, or if they adversely change their recommendations regarding our common stock, our stock price andtrading volume of our common stock could decline.
The trading market for our common stock will beinfluenced by the research and reports that industry or securities analysts publish about us, our industry, and our market. If no analystelects to cover us and publish research or reports about us, the market for our common stock could be severely limited and our stock pricecould be adversely affected. In addition, if one or more analysts ceases coverage of us or fails to regularly publish reports on us, wecould lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. If one or moreanalysts who elect to cover us issue negative reports or adversely change their recommendations regarding our common stock, the marketprice of our common stock could decline.
The requirements of being a public company,including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)and the requirements of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), may strain our resources, increase our costs,and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
We are required to comply with the laws, regulations,requirements, and certain corporate governance provisions under the Exchange Act and the Sarbanes-Oxley Act. Complying with these statutes,regulations, and requirements occupies a significant amount of time of our board of directors and management, significantly increasesour costs and expenses, and makes some activities more time-consuming and costly. As a reporting company, we are:
| ● | instituting a more comprehensive compliance function; |
| ● | preparing and distributing periodic and current reports under the federal securities laws; |
| ● | establishing and enforcing internal compliance policies, such as those related to insider trading; and |
| ● | involving and retaining outside counsel and accountants to a greater degree than before we became a reporting company. |
Our ongoing compliance efforts will increase generaland administrative expenses and may divert management’s time and attention from the development of our business, which may adverselyaffect our financial condition and results of operations.
If we fail to establish and maintain aneffective system of internal controls, we may not be able to report our financial results accurately. Any inability to report and fileour financial results accurately and timely could harm our business and adversely affect the trading price of our common stock.
We have been required to evaluate our internalcontrol over financial reporting under Section 404 of the Sarbanes-Oxley Act beginning with the annual report on Form 10-K for the fiscalyear ended March 31, 2019. The process of designing and implementing internal controls over financial reporting may divert our internalresources and take a significant amount of time and expense to complete.
In connection with the preparation and externalaudit of our consolidated financial statements for the fiscal year ended March 31, 2024, we identified certain material weaknesses inour internal control over financial reporting and have formulated plans for remedial measures. Although some remedial measures have beenimplemented, our management concluded that our internal control over financial reporting was still ineffective as of March 31, 2025 assome of the material weaknesses around the information technology environment have not been sufficiently remediated. See “Item 9A.Controls and Procedures.”
However, our management team cannot guaranteethat our internal controls and disclosure controls and procedures will prevent all possible errors. Because of the inherent limitationsin all control systems, no system of controls can provide absolute assurance that all control issues and instances of fraud, if any, withinthe Company have been detected. These inherent limitations include the possibility that judgments in decision-making can be faulty andsubject to simple error or mistake. Furthermore, controls can be circumvented by individual acts of some persons, by collusion of twoor more persons, or by management override of the controls. The design of any system of controls is based in part upon certain assumptionsabout the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals underall potential future conditions. Over time, measures of control may become inadequate because of changes in conditions or the degree ofcompliance with policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatementsdue to error or fraud may occur and may not be detected.
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We incur and will continue to incur increasedcosts and demands upon management as a result of being a public company.
As a public company listed in the United States,we incur, and will continue to incur, now that we have ceased to be an “emerging growth company,” significant legal, accounting,and other costs. These costs could negatively affect our financial results. In addition, changing laws, regulations, and standards relatingto corporate governance and public disclosure, including regulations implemented by the SEC and Nasdaq, may increase legal and financialcompliance costs and make some activities more time-consuming. These laws, regulations, and standards are subject to varying interpretationsand, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies.
We are committed to comply with evolving laws,regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’stime and attention from revenue-generating activities to compliance activities. If we do not comply with new laws, regulations, and standards,regulatory authorities may initiate legal proceedings against us and our business may be harmed.
Failure to comply with these rules might alsomake it more difficult for us to obtain some types of insurance, including director and officer liability insurance, and we might be forcedto accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact ofthese events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committeesof our board of directors or as members of senior management.
We are currently operating in a period ofeconomic uncertainty and capital market disruption, which has been significantly impacted by geopolitical instability due to the ongoingmilitary conflict between Russia and Ukraine. Our business, financial condition, and results of operations could be materially adverselyaffected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopoliticaltensions, including the ongoing confrontations in the Middle East, such as the conflicts between Iran and Israel and between Israel andHamas.
U.S. and global markets are experiencing volatilityand disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. OnFebruary 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoingmilitary conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatilityin commodity prices, credit and capital markets, and supply chain interruptions.
The military conflict in Ukraine has led to sanctionsand other penalties being levied by the United States, European Union, and other countries against Russia. Additional potential sanctionsand penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect theglobal economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficultfor us to obtain additional funds. In addition, in managing an organization operating globally, we are subject to the risks and challengesrelated to the potential to subject our business to materially adverse consequences should the situation escalate beyond its current scope,including, among other potential impacts, the geographic proximity of the situation relative to the Middle East, where a material portionof our business is conducted.
Although our business has not been materiallyimpacted by the ongoing military conflict between Russian and Ukraine to date, it is impossible to predict the extent to which our operations,or those of our suppliers and manufacturers, will be impacted in the short and long term, or the ways in which the conflict may impactour business. The extent and duration of the military action, sanctions, and resulting market disruptions are impossible to predict, butcould be substantial. Any such disruptions may also magnify the impact of other risks described in this annual report.
See also “—Risks Related to Operationsin Jordan—Our operations in Jordan may be adversely affected by social and political uncertainties or change, military actions,health-related risks, acts of terrorism, or other geopolitical instability.”
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We may be adversely affected by the effectsof inflation and a potential recession.
Inflation has the potential to adversely affectour liquidity, business, financial condition, and results of operations by increasing our overall cost structure, particularly if we areunable to achieve commensurate increases in the prices we charge our customers. The existence of inflation in the economy has resultedin, and may continue to result in, higher interest rates and capital costs, shipping costs, supply shortages, increased costs of labor,weakening exchange rates, and other similar effects. As a result of inflation, we have experienced and may continue to experience, costincreases. In addition, poor economic and market conditions, including a potential recession, may negatively impact market sentiment,decreasing the demand for sportswear and outerwear, which would adversely affect our operating income and results of operations. If weare unable to take effective measures in a timely manner to mitigate the impact of the inflation as well as a potential recession, ourbusiness, financial condition, and results of operations could be adversely affected.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Risk Management and Strategy
Cybersecurity is a vital aspect of maintainingthe trust of our customers and employees. We have instituted a comprehensive cybersecurity risk management program that employs variousmethods to monitor and assess our threat environment and risk profile. These methods include the use of manual and automated tools, conductingscans of the threat environment, evaluating our and our industry’s risk profile, evaluating threats reported to us and conductingvulnerabilities assessments. We have company-wide policies and procedures in place that further enhance our ability to identify and managecybersecurity risks. Our employees receive ongoing training under our security policies.
Annual risk assessments and penetration testingare primarily performed by our internal staff, and we have not engaged any
During the fiscal year ended March 31, 2025, wehave not identified any risks from cybersecurity threats that have
Governance
Our CEO, MIS consultant, and MIS supervisor overseerisk management to ensure that the Company’s policies and procedures are functioning as intended to protect the Company’sinformation systems from cybersecurity threats.
More specifically, MIS supervisor is responsiblefor identifying and assessing cybersecurity risks on an ongoing basis, establishing processes designed to ensure that such potential cybersecurityrisk exposures are monitored, putting in place appropriate mitigation and remediation measures, and maintaining cybersecurity programs.
Item 2. Properties.
Jerash Garments and Kawkab own two industrialbuildings of approximately 136,000 and 79,000 square feet, respectively, a dormitory building with a kitchen area of approximately 195,000square feet, and one piece of land of approximately 133,000 square feet in Al Tajamouat Industrial City. We lease additional space totalingapproximately 527,000 square feet in industrial buildings in Al Tajamouat Industrial City. In addition, we lease space for our workersin dormitories located inside and outside of Al Tajamouat Industrial City.
18
Treasure Success owns an office space in HongKong through acquisition of Ever Winland on August 29, 2022. See “—Item 1. Business—Organizational Structure.”
In 2018, we commenced another project to builda 54,000 square-foot factory in Al-Hasa County in the Tafilah Governorate of Jordan, which started operation in November 2019. This projectis a joint project with the Jordanian Ministry of Labor and the Employment and Training Department in Jordan. The Ministry of Labor financedthe building of the factory and the Employment and Training Department supported 50% of the workers’ salaries, as well as transportationand social security costs in the first 12 months following the completion of the project. We used the factory without paying rent throughDecember 2022. We have continued to use the factory without paying rent since January 2023 as new arrangements with the Jordanian Ministryof Labor are still being made.
In April 2021, we commenced construction on a189,000-square-foot housing facility for our multi-national workforce, situated on a 49,000-square-foot site owned by us, located in AlTajamouat Industrial City. The construction has been completed as of the date of this annual report and our workers have started movingin. To meet increasing demand, we are also finalizing plans to construct an additional project on a nearby 133,000-square-foot parcelthat we purchased in 2019 for $1.2 million, with 2/3 of the land expected to be allocated for the establishment of our seventh factoryand 1/3 for housing purposes. As of the date of this annual report, we are working with engineering consultants to proceed with the architecturaldesign of these buildings. However, execution of this construction plan will depend on the progress of the Company’s business developmentand an ongoing assessment of customer order condition.
On January 1, 2021, Jiangmen Treasure Successentered a factory lease agreement with an independent third party. The lease has a five-year term with monthly rent amount of CNY50,245(approximately $6,900) for the first year, CNY60,270 (approximately $8,400) for the second year, and 5% further annual increments startingfrom the third year.
On June 24, 2021, we entered into an agreementthrough Jerash Garments to acquire all of the stock of an existing garment manufacturing business in order to operate our fifth manufacturingfacility in Al Tajamouat Industrial City located in Amman, Jordan.
On July 14, 2021, Jerash Garments and the soleshareholder of Kawkab Venus entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of KawkabVenus. Apart from the land and factory premises, Kawkab Venus had no other significant assets or liabilities and no operation activitiesor employees at the time of acquisition, so the acquisition was accounted for an asset acquisition. As of August 21, 2022, Kawkab Venusbecame a subsidiary of Jerash Garments.
We believe the real estate property that we ownand lease is sufficient to conduct our operations as they are currently conducted.
Item 3. Legal Proceedings.
We are not currently involved in any materiallegal proceedings. From time-to-time we are, and we anticipate that we will be, involved in legal proceedings, claims, and litigationarising in the ordinary course of our business and otherwise. The ultimate costs to resolve any such matters could have a material adverseeffect on our financial statements. We could be forced to incur material expenses with respect to these legal proceedings, and in theevent that there is an outcome in any that is adverse to us, our financial position and prospects could be harmed.
Item 4. Mine Safety Disclosures
Not applicable.
19
PART II
Item 5. Market for Registrant’s CommonEquity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock has been traded and quoted onthe Nasdaq Capital Market under the symbol “JRSH” since May 4, 2018. Before that, our stock was not traded on any stock exchange.As of June 24, 2025, there were 12,699,940 shares of common stock issued and outstanding held by approximately 41 stockholders of record.
Since November 2018, the Board of Directors ofJerash Holdings has declared a quarterly cash dividend payable to holders of its common stock. Subject to the discretion of the Boardof Directors and applicable law, we currently expect to continue declaring comparable quarterly cash dividends in the future.
For information on securities authorized for issuanceunder our existing equity compensation plan, see Item 12 under the heading “Security Ownership of Certain Beneficial Owners andManagement and Related Stockholder Matters.”
In the fourth quarter of the fiscal year endedMarch 31, 2025, the Company has not made any repurchases of its outstanding shares of common stock.
During the fiscal years ended March 31, 2025 and2024, we did not have sales of unregistered securities other than those already disclosed in the quarterly reports on Form 10-Q in thefiscal years 2025 and 2024, and current reports on Form 8-K.
Item 6. [Reserved].
Item 7. Management’s Discussion and Analysis of FinancialCondition and Results of Operations.
The following discussion of our financial conditionand results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewherein this annual report.
Executive Overview
Seasonality of Sales
A significant portion of our revenue is receivedduring the first six months of our fiscal year. The majority of our VF Corporation orders are derived from winter season fashions, thesales of which occur in Spring and Summer and are merchandized by VF Corporation during the months of September through November. As such,the second half of our fiscal years reflect lower sales in anticipation of the spring and summer seasons. One of our strategies is toincrease sales with other customers where clothing lines are stronger during the spring months. This strategy also reflects our currentplan to increase our number of customers to mitigate our current concentration risk with VF Corporation.
Results of Operations
The following table presents certain informationfrom our consolidated statements of operations and comprehensive loss for the fiscal years ended March 31, 2025 and 2024 and should beread, along with all of the information in this management’s discussion and analysis, in conjunction with the consolidated financialstatements and related notes included elsewhere in this annual report.
20
(All amounts, other than percentages, in thousandsof U.S. dollars)
| Fiscal Years Ended March 31, | ||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||
| As % of | As % of | Year over Year | ||||||||||||||||||||||
| Statement of Income Data: | Amount | Sales | Amount | Sales | Amount | % | ||||||||||||||||||
| Revenue | $ | 145,812 | 100 | % | $ | 117,187 | 100 | % | $ | 28,625 | 24 | % | ||||||||||||
| Cost of goods sold | 123,493 | 85 | % | 100,285 | 86 | % | 23,208 | 23 | % | |||||||||||||||
| Gross profit | 22,319 | 15 | % | 16,902 | 14 | % | 5,417 | 32 | % | |||||||||||||||
| Selling, general, and administrative expenses | 20,872 | 14 | % | 17,567 | 15 | % | 3,305 | 19 | % | |||||||||||||||
| Other expenses, net | 1,296 | 1 | % | 705 | 0 | % | 591 | 84 | % | |||||||||||||||
| Net income (loss) before taxation | $ | 151 | 0 | % | $ | (1,370 | ) | (1 | )% | $ | 1,521 | (111 | )% | |||||||||||
| Income tax expense | 991 | 1 | % | 672 | 1 | % | 319 | 47 | % | |||||||||||||||
| Net loss | $ | (840 | ) | (1 | )% | $ | (2,042 | ) | (2 | )% | $ | 1,202 | (59 | )% | ||||||||||
Revenue. Our revenue was $145.8million for fiscal 2025, compared to $117.2 million for fiscal 2024, an increase of $28.6 million, or 24%, primarily due to increasesin shipments to two of our major customers in the U.S., which is our main export market.
The following table outlines the dollar amountand percentage of total sales to our customers for the fiscal years ended March 31, 2025 and 2024, respectively.
(All amounts, other than percentages, in thousandsof U.S. dollars)
| Fiscal 2025 | Fiscal 2024 | |||||||||||||||
| Sales | Sales | |||||||||||||||
| (Amount) | % | (Amount) | % | |||||||||||||
| VF Corporation(1) | $ | 94,151 | 64.6 | % | $ | 78,912 | 67.3 | % | ||||||||
| New Balance | 17,872 | 12.2 | % | 13,931 | 11.9 | % | ||||||||||
| Suzhou Unitex | 5,696 | 3.9 | % | 916 | 0.8 | % | ||||||||||
| SWC Inc. | 5,049 | 3.5 | % | 671 | 0.6 | % | ||||||||||
| Tharanco | 4,673 | 3.2 | % | 244 | 0.2 | % | ||||||||||
| Hugo Boss | 4,018 | 2.8 | % | 2,920 | 2.5 | % | ||||||||||
| G-III | 2,352 | 1.6 | % | 5,773 | 4.9 | % | ||||||||||
| Others | 12,001 | 8.2 | % | 13,820 | 11.8 | % | ||||||||||
| Total | $ | 145,812 | 100.0 | % | $ | 117,187 | 100.0 | % | ||||||||
| (1) | A large portion of our products are sold under The North Face, Timberland, and Vans brands owned by VF Corporation. |
21
Revenue by Geographic Area
(All amounts, other than percentages, in thousandsof U.S. dollars)
| Fiscal Years Ended March 31, | ||||||||||||||||||||||||
| 2025 | 2024 | Year over Year | ||||||||||||||||||||||
| Region | Amount | % | Amount | % | Amount | % | ||||||||||||||||||
| United States | $ | 128,577 | 88 | % | $ | 102,520 | 88 | % | $ | 26,057 | 25 | % | ||||||||||||
| China and Hong Kong | 8,941 | 6 | % | 8,187 | 7 | % | 754 | 9 | % | |||||||||||||||
| Germany | 4,018 | 3 | % | 2,920 | 2 | % | 1,098 | 38 | % | |||||||||||||||
| Jordan | 3,081 | 2 | % | 2,179 | 2 | % | 902 | 41 | % | |||||||||||||||
| Others | 1,195 | 1 | % | 1,381 | 1 | % | (186 | ) | (13 | )% | ||||||||||||||
| Total | $ | 145,812 | 100 | % | $ | 117,187 | 100 | % | $ | 28,625 | 24 | % | ||||||||||||
Since January 2010, all apparel manufactured inJordan can be exported to the U.S. without customs duty being imposed, pursuant to the United States-Jordan Free Trade Agreement enteredinto in December 2001. This free trade agreement provides us with substantial competitiveness and benefit that allowed us to expand ourgarment export business in the U.S. Effective from April 5, 2025, the U.S. imposed a baseline tariff of 10% on imports from almost allcountries, including Jordan. Then, effective from April 9, 2025, it had announced “reciprocal” tariffs of imports from specifiedcountries, amongst them Jordan with a prevailing rate of then 20%. These “reciprocal” tariffs are postponed for 90 days, whilstthe 10% baseline tariff persists. Up to the date of this annual report, the 90 days postponement of the “reciprocal” tariffhas not expired. Impact of the tariff would also be affected by the comparative levels of the tariffs of Jordan and other countries.
The increase of approximately 25% in sales tothe U.S. during fiscal 2025 was mainly attributable to increases in shipments to two of our major customers in the U.S. Some shipmentsdeferred to the first quarter of fiscal 2025, from the fourth quarter of fiscal 2024 due to disruptions in the logistic route in the RedSea turmoil.
During fiscal 2025, aggregate sales to Jordan,China and Hong Kong, Germany, and other locations, such as Mexico and Indonesia, increased by 18% from approximately $14.7 million infiscal 2024 to $17.2 million. This increase can be attributed to growth in businesses with customers in these countries introduced inthe past few years.
Cost of goods sold. Our costof goods sold experienced an increase of approximately $23.2 million to approximately $123.5 million in fiscal 2025 from approximately$100.3 million in fiscal 2024. As a percentage of revenue, the cost of goods sold decreased by approximately 1 percentage point to 85%in fiscal 2025 from 86% in fiscal 2024. The decrease in the cost of goods sold as a percentage of revenue was primarily attributable tohigher production and shipment volume that generated higher margin through economy of scale.
For the fiscal year ended March 31, 2025 and 2024,we purchased approximately 10% of our garments from one major supplier.
Gross profit margin. Our gross profitmargin was approximately 15% in fiscal 2025, representing an increase by approximately 1 percentage point from 14% in fiscal 2024. Theincrease in gross profit margin was primarily influenced by better planning and execution of logistic and production that resulted inhigher production and shipment volume that brought down unit cost of production.
Selling, general, and administrative expenses.Selling, general, and administrative expenses increased by approximately 19% from approximately $17.6 million in fiscal 2024 to$20.9 million in fiscal 2025. The increase was mainly attributable to higher shipment costs due to higher sales volume and also some airshipping costs for garments in the first quarter of fiscal 2025 due to logistic hiccups in early 2024 and an increase in share-based compensationexpenses of $772,000.
Other expenses, net. Otherexpenses, net were approximately $1.3 million in fiscal 2025, compared to other expenses, net of approximately $0.7 million in fiscal2024. The increase in other expenses from fiscal 2024 to fiscal 2025 was primarily due to increase in interest expenses from the supplychain financing programs of our major customers, more proceeds from short-term loan from credit facility and higher interest rate in fiscal2025.
Taxation. Income tax expenses forfiscal 2025 were approximately $1.0 million, compared to income tax expenses of approximately $0.7 million for fiscal 2024. The effectivetax rate for fiscal 2025 increased to 656%, compared to -49.1% for fiscal 2024. The increase in the effective tax rate mainly resultedfrom the increase in operating profit in a Hong Kong subsidiary and $175,290 amendment of federal tax returns for the fiscal years endedMarch 31, 2022 and March 31, 2023, related to the inclusion of Subpart F income during the fiscal year.
Net loss. Net loss for fiscal 2025was $0.8 million, compared to net loss of approximately $2.0 million for fiscal 2024. The net loss mainly attributable to higher logisticcosts and labor costs incurred in early to mid-2024 arisen from the logistic hiccups in the short period after the Red Sea crisis brokeout.
22
Liquidity and Capital Resources
Jerash Holdings is a holding company incorporatedin Delaware. As a holding company, we rely on dividends and other distributions from our Jordanian and Hong Kong subsidiaries to satisfyour liquidity requirements. Current Jordanian regulations permit our Jordanian subsidiaries to pay dividends to us only out of their accumulatedprofits, if any, determined in accordance with Jordanian accounting standards and regulations. In addition, our Jordanian subsidiariesare required to set aside at least 10% of their respective accumulated profits each year until the reserve is equal to 100% of the entity’sshare capital, if any, to fund certain reserve funds. These reserves are not distributable as cash dividends. We have relied on directpayments of expenses by our subsidiaries to meet our obligations to date. To the extent payments are due in U.S. dollars, we have occasionallypaid such amounts in JOD to an entity controlled by our management capable of paying such amounts in U.S. dollars. Such transactions havebeen made at prevailing exchange rates and have resulted in immaterial losses or gains on currency exchange.
As of March 31, 2025, our cash balance was approximately$13.3 million and restricted cash was approximately $1.7 million, compared to cash of approximately $12.4 million and restricted cashof approximately $1.6 million as of March 31, 2024. The increase in total cash during fiscal 2025 was primarily due to the utilizationof the supply chain financing programs of our major customers that expedited receivable collections and also the drawdown of $4.5 millionof short-term bank financing to support purchases of raw materials for orders to be shipped in fiscal 2026.
Our current assets as of March 31, 2025 were approximately$54.4 million, and our current liabilities were approximately $19.8 million, which resulted in a current ratio of approximately 2.7 to1. Our current assets as of March 31, 2024 were approximately $50.9 million, and our current liabilities were approximately $14.8 million,which resulted in a current ratio of approximately 3.4:1. For fiscal 2025, the increase in current assets were primarily due to increasesin advances to suppliers to support raw material purchases, prepaid expenses, cash, and inventory, which was offset partially by decreasesin accounts receivable balance due to the use of customers’ supply chain financing programs.
We had net working capital of $34.6 million and$36.1 million as of March 31, 2025 and 2024, respectively. Based on our current operating plan, we believe that cash on hand and cashgenerated from operation will be sufficient to support our working capital needs for the next 12 months from the date of this Annual Report.
Since May and October 2021, we have participatedin supply chain financing programs of two of our major customers, respectively. The programs allow us to receive early payments for approvedsales invoices submitted by us through the bank the customer cooperates with. For any early payments received, we are subject to an earlypayment charge imposed by the customer’s bank, for which the rate is Secured Overnight Financing Rate (“SOFR”) plusa spread. The arrangement allows us to have better liquidity without the need to incur administrative charges and handling fees as inbank financing. In March 2024, we participated in an additional supply chain financing program with one customer.
We have funded our working capital needs fromoperations. Our working capital requirements are influenced by the level of our operations, the numerical and dollar volume of our salescontracts, the progress of execution on our customer contracts, and the timing of accounts receivable collections.
Credit Facilities
DBS Facility Letter
Pursuant to the DBS facility letter dated January12, 2022, DBSHK provided a bank facility of up to $5.0 million to Treasure Success, which was amended pursuant to a facility letter datedJanuary 4, 2024. Pursuant to the amended agreement, DBSHK agreed to finance cargo receipt, trust receipt, account payable financing, andcertain types of import and export invoice financing up to an aggregate of $5.0 million, subject to certain financial covenants. The DBSHKfacility bears interest at 1.5% per annum over HIBOR for HKD bills and 1.1% to 1.3% per annum over DBSHK’s cost of funds for foreigncurrency bills. The facility is guaranteed by Jerash Holdings and became available to the Company on June 17, 2022. As of March 31, 2025and 2024, the outstanding balances were $4.5 million and $nil, respectively, under this DBSHK facility. The increase in short-term bankfinancing was to support purchases of raw materials to support orders to be shipped in fiscal 2026.
23
Fiscal Years ended March 31, 2025 and 2024
The following table sets forth a summary of ourcash flows for the fiscal years ended March 31, 2025 and 2024.
(All amounts in thousands of U.S. dollars)
| For the fiscal years ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash provided by operating activities | $ | 1,365 | $ | 2,485 | ||||
| Net cash used in investing activities | (2,370 | ) | (5,143 | ) | ||||
| Net cash provided by (used in) financing activities | 2,053 | (2,428 | ) | |||||
| Effect of exchange rate changes on cash | (21 | ) | (289 | ) | ||||
| Net increase (decrease) in cash and restricted cash | 1,027 | (5,375 | ) | |||||
| Cash and restricted cash, beginning of year | 14,037 | 19,412 | ||||||
| Cash and restricted cash, end of year | $ | 15,064 | $ | 14,037 | ||||
| Supplemental disclosure information | ||||||||
| Cash paid for interest | $ | 1,720 | $ | 1,204 | ||||
| Income tax paid | $ | 1,399 | $ | 2,253 | ||||
| Non-cash investing and financing activities | ||||||||
| Equipment obtained by utilizing long-term deposit | $ | 668 | $ | 355 | ||||
| Operating lease right of use assets obtained in exchange for operating lease obligations | $ | 187 | $ | 1,059 | ||||
Operating Activities
Net cash provided by operating activities wasapproximately $1.4 million in fiscal 2025, compared to net cash provided by operating activities of approximately $2.5 million in fiscal2024. The decrease in net cash provided by operating activities was primarily attributable to the following factors:
| ● | a decrease of $2.4 million in accounts receivable duringfiscal 2025, compared to an increase of $3.0 million during fiscal 2024; |
| ● | an increase of $0.5 million in inventory during fiscal 2025,compared to a decrease of $5.4 million during fiscal 2024; |
| ● | an increase of $3.6 million in advances to suppliers duringfiscal 2025, compared to an increase of $1.6 million during fiscal 2024; |
| ● | A decrease of $0.5 million of deferred revenue during fiscal2025, compared to an increase of $0.9 million during fiscal 2024; |
| ● | a net loss of $0.8 million during fiscal 2025, compared toa net loss of $2.0 million during fiscal 2024; and |
Investing Activities
Net cash used in investing activities was approximately$2.4 million and $5.1 million for fiscal 2025 and 2024, respectively. The decrease in net cash used in fiscal year 2025 compared to 2024was primarily due to the capital expenditures for the dormitory construction of $3.6 million and $1.1 million in fiscal 2024 and fiscal2025, respectively. There was a slight decrease in capital expenditures in property, plant, and equipment for expansions in fiscal 2025.
Financing Activities
Cash provided by financing activities was $2.1million in fiscal 2025, which was primarily related to the net draw down of short-term bank financing of $4.5 million, which was offsetby the distribution of dividends of $2.4 million. Net cash used in financing activities was approximately $2.4 million for fiscal 2024,mainly due to dividend payments in the period.
24
Statutory Reserves
In accordance with the corporate Law in Jordan,Jerash Holdings’ subsidiaries in Jordan are required to make appropriations to certain reserve funds, based on net income determinedin accordance with generally accepted accounting principles of Jordan. Appropriations to the statutory reserve are required to be 10%of net income until the reserve is equal to 100% of the entity’s share capital. Jiangmen Treasure Success is required to set aside10% of its net income as statutory surplus reserve until such reserve is equal to 50% of its registered capital. These reserves are notavailable for dividend distribution. The statutory reserve was $413,821 as of March 31, 2025 and 2024.
The following table provides the amount of ourstatutory reserves, the amount of restricted net assets, consolidated net assets, and the amount of restricted net assets as a percentageof consolidated net assets, as of March 31, 2025 and 2024.
(All amounts, other than percentages, in thousandsof U.S. dollars)
| As of March 31, | ||||||||
| 2025 | 2024 | |||||||
| Statutory Reserves | $ | 414 | $ | 414 | ||||
| Total Restricted Net Assets | $ | 414 | $ | 414 | ||||
| Consolidated Net Assets | $ | 62,869 | $ | 64,431 | ||||
| Restricted Net Assets as Percentage of Consolidated Net Assets | 0.66 | % | 0.64 | % | ||||
Total restricted net assets accounted for approximately0.66% of our consolidated net assets as of March 31, 2025. As our subsidiaries in Jordan are only required to set aside 10% of net profitsto fund the statutory reserves with the maximum reserve equal to 100% of the entity’s capital, we believe the potential impact ofsuch restricted net assets on our liquidity is limited.
Capital Expenditures
We had capital expenditures of approximately $2.4million and $5.1 million in fiscal 2025 and 2024, respectively. For the fiscal year ended March 31, 2025, our capital expenditures includedpayments for additional plant and machinery of approximately $1.0 million and payments for construction of properties of approximately$1.1 million. For the fiscal year ended March 31, 2024, payments for additional plant and machinery, and construction of a dormitory andfactory expansion, amounted to approximately $1.2 million and $3.6 million, respectively.
On August 7, 2019, we completed a transactionto acquire 12,340 square meters (approximately three acres) of land in Al Tajamouat Industrial City, Jordan, from a third party to constructa dormitory for our employees with aggregate purchase price JOD863,800 (approximately $1,218,303). Management has revised the plan toconstruct both dormitory and production facilities on the land in order to capture the increasing demand for our capacity. We are conductingengineering design and study on this project with the business growth prospect of new customers to be introduced in the coming few years.On February 6, 2020, we completed a transaction to acquire 4,516 square meters (approximately 48,608 square feet) of land in Al TajamouatIndustrial City, Jordan, from a third party to construct a dormitory for our employee with aggregate purchase price JOD313,501 (approximatelyUS$442,162). The dormitory and dormitory kitchen were completed in the second quarter and the fourth quarter of fiscal year 2025, respectively.We have spent approximately $10.6 million in capital expenditures to build the dormitory and the dormitory kitchen.
We project that there will be an aggregate ofapproximately $1.3 million and $7.8 million of capital expenditures in the fiscal years ending March 31, 2026 and 2027, respectively,for further enhancement of production capacity to meet future sales growth. The realization of these investments depends on the progressof our business development, including expanding our client base and securing increased commitments from existing customers. We expectthat our capital expenditures will increase in the future as our business continues to develop and expand. We have used cash generatedfrom operations of our subsidiaries to fund our capital commitments in the past and anticipate using such funds to fund capital expenditurecommitments in the future.
25
Off-balance Sheet Commitments and Arrangements
We have not entered into any other financial guaranteesor other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contractsthat are indexed to our own shares and classified as stockholders’ equity, or that are not reflected in our consolidated financialstatements.
For Management’s Discussion and Analysisof the fiscal years ended March 31, 2024 and 2023, please see our Annual Report on Form 10-K for the fiscal year ended March 31, 2024,filed with the SEC on June 28, 2024.
Critical Accounting Estimates
We prepare our consolidated financial statementsin conformity with accounting principles generally accepted by the United States of America, which require us to make judgments, estimates,and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Althoughthere were no material changes made to the accounting estimates and assumptions in the past two years, we continually evaluate these estimatesand assumptions based on the most recently available information, our own historical experience, and various other assumptions that webelieve to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process,actual results could differ from our expectations as a result of changes in our estimates. We have not identified any critical accountingestimates.
Recent Accounting Pronouncements
See “Note 3—Recent Accounting Pronouncements”in the notes to our audited consolidated financial statements for a discussion of recent accounting pronouncements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
26
Item 8. Financial Statements and Supplementary Data.
JERASH HOLDINGS (US), INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM
To the Stockholders and Board of Directors of
Jerash Holdings (US), Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidatedbalance sheet of Jerash Holdings (US), Inc. (the “Company”) as of March 31, 2025, the related consolidated statements of operationsand comprehensive loss, changes in equity and cash flows for the year ended March 31, 2025, and the related notes (collectively referredto as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, thefinancial position of the Company as of March 31, 2025, and the results of its operations and its cash flows for the year ended March31, 2025, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Notes 3 and 15 to the financialstatements, the Company adopted ASU 2023-07, Segment Reporting (Topic 280) as of March 31, 2025. We also have audited the adjustmentsnecessary to restate the segment information for the year ended March 31, 2024, and to reflect the adoption of ASU 2023-07, Segment Reporting(Topic 280) to the segment information for the year ended March 31, 2024, as provided in Note 15. In our opinion, such adjustments areappropriate and have been properly applied. We were not engaged to audit, review or apply any procedures to the financial statements ofthe Company for the year ended March 31, 2024, other than with respect to the adjustments and, accordingly, we do not express an opinionor any other form of assurance on the financial statements for the year ended March 31, 2024 taken as a whole.
Basis for Opinion
These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. Weare a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and arerequired to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with thestandards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engagedto perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understandingof internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internalcontrol over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assessthe risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respondto those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluatingthe overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Prior Period Financial Statements
The financial statements of the Company as ofand for the year ended March 31, 2024, were audited by Marcum LLP, whose report dated June 28, 2024, expressed an unmodified opinion onthose statements.
Critical Audit Matters
Critical audit matters are matters arising fromthe current period audit of the financial statements that were communicated or required to be communicated to the audit committee andthat: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,subjective, or complex judgments. We determined that there are no critical audit matters.
| /s/ CBIZ CPAs P.C. |
We have served as the Company’s auditor since 2016 (such datetakes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024).
June 25, 2025
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM
To the Stockholders and Board of Directors of
Jerash Holdings (US), Inc.
Opinion on the Financial Statements
We have audited before the effects of the retrospectiveadjustments to the disclosures for the adoption of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures(“ASU 2023-07”) discussed in Notes 3 and 15 to the consolidated financial statements, the accompanying consolidated balancesheet of Jerash Holdings (US), Inc. (the “Company”) as of March 31, 2024, the related consolidated statements of operationsand comprehensive loss, changes in equity and cash flows for the year ended March 31, 2024, and the related notes (collectively referredto as the “financial statements”) (the FY2024 financial statements before the effects of the adjustments discussed inNotes 3 and 15 to the financial statements are not presented herein). In our opinion, the financial statements, before the effects ofthe retrospective adjustments to the disclosures for the adoption of ASU 2023-07 discussed in Notes 3 and 15 to the financial statements,present fairly, in all material respects, the financial position of the Company as of March 31, 2024, and the results of its operationsand its cash flows for the year ended March 31, 2024, in conformity with accounting principles generally accepted in the United Statesof America.
We were not engaged to audit, review, or applyany procedures to the retrospective adjustments to the disclosures for the adoption of ASU 2023-07 discussed in Notes 3 and 15 to thefinancial statements, and accordingly, we do not express an opinion or any form of assurance about whether such adjustments are appropriateand have been properly applied. Those adjustments were audited by CBIZ CPAs P.C.
Basis for Opinion
These financial statements are the responsibilityof the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. Weare a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and arerequired to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules andregulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with thestandards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financialstatements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engagedto perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understandingof internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internalcontrol over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assessthe risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respondto those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluatingthe overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising fromthe current period audit of the financial statements that were communicated or required to be communicated to the audit committee andthat: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,subjective, or complex judgments. We determined that there are no critical audit matters.
| /s/ Marcum llp |
Marcum llp
We have served as the Company’s auditor from 2016 to 2025.
Costa Mesa, CA
June 28, 2024
F-3
JERASH HOLDINGS (US), INC.,
AND SUBSIDIARIES
CONSOLIDATEDBALANCE SHEETS
| March 31, 2025 | March 31, 2024 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Advances to suppliers, net | ||||||||
| Total Current Assets | ||||||||
| Restricted cash - non-current | ||||||||
| Long-term deposits | ||||||||
| Deferred tax assets, net | ||||||||
| Property, plant, and equipment, net | ||||||||
| Goodwill | ||||||||
| Operating lease right of use assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Credit facilities | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Income tax payable - current | ||||||||
| Uncertain tax provision | ||||||||
| Other payables | ||||||||
| Deferred revenue | ||||||||
| Operating lease liabilities - current | ||||||||
| Total Current Liabilities | ||||||||
| Deferred tax liabilities, net | ||||||||
| Operating lease liabilities - non-current | ||||||||
| Income tax payable - non-current | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 16) | ||||||||
| Equity | ||||||||
| Preferred stock, $ | $ | $ | ||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Treasury stock, | ( | ) | ( | ) | ||||
| Statutory reserve | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Jerash Holdings (US), Inc. Stockholders’ Equity | ||||||||
| Noncontrolling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
Theaccompanying notes are an integral part of these consolidated financial statements.
F-4
JERASH HOLDINGS (US),INC.,
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the Fiscal Years Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue, net | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross Profit | ||||||||
| Selling, general, and administrative expenses | ||||||||
| Stock-based compensation expenses | ||||||||
| Total Operating Expenses | ||||||||
| Income (Loss) from Operations | ( | ) | ||||||
| Other (Income) Expenses: | ||||||||
| Interest expenses | ( | ) | ( | ) | ||||
| Other income, net | ||||||||
| Total other expenses, net | ( | ) | ( | ) | ||||
| Net profit (loss) before provision for income taxes | ( | ) | ||||||
| Income tax expenses | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Net (profit) loss attributable to noncontrolling interest | ( | ) | ||||||
| Net loss attributable to Jerash Holdings (US), Inc.’s Common Stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other Comprehensive Income (Loss): | ||||||||
| Foreign currency translation loss | ( | ) | ( | ) | ||||
| Total Comprehensive Loss | ( | ) | ( | ) | ||||
| Comprehensive (gain) loss attributable to noncontrolling interest | ( | ) | ||||||
| Comprehensive Loss Attributable to Jerash Holdings (US), Inc.’s Common Stockholders | $ | ( | ) | $ | ( | ) | ||
| Loss Per Share Attributable to Common Stockholders: | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Number of Shares | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
| Dividend per share | $ | $ | ||||||
Theaccompanying notes are an integral part of these consolidated financial statements.
F-5
JERASH HOLDINGS (US),INC.,
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FORTHE FISCAL YEARS ENDED MARCH 31, 2025 AND 2024
| Preferred Stock | Common Stock | Additional Paid-in | Treasury | Statutory | Retained | Accumulated Other Comprehensive | Noncontrolling | Total | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Stock | Reserve | Earnings | Loss | interest | Equity | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||||||
| Stock-based compensation expense for the restricted stock units issued under stock incentive plan | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Allocation of J&B shares | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Allocation of Jerash Newtech shares | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Dividend payments | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Statutory reserve | - | - | - | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Foreign currency translation loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense for the restricted stock units issued under stock incentive plan | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stocks upon vesting of restricted stock units | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Net (loss) profit | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Dividend payments | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Foreign currency translation loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financialstatements.
F-6
JERASH HOLDINGS (US),INC.,
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Fiscal Years Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation | ||||||||
| Stock-based compensation expenses | ||||||||
| Credit loss recovery, net | ( | ) | ( | ) | ||||
| Amortization of operating lease right-of-use assets | ||||||||
| Uncertain tax provision | ||||||||
| Changes in operating assets: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Bills receivable | ||||||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Advances to suppliers | ( | ) | ( | ) | ||||
| Deferred tax assets | ( | ) | ||||||
| Changes in operating liabilities: | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Other payables | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Income tax payable | ( | ) | ( | ) | ||||
| Deferred tax liabilities | - | |||||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property, plant, and equipment | ( | ) | ( | ) | ||||
| Payments for construction of properties | ( | ) | ( | ) | ||||
| Payment for long-term deposits | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Dividend payments | ( | ) | ( | ) | ||||
| Investment of noncontrolling interest | ||||||||
| Repayment from short-term loan | ( | ) | ( | ) | ||||
| Proceeds from short-term loan | ||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH | ( | ) | ( | ) | ||||
| NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH | ( | ) | ||||||
| CASH AND RESTRICTED CASH, BEGINNING OF THE YEAR | ||||||||
| CASH AND RESTRICTED CASH, END OF THE YEAR | $ | $ | ||||||
| CASH AND RESTRICTED CASH, END OF THE YEAR | $ | $ | ||||||
| LESS: NON-CURRENT RESTRICTED CASH | ||||||||
| CASH, END OF THE YEAR | $ | $ | ||||||
| Supplemental disclosure information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Income tax paid | $ | $ | ||||||
| Non-cash investing and financing activities | ||||||||
| Equipment obtained by utilizing long-term deposit | $ | $ | ||||||
| Operating lease right of use assets obtained in exchange for operating lease obligations | $ | $ | ||||||
The accompanying notes arean integral part of these consolidated financial statements.
F-7
JERASH HOLDINGS (US), INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Jerash Holdings (US), Inc. (“Jerash Holdings”)was incorporated under the laws of the State of Delaware on January 20, 2016. Jerash Holdings is a holding company with no operations.Jerash Holdings and its subsidiaries are herein collectively referred to as the “Company.”
Jerash Garments and Fashions Manufacturing CompanyLimited (“Jerash Garments”) is a wholly owned subsidiary of Jerash Holdings and was established in Amman, the Hashemite Kingdomof Jordan (“Jordan”), as a limited liability company on November 26, 2000 with a declared capital of
Jerash for Industrial Embroidery Company (“JerashEmbroidery”) and Chinese Garments and Fashions Manufacturing Company Limited (“Chinese Garments”) were both establishedin Amman, Jordan, as limited liability companies on March 11, 2013 and June 13, 2013, respectively, each with a declared capital of JOD
Al-Mutafaweq Co. for Garments Manufacturing Ltd.(“Paramount”) is a contract garment manufacturer that was established in Amman, Jordan, as a limited liability company onOctober 24, 2004 with a declared capital of JOD
Jerash The First for Medical Supplies ManufacturingCompany Limited (“Jerash The First”) was established in Amman, Jordan, as a limited liability company on July 6, 2020, witha registered capital of JOD
Mustafa and Kamal Ashraf Trading Company (Jordan)for the Manufacture of Ready-Make Clothes LLC (“MK Garments”) is a garment manufacturer that was established in Amman, Jordan,as a limited liability company on January 23, 2003 with a declared capital of JOD
Kawkab Venus Dowalyah Lisenaet Albesah (“KawkabVenus”) was established in Amman, Jordan, as a limited liability company on January 15, 2015 with a declared capital of JOD
Treasure Success International Limited (“TreasureSuccess”) was organized on July 5, 2016 in Hong Kong Special Administrative Region of the People’s Republic of China (“HongKong”) as a limited liability company for the primary purpose of employing staff from People’s Republic of China (“China”)to support Jerash Garments’ operations and is a wholly owned subsidiary of Jerash Holdings.
Ever Winland Limited (“Ever Winland”)was organized in Hong Kong, as a limited liability company. It holds office premises, which are leased to Treasure Success. On June 22,2022, Treasure Success and the shareholders of Ever Winland entered into an agreement, pursuant to which Treasure Success acquired allof the outstanding stock of Ever Winland. Apart from the office premises used by Treasure Success, Ever Winland had no other significantassets or liabilities and no operating activities or employees at the time of this acquisition, so this transaction was accounted foras an asset acquisition. As of August 29, 2022, Ever Winland became a subsidiary of Treasure Success.
F-8
NOTE 1 – ORGANIZATION AND DESCRIPTIONOF BUSINESS (CONTINUED)
J&B International Limited (“J&B”)is a joint venture company established in Hong Kong on January 10, 2023. On March 20, 2023, Treasure Success and P. T. Eratex (Hong Kong)Limited entered into a Joint Venture and Shareholders’ Agreement, pursuant to which Treasure Success acquired
Jerash Newtech (Hong Kong) Holdings Limited (“JerashNewtech”) is a joint venture company established in Hong Kong on November 3, 2023. On October 10, 2023, Treasure Success and NewtechTextile (HK) Limited entered into a Joint Venture and Shareholder’s Agreement to establish a new joint venture for the establishmentof a fabric facility in Jordan. On November 3, 2023, Jerash Newtech was established according to the aforementioned Joint Venture andShareholder’s Agreement. Treasure Success owns
Jiangmen Treasure Success Business ConsultancyCompany Limited (“Jiangmen Treasure Success”) was organized on August 28, 2019 under the laws of China in Jiangmen City ofGuangdong Province in China with a total registered capital of HKD
Jerash Supplies, LLC (“Jerash Supplies”)was formed under the laws of the State of Delaware on November 20, 2020. Jerash Supplies is engaged in the trading of personal protectiveequipment products and is a wholly owned subsidiary of Jerash Holdings.
The Company is engaged primarily in the manufacturingand exporting of customized, ready-made sportswear and outerwear produced in its facilities in Jordan and sold in the United States, Jordan,and other countries.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The Company’s consolidated financial statementsare prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) andpursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).
The consolidated financial statements includethe financial statements of Jerash Holdings, its wholly owned subsidiaries, and two non-wholly owned subsidiaries.
Non-wholly owned subsidiaries are entities thatthe reporting parent entity does not own equity interests in full. Noncontrolling interest is evaluated with a depiction of the portionof a non-wholly owned subsidiary’s net assets, net income, and net comprehensive income that is attributable to holders of equityclassified ownership interests other than the reporting parent entity. As mentioned in Note 1, the Company holds
All significant intercompany balances and transactions have been eliminatedin consolidation.
Use of Estimates
The preparation of the consolidated financialstatements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assetsand liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reportedamounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
Cash
The Company’s cash consists of cash on handand cash deposited in financial institutions. The Company considers all highly liquid investment instruments with an original maturityof three months or less from the original date of purchase to be cash equivalents. As of March 31, 2025 and 2024, the Company had cashequivalents.
Restricted Cash
Restricted cash consists of cash used as securitydeposits to obtain credit facilities from a bank and to secure customs clearance, labor import requirements, and other requirements oflocal regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These securitydeposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a current assetif the Company intends to terminate these bank facilities within one year, and as a non-current asset if otherwise.
F-9
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts Receivable, Net
Accounts receivable are recognized and carriedat the original invoiced amount less an estimated allowance for credit loss. The Company usually grants extended payment terms to customerswith good credit standing and determines the adequacy of credit losses based on the historical level of credit losses, current economictrends, and reasonable and supportable forecasts that affect the collectability of the future cash flows.
Inventories
Inventories are stated at the lower of cost ornet realizable value. Inventories include the cost of raw materials, freight, direct labor and related production overhead. The cost ofinventories is determined using the First-in, First-out method. The Company periodically reviews its inventories for excess or slow-movingitems and makes provisions as necessary to properly reflect inventory value.
Advance to Suppliers, Net
Advance to suppliers consists of balances paidto suppliers for services or materials purchased that have not been provided or received. Advance to suppliers for services and materialsis short-term in nature. Advance to suppliers is reviewed periodically to determine whether its carrying value has become impaired. TheCompany considers the assets to be impaired if the performance of the suppliers becomes doubtful. At each reporting date, the Companygenerally determines the adequacy of allowance for impairment by evaluating all available information, and then records specific allowancesfor those advances based on the specific facts and circumstances.
Credit Loss
The Company maintains expected loss methodologythat is referred to as the current expected credit loss methodology. The expected credit loss impairment model requires the entity torecognize its estimate of expected credit losses for affected financial assets using an allowance for credit losses and requires considerationof a broader range of reasonable and supportable information to inform credit loss estimates.
The Company’s accounts receivable and otherreceivables which are included in prepaid expenses and other current assets line item in the consolidated balance sheets are within thescope of ASC Topic 326. The Company measures expected credit losses of account receivables and other receivables, on a collective basiswhen similar risk characteristics exist. The Company makes estimates of expected credit and collectability trends for the allowance forcredit losses based upon assessment of various factors, including historical experience, the age of the receivables, creditworthinessof the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, andother factors that may affect its ability to collect from the customers and other debtors. The Company also provides specific provisionsfor allowance when facts and circumstances indicate that the receivable is unlikely to be collected.
Expected credit losses are included in generaland administrative expenses in the consolidated statements of operations and comprehensive loss. After all attempts to collect a receivablehave failed, the receivable is written off against the allowance.
Property, Plant, and Equipment, Net
Property, plant, and equipment are recorded atcost, reduced by accumulated depreciation and amortization. Depreciation and amortization expense related to property, plant, and equipmentis computed using the straight-line method based on the estimated useful lives of the assets, or in the case of leasehold improvements,the shorter of the initial lease term or the estimated useful life of the improvements. The useful life and depreciation method are reviewedperiodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from itemsof property, plant, and equipment.
| Useful life | ||
| Land | ||
| Property and buildings | ||
| Equipment and machinery | ||
| Office and electronic equipment | ||
| Automobiles | ||
| Leasehold improvements |
F-10
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Expenditures for maintenance and repairs, whichdo not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and bettermentsthat substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation or amortization ofassets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements ofoperations and comprehensive loss.
Construction in Progress
Construction in Progress (“CIP”) isrecorded at cost for property, plant, and equipment where the asset is in construction or development. CIP accumulates cost of constructionand transaction costs involved in the process of acquiring the materials for construction or development. The Company does not commencedepreciating the asset in CIP account because the asset has not yet been placed in service. Once an asset is placed in service, all costsassociated with the asset that are recorded in the CIP account are transferred to property, plant, and equipment for the asset.
Impairment of Long-Lived Assets
The Company assesses its long-lived assets, includingproperty and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset groupmay not be recoverable. Factors which may indicate potential impairment include a significant underperformance relative to the historicalor projected future operating results or a significant negative industry or economic trend. Recoverability of assets to be held and usedis measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by thatasset. If impairment is indicated, a loss is recognized for any excess of the carrying value over the estimated fair value of the asset.The fair value is estimated based on the discounted future cash flows or comparable market values, if available. The Company did not recordany impairment loss during the fiscal years ended March 31, 2025 and 2024.
Goodwill
Goodwill represents the excess purchase pricepaid over the fair value of the net assets of acquired companies. Goodwill is not amortized. As of March 31, 2025 and 2024, the carryingamount of goodwill was $
F-11
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
Substantially all of the Company’s revenueis derived from product sales, which consist of sales of the Company’s customized ready-made outerwear for large brand-name retailers.The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term whenthe time between order confirmation and satisfaction of the performance obligations is equal to or less than one year. Virtually all ofthe Company’s contracts are short-term. The Company has minimal incremental costs of obtaining a contract, which are expensed whenincurred. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the considerationto which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations incontracts with customers upon shipment of the goods. Generally, payment is due from customers within 14 to 150 days of the invoice date.The contracts do not have significant financing components. Shipping and handling costs associated with outbound freight from Jordan exportdock are not an obligation of the Company. Returns and allowances are not a significant aspect of the revenue recognition process as historicallythey have been immaterial.
The Company also derives revenue from renderingcutting and making services to other apparel vendors who subcontract orders to the Company. Revenue is recognized when the service isrendered. All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction priceis stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience, completesatisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made. Historically, salesreturns have not significantly impacted the Company’s revenue.
The Company does not have any contract assetssince the Company recognizes accounts receivable and revenue for the transfer of promised goods to customer in an amount that reflectsthe consideration to which the Company expects to be entitled in exchange for those goods. The Company has an unconditional right to considerationwhen the Company has satisfied its performance obligation and payment to the accounts receivable from customers is not contingent on afuture event. The Company had contract liabilities of $
Segment
The Company has
Shipping and Handling
Proceeds collected from customers for shippingand handling costs are included in revenue. Shipping and handling costs are expensed as incurred and are included in operating expenses,as a part of selling, general, and administrative expenses. Total shipping and handling expenses were $
Income and Sales Taxes
The Company is subject to income taxes on an entitybasis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Jerash Holdings and Jerash Suppliesare incorporated/formed in the State of Delaware and are subject to federal income tax in the United States of America. Treasure Success,Ever Winland, J&B, and Jerash Newtech are registered in Hong Kong and are subject to profit tax in Hong Kong. Jiangmen Treasure Successis incorporated in China and is subject to corporate income tax in China. Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount,Jerash The First, MK Garments, and Kawkab Venus are subject to income tax in Jordan, unless an exemption is granted. In accordance withDevelopment Zone law, Jerash Garments and its subsidiaries were subject to corporate income tax in Jordan at a rate of
F-12
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income and Sales Taxes (continued)
Jerash Garments and its subsidiaries are subjectto a local sales tax of
The Company accounts for income taxes in accordancewith ASC 740, “Income Taxes,” which requires the Company to use the asset and liability method of accounting for income taxes.Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applyingenacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases ofexisting assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, any changes in tax ratesand the impact on deferred income taxes are recognized in consolidated statements of operations and comprehensive loss in the period whenthe new rates are enacted. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferredtax asset will not be realized.
The Company applies the provisions of ASC 740-10-50,“Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accountingfor uncertain tax positions recognized in the financial statements. Audit periods remain open for review until the statute of limitationshas passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustmentto the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operationsfor any given quarterly or annual period based, in part, upon the results of operations for the given period. As of the date of this annualreport, the Company is current on all corporate, federal, and state tax returns. The Company’s policy is to record interest andpenalties related to unrecognized tax benefits as income tax expense. There is significant uncertainty in tax position relating to incometaxes incurred for the fiscal years ended March 31, 2023 and 2022.
Foreign Currency Translation
The reporting currency of the Company is the U.S.dollar (“US$” or “$”). The Company uses JOD in Jordan companies, HKD in Treasure Success, Ever Winland, J&B,and Jerash Newtech, and Chinese Yuan (“CNY”) in Jiangmen Treasure Success as the functional currency of each above-mentionedentity. The assets and liabilities of the Company have been translated into US$ using the exchange rates in effect at the balance sheetdate, equity accounts have been translated at historical rates, and revenue and expenses have been translated into US$ using average exchangerates in effect during the reporting period. Cash flows are also translated at average translation rates for the periods. Therefore, amountsrelated to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in thecorresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates fromperiod to period are included as a separate component of accumulated other comprehensive income or loss. Transaction gains and lossesthat arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included inthe consolidated statements of operations and comprehensive loss as incurred, and the total amount of transaction gains and losses wereimmaterial as of the fiscal years ended March 31, 2025 and 2024.
The value of JOD against US$ and other currenciesmay fluctuate and is affected by, among other things, changes in Jordan’s political and economic conditions. Any significant revaluationof JOD, HKD, and CNY may materially affect the Company’s financial condition in terms of US$ reporting.
| March 31, 2025 | March 31, 2024 | |||||||
| Period-end spot rate | US$1=JOD | US$1=JOD | ||||||
| US$1=HKD | US$1=HKD | |||||||
| US$1=CNY | US$1=CNY | |||||||
| Average rate | US$1=JOD | US$1=JOD | ||||||
| US$1=HKD | US$1=HKD | |||||||
| US$1=CNY | US$1=CNY |
F-13
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-Based Compensation
The Company measures compensation expense forstock-based awards based upon the awards’ initial grant-date fair value. The estimated grant-date fair value of the award is recognizedas expense over the requisite service period using the straight-line method.
The Company estimates the fair value of stockoptions using a Black-Scholes model. This model is affected by the Company’s stock price on the date of the grant as well as assumptionsregarding a number of variables. These variables include the expected term of the option, expected risk-free rates of return, the expectedvolatility of the Company’s common stock, and expected dividend yield, each of which is more fully described below. The assumptionsfor expected term and expected volatility are the two assumptions that significantly affect the grant date fair value.
| ● | Expected Term: the expected term of a warrant or a stock option is the period of time that the warrant or a stock option is expected to be outstanding. |
| ● | Risk-free Interest Rate: the Company bases the risk-free interest rate used in the Black-Scholes model on the implied yield at the grant date of the U.S. Treasury zero-coupon issued with an equivalent term to the stock-based award being valued. Where the expected term of a stock-based award does not correspond with the term for which a zero-coupon interest rate is quoted, the Company uses the nearest interest rate from the available maturities. |
| ● | Expected Stock Price Volatility: the Company utilizes the expected volatility of the Company’s common stock over the same period of time as the life of the warrant or stock option. When the Company’s own stock volatility information is unavailable for such a period of time, the Company utilizes comparable public company volatility. |
| ● | Dividend Yield: Stock-based compensation awards granted prior to November 2018 assumed no dividend yield, while any subsequent stock-based compensation awards will be valued using the anticipated dividend yield. |
Earnings or Loss per Share
The Company computes earnings per share (“EPS”)in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capitalstructures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstandingfor the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per-share basis of potential common shares (e.g.,convertible securities, options, warrants, and restricted stock units) as if they had been converted at the beginning of the periods presented,or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decreaseloss per share) are excluded from the calculation of diluted EPS (See “Note 14–Loss per Share”).
Comprehensive Income or Loss
Comprehensive income or loss consists of twocomponents, net income or loss and other comprehensive income or loss. The foreign currency translation gain or loss resulting from translationsof the financial statements expressed in JOD or HKD or CNY to US$ is reported in other comprehensive income or loss in the consolidatedstatements of operations and comprehensive loss.
F-14
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments
ASC 825-10 requires certain disclosures regardingthe fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfera liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizesthe inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use ofunobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 - Quoted prices in active markets for identical assets and liabilities. |
| ● | Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| ● | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
The Company considers the recorded value of itsfinancial assets and liabilities, which consist primarily of cash, accounts receivable, other current assets, credit facilities, accountspayable, accrued expenses, income tax payables, other payables and operating lease liabilities to approximate the fair value of the respectiveassets and liabilities at March 31, 2025 and 2024 based upon the short-term nature of these assets and liabilities.
Concentrations and Credit Risk
Credit risk
Financial instruments that potentially subjectthe Company to significant concentrations of credit risk consist primarily of cash. As of March 31, 2025 and 2024, respectively, $
Accounts receivable are typically unsecured andderived from revenue earned from customers, and therefore are exposed to credit risk. The risk is mitigated by the Company’s assessmentof its customers’ creditworthiness and its ongoing monitoring of outstanding balances.
Customer and vendor concentration risk
The Company’s sales are made primarily inthe United States. Its operating results could be adversely affected by U.S. government policies on importing business, foreign exchangerate fluctuations, and changes in local market conditions. The Company has a concentration of its revenue and purchases with specificcustomers and suppliers. For the fiscal years ended March 31, 2025 and 2024, two customers accounted for
F-15
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
For the fiscal years ended March 31, 2025 and2024, the Company purchased approximately
Risks and Uncertainties
The principal operations of the Company are locatedin Jordan. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic,and legal environments in Jordan, as well as by the general state of the Jordanian economy. The Company’s operations in Jordan aresubject to special considerations and significant risks not typically associated with companies in North America. These include risksassociated with, among others, the political, economic, and legal environment, foreign currency exchange, and the recent conflicts betweenIsrael and Hamas and between Israel and Iran. The Company’s results may be adversely affected by changes in the political, regulatory,and social conditions in Jordan. Although the Company has not experienced losses from these situations and believes that it is in compliancewith existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of futureresults.
Since the inception of the turmoil in the MiddleEast, the Company has been closely monitoring the situation and keeping its customers informed. Production is ongoing as usual, with nochanges to customer orders or commitments, and the Company is currently mainly using the port in Aqaba, Jordan for import and export.In order to provide flexibility, the Company has also been using the Port of Jebel Ali in the United Arab Emirates as an alternative routefor raw material import since December 2023. However, in the event of any potential impact on the ports, the Company has prepared a contingencyplan, approved by its major customers, to temporarily relocate production to alternate regions.
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS
In December 2023, the Financial Accounting StandardsBoard (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvementsto Income Tax Disclosures,” which modifies the rules on income tax disclosures to require disaggregated information about a reportingentity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investorsby providing more detailed income tax disclosures that would be useful in making capital allocation decisions. The guidance is effectivefor annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 should be applied on a prospective basis,but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance onits consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures(Subtopic 220-40): Disaggregation of Income Statement Expenses.”. This update requires that at each interim and annual reportingperiod a report entity to disclose (1) the amounts of purchases of inventory, employee compensation, depreciation, amortization, and depletionin commonly presented expense captions; (2) certain amounts that are already required to be disclosed under current GAAP in the same disclosureas the other disaggregation requirements; (3) a qualitative description of the amounts remaining in relevant expense captions that arenot separately disaggregated quantitatively; and (4) the total amount of selling expenses and, in annual reporting periods, the definitionof selling expenses. In January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income - ExpenseDisaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date.”. This update clarifies that ASU 2024-03 is effectivefor annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December15, 2027. Early adoption is permitted. The Company is currently evaluating the impact on its financial statements of adopting this guidance.
F-16
NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS(CONTINUED)
In November 2023, the FASB issued ASU 2023-07,“Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segmentdisclosure requirements, primarily through enhanced disclosures about significant segment expenses. The purpose of the amendment is toenable investors to better understand an entity’s overall performance and assess potential future cash flows. The guidance is effectivefor fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with earlyadoption permitted. The guidance is to be applied retrospectively to all prior periods presented in the financial statements. Based onmanagement’s assessment, the Company has determined that it has only
Except for the above-mentioned pronouncements,there are no new recently issued accounting standards that will have a material impact on the consolidated financial position, statementsof operations, and cash flows.
NOTE 4 – ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following:
| As of | As of | |||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Trade accounts receivable | $ | $ | ||||||
| Less: allowances for credit loss | ||||||||
| Accounts receivable, net | $ | $ | ||||||
NOTE 5 – INVENTORIES
Inventories consisted of the following:
| As of | As of | |||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Work-in-progress | ||||||||
| Finished goods | ||||||||
| Total inventory | $ | $ | ||||||
As of March 31, 2025 and 2024, the Company had$ inventory valuation reserve as the Company arranged its inventory based on
NOTE 6 – ADVANCE TO SUPPLIERS, NET
Advance to suppliers consisted of the following:
| As of | As of | |||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Advance to suppliers | $ | $ | ||||||
| Less: allowances for impairment | ||||||||
| Advance to suppliers, net | $ | $ | ||||||
NOTE 7 – LEASES
The Company had 42 operating leases for manufacturingfacilities and offices on March 31, 2025. Some leases include one or more options to renew, which is typically at the Company’ssole discretion. The Company regularly evaluates the renewal options, and, when it is reasonably certain of exercise, it will includethe renewal period in its lease term. New lease modifications result in measurement of the right of use (“ROU”) assets andlease liability. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.ROU assets and related lease obligations are recognized at the commencement date based on the present value of remaining lease paymentsover the lease term.
All of the Company’s leases are classified as operating leasesand primarily include office space and manufacturing facilities.
F-17
NOTE 7 – LEASES (CONTINUED)
Supplemental balance sheet information related to operating leaseswas as follows:
| March 31, 2025 | ||||
| Operating lease right of use assets | $ | |||
| Operating lease liabilities – current | $ | |||
| Operating lease liabilities – non-current | ||||
| Total operating lease liabilities | $ | |||
The weighted average remaining lease terms anddiscount rates for all of operating leases were as follows as of March 31, 2025:
| Remaining lease term and discount rate: | ||||
| Weighted average remaining lease term (years) | ||||
| Weighted average discount rate | % | |||
During the fiscal years ended March 31, 2025 and2024, the Company incurred total operating lease expenses of $
The following is a schedule, by fiscal years, of maturities of leaseliabilities as of March 31, 2025:
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Less: prepayments | ( | ) | ||
| Present value of lease liabilities | $ |
NOTE 8 – PROPERTY, PLANT, AND EQUIPMENT, NET
Property, plant, and equipment, net consisted of the following:
| As of | As of | |||||||
| March 31, 2025 | March 31, 2024 | |||||||
| Land | $ | $ | ||||||
| Property and buildings(1) | ||||||||
| Equipment and machinery | ||||||||
| Office and electric equipment | ||||||||
| Automobiles | ||||||||
| Leasehold improvements | ||||||||
| Subtotal | ||||||||
| Construction in progress (1) | ||||||||
| Less: Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property, plant, and equipment, net | $ | $ | ||||||
| (1) |
For the fiscal year ended March 31, 2025 and2024, depreciation expenses were $
F-18
NOTE 9 – EQUITY
Preferred Stock
The Company has
Common Stock
The Company had
On February 9, 2023, the Board of Directors approvedthe grant of
Statutory Reserve
In accordance with the Corporate Law in Jordan,Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash The First, and MK Garments and Kawkab Venus are required to makeappropriations to certain reserve funds, based on net income determined in accordance with generally accepted accounting principles ofJordan. Appropriations to the statutory reserve are required to be
Dividends
During the fiscal year ended March 31, 2025, theBoard of Directors declared a cash dividend of $
During the fiscal year ended March 31, 2024,the Board of Directors declared a cash dividend of $
F-19
NOTE 10 – STOCK-BASED COMPENSATION
Warrants issued for services
From time to time, the Company issues warrantsto purchase its common stock. These warrants are valued using the Black-Scholes model and using the volatility, market price, exerciseprice, risk-free interest rate, and dividend yield appropriate at the date the warrants were issued. A total of
Stock Options
On March 21, 2018, the Board of Directors adoptedthe Plan, pursuant to which the Company may grant various types of equity awards.
All stock option activities are summarized asfollows:
| Option to | Weighted Average | |||||||
| Acquire Shares | Exercise Price | |||||||
| Stock options outstanding at March 31, 2023 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Expired | ( | ) | ||||||
| Stock options outstanding at March 31, 2024 | $ | |||||||
| Option to | Weighted Average | |||||||
| Acquire Shares | Exercise Price | |||||||
| Stock options outstanding at March 31, 2024 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Expired | ||||||||
| Stock options outstanding at March 31, 2025 | $ | |||||||
All these outstanding options were fully vestedand exercisable. As of March 31, 2025, there were
F-20
NOTE 10 – STOCK-BASED COMPENSATION (CONTINUED)
Restricted Stock Units
On February 9, 2023, the Board of Directors approvedthe grant of
On March 25, 2024, the Board of Directors approvedthe grant of
RSU activities are summarized as follows:
| Number of Shares | Weighted- Average Grant Date Fair Value Per Share | |||||||
| RSU outstanding at March 31, 2023 | $ | |||||||
| Granted | ||||||||
| Vested | ||||||||
| Forfeited | ||||||||
| RSU outstanding at March 31, 2024 | $ | |||||||
| Number of Shares | Weighted- Average Grant Date Fair Value Per Share | |||||||
| RSU outstanding at March 31, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| RSU outstanding at March 31, 2025 | $ | |||||||
Total expenses related to the RSUs issued were$
NOTE 11 – RELATED PARTY TRANSACTIONS
The relationship and the nature of related partytransactions are summarized as follow:
| Name of Related Party | Relationship to the Company | Nature of Transactions | ||
| Yukwise Limited (“Yukwise”) | ||||
| Multi-Glory Corporation Limited (“Multi-Glory”) |
Consulting agreements
On January 12, 2018, Treasure Success and Yukwiseentered into a consulting agreement, pursuant to which Mr. Choi will serve as Chief Executive Officer and provide high-level advisoryand general management services for $
On January 16, 2018, Treasure Success and Multi-Gloryentered into a consulting agreement, pursuant to which Multi-Glory will provide high-level advisory, marketing, and sales services tothe Company for $
F-21
NOTE 12 – CREDIT FACILITIES
Starting from May and October 2021, the Companyhas participated in a financing program with two customers, in which the Company may receive early payments for approved sales invoicessubmitted by the Company through the bank the customer cooperates with. In March 2024, the Company joined a supply chain financing programwith one additional customer. For any early payments received, the Company is subject to an early payment charge imposed by the customer’sbank, for which the rate is based on Secured Overnight Financing Rate (“SOFR”) plus a spread. In certain scenarios, the Companysubmits the sales invoice and receives payments prior to the shipment of the relative products. In that case, instead of recording thecash receipts as a reduction to accounts receivables, the Company records the cash receipts as receipts in advance from a customer untilproducts are entitled to transfer. The Company records the early payment charge in interest expenses on the consolidated statements ofoperations and comprehensive loss. For the fiscal years ended March 31, 2025 and 2024, the early payment charge was $
On January 12, 2022, DBS Bank (Hong Kong) Limited(“DBSHK”) offered to provide a banking facility of up to $
As of March 31, 2025 and 2024, the Company had$
NOTE 13 – NONCONTROLLING INTEREST
On March 20, 2023, Treasure Success and P.T. Eratex(Hong Kong) Limited entered into a Joint Venture and Shareholders’ Agreement, pursuant to which Treasure Success and P.T Eratex(Hong Kong) Limited acquired
On October 10, 2023, Treasure Success and NewtechTextile (HK) Limited entered into a Joint Venture and Shareholders’ Agreement, pursuant to which Treasure Success and Newtech Textile(HK) Limited acquired
The net profit or (loss) generated by J&Band Jerash Newtech was $
NOTE 14 – LOSS PER SHARE
The following table sets forth the computationof basic and diluted loss per share for the fiscal years ended March 31, 2025 and 2024. As of March 31, 2025,
| Fiscal Year Ended | ||||||||
| March 31, | ||||||||
| (in $000s except share and | ||||||||
| per share information) | ||||||||
| 2025 | 2024 | |||||||
| Numerator: | ||||||||
| Net loss attributable to Jerash Holdings (US), Inc.’s Common Stockholders | $ | ( | ) | $ | ( | ) | ||
| Denominator: | ||||||||
| Denominator for basic earnings per share (weighted-average shares) | ||||||||
| Dilutive securities – unexercised warrants and options | ||||||||
| Denominator for diluted earnings per share (adjusted weighted-average shares) | ||||||||
| Basic and diluted loss per share | $ | ( | ) | $ | ( | ) | ||
F-22
NOTE 15 – SEGMENT REPORTING
ASC 280, “Segment Reporting,” establishesstandards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structureas well as information about geographical areas, business segments and major customers in financial statements for details on the Company’sbusiness segments. The amendment of ASC 280 requires incremental disclosures in annual and interims periods to reportable segments andclarifies entities with a single reportable segment are also required to provide new disclosures in significant segment expenses, profitand loss, assets, and other segment items for better understanding Company business activities and overall financial performance and assesspotential future cash flow for the business. The Company uses the “management approach” in determining reportable operatingsegments. The management approach considers the internal organization and reporting used by the CODM for making operating decisions andassessing performance as the source for determining the Company’s reportable segments. CODM, including Chief Executive Officer andChief Financial Officer, reviews operation results on the consolidated revenue, gross profit, selling, general, and administrative expenses,and net profit or loss. In selling, general, and administration expense, CODM reviews staff payroll and other related expenses, inventoryexport and related costs, deprecation and other major items. Based on CODM’s assessment, the Company has determined that it hasonly
| For the Fiscal Years Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Less: Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Other income | ||||||||
| Expenses | ||||||||
| Staff payroll and other related cost | ||||||||
| Inventory export and related cost | ||||||||
| Depreciation | ||||||||
| Other selling, general, and administrative expenses | ||||||||
| Total selling, general, and administrative expenses | ||||||||
| Stock-based compensation expenses | ||||||||
| Interest expenses | ||||||||
| Total expenses | ||||||||
| Net profit (loss) before provision for income taxes | $ | $ | ( | ) | ||||
Other selling, general, and administrative expensesinclude consultancy fees and director remunerations, audit and professional fees, staff travelling and transportation expenses, rentaland general office expenses.
The Company’s major product is outerwear.For the fiscal years ended March 31, 2025 and 2024, outerwear accounted for approximately
| For the Fiscal Year Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| United States | $ | $ | ||||||
| China | ||||||||
| Hong Kong | ||||||||
| Germany | ||||||||
| Jordan | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
As of March 31, 2025 and 2024, there were
F-23
NOTE 16 – COMMITMENTS AND CONTINGENCIES
Commitments
On August 28, 2019, Jiangmen Treasure Successwas incorporated under the laws of the People’s Republic of China in Jiangmen City, Guangdong Province, China, with a total registeredcapital of HKD
Contingencies
From time to time, the Company is a party to variouslegal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probableand the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’smanagement does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would nothave a material adverse impact on the Company’s consolidated financial position, results of operations, and cash flows.
In 2020, Jerash Garments had business with a personalprotective equipment (“PPE”) customer (the “PPE Customer”) to produce PPE products for them. The PPE productswere delivered in 2020 against some postdated checks issued by the PPE Customer. Delivery was also supported by delivery documents signedby persons of the PPE Customer for inspection and receiving. The PPE Customer declined to honor the postdated checks. Jerash Garment broughtthe case to the court and won in the Cassation Court. For the same PPE products, the PPE Customer filed another case claiming that certainlengths/widths of the PPE products were inconsistent with the specifications. The Court of First Instance ruled in favor of the PPE Customer.Jerash Garment was ordered to pay to the PPE Customer an amount of US$
The management has consulted two external legaladvisors of Jordanian laws. Both opined that Jerash Garments has a strong position in the appeal as Jerash Garments will be allowed topresent witnesses with additional evidence including the proof of inspections and receipts in the appeal. Also, given the appeal processmentioned above, the case would take a considerable long period of time to reach conclusion.
The management, based on the legal opinion ofexternal advisors, the fact that the Court of Appeal and Cassation’s previous favorable verdicts on Jerash Garments’ lawfulright to collect proceeds for the PPE products, and the proceedings of the appeal, concluded that the chance of loss is remote. Therefore,there was no accrual in the financial statements.
NOTE 17 – INCOME TAX
Jerash Garments, Jerash Embroidery, Chinese Garments,Paramount, Jerash the First, MK Garments, and Kawkab Venus are subject to the regulations of the Income Tax Department in Jordan. EffectiveJanuary 1, 2019, the Jordanian government reclassified the area where Jerash Garments and its subsidiaries are to a Development Zone.In accordance with the Development Zone law, Jerash Garments and its subsidiaries were subject to income tax at an income tax rate of
On December 22, 2017, the U.S. Tax Cuts and JobsAct (the “Tax Act”) was enacted. The Tax Act imposed a tax on previously untaxed accumulated earnings and profits (“E&P”)of foreign subsidiaries (the “Toll Charge”). The Toll Charge is based in part on the amount of E&P held in cash and otherspecific assets as of December 31, 2017. The Toll Charge can be paid over an eight-year period, starting in 2018, and will not accrueinterest. As of March 31, 2025, the Company has one year of installments remaining with total amounting to $
F-24
NOTE 17 – INCOME TAX (CONTINUED)
The provision for income taxes consisted of thefollowing:
| For the fiscal years ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Domestic and foreign components of income (loss) before income taxes | ||||||||
| Domestic | $ | ( | ) | $ | ( | ) | ||
| Foreign | ||||||||
| Total | $ | $ | ( | ) | ||||
| For the fiscal years ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Provision (benefit) for income taxes | ||||||||
| Current tax: | ||||||||
| U.S. federal | $ | $ | ||||||
| U.S. state and local | ||||||||
| Foreign | ||||||||
| Total Current Tax | ||||||||
| Deferred tax: | ||||||||
| U.S. federal | ( | ) | ||||||
| Total deferred tax | ( | ) | ||||||
| Total tax | $ | $ | ||||||
| Effective tax rates | % | - | % | |||||
F-25
NOTE 17 – INCOME TAX (CONTINUED)
A reconciliation of the effective tax rate was as follows:
| For the fiscal years ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Tax at statutory rate | $ | $ | ( | ) | ||||
| State tax, net of federal benefit | ||||||||
| Non-deductible expenses | ( | ) | ||||||
| Non-taxable income | ||||||||
| Global Intangible Low-Taxed Income, net | ||||||||
| Subpart F | ||||||||
| Tax Credits | ( | ) | ( | ) | ||||
| Foreign tax rate differential | ||||||||
| Foreign tax attributes | ( | ) | ||||||
| Change in Valuation Allowance | ( | ) | ||||||
| Provision to return adjustments | ( | ) | ||||||
| Uncertain Tax Provision: Amended tax returns | ||||||||
| Total | $ | $ | ||||||
Scheduleof Unrecognized Tax Benefits was as follows:
| Fiscal 2025 | ||||
| Beginning balance | $ | |||
| Additions for tax positions of prior years (Subpart F income inclusion on amended federal tax returns) | ||||
| Fiscal Year(s) Affected: FY 2022 | ||||
| Fiscal Year(s) Affected: FY 2023 | ||||
| Reductions for tax positions of prior years | ||||
| Loss before provision for income taxes | $ | |||
The Company estimates $
The Company’s deferred tax assets and liabilitiesas of March 31, 2025 and 2024 consisted of the following:
| Deferred tax assets/ (liabilities) | As of March 31, 2025 | As of March 31, 2024 | ||||||
| Stock-based compensation | $ | $ | ||||||
| Deferred tax liabilities | ( | ) | ( | ) | ||||
| Net operating losses carried forward | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax (liabilities) assets, net | $ | ( | ) | $ | ||||
Deferred tax assets are reduced by a valuationallowance when it is considered more likely than not that some portion or all of the deferred tax assets will not be realized. As of March31, 2025 and 2024, the allowance for deferred tax assets was $
As of March 31, 2025, the Company had cumulativebook-tax basis differences in its foreign subsidiaries of approximately $
The Company files income tax returns in the U.S.federal, state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S.income tax examinations by tax authorities for years prior to April 1, 2018.
NOTE 18 – SUBSEQUENT EVENTS
On May 20, 2025, the Board of Directors approvedthe payment of a dividend of $
F-26
Item 9. Changes in and Disagreements with Accountants on Accountingand Financial Disclosure.
There has been no change in independent accountantsfor our Company during the two most recent fiscal years or any subsequent interim period except for the change in independent accountantsfrom Marcum LLP to CBIZ CPAs P.C., resulted from the acquisition of Marcum LLP by CBIZ CPAs P.C., as previously reported in our CurrentReport on Form 8-K filed with the SEC on March 27, 2025. There have been no disagreements of the type required to be disclosed by Item304(b) of Regulation S-K.
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
Disclosure controls and procedures (as definedin Exchange Act Rule 15d-15(e)) are designed with the objective of ensuring that information required to be disclosed in our reports filedunder the Exchange Act, such as this annual report, is recorded, processed, summarized, and reported within the time periods specifiedin the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such informationis accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate,to allow timely decisions regarding required disclosure.
Our Chief Executive Officer (principal executiveofficer) and Chief Financial Officer (principal financial officer), based on their evaluation of our disclosure controls and proceduresas of March 31, 2025, concluded that our disclosure controls and procedures were still ineffective.
Internal Control Over Financial Reporting
Management’s annual report on internalcontrol over financial reporting
Our management is responsible for establishingand maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Internalcontrol over financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Becauseof its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures may deteriorate.
Our management, with the participation of ourChief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), has assessed the effectivenessof our internal control over financial reporting as of March 31, 2025. In making this assessment, management used the criteria set forthin the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).
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Based on the assessment using those criteria,management concluded that, as of March 31, 2024, our internal control over financial reporting was not effective because there were ineffectiveinformation technology general controls in the areas of privileged user access and the review of user access over certain informationtechnology systems that support our financial reporting processes.
Although some remedial actions have been implementedto address the issues, in the assessment in fiscal 2025, the management concluded that, as of March 31, 2025, our internal control overfinancial reporting was still ineffective as some of the control deficiencies surrounding the information technology environment werenot sufficiently remediated.
The Company plans to put in more resources tostrengthen the internal control to duly address the above material control weaknesses. Details of implementation will be provided in thequarterly report on Form 10-Q for the quarter ending June 30, 2025.
Attestation report of the registered publicaccounting firm
This Annual Report on Form 10-K does not includean attestation report of our registered public accounting firm due to an exemption for “non-accelerated filers.”
Changes in internal control over financialreporting
There were no changes in our internal controlover financial reporting (as the term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
During the three months ended March 31, 2025,no director or officer of the Company
Item 9C. Disclosure Regarding Foreign Jurisdictions that PreventInspections.
Not Applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
In response to this Item, the information setforth in our Proxy Statement for our 2025 Annual Meeting of Stockholders (the “2025 Proxy Statement”) to be filed within 120days following the end of our fiscal year, under the headings “Proposal No. 1—Election of Directors,” “Our ExecutiveOfficers,” “Section 16(a) Compliance,” and “Corporate Governance Practices and Policies” is incorporatedherein by reference.
Item 11. Executive Compensation.
In response to this Item, the information setforth in the 2025 Proxy Statement under the headings “Executive Compensation” and “Corporate Governance Practices andPolicies” is incorporated herein by reference.
Item 12. Security Ownership of Certain BeneficialOwners and Management and Related Stockholder Matters.
The following table provides information regardingshares outstanding and available for issuance under our existing equity compensation plans as of June 25, 2025.
Equity Compensation Plan Information
| (a) | (b) | (c) | ||||||||||
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted- average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
| Equity compensation plans approved by security holders | 150,000 | $ | 6.25 | 117,710 | ||||||||
| Equity compensation plans not approved by security holders | - | $ | - | - | ||||||||
| Total | 150,000 | $ | 6.25 | 117,710 | ||||||||
For additional information concerning our equitycompensation plans, see the discussion in “Note 10—Stock-Based Compensation.”
The remainder of the information required by thisItem is set forth in the 2025 Proxy Statement under the headings “Executive Compensation—Equity Compensation Plan Information”and “Security Ownership of Certain Beneficial Owners and Management” and is hereby incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and DirectorIndependence.
In response to this Item, the information setforth in the 2025 Proxy Statement under the headings “Certain Relationships and Related Party Transactions” and “CorporateGovernance Practices and Policies—Board and Committee Independence” is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
In response to this Item, the information setforth in the 2025 Proxy Statement under the heading “Matters Relating to the Independent Registered Public Accounting Firm”is incorporated herein by reference.
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PART IV
Item 15. Exhibit and Financial Statement Schedules
(a) Financial Statements
We have filed the financial statements in Item8. Financial Statements and Supplementary Data as a part of this Annual Report on Form 10-K.
(b) Exhibits
The following is a list of all exhibits filedor incorporated by reference as part of this Annual Report on Form 10-K.
| Exhibit Number | Description | Location | ||
| 3.1 | Amended and Restated Certificate of Incorporation | Incorporated herein by reference to Exhibit 3.1 to the Post-Effective Amendment No. 1 to Form S-1, filed with the SEC on September 19, 2018 | ||
| 3.2 | Amended and Restated Bylaws | Incorporated herein by reference to Exhibit 3.1 to the Form 8-K, filed with the SEC on July 24, 2019 | ||
| 4.1 | Specimen Certificate for Common Stock | Incorporated herein by reference to Exhibit 4.1 to the Form S-1, filed with the SEC on June 27, 2017 | ||
| 4.2 | Description of Securities | Incorporated herein by reference to Exhibit 4.1 to the Form 10-K, filed with the SEC on June 28, 2019 | ||
| 10.1+ | Unified Work Contract for Migrant Workers, dated May 1, 2023, by and between Jerash Garments and Fashions Manufacturing Company Limited and Wei Yang | Incorporated herein by reference to Exhibit 10.1 to the Annual Report on Form 10-K, filed with the SEC on June 28, 2023 | ||
| 10.2+ | Consulting Agreement, dated January 12, 2018, by and between Treasure Success and Yukwise Limited | Incorporated herein by reference to Exhibit 10.1 to the Form 8-K, filed with the SEC on January 16, 2018 | ||
| 10.3+ | Consulting Agreement, dated January 16, 2018, by and between Treasure Success and Multi-Glory Corporation Ltd. | Incorporated herein by reference to Exhibit 10.18 to the Form S-1, filed with the SEC on January 18, 2018 | ||
| 10.4+ | Amended and Restated 2018 Stock Incentive Plan | Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on September 19, 2019 | ||
| 10.5+ | Form of Option Award Notice and Agreement (Employee) | Incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the SEC on March 23, 2018 | ||
| 10.6+ | Form of Option Award Notice and Agreement (Consultant) | Incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed with the SEC on March 23, 2018 | ||
| 10.7+ | Employment Agreement dated November 27, 2019 by and between Jerash Holdings and Gilbert K. Lee | Incorporated herein by reference to Exhibit 10.1 to the Form 8-K, filed with the SEC on December 2, 2019 | ||
| 10.8 | Director Offer Letter dated June 15, 2020 by and between Jerash Holdings and Bill Korn | Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on June 15, 2020 | ||
| 10.9+ | Option Award Agreement dated November 27, 2019 by and between Jerash Holdings and Gilbert K. Lee | Incorporated herein by reference to Exhibit 10.2 to the Form 8-K, filed with the SEC on December 2, 2019 | ||
| 10.10+ | Form of Indemnification Agreement | Incorporated herein by reference to Exhibit 10.2 to the Form 8-K, filed with the SEC on June 15, 2020 |
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| 10.11 | Factory Lease Agreement dated January 1, 2021 between Jiangmen Treasure Success and Guangdong Huadian Technology Industry Co., Ltd. | Incorporated herein by reference to Exhibit 10.20 to the Annual Report on Form 10-K, filed with the SEC on June 23, 2021 | ||
| 10.12+ | Letter of Employment dated April 22, 2022 between Treasure Success and Choi Lin Hung | Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on April 28, 2022 |
| 10.13+ | Letter of Employment dated April 22, 2022 between Treasure Success and Ng Tsze Lun | Incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K, filed with the SEC on April 28, 2022 | ||
| 10.14 | Facility Letter dated January 12, 2022 by and between Treasure Success and DBS Bank (Hong Kong) Limited | Incorporated herein by reference to Exhibit 10.18 to the Annual Report on Form 10-K, filed with the SEC on June 27, 2022 | ||
| 10.15 | Joint Venture and Shareholder’s Agreement dated March 20, 2023 by and between Treasure Success and P.T. Eratex | Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on March 21, 2023 | ||
| 10.16 | The Shareholders’ Agreement dated October 10, 2023 by and between Treasure Success and Newtech Textile (HK) Limited | Incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed with the SEC on October 12, 2023 | ||
| 10.17 | Banking Facilities dated January 4, 2024, by and between Treasure Success and DBSHK | Incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q, filed with the SEC on February 8, 2024 | ||
| 14.1 | Code of Ethics | Incorporated herein by reference to Exhibit 14.1 to the Annual Report on Form 10-K, filed with the SEC on June 29, 2020 | ||
| 16.1 | Letter, dated March 27, 2025, from Marcum LLP addressed to the SEC | Incorporated herein by reference to Exhibit 16.1 to the Current Report on Form 8-K, filed with the SEC on March 27, 2025 | ||
| 19.1 | Insider Trading Policy | Incorporated herein by reference to Exhibit 19.1 to the Annual Report on Form 10-K, filed with the SEC on June 28, 2024 | ||
| 21.1 | Subsidiaries of Jerash Holdings (US), Inc. | Incorporated herein by reference to Exhibit 21.1 to the Annual Report on Form 10-K, filed with the SEC on June 28, 2024 | ||
| 23.1 | Consent of CBIZ CPAs P.C. | Filed herewith | ||
| 23.2 | Consent of Marcum LLP | Filed herewith | ||
| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
| 31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed herewith | ||
| 32.1* | Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Furnished herewith | ||
| 32.2* | Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | Furnished herewith |
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| 97.1 | Compensation Recovery Policy | Incorporated herein by reference to Exhibit 97.1 to the Annual Report on Form 10-K, filed with the SEC on June 28, 2024 | ||
| 101.INS | Inline XBRL Instance Document | Filed herewith | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed herewith | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | ||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | ||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | ||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith | ||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed herewith |
| + | Indicates a management contract or compensatory plan, contract, or arrangement. |
| * | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-K and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act. |
Item 16. Form 10-K Summary.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.
| JERASH HOLDINGS (US), INC. | ||
| Date: June 25, 2025 | By: | /s/ Gilbert K. Lee |
| Name: | Gilbert K. Lee | |
| Title: | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |
Pursuant to the requirements of the SecuritiesExchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicatedbelow on June 25, 2025.
| Signature | Title | |
| /s/ Choi Lin Hung | Chairman, Chief Executive Officer, President, and Treasurer | |
| Choi Lin Hung | (Principal Executive Officer) | |
| /s/ Gilbert K. Lee | Chief Financial Officer (Principal Financial Officer and | |
| Gilbert K. Lee | Principal Accounting Officer) | |
| /s/ Wei Yang | Vice President, Secretary, and Director | |
| Wei Yang | ||
| /s/ Bill Korn | Director | |
| Bill Korn | ||
| /s/ Ibrahim H. Saif | Director | |
| Ibrahim H. Saif | ||
| /s/ Mak Chi Yan | Director | |
| Mak Chi Yan |
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