10-Q

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 001-38474

Jerash Holdings (US), Inc.

(Exact name of registrant as specified in its charter)

Delaware	81-4701719
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

277 Fairfield Road, Suite 338

Fairfield, New Jersey 07004

(Address of principal executive offices) (Zip Code)

(214) 906-0065

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	JRSH	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No ☒

As of November 10, 2020, there were 11,325,000 shares of common stock, par value $0.001 per share, outstanding.

Jerash Holdings (US), Inc.

Form 10-Q

For the Quarterly Period Ended September 30, 2020

Contents

Part I	Financial Information	1
Item 1	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2020 and March 31, 2020	1
	Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended September 30, 2020 and 2019	2
	Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended September 30, 2020 and 2019	3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2020 and 2019	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3	Quantitative and Qualitative Disclosures about Market Risk	34
Item 4	Controls and Procedures	34
Part II	Other Information	35
Item 1	Legal Proceedings	35
Item 1A	Risk Factors	35
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3	Defaults Upon Senior Securities	35
Item 4	Mine Safety Disclosures	35
Item 5	Other Information	35
Item 6	Exhibits	36
Signature		37

i 

JERASH HOLDINGS (US), INC.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

JERASH HOLDINGS (US), INC.,

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2020			March 31, 2020
	(Unaudited)
ASSETS
Current Assets:
Cash	$	27,334,093		$	26,130,411
Accounts receivable, net		19,924,392			5,335,748
Inventories		10,304,880			22,633,772
Prepaid expenses and other current assets		2,044,054			2,761,877
Advance to suppliers, net		2,793,782			2,116,367
Total Current Assets		62,401,201			58,978,175
Restricted cash		786,298			786,298
Long-term deposits		133,727			253,414
Deferred tax assets, net		139,895			139,895
Property, plant and equipment, net		5,773,159			6,174,164
Right of use assets		952,900			1,147,090
Total Assets	$	70,187,180		$	67,479,036
LIABILITIES AND EQUITY
Current Liabilities:
Credit facilities	$	932,152		$	235
Accounts payable		4,952,525			6,376,320
Accrued expenses		2,485,531			2,245,402
Income tax payable - current		1,771,922			1,088,497
Other payables		1,142,369			929,783
Operating lease liabilities - current		218,583			210,081
Total Current Liabilities		11,503,082			10,850,318
Operating lease liabilities - non-current		555,144			649,935
Income tax payable - non-current		1,094,048			1,227,632
Total  Liabilities		13,152,274			12,727,885
Commitments and Contingencies (See Note 15)
Equity
Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding	$	-		$	-
Common stock, $0.001 par value; 30,000,000 shares authorized; 11,325,000 shares issued and outstanding		11,325			11,325
Additional paid-in capital		15,277,176			15,235,025
Statutory reserve		212,739			212,739
Retained earnings		41,238,636			38,997,177
Accumulated other comprehensive loss		(8,165	)		(8,324	)
Total Jerash Holdings (US), Inc.’s Stockholder’s Equity		56,731,711			54,447,942
Noncontrolling interest		303,195			303,209
Total Equity		57,034,906			54,751,151
Total Liabilities and Equity	$	70,187,180		$	67,479,036

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

 1

JERASH HOLDINGS (US), INC.,

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

	For the Three Months Ended September 30,					For the Six Months Ended September 30,
	2020		2019			2020		2019
Revenue, net	$	27,086,318	$	30,611,119		$	45,793,073	$	53,138,444
Cost of goods sold		21,203,568		23,308,762			36,858,753		41,323,384
Gross Profit		5,882,750		7,302,357			8,934,320		11,815,060
Selling, general and administrative expenses		2,853,679		2,919,920			4,704,506		5,543,602
Stock-based compensation expenses		-		193,955			42,151		193,955
Total Operating Expenses		2,853,679		3,113,875			4,746,657		5,737,557
Income from Operations		3,029,071		4,188,482			4,187,663		6,077,503
Other Income (Expense):
Other income (expense), net		62,917		(5,059	)		60,178		(9,592	)
Total other income (expense), net		62,917		(5,059	)		60,178		(9,592	)
Net income before provision for income taxes		3,091,988		4,183,423			4,247,841		6,067,911
Income tax expense		531,896		594,687			873,896		929,687
Net Income		2,560,092		3,588,736			3,373,945		5,138,224
Net loss attributable to noncontrolling interest		8		4,011			14		4,011
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$	2,560,100	$	3,592,747		$	3,373,959	$	5,142,235
Net Income	$	2,560,092	$	3,588,736		$	3,373,945	$	5,138,224
Other Comprehensive Income:
Foreign currency translation gain		712		2,946			159		3,757
Total Comprehensive Income		2,560,804		3,591,682			3,374,104		5,141,981
Comprehensive income attributable to noncontrolling interest		-		-			-		-
Comprehensive Income Attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$	2,560,804	$	3,591,682		$	3,374,104	$	5,141,981
Earnings Per Share Attributable to Common Stockholders:
Basic	$	0.23	$	0.32		$	0.30	$	0.45
Diluted	$	0.23	$	0.31		$	0.30	$	0.45
Weighted Average Number of Shares
Basic		11,325,000		11,325,000			11,325,000		11,325,000
Diluted		11,329,953		11,507,071			11,330,081		11,496,803
Dividend per share	$	0.05	$	0.05		$	0.10	$	0.10

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

 2

JERASH HOLDINGS (US), INC.,

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

	Preferred Stock				Common Stock				Additional Paid-in		Statutory		Retained			Accumulated Other Comprehensive			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital		Reserve		Earnings			Loss			Interest			Equity
Balance at March 31, 2019		-	$	-		11,325,000	$	11,325	$	14,956,767	$	212,739	$	34,786,735		$	(14,440	)	$	309,003		$	50,262,129
Stock-based compensation expense for the stock options issued under stock incentive plan		-		-		-		-		193,955		-		-			-			-			193,955
Net income (loss)		-		-		-		-		-		-		5,142,235			-			(4,011	)		5,138,224
Dividend distribution		-		-		-		-		-		-		(1,132,500	)		-			-			(1,132,500	)
Foreign currency translation gain		-		-		-		-		-		-		-			3,757			-			3,757
Balance at September 30, 2019 (unaudited)		-	$	-		11,325,000	$	11,325	$	15,150,722	$	212,739	$	38,796,470		$	(10,683	)	$	304,992		$	54,465,565
Balance at March 31, 2020		-	$	-		11,325,000	$	11,325	$	15,235,025	$	212,739	$	38,997,177		$	(8,324	)	$	303,209		$	54,751,151
Stock-based compensation expense for the stock options issued under stock incentive plan		-		-		-		-		42,151		-		-			-			-			42,151
Net income (loss)		-		-		-		-		-		-		3,373,959			-			(14	)		3,373,945
Dividend distribution		-		-		-		-		-		-		(1,132,500	)		-			-			(1,132,500	)
Foreign currency translation gain		-		-		-		-		-		-		-			159			-			159
Balance at September 30, 2020 (unaudited)		-	$	-		11,325,000	$	11,325	$	15,277,176	$	212,739	$	41,238,636		$	(8,165	)	$	303,195		$	57,034,906

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

 3

	FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
	Preferred Stock				Common Stock				Additional Paid-in		Statutory		Retained			Accumulated Other Comprehensive			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital		Reserve		Earnings			Loss			Interest			Equity
Balance at June 30, 2019 (unaudited)		-	$	-		11,325,000	$	11,325	$	14,956,767	$	212,739	$	35,769,973		$	(13,629	)	$	309,003		$	51,246,178
Stock-based compensation expense for the stock options issued under stock incentive plan		-		-		-		-		193,955		-		-			-			-			193,955
Net income (loss)		-		-		-		-		-		-		3,592,747			-			(4,011	)		3,588,736
Dividend Distribution		-		-		-		-		-		-		(566,250	)		-			-			(566,250	)
Foreign currency translation gain		-		-		-		-		-		-		-			2,946			-			2,946
Balance at September 30, 2019 (unaudited)		-	$	-		11,325,000	$	11,325	$	15,150,722	$	212,739	$	38,796,470		$	(10,683	)	$	304,992		$	54,465,565

	Preferred Stock				Common Stock				Additional Paid-in		Statutory		Retained			Accumulated Other Comprehensive			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital		Reserve		Earnings			Loss			Interest			Equity
Balance at June 30, 2020 (unaudited)		-	$	-		11,325,000	$	11,325	$	15,277,176	$	212,739	$	39,244,786		$	(8,877	)	$	303,203		$	55,040,352
Net income (loss)		-		-		-		-		-		-		2,560,100			-			(8	)		2,560,092
Dividend distribution		-		-		-		-		-		-		(566,250	)		-			-			(566,250	)
Foreign currency translation gain		-		-		-		-		-		-		-			712			-			712
Balance at September 30, 2020 (unaudited)		-	$	-		11,325,000	$	11,325	$	15,277,176	$	212,739	$	41,238,636		$	(8,165	)	$	303,195		$	57,034,906

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

 4

JERASH HOLDINGS (US), INC.,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Six Months Ended September 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	3,373,945		$	5,138,224
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		829,285			724,778
Stock-based compensation expenses		42,151			193,955
Bad debt expense		58,563			-
Amortization of operating lease right-of-use assets		365,478			114,803
Changes in operating assets:
Accounts receivable		(14,588,644	)		(10,286,102	)
Inventories		12,328,893			8,023,021
Prepaid expenses and other current assets		659,257			(1,327,225	)
Advance to suppliers		(677,415	)		(224,590	)
Changes in operating liabilities:
Accounts payable		(1,423,796	)		(1,521,441	)
Accrued expenses		240,129			628,643
Other payables		212,586			453,717
Operating lease liabilities		(257,577	)		2,058
Income tax payable		550,033			(553,835	)
Net cash provided by operating activities		1,712,888			1,366,006
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(428,280	)		(3,053,472	)
Long-term assets		119,687			-
Net cash used in investing activities		(308,593	)		(3,053,472	)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend distribution		(1,132,500	)		(1,132,500	)
Repayment from short-term loan		(235	)		(648,666	)
Proceeds from short-term loan		932,152			16,049
Net cash used in financing activities		(200,583	)		(1,765,117	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH		(30	)		12,895
NET INCREASE (DECREASE) IN CASH		1,203,682			(3,439,688	)
CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD		26,916,709			27,834,468
CASH, AND RESTRICTED CASH, END OF THE PERIOD	$	28,120,391		$	24,394,780
CASH AND RESTRICTED CASH, END OF PERIOD		28,120,391			24,394,780
LESS: NON-CURRENT RESTRICTED CASH		786,298			796,876
CASH, END OF PERIOD	$	27,334,093		$	23,597,904
Supplemental disclosure information:
Cash paid for interest	$	-		$	5,755
Income tax paid	$	347,689		$	1,483,507
Non-cash financing activities
Right of use assets obtained in exchange for operating lease obligations	$	172,413		$	1,292,416

The accompanying notes are an integral part of these condensed unaudited consolidated financial statements.

 5

JERASH HOLDINGS (US), INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Jerash Holdings (US), Inc. (“Jerash Holdings”) is a corporation incorporated under the laws of the State of Delaware on January 20, 2016. Jerash Holdings is a parent holding company with no operations. Jerash Holdings, and its subsidiaries and Variable Interest Entity (“VIE”) are herein collectively referred to as the “Company.”

Jerash Garments and Fashions Manufacturing Company Limited (“Jerash Garments”) is a wholly owned subsidiary of Jerash Holdings and was established in Amman, the Hashemite Kingdom of Jordan (“Jordan”), as a limited liability company on November 26, 2000 with a declared capital of 150,000 Jordanian Dinar (“JOD”) (approximately US$212,000) as of September 30, 2020.

Jerash for Industrial Embroidery Company (“Jerash Embroidery”) and Chinese Garments and Fashions Manufacturing Company Limited (“Chinese Garments”) were both incorporated in Amman, Jordan, as limited liability companies on March 11, 2013 and June 13, 2013, respectively, each with a declared capital of JOD50,000 as of September 30, 2020. Jerash Embroidery and Chinese Garments are wholly owned subsidiaries of Jerash Garments.

Al-Mutafaweq Co. for Garments Manufacturing Ltd. (“Paramount”) was a contract garment manufacturer that was incorporated in Amman, Jordan, as a limited liability company on October 24, 2004 with a declared capital of JOD100,000. On December 11, 2018, Jerash Garments and the sole stockholder of Paramount entered into an agreement pursuant to which Jerash Garments acquired all of the outstanding shares of stock of Paramount. Jerash Garments assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of June 18, 2019, Paramount became a subsidiary of Jerash Garments.

Jerash the First for Medical Supplies Manufacturing Company Limited (“Jerash the First”) was incorporated in Amman, Jordan, as a limited liability company on July 6, 2020, with a registered capital of JOD150,000. Jerash the First is engaged in the production of medical supplies in Jordan and is a wholly owned subsidiary of Jerash Garments.

Treasure Success International Limited (“Treasure Success”) was incorporated on July 5, 2016 in Hong Kong, China, for the primary purpose of employing staff from China to support Jerash Garments’ operations and is a wholly-owned subsidiary of Jerash Holdings.

Victory Apparel (Jordan) Manufacturing Company Limited (“Victory Apparel”) was incorporated as a limited liability company in Amman, Jordan, on September 18, 2005 with a declared capital of JOD50,000. Victory Apparel has no significant assets or liabilities or other operating activities of its own. Although Jerash Garments does not own the equity interest of Victory Apparel, the Company’s president, director, and significant stockholder, Mr. Choi Lin Hung (“Mr. Choi”), is also a director of Victory Apparel and controls all decision-making for Victory Apparel along with another significant stockholder of Jerash Garments, Mr. Lee Kian Tjiauw (“Mr. Lee”), who has the ability to control Victory Apparel’s financial affairs. In addition, Victory Apparel’s equity at risk is not sufficient to permit it to operate without additional subordinated financial support from Jerash Garments. Based on these facts, the Company concluded that Jerash Garments has effective control over Victory Apparel due to Mr. Choi’s roles at both organizations and therefore Victory Apparel is considered a VIE under Accounting Standards Codification (“ASC”) 810-10-05-08A. Accordingly, Jerash Garments consolidates Victory Apparel’s operating results, assets, and liabilities.

Jiangmen Treasure Success Business Consultancy Company Limited (“Jiangmen Treasure Success”) was incorporated on August 28, 2019 under the laws of the People’s Republic of China (“China”) in Guangzhou City of Guangdong Province in China with a total registered capital of 3 million Hong Kong Dollars (“HKD”) (approximately $385,000) to provide support in sales and marketing, sample development, merchandising, procurement, and other areas. Treasure Success owns 100% of the equity interests in Jiangmen Treasure Success.

The Company is engaged in the manufacturing and exporting of customized, ready-made sport and outerwear from knitted fabric produced in its facilities in Jordan and sold in the United States, Jordan, and other countries. 

 6

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

Principles of Consolidation

The consolidated financial statements include the financial statements of Jerash Holdings, and its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation.

VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which a company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIEs. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company’s VIE, Victory Apparel, was inactive for the six months ended September 30, 2020, and the net assets of the VIE were approximately $0.3 million as of each of September 30, 2020 and March 31, 2020.

Use of Estimates

The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s most significant estimates include allowance for doubtful accounts, valuation of inventory reserve, useful lives of buildings and other property, and the measurement of stock-based compensation expenses. Actual results could differ from these estimates.

Cash

The Company considers all highly liquid investment instruments with an original maturity of three months or less from the original date of purchase to be cash equivalents. As of September 30, 2020, and March 31, 2020, the Company had no cash equivalents.

Restricted Cash

Restricted cash consists of cash used as security deposits to obtain credit facilities from a bank and to secure customs clearance under the requirements of local regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security deposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a non-current asset since the Company has no intention to terminate these bank facilities within one year.

Short-term Investments

The Company’s short-term investments consist of financial products purchased from banks. The bank invests the Company’s funds in certain financial instruments including money market funds, bonds, and mutual funds, with an expected annual return of 5%. The carrying values of the Company’s short-term investments approximate fair value because of their liquidity. The gain and interest earned are recognized in the consolidated statements of operations and comprehensive income (loss) over the contractual terms of these investments. The Company exited the investment before September 30, 2020.

The Company had short-term investments of $Nil and $Nil as of September 30, 2020 and 2019, respectively. The Company recorded a realized gain of $64,692 and $Nil for the six months ended September 30, 2020 and 2019, respectively.

 7

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounts Receivable

Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants extended payment terms to customers with good credit standing and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. An allowance was recorded totaling $45,167 and $4,641 as of September 30, 2020 and March 31, 2020, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value. Inventories include cost of raw materials, freight, direct labor, and related production overhead. The cost of inventories is determined using the First in, First-out method. The Company periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value.

Advance to Suppliers

Advance to suppliers consists of balances paid to suppliers for services or materials purchased that have not been provided or received. Advance to suppliers for services and materials is short term in nature. Advance to Suppliers is reviewed periodically to determine whether its carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance was $13,396 and $2,000 as of September 30, 2020 and March 31, 2020 respectively.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, reduced by accumulated depreciation and amortization. Depreciation and amortization expense related to property, plant and equipment is computed using the straight-line method based on 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 reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. The estimated useful lives of depreciation and amortization of the principal classes of assets are as follows:

	Useful life
Land	Infinite
Property and buildings	15 years
Equipment and machinery	3-5 years
Office and electronic equipment	3-5 years
Automobiles	5 years
Leasehold improvements	Lesser of useful life and lease term

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation or amortization of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and comprehensive income.

 8

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of Long-Lived Assets

The Company assesses its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Factors which may indicate potential impairment include a significant underperformance relative to the historical or projected future operating results or a significant negative industry or economic trend. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by that asset. 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 record any impairment loss during the six months ended September 30, 2020 and 2019.

Revenue Recognition

Substantially all of the Company’s revenue is derived from product sales, which consist of sales of the Company’s customized ready-made outerwear for large brand-name retailers and personal protective equipment. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within seven to 150 days of the invoice date, and the contracts do not have significant financing components. Shipping and handling costs associated with outbound freight are not an obligation of the Company. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial.

The Company also derives revenue rendering cutting and making services to other apparel vendors who subcontract orders to the Company, and the revenue is recognized when the service is rendered.

All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience, complete satisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted the Company’s revenue.

The Company does not have any contract assets since the Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment from customers is not contingent on a future event. For the six months ended September 30, 2020 and 2019, there was no revenue recognized from performance obligations related to prior periods. As of September 30, 2020, there was no revenue expected to be recognized in any future periods related to remaining performance obligations.

The Company has one revenue generating reportable geographic segment under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its sales of customized ready-made outerwear. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see “Note 14—Segment Reporting”).

Shipping and Handling

Proceeds collected from customers for shipping and 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 $360,217 and $292,354 for the three months ended September 30, 2020 and 2019, respectively. Total shipping and handling expenses were $544,130 and $501,136 for the six months ended September 30, 2020 and 2019, respectively.

 9

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Jerash Holdings is incorporated in the State of Delaware and is subject to federal income tax in the United States of America. Treasure Success is registered in Hong Kong and has no operating profit. Jiangmen Treasure Success is incorporated in China and is subject to corporate income tax in China. Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash the First, and Victory Apparel are subject to income tax in Jordan, unless an exemption is granted. The corporate income tax rate is 14% for the businesses classified within the industrial sector. In accordance with the Investment Encouragement Law, Jerash Garments’ export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing on the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, the Jordanian government changed some features of its tax incentive programs and Jerash Garments and its subsidiaries and VIE are now qualified for incentives applicable to an industrial park that houses manufacturing operations in Jordan (“Development Zone”), a change from the previous incentive program relating to Qualifying Industrial Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE were subject to corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020, that rate increased to 14% plus a 1% social contribution.

Jerash Garments and its subsidiaries and VIE are subject to local sales tax of 16% on purchases. Jerash Garments was granted a sales tax exemption from the Jordanian Investment Commission for the period from June 1, 2015 to June 1, 2018 that allowed Jerash Garments to make purchases with no sales tax charge. This exemption has been extended to February 5, 2021.

The Company accounts for income taxes in accordance with 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 applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740 clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of income and comprehensive income. No significant uncertainty in tax positions relating to income taxes were incurred during six months ended September 30, 2020 and 2019.

Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar (“US$” or “$”). The Company uses JOD as its functional currency in Jordanian companies, HKD in Treasure Success, and Chinese Yuan (“CNY”) in Jiangmen Treasure Success as functional currency of each abovementioned entity. The assets and liabilities of the Company have been translated into US$ using the exchange rates in effect at the balance sheet date, equity accounts have been translated at historical rates, and revenue and expenses have been translated into US$ using average exchange rates in effect during the reporting period. Cash flows are also translated at average translation rates for the periods. Therefore, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income or loss. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

 10

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Foreign Currency Translation (Continued)

The value of JOD against US$ and other currencies may fluctuate and is affected by, among other things, changes in Jordan’s political and economic conditions. Any significant revaluation of JOD may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

	September 30, 2020	March 31, 2020
Period-end spot rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.7501	US$1=HKD7.7529
	US$1=CNY6.8033	US$1=CNY7.0896
Average rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.7510	US$1=HKD7.8163
	US$1=CNY7.0012	US$1=CNY6.9642

Stock-Based Compensation

The Company measures compensation expense for stock-based awards to non-employee contractors and directors based upon the awards’ initial grant-date fair value. The estimated grant-date fair value of the award is recognized as expense over the requisite service period using the straight-line method.

The Company estimates the fair value of stock options using a Black-Scholes model. This model is affected by the Company’s stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of the option, expected risk-free rates of return, the expected volatility of the Company’s common stock, and expected dividend yield, each of which is more fully described below. The assumptions for 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 sock option is the period of time that the warrant or 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 share-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 comparable public company volatility over the same period of time as the life of the warrant or stock option.

● Dividend Yield: Stock-based compensation awards granted prior to November 2018 assumed no dividend yield, while any subsequent stock-based compensation awards are valued using the anticipated dividend yield.

Earnings 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 capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for 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 and warrants) 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 decrease loss per share) are excluded from the calculation of diluted EPS (See “Note 13—Earnings per Share”).

 11

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Comprehensive Income

Comprehensive income consists of two components, net income and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in JOD or HKD or CNY to US$ is reported in other comprehensive income in the consolidated statements of income and comprehensive income.

Fair Value of Financial Instruments

ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable 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 its financial assets and liabilities, which consist primarily of cash, including restricted cash, accounts receivable, other receivables, credit facilities, accounts payable, accrued expenses, income tax payable, other payables, and operating lease liabilities to approximate the fair value of the respective assets and liabilities at September 30, 2020 and March 31, 2020 based upon the short-term nature of these assets and liabilities.

Concentrations and Credit Risk

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of September 30, 2020, and March 31, 2020, respectively, $8,678,214 and $6,894,641 of the Company’s cash was on deposit at financial institutions in Jordan, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of September 30, 2020 and March 31, 2020, respectively, $9,941 and $125,830 of the Company’s cash was on deposit at financial institutions in China, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of September 30, 2020 and March 31, 2020, respectively, $19,358,851 and $19,847,852 of the Company’s cash was on deposit at financial institutions in Hong Kong, which are insured by the Hong Kong Deposit Protection Board subject to certain limitations. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. As of September 30, 2020 and March 31, 2020, respectively, $73,385 and $48,386 of the Company’s cash was on deposit in the United States and are insured by the Federal Deposit Insurance Corporation up to $250,000.

Accounts receivable are typically unsecured and derived from revenue earned from customers, and therefore are exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Concentrations and Credit Risk (Continued)

Customer and vendor concentration risk

The Company’s sales are made primarily in the United States. Its operating results could be adversely affected by U.S. government policies on exporting business, foreign exchange rate fluctuations, and changes in local market conditions. The Company has a concentration of its revenue and purchases with specific customers and suppliers. For the three months ended September 30, 2020 and 2019, one end-customer accounted for 74% and 87% of the Company’s total revenue, respectively. For the six months ended September 30, 2020 and 2019, one end-customer accounted for 76% and 91% of the Company’s total revenue, respectively. As of September 30, 2020, one end-customers accounted for 78% of the Company’s total accounts receivable balance. As of March 31, 2020, four end-customers accounted for 42%, 20%, 20%, and 14% of the Company’s total accounts receivable balance, respectively.

For the three months ended September 30, 2020, the Company purchased approximately 20% of its garments from one major supplier. For the six months ended September 30, 2020, the Company purchased approximately 12% of its garments from one major supplier. For the three months ended September 30, 2019, the Company purchased 18% and 13% of its raw materials from two major suppliers, respectively. For the six months ended September 30, 2019, the Company purchased approximately 24% and 11% of its raw materials from two major suppliers, respectively. As of September 30, 2020, accounts payable to the Company’s one major suppliers accounted for 47% of the total accounts payable balance. As of March 31, 2020, accounts payable to the Company’s three major suppliers accounted for 39%, 16%, and 10% of the total accounts payable balance, respectively.

Risks and Uncertainties

The principal operations of the Company are located in 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 are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic, and legal environment and foreign currency exchange. 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 compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.

The spread of COVID-19 around the world since March 2020 has caused significant volatility in U.S. and international markets. The Company’s sales declined in the first half of fiscal 2021. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies. Based on the assessment of the current economic environment, customer demand, and sales trend, and the negative impact from the prolonged COVID-19 outbreak and spread, the Company’s revenue and operating cash flows may be lower than expected for fiscal year 2021.

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of the Company’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. This ASU is effective for interim and annual periods beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. As an emerging growth company, the Company plans to adopt this guidance effective April 1, 2023. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements. 

 13

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS (Continued)

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company does not expect adoption of the new guidance to have a significant impact on its consolidated financial statements.

NOTE 4 – ACCOUNTS RECEIVABLE, NET

Accounts receivable consisted of the following:

	As of			As of
	September 30, 2020			March 31, 2020
Trade accounts receivable	$	19,969,559		$	5,340,389
Less: allowances for doubtful accounts		(45,167	)		(4,641	)
Accounts receivable, net	$	19,924,392		$	5,335,748

NOTE 5 – INVENTORIES

Inventories consisted of the following:

	As of		As of
	September 30, 2020		March 31, 2020
Raw materials	$	4,614,464	$	12,499,301
Work-in-progress		377,627		1,541,716
Finished goods		5,312,789		8,592,755
Total inventory	$	10,304,880	$	22,633,772

NOTE 6 – ADVANCE TO SUPPLIERS

Advance to suppliers consisted of the following:

	As of			As of
	September 30, 2020			March 31, 2020
Advance to suppliers	$	2,807,178		$	2,118,367
Less: allowances for doubtful accounts		(13,396	)		(2,000	)
Advance to suppliers, net	$	2,793,782		$	2,116,367

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NOTE 7 – LEASES

The Company has 35 operating leases for manufacturing facilities and offices. Some leases include one or more options to renew, which is typically at the Company’s sole discretion. The Company regularly evaluates the renewal options, and, when it is reasonably certain of exercise, it will include the renewal period in its lease term. New lease modifications result in measurement of the right of use (“ROU”) assets and lease 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 commencement date based on the present value of remaining lease payments over the lease term.

All of the Company’s leases are classified as operating leases and primarily include office space and manufacturing facilities.

Supplemental balance sheet information related to operating leases was as follows:

	September 30, 2020
Right-of-use assets	$	952,900
Operating lease liabilities - current	$	218,583
Operating lease liabilities - non-current		555,144
Total operating lease liabilities	$	773,727

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of September 30, 2020:

Remaining lease term and discount rate:
Weighted average remaining lease term (years)	2.9
Weighted average discount rate	4.06	%

During the three months ended September 30, 2020 and 2019, the Company incurred total operation lease expenses of $535,568 and $402,950, respectively. During the six months ended September 30, 2020 and 2019, the Company incurred total operation lease expenses of $1,047,341 and $945,735, respectively.

The following is a schedule, by fiscal years, of maturities of lease liabilities as of September 30, 2020:

2021	$	203,279
2022		372,363
2023		248,297
2024		186,854
Total lease payments		1,010,793
Less: imputed interest		(57,893	)
Less: prepayments		(179,173	)
Present value of lease liabilities	$	773,727

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NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:

	As of			As of
	September 30, 2020			March 31, 2020
Land (1)	$	1,831,192		$	1,831,192
Property and buildings		432,562			432,562
Equipment and machinery (2)		8,029,899			7,630,255
Office and electric equipment		808,088			793,405
Automobiles		492,976			480,687
Leasehold improvements		2,767,274			2,765,610
Subtotal		14,361,991			13,933,711
Construction in progress (3)		194,752			194,752
Less: Accumulated depreciation and amortization (4)		(8,783,584	)		(7,954,299	)
Property and equipment, net	$	5,773,159		$	6,174,164

(1) On August 7, 2019 and February 6, 2020, the Company, through Jerash Garments, purchased 12,340 square meters (approximately three acres) and 4,516 square meters (approximately 48,608 square feet) of land in Al Tajamouat Industrial City, Jordan (the “Jordan Properties”), from third parties to construct a factory and a dormitory for the Company’s employees, respectively. The aggregate purchase price of the Jordan Properties was JOD1,177,301 (approximately US$1.7 million).

(2) On June 18, 2019, the Company acquired all of the outstanding shares of Paramount, a contract manufacturer based in Amman, Jordan. As a result, Paramount became a subsidiary of Jerash Garments, and the Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of acquisition, so this transaction was accounted for as an asset acquisition. $980,000 was paid in cash to acquire all of the machinery and equipment from Paramount and the machinery and equipment were transferred to the Company.

(3) The construction in progress account represents costs incurred for constructing a dormitory, which was previously planned to be a sewing workshop. This dormitory is approximately 4,800 square feet in the Tafilah Governorate of Jordan. Construction was temporarily suspended due to the COVID-19 pandemic. The dormitory is expected to be completed and ready for use in fiscal 2022.

(4) Depreciation and amortization expenses were $417,231 and $386,136 for the three months ended September 30, 2020 and 2019, respectively. Depreciation and amortization expenses were $829,285 and $724,778 for the six months ended September 30, 2020 and 2019, respectively.

NOTE 9 – EQUITY

Preferred Stock

The Company had 500,000 shares of preferred stock authorized with a par value of $0.001 per share; none were issued and outstanding as of September 30, 2020 and March 31, 2020. The preferred stock can be issued by the board of directors of Jerash Holdings (the “Board of Directors”) in one or more classes or one or more series within any class, and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, rights, qualifications, limitations, or restrictions of such rights as the Board of Directors may determine from time to time.

Common Stock

The Company had 11,325,000 shares common stock outstanding as of September 30, 2020 and March 31, 2020.

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NOTE 9 – EQUITY (Continued)

Statutory Reserve

In accordance with the Corporate Law in Jordan, Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash the First, and Victory Apparel are required to make appropriations to certain reserve funds, based on net income determined in 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. This reserve is not available for dividend distribution. In addition, PRC companies are required to set aside at least 10% of their after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of their registered capital. The statutory reserves are not distributable in the form of cash dividends to the Company and can be used to make up cumulative prior year losses. The Company’s subsidiaries and VIE have already reserved the maximum amount required.

Dividends

On August 5, 2020, the Board of Directors declared a cash dividend of $0.05 per share of common stock. Cash dividends of $566,250 to the stockholders of the Company were paid in full on August 24, 2020.

On May 15, 2020, the Board of Directors declared a cash dividend of $0.05 per share of common stock. Cash dividends of $566,250 to the stockholders of the Company were paid in full on June 2, 2020.

On each of February 5, 2020, November 4, 2019, July 29, 2019, and May 17, 2019, the Board of Directors declared cash dividends of $0.05 per share of common stock. Cash dividends of $566,250 to the stockholders of the Company were paid in full on February 26, 2020, November 26, 2019, August 19, 2019, and June 5, 2019, respectively.

NOTE 10 – STOCK-BASED COMPENSATION

Warrants issued for services

From time to time, the Company issues warrants to purchase its common stock. These warrants are valued using the Black-Scholes model and using the volatility, market price, exercise price, risk-free interest rate, and dividend yield appropriate at the date the warrants were issued.

Simultaneous with the closing of the IPO, the Company issued to the underwriter and its affiliates warrants to purchase 57,200 shares of common stock (“IPO Underwriter Warrants”) at an exercise price of $8.75 per share with an expiration date of May 2, 2023. The shares underlying the IPO Underwriter Warrants were subject to a 180-day lock-up that expired on October 29, 2018.

The fair value of these warrants was estimated as of the grant date using the Black-Scholes model with the major assumptions that the expected term is five years; risk-free interest rate is 1.8-2.8%; and the expected volatility is 50.3-52.2%. There were 264,410 warrants outstanding as of September 30, 2020 and March 31, 2020 with a weighted average exercise price of $6.35. All of the outstanding warrants were fully vested and exercisable as of September 30, 2020 and March 31, 2020.

Stock Options

On March 21, 2018, the Board of Directors adopted the Jerash Holdings (US), Inc. 2018 Stock Incentive Plan (the “Plan”), pursuant to which the Company may grant various types of equity awards. 1,484,250 shares of common stock of the Company were reserved for issuance under the Plan. In addition, on July 19, 2019, the Board of Directors approved an amendment and restatement of the Plan, which was approved by the Company’s stockholders at its annual meeting of stockholders on September 16, 2019. The amended and restated Plan increased the number of shares reserved for issuance under the Plan by 300,000, to 1,784,250, among other changes.

 17

NOTE 10 – STOCK-BASED COMPENSATION (Continued)

On April 9, 2018, the Board of Directors approved the issuance of 989,500 nonqualified stock options under the Plan to 13 executive officers and employees of the Company in accordance with the Plan at an exercise price of $7.00 per share, and a term of five years. The fair value of these options was estimated as of the grant date using the Black-Scholes model with the major assumptions that expected terms is five years; risk-free interest rate is 2.6%; and the expected volatility is 50.3%. All these outstanding options were fully vested and exercisable on issue date.

On August 3, 2018, the Board of Directors granted the Company’s then Chief Financial Officer and Head of U.S. Operations a total of 150,000 nonqualified stock options under the Plan in accordance with the Plan at an exercise price of $6.12 per share and a term of 10 years. The fair value of these options was estimated as of the grant date using the Black-Scholes model with the major assumptions that expected terms is 10 years; risk-free interest rate is 2.95%; and the expected volatility is 50.3%. All these outstanding options were fully vested and exercisable in August 2019.

On November 27, 2019, the Board of Directors granted the Company’s Chief Financial Officer 50,000 nonqualified stock options under the amended and restated Plan in accordance with the amended and restated Plan at an exercise price of $6.50 per share and a term of 10 years. All these outstanding options were fully vested and exercisable in May 2020.

The fair value of the options granted on November 27, 2019 was $126,454. It is estimated as of the grant date using the Black-Scholes model with the following assumptions:

	Stock Options November 27, 2019
Expected term (in years)		10.0
Risk-free interest rate (%)		1.77	%
Expected volatility (%)		48.59	%
Dividend yield (%)		3.08	%

All stock option activities are summarized as follows:

	Option to acquire Shares		Weighted Average Exercise Price
Stock options outstanding at March 31, 2020		1,189,500	$	6.87
Granted		-		-
Exercised		-		-
Cancelled		-		-
Stock options outstanding at September 30, 2020		1,189,500	$	6.87

Total expense related to the stock options issued was $Nil and $193,955 for the three months ended September 30, 2020 and 2019, respectively. Total expense related to the stock options issued was $42,151 and $193,955 for the six months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, all outstanding options were fully vested and exercisable.

 18

NOTE 11 – RELATED PARTY TRANSACTIONS

The relationship and the nature of related party transactions are summarized as follow:

Name of Related Party	Relationship to the Company	Nature of Transactions
Ford Glory International Limited (“FGIL”)	Affiliate, subsidiary of Ford Glory Holdings (“FGH”), which is 49% indirectly owned by the Company’s President, Chief Executive Officer and Chairman, and a significant stockholder	Operating Lease
Yukwise Limited (“Yukwise”)	Wholly owned by the Company’s President, Chief Executive Officer, and Chairman, and a significant stockholder	Consulting Services
Multi-Glory Corporation Limited (“Multi-Glory”)	Wholly owned by a significant stockholder	Consulting Services
Jiangmen V-Apparel Manufacturing Limited	Affiliate, subsidiary of FGH	Operating Lease

a. Related party lease and purchases agreement

On October 3, 2018, Treasure Success and FGIL entered into a lease agreement, pursuant to which Treasure Success leases its office space in Hong Kong from FGIL for a monthly rent in the amount of HKD119,540 (approximately $15,253) and for a one-year term with an option to extend the term for an additional year at the same rent. On October 3, 2019, Treasure Success exercised the option to extend the lease for an additional year at the same rent.

On July 1, 2020, Jiangmen Treasure Success and Jiangmen V-Apparel Manufacturing Limited entered into a factory lease agreement, which was a replacement of a previous lease agreement between Treasure Success and Jiangmen V-Apparel Manufacturing Limited dated August 31, 2019, pursuant to which Treasure Success leases additional space for office and sample production purposes in Jiangmen, China from Jiangmen V-Apparel Manufacturing Limited for a monthly rent in the amount of CNY28,300 (approximately $4,000). The lease has a one-year term and may be renewed with a one-month notice. The rental amount will be reviewed by and negotiated between both parties according to the market rental rate annually.

On July 15, 2019, the Company, through Treasure Success, entered into an agreement to purchase office space together with certain parking spaces from FGIL for an aggregate purchase price of HKD63,000,000 (approximately $8.1 million). Pursuant to the agreement, Treasure Success paid an initial deposit of HKD6,300,000 (approximately $0.8 million) upon signing the agreement. On October 31, 2019, this agreement was terminated pursuant to its terms because the conditions precedent to closing under the agreement were not met. As a result of the termination, on November 7, 2019, FGIL repaid in full, without interest, the deposit Treasure Success paid at the time the agreement was signed.

b. Consulting agreements

On January 16, 2018, Treasure Success and Multi-Glory entered into a consulting agreement, pursuant to which Multi-Glory will provide high-level advisory, marketing, and sales services to the Company for $300,000 per annum. The agreement renews automatically for one-month terms. The agreement became effective as of January 1, 2018. Due to the COVID-19 pandemic, Multi-Glory’s compensation was temporarily reduced to $20,000 per month from May 2020 to August 2020. For the three months ended September 30, 2020 and 2019, total consulting fees under this agreement were $65,000 and $75,000, respectively. For the six months ended September 30, 2020 and 2019, total consulting fees under this agreement were $130,000 and $150,000, respectively.

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NOTE 11 – RELATED PARTY TRANSACTIONS (Continued)

b. Consulting agreements (Continued)

On January 12, 2018, Treasure Success and Yukwise entered into a consulting agreement, pursuant to which Mr. Choi will serve as Chief Executive Officer and provide high-level advisory and general management services for $300,000 per annum. The agreement renews automatically for one-month terms. This agreement became effective as of January 1, 2018. Due to the COVID-19 pandemic, Yukwise’s compensation was temporarily reduced to $20,000 per month from May 2020 to August 2020. For the three months ended September 30, 2020 and 2019, total advisory and management expenses under this agreement were $65,000 and $75,000, respectively. For the six months ended September 30, 2020 and 2019, total advisory and management expenses under this agreement were $130,000 and $150,000, respectively.

c. Personal Guarantees

Borrowings under the HSBC Credit Facilities (as defined below) were previously secured by the personal guarantees of Mr. Choi and Mr. Ng Tsze Lun (“Mr. Ng”). These guarantees were released as of August 12, 2019. (See “Note 12—Credit Facilities”).

NOTE 12 – CREDIT FACILITIES

Pursuant to a letter agreement dated May 29, 2017, Treasure Success entered into an $8,000,000 import credit facility with Hong Kong and Shanghai Banking Corporation (“HSBC”) (the “2017 Facility Letter”), which was first amended pursuant to a letter agreement between HSBC, Treasure Success, and Jerash Garments dated June 19, 2018 (the “2018 Facility Letter”), further amended pursuant to a letter agreement dated August 12, 2019 (the “2019 Facility Letter”), and further amended pursuant to a letter agreement dated July 3, 2020 (the “2020 Facility Letter,” and together with the 2017 Facility Letter, 2018 Facility Letter, and 2019 Facility Letter, the “HSBC Facility”). The 2020 Facility Letter extends the term of the HSBC Facility indefinitely. Pursuant to the HSBC Facility, the Company has a total credit limit of $11,000,000.

In addition, on June 5, 2017, Treasure Success entered into an Offer Letter - Invoice Discounting/Factoring Agreement, and on August 21, 2017, Treasure Success entered into an Invoice Discounting/Factoring Agreement (together, the “2017 Factoring Agreement”) with HSBC for certain debt purchase services related to the Company’s accounts receivable. On June 14, 2018, Treasure Success and Jerash Garments entered into another Offer Letter-Invoice Discounting/Factoring Agreement with HSBC, which amended the 2017 Factoring Agreement (the “2018 Factoring Agreement, and together with the 2017 Factoring Agreement, the “HSBC Factoring Agreement,” and together with the HSBC Facility, the “HSBC Credit Facilities”). Pursuant to the HSBC Factoring Agreement, HSBC offered to provide Treasure Success with a $12,000,000 factoring facility for certain debt purchase services related to Treasure Success’s accounts receivable.

The HSBC Credit Facilities are guaranteed by Jerash Holdings, Jerash Garments, and Treasure Success. In addition, the HSBC Credit Facilities required cash and other investment security collateral of $3,000,000 and were secured by the personal guarantees of Mr. Choi and Mr. Ng. As of January 22, 2019, the security collateral of $3,000,000 had been released. HSBC also released the personal guarantees of Mr. Choi and Mr. Ng on August 12, 2019. The HSBC Credit Facilities provide that drawings under the HSBC Credit Facilities are charged interest at the Hong Kong Interbank Offered Rate plus 1.5% for drawings in HKD, and the London Interbank Offered Rate plus 1.5% for drawings in other currencies. In addition, the HSBC Credit Facilities also contain certain service charges and other commissions and fees.

Under the HSBC Factoring Agreement, HSBC also provides credit protection and debt services related to each of the Company’s preapproved customers. For any approved debts or collections assigned to HSBC, HSBC charges a flat fee of 0.35% on the face value of the invoice for such debt or collection. The Company may assign debtor payments that are to be paid to HSBC within 90 days, defined as the maximum terms of payment. The Company may receive advances on invoices that are due within 30 days of the delivery of its goods, defined as the maximum invoicing period.

The HSBC Credit Facilities are subject to review at any time, and HSBC has discretion on whether to renew the HSBC Facility. Either party may terminate the HSBC Factoring Agreement subject to a 30-day notice period.

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NOTE 12 – CREDIT FACILITIES (Continued)

As of September 30, 2020 and March 31, 2020, the Company had made $932,152 and $235 in withdrawals, under the HSBC Credit Facilities, which are due within 120 days of each borrowing date or upon demand by HSBC. As of September 30, 2020, $932,152 was outstanding under the HSBC Facility. As of March 31, 2020, $235 was outstanding under the HSBC Factoring Agreement.

On January 31, 2019, Standard Chartered Bank (Hong Kong) Limited (“SCBHK”) offered to provide an import facility of up to $3.0 million to Treasure Success pursuant to a facility letter dated June 15, 2018. Pursuant to the agreement, SCBHK agreed to finance import invoice financing and pre-shipment financing of export orders up to an aggregate of $3.0 million. The SCBHK facility bears interest at 1.3% per annum over SCBHK’s cost of funds. As of September 30, 2020 and March 31, 2020, the Company had no outstanding amount, respectively, in import invoice financing under the SCBHK facility.

NOTE 13 – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended September 30, 2020 and 2019. As of September 30, 2020, 1,453,910 warrants and stock options were issued and outstanding. For the three and six months ended September 30, 2020, 1,403,910 warrants and stock options were excluded from the EPS calculation as containing anti-dilution provisions. For the three and six months ended September 30, 2019, 57,200 warrants were excluded from the EPS calculation as containing anti-dilution provisions. 

	Three Months Ended September 30, (in $000s except share and per share information)				Six Months Ended September 30, (in $000s except share and per share information)
	2020		2019		2020		2019
Numerator:
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$	2,560	$	3,593	$	3,374	$	5,142
Denominator:
Denominator for basic earnings per share (weighted-average shares)		11,325,000		11,325,000		11,325,000		11,325,000
Dilutive securities – unexercised warrants and options		4,953		182,071		5,081		171,803
Denominator for diluted earnings per share (adjusted weighted-average shares)		11,329,953		11,507,071		11,330,081		11,496,803
Basic earnings per share	$	0.23	$	0.32	$	0.30	$	0.45
Diluted earnings per share	$	0.23	$	0.31	$	0.30	$	0.45

NOTE 14 – SEGMENT REPORTING

ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of the Company’s products. The Company’s major product is outerwear. For the three months ended September 30, 2020 and 2019, outerwear accounted for approximately 87.5% and 94.8% of the Company’s total revenue, respectively. For the six months ended September 30, 2020 and 2019, outerwear accounted for approximately 89.9% and 95.5% of the Company’s total revenue, respectively. Based on management’s assessment, the Company has determined that it has only one operating segment as defined by ASC 280.

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NOTE 14 – SEGMENT REPORTING (Continued)

The following table summarizes sales by geographic areas for the three months ended September 30, 2020 and 2019, respectively.

	For the three months ended September 30,
	2020		2019
United States	$	23,411,339	$	29,352,998
Jordan		2,302,615		1,094,707
Other		1,372,364		163,414
Total	$	27,086,318	$	30,611,119

The following table summarizes sales by geographic areas for the six months ended September 30, 2020 and 2019, respectively.

	For the six months ended September 30,
	2020		2019
United States	$	40,992,512	$	51,393,943
Jordan		3,428,197		1,581,087
Other		1,372,364		163,414
Total	$	45,793,073	$	53,138,444

99.9% of long-lived assets were located in Jordan as of September 30, 2020.

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Commitments

On August 28, 2019, Jiangmen Treasure Success, was incorporated under the laws of the People’s Republic of China in Jiangmen City, Guangdong Province, China, with a total registered capital of HKD3 million (approximately $385,000). The Company’s subsidiary, Treasure Success, is required to contribute HKD3 million (approximately $385,000) as paid-in capital in exchange for 100% ownership interest in Jiangmen Treasure Success. As of September 30, 2020, Treasure Success had fully made its capital contribution.

Contingencies

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would not have a material adverse impact on the Company’s consolidated financial position, results of operations, and cash flows.

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NOTE 16 – INCOME TAX 

Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash the First, and Victory Apparel are subject to the regulations of the Income Tax Department in Jordan. The corporate income tax rate is 14% for the industrial sector. In accordance with the Investment Encouragement Law, Jerash Garments’ export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing on the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, Jordanian government has changed some features of Jerash Garments and its subsidiaries area to a Development Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE began paying corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020, that rate increased to 14% plus a 1% social contribution.

On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Act”) was enacted. The Tax Act imposed tax on previously untaxed accumulated earnings and profits (“E&P”) of foreign subsidiaries (the “Toll Charge”). The Toll Charge is based in part of the amount of E&P held in cash and other specific assets as of December 31, 2017. The Toll Charge can be paid over an eight-year period, starting in 2018, and will not accrue interest. Additionally, under the provisions of the Tax Act, for taxable years beginning after December 31, 2017, the foreign earnings of Jerash Garments and its subsidiaries are subject to U.S. taxation at the Jerash Holdings level under the new Global Intangible Low-Taxed Income (“GILTI”) regime.

NOTE 17 – SUBSEQUENT EVENTS

On November 2, 2020, the Board of Directors approved the payments of a dividend of $0.05 per share payable on November 23, 2020 to stockholders of record as of November 16, 2020.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements.” All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue, or other financial items; any statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “plan,” “project,” or “anticipate,” and other similar words. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in the forward-looking statements include those factors set forth in the “Risk Factors” section included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020 and in subsequent reports that we file with the Securities and Exchange Commission (the “SEC”).

Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed in this Quarterly Report. We do not intend, and undertake no obligation, to update any forward-looking statement, except as required by law.

The information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes included in this Quarterly Report, and the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2020, filed with the SEC on June 29, 2020. References to fiscal 2021 and fiscal 2020 in this Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to our fiscal year ending March 31, 2021, and fiscal year ended March 31, 2020, respectively.

Impact of COVID-19 on our business

Collectability of receivables. We had accounts receivable of $19.9 million as of September 30, 2020, out of which $12.1 million had been received through November 10, 2020. There was no overdue account receivable as of September 30, 2020.

Inventory. We had inventory of $10.3 million as of September 30, 2020, substantially for orders scheduled to be shipped within fiscal 2021.

Investments. We acquired two pieces of land in fiscal 2020 for the construction of dormitory and production facilities. Due to the COVID-19 outbreak, management previously decided to hold off the construction to wait for a clearer picture on customer demand. As customer orders recovered to a satisfactory level, management has decided to resume the preparation work for the dormitory construction. Management is still reviewing the construction plan for the production facilities.

Revenue. For the quarter ended September 30, 2020, our sales were $27.1 million, which was over 88% of that of the same period in fiscal 2020. This quarterly percentage was an improvement from 83% of first quarter in fiscal 2021. We are continuing to proactively communicate with our existing customers to reconfirm their orders and shipment schedules for the second half of fiscal 2021. We also managed to start business with some new customers. However, the above is subject to the progress of reopening of economies in the U.S. and the EU that would have significant impact on both order fulfilment and delivery schedules. We have started our personal protective equipment shipments in this quarter that helped both our product and customer diversification.

Liquidity/Going Concern. As of September 30, 2020, we had approximately $28.1 million of cash and cash equivalent and net current assets of approximately $50.9 million with a current ratio of 5.4 to 1. In addition, we had banking facilities with aggregate limits of $26 million with approximately $932,000 outstanding as of September 30, 2020. Given the above, we believe that we will have sufficient financial resources to maintain as a going concern in fiscal 2021.

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Results of Operations

Three months ended September 30, 2020 and September 30, 2019

The following table summarizes the results of our operations during the three-month periods ended September 30, 2020 and 2019, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

(All amounts, other than percentages, in thousands of U.S. dollars)

	Three Months Ended September 30, 2020					Three Months Ended September 30, 2019						Period over Period Increase (Decrease)
Statement of Income Data:	Amount		As % of Sales			Amount			As % of Sales			Amount			%
Revenue	$	27,086		100	%	$	30,611			100	%	$	(3,525	)		(12	)%
Cost of goods sold		21,204		78	%		23,309			76	%		(2,105	)		(9	)%
Gross profit		5,882		22	%		7,302			24	%		(1,420	)		(19	)%
Selling, general and administrative expenses		2,853		11	%		2,920			10	%		(67	)		(2	)%
Stock-based compensation expenses		-		0	%		194			0	%		(194	)		(100	)%
Other income (expense), net		63		0	%		(5	)		0	%		68			1,360	%
Net income before taxation	$	3,092		11	%	$	4,183			14	%	$	(1,091	)		(26	)%
Taxation		532		2	%		595			2	%		(63	)		(11	)%
Net income	$	2,560		9	%	$	3,588			12	%	$	(1,028	)		(29	)%

Revenue. Revenue decreased by approximately $3.5 million, or 12%, to $27.1 million, for the three months ended September 30, 2020, from approximately $30.6 million for the same period in fiscal 2020. The decrease was mainly due to a decrease in shipments to one of our major customers in the U.S. during this quarter.

The following table outlines the dollar amount and percentage of total sales to our customers for the three months ended September 30, 2020.

(All amounts, other than percentages, in thousands of U.S. dollars)

	Three Months Ended September 30, 2020
	Sales
	Amount		%
VF Corporation(1)	$	20,071		74	%
New Balance		1,322		5	%
ARK Garments		1,208		5	%
Onset Time Limited		1,165		4	%
G-III		907		3	%
United Creations LLC		856		3	%
Others		1,557		6	%
Total	$	27,086		100	%

⁽¹⁾ Most of our products are sold under The North Face brand that is owned by VF Corporation.

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Revenue by Geographic Area

(All amounts, other than percentages, in thousands of U.S. dollars)

	Three Months Ended September 30, 2020					Three Months Ended September 30, 2019					Period over Period Increase (decrease)
Region	Amount		%			Amount		%			Amount			%
United States	$	23,411		86	%	$	29,353		96	%	$	(5,942	)		(20	)%
Jordan		2,303		9	%		1,095		3	%		1,208			110	%
Others		1,372		5	%		163		1	%		1,209			742	%
Total	$	27,086		100	%	$	30,611		100	%	$	(3,525	)		(12	)%

Since January 2010, all apparel manufactured in Jordan can be exported to the U.S. without customs duty being imposed, pursuant to the United States-Jordan Free Trade Agreement entered into in December 2001. This free trade agreement allowed us to expand our garment export business in the U.S.

The decrease of approximately 20% in sales to the U.S. during the three months ended September 30, 2020 was mainly attributable to the decrease in sales to one of our major customers in the U.S.

During the three months ended September 30, 2020, sales to Jordan and other locations, such as Hong Kong and China, increased by 110% and 742%, respectively, as we managed to secure more local orders to compensate for the decrease in orders from overseas customers.

Cost of goods sold. Following the decrease in sales revenue, our cost of goods sold decreased by approximately $2.1 million, or 9%, to approximately $21.2 million for the three months ended September 30, 2020, compared to approximately $23.3 million for the same period in fiscal 2020. As a percentage of revenue, the cost of goods sold increased by approximately 2% points to 78% for the three months ended September 30, 2020, compared to 76% for the same period in fiscal 2020. The increase in cost of goods sold as a percentage of revenue was primarily attributable to the higher proportion of local orders, which typically have lower margin. For the three months ended September 30, 2020, we purchased 20% of our garments from one major supplier, Agencia Comercial Wai Yuen (“Wai Yuen”). For the three months ended September 30, 2019, we purchased 18% and 13% of our raw materials from two major suppliers, Duck San Enterprise Co., Ltd (“Duck San”) and Universal Star Corporation (“Universal Star”), respectively. We have been actively seeking cooperation with various suppliers to diversify our supplier chain and to control the cost of raw materials.

Gross profit margin. Gross profit margin was approximately 22% for the three months ended September 30, 2020, which decreased by 2% points from 24% for the same period in fiscal 2020. The decrease in gross profit margin was primarily driven by the increase in local orders, which typically have lower margin.

Selling, general, and administrative expenses. Selling, general, and administrative expenses slightly decreased by approximately 2% from approximately $2,920,000 for the three months ended September 30, 2019, to approximately $2,853,000 for the three months ended September 30, 2020. The decrease was primarily attributable to lower travelling expenses due to the restriction in international travels amid the COVID-19 pandemic.

Other income/expense, net. Other income, net was approximately $63,000 for the three months ended September 30, 2020, as compared to other expense, net of approximately $5,000 for the same period in fiscal 2020. The increase in income was primarily due to a realized gain from short-term investment.

Net income before taxation. Net income before taxation for the three months ended September 30, 2020, was approximately $3.1 million compared to net income before taxation of approximately $4.2 million for the same period in fiscal 2020. The decrease was mainly attributable to the lower sales and gross margin discussed above.

Taxation. Income tax expense for the three months ended September 30, 2020 was approximately $532,000 compared to income tax expense of approximately $595,000 for the same period in fiscal 2020. The effective tax rate was 17.2% for the three months ended September 30, 2020, and 14.2% for the three months ended September 30, 2019, respectively. The increase in the effective tax rate mainly resulted from a 4% increase in the local tax rate to 14% plus a 1% social contribution.

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Net income. Net income for the three months ended September 30, 2020 was approximately $2.6 million compared to net income of approximately $3.6 million for the same period in fiscal 2020. The decrease was mainly attributable to lower sales and gross margin compensated by reduction in selling, administrative, and general expenses discussed above.

Six months ended September 30, 2020 and September 30, 2019

The following table summarizes the results of our operations during the six-month periods ended September 30, 2020 and 2019, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

(All amounts, other than percentages, in thousands of U.S. dollars)

	Six Months Ended September 30, 2020					Six Months Ended September 30, 2019						Period over Period Increase (Decrease)
Statement of Income Data:	Amount		As % of Sales			Amount			As % of Sales			Amount			%
Revenue	$	45,793		100	%	$	53,138			100	%	$	(7,345	)		(14	)%
Cost of goods sold		36,859		80	%		41,323			78	%		(4,464	)		(11	)%
Gross profit		8,934		20	%		11,815			22	%		(2,881	)		(24	)%
Selling, general and administrative expenses		4,704		11	%		5,544			11	%		(840	)		(15	)%
Stock-based compensation expenses		42		0	%		194			0	%		(152	)		(78	)%
Other income (expense), net		60		0	%		(9	)		0	%		69			767	%
Net income before taxation	$	4,248		9	%	$	6,068			11	%	$	(1,820	)		(30	)%
Taxation		874		2	%		930			2	%		(56	)		(6	)%
Net income	$	3,374		7	%	$	5,138			9	%	$	(1,764	)		(34	)%

Revenue. Revenue decreased by approximately $7.3 million, or 14%, to $45.8 million, for the six months ended September 30, 2020, from approximately $53.1 million for the same period in fiscal 2020. The decrease was mainly because lower sales to one of our customers in the U.S. during the six-month period.

The following table outlines the dollar amount and percentage of total sales to our customers for the six months ended September 30, 2020.

(All amounts, other than percentages, in thousands of U.S. dollars)

	Six Months Ended September 30, 2020
	Sales
	Amount		%
VF Corporation(1)	$	34,619		76	%
New Balance		2,772		6	%
United Creations LLC		1,617		4	%
ARK Garments		1,490		3	%
G-III		1,278		3	%
Onset Time Limited		1,165		2	%
Dick’s Sporting Goods		1,092		2	%
Others		1,760		4	%
Total	$	45,793		100	%

⁽¹⁾ Most of our products are sold under The North Face brand that is owned by VF Corporation.

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Revenue by Geographic Area

(All amounts, other than percentages, in thousands of U.S. dollars)

	Six Months Ended September 30, 2020					Six Months Ended September 30, 2019					Period over Period Increase (decrease)
Region	Amount		%			Amount		%			Amount			%
United States	$	40,993		90	%	$	51,394		97	%	$	(10,401	)		(20	)%
Jordan		3,428		7	%		1,581		3	%		1,847			117	%
Others		1,372		3	%		163		0	%		1,209			742	%
Total	$	45,793		100	%	$	53,138		100	%	$	(7,345	)		(14	)%

Since January 2010, all apparel manufactured in Jordan can be exported to the U.S. without customs duty being imposed, pursuant to the United States-Jordan Free Trade Agreement entered into in December 2001. This free trade agreement allowed us to expand our garment export business in the U.S.

The decrease of approximately 20% in sales to the U.S. during the six months ended September 30, 2020 was mainly attributable to the decrease in sales to one of our major customers in the U.S.

During the six months ended September 30, 2020, sales to Jordan and other locations, such as Hong Kong and China, increased by 117% and 742%, respectively, as we managed to secure more local orders to compensate for the decrease in orders from overseas customers.

Cost of goods sold. Following the decrease in sales revenue, our cost of goods sold decreased by approximately $4.5 million, or 11%, to approximately $36.9 million for the six months ended September 30, 2020, compared to approximately $41.3 million for the same period in fiscal 2020. As a percentage of revenue, the cost of goods sold increased by approximately 2% points to 80% for the six months ended September 30, 2020, compared to 78% for the same period in fiscal 2020. The increase in cost of goods sold as a percentage of revenue was primarily attributable to the higher proportion of local orders, which typically have lower margin. For the six months ended September 30, 2020, we purchased 12% of our garments from one major supplier, Wai Yuen. For the six months ended September 30, 2019, we purchased approximately 24% and 11% of our raw materials from two major suppliers, Duck San and Universal Star, respectively. We have been actively seeking cooperation with various suppliers to diversify our supplier chain and to control the cost of raw materials.

Gross profit margin. Gross profit margin was approximately 20% for the six months ended September 30, 2020, which decreased by 2% points from 22% for the same period in fiscal 2020. The decrease in gross profit margin was primarily driven by the higher proportion of local orders, which typically have lower margin.

Selling, general, and administrative expenses. Selling, general, and administrative expenses decreased by approximately 15% from approximately $5.5 million for the six months ended September 30, 2019, to approximately $4.7 million for the six months ended September 30, 2020. The decrease was primarily due to lower repair and maintenance and recruitment expenses this year.

Other income/expense, net. Other income, net was approximately $60,000 for the six months ended September 30, 2020, as compared to other expense, net of approximately $9,000 for the same period in fiscal 2020. The increase in net other income was primarily due to a realized gain from short-term investment.

Net income before taxation. Net income before taxation for the six months ended September 30, 2020 was $4.2 million compared to net income before taxation of approximately $6.1 million for the same period in fiscal 2020. The decrease was mainly attributable to the lower sales and gross margin discussed above.

Taxation. Income tax expense for the six months ended September 30, 2020, was approximately $874,000 compared to income tax expense of approximately $930,000 for the same period in fiscal 2020. The effective tax rate was 20.6% for the six months ended September 30, 2020, and 15.3% for the six months ended September 30, 2019, respectively. The increase in the effective tax rate mainly resulted from a 4% increase in the local tax rate to 14% plus a 1% social contribution.

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Net income. Net income for the six months ended September 30, 2020, was approximately $3.4 million compared to net income of approximately $5.1 million for the same period in fiscal 2020. The decrease was mainly attributable to lower sales and gross margin compensated by reduction in selling, administrative, and general expenses discussed above.

Liquidity and Capital Resources

We are a holding company incorporated in the U.S. As a holding company, we rely on dividends and other distributions on equity from our Jordanian subsidiaries to satisfy our liquidity requirements. Current Jordanian regulations permit our Jordanian subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Jordanian accounting standards and regulations. We have relied on direct payments of expenses by our subsidiaries and variable interest entity (“VIE”) (which generate all of our revenue) to meet our obligations to date. To the extent payments are due in US$, we have occasionally paid such amounts in JOD to an entity controlled by our management capable of paying such amounts in US$. Such transactions have been made at prevailing exchange rates and have resulted in immaterial losses or gains on currency exchange.

As of September 30, 2020, we had cash of approximately $27.3 million and restricted cash of approximately $786,000 compared to cash of approximately $26.1 million and restricted cash of approximately $786,000 at March 31, 2020. The increase in cash is mainly a result of net cash generated from operating activities.

Our current assets as of September 30, 2020 were approximately $62.4 million and our current liabilities were approximately $11.5 million, which resulted in a ratio of approximately 5.4:1. As of March 31, 2020, our current assets were approximately $59.0 million and our current liabilities were $10.9 million, resulting in a ratio of 5.4:1.

The primary driver in the increase in current assets was an increase in accounts receivable following the higher sales in the quarter with more shipments concentrated in September 2020.

The primary driver in the increase in current liabilities was an increase in trade credits of approximately $932,000 per negotiated payment terms with certain suppliers.

Total equity as of September 30, 2020 was approximately $57.0 million compared to $54.8 million as of March 31, 2020.

We had net working capital of $50.9 million and $48.1 million as of September 30, 2020, and March 31, 2020, respectively. Based on our current operating plan, we believe that cash on hand and cash generated from operation will be sufficient to support our working capital needs for the next 12 months from the date this document is filed.

We have funded our working capital needs from our operations. Our working capital requirements are influenced by the level of our operations, the numerical and dollar volume of our sales contracts, the progress of execution on our customer contracts, and the timing of accounts receivable collections.

Credit Facilities

HSBC Facility

On May 29, 2017, our wholly owned subsidiary, Treasure Success International Limited (“Treasure Success”), entered into a facility letter (“2017 Facility Letter”) with Hong Kong and Shanghai Banking Corporation (“HSBC”) to provide credit to us, which was later amended by an offer letter between HSBC, Treasure Success, and Jerash Garments and Fashions Manufacturing Company Limited (“Jerash Garments”) dated June 19, 2018 (“2018 Facility Letter”), and further amended pursuant to a letter agreement dated August 12, 2019 (the “2019 Facility Letter”), which was amended pursuant to a letter agreement dated July 3, 2020 (the “2020 Facility Letter,” and together with the 2017 Facility Letter, the 2018 Facility Letter, and the 2019 Facility Letter, the “HSBC Facility”). The 2020 Facility Letter extends the term of the HSBC Facility indefinitely. Pursuant to the HSBC Facility, we have a total credit limit of $11,000,000.

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The HSBC Facility currently provides us with various credit facilities for importing and settling payment for goods purchased from our suppliers. The available credit facilities as described in greater detail below includes an import facility, import facilities with loan against import, trust receipts, clean import loan, and advances to us against purchase orders. HSBC charges an interest rate of 1.5% per annum over LIBOR or HIBOR, as applicable, for credit related to the release of goods immediately on our documentary credit. LIBOR was 0.22% and HIBOR was 0.35% at November 10, 2020. HSBC charges a commission of: i) 0.25% for the first $50,000, ii) 0.125% for the balance in excess of $50,000 and up to $100,000, and iii) 0.0625% for balance in excess of $100,000 and an interest rate of 1.5% per annum over LIBOR or HIBOR, as applicable, for credit related to trust receipts whereby HSBC has title to the goods or merchandise released immediately to us. HSBC has approved certain of our suppliers that are eligible to use clean import loans. HSBC charges a commission of: i) 0.25% for the first $50,000, ii) 0.125% for the balance in excess of $50,000 and up to $100,000, and iii) 0.0625% for balance in excess of $100,000 and an interest of 1.5% per annum over LIBOR or HIBOR, as applicable, for credit services related to clean import loans or release of the goods or merchandise based on evidence of delivery or invoice. HSBC will advance up to 70% of the purchase order value in our favor. HSBC charges a handling fee of 0.25% and an interest rate of 1.5% per annum over LIBOR or HIBOR, as applicable, for credit services related to advances. Previously, the HSBC Facility was secured by collateral provided by us, Jerash Garments, Treasure Success, and the personal guarantees of Mr. Choi Lin Hung, our Chief Executive Officer, and Mr. Ng Tsze Lun, one of our significant stockholders. The personal guarantees were released by HSBC in August 2019. Jerash Garments is also required to maintain an account at HSBC for receiving payments from VF Sourcing Asia S.A.R.L. and its related companies.

As of September 30, 2020, $932,152 were outstanding under the HSBC Facility. Borrowings under the HSBC Facility are due upon demand by HSBC or within 120 days of each borrowing date.

HSBC Factoring Agreement

On June 5, 2017, Treasure Success entered into an Offer Letter - Invoice Discounting/Factoring Agreement, and on August 21, 2017, Treasure Success entered into the Invoice Discounting/Factoring Agreement (together, the “2017 Factoring Agreement”) with HSBC for certain debt purchase services related to our accounts receivable. On June 14, 2018, Treasure Success and Jerash Garments entered into another Offer Letter - Invoice Discounting/Factoring Agreement with HSBC (the “2018 Factoring Agreement, and together with the 2017 Factoring Agreement, the “HSBC Factoring Agreement”), which amended the 2017 Factoring Agreement. The HSBC Factoring Agreement was effective through May 1, 2019. We anticipate amending the HSBC Factoring Agreement to extend the term of the facility with substantially similar terms and that we will continue to be able to use the borrowings under the HSBC Factoring Agreement through any negotiation period. Under the current terms of the HSBC Factoring Agreement, we may borrow up to $12,000,000. In exchange for advances on eligible invoices from HSBC for our approved customers, HSBC charges a fee to advance such payments at a discounting charge of 1.5% per annum over 2-month LIBOR or HIBOR, as applicable. Such fee accrues on a daily basis on the amount of funds in use. HSBC has final determination of the percentage amount available for prepayment from each of our approved customers. We may not prepay an amount from a customer in excess of 85% of the funds available for borrowing. As of September 30, 2020, there were no outstanding amounts under the HSBC Factoring Agreement. HSBC also provides credit protection and debt services related to each of our preapproved customers. For any approved debts or collections assigned to HSBC, HSBC charges a flat fee of 0.35% on the face value of the invoice for such debt or collection. We may assign debtor payments that are to be paid to HSBC within 90 days, defined as the maximum terms of payment. We may receive advances on invoices that are due within 30 days of the delivery of our goods, defined as the maximum invoicing period. The advances made by HSBC were secured by collateral provided by us, Jerash Garments, and Treasure Success, and the personal guarantees of Mr. Choi and Mr. Ng. If we fail to pay any sum due to HSBC, HSBC may charge a default interest at the rate of 8.5% per annum over the best lending rate quoted by HSBC on such defaulted amount. In addition, to secure the Factoring Agreement, we had granted HSBC a charge of $3,000,000 over our deposits. Following the effectiveness of the 2018 Factoring Agreement, the security collateral of $3,000,000 was released as of January 22, 2019. HSBC released the personal guarantees of Mr. Choi and Mr. Ng in August 2019. The HSBC Factoring Agreement is subject to the review by HSBC at any time and HSBC has discretion on whether to renew the HSBC Factoring Agreement. Either party may terminate the agreement subject to a 30-day notice period.

SCBHK Facility Letter

Pursuant to the Standard Chartered Hong Kong (“SCBHK”) facility letter dated June 15, 2018, and issued to Treasure Success by SCBHK, on January 31, 2019, SCBHK offered to provide an import facility of up to $3.0 million to Treasure Success. The SCBHK facility covers import invoice financing and pre-shipment financing under export orders with a combined limit of $3 million. Borrowings under the SCBHK facility are due within 90 days of each invoice or financing date. SCBHK charges interest at 1.3% per annum over SCBHK’s cost of funds. In consideration for arranging the SCBHK facility, Treasure Success paid SCBHK HKD50,000. As of September 30, 2020, there were no outstanding amounts under the SCBHK facility.

 30

Six months ended September 30, 2020 and 2019

The following table sets forth a summary of our cash flows for the periods indicated:

(All amounts in thousands of U.S. dollars)

	Six months ended September 30,
	2020			2019
Net cash provided by operating activities	$	1,713		$	1,366
Net cash used in investing activities		(309	)		(3,053	)
Net cash used in financing activities		(200	)		(1,765	)
Effect of exchange rate changes on cash		-			13
Net increase (decrease) in cash		1,204			(3,439	)
Cash, beginning of six-month period		26,917			27,834
Cash, end of six-month period	$	28,121		$	24,395

Operating Activities

Net cash provided by operating activities was approximately $1.7 million for the six months ended September 30, 2020, compared to cash provided by operating activities of approximately $1.4 million for the same period in fiscal 2020. The increase in net cash provided by operating activities was primarily attributable to the following factors:

● a decrease in inventory of $12.3 million in the six months ended September 30, 2020 compared to a decrease of $8.0 million in the same period in fiscal 2020;

● an increase in accounts receivable of $14.6 million in the six months ended September 30, 2020 compared to an increase of $10.3 million in the same period in fiscal 2020;

● an increase in income tax payable of approximately $550,000 in the six months ended September 30, 2020 compared to a decrease of $554,000 in the same period in fiscal 2020;

● a decrease of prepaid expenses and other current assets of $0.7 million in the six months ended September 30, 2020 compared to an increase of $1.3 million in the same period in fiscal 2020; and

● a decrease of net income to $3.4 million in the six months ended September 30, 2020 from net income of $5.1 million in the same period in fiscal 2020.

Investing Activities

Net cash used in investing activities was approximately $309,000 for the six months ended September 30, 2020, compared to approximately $3.1 million in the same period in fiscal 2020. The net cash used in investing activities in the six-month period ended September 30, 2020, was mainly used in acquisition of plant and machineries.

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Financing Activities

Net cash used in financing activities was approximately $201,000 for the six months ended September 30, 2020, for dividend payments of approximately $1.1 million with proceeds of short-term loans of approximately $932,000 in the six-month period. There was a net cash outflow of $1.8 million in the same period in fiscal 2020 resulting from dividend payments and net repayment of short-term loans.

Statutory Reserves

In accordance with the Corporate Laws in Jordan, our subsidiaries and VIE in Jordan are required to make appropriations to certain reserve funds, based on net income determined in accordance with generally accepted accounting principles in 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. This reserve is not available for dividend distribution. In addition, PRC companies are required to set aside at least 10% of their after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of their registered capital. The statutory reserves are not distributable in the form of cash dividends to us and can be used to make up cumulative prior year losses. As our subsidiaries and VIE had already reserved the maximum required by law, they did not reserve any additional amounts during the six months ended September 30, 2020 and 2019.

The following table provides the amount of our statutory reserves, the amount of restricted net assets, consolidated net assets, and the amount of restricted net assets as a percentage of consolidated net assets, as of September 30, 2020 and 2019.

(All amounts, other than percentages, in thousands of U.S. dollars)

	As of September 30,
	2020			2019
Statutory Reserves	$	213		$	213
Total Restricted Net Assets	$	213		$	213
Consolidated Net Assets	$	57,035		$	54,466
Restricted Net Assets as Percentage of Consolidated Net Assets		0.37	%		0.39	%

Total restricted net assets accounted for approximately 0.37% of our consolidated net assets as of September 30, 2020. As discussed above, our subsidiaries and VIE in Jordan are required to reserve 10% of net profits until the reserve is equal to 100% of the subsidiary’s share capital. Our subsidiaries and VIE have already reserved the maximum amount required. We believe the potential impact of such restricted net assets on our liquidity is limited.

Capital Expenditures

We had capital expenditures of approximately $428,000 and $3.1 million for the six months ended September 30, 2020 and 2019, respectively, including investment related to the Paramount acquisition in fiscal 2020. Additions in plant and machinery amounted to approximately $381,000 and approximately $1.2 million for the six months ended September 30, 2020 and 2019, respectively. Additions to leasehold improvements amounted to approximately $2,000 and $276,000 for the six months ended September 30, 2020 and 2019 respectively.

In 2015, we commenced a project to build a 4,800 square foot facility in the Tafilah Governorate of Jordan, which was initially intended to be used as a sewing workshop for Jerash Garments, but which we now intend to use as a dormitory. This dormitory is expected to be operational in fiscal 2022 and is expected to house workers for the 54,000 square foot workshop in Al-Hasa County. This project is expected to cost approximately $200,000 upon completion.

In 2018, we commenced another project to build a 54,000 square foot workshop in Al-Hasa County in the Tafilah Governorate of Jordan, which started operation in November 2019 with approximately 200 workers. Provided that we satisfy certain employment requirements over certain time periods, we do not anticipate incurring any significant costs for the project, which is being constructed in conjunction with the Jordanian Ministry of Labor and the Jordanian Education and Training Department. In the event we breach our agreement with these government agencies, we will have to pay such agencies JOD250,000 or approximately $353,000.

 32

On December 11, 2018, we entered into an agreement through Jerash Garments to acquire all of the stock of Paramount, an existing garment manufacturing business, in order to operate our fourth manufacturing facility in Al Tajamouat Industrial City in Amman, Jordan. We paid approximately $980,000 in aggregate as of the closing date of the transaction on June 18, 2019.

On August 7, 2019, we completed a transaction to acquire 12,340 square meters (approximately 3 acres) of land in Al Tajamouat Industrial City, Jordan, from a third party to construct a dormitory for our employees with aggregate purchase price JOD863,800 (approximately $1,218,303). Management has revised the plan to construct both dormitory and production facilities on the land in order to capture the increasing demand for our capacity. On February 6, 2020, we completed a transaction to acquire 4,516 square meters (approximately 48,608 square feet) of land in Al Tajamouat Industrial City, Jordan, from a third party to construct a dormitory for our employee with aggregate purchase price JOD313,501 (approximately $442,162).

Due to the ongoing COVID-19 outbreak, management previously decided to put on hold the construction project to retain financial resources to support our operations, and also to wait and see how the global economy and customer demand recover after the outbreak. As customer orders recovered to a satisfactory level, management has decided to restart the preparation work for the construction of the dormitory. Management is still reviewing the construction plan for the production facilities. We expect to pay approximately $5 million in capital expenditures to build the dormitory.

We project that there will be an aggregate of approximately $3 million of capital expenditures in both the fiscal years ending March 31, 2021 and 2022 for further enhancement of business and production capacity to meet expected future sales growth. We expect that our capital expenditures will increase in the future as our business continues to develop and expand. We have used cash generated from operations of our subsidiaries and VIE to fund our capital commitments in the past and anticipate using such funds to fund capital expenditure commitments in the future.

Off-balance Sheet Commitments and Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed to our own shares and classified as shareholders’ equity, or that are not reflected in our consolidated financial statements.

Critical Accounting Policies

We prepare our financial statements in conformity with accounting principles generally accepted by the United States of America (“U.S. GAAP”), 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. Although there were no material changes made to the accounting estimates and assumptions in the past three years, we continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe 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 believe that our accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates. Accordingly, the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations are summarized in “Note 2—Summary of Significant Accounting Policies” in the notes to our unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements

See “Note 3—Recent Accounting Pronouncements” in the notes to our unaudited condensed consolidated financial statements for a discussion of recent accounting pronouncements.

 33

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, we are not required to provide this information.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Exchange Act Rule 15d-15(e)) are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), based on their evaluation of our disclosure controls and procedures as of September 30, 2020, concluded that our disclosure controls and procedures were effective as of that date.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as the term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the quarter ended September 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 34

JERASH HOLDINGS (US), INC. 

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently involved in any material legal proceedings. From time-to-time we are, and we anticipate that we will be, involved in legal proceedings, claims, and litigation arising in the ordinary course of our business and otherwise. The ultimate costs to resolve any such matters could have a material adverse effect on our financial statements. We could be forced to incur material expenses with respect to these legal proceedings, and in the event there is an outcome in any that is adverse to us, our financial position and prospects could be harmed.

Item 1A. Risk Factors

As a smaller reporting company, we are not required to provide the information required by this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

 35

Item 6. Exhibits

The exhibits listed below are filed as part of this Quarterly Report on Form 10-Q.

Index to Exhibits

Exhibit		Incorporated by Reference (Unless Otherwise Indicated)
Number	Exhibit Title	Form	File	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation	S-1	333-222596	3.1	September 19, 2018
3.2	Amended and Restated Bylaws	8-K	001-38474	3.1	July 24, 2019
4.1	Specimen Certificate for Common Stock	S-1	333-218991	4.1	June 27, 2017
10.1	Factory Lease Agreement between Jiangmen Treasure Success and Jiangmen V-Apparel Manufacturing Limited dated July 1, 2020	10-Q	001-38474	10.4	August 13, 2020
10.2	Letter Agreement for Banking Facilities, dated July 3, 2020, by and between Hongkong and Shanghai Banking Corporation Limited, Treasure Success International Limited, and Jerash Garments and Fashions Manufacturing Company Limited	—	—	—	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
101.INS	XBRL Instance Document				Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Linkbase				Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase				Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase				Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase				Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase				Filed herewith

* 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-Q 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.

 36

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 12, 2020	Jerash Holdings (US), Inc.
	By:	/s/ Gilbert K. Lee
		Gilbert K. Lee
		Chief Financial Officer (Principal Financial Officer)

 37

EX-10.2

Exhibit 10.2

Commercial Banking

(CARM 200414)

CONFIDENTIAL Treasure Success International Limited / Jerash Garments and Fashions Manufacturing Company Limited 19/F Ford Glory Plaza 37-39 Wing Hong Street
Cheung Sha Wan	3 July 2020
Kowloon

Attn: Mr Samuel Choi

Dear Sir

BORROWER(S)
Treasure Success International Limited	[TSL]	[Customer No.*]
Jerash Garments and Fashions Manufacturing Company Limited	[JGL]	[Customer No.*]

BANKING Facility - facility letter dated 19 June 2018 and 12 August 2019, as amended or supplemented from time to time (the “Facility Letter”)

With reference to our recent discussions, we confirm that the Facility Letter will be amended as set out below. Save as amended by this letter, the terms of the Facility Letter and (if any) all related documents shall remain unchanged and continue in full force and effect. The Bank shall have an unrestricted discretion to cancel, reduce or suspend, or determine whether or not to permit drawings in relations to, the Faci1ity. The Facility is subject to review at any time, and also subject to the Bank’s overriding right of repayment on demand including the right to call for cash cover on demand for prospective and contingent liabilities.

In consideration of us continuing to make the facilities available to you, we will charge you an annual fee of HKD15,000.- and such amount shall be debited automatically from TSL and JGL’s account each in July each year after the date of the Facility Letter until the facilities have been cancelled and all sums due or to become due from you under the Facility Letter have been fully paid to the Bank.

Unless defined differently, a term defined in the Facility Letter has the same meaning in this letter.

The Hongkong and Shanghai Banking
Corporation Limited

HSBC Main Building, 1 Queen’s Road Central,
Hong Kong

Tel:  (852) 2822 1111

Web:   www.hsbc.com.hk

Incorporated in the Hong Kong SAR with limited liability

Registered at the Hong Kong Companies Registry No. 263876

Page 1 of 6

Treasure Success International Limited / Jerash Garments and Fashions Manufacturing Company Limited 3 July 2020

OTHER AMENDMENT(S)

The following changes shall be made to the Facility Letter.

Section of Change	New	Previously
Clause 12 under the Terms and Conditions For Facilities	Banking (Exposure Limits) Rules - exposures to connected parties The Banking (Exposure Limits) Rules (Cap. 155S) and the related regulations in Hong Kong have imposed on the Bank certain limitations on advances to persons related to HSBC Group. In accepting the Facility Letter, the Borrower(s) should, to the best of its (their) knowledge, advise the Bank whether it is in any way related or connected to the HSBC Group. In the absence of such advice, the Bank will assume that the Borrower(s) is not so related or connected. The Bank would also ask, that if the Borrower(s) becomes aware that it (they) becomes so related or connected in future, that the Borrower(s) immediately advises the Bank in writing. You may refer to the reference page for information on whether you may be considered as related or connected to the HSBC Group.	Section 83 of the Banking Ordinance Section 83 of the Banking Ordinance and the related regulations in Hong Kong have imposed on the Bank certain limitations on advances to persons related to HSBC Group. In accepting the Facility Letter, the Borrower(s) should, to the best of its (their) knowledge, advise the Bank whether it is in any way related or connected to the HSBC Group. In the absence of such advice, the Bank will assume that the Borrower(s) is not so related or connected. The Bank would also ask, that if the Borrower(s) become aware that it (they) becomes so related or connected in future, that the Borrower(s) immediately advises the Bank in writing. You may refer to the reference page for information on whether you may be considered as related or connected to the HSBC Group.

Page 2 of 6

Treasure Success International Limited /
Jerash Garments and Fashions Manufacturing Company Limited 3 July 2020

GOVERNING LAW

This letter shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region. No one other than the Bank and the Borrower(s) will have any right to enforce the terms of this letter.

ACCEPTANCE

Please arrange for the authorised signatories of TSL and JGL in accordance with the terms of the mandates given to the Bank, to sign and return the duplicate copy of this letter by 24 July 2020 to signify the Borrower(s)’s understanding and acceptance of the terms of this letter.

We have shared and discussed with you a risk disclosure document about the demise of or possible changes to certain interest rate benchmarks (such as LIBOR). By signing this letter, you acknowledge that you understand the implications and risks of the changes referred to in the risk disclosure document. We enclose a copy of the risk disclosure document again for your easy reference.

Yours faithfully

For and on behalf of

The Hongkong and Shanghai Banking Corporation Limited

/s/ Henry Ng

Henry Ng

Senior Vice President

jl/bbz

Encl

Page 3 of 6

Treasure Success International Limited /
Jerash Garments and Fashions Manufacturing Company Limited 3 July 2020

Acceptance and Confirmation

We, Treasure Success International Limited and Jerash Garments and Fashions Manufacturing Company Limited, confirm our acceptance of and agreement to all of the terms and conditions set out above.

For and on behalf of Treasure Success International Limited
Signature	/s/ Choi Lin Hung	Signature	/s/ Ng Tsze Lun
Name	Choi Lin Hung	Name	Ng Tsze Lun
Title	Director	Title	Director
Date	8 July, 2020	Date	8 July, 2020
For and on behalf of Jerash Garments and Fashions Manufacturing Company Limited
Signature	/s/ Choi Lin Hung	Signature	/s/ Ng Tsze Lun
Name	Choi Lin Hung	Name	Ng Tsze Lun
Title	Director	Title	Authorized Person
Date	8 July, 2020	Date	8 July, 2020

Page 4 of 6

Treasure Success International Limited /
Jerash Garments and Fashions Manufacturing Company Limited 3 July 2020

Reference Page

(This is for your reference only and are not intended to be contractual terms.

You may also access the Banking (Exposure Limits) Rules at

https.//www.elegislation.gov.hk/hk/cap155S)

The Borrower may be considered as related or connected to the HSBC Group if you/it are/is:

a) a director, employee, controller or minority shareholder controller, of a member of the HSBC Group;

b) a relative of a director, employee, controller or minority shareholder controller, of a member of the HSBC Group;

c) a firm, partnership or non-listed company in which a member of the HSBC Group or any of the following entities is interested as director, partner, manager or agent:

(i) a controller, minority shareholder controller or director of a member of the HSBC Group;

(ii) a relative of a controller, minority shareholder controller or director of a member of the HSBC Group; or

d) a natural person, firm, partnership or non-listed company to whom a member of the HSBC Group has provided a financial facility if any of the following entities is a guarantor of the facility:

(i) a controller, minority shareholder controller or director of a member of the HSBC Group;

(ii) a relative of a controller, minority shareholder controller or director of a member of the HSBC Group.

Relevant definitions

1) A person has “control” if such person is:

(A) an indirect controller, that is, in relation to a company, any person in accordance with whose directions or instructions the directors of the company or of another company of which it is a subsidiary are accustomed to act, or

(B) a majority shareholder controller, that is, in relation to a company, any person who, either alone or with any associate or associates, is entitled to exercise, or control the exercise of, more than 50% of the voting power at any general meeting of the company or of another company of which it is a subsidiary,

and “controller” means either an “indirect controller” or a “majority shareholder controller”.

2) “employee” includes permanent full time, permanent part-time, fixed-term full time, fixed-term part-time staff and international assignees.

3) “HSBC Group” means HSBC Holdings plc, its subsidiaries, related bodies corporate, associated entities and undertakings and any of their branches and member or office of the HSBC Group shall be construed accordingly.

Page 5 of 6

Treasure Success International Limited /
Jerash Garments and Fashions Manufacturing Company Limited 3 July 2020

4) “minority shareholder controller” in relation to a company, means any person who, either alone or with any associate or associates, is entitled to exercise, or control the exercise of, 10% or more, but not more than 50%, of the voting power at any general meeting of the company or of another company of which it is a subsidiary.

5) “relative” in relation to a natural person, means the following:

(A) a parent, grandparent or great grandparent;

(B) a step-parent or adoptive parent;

(C) a brother or sister;

(D) the spouse;

(E) if the person is a party to a union of concubinage-the other party of the union;

(F) a cohabitee;

(G) a parent, step-parent or adoptive parent of a spouse;

(H) a brother or sister of a spouse;

(I) a son, step-son, adopted son, daughter, step-daughter or adopted daughter; or

(J) a grandson, granddaughter, great grandson or great granddaughter.

Page 6 of 6

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

I,  Choi Lin Hung, certify that:

1.  I have reviewed this report on Form 10-Q of Jerash Holdings (US), Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)  all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2020

/s/ Choi Lin Hung

Choi Lin Hung

Chairman of the Board of Directors, Chief Executive Officer, President, and Treasurer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 

I,  Gilbert K. Lee, certify that:

1.  I have reviewed this report on Form 10-Q of Jerash Holdings (US), Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)  all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2020

/s/ Gilbert K. Lee

Gilbert K. Lee

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, in his capacity as an officer of Jerash Holdings (US), Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1)  The Quarterly Report of the Company on Form 10-Q for the three months ended September 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 12, 2020

/s/ Choi Lin Hung

Choi Lin Hung

Chairman of the Board of Directors, Chief Executive Officer, President, and Treasurer (Principal Executive Officer and Director)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies, in his capacity as an officer of Jerash Holdings (US), Inc. (the “Company”), for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1)  The Quarterly Report of the Company on Form 10-Q for the three months ended September 30, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 12, 2020

/s/ Gilbert K. Lee

Gilbert K. Lee

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

XML

Document And Entity Information - shares	6 Months Ended
	Sep. 30, 2020	Nov. 10, 2020
Document Information Line Items
Entity Registrant Name	Jerash Holdings (US), Inc.
Document Type	10-Q
Current Fiscal Year End Date	--03-31
Entity Common Stock, Shares Outstanding		11,325,000
Amendment Flag	false
Entity Central Index Key	0001696558
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Sep. 30, 2020
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Shell Company	false
Entity Ex Transition Period	true
Entity File Number	001-38474
Entity Incorporation, State or Country Code	DE
Entity Interactive Data Current	Yes

XML

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2020	Mar. 31, 2020
Current Assets:
Cash	$ 27,334,093	$ 26,130,411
Accounts receivable, net	19,924,392	5,335,748
Inventories	10,304,880	22,633,772
Prepaid expenses and other current assets	2,044,054	2,761,877
Advance to suppliers, net	2,793,782	2,116,367
Total Current Assets	62,401,201	58,978,175
Restricted cash	786,298	786,298
Long-term deposits	133,727	253,414
Deferred tax assets, net	139,895	139,895
Property, plant and equipment, net	5,773,159	6,174,164
Right of use assets	952,900	1,147,090
Total Assets	70,187,180	67,479,036
Current Liabilities:
Credit facilities	932,152	235
Accounts payable	4,952,525	6,376,320
Accrued expenses	2,485,531	2,245,402
Income tax payable - current	1,771,922	1,088,497
Other payables	1,142,369	929,783
Operating lease liabilities - current	218,583	210,081
Total Current Liabilities	11,503,082	10,850,318
Operating lease liabilities - non-current	555,144	649,935
Income tax payable - non-current	1,094,048	1,227,632
Total Liabilities	13,152,274	12,727,885
Commitments and Contingencies (See Note 15)
Equity
Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding
Common stock, $0.001 par value; 30,000,000 shares authorized; 11,325,000 shares issued and outstanding	11,325	11,325
Additional paid-in capital	15,277,176	15,235,025
Statutory reserve	212,739	212,739
Retained earnings	41,238,636	38,997,177
Accumulated other comprehensive loss	(8,165)	(8,324)
Total Jerash Holdings (US), Inc.’s Stockholder’s Equity	56,731,711	54,447,942
Noncontrolling interest	303,195	303,209
Total Equity	57,034,906	54,751,151
Total Liabilities and Equity	$ 70,187,180	$ 67,479,036

XML

Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares	Sep. 30, 2020	Mar. 31, 2020
Statement of Financial Position [Abstract]
Preferred stock par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	11,325,000	11,325,000
Common stock, shares outstanding	11,325,000	11,325,000

XML

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
Revenue, net	$ 27,086,318	$ 30,611,119	$ 45,793,073	$ 53,138,444
Cost of goods sold	21,203,568	23,308,762	36,858,753	41,323,384
Gross Profit	5,882,750	7,302,357	8,934,320	11,815,060
Selling, general and administrative expenses	2,853,679	2,919,920	4,704,506	5,543,602
Stock-based compensation expenses		193,955	42,151	193,955
Total Operating Expenses	2,853,679	3,113,875	4,746,657	5,737,557
Income from Operations	3,029,071	4,188,482	4,187,663	6,077,503
Other Income (Expense):
Other income (expense), net	62,917	(5,059)	60,178	(9,592)
Total other income (expense), net	62,917	(5,059)	60,178	(9,592)
Net income before provision for income taxes	3,091,988	4,183,423	4,247,841	6,067,911
Income tax expense	531,896	594,687	873,896	929,687
Net Income	2,560,092	3,588,736	3,373,945	5,138,224
Net loss attributable to noncontrolling interest	8	4,011	14	4,011
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders	2,560,100	3,592,747	3,373,959	5,142,235
Net Income	2,560,092	3,588,736	3,373,945	5,138,224
Other Comprehensive Income:
Foreign currency translation gain	712	2,946	159	3,757
Total Comprehensive Income	2,560,804	3,591,682	3,374,104	5,141,981
Comprehensive income attributable to noncontrolling interest
Comprehensive Income Attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$ 2,560,804	$ 3,591,682	$ 3,374,104	$ 5,141,981
Earnings Per Share Attributable to Common Stockholders:
Basic (in Dollars per share)	$ 0.23	$ 0.32	$ 0.30	$ 0.45
Diluted (in Dollars per share)	$ 0.23	$ 0.31	$ 0.30	$ 0.45
Weighted Average Number of Shares
Basic (in Shares)	11,325,000	11,325,000	11,325,000	11,325,000
Diluted (in Shares)	11,329,953	11,507,071	11,330,081	11,496,803
Dividend per share (in Dollars per share)	$ 0.05	$ 0.05	$ 0.10	$ 0.10

XML

Condensed Consolidated Statements of Changes in Equity - USD ($)	Preferred Stock	Common Stock	Additional Paid-in Capital	Statutory Reserve	Retained Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interest	Total
Balance at Mar. 31, 2019		$ 11,325	$ 14,956,767	$ 212,739	$ 34,786,735	$ (14,440)	$ 309,003	$ 50,262,129
Balance (in Shares) at Mar. 31, 2019		11,325,000
Stock-based compensation expense for the stock options issued under stock incentive plan			193,955					193,955
Net income (loss)					5,142,235		(4,011)	5,138,224
Dividend distribution					(1,132,500)			(1,132,500)
Foreign currency translation gain						3,757		3,757
Balance at Sep. 30, 2019		$ 11,325	15,150,722	212,739	38,796,470	(10,683)	304,992	54,465,565
Balance (in Shares) at Sep. 30, 2019		11,325,000
Balance at Jun. 30, 2019		$ 11,325	14,956,767	212,739	35,769,973	(13,629)	309,003	51,246,178
Balance (in Shares) at Jun. 30, 2019		11,325,000
Stock-based compensation expense for the stock options issued under stock incentive plan			193,955					193,955
Net income (loss)					3,592,747		(4,011)	3,588,736
Dividend distribution					(566,250)			(566,250)
Foreign currency translation gain						2,946		2,946
Balance at Sep. 30, 2019		$ 11,325	15,150,722	212,739	38,796,470	(10,683)	304,992	54,465,565
Balance (in Shares) at Sep. 30, 2019		11,325,000
Balance at Mar. 31, 2020		$ 11,325	15,235,025	212,739	38,997,177	(8,324)	303,209	54,751,151
Balance (in Shares) at Mar. 31, 2020		11,325,000
Stock-based compensation expense for the stock options issued under stock incentive plan			42,151					42,151
Net income (loss)					3,373,959		(14)	3,373,945
Dividend distribution					(1,132,500)			(1,132,500)
Foreign currency translation gain						159		159
Balance at Sep. 30, 2020		$ 11,325	15,277,176	212,739	41,238,636	(8,165)	303,195	57,034,906
Balance (in Shares) at Sep. 30, 2020		11,325,000
Balance at Jun. 30, 2020		$ 11,325	15,277,176	212,739	39,244,786	(8,877)	303,203	55,040,352
Balance (in Shares) at Jun. 30, 2020		11,325,000
Net income (loss)					2,560,100		(8)	2,560,092
Dividend distribution					(566,250)			(566,250)
Foreign currency translation gain						712		712
Balance at Sep. 30, 2020		$ 11,325	$ 15,277,176	$ 212,739	$ 41,238,636	$ (8,165)	$ 303,195	$ 57,034,906
Balance (in Shares) at Sep. 30, 2020		11,325,000

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$ 3,373,945	$ 5,138,224
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	829,285	724,778
Stock-based compensation expenses	42,151	193,955
Bad debt expense	58,563
Amortization of operating lease right-of-use assets	365,478	114,803
Changes in operating assets:
Accounts receivable	(14,588,644)	(10,286,102)
Inventories	12,328,893	8,023,021
Prepaid expenses and other current assets	659,257	(1,327,225)
Advance to suppliers	(677,415)	(224,590)
Changes in operating liabilities:
Accounts payable	(1,423,796)	(1,521,441)
Accrued expenses	240,129	628,643
Other payables	212,586	453,717
Operating lease liabilities	(257,577)	2,058
Income tax payable	550,033	(553,835)
Net cash provided by operating activities	1,712,888	1,366,006
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(428,280)	(3,053,472)
Long-term assets	119,687
Net cash used in investing activities	(308,593)	(3,053,472)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend distribution	(1,132,500)	(1,132,500)
Repayment from short-term loan	(235)	(648,666)
Proceeds from short-term loan	932,152	16,049
Net cash used in financing activities	(200,583)	(1,765,117)
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(30)	12,895
NET INCREASE (DECREASE) IN CASH	1,203,682	(3,439,688)
CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD	26,916,709	27,834,468
CASH, AND RESTRICTED CASH, END OF THE PERIOD	28,120,391	24,394,780
CASH AND RESTRICTED CASH, END OF PERIOD	28,120,391	24,394,780
LESS: NON-CURRENT RESTRICTED CASH	786,298	796,876
CASH, END OF PERIOD	27,334,093	23,597,904
Supplemental disclosure information:
Cash paid for interest		5,755
Income tax paid	347,689	1,483,507
Non-cash financing activities
Right of use assets obtained in exchange for operating lease obligations	$ 172,413	$ 1,292,416

XML

Organization and Description of Business

6 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Jerash Holdings (US), Inc. (“Jerash Holdings”) is a corporation incorporated under the laws of the State of Delaware on January 20, 2016. Jerash Holdings is a parent holding company with no operations. Jerash Holdings, and its subsidiaries and Variable Interest Entity (“VIE”) are herein collectively referred to as the “Company.”

Jerash Garments and Fashions Manufacturing Company Limited (“Jerash Garments”) is a wholly owned subsidiary of Jerash Holdings and was established in Amman, the Hashemite Kingdom of Jordan (“Jordan”), as a limited liability company on November 26, 2000 with a declared capital of 150,000 Jordanian Dinar (“JOD”) (approximately US$212,000) as of September 30, 2020.

Jerash for Industrial Embroidery Company (“Jerash Embroidery”) and Chinese Garments and Fashions Manufacturing Company Limited (“Chinese Garments”) were both incorporated in Amman, Jordan, as limited liability companies on March 11, 2013 and June 13, 2013, respectively, each with a declared capital of JOD50,000 as of September 30, 2020. Jerash Embroidery and Chinese Garments are wholly owned subsidiaries of Jerash Garments.

Al-Mutafaweq Co. for Garments Manufacturing Ltd. (“Paramount”) was a contract garment manufacturer that was incorporated in Amman, Jordan, as a limited liability company on October 24, 2004 with a declared capital of JOD100,000. On December 11, 2018, Jerash Garments and the sole stockholder of Paramount entered into an agreement pursuant to which Jerash Garments acquired all of the outstanding shares of stock of Paramount. Jerash Garments assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of June 18, 2019, Paramount became a subsidiary of Jerash Garments.

Jerash the First for Medical Supplies Manufacturing Company Limited (“Jerash the First”) was incorporated in Amman, Jordan, as a limited liability company on July 6, 2020, with a registered capital of JOD150,000. Jerash the First is engaged in the production of medical supplies in Jordan and is a wholly owned subsidiary of Jerash Garments.

Treasure Success International Limited (“Treasure Success”) was incorporated on July 5, 2016 in Hong Kong, China, for the primary purpose of employing staff from China to support Jerash Garments’ operations and is a wholly-owned subsidiary of Jerash Holdings.

Victory Apparel (Jordan) Manufacturing Company Limited (“Victory Apparel”) was incorporated as a limited liability company in Amman, Jordan, on September 18, 2005 with a declared capital of JOD50,000. Victory Apparel has no significant assets or liabilities or other operating activities of its own. Although Jerash Garments does not own the equity interest of Victory Apparel, the Company’s president, director, and significant stockholder, Mr. Choi Lin Hung (“Mr. Choi”), is also a director of Victory Apparel and controls all decision-making for Victory Apparel along with another significant stockholder of Jerash Garments, Mr. Lee Kian Tjiauw (“Mr. Lee”), who has the ability to control Victory Apparel’s financial affairs. In addition, Victory Apparel’s equity at risk is not sufficient to permit it to operate without additional subordinated financial support from Jerash Garments. Based on these facts, the Company concluded that Jerash Garments has effective control over Victory Apparel due to Mr. Choi’s roles at both organizations and therefore Victory Apparel is considered a VIE under Accounting Standards Codification (“ASC”) 810-10-05-08A. Accordingly, Jerash Garments consolidates Victory Apparel’s operating results, assets, and liabilities.

Jiangmen Treasure Success Business Consultancy Company Limited (“Jiangmen Treasure Success”) was incorporated on August 28, 2019 under the laws of the People’s Republic of China (“China”) in Guangzhou City of Guangdong Province in China with a total registered capital of 3 million Hong Kong Dollars (“HKD”) (approximately $385,000) to provide support in sales and marketing, sample development, merchandising, procurement, and other areas. Treasure Success owns 100% of the equity interests in Jiangmen Treasure Success.

The Company is engaged in the manufacturing and exporting of customized, ready-made sport and outerwear from knitted fabric produced in its facilities in Jordan and sold in the United States, Jordan, and other countries. 

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Summary of Significant Accounting Policies

6 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

Principles of Consolidation

The consolidated financial statements include the financial statements of Jerash Holdings, and its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation.

VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which a company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIEs. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company’s VIE, Victory Apparel, was inactive for the six months ended September 30, 2020, and the net assets of the VIE were approximately $0.3 million as of each of September 30, 2020 and March 31, 2020.

Use of Estimates

The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s most significant estimates include allowance for doubtful accounts, valuation of inventory reserve, useful lives of buildings and other property, and the measurement of stock-based compensation expenses. Actual results could differ from these estimates.

Cash

The Company considers all highly liquid investment instruments with an original maturity of three months or less from the original date of purchase to be cash equivalents. As of September 30, 2020, and March 31, 2020, the Company had no cash equivalents.

Restricted Cash

Restricted cash consists of cash used as security deposits to obtain credit facilities from a bank and to secure customs clearance under the requirements of local regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security deposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a non-current asset since the Company has no intention to terminate these bank facilities within one year.

Short-term Investments

The Company’s short-term investments consist of financial products purchased from banks. The bank invests the Company’s funds in certain financial instruments including money market funds, bonds, and mutual funds, with an expected annual return of 5%. The carrying values of the Company’s short-term investments approximate fair value because of their liquidity. The gain and interest earned are recognized in the consolidated statements of operations and comprehensive income (loss) over the contractual terms of these investments. The Company exited the investment before September 30, 2020.

The Company had short-term investments of $Nil and $Nil as of September 30, 2020 and 2019, respectively. The Company recorded a realized gain of $64,692 and $Nil for the six months ended September 30, 2020 and 2019, respectively.

Accounts Receivable

Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants extended payment terms to customers with good credit standing and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. An allowance was recorded totaling $45,167 and $4,641 as of September 30, 2020 and March 31, 2020, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value. Inventories include cost of raw materials, freight, direct labor, and related production overhead. The cost of inventories is determined using the First in, First-out method. The Company periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value.

Advance to Suppliers

Advance to suppliers consists of balances paid to suppliers for services or materials purchased that have not been provided or received. Advance to suppliers for services and materials is short term in nature. Advance to Suppliers is reviewed periodically to determine whether its carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance was $13,396 and $2,000 as of September 30, 2020 and March 31, 2020 respectively.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, reduced by accumulated depreciation and amortization. Depreciation and amortization expense related to property, plant and equipment is computed using the straight-line method based on 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 reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. The estimated useful lives of depreciation and amortization of the principal classes of assets are as follows:

	Useful life
Land	Infinite
Property and buildings	15 years
Equipment and machinery	3-5 years
Office and electronic equipment	3-5 years
Automobiles	5 years
Leasehold improvements	Lesser of useful life and lease term

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation or amortization of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and comprehensive income.

Impairment of Long-Lived Assets

The Company assesses its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Factors which may indicate potential impairment include a significant underperformance relative to the historical or projected future operating results or a significant negative industry or economic trend. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by that asset. 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 record any impairment loss during the six months ended September 30, 2020 and 2019.

Revenue Recognition

Substantially all of the Company’s revenue is derived from product sales, which consist of sales of the Company’s customized ready-made outerwear for large brand-name retailers and personal protective equipment. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within seven to 150 days of the invoice date, and the contracts do not have significant financing components. Shipping and handling costs associated with outbound freight are not an obligation of the Company. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial.

The Company also derives revenue rendering cutting and making services to other apparel vendors who subcontract orders to the Company, and the revenue is recognized when the service is rendered.

All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience, complete satisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted the Company’s revenue.

The Company does not have any contract assets since the Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment from customers is not contingent on a future event. For the six months ended September 30, 2020 and 2019, there was no revenue recognized from performance obligations related to prior periods. As of September 30, 2020, there was no revenue expected to be recognized in any future periods related to remaining performance obligations.

The Company has one revenue generating reportable geographic segment under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its sales of customized ready-made outerwear. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see “Note 14—Segment Reporting”).

Shipping and Handling

Proceeds collected from customers for shipping and 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 $360,217 and $292,354 for the three months ended September 30, 2020 and 2019, respectively. Total shipping and handling expenses were $544,130 and $501,136 for the six months ended September 30, 2020 and 2019, respectively.

Income Taxes

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Jerash Holdings is incorporated in the State of Delaware and is subject to federal income tax in the United States of America. Treasure Success is registered in Hong Kong and has no operating profit. Jiangmen Treasure Success is incorporated in China and is subject to corporate income tax in China. Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash the First, and Victory Apparel are subject to income tax in Jordan, unless an exemption is granted. The corporate income tax rate is 14% for the businesses classified within the industrial sector. In accordance with the Investment Encouragement Law, Jerash Garments’ export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing on the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, the Jordanian government changed some features of its tax incentive programs and Jerash Garments and its subsidiaries and VIE are now qualified for incentives applicable to an industrial park that houses manufacturing operations in Jordan (“Development Zone”), a change from the previous incentive program relating to Qualifying Industrial Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE were subject to corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020, that rate increased to 14% plus a 1% social contribution.

Jerash Garments and its subsidiaries and VIE are subject to local sales tax of 16% on purchases. Jerash Garments was granted a sales tax exemption from the Jordanian Investment Commission for the period from June 1, 2015 to June 1, 2018 that allowed Jerash Garments to make purchases with no sales tax charge. This exemption has been extended to February 5, 2021.

The Company accounts for income taxes in accordance with 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 applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740 clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of income and comprehensive income. No significant uncertainty in tax positions relating to income taxes were incurred during six months ended September 30, 2020 and 2019.

Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar (“US$” or “$”). The Company uses JOD as its functional currency in Jordanian companies, HKD in Treasure Success, and Chinese Yuan (“CNY”) in Jiangmen Treasure Success as functional currency of each abovementioned entity. The assets and liabilities of the Company have been translated into US$ using the exchange rates in effect at the balance sheet date, equity accounts have been translated at historical rates, and revenue and expenses have been translated into US$ using average exchange rates in effect during the reporting period. Cash flows are also translated at average translation rates for the periods. Therefore, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income or loss. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

The value of JOD against US$ and other currencies may fluctuate and is affected by, among other things, changes in Jordan’s political and economic conditions. Any significant revaluation of JOD may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

	September 30, 2020	March 31, 2020
Period-end spot rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.7501	US$1=HKD7.7529
	US$1=CNY6.8033	US$1=CNY7.0896
Average rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.7510	US$1=HKD7.8163
	US$1=CNY7.0012	US$1=CNY6.9642

Stock-Based Compensation

The Company measures compensation expense for stock-based awards to non-employee contractors and directors based upon the awards’ initial grant-date fair value. The estimated grant-date fair value of the award is recognized as expense over the requisite service period using the straight-line method.

The Company estimates the fair value of stock options using a Black-Scholes model. This model is affected by the Company’s stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of the option, expected risk-free rates of return, the expected volatility of the Company’s common stock, and expected dividend yield, each of which is more fully described below. The assumptions for 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 sock option is the period of time that the warrant or 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 share-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 comparable public company volatility over the same period of time as the life of the warrant or stock option.

● Dividend Yield: Stock-based compensation awards granted prior to November 2018 assumed no dividend yield, while any subsequent stock-based compensation awards are valued using the anticipated dividend yield.

Earnings 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 capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for 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 and warrants) 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 decrease loss per share) are excluded from the calculation of diluted EPS (See “Note 13—Earnings per Share”).

Comprehensive Income

Comprehensive income consists of two components, net income and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in JOD or HKD or CNY to US$ is reported in other comprehensive income in the consolidated statements of income and comprehensive income.

Fair Value of Financial Instruments

ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable 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 its financial assets and liabilities, which consist primarily of cash, including restricted cash, accounts receivable, other receivables, credit facilities, accounts payable, accrued expenses, income tax payable, other payables, and operating lease liabilities to approximate the fair value of the respective assets and liabilities at September 30, 2020 and March 31, 2020 based upon the short-term nature of these assets and liabilities.

Concentrations and Credit Risk

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of September 30, 2020, and March 31, 2020, respectively, $8,678,214 and $6,894,641 of the Company’s cash was on deposit at financial institutions in Jordan, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of September 30, 2020 and March 31, 2020, respectively, $9,941 and $125,830 of the Company’s cash was on deposit at financial institutions in China, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of September 30, 2020 and March 31, 2020, respectively, $19,358,851 and $19,847,852 of the Company’s cash was on deposit at financial institutions in Hong Kong, which are insured by the Hong Kong Deposit Protection Board subject to certain limitations. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. As of September 30, 2020 and March 31, 2020, respectively, $73,385 and $48,386 of the Company’s cash was on deposit in the United States and are insured by the Federal Deposit Insurance Corporation up to $250,000.

Accounts receivable are typically unsecured and derived from revenue earned from customers, and therefore are exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.

Customer and vendor concentration risk

The Company’s sales are made primarily in the United States. Its operating results could be adversely affected by U.S. government policies on exporting business, foreign exchange rate fluctuations, and changes in local market conditions. The Company has a concentration of its revenue and purchases with specific customers and suppliers. For the three months ended September 30, 2020 and 2019, one end-customer accounted for 74% and 87% of the Company’s total revenue, respectively. For the six months ended September 30, 2020 and 2019, one end-customer accounted for 76% and 91% of the Company’s total revenue, respectively. As of September 30, 2020, one end-customers accounted for 78% of the Company’s total accounts receivable balance. As of March 31, 2020, four end-customers accounted for 42%, 20%, 20%, and 14% of the Company’s total accounts receivable balance, respectively.

For the three months ended September 30, 2020, the Company purchased approximately 20% of its garments from one major supplier. For the six months ended September 30, 2020, the Company purchased approximately 12% of its garments from one major supplier. For the three months ended September 30, 2019, the Company purchased 18% and 13% of its raw materials from two major suppliers, respectively. For the six months ended September 30, 2019, the Company purchased approximately 24% and 11% of its raw materials from two major suppliers, respectively. As of September 30, 2020, accounts payable to the Company’s one major suppliers accounted for 47% of the total accounts payable balance. As of March 31, 2020, accounts payable to the Company’s three major suppliers accounted for 39%, 16%, and 10% of the total accounts payable balance, respectively.

Risks and Uncertainties

The principal operations of the Company are located in 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 are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic, and legal environment and foreign currency exchange. 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 compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.

The spread of COVID-19 around the world since March 2020 has caused significant volatility in U.S. and international markets. The Company’s sales declined in the first half of fiscal 2021. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies. Based on the assessment of the current economic environment, customer demand, and sales trend, and the negative impact from the prolonged COVID-19 outbreak and spread, the Company’s revenue and operating cash flows may be lower than expected for fiscal year 2021.

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Recent Accounting Pronouncements

6 Months Ended

Sep. 30, 2020

Accounting Changes and Error Corrections [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of the Company’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. This ASU is effective for interim and annual periods beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. As an emerging growth company, the Company plans to adopt this guidance effective April 1, 2023. The Company is currently evaluating the impact of adopting ASU 2016-13 on its consolidated financial statements. 

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company does not expect adoption of the new guidance to have a significant impact on its consolidated financial statements.

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Accounts Receivables, Net

6 Months Ended

Sep. 30, 2020

Receivables [Abstract]

ACCOUNTS RECEIVABLE, NET

NOTE 4 – ACCOUNTS RECEIVABLE, NET

Accounts receivable consisted of the following:

	As of			As of
	September 30, 2020			March 31, 2020
Trade accounts receivable	$	19,969,559		$	5,340,389
Less: allowances for doubtful accounts		(45,167	)		(4,641	)
Accounts receivable, net	$	19,924,392		$	5,335,748

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Inventories

6 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 5 – INVENTORIES

Inventories consisted of the following:

	As of		As of
	September 30, 2020		March 31, 2020
Raw materials	$	4,614,464	$	12,499,301
Work-in-progress		377,627		1,541,716
Finished goods		5,312,789		8,592,755
Total inventory	$	10,304,880	$	22,633,772

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Advance to Suppliers

6 Months Ended

Sep. 30, 2020

Advance To Suppliers [Abstract]

ADVANCE TO SUPPLIERS

NOTE 6 – ADVANCE TO SUPPLIERS

Advance to suppliers consisted of the following:

	As of			As of
	September 30, 2020			March 31, 2020
Advance to suppliers	$	2,807,178		$	2,118,367
Less: allowances for doubtful accounts		(13,396	)		(2,000	)
Advance to suppliers, net	$	2,793,782		$	2,116,367

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Leases

6 Months Ended

Sep. 30, 2020

Leases [Abstract]

LEASES

NOTE 7 – LEASES

The Company has 35 operating leases for manufacturing facilities and offices. Some leases include one or more options to renew, which is typically at the Company’s sole discretion. The Company regularly evaluates the renewal options, and, when it is reasonably certain of exercise, it will include the renewal period in its lease term. New lease modifications result in measurement of the right of use (“ROU”) assets and lease 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 commencement date based on the present value of remaining lease payments over the lease term.

All of the Company’s leases are classified as operating leases and primarily include office space and manufacturing facilities.

Supplemental balance sheet information related to operating leases was as follows:

	September 30, 2020
Right-of-use assets	$	952,900
Operating lease liabilities - current	$	218,583
Operating lease liabilities - non-current		555,144
Total operating lease liabilities	$	773,727

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of September 30, 2020:

Remaining lease term and discount rate:
Weighted average remaining lease term (years)	2.9
Weighted average discount rate	4.06	%

During the three months ended September 30, 2020 and 2019, the Company incurred total operation lease expenses of $535,568 and $402,950, respectively. During the six months ended September 30, 2020 and 2019, the Company incurred total operation lease expenses of $1,047,341 and $945,735, respectively.

The following is a schedule, by fiscal years, of maturities of lease liabilities as of September 30, 2020:

2021	$	203,279
2022		372,363
2023		248,297
2024		186,854
Total lease payments		1,010,793
Less: imputed interest		(57,893	)
Less: prepayments		(179,173	)
Present value of lease liabilities	$	773,727

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Property, Plant and Equipment, Net

6 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT, NET

NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consisted of the following:

	As of			As of
	September 30, 2020			March 31, 2020
Land (1)	$	1,831,192		$	1,831,192
Property and buildings		432,562			432,562
Equipment and machinery (2)		8,029,899			7,630,255
Office and electric equipment		808,088			793,405
Automobiles		492,976			480,687
Leasehold improvements		2,767,274			2,765,610
Subtotal		14,361,991			13,933,711
Construction in progress (3)		194,752			194,752
Less: Accumulated depreciation and amortization (4)		(8,783,584	)		(7,954,299	)
Property and equipment, net	$	5,773,159		$	6,174,164

(1) On August 7, 2019 and February 6, 2020, the Company, through Jerash Garments, purchased 12,340 square meters (approximately three acres) and 4,516 square meters (approximately 48,608 square feet) of land in Al Tajamouat Industrial City, Jordan (the “Jordan Properties”), from third parties to construct a factory and a dormitory for the Company’s employees, respectively. The aggregate purchase price of the Jordan Properties was JOD1,177,301 (approximately US$1.7 million).

(2) On June 18, 2019, the Company acquired all of the outstanding shares of Paramount, a contract manufacturer based in Amman, Jordan. As a result, Paramount became a subsidiary of Jerash Garments, and the Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of acquisition, so this transaction was accounted for as an asset acquisition. $980,000 was paid in cash to acquire all of the machinery and equipment from Paramount and the machinery and equipment were transferred to the Company.

(3) The construction in progress account represents costs incurred for constructing a dormitory, which was previously planned to be a sewing workshop. This dormitory is approximately 4,800 square feet in the Tafilah Governorate of Jordan. Construction was temporarily suspended due to the COVID-19 pandemic. The dormitory is expected to be completed and ready for use in fiscal 2022.

(4) Depreciation and amortization expenses were $417,231 and $386,136 for the three months ended September 30, 2020 and 2019, respectively. Depreciation and amortization expenses were $829,285 and $724,778 for the six months ended September 30, 2020 and 2019, respectively.

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Equity

6 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

EQUITY

NOTE 9 – EQUITY

Preferred Stock

The Company had 500,000 shares of preferred stock authorized with a par value of $0.001 per share; none were issued and outstanding as of September 30, 2020 and March 31, 2020. The preferred stock can be issued by the board of directors of Jerash Holdings (the “Board of Directors”) in one or more classes or one or more series within any class, and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, rights, qualifications, limitations, or restrictions of such rights as the Board of Directors may determine from time to time.

Common Stock

The Company had 11,325,000 shares common stock outstanding as of September 30, 2020 and March 31, 2020.

Statutory Reserve

In accordance with the Corporate Law in Jordan, Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash the First, and Victory Apparel are required to make appropriations to certain reserve funds, based on net income determined in 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. This reserve is not available for dividend distribution. In addition, PRC companies are required to set aside at least 10% of their after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of their registered capital. The statutory reserves are not distributable in the form of cash dividends to the Company and can be used to make up cumulative prior year losses. The Company’s subsidiaries and VIE have already reserved the maximum amount required.

Dividends

On August 5, 2020, the Board of Directors declared a cash dividend of $0.05 per share of common stock. Cash dividends of $566,250 to the stockholders of the Company were paid in full on August 24, 2020.

On May 15, 2020, the Board of Directors declared a cash dividend of $0.05 per share of common stock. Cash dividends of $566,250 to the stockholders of the Company were paid in full on June 2, 2020.

On each of February 5, 2020, November 4, 2019, July 29, 2019, and May 17, 2019, the Board of Directors declared cash dividends of $0.05 per share of common stock. Cash dividends of $566,250 to the stockholders of the Company were paid in full on February 26, 2020, November 26, 2019, August 19, 2019, and June 5, 2019, respectively.

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Stock-Based Compensation

6 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 10 – STOCK-BASED COMPENSATION

Warrants issued for services

From time to time, the Company issues warrants to purchase its common stock. These warrants are valued using the Black-Scholes model and using the volatility, market price, exercise price, risk-free interest rate, and dividend yield appropriate at the date the warrants were issued.

Simultaneous with the closing of the IPO, the Company issued to the underwriter and its affiliates warrants to purchase 57,200 shares of common stock (“IPO Underwriter Warrants”) at an exercise price of $8.75 per share with an expiration date of May 2, 2023. The shares underlying the IPO Underwriter Warrants were subject to a 180-day lock-up that expired on October 29, 2018.

The fair value of these warrants was estimated as of the grant date using the Black-Scholes model with the major assumptions that the expected term is five years; risk-free interest rate is 1.8-2.8%; and the expected volatility is 50.3-52.2%. There were 264,410 warrants outstanding as of September 30, 2020 and March 31, 2020 with a weighted average exercise price of $6.35. All of the outstanding warrants were fully vested and exercisable as of September 30, 2020 and March 31, 2020.

Stock Options

On March 21, 2018, the Board of Directors adopted the Jerash Holdings (US), Inc. 2018 Stock Incentive Plan (the “Plan”), pursuant to which the Company may grant various types of equity awards. 1,484,250 shares of common stock of the Company were reserved for issuance under the Plan. In addition, on July 19, 2019, the Board of Directors approved an amendment and restatement of the Plan, which was approved by the Company’s stockholders at its annual meeting of stockholders on September 16, 2019. The amended and restated Plan increased the number of shares reserved for issuance under the Plan by 300,000, to 1,784,250, among other changes.

On April 9, 2018, the Board of Directors approved the issuance of 989,500 nonqualified stock options under the Plan to 13 executive officers and employees of the Company in accordance with the Plan at an exercise price of $7.00 per share, and a term of five years. The fair value of these options was estimated as of the grant date using the Black-Scholes model with the major assumptions that expected terms is five years; risk-free interest rate is 2.6%; and the expected volatility is 50.3%. All these outstanding options were fully vested and exercisable on issue date.

On August 3, 2018, the Board of Directors granted the Company’s then Chief Financial Officer and Head of U.S. Operations a total of 150,000 nonqualified stock options under the Plan in accordance with the Plan at an exercise price of $6.12 per share and a term of 10 years. The fair value of these options was estimated as of the grant date using the Black-Scholes model with the major assumptions that expected terms is 10 years; risk-free interest rate is 2.95%; and the expected volatility is 50.3%. All these outstanding options were fully vested and exercisable in August 2019.

On November 27, 2019, the Board of Directors granted the Company’s Chief Financial Officer 50,000 nonqualified stock options under the amended and restated Plan in accordance with the amended and restated Plan at an exercise price of $6.50 per share and a term of 10 years. All these outstanding options were fully vested and exercisable in May 2020.

The fair value of the options granted on November 27, 2019 was $126,454. It is estimated as of the grant date using the Black-Scholes model with the following assumptions:

	Stock Options November 27, 2019
Expected term (in years)		10.0
Risk-free interest rate (%)		1.77	%
Expected volatility (%)		48.59	%
Dividend yield (%)		3.08	%

All stock option activities are summarized as follows:

	Option to acquire Shares		Weighted Average Exercise Price
Stock options outstanding at March 31, 2020		1,189,500	$	6.87
Granted		-		-
Exercised		-		-
Cancelled		-		-
Stock options outstanding at September 30, 2020		1,189,500	$	6.87

Total expense related to the stock options issued was $Nil and $193,955 for the three months ended September 30, 2020 and 2019, respectively. Total expense related to the stock options issued was $42,151 and $193,955 for the six months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, all outstanding options were fully vested and exercisable.

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Related Party Transactions

6 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 11 – RELATED PARTY TRANSACTIONS

The relationship and the nature of related party transactions are summarized as follow:

Name of Related Party	Relationship to the Company	Nature of Transactions
Ford Glory International Limited (“FGIL”)	Affiliate, subsidiary of Ford Glory Holdings (“FGH”), which is 49% indirectly owned by the Company’s President, Chief Executive Officer and Chairman, and a significant stockholder	Operating Lease
Yukwise Limited (“Yukwise”)	Wholly owned by the Company’s President, Chief Executive Officer, and Chairman, and a significant stockholder	Consulting Services
Multi-Glory Corporation Limited (“Multi-Glory”)	Wholly owned by a significant stockholder	Consulting Services
Jiangmen V-Apparel Manufacturing Limited	Affiliate, subsidiary of FGH	Operating Lease

a. Related party lease and purchases agreement

On October 3, 2018, Treasure Success and FGIL entered into a lease agreement, pursuant to which Treasure Success leases its office space in Hong Kong from FGIL for a monthly rent in the amount of HKD119,540 (approximately $15,253) and for a one-year term with an option to extend the term for an additional year at the same rent. On October 3, 2019, Treasure Success exercised the option to extend the lease for an additional year at the same rent.

On July 1, 2020, Jiangmen Treasure Success and Jiangmen V-Apparel Manufacturing Limited entered into a factory lease agreement, which was a replacement of a previous lease agreement between Treasure Success and Jiangmen V-Apparel Manufacturing Limited dated August 31, 2019, pursuant to which Treasure Success leases additional space for office and sample production purposes in Jiangmen, China from Jiangmen V-Apparel Manufacturing Limited for a monthly rent in the amount of CNY28,300 (approximately $4,000). The lease has a one-year term and may be renewed with a one-month notice. The rental amount will be reviewed by and negotiated between both parties according to the market rental rate annually.

On July 15, 2019, the Company, through Treasure Success, entered into an agreement to purchase office space together with certain parking spaces from FGIL for an aggregate purchase price of HKD63,000,000 (approximately $8.1 million). Pursuant to the agreement, Treasure Success paid an initial deposit of HKD6,300,000 (approximately $0.8 million) upon signing the agreement. On October 31, 2019, this agreement was terminated pursuant to its terms because the conditions precedent to closing under the agreement were not met. As a result of the termination, on November 7, 2019, FGIL repaid in full, without interest, the deposit Treasure Success paid at the time the agreement was signed.

b. Consulting agreements

On January 16, 2018, Treasure Success and Multi-Glory entered into a consulting agreement, pursuant to which Multi-Glory will provide high-level advisory, marketing, and sales services to the Company for $300,000 per annum. The agreement renews automatically for one-month terms. The agreement became effective as of January 1, 2018. Due to the COVID-19 pandemic, Multi-Glory’s compensation was temporarily reduced to $20,000 per month from May 2020 to August 2020. For the three months ended September 30, 2020 and 2019, total consulting fees under this agreement were $65,000 and $75,000, respectively. For the six months ended September 30, 2020 and 2019, total consulting fees under this agreement were $130,000 and $150,000, respectively.

On January 12, 2018, Treasure Success and Yukwise entered into a consulting agreement, pursuant to which Mr. Choi will serve as Chief Executive Officer and provide high-level advisory and general management services for $300,000 per annum. The agreement renews automatically for one-month terms. This agreement became effective as of January 1, 2018. Due to the COVID-19 pandemic, Yukwise’s compensation was temporarily reduced to $20,000 per month from May 2020 to August 2020. For the three months ended September 30, 2020 and 2019, total advisory and management expenses under this agreement were $65,000 and $75,000, respectively. For the six months ended September 30, 2020 and 2019, total advisory and management expenses under this agreement were $130,000 and $150,000, respectively.

c. Personal Guarantees

Borrowings under the HSBC Credit Facilities (as defined below) were previously secured by the personal guarantees of Mr. Choi and Mr. Ng Tsze Lun (“Mr. Ng”). These guarantees were released as of August 12, 2019. (See “Note 12—Credit Facilities”).

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Credit Facilities

6 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

CREDIT FACILITIES

NOTE 12 – CREDIT FACILITIES

Pursuant to a letter agreement dated May 29, 2017, Treasure Success entered into an $8,000,000 import credit facility with Hong Kong and Shanghai Banking Corporation (“HSBC”) (the “2017 Facility Letter”), which was first amended pursuant to a letter agreement between HSBC, Treasure Success, and Jerash Garments dated June 19, 2018 (the “2018 Facility Letter”), further amended pursuant to a letter agreement dated August 12, 2019 (the “2019 Facility Letter”), and further amended pursuant to a letter agreement dated July 3, 2020 (the “2020 Facility Letter,” and together with the 2017 Facility Letter, 2018 Facility Letter, and 2019 Facility Letter, the “HSBC Facility”). The 2020 Facility Letter extends the term of the HSBC Facility indefinitely. Pursuant to the HSBC Facility, the Company has a total credit limit of $11,000,000.

In addition, on June 5, 2017, Treasure Success entered into an Offer Letter - Invoice Discounting/Factoring Agreement, and on August 21, 2017, Treasure Success entered into an Invoice Discounting/Factoring Agreement (together, the “2017 Factoring Agreement”) with HSBC for certain debt purchase services related to the Company’s accounts receivable. On June 14, 2018, Treasure Success and Jerash Garments entered into another Offer Letter-Invoice Discounting/Factoring Agreement with HSBC, which amended the 2017 Factoring Agreement (the “2018 Factoring Agreement, and together with the 2017 Factoring Agreement, the “HSBC Factoring Agreement,” and together with the HSBC Facility, the “HSBC Credit Facilities”). Pursuant to the HSBC Factoring Agreement, HSBC offered to provide Treasure Success with a $12,000,000 factoring facility for certain debt purchase services related to Treasure Success’s accounts receivable.

The HSBC Credit Facilities are guaranteed by Jerash Holdings, Jerash Garments, and Treasure Success. In addition, the HSBC Credit Facilities required cash and other investment security collateral of $3,000,000 and were secured by the personal guarantees of Mr. Choi and Mr. Ng. As of January 22, 2019, the security collateral of $3,000,000 had been released. HSBC also released the personal guarantees of Mr. Choi and Mr. Ng on August 12, 2019. The HSBC Credit Facilities provide that drawings under the HSBC Credit Facilities are charged interest at the Hong Kong Interbank Offered Rate plus 1.5% for drawings in HKD, and the London Interbank Offered Rate plus 1.5% for drawings in other currencies. In addition, the HSBC Credit Facilities also contain certain service charges and other commissions and fees.

Under the HSBC Factoring Agreement, HSBC also provides credit protection and debt services related to each of the Company’s preapproved customers. For any approved debts or collections assigned to HSBC, HSBC charges a flat fee of 0.35% on the face value of the invoice for such debt or collection. The Company may assign debtor payments that are to be paid to HSBC within 90 days, defined as the maximum terms of payment. The Company may receive advances on invoices that are due within 30 days of the delivery of its goods, defined as the maximum invoicing period.

The HSBC Credit Facilities are subject to review at any time, and HSBC has discretion on whether to renew the HSBC Facility. Either party may terminate the HSBC Factoring Agreement subject to a 30-day notice period.

As of September 30, 2020 and March 31, 2020, the Company had made $932,152 and $235 in withdrawals, under the HSBC Credit Facilities, which are due within 120 days of each borrowing date or upon demand by HSBC. As of September 30, 2020, $932,152 was outstanding under the HSBC Facility. As of March 31, 2020, $235 was outstanding under the HSBC Factoring Agreement.

On January 31, 2019, Standard Chartered Bank (Hong Kong) Limited (“SCBHK”) offered to provide an import facility of up to $3.0 million to Treasure Success pursuant to a facility letter dated June 15, 2018. Pursuant to the agreement, SCBHK agreed to finance import invoice financing and pre-shipment financing of export orders up to an aggregate of $3.0 million. The SCBHK facility bears interest at 1.3% per annum over SCBHK’s cost of funds. As of September 30, 2020 and March 31, 2020, the Company had no outstanding amount, respectively, in import invoice financing under the SCBHK facility.

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Earnings Per Share

6 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 13 – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended September 30, 2020 and 2019. As of September 30, 2020, 1,453,910 warrants and stock options were issued and outstanding. For the three and six months ended September 30, 2020, 1,403,910 warrants and stock options were excluded from the EPS calculation as containing anti-dilution provisions. For the three and six months ended September 30, 2019, 57,200 warrants were excluded from the EPS calculation as containing anti-dilution provisions. 

	Three Months Ended September 30, (in $000s except share and per share information)				Six Months Ended September 30, (in $000s except share and per share information)
	2020		2019		2020		2019
Numerator:
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$	2,560	$	3,593	$	3,374	$	5,142
Denominator:
Denominator for basic earnings per share (weighted-average shares)		11,325,000		11,325,000		11,325,000		11,325,000
Dilutive securities – unexercised warrants and options		4,953		182,071		5,081		171,803
Denominator for diluted earnings per share (adjusted weighted-average shares)		11,329,953		11,507,071		11,330,081		11,496,803
Basic earnings per share	$	0.23	$	0.32	$	0.30	$	0.45
Diluted earnings per share	$	0.23	$	0.31	$	0.30	$	0.45

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Segment Reporting

6 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

SEGMENT REPORTING

NOTE 14 – SEGMENT REPORTING

ASC 280, “Segment Reporting,” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of the Company’s products. The Company’s major product is outerwear. For the three months ended September 30, 2020 and 2019, outerwear accounted for approximately 87.5% and 94.8% of the Company’s total revenue, respectively. For the six months ended September 30, 2020 and 2019, outerwear accounted for approximately 89.9% and 95.5% of the Company’s total revenue, respectively. Based on management’s assessment, the Company has determined that it has only one operating segment as defined by ASC 280.

The following table summarizes sales by geographic areas for the three months ended September 30, 2020 and 2019, respectively.

	For the three months ended September 30,
	2020		2019
United States	$	23,411,339	$	29,352,998
Jordan		2,302,615		1,094,707
Other		1,372,364		163,414
Total	$	27,086,318	$	30,611,119

The following table summarizes sales by geographic areas for the six months ended September 30, 2020 and 2019, respectively.

	For the six months ended September 30,
	2020		2019
United States	$	40,992,512	$	51,393,943
Jordan		3,428,197		1,581,087
Other		1,372,364		163,414
Total	$	45,793,073	$	53,138,444

99.9% of long-lived assets were located in Jordan as of September 30, 2020.

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Commitments and Contingencies

6 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Commitments

On August 28, 2019, Jiangmen Treasure Success, was incorporated under the laws of the People’s Republic of China in Jiangmen City, Guangdong Province, China, with a total registered capital of HKD3 million (approximately $385,000). The Company’s subsidiary, Treasure Success, is required to contribute HKD3 million (approximately $385,000) as paid-in capital in exchange for 100% ownership interest in Jiangmen Treasure Success. As of September 30, 2020, Treasure Success had fully made its capital contribution.

Contingencies

From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would not have a material adverse impact on the Company’s consolidated financial position, results of operations, and cash flows.

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Income Tax

6 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

INCOME TAX

NOTE 16 – INCOME TAX 

Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash the First, and Victory Apparel are subject to the regulations of the Income Tax Department in Jordan. The corporate income tax rate is 14% for the industrial sector. In accordance with the Investment Encouragement Law, Jerash Garments’ export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing on the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, Jordanian government has changed some features of Jerash Garments and its subsidiaries area to a Development Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE began paying corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020, that rate increased to 14% plus a 1% social contribution.

On December 22, 2017, the U.S. Tax Cuts and Jobs Act (the “Tax Act”) was enacted. The Tax Act imposed tax on previously untaxed accumulated earnings and profits (“E&P”) of foreign subsidiaries (the “Toll Charge”). The Toll Charge is based in part of the amount of E&P held in cash and other specific assets as of December 31, 2017. The Toll Charge can be paid over an eight-year period, starting in 2018, and will not accrue interest. Additionally, under the provisions of the Tax Act, for taxable years beginning after December 31, 2017, the foreign earnings of Jerash Garments and its subsidiaries are subject to U.S. taxation at the Jerash Holdings level under the new Global Intangible Low-Taxed Income (“GILTI”) regime.

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Subsequent Events

6 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 17 – SUBSEQUENT EVENTS

On November 2, 2020, the Board of Directors approved the payments of a dividend of $0.05 per share payable on November 23, 2020 to stockholders of record as of November 16, 2020.

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Accounting Policies, by Policy (Policies)

6 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the financial statements of Jerash Holdings, and its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation.

VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which a company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIEs. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company’s VIE, Victory Apparel, was inactive for the six months ended September 30, 2020, and the net assets of the VIE were approximately $0.3 million as of each of September 30, 2020 and March 31, 2020.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company’s most significant estimates include allowance for doubtful accounts, valuation of inventory reserve, useful lives of buildings and other property, and the measurement of stock-based compensation expenses. Actual results could differ from these estimates.

Cash

Cash

The Company considers all highly liquid investment instruments with an original maturity of three months or less from the original date of purchase to be cash equivalents. As of September 30, 2020, and March 31, 2020, the Company had no cash equivalents.

Restricted Cash

Restricted Cash

Restricted cash consists of cash used as security deposits to obtain credit facilities from a bank and to secure customs clearance under the requirements of local regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security deposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a non-current asset since the Company has no intention to terminate these bank facilities within one year.

Short-term Investments

Short-term Investments

The Company’s short-term investments consist of financial products purchased from banks. The bank invests the Company’s funds in certain financial instruments including money market funds, bonds, and mutual funds, with an expected annual return of 5%. The carrying values of the Company’s short-term investments approximate fair value because of their liquidity. The gain and interest earned are recognized in the consolidated statements of operations and comprehensive income (loss) over the contractual terms of these investments. The Company exited the investment before September 30, 2020.

The Company had short-term investments of $Nil and $Nil as of September 30, 2020 and 2019, respectively. The Company recorded a realized gain of $64,692 and $Nil for the six months ended September 30, 2020 and 2019, respectively.

Accounts Receivable

Accounts Receivable

Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants extended payment terms to customers with good credit standing and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. An allowance was recorded totaling $45,167 and $4,641 as of September 30, 2020 and March 31, 2020, respectively.

Inventories

Inventories

Inventories are stated at the lower of cost or net realizable value. Inventories include cost of raw materials, freight, direct labor, and related production overhead. The cost of inventories is determined using the First in, First-out method. The Company periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value.

Advance to Suppliers

Advance to Suppliers

Advance to suppliers consists of balances paid to suppliers for services or materials purchased that have not been provided or received. Advance to suppliers for services and materials is short term in nature. Advance to Suppliers is reviewed periodically to determine whether its carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance was $13,396 and $2,000 as of September 30, 2020 and March 31, 2020 respectively.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are recorded at cost, reduced by accumulated depreciation and amortization. Depreciation and amortization expense related to property, plant and equipment is computed using the straight-line method based on 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 reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. The estimated useful lives of depreciation and amortization of the principal classes of assets are as follows:

	Useful life
Land	Infinite
Property and buildings	15 years
Equipment and machinery	3-5 years
Office and electronic equipment	3-5 years
Automobiles	5 years
Leasehold improvements	Lesser of useful life and lease term

Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation or amortization of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and comprehensive income.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company assesses its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Factors which may indicate potential impairment include a significant underperformance relative to the historical or projected future operating results or a significant negative industry or economic trend. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by that asset. 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 record any impairment loss during the six months ended September 30, 2020 and 2019.

Revenue Recognition

Revenue Recognition

Substantially all of the Company’s revenue is derived from product sales, which consist of sales of the Company’s customized ready-made outerwear for large brand-name retailers and personal protective equipment. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within seven to 150 days of the invoice date, and the contracts do not have significant financing components. Shipping and handling costs associated with outbound freight are not an obligation of the Company. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial.

The Company also derives revenue rendering cutting and making services to other apparel vendors who subcontract orders to the Company, and the revenue is recognized when the service is rendered.

All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience, complete satisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted the Company’s revenue.

The Company does not have any contract assets since the Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment from customers is not contingent on a future event. For the six months ended September 30, 2020 and 2019, there was no revenue recognized from performance obligations related to prior periods. As of September 30, 2020, there was no revenue expected to be recognized in any future periods related to remaining performance obligations.

The Company has one revenue generating reportable geographic segment under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its sales of customized ready-made outerwear. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see “Note 14—Segment Reporting”).

Shipping and Handling

Shipping and Handling

Proceeds collected from customers for shipping and 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 $360,217 and $292,354 for the three months ended September 30, 2020 and 2019, respectively. Total shipping and handling expenses were $544,130 and $501,136 for the six months ended September 30, 2020 and 2019, respectively.

Income Taxes

Income Taxes

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Jerash Holdings is incorporated in the State of Delaware and is subject to federal income tax in the United States of America. Treasure Success is registered in Hong Kong and has no operating profit. Jiangmen Treasure Success is incorporated in China and is subject to corporate income tax in China. Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash the First, and Victory Apparel are subject to income tax in Jordan, unless an exemption is granted. The corporate income tax rate is 14% for the businesses classified within the industrial sector. In accordance with the Investment Encouragement Law, Jerash Garments’ export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing on the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, the Jordanian government changed some features of its tax incentive programs and Jerash Garments and its subsidiaries and VIE are now qualified for incentives applicable to an industrial park that houses manufacturing operations in Jordan (“Development Zone”), a change from the previous incentive program relating to Qualifying Industrial Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE were subject to corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020, that rate increased to 14% plus a 1% social contribution.

Jerash Garments and its subsidiaries and VIE are subject to local sales tax of 16% on purchases. Jerash Garments was granted a sales tax exemption from the Jordanian Investment Commission for the period from June 1, 2015 to June 1, 2018 that allowed Jerash Garments to make purchases with no sales tax charge. This exemption has been extended to February 5, 2021.

The Company accounts for income taxes in accordance with 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 applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

ASC 740 clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of income and comprehensive income. No significant uncertainty in tax positions relating to income taxes were incurred during six months ended September 30, 2020 and 2019.

Foreign Currency Translation

Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar (“US$” or “$”). The Company uses JOD as its functional currency in Jordanian companies, HKD in Treasure Success, and Chinese Yuan (“CNY”) in Jiangmen Treasure Success as functional currency of each abovementioned entity. The assets and liabilities of the Company have been translated into US$ using the exchange rates in effect at the balance sheet date, equity accounts have been translated at historical rates, and revenue and expenses have been translated into US$ using average exchange rates in effect during the reporting period. Cash flows are also translated at average translation rates for the periods. Therefore, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income or loss. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

The value of JOD against US$ and other currencies may fluctuate and is affected by, among other things, changes in Jordan’s political and economic conditions. Any significant revaluation of JOD may materially affect the Company’s financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

	September 30, 2020	March 31, 2020
Period-end spot rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.7501	US$1=HKD7.7529
	US$1=CNY6.8033	US$1=CNY7.0896
Average rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.7510	US$1=HKD7.8163
	US$1=CNY7.0012	US$1=CNY6.9642

Stock-Based Compensation

Stock-Based Compensation

The Company measures compensation expense for stock-based awards to non-employee contractors and directors based upon the awards’ initial grant-date fair value. The estimated grant-date fair value of the award is recognized as expense over the requisite service period using the straight-line method.

The Company estimates the fair value of stock options using a Black-Scholes model. This model is affected by the Company’s stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of the option, expected risk-free rates of return, the expected volatility of the Company’s common stock, and expected dividend yield, each of which is more fully described below. The assumptions for 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 sock option is the period of time that the warrant or 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 share-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 comparable public company volatility over the same period of time as the life of the warrant or stock option.

● Dividend Yield: Stock-based compensation awards granted prior to November 2018 assumed no dividend yield, while any subsequent stock-based compensation awards are valued using the anticipated dividend yield.

Earnings per Share

Earnings 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 capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for 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 and warrants) 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 decrease loss per share) are excluded from the calculation of diluted EPS (See “Note 13—Earnings per Share”).

Comprehensive Income

Comprehensive Income

Comprehensive income consists of two components, net income and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in JOD or HKD or CNY to US$ is reported in other comprehensive income in the consolidated statements of income and comprehensive income.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable 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 its financial assets and liabilities, which consist primarily of cash, including restricted cash, accounts receivable, other receivables, credit facilities, accounts payable, accrued expenses, income tax payable, other payables, and operating lease liabilities to approximate the fair value of the respective assets and liabilities at September 30, 2020 and March 31, 2020 based upon the short-term nature of these assets and liabilities.

Concentrations and Credit Risk

Concentrations and Credit Risk

Credit risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of September 30, 2020, and March 31, 2020, respectively, $8,678,214 and $6,894,641 of the Company’s cash was on deposit at financial institutions in Jordan, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of September 30, 2020 and March 31, 2020, respectively, $9,941 and $125,830 of the Company’s cash was on deposit at financial institutions in China, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of September 30, 2020 and March 31, 2020, respectively, $19,358,851 and $19,847,852 of the Company’s cash was on deposit at financial institutions in Hong Kong, which are insured by the Hong Kong Deposit Protection Board subject to certain limitations. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. As of September 30, 2020 and March 31, 2020, respectively, $73,385 and $48,386 of the Company’s cash was on deposit in the United States and are insured by the Federal Deposit Insurance Corporation up to $250,000.

Accounts receivable are typically unsecured and derived from revenue earned from customers, and therefore are exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.

Customer and vendor concentration risk

The Company’s sales are made primarily in the United States. Its operating results could be adversely affected by U.S. government policies on exporting business, foreign exchange rate fluctuations, and changes in local market conditions. The Company has a concentration of its revenue and purchases with specific customers and suppliers. For the three months ended September 30, 2020 and 2019, one end-customer accounted for 74% and 87% of the Company’s total revenue, respectively. For the six months ended September 30, 2020 and 2019, one end-customer accounted for 76% and 91% of the Company’s total revenue, respectively. As of September 30, 2020, one end-customers accounted for 78% of the Company’s total accounts receivable balance. As of March 31, 2020, four end-customers accounted for 42%, 20%, 20%, and 14% of the Company’s total accounts receivable balance, respectively.

For the three months ended September 30, 2020, the Company purchased approximately 20% of its garments from one major supplier. For the six months ended September 30, 2020, the Company purchased approximately 12% of its garments from one major supplier. For the three months ended September 30, 2019, the Company purchased 18% and 13% of its raw materials from two major suppliers, respectively. For the six months ended September 30, 2019, the Company purchased approximately 24% and 11% of its raw materials from two major suppliers, respectively. As of September 30, 2020, accounts payable to the Company’s one major suppliers accounted for 47% of the total accounts payable balance. As of March 31, 2020, accounts payable to the Company’s three major suppliers accounted for 39%, 16%, and 10% of the total accounts payable balance, respectively.

Risks and Uncertainties

Risks and Uncertainties

The principal operations of the Company are located in 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 are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic, and legal environment and foreign currency exchange. 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 compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.

The spread of COVID-19 around the world since March 2020 has caused significant volatility in U.S. and international markets. The Company’s sales declined in the first half of fiscal 2021. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies. Based on the assessment of the current economic environment, customer demand, and sales trend, and the negative impact from the prolonged COVID-19 outbreak and spread, the Company’s revenue and operating cash flows may be lower than expected for fiscal year 2021.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets

	Useful life
Land	Infinite
Property and buildings	15 years
Equipment and machinery	3-5 years
Office and electronic equipment	3-5 years
Automobiles	5 years
Leasehold improvements	Lesser of useful life and lease term

Schedule of currency exchange rates used in creating consolidated financial statements

	September 30, 2020	March 31, 2020
Period-end spot rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.7501	US$1=HKD7.7529
	US$1=CNY6.8033	US$1=CNY7.0896
Average rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.7510	US$1=HKD7.8163
	US$1=CNY7.0012	US$1=CNY6.9642

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Accounts Receivables, Net (Tables)

6 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Schedule of accounts receivable

	As of			As of
	September 30, 2020			March 31, 2020
Trade accounts receivable	$	19,969,559		$	5,340,389
Less: allowances for doubtful accounts		(45,167	)		(4,641	)
Accounts receivable, net	$	19,924,392		$	5,335,748

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Inventories (Tables)

6 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

Schedule of components of inventories

	As of		As of
	September 30, 2020		March 31, 2020
Raw materials	$	4,614,464	$	12,499,301
Work-in-progress		377,627		1,541,716
Finished goods		5,312,789		8,592,755
Total inventory	$	10,304,880	$	22,633,772

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Advance to Suppliers (Tables)

6 Months Ended

Sep. 30, 2020

Advance To Suppliers [Abstract]

Schedule of advance to suppliers

	As of			As of
	September 30, 2020			March 31, 2020
Advance to suppliers	$	2,807,178		$	2,118,367
Less: allowances for doubtful accounts		(13,396	)		(2,000	)
Advance to suppliers, net	$	2,793,782		$	2,116,367

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Leases (Tables)

6 Months Ended

Sep. 30, 2020

Leases [Abstract]

Schedule of supplemental balance sheet information related to operating leases

	September 30, 2020
Right-of-use assets	$	952,900
Operating lease liabilities - current	$	218,583
Operating lease liabilities - non-current		555,144
Total operating lease liabilities	$	773,727

Schedule of weighted average remaining lease term and discounts rate of operating leases

Remaining lease term and discount rate:
Weighted average remaining lease term (years)	2.9
Weighted average discount rate	4.06	%

Schedule of maturities of lease liabilities

2021	$	203,279
2022		372,363
2023		248,297
2024		186,854
Total lease payments		1,010,793
Less: imputed interest		(57,893	)
Less: prepayments		(179,173	)
Present value of lease liabilities	$	773,727

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Property, Plant and Equipment, Net (Tables)

6 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of property, plant and equipment, net

	As of			As of
	September 30, 2020			March 31, 2020
Land (1)	$	1,831,192		$	1,831,192
Property and buildings		432,562			432,562
Equipment and machinery (2)		8,029,899			7,630,255
Office and electric equipment		808,088			793,405
Automobiles		492,976			480,687
Leasehold improvements		2,767,274			2,765,610
Subtotal		14,361,991			13,933,711
Construction in progress (3)		194,752			194,752
Less: Accumulated depreciation and amortization (4)		(8,783,584	)		(7,954,299	)
Property and equipment, net	$	5,773,159		$	6,174,164

(1) On August 7, 2019 and February 6, 2020, the Company, through Jerash Garments, purchased 12,340 square meters (approximately three acres) and 4,516 square meters (approximately 48,608 square feet) of land in Al Tajamouat Industrial City, Jordan (the “Jordan Properties”), from third parties to construct a factory and a dormitory for the Company’s employees, respectively. The aggregate purchase price of the Jordan Properties was JOD1,177,301 (approximately US$1.7 million).

(2) On June 18, 2019, the Company acquired all of the outstanding shares of Paramount, a contract manufacturer based in Amman, Jordan. As a result, Paramount became a subsidiary of Jerash Garments, and the Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of acquisition, so this transaction was accounted for as an asset acquisition. $980,000 was paid in cash to acquire all of the machinery and equipment from Paramount and the machinery and equipment were transferred to the Company.

(3) The construction in progress account represents costs incurred for constructing a dormitory, which was previously planned to be a sewing workshop. This dormitory is approximately 4,800 square feet in the Tafilah Governorate of Jordan. Construction was temporarily suspended due to the COVID-19 pandemic. The dormitory is expected to be completed and ready for use in fiscal 2022.

(4) Depreciation and amortization expenses were $417,231 and $386,136 for the three months ended September 30, 2020 and 2019, respectively. Depreciation and amortization expenses were $829,285 and $724,778 for the six months ended September 30, 2020 and 2019, respectively.

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Stock-Based Compensation (Tables)

6 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Schedule of fair value of the options granted

	Stock Options November 27, 2019
Expected term (in years)		10.0
Risk-free interest rate (%)		1.77	%
Expected volatility (%)		48.59	%
Dividend yield (%)		3.08	%

Schedule of stock option activity

	Option to acquire Shares		Weighted Average Exercise Price
Stock options outstanding at March 31, 2020		1,189,500	$	6.87
Granted		-		-
Exercised		-		-
Cancelled		-		-
Stock options outstanding at September 30, 2020		1,189,500	$	6.87

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Related Party Transactions (Tables)

6 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Schedule of relationship and the nature of related party transactions

Name of Related Party	Relationship to the Company	Nature of Transactions
Ford Glory International Limited (“FGIL”)	Affiliate, subsidiary of Ford Glory Holdings (“FGH”), which is 49% indirectly owned by the Company’s President, Chief Executive Officer and Chairman, and a significant stockholder	Operating Lease
Yukwise Limited (“Yukwise”)	Wholly owned by the Company’s President, Chief Executive Officer, and Chairman, and a significant stockholder	Consulting Services
Multi-Glory Corporation Limited (“Multi-Glory”)	Wholly owned by a significant stockholder	Consulting Services
Jiangmen V-Apparel Manufacturing Limited	Affiliate, subsidiary of FGH	Operating Lease

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Earnings Per Share (Tables)

6 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted earnings per share

	Three Months Ended September 30, (in $000s except share and per share information)				Six Months Ended September 30, (in $000s except share and per share information)
	2020		2019		2020		2019
Numerator:
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$	2,560	$	3,593	$	3,374	$	5,142
Denominator:
Denominator for basic earnings per share (weighted-average shares)		11,325,000		11,325,000		11,325,000		11,325,000
Dilutive securities – unexercised warrants and options		4,953		182,071		5,081		171,803
Denominator for diluted earnings per share (adjusted weighted-average shares)		11,329,953		11,507,071		11,330,081		11,496,803
Basic earnings per share	$	0.23	$	0.32	$	0.30	$	0.45
Diluted earnings per share	$	0.23	$	0.31	$	0.30	$	0.45

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Segment Reporting (Tables)

6 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Schedule of sales by geographic areas

	For the three months ended September 30,
	2020		2019
United States	$	23,411,339	$	29,352,998
Jordan		2,302,615		1,094,707
Other		1,372,364		163,414
Total	$	27,086,318	$	30,611,119

	For the six months ended September 30,
	2020		2019
United States	$	40,992,512	$	51,393,943
Jordan		3,428,197		1,581,087
Other		1,372,364		163,414
Total	$	45,793,073	$	53,138,444

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Organization and Description of Business (Details) $ in Millions	Sep. 30, 2020 USD ($)	Sep. 30, 2020 JOD (JD)	Jul. 06, 2020 JOD (JD)	Aug. 28, 2019 USD ($)	Aug. 28, 2019 HKD ($)	Sep. 18, 2005 JOD (JD)	Oct. 24, 2004 JOD (JD)
Hashemite Kingdom Of Jordan [Member]
Organization and Description of Business (Details) [Line Items]
Capital	$ 212,000	JD 150,000
Chinese Garments [Member]
Organization and Description of Business (Details) [Line Items]
Capital		JD 50,000
Paramount [Member]
Organization and Description of Business (Details) [Line Items]
Capital							JD 100,000
Jerash First [Member]
Organization and Description of Business (Details) [Line Items]
Capital			JD 150,000
Victory Apparel [Member]
Organization and Description of Business (Details) [Line Items]
Capital						JD 50,000
Jiangmen Treasure Success [Member]
Organization and Description of Business (Details) [Line Items]
Capital				$ 385,000	$ 3
Ownership percentage				100.00%	100.00%

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Summary of Significant Accounting Policies (Details)	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)
Summary of Significant Accounting Policies (Details) [Line Items]
Net asset variable interest entity, description				The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Company’s VIE, Victory Apparel, was inactive for the six months ended September 30, 2020, and the net assets of the VIE were approximately $0.3 million as of each of September 30, 2020 and March 31, 2020.
Annual return percentage				5.00%
short-term investments (in Dollars)
Realized gain (in Dollars)				64,692
Allowance for accounts receivable (in Dollars)	$ 4,641	45,167		45,167
Allowance for advance to suppliers (in Dollars)	$ 2,000	13,396		13,396
Total shipping and handling expenses (in Dollars)		$ 2,853,679	3,113,875	$ 4,746,657	5,737,557
Corporate income tax rate				14.00%
Income tax, description				In accordance with the Investment Encouragement Law, Jerash Garments’ export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing on the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, the Jordanian government changed some features of its tax incentive programs and Jerash Garments and its subsidiaries and VIE are now qualified for incentives applicable to an industrial park that houses manufacturing operations in Jordan (“Development Zone”), a change from the previous incentive program relating to Qualifying Industrial Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE were subject to corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020, that rate increased to 14% plus a 1% social contribution.
Local sales tax				16.00%
Income tax realized percentage		50.00%		50.00%
FDIC insured amount (in Dollars)		$ 250,000		$ 250,000
Revenue From Contract With Customer [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Number of customer				1
Accounts Receivable [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Number of customer	4
Shipping and Handling [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Total shipping and handling expenses (in Dollars)		$ 360,217	$ 292,354	$ 544,130	$ 501,136
Customer One [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk				76.00%	91.00%
Customer One [Member] | Revenue From Contract With Customer [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk		74.00%	87.00%
Customer One [Member] | Accounts Receivable [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk	42.00%			78.00%
Customer Two [Member] | Accounts Receivable [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk	20.00%
Customer Three [Member] | Accounts Receivable [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk	20.00%
Jordan [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Deposits (in Dollars)	$ 6,894,641	$ 8,678,214		$ 8,678,214
China [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Deposits (in Dollars)	125,830	9,941		9,941
Hong Kong [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Deposits (in Dollars)	19,847,852	19,358,851		19,358,851
United States [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
FDIC insured amount (in Dollars)	$ 48,386	$ 73,385		$ 73,385
Accounts Receivable [Member] | Customer Four [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk	14.00%
Supplier One [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk		20.00%	18.00%	12.00%	24.00%
Supplier One [Member] | Accounts Receivable [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk		39.00%		47.00%
Supplier Two [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk			13.00%		11.00%
Supplier Two [Member] | Accounts Receivable [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk		16.00%
Supplier Three [Member] | Accounts Receivable [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Concentration risk		10.00%

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Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets	6 Months Ended
	Sep. 30, 2020
Land [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets [Line Items]
Estimated useful lives, description	Infinite
Property and Buildings [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets [Line Items]
Estimated useful lives	15 years
Equipment and Machinery [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets [Line Items]
Estimated useful lives	3 years
Equipment and Machinery [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets [Line Items]
Estimated useful lives	5 years
Office and Electronic Equipment [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets [Line Items]
Estimated useful lives	3 years
Office and Electronic Equipment [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets [Line Items]
Estimated useful lives	5 years
Automobiles [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets [Line Items]
Estimated useful lives	5 years
Leasehold Improvements [Member]
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets [Line Items]
Estimated useful lives, description	Lesser of useful life and lease term

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Summary of Significant Accounting Policies (Details) - Schedule of currency exchange rates used in creating consolidated financial statements	Sep. 30, 2020	Mar. 31, 2020
JOD | Period- End Spot Rate [Member]
Foreign currency exchange rate	0.7090	0.7090
JOD | Average Rate [Member]
Foreign currency exchange rate	0.7090	0.7090
HKD | Period- End Spot Rate [Member]
Foreign currency exchange rate	7.7501	7.7529
HKD | Average Rate [Member]
Foreign currency exchange rate	7.7510	7.8163
CNY | Period- End Spot Rate [Member]
Foreign currency exchange rate	6.8033	7.0896
CNY | Average Rate [Member]
Foreign currency exchange rate	7.0012	6.9642

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Accounts Receivables, Net (Details) - Schedule of accounts receivable - USD ($)	Sep. 30, 2020	Mar. 31, 2020
Schedule of accounts receivable [Abstract]
Trade accounts receivable	$ 19,969,559	$ 5,340,389
Less: allowances for doubtful accounts	(45,167)	(4,641)
Accounts receivable, net	$ 19,924,392	$ 5,335,748

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Inventories (Details) - Schedule of components of inventories - USD ($)	Sep. 30, 2020	Mar. 31, 2020
Schedule of components of inventories [Abstract]
Raw materials	$ 4,614,464	$ 12,499,301
Work-in-progress	377,627	1,541,716
Finished goods	5,312,789	8,592,755
Total inventory	$ 10,304,880	$ 22,633,772

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Advance to Suppliers (Details) - Schedule of advance to suppliers - USD ($)	Sep. 30, 2020	Mar. 31, 2020
Schedule of advance to suppliers [Abstract]
Advance to suppliers	$ 2,807,178	$ 2,118,367
Less: allowances for doubtful accounts	(13,396)	(2,000)
Advance to suppliers, net	$ 2,793,782	$ 2,116,367

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Leases (Details)	3 Months Ended		6 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)
Leases [Abstract]
Number of operating leases			35
Operating lease expenses	$ 535,568	$ 402,950	$ 1,047,341	$ 945,735

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Leases (Details) - Schedule of supplemental balance sheet information related to operating leases - USD ($)	Sep. 30, 2020	Mar. 31, 2020
Leases [Abstract]
Right-of-use assets	$ 952,900	$ 1,147,090
Operating lease liabilities - current	218,583	210,081
Operating lease liabilities - non-current	555,144	$ 649,935
Total operating lease liabilities	$ 773,727

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Leases (Details) - Schedule of weighted average remaining lease term and discounts rate of operating leases	Sep. 30, 2020
Schedule of weighted average remaining lease term and discounts rate of operating leases [Abstract]
Weighted average remaining lease term (years)	2 years 328 days
Weighted average discount rate	4.06%

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Leases (Details) - Schedule of maturities of lease liabilities	Sep. 30, 2020 USD ($)
Schedule of maturities of lease liabilities [Abstract]
2021	$ 203,279
2022	372,363
2023	248,297
2024	186,854
Total lease payments	1,010,793
Less: imputed interest	(57,893)
Less: prepayments	(179,173)
Present value of lease liabilities	$ 773,727

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Property, Plant and Equipment, Net (Details)				1 Months Ended	3 Months Ended		6 Months Ended
	Feb. 06, 2020 JOD (JD) m²	Aug. 07, 2019 USD ($) m²	Aug. 07, 2019 JOD (JD) m²	Jun. 18, 2019 USD ($)	Sep. 30, 2020 USD ($) m²	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) m²	Sep. 30, 2019 USD ($)
Property, Plant and Equipment, Net (Details) [Line Items]
Area of Land (in Square Meters) | m²					4,800		4,800
Depreciation and amortization expenses | $					$ 417,231	$ 386,136	$ 829,285	$ 724,778
Almutafaweq Co [Member]
Property, Plant and Equipment, Net (Details) [Line Items]
Payments to acquire machinery and equipment | $				$ 980,000
Jordan Property [Member]
Property, Plant and Equipment, Net (Details) [Line Items]
Area of Land (in Square Meters) | m²	4,516	12,340	12,340
Aggregate purchase price	JD 1,177,301	$ 1,700,000	JD 1,177,301

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Property, Plant and Equipment, Net (Details) - Schedule of property, plant and equipment, net - USD ($)		Sep. 30, 2020	Mar. 31, 2020
Property, Plant and Equipment [Line Items]
Subtotal		$ 14,361,991	$ 13,933,711
Construction in progress	[1]	194,752	194,752
Less: Accumulated depreciation and amortization	[2]	(8,783,584)	(7,954,299)
Property and equipment, net		5,773,159	6,174,164
Land [Member]
Property, Plant and Equipment [Line Items]
Subtotal	[3]	1,831,192	1,831,192
Property and buildings [Member]
Property, Plant and Equipment [Line Items]
Subtotal		432,562	432,562
Equipment and machinery [Member]
Property, Plant and Equipment [Line Items]
Subtotal	[4]	8,029,899	7,630,255
Office and electric equipment [Member]
Property, Plant and Equipment [Line Items]
Subtotal		808,088	793,405
Automobiles [Member]
Property, Plant and Equipment [Line Items]
Subtotal		492,976	480,687
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Subtotal		$ 2,767,274	$ 2,765,610

[1] The construction in progress account represents costs incurred for constructing a dormitory, which was previously planned to be a sewing workshop. This dormitory is approximately 4,800 square feet in the Tafilah Governorate of Jordan. Construction was temporarily suspended due to the COVID-19 pandemic. The dormitory is expected to be completed and ready for use in fiscal 2022.

[2] Depreciation and amortization expenses were $417,231 and $386,136 for the three months ended September 30, 2020 and 2019, respectively. Depreciation and amortization expenses were $829,285 and $724,778 for the six months ended September 30, 2020 and 2019, respectively.

[3] On August 7, 2019 and February 6, 2020, the Company, through Jerash Garments, purchased 12,340 square meters (approximately three acres) and 4,516 square meters (approximately 48,608 square feet) of land in Al Tajamouat Industrial City, Jordan (the “Jordan Properties”), from third parties to construct a factory and a dormitory for the Company’s employees, respectively. The aggregate purchase price of the Jordan Properties was JOD1,177,301 (approximately US$1.7 million).

[4] On June 18, 2019, the Company acquired all of the outstanding shares of Paramount, a contract manufacturer based in Amman, Jordan. As a result, Paramount became a subsidiary of Jerash Garments, and the Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of acquisition, so this transaction was accounted for as an asset acquisition. $980,000 was paid in cash to acquire all of the machinery and equipment from Paramount and the machinery and equipment were transferred to the Company.

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Equity (Details) - USD ($)		1 Months Ended					6 Months Ended
	Jun. 05, 2019	Aug. 24, 2020	Jun. 02, 2020	Feb. 26, 2020	Nov. 26, 2019	Aug. 19, 2019	Sep. 30, 2020	Aug. 05, 2020	May 15, 2020	Mar. 31, 2020	Feb. 05, 2020	Nov. 04, 2019	Jul. 29, 2019	May 17, 2019
Stockholders' Equity Note [Abstract]
Preferred stock, shares authorized (in Shares)							500,000			500,000
Preferred stock, par value							$ 0.001			$ 0.001
Common stock, shares outstanding (in Shares)							11,325,000			11,325,000
Statutory reserve, description							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. This reserve is not available for dividend distribution. In addition, PRC companies are required to set aside at least 10% of their after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of their registered capital.
Dividends payable, amount per share								$ 0.05	$ 0.05		$ 0.05	$ 0.05	$ 0.05	$ 0.05
Cash dividends (in Dollars)	$ 566,250	$ 566,250	$ 566,250	$ 566,250	$ 566,250	$ 566,250

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Stock-Based Compensation (Details) - USD ($)			1 Months Ended		3 Months Ended		6 Months Ended
	Aug. 03, 2018	Apr. 09, 2018	Nov. 27, 2019	Oct. 29, 2018	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Mar. 21, 2018
Stock-Based Compensation (Details) [Line Items]
Weighted average remaining contractual term	10 years	5 years	10 years				5 years
Risk-free interest rate	2.95%	2.60%
Expected volatility	50.30%	50.30%
Warrants outstanding					264,410		264,410
Weighted average exercise price							$ 6.35
Common stock, capital shares reserved for future issuance									1,484,250
Stock options	150,000	989,500	50,000
Weighted average exercise price	$ 6.12	$ 7.00	$ 6.50
Fair value of options granted			$ 126,454
Total expense						$ 193,955	$ 42,151	$ 193,955
IPO Underwriter Warrants [Member]
Stock-Based Compensation (Details) [Line Items]
Class of warrant or right					57,200		57,200
Class of warrant or right, exercise price of warrants or rights					$ 8.75		$ 8.75
Lock up period for shares				180 days
Minimum [Member]
Stock-Based Compensation (Details) [Line Items]
Risk-free interest rate							1.80%
Expected volatility							50.30%
Number of shares authorized					300,000		300,000
Maximum [Member]
Stock-Based Compensation (Details) [Line Items]
Risk-free interest rate							2.80%
Expected volatility							52.20%
Number of shares authorized					1,784,250		1,784,250

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Stock-Based Compensation (Details) - Schedule of fair value of the options granted - Stock Options [Member]	1 Months Ended
	Nov. 27, 2019
Stock-Based Compensation (Details) - Schedule of fair value of the options granted [Line Items]
Expected term (in years)	10 years
Risk-free interest rate (%)	1.77%
Expected volatility (%)	48.59%
Dividend yield (%)	3.08%

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Stock-Based Compensation (Details) - Schedule of stock option activity - $ / shares			1 Months Ended	6 Months Ended
	Aug. 03, 2018	Apr. 09, 2018	Nov. 27, 2019	Sep. 30, 2020
Schedule of stock option activity [Abstract]
Stock option outstanding, beginning				1,189,500
Weighted Average Exercise Price, beginning				$ 6.87
Granted	150,000	989,500	50,000
Granted, Weighted Average Exercise Price	$ 6.12	$ 7.00	$ 6.50
Exercised
Exercised, Weighted Average Exercise Price
Cancelled
Cancelled, Weighted Average Exercise Price
Stock option outstanding, beginning				1,189,500
Weighted Average Exercise Price, beginning				$ 6.87

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Related Party Transactions (Details)						1 Months Ended			3 Months Ended				6 Months Ended
	Jul. 15, 2019 USD ($)	Jul. 15, 2019 HKD ($)	Oct. 03, 2018 USD ($)	Oct. 03, 2018 HKD ($)	Jan. 12, 2018 USD ($)	Aug. 31, 2019 USD ($)	Aug. 31, 2019 CNY (¥)	Jan. 16, 2018 USD ($)	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)
Related Party Transactions (Details) [Line Items]
Operating lease, expense									$ 535,568		$ 402,950		$ 1,047,341	$ 945,735
Aggregate purchase price													428,280	3,053,472
Marketing services and advisory, amount					$ 300,000			$ 300,000
Operating lease renewal, term					1 month			1 month
Amount of compensation temporarily reduced					$ 20,000			$ 20,000
Temporarily compensation term					May 2020 to August 2020.			May 2020 to August 2020.
Consulting Fees										$ 65,000		$ 75,000	130,000	150,000
Advisory and management expenses										$ 65,000		$ 75,000	$ 130,000	$ 150,000
Ford Glory International Limited [Member]
Related Party Transactions (Details) [Line Items]
Operating lease, expense			$ 15,253	$ 119,540
Aggregate purchase price	$ 8,100,000	$ 63,000,000
Jiangmen V-Apparel Manufacturing Limited [Member]
Related Party Transactions (Details) [Line Items]
Operating lease, expense						$ 4,000	¥ 28,300
Operating lease, term						1 year	1 year
Treasure Success International [Member]
Related Party Transactions (Details) [Line Items]
Aggregate purchase price	$ 800,000	$ 6,300,000

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Related Party Transactions (Details) - Schedule of relationship and the nature of related party transactions	3 Months Ended
	Dec. 31, 2020
Ford Glory International Limited [Member]
Related Party Transactions (Details) - Schedule of relationship and the nature of related party transactions [Line Items]
Relationship to the Company	Affiliate, subsidiary of Ford Glory Holdings ("FGH"), which is 49% indirectly owned by the Company's President, Chief Executive Officer and Chairman, and a significant stockholder
Nature of Transactions	Operating Lease
Yukwise Limited [Member]
Related Party Transactions (Details) - Schedule of relationship and the nature of related party transactions [Line Items]
Relationship to the Company	Wholly owned by the Company's President, Chief Executive Officer, and Chairman, and a significant stockholder
Nature of Transactions	Consulting Services
Multi-Glory Corporation Limited [Member]
Related Party Transactions (Details) - Schedule of relationship and the nature of related party transactions [Line Items]
Relationship to the Company	Wholly owned by a significant stockholder
Nature of Transactions	Consulting Services
Jiangmen V-Apparel Manufacturing Limited [Member]
Related Party Transactions (Details) - Schedule of relationship and the nature of related party transactions [Line Items]
Relationship to the Company	Affiliate, subsidiary of FGH
Nature of Transactions	Operating Lease

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Related Party Transactions (Details) - Schedule of relationship and the nature of related party transactions (Parentheticals)	Dec. 31, 2020
President [Member]
Related Party Transactions (Details) - Schedule of relationship and the nature of related party transactions (Parentheticals) [Line Items]
Percentage of ownership indirectly owned by the president	49.00%

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Credit Facilities (Details) - USD ($)	6 Months Ended
	Sep. 30, 2020	Mar. 31, 2020	Jan. 31, 2019	Jan. 22, 2019	Jun. 14, 2018	May 29, 2017
Credit Facilities (Details) [Line Items]
Letter extends term description	The 2020 Facility Letter extends the term of the HSBC Facility indefinitely. Pursuant to the HSBC Facility, the Company has a total credit limit of $11,000,000.
Percentage of flat fee	0.35%
Credit facility outstanding amount	$ 932,152	$ 235
Credit facility due period	120 years
S C B H K Credit Facility [Member]
Credit Facilities (Details) [Line Items]
Import invoice financing and pre-shipment financing of export orders			$ 3.0
Credit facility bears interest, Percentage			1.30%
Treasure Success International [Member] | Credit Facility [Member]
Credit Facilities (Details) [Line Items]
Credit facility borrowing capacity					$ 12,000,000	$ 8,000,000
Cash and other investment security collateral amount				$ 3,000,000	$ 3,000,000
Credit facility outstanding amount	$ 932,152	235
Long-term Line of Credit	$ 932,152	$ 235
Treasure Success International [Member] | S C B H K Credit Facility [Member]
Credit Facilities (Details) [Line Items]
Credit facility borrowing capacity			$ 3.0
Hongkong Interbank Offered Rate Libor [Member] | Treasure Success International [Member] | Credit Facility [Member]
Credit Facilities (Details) [Line Items]
Interest rate of credit facility	1.50%
London Interbank Offered Rate L I B O R [Member] | Treasure Success International [Member] | Credit Facility [Member]
Credit Facilities (Details) [Line Items]
Interest rate of credit facility	1.50%

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Earnings Per Share (Details) - Warrant [Member] - shares	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share (Details) [Line Items]
Class of warrant or right, outstanding	1,453,910		1,453,910
Anti-dilutive basic and diluted earnings per share	1,403,910	57,200	1,403,910	57,200

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Earnings Per Share (Details) - Schedule of computation of basic and diluted earnings per share - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Schedule of computation of basic and diluted earnings per share [Abstract]
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders (in Dollars)	$ 2,560	$ 3,593	$ 3,374	$ 5,142
Denominator for basic earnings per share (weighted-average shares)	11,325,000	11,325,000	11,325,000	11,325,000
Dilutive securities – unexercised warrants and options	4,953	182,071	5,081	171,803
Denominator for diluted earnings per share (adjusted weighted-average shares)	11,329,953	11,507,071	11,330,081	11,496,803
Basic earnings per share (in Dollars per share)	$ 0.23	$ 0.32	$ 0.30	$ 0.45
Diluted earnings per share (in Dollars per share)	$ 0.23	$ 0.31	$ 0.30	$ 0.45

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Segment Reporting (Details)	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Segment Reporting (Details) [Line Items]
Number of operating segment				1
Long-lived assets			99.90%
Revenue from Contract with Customer, Product and Service Benchmark [Member] | Customer Concentration Risk [Member]
Segment Reporting (Details) [Line Items]
Concentration risk, Percentage	87.50%	94.80%	89.90%	95.50%

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Segment Reporting (Details) - Schedule of sales by geographic areas - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 27,086,318	$ 30,611,119	$ 45,793,073	$ 53,138,444
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	23,411,339	29,352,998	40,992,512	51,393,943
Jordan [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	2,302,615	1,094,707	3,428,197	1,581,087
Other Country [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 1,372,364	$ 163,414	$ 1,372,364	$ 163,414

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Commitments and Contingencies (Details) - CHINA $ in Millions	Aug. 28, 2019 USD ($)	Aug. 28, 2019 HKD ($)
Commitments and Contingencies (Details) [Line Items]
Capital	$ 385,000	$ 3
Paid in capital	$ 385,000	$ 3
Equity method investment, ownership percentage	100.00%	100.00%

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Income Tax (Details)	6 Months Ended
	Sep. 30, 2020
Income Tax Disclosure [Abstract]
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Percent	14.00%
Income Tax Holiday, Description	In accordance with the Investment Encouragement Law, Jerash Garments’ export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing on the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, Jordanian government has changed some features of Jerash Garments and its subsidiaries area to a Development Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE began paying corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020, that rate increased to 14% plus a 1% social contribution.

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Subsequent Events (Details)	Nov. 02, 2020 $ / shares
Subsequent Events [Abstract]
Dividends Payable, Amount Per Share	$ 0.05