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, ~~2021~~2022

☐ 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~~(201) 285-7973

(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 ~~11, 2021,~~10, 2022, there were ~~12,334,318~~12,429,492 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, ~~2021~~2022

Contents

Part I		Financial Information	1

~~Item 1~~	~~Financial Statements~~	1

Item 1		Financial Statements	1

		Condensed Consolidated Balance Sheets as of September 30, ~~2021~~2022 and March 31, ~~2021~~2022	1

		Condensed Consolidated Statements of ~~Income and~~ Comprehensive Income for the Three and Six Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	2

		Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	3

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, ~~2021~~2022 and ~~2020~~2021	5

		Notes to Condensed Consolidated Financial Statements	6

Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations	2221

Item 3		Quantitative and Qualitative Disclosures about Market Risk	3230

Item 4		Controls and Procedures	3230

Part II		Other Information	3331

Item 1		Legal Proceedings	3331

Item 1A		Risk Factors	3331

Item 2		Unregistered Sales of Equity Securities and Use of Proceeds	3331

Item 3		Defaults Upon Senior Securities	3331

Item 4		Mine Safety Disclosures	3331

Item 5		Other Information	3331

Item 6	~~Exhibits~~	34Exhibits	32

Signature			3533

JERASH HOLDINGS (US), INC.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

JERASH HOLDINGS (US), INC.,

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,
2021 March 31,
2021
(Unaudited)

ASSETS
Current Assets:
Cash $ 25,042,220 $ 21,126,090
Restricted cash - 714,844
Accounts receivable, net 13,416,125 12,033,268
Tax recoverable 1,079 379,719
Inventories 20,560,272 25,035,966
Prepaid expenses and other current assets 2,833,962 2,329,289
Investment deposits 3,200,000 -
Advance to suppliers, net 1,886,856 3,036,693
Total Current Assets 66,940,514 64,655,869

Restricted cash - non-current 1,301,588 1,020,777
Long-term deposits 268,255 128,690
Deferred tax assets, net 148,663 148,663
Property, plant and equipment, net 6,554,481 5,699,506
Right of use assets 1,601,671 1,596,600
Total Assets $ 76,815,172 $ 73,250,105

LIABILITIES AND EQUITY

Current Liabilities:
Credit facilities $ - $ 612,703
Accounts payable 4,535,255 7,922,839
Accrued expenses 3,460,886 2,332,867
Income tax payable - current 1,519,978 1,803,175
Other payables 1,076,251 1,455,208
Receipt in advance from a customer 1,474,932 -
Operating lease liabilities - current 550,099 400,043
Total Current Liabilities 12,617,401 14,526,835

Operating lease liabilities - non-current 905,710 935,773
Income tax payable - non-current 961,048 1,094,048
Total Liabilities 14,484,159 16,556,656

Commitments and Contingencies

Equity
Preferred stock, $0.001 par value; 500,000 shares authorized; NaN issued and outstanding $ - $ -
Common stock, $0.001 par value; 30,000,000 shares authorized; 11,334,318 and 11,332,974 shares issued and outstanding respectively 11,334 11,333
Additional paid-in capital 15,617,080 15,301,268
Statutory reserve 346,315 346,315
Retained earnings 45,991,062 40,748,314
Accumulated other comprehensive gain (loss) 63,824 (15,901 )
Total Jerash Holdings (US), Inc.’s Stockholder’s Equity 62,029,615 56,391,329

Noncontrolling interest 301,398 302,120
Total Equity 62,331,013 56,693,449

Total Liabilities and Equity $ 76,815,172 $ 73,250,105

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

~~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,
2021 2020 2021 2020

Revenue, net $ 45,711,166 $ 27,086,318 $ 75,599,858 $ 45,793,073
Cost of goods sold 35,606,587 21,203,568 59,864,337 36,858,753
Gross Profit 10,104,579 5,882,750 15,735,521 8,934,320

Selling, general and administrative expenses 4,223,671 2,853,679 7,537,902 4,704,506
Stock-based compensation expenses 315,296 - 315,813 42,151
Total Operating Expenses 4,538,967 2,853,679 7,853,715 4,746,657

Income from Operations 5,565,612 3,029,071 7,881,806 4,187,663

Other (Expense) Income:
Other (expense) income, net (74,557 ) 62,917 (38,276 ) 60,178
Total other (expense) income, net (74,557 ) 62,917 (38,276 ) 60,178

Net income before provision for income taxes 5,491,055 3,091,988 7,843,530 4,247,841

Income tax expense 1,050,330 531,896 1,468,139 873,896

Net Income 4,440,725 2,560,092 6,375,391 3,373,945

Net loss attributable to noncontrolling interest 705 8 722 14
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders $ 4,441,430 $ 2,560,100 $ 6,376,113 $ 3,373,959

Net Income $ 4,440,725 $ 2,560,092 $ 6,375,391 $ 3,373,945

Other Comprehensive Income:
Foreign currency translation (loss) gain (263 ) 712 79,725 159
Total Comprehensive Income 4,440,462 2,560,804 6,455,116 3,374,104
Comprehensive income attributable to noncontrolling interest - - - -
Comprehensive Income Attributable to Jerash Holdings (US), Inc.’s Common Stockholders $ 4,440,462 $ 2,560,804 $ 6,455,116 $ 3,374,104

Earnings Per Share Attributable to Common Stockholders:
Basic and diluted $ 0.39 $ 0.23 $ 0.56 $ 0.30

Weighted Average Number of Shares
Basic 11,334,318 11,325,000 11,333,907 11,325,000
Diluted 11,512,533 11,329,953 11,403,931 11,330,081

Dividend per share $ 0.05 $ 0.05 $ 0.10 $ 0.10

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

~~JERASH HOLDINGS (US), INC.,~~

~~SUBSIDIARIES AND AFFILIATE~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

~~FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 AND 2020~~

Additional Accumulated Other
Preferred Stock Common Stock Paid-in Statutory Retained Comprehensive Noncontrolling Total
Shares Amount Shares Amount Capital Reserve Earnings Gain (Loss) Interest Equity
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 payment - - - - - - (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

Balance at March 31, 2021 - $ - 11,332,974 $ 11,333 $ 15,301,268 $ 346,315 $ 40,748,314 $ (15,901 ) $ 302,120 $ 56,693,449

Stock-based compensation expense for the restricted stock units issued under stock incentive plan - - - - 315,813 - - - - 315,813
Cashless exercise of warrants - - 1,344 1 (1 ) - - - - -
Net income (loss) - - - - - - 6,376,113 - (722 ) 6,375,391
Dividend payment - - - - - - (1,133,365 ) - - (1,133,365 )
Foreign currency translation gain - - - - - - - 79,725 - 79,725

Balance at September 30, 2021 (unaudited) - $ - 11,334,318 $ 11,334 $ 15,617,080 $ 346,315 $ 45,991,062 $ 63,824 $ 301,398 $ 62,331,013

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

~~FOR THE THREE MONTHS ENDED SEPTERMBER 30, 2021 AND 2020~~

Preferred Stock Common Stock Additional Paid-in Statutory Retained Accumulated Other Comprehensive Noncontrolling Total
Shares Amount Shares Amount Capital Reserve Earnings Gain (Loss) Interest Equity
Balance at June 30, 2021 (unaudited) - $ - 11,334,318 $ 11,334 $ 15,301,784 $ 346,315 $ 42,116,348 $ 64,087 $ 302,103 $ 58,141,971

Stock-based compensation expense for the restricted stock units issued under stock incentive plan - - - - 315,296 - - - - 315,296
Net income (loss) - - - - - - 4,441,430 - (705 ) 4,440,725
Dividend payment - - - - - - (566,716 ) - - (566,716 )
Foreign currency translation loss - - - - - - - (263 ) - (263 )

Balance at September 30, 2021 (unaudited) - $ - 11,334,318 $ 11,334 $ 15,617,080 $ 346,315 $ 45,991,062 $ 63,824 $ 301,398 $ 62,331,013

	September 30, 2022			March 31, 2022
	(Unaudited)

ASSETS
Current Assets:
Cash	$	23,013,797		$	25,176,120
Accounts receivable, net		4,030,082			11,049,069
Tax recoverable		20,524			374,377
Inventories		36,426,607			28,255,179
Prepaid expenses and other current assets		2,896,886			3,233,592
Investment deposits		-			500,000
Advance to suppliers, net		2,271,202			1,284,601
Total Current Assets		68,659,098			69,872,938

Restricted cash - non-current		1,437,339			1,407,368
Long-term deposits		302,941			419,597
Deferred tax assets, net		352,590			352,590
Property, plant and equipment, net		20,815,727			10,933,147
Goodwill		499,282			499,282
Right of use assets, net		1,304,530			1,826,062
Total Assets	$	93,371,507		$	85,310,984

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Credit facilities	$	1,106,130		$	-
Accounts payable		10,536,911			4,840,225
Accrued expenses		3,795,540			3,115,953
Income tax payable - current		3,019,804			2,861,272
Other payables		1,528,980			2,278,816
Deferred revenue		465,405			-
Amount due to a related party		-			300,166
Operating lease liabilities - current		685,297			739,101
Total Current Liabilities		21,138,067			14,135,533

Operating lease liabilities - non-current		494,831			869,313
Income tax payable - non-current		751,410			1,001,880
Total Liabilities		22,384,308			16,006,726

Commitments and Contingencies

Stockholders’ 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; 12,534,318 and 12,334,318 shares issued; 12,429,492 and 12,334,318 outstanding as of September 30, 2022, and March 31, 2022, respectively		12,534			12,334
Additional paid-in capital		22,811,968			22,517,346
Treasury stock, cost base (104,826 shares held as of September 30, 2022, and no share held as of March 31, 2022, respectively)		(547,713	)		-
Statutory reserve		379,323			379,323
Retained earnings		48,537,812			46,268,110
Accumulated other comprehensive (loss) income		(206,725	)		127,145
Total Jerash Holdings (US), Inc.’s Stockholders’ Equity		70,987,199			69,304,258

Total Liabilities and Stockholders’ Equity	$	93,371,507		$	85,310,984

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

JERASH HOLDINGS (US), INC.,

~~SUBSIDIARIES~~ AND ~~AFFILIATE~~SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~COMPREHENSIVE INCOME

(UNAUDITED)

For the Six Months Ended
September 30,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 6,375,391 $ 3,373,945
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 880,135 829,285
Stock-based compensation expenses 315,813 42,151
Bad debt expense - 58,563
Amortization of operating lease right-of-use assets 356,030 365,478
Changes in operating assets:
Accounts receivable (1,382,857 ) (14,588,644 )
Inventories 4,475,694 12,328,893
Prepaid expenses and other current assets (504,673 ) 659,257
Advance to suppliers 1,149,836 (677,415 )
Changes in operating liabilities:
Accounts payable (3,387,584 ) (1,423,796 )
Accrued expenses 1,128,019 240,129
Other payables (378,957 ) 212,586
Receipt in advance from a customer 1,474,932 -
Operating lease liabilities (241,107 ) (257,577 )
Income tax payable (37,442 ) 550,033
Net cash provided by operating activities 10,223,230 1,712,888

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment (1,606,419 ) (428,280 )
Acquisition deposit (3,200,000 ) -
Payment for long-term deposits (268,255 ) -
Receipt of long-term deposits - 119,687
Net cash used in investing activities (5,074,674 ) (308,593 )

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payment (1,133,365 ) (1,132,500 )
Repayment from short-term loan (612,703 ) (235 )
Proceeds from short-term loan - 932,152
Net cash used in financing activities (1,746,068 ) (200,583 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH 79,609 (30 )

NET INCREASE IN CASH 3,482,097 1,203,682

CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD 22,861,711 26,916,709

CASH, AND RESTRICTED CASH, END OF THE PERIOD $ 26,343,808 $ 28,120,391

CASH AND RESTRICTED CASH, END OF PERIOD 26,343,808 28,120,391
LESS: NON-CURRENT RESTRICTED CASH 1,301,588 786,298
CASH, END OF PERIOD $ 25,042,220 $ 27,334,093
-
Supplemental disclosure information:
Cash paid for interest $ 74,401 $ -
Income tax paid $ 1,512,215 $ 347,689

Non-cash financing activities
Right of use assets obtained in exchange for operating lease obligations $ 353,611 $ 172,413

	For the Three Months Ended September 30,						For the Six Months Ended September 30,
	2022			2021			2022			2021

Revenue, net	$	37,825,695		$	45,711,166		$	71,262,256		$	75,599,858
Cost of goods sold		30,907,908			35,606,587			57,722,102			59,864,337
Gross Profit		6,917,787			10,104,579			13,540,154			15,735,521

Selling, general, and administrative expenses		4,308,084			4,177,204			8,326,782			7,462,779
Stock-based compensation expenses		-			315,296			294,822			315,813
Total Operating Expenses		4,308,084			4,492,500			8,621,604			7,778,592

Income from Operations		2,609,703			5,612,079			4,918,550			7,956,929

Other Income (Expenses):
Interest expenses		(163,595	)		(45,762	)		(251,437	)		(74,401	)
Other income (expenses), net		57,807			(74,557	)		118,049			(38,276	)
Total other income (expenses), net		(105,788	)		(120,319	)		(133,388	)		(112,677	)

Net income before provision for income taxes		2,503,915			5,491,760			4,785,162			7,844,252

Income tax expenses		712,163			1,050,330			1,272,028			1,468,139

Net Income		1,791,752			4,441,430			3,513,134			6,376,113

Other Comprehensive Income:
Foreign currency translation (loss) income		(216,210	)		(263	)		(333,870	)		79,725
Comprehensive Income Attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$	1,575,542		$	4,441,167		$	3,179,264		$	6,455,838

Earnings Per Share Attributable to Common Stockholders:
Basic and diluted	$	0.14		$	0.39		$	0.28		$	0.56

Weighted Average Number of Shares
Basic		12,498,431			11,334,318			12,416,823			11,333,907
Diluted		12,498,431			11,512,533			12,485,512			11,403,931

Dividend per share	$	0.05		$	0.05		$	0.10		$	0.10

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

JERASH HOLDINGS (US), INC.,

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

	Preferred Stock				Common Stock				Additional Paid-in			Treasury			Statutory		Retained			Accumulated Other Comprehensive			Total
	Shares		Amount		Shares		Amount		Capital			Stock			Reserve		Earnings			Income (Loss)			Equity
Balance at March 31, 2021		-	$	-		11,332,974	$	11,333	$	15,301,268		$	-		$	346,315	$	40,748,314		$	(15,901	)	$	56,391,329

Stock-based compensation expense for the restricted stock units under stock incentive plan		-		-		-		-		315,813			-			-		-			-			315,813
Cashless exercise of warrants		-		-		1,344		1		(1	)		-			-		-			-			-
Net income		-		-		-		-		-			-			-		6,376,113			-			6,376,113
Dividend payments		-		-		-		-		-			-			-		(1,133,365	)		-			(1,133,365	)
Foreign currency translation gain		-		-		-		-		-			-			-		-			79,725			79,725

Balance at September 30, 2021 (unaudited)		-	$	-		11,334,318	$	11,334	$	15,617,080		$	-		$	346,315	$	45,991,062		$	63,824		$	62,029,615

Balance at March 31, 2022		-	$	-		12,334,318	$	12,334	$	22,517,346		$	-		$	379,323	$	46,268,110		$	127,145		$	69,304,258

Stock-based compensation expense for the restricted stock units issued under stock incentive plan		-		-		-		-		294,822			-			-		-			-			294,822
Issuance of common stocks upon vesting of restricted stock units		-		-		200,000		200		(200	)		-			-		-			-			-
Shares repurchase		-		-		-		-		-			(547,713	)		-		-			-			(547,713	)
Net income		-		-		-		-		-			-			-		3,513,134			-			3,513,134
Dividend payments		-		-		-		-		-			-			-		(1,243,432	)		-			(1,243,432	)
Foreign currency translation loss		-		-		-		-		-			-			-		-			(333,870	)		(333,870	)

Balance at September 30, 2022 (unaudited)		-	$	-		12,534,318	$	12,534	$	22,811,968		$	(547,713	)	$	379,323	$	48,537,812		$	(206,725	)	$	70,987,199

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

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

	Preferred Stock				Common Stock				Additional Paid-in		Treasury			Statutory		Retained			Accumulated Other Comprehensive			Total
	Shares		Amount		Shares		Amount		Capital		Stock			Reserve		Earnings			Income (Loss)			Equity
Balance at June 30, 2021 (unaudited)		-	$	-		11,334,318	$	11,334	$	15,301,784	$	-		$	346,315	$	42,116,348		$	64,087		$	57,839,868
Stock-based compensation expense for the restricted stock units issued under stock incentive plan		-		-		-		-		315,296		-			-		-			-			315,296
Net income		-		-		-		-		-		-			-		4,441,430			-			4,441,430
Dividend payment		-		-		-		-		-		-			-		(566,716	)		-			(566,716	)
Foreign currency translation loss		-		-		-		-		-		-			-		-			(263	)		(263	)

Balance at September 30, 2021 (unaudited)		-	$	-		11,334,318	$	11,334	$	15,617,080	$	-		$	346,315	$	45,991,062		$	63,824		$	62,029,615

Balance at June 30, 2022 (unaudited)		-	$	-		12,534,318	$	12,534	$	22,811,968	$	-		$	379,323	$	47,372,776		$	9,485		$	70,586,086

Shares repurchase		-		-		-		-		-		(547,713	)		-		-			-			(547,713	)
Net income		-		-		-		-		-		-			-		1,791,752			-			1,791,752
Dividend payment		-		-		-		-		-		-			-		(626,716	)		-			(626,716	)
Foreign currency translation loss		-		-		-		-		-		-			-		-			(216,210	)		(216,210	)

Balance at September 30, 2022 (unaudited)		-	$	-		12,534,318	$	12,534	$	22,811,968	$	(547,713	)	$	379,323	$	48,537,812		$	(206,725	)	$	70,987,199

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

JERASH HOLDINGS (US), INC.,

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Six Months Ended September 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	3,513,134		$	6,376,113
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,184,940			880,135
Stock-based compensation expenses		294,822			315,813
Amortization of operating lease right-of-use assets		548,849			356,030
Changes in operating assets:
Accounts receivable		7,018,987			(1,382,857	)
Inventories		(8,171,427	)		4,475,694
Prepaid expenses and other current assets		336,710			(504,673	)
Advance to suppliers		(986,600	)		1,149,836
Changes in operating liabilities:
Accounts payable		5,696,686			(3,387,584	)
Accrued expenses		679,586			1,127,297
Other payables		(749,837	)		(378,957	)
Deferred revenue		465,405			1,474,932
Operating lease liabilities		(455,604	)		(241,107	)
Income tax payable, net of recovery		262,106			(37,442	)
Net cash provided by operating activities		9,637,757			10,223,230

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment		(7,679,600	)		(1,606,419	)
Payments for construction of properties		(2,641,614	)		-
Acquisition deposit		-			(3,200,000	)
Payment for long-term deposits		(129,650	)		(268,255	)
Net cash used in investing activities		(10,450,864	)		(5,074,674	)

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments		(1,243,432	)		(1,133,365	)
Shares repurchase		(547,713	)		-
Repayments from short-term loan		(901,055	)		(612,703	)
Repayment to a related party		(300,166	)		-
Proceeds from short-term loan		2,007,185			-
Net cash used in financing activities		(985,181	)		(1,746,068	)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH		(334,064	)		79,625

NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH		(2,132,352	)		3,482,113

CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD		26,583,488			22,860,463

CASH, AND RESTRICTED CASH, END OF THE PERIOD	$	24,451,136		$	26,342,576

CASH, AND RESTRICTED CASH, END OF THE PERIOD		24,451,136			26,342,576
LESS: NON-CURRENT RESTRICTED CASH		1,437,339			1,301,588
CASH, END OF THE PERIOD	$	23,013,797		$	25,040,988

Supplemental disclosure information:
Cash paid for interest	$	251,437		$	74,401
Income tax paid	$	1,096,934		$	1,512,215

Non-cash financing activities
Equipment obtained by utilizing long-term deposit	$	1,111,043		$	321,955
Right of use assets obtained in exchange for operating lease obligations	$	68,932		$	353,611

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

JERASH HOLDINGS (US), INC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Jerash Holdings (US), Inc. (“Jerash Holdings”) was incorporated under the laws of the State of Delaware on January 20, 2016. Jerash Holdings is a holding company with no operations. Jerash Holdings and its subsidiaries ~~and its 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).

Jerash for Industrial Embroidery Company (“Jerash Embroidery”) and Chinese Garments and Fashions Manufacturing Company Limited (“Chinese Garments”) were both established in Amman, Jordan, as limited liability companies on March 11, 2013 and June 13, 2013, respectively, each with a declared capital of ~~JOD 50,000.~~JOD50,000. Jerash Embroidery and Chinese Garments are wholly owned subsidiaries of Jerash Garments.

Al-Mutafaweq Co. for Garments Manufacturing Ltd. (“Paramount”) ~~was~~is a contract garment manufacturer that was established in Amman, Jordan, as a limited liability company on October 24, 2004 with a declared capital of ~~JOD 100,000.~~JOD100,000. On December 11, 2018, Jerash Garments and the sole shareholder 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 established in Amman, Jordan, as limited liability company on July 6, 2020, with a registered capital of ~~JOD 150,000.~~JOD150,000. Jerash The First is engaged in the production of medical supplies in Jordan and is a wholly owned subsidiary of Jerash Garments.

~~Victory Apparel~~Mustafa and Kamal Ashraf Trading Company (Jordan) ~~Manufacturing Company Limited~~for the Manufacture of Ready-Make Clothes LLC (“~~Victory Apparel”~~MK Garments”) is a garment manufacturer that was established in Amman, Jordan, as a limited liability company ~~in Amman, Jordan,~~ on ~~September 18, 2005~~January 23, 2003 with a declared capital of ~~JOD 50,000. Victory Apparel has~~JOD100,000. On June 24, 2021, Jerash Garments and the sole shareholder of MK Garments entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of MK Garments. As of October 7 2021, MK Garments became a subsidiary of Jerash Garments.

Kawkab Venus Dowalyah Lisenaet Albesah (“Kawkab Venus”) was established in Amman, Jordan, as a limited liability company on January 15, 2015 with a declared capital of JOD50,000. It holds land with factory premises, which are leased to MK Garments. On July 14, 2021, Jerash Garments and the sole shareholder of Kawkab Venus entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of Kawkab Venus. Apart from the land and factory premises, Kawkab had no other significant assets or liabilities and no operation activities or ~~other operating activities~~employees at the time of ~~its own. Although Jerash Garments does not own~~acquisition, so the ~~equity interest~~acquisition was accounted for an asset acquisition. As of ~~Victory Apparel, the Company’s president, director, and significant shareholder, Mr. Choi Lin Hung (“Mr. Choi”), is also~~August 21, 2022, Kawkab Venus became a ~~director of Victory Apparel and controls all decision-making for Victory Apparel along with another significant shareholder~~subsidiary 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.

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

Ever Winland Limited (“Ever Winland”) was organized in Hong Kong, China, as a limited liability company. It holds office premises, which are leased to Treasure Success. On June 22, 2022, Treasure Success and the shareholders of Ever Winland entered into an agreement, pursuant to which Treasure Success acquired all of the outstanding stock of Ever Winland. Apart from the office premises used by Treasure Success, Ever Winland 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 August 29, 2022, Ever Winland became a subsidiary of Treasure Success.

Jiangmen Treasure Success Business Consultancy Company Limited (“Jiangmen Treasure Success”) was organized on August 28, 2019 under the laws of China in Guangzhou City of Guangdong Province in China with a total registered capital of 15 million Hong Kong Dollars (“HKD”) (approximately $1.9 million) 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.

Jerash Supplies, LLC (“Jerash Supplies”) was formed under the laws of the State of Delaware on November 20, 2020. Jerash Supplies is engaged in the trading of personal protective equipment products and is a wholly owned subsidiary of Jerash Holdings.

The Company is engaged primarily in the manufacturing and exporting of customized, ready-made ~~sport~~sportwear and outerwear and personal protective equipment (“PPE”) produced in its facilities in Jordan and sold in the United States, Jordan, and other countries.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the Company’s unaudited condensed consolidated financial statements. The consolidated balance sheet as of March 31, ~~2021~~2022 has been derived from the audited consolidated balance sheet at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, ~~2021,~~2022, as filed with the U.S. Securities and Exchange Commission (the “SEC”).

~~Principles of Consolidation~~

The unaudited condensed consolidated financial statements include the financial statements of Jerash Holdings, and its ~~subsidiaries and VIE.~~subsidiaries. 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, 2021, and the net assets of the VIE were approximately $0.3 million as each of September 30, 2021 and March 31, 2021.

Use of Estimates

The preparation of the unaudited condensed 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’s cash consists of cash on hand and cash deposited in financial institutions. 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, ~~2021~~2022 and March 31, ~~2021,~~2022, 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 current asset if the Company intends to terminate these bank facilities within one year, and as a non-current asset if otherwise.

~~Short-term Investments~~

From time to time, the Company purchased financial products that can be readily converted into cash and accounted for such financial products as short-term investments. The financial products include money market funds, bonds, and mutual funds. 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 income over the contractual terms of these investments.

~~The Company had no short-term investments as of September 30, 2021 and March 31, 2021. The Company recorded a realized gain of $Nil~~ ~~and $64,692 for the six months ended September 30, 2021 and 2020, respectively.~~

~~NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)~~

Accounts Receivable, Net

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 receivables 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.

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.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Advance to Suppliers, Net

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 performance by the suppliers becomes doubtful. The Company uses the aging method to estimate the allowance for the questionable 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.

Property, Plant, and Equipment, ~~Net~~net

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		1515-25 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~~comprehensive income.

Construction in Progress

Construction in Progress (“CIP”) is recorded at cost for property, plant, and ~~comprehensive income.~~equipment where the asset is in construction or development. CIP accumulates cost of construction and transaction costs involved in the progress of acquiring the materials for construction or development. The Company does not commence depreciating the asset in CIP account because the asset has not yet been placed in service. Once an asset is placed in service, all costs associated with the asset that are recorded in the CIP account are transferred to plant, plant, and equipment for the asset.

Impairment of Long-Lived Assets

The Company assesses its long-lived assets, including property, plant, 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, ~~2021~~2022 and ~~2020.~~ 2021.

Asset Acquisition

An asset acquisition is an acquisition of an asset, or a group of assets, that does not meet the definition of a business, as substantially all of the fair value of the gross assets acquired are concentrated in a single or group of similar, identifiable assets. Asset acquisitions are accounted for by using the cost accumulation model, whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on a relative fair value basis. Determining and valuing intangible assets requires judgment.

Goodwill

Goodwill represents the excess purchase price paid over the fair value of the net assets of acquired companies. Goodwill is not amortized. As of September 30, 2022 and March 31, 2022, the carrying amount of goodwill was $499,282. Goodwill is tested for impairment on an annual basis, or in interim periods if indicators of potential impairment exist, based on the one reporting unit. The Company has the option to perform a qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment test. When performing the quantitative impairment test, the Company compares the fair value of its only reporting unit with the carrying amounts. The Company would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company concluded that no impairment of its goodwill occurred for the six months ended September 30, 2022.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 PPE. 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. 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. The contracts do not have significant financing components. Shipping and handling costs associated with outbound freight from Jordan export dock 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 order to the Company. 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. The Company had contract liabilities of $465,405 and $nil as of September 30, 2022 and March 31, 2022, respectively. For the six months ended September 30, ~~2021~~2022 and ~~2020,~~2021, there was no revenue recognized from performance obligations related to prior periods. As of September 30, ~~2021, there~~2022, $465,405 deferred revenue was ~~no revenue~~ expected to be recognized ~~in any future periods related to remaining performance obligations.~~within fiscal year 2023.

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~~. expenses. Total shipping and handling expenses were ~~$631,414~~$516,614 and ~~$360,217~~$631,414 for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Total shipping and handling expenses were ~~$985,579~~$925,803 and ~~$544,130~~$985,579 for the six months ended September 30, 2022 and 2021, ~~and 2020,~~ respectively.

Income and Sales 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 and Jerash Supplies are incorporated/formed in the State of Delaware and are subject to federal income tax in the United States of America. Treasure Success isand Ever Winland are registered in Hong Kong and ~~has no operating profit.~~are subject to profit tax in Hong Kong. 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, MK Garments, and ~~Victory Apparel~~Kawkab Venue are subject to income tax in Jordan, unless an exemption is granted. 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. The income tax rate increased to 14%~~16% plus a 1% social contribution ~~from~~between January 1, ~~2020.~~2021 and December 31, 2021. Effective January 1, ~~2021,~~2022, the income tax rate increased to ~~16% and~~18% or 20%, 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. The exemption has been extended to February 5, ~~2022.~~2023.

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.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income and Sales Taxes (continued)

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 the six months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar (“US$” or “$”). The Company uses JOD in Jordan companies, HKD in Treasure Success and Ever Winland, 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~~consolidated statements of ~~operations~~comprehensive income 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, HKD, and CNY 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, 2022	March 31, 2022
Period-end spot rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.8499	US$1=HKD7.8325
	US$1=CNY7.1128	US$1=CNY6.3393
Average rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.8480	US$1=HKD7.7844
	US$1=CNY6.8456	US$1=CNY6.4180

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 stock option is the period of time that the warrant or a stock option is expected to be outstanding.

●

Risk-free Interest Rate: the Company bases the risk-free interest rate used in the Black-Scholes model on the implied yield at the grant date of the U.S. Treasury zero-coupon issued with an equivalent term to the stock-based award being valued. Where the expected term of a stock-based award does not correspond with the term for which a zero-coupon interest rate is quoted, the Company uses the nearest interest rate from the available maturities.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

●

Expected Stock Price Volatility: the Company utilizes the expected volatility of the Company’s common stock over the same period of time as the life of the warrant or stock option. When the Company’s own stock volatility information is unavailable for such period of time, the Company utilizes comparable public company volatility.

●

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

~~NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)~~

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 unaudited condensed 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,~~current assets, credit facilities, accounts payable, accrued expenses, income tax payables, other payables, amounts due to a related party and operating lease liabilities to approximate the fair value of the respective assets and liabilities at September 30, ~~2021~~2022 and March 31, ~~2021~~2022 based upon the short-term nature of these assets and liabilities.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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, ~~2021~~2022, and March 31, ~~2021,~~2022, respectively, ~~$5,896,542~~$11,022,463 and ~~$5,122,292~~$12,735,486 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, ~~2021,~~2022, and March 31, ~~2021, respectively, $129,457~~2022, $245,405 and ~~$2,036,147~~$351,255 of the Company’s cash was on deposit at financial institutions in ~~China.~~China, respectively. Cash maintained in banks within China of less than ~~CNY0.5~~CNY 0.5 million (equivalent to ~~$77,420)~~$70,296) per bank are covered by “deposit insurance regulation” promulgated by the State Council of the People’s Republic of China. As of September 30, ~~2021,~~2022, and March 31, ~~2021, respectively, $20,169,417~~2022, $12,789,582 and ~~$15,622,051~~$13,311,340 of the Company’s cash was on deposit at financial institutions in Hong Kong, respectively, 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, ~~2021,~~2022, and March 31, ~~2021, respectively, $64,778~~2022, $269,505 and ~~$81,221~~$37,342 of the Company’s cash was on deposit in the United States, respectively 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 importing 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 and six months ended September 30, 2022, two end-customers accounted for 64% and 11%, and 65% and 16% of the Company’s total revenue, respectively. For the three and six months ended September 30, 2021, two end-customers accounted for 80% and 14%, and 75% and 21% of the Company’s total revenue, respectively. ~~For the three and six months ended September 30, 2020, one end customer accounted for 74% and 76% of the Company’s total revenue, respectively.~~ As of September 30, ~~2021, two~~2022, four end-customers accounted for ~~80%~~28%, 23%, 20%, and ~~10%~~15% of the Company’s total accounts receivable balance, respectively. As of March 31, ~~2021, two end-customers~~2022, one end-customer accounted for ~~68% and 24%~~89% of the Company’s total accounts receivable ~~balance, respectively.~~balance.

For the three months ended September 30, 2022, the Company purchased approximately 23%, 20%, and 10% of its raw materials from three major suppliers, respectively. For the six months ended September 30, 2022, the Company purchased approximately 15% and 13% of its raw materials from two major suppliers, respectively. For the three and six months ended September 30, 2021, the Company purchased approximately 25% and 16%, respectively, of its garments from one major supplier. ~~For the three and six months ended September 30, 2020, the Company purchased approximately 20% and 12%, respectively, of its garments from one major suppliers.~~ As of September 30, ~~2021,~~2022, accounts payable to the Company’s ~~three~~two major suppliers accounted for ~~14%, 12%,~~50% and ~~10%~~25%, of its total accounts payable balance, respectively. As of March 31, ~~2021,~~2022, accounts payable to the Company’s ~~four~~three major suppliers accounted for ~~19%,~~ 11%, 11%, and 10% of its 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 operations were negatively impacted during the first three quarters~~However, sales growth of the ~~fiscal year ended March 31, 2021 due to COVID-19 related shutdowns, global logistics disruptions, and order cancelations and shipment delays. However, sales growth~~Company resumed in the fourth quarter of ~~the prior~~ fiscal year 2021 and has extended well into fiscal year 2022. Since fiscal 2022, the ~~current fiscal year.~~Company’s production facilities resumed full operation with additional medical and hygienic measures in place. The Company does not believe the COVID-19 pandemic had a significant impact on its operations during the three and six months ended September 30, ~~2021.~~2022.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

There is still significant uncertainty around the breadth and duration of business disruptions related to the COVID-19 pandemic, as well as its impact on the U.S. and international economies. The Company currently expects that its operation results for the fiscal year ending March 31, ~~2022~~2023 would not be significantly impacted by ~~COVID-19.~~the COVID-19 pandemic. However, given the dynamic nature of these circumstances, should there be resurgence of COVID-19 cases globally and should the U.S. government or the Jordan government implement new restrictions to contain the spread, the Company’s business would be negatively impacted.

Reclassification

Certain prior period amounts have been reclassified to conform to the current period presentation. Such reclassifications had no effect on net income or cash flows as previously reported.

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. In November 2019, the FASB issued ASU 2019-10, which amended the effective dates of ASU 2016-13. For public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies (“SRC”) as defined by the SEC, ASU 2016-13 will become effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, ASU 2016-13 will become effective for the fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As an SRC, the Company plans to adopt this ASU effective April 1, 2023. The Company is currently evaluating the impact of the adoption of 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 adopted this new ASU in April 2021 and the adoption of the new ASU did not 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, 2021		March 31, 2021		As of September 30, 2022 (Unaudited)		As of March 31, 2022
Trade accounts receivable	$	13,416,125	$	12,033,268	$	4,251,665	$	11,270,652
Less: allowances for doubtful accounts		—		—		221,583		221,583
Accounts receivable, net	$	13,416,125	$	12,033,268	$	4,030,082	$	11,049,069

NOTE 5 – INVENTORIES

Inventories consisted of the following:

	As of		As of
	September 30, 2021		March 31, 2021		As of September 30, 2022 (Unaudited)		As of March 31, 2022
Raw materials	$	9,955,385	$	13,293,628	$	18,783,134	$	17,714,578
Work-in-progress		1,456,121		2,057,986		1,976,978		2,010,417
Finished goods		9,148,766		9,684,352		15,666,495		8,530,184
Total inventory	$	20,560,272	$	25,035,966	$	36,426,607	$	28,255,179

As of September 30, 2022, and March 31, 2022, the Company had $nil inventory valuation reserve as the Company arranged its inventory based on actual orders received and all inventories held on hand were associated with unfulfilled sales orders.

NOTE 6 – ADVANCE TO SUPPLIERS, NET

Advance to suppliers consisted of the following:

	As of		As of
	September 30, 2021		March 31, 2021		As of September 30, 2022 (Unaudited)		As of March 31, 2022
Advance to suppliers	$	1,886,856	$	3,036,693	$	2,271,202	$	1,284,601
Less: allowances for doubtful accounts		—		—		-		-
Advance to suppliers, net	$	1,886,856	$	3,036,693	$	2,271,202	$	1,284,601

NOTE 7 – LEASES

The Company has 4947 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:~~

As of September 30,
2021
Right-of-use assets $ 1,601,671

Operating lease liabilities – current $ 550,099
Operating lease liabilities - non-current 905,710
Total operating lease liabilities $ 1,455,809

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of September 30, ~~2021:~~2022:

Remaining lease term and discount rate:

Weighted average remaining lease term (years)	~~2.7~~1.9

Weighted average discount rate	4.06	%

During the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, the Company incurred total operation lease expenses of ~~$607,013~~$626,994 and ~~$535,568,~~$607,013, respectively. During the six months ended September 30, ~~2021~~2022 and ~~2020,~~2021, the Company incurred total ~~operation~~operating lease expenses of ~~$1,191,750~~$1,266,713 and ~~$1,047,341,~~$1,191,750, respectively.

~~NOTE 7 – LEASES (continued)~~

The following is a schedule, by fiscal years, of maturities of lease liabilities as of September 30, ~~2021:~~2022:

2022	$	371,729
2023		659,543		$	413,183
2024		432,486			667,388
2025		135,396			190,886
2026		97,093			88,155
2027					-
Thereafter		-			-
Total lease payments		1,696,247			1,359,612
Less: imputed interest		(94,576	)		(55,082	)
Less: prepayments		(145,862	)		(124,402	)
Present value of lease liabilities	$	1,455,809		$	1,180,128

NOTE 8 – PROPERTY, PLANT, AND EQUIPMENT, NET

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

	As of			As of
	September 30, 2021			March 31, 2021			As of September 30, 2022 (Unaudited)			As of March 31, 2022
Land	$	1,831,192		$	1,831,192		$	2,221,420		$	1,831,192
Property and buildings		1,398,017			432,562			9,287,340			1,911,818
Equipment and machinery		8,938,277			8,532,813			11,667,705			11,091,566
Office and electric equipment		878,478			825,013			935,840			915,686
Automobiles		781,525			512,209			858,012			802,399
Leasehold improvements		3,178,471			2,943,797			3,997,654			4,002,833
Subtotal		17,005,960			15,077,586			28,967,971			20,555,494
Construction in progress ⁽¹⁾		—			194,752
Construction in progress ⁽¹⁾⁽²⁾								4,739,937			2,098,323
Less: Accumulated depreciation and amortization		(10,451,479	)		(9,572,832	)		(12,892,181	)		(11,720,670	)
Property and equipment, net	$	6,554,481		$	5,699,506
Property, plant, and equipment, net							$	20,815,727		$	10,933,147

(1)

In January 2022, the Company commenced a construction project of an expansion of the Company’s own premises in Al Tajamouat Industrial City, Jordan. Through September 30, 2022, the Company had paid approximately JOD392,000 (approximately $553,000) and the entire approximately $553,000 was recorded as construction in progress. The estimated construction cost is revised to approximately JOD870,000 (approximately $1.2 million). The project is expected to be completed and ready to use in fiscal 2023.

(2)

In January 2022, the Company commenced a construction project to build a dormitory for employee. The construction is built on a land of 12,340 square meters (approximately three acres) in ~~progress account represents costs incurred for constructing a dormitory,~~Al Tajamouat Industrial City, Jordan, which was ~~previously planned~~acquired by the Company in 2019. The dormitory is expected to cost $8.2 million. Through September 30, 2022, the Company had spent approximately JOD 3.0 million (approximately $4.2 million) for the construction. The dormitory is expected to be a sewing workshop. This dormitory is approximately 4,800 square feet in the Tafilah Governorate of Jordan. Construction was temporarily suspended in March 2020 due to the COVID-19 pandemic but was subsequently completed and ~~the dormitory~~ ready for use ~~as of September 30, 2021.~~in fiscal 2023.

In August 2022, the Company completed the acquisitions of Ever Winland and Kawkab Venus. Ever Winland holds office premises of HK$39.6 million (approximately $5.1 million), which are classified as property and buildings. Kawkab Venus holds land with factory premises, which are classified as land of approximately $390,000 and $2.3 million, respectively. Ever Winland and Kawkab Venus only contain fixed assets (buildings and land) and neither of these two entities have any other assets or liabilities, operations, or employees as of the acquisition date, so the acquisitions of Ever Winland and Kawkab Venus were accounted as asset acquisitions.

For the three months ended September 30, 2022 and 2021, depreciation expenses were $553,941 and $475,609 respectively. For the six months ended September 30, 2022 and 2021, depreciation expenses were $1,184,940 and $880,135, respectively.

NOTE 9 – EQUITY

Preferred Stock

The Company has 500,000 shares of preferred stock, par value of $0.001 per share, authorized; none were issued and outstanding as of September 30, ~~2021~~2022 and March 31, ~~2021.~~2022. 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 ~~11,334,318~~12,429,492 and ~~11,332,974~~12,334,318 shares of common stock outstanding as of September 30, ~~2021~~2022 and March 31, ~~2021,~~2022, respectively.

On June 24, 2021, the Board of Directors approved the grant of 200,000 Restricted Stock Units (“RSUs”) under the Plan to 32 executive officers and employees of the Company, with a one-year vesting period. All RSUs were vested and 200,000 additional shares were issued on June 30, 2022.

On June 13, 2022, the Board of Directors authorized a share repurchase program, under which the Company may repurchase up to $3.0 million of its outstanding shares of common stock. The share repurchase program will be in effect through March 31, 2023. As of September 30, 2022, 104,826 shares had been repurchased at market rate with a total consideration of $547,713. $2,452,287 remaining available for future repurchase.

NOTE 9 – EQUITY (continued)

Statutory Reserve

In accordance with the corporate laws in Jordan, Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash The First, MK Garments, and ~~Victory Apparel~~Kawkab Venus 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 reserved the maximum amount required.~~

Dividends

During the fiscal year ending March 31, ~~2022,~~2023, on August 5, 2022 and May 16, 2022, the Board of Directors declared a cash dividend of $0.05 per share of common stock, respectively. The cash dividends of $626,716 and $616,716 were paid in full on August 24, 2022 and June 3, 2022, respectively.

During the fiscal year ended March 31, 2022, on February 4, 2022, November 2, 2021, August 5, 2021, and May 14, 2021, the Board of Directors declared a cash dividend of $0.05 per share of common stock, respectively. The cash dividends of $616,715, $616,716, $566,716, and $566,649 were paid in full on February 22, 2022, November 29, 2021, August 24, 2021, and June 2, 2021, respectively.

During the fiscal year ended March 31, 2021, on February 5, 2021, November 2, 2020, August 5, 2020, and May 15, 2020, the Board of Directors declared a cash dividend of $0.05 per share of common stock, respectively. The cash dividends of $566,250 were paid in full on February 23, 2021, November 23, 2020, August 24, 2020, and June 2, 2020, 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. The major assumptions used in the Black Scholes model included the followings: the expected term is five years; risk-free interest rate is 1.8% to 2.8%; and the expected volatility is 50.3% to 52.2%. ~~For~~137,210 warrants expired for the six months ended September 30, ~~2021, 20,000 warrants~~2022 and there were ~~exercised on a cashless basis. There were 194,410~~57,200 warrants outstanding as of September 30, ~~2021~~2022 with a weighted average exercise price of ~~$6.71.~~$8.75. All of the outstanding warrants were fully vested and exercisable as of September 30, ~~2021~~2022 and March 31, ~~2021.~~2022.

All stock warrants activities are summarized as follows:

	Option to Acquire Shares		Weighted Average Exercise Price		Option to			Weighted Average
Stock warrants outstanding at March 31, 2021		214,410	$	6.67
					Acquire Shares			Exercise Price
Stock warrants outstanding at March 31, 2022						194,410		$	6.71
Granted		—		—		-			-
Exercised		20,000		6.25		-			-
Stock warrants outstanding at September 30, 2021		194,410	$	6.71
Expired						(137,210	)		5.86
Stock warrants outstanding at September 30, 2022						57,200		$	8.75

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 September 30, 2022, the Company had 394,750 of shares remaining available for future issuance under the Plan.

NOTE 10 – STOCK-BASED COMPENSATION (continued)

~~Stock Options~~ ~~(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. 3,000 options were forfeited in November 2020.~~

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. 50,000 options were forfeited in October 2020. The remaining 100,000 options became 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 became 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 major assumptions that expected term of 10 years; risk-free interest rate of 1.77%; expected volatility of 48.59%; and dividend yield of 3.08%.

All these outstanding options were fully vested and exercisable. As of September 30, 2022, there were 1,136,500 stock options outstanding.

All stock option activities are summarized as follows:

	Option to Acquire Shares		Weighted Average Exercise Price		Option to		Weighted Average
Stock options outstanding at March 31, 2021		1,136,500	$	6.90
					Acquire Shares		Exercise Price
Stock options outstanding at March 31, 2022						1,136,500	$	6.90
Granted		—		—		-		-
Exercised		—		—		-		-
Forfeited		—		—		-		-
Stock options outstanding at September 30, 2021		1,136,500	$	6.90
Stock options outstanding at September 30, 2022						1,136,500	$	6.90

Restricted Stock Units

On June 24, 2021, the Board of Directors approved the grant of 200,000 ~~Restricted Stock Units (“RSUs”)~~RSUs under the Plan to 32 executive officers and employees of the Company, with a one-year vesting period. The fair value of these RSUs on June 24, 2021 was $1,266,000, based on the market price of the Company’s common stock as of the date of the grant. ~~As of September~~On June 30, ~~2021, there~~2022, all 200,000 RSUs were ~~$926,088 unrecognized stock-based compensation expenses to be recognized in the future.~~vested.

Total ~~stock-based~~ expenses related to the restricted stock units issued were ~~$315,296~~$nil and $~~Nil~~$315,296 for the three months ended September 30, ~~2021~~2022 and ~~2020,~~September 30, 2021, respectively. Total ~~stock-based~~ expenses related to the restricted stock units issued were ~~$315,813~~$294,822 and ~~$42,151~~$315,813 for the six months ended September 30, ~~2021~~2022 and ~~2020,~~September 30, 2021, respectively.

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~~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

Victory Apparel (Jordan) Manufacturing Company Limited (“Victory Apparel”)	Affiliate, controlled by the Company’s President, Chief Executive Officer, Chairman, and a significant stockholder and another significant stockholder	Borrowings

NOTE 11 – RELATED PARTY TRANSACTIONS (continued)

Related party lease ~~and purchases~~ agreement

On October 3, 2018, Treasure Success and FGIL entered into a lease agreement, pursuant to which Treasure Success leased 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 December 15, 2020, Treasure Success and FGIL renewed the lease agreement with the same term and lease amount. On February 25, 2021, the lease agreement was terminated, and Ford Glory disposed of the property that was subject of the lease agreement between Treasure Success and Ford Glory.

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 leased 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 CNY 28,300 (approximately $4,400). The lease had one-year term and could be renewed with a one-month notice. On April 30, 2021, the factory lease agreement between Jiangmen Treasure Success and Jiangmen V-apparel Manufacturing Limited was terminated.

Consulting agreements

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, 2021 and 2020, total~~Total consulting fees under this agreement were $75,000 and ~~$65,000, respectively. For~~$150,000 for the three and six months ended September 30, 2022 and 2021, ~~and 2020, total consulting fees under this agreement were $150,000 and $130,000,~~ respectively.

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, 2021 and 2020, total advisory and management expensesTotal consulting fees under this agreement were $75,000 and ~~$65,000, respectively. For~~$150,000 for the three and six months ended September 30, 2022 and 2021, respectively.

c.	Borrowings from a related party

As of September 30, 2022 and ~~2020, total advisory~~March 31, 2022, the Company had outstanding balances due to Victory Apparel of $nil and ~~management expenses under this agreement were $150,000~~$300,166, respectively. These advances are non-interest bearing and ~~$130,000, respectively.~~due on demand. The outstanding balance as of March 31, 2022 was repaid in the first quarter of fiscal 2023.

NOTE 12 – CREDIT FACILITIES

Pursuant to a letter agreement dated May 29, 2017, Treasure Success entered into an initial $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 extended the term of the HSBC Facility indefinitely. Pursuant to the HSBC Facility, the Company had 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 were 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 Tsze Lun (“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 were 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 contained certain service charges and other commissions and fees.

Under the HSBC Factoring Agreement, HSBC also provided credit protection and debt services related to each of the Company’s preapproved customers. For any approved debts or collections assigned to HSBC, HSBC charged 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.

~~NOTE 12 – CREDIT FACILITIES (continued)~~

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

On March 30, 2021, HSBC informed Treasure Success that the debts purchase services under the HSBC Factoring Agreement were terminated with immediate effect. As of September 30, 2021 and March 31, 2021, the Company had made $~~nil~~ ~~and $nil~~ in withdrawals under the HSBC Credit Facilities, which were due within 120 days of each borrowing date or upon demand by HSBC. On June 30, 2021, the Company terminated the HSBC Facilities with immediately effect.

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, ~~2021~~2022 and March 31, ~~2021,~~2022, the Company had $nil ~~and $612,703~~ outstanding ~~amount, respectively,~~ in import invoice financing under the SCBHK facility. In June 2022, the Company was informed by SCBHK that the facility was cancelled due to persistently low usage and zero loan outstanding.

Starting from May and October 2021, the Company has participated in a financing program with ~~1 customer,~~two customers, in which the Company may receive early payments for approved sales invoices submitted by the Company through the bank the customer cooperates with. For any early payments received, the Company is subject to an early payment charge imposed by the customer’s bank, for which the rate is based on London Interbank Offered Rate (“LIBOR”) plus a spread. In certain scenarios, the Company submits the sales invoice and receives payments prior to the shipment of the relative products. In that case, instead of recording the cash receipts as a reduction to accounts receivables, the Company records the cash receipts as receipts in advance from a customer until products are entitled to transfer. The Company records the early payment charge in interest expenses ~~in the unaudited condensed~~ consolidated statements of ~~income and~~ comprehensive income. For the three and six months ended September 30, ~~2021,~~2022, the early payment charge was ~~$45,765~~$163,595 and ~~$74,401,~~$251,437, respectively. As of September 30, ~~2021 and March 31, 2021,~~2022, there was $465,405 in receipts in advance from a ~~customer was $1,474,932~~customer. The Company recorded the receipts in advance as deferred revenue on the unaudited condensed consolidated balance sheet as of September 30, 2022.

On January 12, 2022, DBS Bank (Hong Kong) Limited (“DBSHK”) offered to provide a banking facility of up to $5.0 million to Treasure Success pursuant to a facility letter dated January 12, 2022. Pursuant to the agreement, DBSHK agreed to finance cargo receipt, trust receipt, account payable financing, and certain type of import invoice financing up to an aggregate of $5.0 million. The DBSHK facility bears interest at 1.5% per annum over Hong Kong Interbank Offered Rate for HKD bills and 1.3% per annum over DBSHK’s cost of funds for foreign currency bills. The facility is guaranteed by Jerash Holdings and became available to the Company on June 17, 2022. As of September 30, 2022 and March 31, 2022, the Company had $1,106,130 and $~~Nil~~nil, outstanding under the DBSHK facility, respectively.

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, ~~2021~~2022 and ~~2020.~~2021. As of September 30, ~~2021, 1,530,910 RSUs,~~2022, 1,193,700 warrants and stock options were outstanding. For the three and six months ended September 30, 2022 and 2021, ~~57,200 warrants were excluded from the EPS calculation as containing anti-dilution provisions. For the three and six months ended September 30, 2020, 1,403,910~~all warrants and stock options were excluded from the EPS calculation, respectively, as ~~containing anti-dilution provisions.~~ the result would be anti-dilutive.

	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)				Three Months Ended September 30, (Unaudited)				Six Months Ended September 30, (Unaudited)
	2021		2020		2021		2020		2022		2021		2022		2021
Numerator:
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$	4,441	$	2,560	$	6,376	$	3,374	$	1,791,752	$	4,441,430	$	3,513,134	$	6,376,113

Denominator:
Denominator for basic earnings per share (weighted-average shares)		11,334,318		11,325,000		11,333,907		11,325,000		12,498,431		11,334,318		12,416,823		11,333,907
Dilutive securities – unexercised RSUs, warrants and options		178,215		4,953		70,024		5,081
Dilutive securities – unexercised RSUs, warrants, and options										-		178,215		68,689		70,024
Denominator for diluted earnings per share (adjusted weighted-average shares)		11,512,533		11,329,953		11,403,931		11,330,081		12,498,431		11,512,533		12,485,512		11,403,931
Basic and diluted earnings per share	$	0.39	$	0.23	$	0.56	$	0.30	$	0.14	$	0.39	$	0.28	$	0.56

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, ~~2021~~2022 and ~~2020,~~2021, outerwear accounted for approximately ~~96.4%~~93.8% and ~~87.5%~~96.4% of the Company’s total revenue, respectively. For the six months ended September 30, ~~2021~~2022 and ~~2020,~~2021, outerwear accounted for approximately ~~97.2%~~93.6% and ~~89.9%~~97.2% 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.

~~NOTE 14 – SEGMENT REPORTING (continued)~~

The following table summarizes sales by geographic areas for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

	For the three months Ended September 30,				For the Three Months Ended September 30, (Unaudited)
	2021		2020		2022		2021
United States	$	44,241,524	$	23,411,339	$	35,101,055	$	44,241,524
Jordan		141,001		2,302,615		1,278,313		141,001
Others		1,328,641		1,372,364		1,446,327		1,328,641
Total	$	45,711,166	$	27,086,318	$	37,825,695	$	45,711,166

The following table summarizes sales by geographic areas for the six months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

	For the six months ended September 30,				For the Six Months Ended September 30, (Unaudited)
	2021		2020		2022		2021
United States	$	73,693,401	$	40,992,512	$	66,508,460	$	73,693,401
Jordan		300,840		3,428,197		2,755,527		300,840
Others		1,605,617		1,372,364		1,998,269		1,605,617
Total	$	75,599,858	$	45,793,073	$	71,262,256	$	75,599,858

~~78.8%~~67.6% and ~~15.1%~~31.1% of long-lived assets were located in Jordan and Hong Kong, respectively, as of September 30, ~~2021.~~2022.

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 HKD 3 million (approximately $385,000). On December 9, 2020, shareholders of Jiangmen Treasure Success approved to increase its registered capital to HKD 15 million (approximately $1.9 million). The Company’s subsidiary, Treasure Success, as a shareholder of Jiangmen Treasure Success, is required to contribute HKD 15 million (approximately $1.9 million) as paid-in capital in exchange for 100% ownership interest in Jiangmen Treasure Success. As of ~~June~~September 30, ~~2021,~~2022, Treasure Success had made capital contribution of HKD 310 million (approximately ~~$385,000)~~$1.3 million). Pursuant to the articles of incorporation of Jiangmen Treasure Success, Treasure Success is required to complete the remaining capital contribution before December 31, 2029 as Treasure Success’ available funds permit.

On June 24, 2021, the Company, through its wholly owned subsidiary Jerash Garments, entered into a Sale and Purchase Contract (the “MK Agreement”) with MK Garments MFG Co. Jordan (“MK Garments”). Pursuant to the MK Agreement, MK Garments agreed to sell, and Jerash Garments agreed to purchase, 100% of the ownership interests in Mustafa and Kamal Ashraf Trading Company (Jordan) for the Manufacture of Ready-Made Clothes LLC for a consideration of $2.8 million. The MK Agreement contains customary representations and warranties of Jerash Garments and MK Garments, customary conditions to closing, other obligations and rights of the parties, and termination provisions. The Company completed this acquisition in October 2021. As of September 30, 2021, the Company had paid $2.7 million. The Company expects to pay the remaining $100,000 in December 2021.

On July 14, 2021, the Company through its wholly owned subsidiary Jerash Garments, entered into a Sale and Purchase Contract (the “Kawkab Agreement”) with Kawkab Venus Dowalyah Lisenaet Albesah (the “Seller”). Pursuant to the Kawkab Agreement, the Seller agreed to sell, and Jerash Garments agreed to purchase, 100% ownership interests in Kawkab Venus Al Dowalyah for Garment Manufacturing LLC for a consideration of $2.7 million. Kawkab Venus Al Dowalyah for Garment Manufacturing LLC holds a land with factory premises, which it leases to MK Garments. The Kawkab Agreement contains customary representations and warranties of Jerash Garments and the Seller, customary conditions to closing, other obligations and rights of the parties, and termination provisions. The Company will complete this acquisition in December 2021. As of September 30, 2021, the Company paid $500,000. The Company will pay the remaining $2.2 million upon the acquisition closing.

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.

NOTE 16 – INCOME TAX

Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash The First, MK Garments, and ~~Victory Apparel~~Kawkab Venue are subject to the regulations of the Income Tax Department in Jordan. ~~The corporate income tax rate is 16% 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, the Jordanian government reclassified the area where Jerash Garments and its subsidiaries are to a Development Zone. In accordance with the Development Zone law, Jerash Garments and its subsidiaries ~~and VIE began paying corporate~~were subject to income tax ~~in Jordan~~ at ~~a rate of 10% plus a 1% social contribution. The~~ income tax rate ~~increased to 14%~~of 16% plus a 1% social contribution between January 1, 2021 and December 31, 2021. Effective from January 1, ~~2020. Effective January 1, 2021, this~~2022, the income tax rate ~~increased~~raised to ~~16%~~18% or 20% 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.

Interim income tax expenses or benefit is recognized based on the Company’s estimated annual effective tax rate, which is based upon the tax rate expected for the full fiscal year applied to the pretax income or loss of the interim period. The Company’s consolidated effective tax rate for the three and six months ended September 30, ~~2021~~2022 was ~~19.1%~~28.4% and ~~18.7%~~26.6%, respectively, and differed from the effective statutory federal income tax rate of 21.0%, primarily due to GILTI adjustments, foreign tax rate differentials, and valuation allowance adjustments.

NOTE 17 – SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to November 14, 2022, the date that the unaudited condensed consolidated financial statements were issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statement, except for the following:

On November ~~2, 2021,~~4, 2022, the Board of Directors approved the payment of a dividend of $0.05 per share, payable on or about November ~~29, 2021~~28, 2022 to stockholders of record as of the close of business on November ~~22, 2021.~~

On October 4, 2021, the Company completed its public offering of 1,400,000 shares of its common stock at a public offering price of $7.00 per share (the “Offering”). Of the 1,400,000 shares of the Company’s common stock, 1,000,000 shares were issued and sold by the Company and 400,000 shares were sold by a selling stockholder. The Company received net proceeds of approximately $6.25 million from the Offering, after deducting the underwriting discount and estimated offering expenses payable by the Company. On October 7, 2021, the underwriters exercised their over-allotment option and purchased 210,000 additional shares of the Company’s common stock from the selling stockholder. The Company did not receive any of the proceeds from the sale of shares of its common stock by the selling stockholder.

Starting from October 19, 2021, the Company has participated in a financing program offered by a customer. The Company is able to receive early payments for approved sales invoice submitted by the Company from the bank the customer cooperates with. For any early payments received under the program, the Company is subject to an early payment charge, for which the rate is based on LIBOR or Euro Interbank Offered Rate plus a spread.18, 2022.

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

The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q.

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, ~~2021~~2022 and in subsequent reports that we file with the U.S. 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, ~~2021,~~2022, filed with the SEC on June ~~23, 2021.~~27, 2022. References to fiscal ~~2022~~2023 and fiscal ~~2021~~2022 in this Management’s Discussion and Analysis of Financial Condition and Results of Operations refer to our fiscal year ending March 31, ~~2022,~~2023, and fiscal year ended March 31, ~~2021,~~2022, respectively.

Impact of COVID-19 on Our Business

Collectability of ~~receivables.~~Receivables. We had accounts receivable of ~~$13.4~~$4.0 million as of September 30, ~~2021,~~2022, out of which ~~$9.8~~$3.9 million had been received through November ~~4, 2021.~~1, 2022. Two major customers have started to offer early payment alternatives since May and July 2021, which have shortened payment terms to below 10 days from submission of documents. See “—Liquidity and Capital Resources” for more details.

Inventory. We had inventory of ~~$20.6~~$36.4 million as of September 30, ~~2021,~~2022, substantially for orders scheduled to be shipped within fiscal ~~2022.~~2023.

~~Investments.~~Investments and Capital Expenditures. We acquired two pieces of land in fiscal 2020 for the construction of dormitory and production facilities. Due to the COVID-19 ~~outbreak,~~pandemic, 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, in April 2021, management decided to resume the preparation work for the dormitory construction, which is expected to be completed and ready for use in fiscal 2023. In June and July 2021, we entered into two Sale and Purchase Contracts to acquire a garment factory and the factory land. The acquisition of the ~~garment~~ factory operation was completed onin October 7, 2021, ~~and~~while the acquisition of the ~~factory~~entity holding the land and building where the factory operation is ~~expected~~located, Kawkab Venus, was completed in August 2022. On June 22, 2022, Treasure Success entered into a Sale and Purchase Agreement with Wong Bing Lun and Chow Lai Ming (the “Sellers”). Pursuant to ~~close~~the agreement, the Sellers agreed to sell, and Treasure Success agreed to purchase, 100% of the ownership interests and the Sellers’ benefit of the shareholder/director loans in ~~December 2021. See “Note 15—Commitments and Contingencies—Commitments.”~~Ever Winland for a consideration of HKD39.6 million (approximately $5.1 million). Ever Winland holds office premises, which are leased to Treasure Success. The acquisition was completed on August 29, 2022.

Revenue. For the quarter ended September 30, ~~2021,~~2022, our sales were ~~$45.7~~$37.8 million, which represented an approximate ~~69% increase~~17% decrease from that of the same period in fiscal ~~2021.~~2022. We continue to proactively communicate with our existing customers to reconfirm their orders and shipment schedules for the rest of fiscal ~~2022. However, the operating results for the rest~~2023. The decrease was mainly because of ~~fiscal 2022 is still subject~~a decrease in sales to ~~the progress~~two of ~~ongoing reopening of economies~~our major customers in the U.S. ~~and the EU that would significantly impact both order fulfilment and delivery schedules.~~

Liquidity/Going Concern. As of September 30, ~~2021,~~2022, we had approximately ~~$25.0~~$24.5 million of cash and restricted cash and net current assets of approximately ~~$66.9~~$47.5 million with a current ratio of ~~5.3~~3.2 to 1. In addition, we had banking facilities with aggregate limits of $3$5.0 million with $0approximately $1.1 million outstanding as of September 30, ~~2021.~~2022. Given the above, we believe that we will have sufficient financial resources to maintain as a going concern in fiscal 2022. On October 4, 2021, we completed the placement of one million new shares to independent investors with a net proceed of approximately $6.3 million to further bolster our financial position for further growth.

~~Capital Expenditures.~~ In fiscal 2021, management decided to put on hold the construction projects on the land acquired in fiscal 2020 to retain financial resources to support our operations, and also to wait and see how the global economy and customer demand recover after the COVID-19 pandemic. As customer orders recovered to a satisfactory level, management decided to restart the preparation work for the construction of the dormitory in April 2021. The dormitory is expected to be completed and ready for use in fiscal 2023.

Results of Operations

Three months ended September 30, ~~2021~~2022 and ~~2020~~2021

The following table summarizes the results of our operations during the three-month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, 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,
2021 Three Months Ended
September 30,
2020 Period over Period
Increase (Decrease)
Statement of Income Data: Amount As % of
Sales Amount As % of
Sales Amount %
Revenue $ 45,711 100 % $ 27,086 100 % $ 18,625 69 %
Cost of goods sold 35,606 78 % 21,204 78 % 14,402 68 %
Gross profit 10,105 22 % 5,882 22 % 4,223 72 %

Selling, general and administrative expenses 4,224 9 % 2,853 11 % 1,371 48 %
Stock-based compensation expenses 315 1 % - 0 % 315 -
Other income (expenses), net (75 ) 0 % 63 0 % (138 ) (219 )%
Net income before taxation $ 5,491 12 % $ 3,092 11 % $ 2,399 78 %
Taxation 1,050 2 % 532 2 % 518 97 %
Net income $ 4,441 10 % $ 2,560 9 % $ 1,881 73 %

	Three Months Ended September 30, 2022					Three Months Ended September 30, 2021					Period over Period Increase (Decrease)
Statement of Income Data:	Amount		As % of Sales			Amount		As % of Sales			Amount			%
Revenue	$	37,825		100	%	$	45,711		100	%	$	(7,886	)		(17	)%
Cost of goods sold		30,908		82	%		35,606		78	%		(4,698	)		(13	)%
Gross profit		6,917		18	%		10,105		22	%		(3,188	)		(32	)%

Selling, general and administrative expenses		4,308		11	%		4,178		9	%		130			3	%
Stock-based compensation expenses		-		-	%		315		1	%		(315	)		(100	)%
Other expenses, net		105		0	%		121		0	%		(16	)		(13	)%
Net income before taxation	$	2,504		7	%	$	5,491		12	%	$	(2,987	)		(54	)%
Income tax expenses		712		2	%		1,050		2	%		(338	)		(32	)%
Net income	$	1,792		5	%	$	4,441		10	%		(2,649	)		(60	)%

Revenue. Revenue ~~increased~~decreased by approximately ~~$18.6~~$8 million, or ~~69%~~17%, to ~~$45.7~~$37.8 million, for the three months ended September 30, ~~2021,~~2022, from approximately ~~$27.1~~$45.7 million for the same period in fiscal ~~2021.~~2022. The ~~increase~~decrease was mainly due to ~~the increase~~a decrease in sales to two of our ~~two~~ major ~~customers in the U.S.~~export customers.

The following table outlines the dollar amount and percentage of total sales to our customers for the three months ended September 30, ~~2021~~2022 and ~~2020, respectively.~~2021.

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

	Three Months Ended September 30, 2021					Three Months Ended September 30, 2020					Three Months Ended September 30, 2022					Three Months Ended September 30, 2021
	Sales					Sales					Sales					Sales
	Amount		%			Amount		%			Amount		%			Amount		%
VF Corporation⁽¹⁾	$	36,473		80	%	$	20,071		74	%	$	24,292		64	%	$	36,473		80	%
Dynamic												3,979		11	%		169		0	%
New Balance		6,468		14	%		1,322		5	%		3,881		10	%		6,468		14	%
GIII												2,482		7	%		1,012		2	%
Soriana		1,250		3	%		-		-	%		548		1	%		1,250		3	%
G-III		1,012		2	%		907		3	%
Others		508		1	%		4,786		18	%		2,643		7	%		339		1	%
Total	$	45,711		100	%	$	27,086		100	%	$	37,825		100	%	$	45,711		100	%

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

Revenue by Geographic Area

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

	Three Months Ended September 30, 2021					Three Months Ended September 30, 2020					Period over Period Increase (decrease)						Three Months Ended September 30, 2022					Three Months Ended September 30, 2021					Period over Period Increase (Decrease)
Region	Amount		%			Amount		%			Amount			%			Amount		%			Amount		%			Amount			%
United States	$	44,241		97	%	$	23,411		86	%	$	20,830			89	%	$	35,101		93	%	$	44,241		97	%	$	(9,140	)		(21	)%
Jordan		141		-	%		2,303		9	%		(2,162	)		(94	)%		1,278		3	%		141		0	%		1,137			806	%
Others		1,329		3	%		1,372		5	%		(43	)		(3	)%		1,446		4	%		1,329		3	%		117			9	%
Total	$	45,711		100	%	$	27,086		100	%	$	18,625			69	%	$	37,825		100	%	$	45,711		100	%	$	(7,886	)		(17	)%

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 provides us with substantial competitiveness and benefit that allowed us to expand our garment export business in the U.S.

The ~~increase~~decrease of approximately 21% in sales to the U.S. ~~of approximately 89% in~~during the three months ended September 30, ~~2021,~~2022, was mainly attributable to ~~the increase in~~lower sales to two of our ~~two~~ major export customers and higher inflation and general inventory levels reported in the U.S. ~~following the stronger demand amid the reopening of the U.S. economy.~~

~~For~~During the three months ended September 30, ~~2021,~~2022, aggregate sales to Jordan and other locations, such as Hong Kong and China, ~~decreased~~increased by ~~60%~~85% from approximately ~~$3.7~~$1.5 million to ~~$1.5~~$2.7 million from the same period last year as ~~our factories took~~more domestic orders were received to fill up ~~more~~capacity released from lower export ~~orders to the U.S., which typically provide higher profit margin.~~demands.

Cost of goods sold. Following the ~~increase~~decrease in sales revenue, our cost of goods sold ~~increased~~decreased by approximately ~~$14.4~~$4.7 million, or ~~68%~~13%, to approximately ~~$35.6~~$31.0 million, for the three months ended September 30, ~~2021, compared to~~2022, from approximately ~~$21.2~~$35.6 million for the same period in fiscal ~~2021.~~2022. As a percentage of revenue, the cost of goods sold ~~was~~increased by approximately ~~78%~~4% points to 82% for the three months ended September 30, ~~2021 with a slight decrease of 40 basis points comparing to~~2022 from 78% for the same period in fiscal ~~2021.~~2022. The ~~slight decrease~~increase in cost of goods sold as a percentage of revenue was primarily attributable to the higher proportion of ~~export sales, which~~domestic orders that typically ~~provide higher profit~~generate lower margin.

For the three months ended September 30, ~~2021 and 2020,~~2022, we purchased 23%, 20%, and 10% of our raw materials from three major suppliers, respectively. For the three months ended September 30, 2021, we purchased approximately 25% and ~~20%~~ of our garments from one major ~~supplier, respectively.~~supplier.

Gross profit margin. Gross profit margin was approximately 18% for the three months ended September 30, 2022, which decreased by 4% points from 22% for the same period in fiscal 2022. The decrease in gross profit margin was primarily driven by the lower proportion of export orders that typically generate higher margin.

Operating expenses. Operating expenses decreased 4% , or approximately $0.2 million, for the three months ended September 30, 2021, which was slightly higher by 40 basis points from the same period in fiscal 2021. The slight increase in gross profit margin was primarily driven by a higher proportion of export orders, which typically provide higher profit margin.

~~Selling, general, and administrative expenses.~~ ~~Selling, general, and administrative expenses increased by~~to approximately ~~48% from approximately $2.9~~$4.3 million for the three months ended September 30, ~~2020, to~~2022, from approximately ~~$4.2~~$4.5 million for the ~~three months ended September 30, 2021.~~same period in fiscal 2022. The ~~increase~~decrease was primarily due to ~~an increase~~stock-based compensation expenses of approximately $315,000 in ~~carriage outward following~~fiscal 2022 while there was $nil in the ~~increase~~quarter in ~~exports,~~fiscal 2023, offsetting by an increase in expenses in relation to ~~bringing~~foreign worker travelling expenses for the expansion in ~~new foreign workers, and an increase in general medical expenses related to the pandemic precautions.~~total group workforce.

Other expenses, net. Other expenses, net ~~were~~was approximately ~~$75,000~~$105,000 for the three months ended September 30, ~~2021,~~2022, as compared to other ~~income,~~expenses, net of approximately ~~$63,000~~$121,000 for the same period in fiscal ~~2021.~~2022. The ~~increase in net expenses~~decrease was primarily due to ~~foreign transaction losses recognized~~government subsidies to Jiangmen Treasure Success and ~~no realized gain from short-term investments for~~Treasure Success by offsetting the ~~three months ended September 30, 2021.~~increase in interest expenses.

~~Taxation.~~Income tax expenses. Income tax expenses for the three months ended September 30, ~~2021~~2022 were approximately ~~$1.1 million~~$712,000 compared to income tax expenses of ~~approximately $532,000~~$1,050,000 for the same period in fiscal ~~2021.~~2022. The increase in the effective tax ~~rates~~rate mainly resulted from the increase of ~~net~~corporate income ~~before tax in Jordan, and the increase of 2% of local~~ tax rate in Jordan from a combined rate of 17% to 19% or 20% since January 1, ~~2021.~~2022, and the increase in valuation allowance provided on deferred tax assets related to increased operating losses in our U.S entities. The effective tax rate ~~increased~~was up to 28.4% for the three months ended September 30, 2022, as compared to 19.1% for the three months ended September 30, ~~2021, compared to 17.2% for the three months ended September 30, 2020.~~2021.

Net income. Net income for the three months ended September 30, ~~2021~~2022 was approximately ~~$4.4~~$1.8 million compared to net income of approximately ~~$2.6~~$4.4 million for the same period in fiscal ~~2021.~~2022. The ~~increase~~decrease was mainly attributable to ~~the increase in~~lower sales ~~and slight improvement in gross profit margin discussed above.~~to two of our major export customers.

Six months ended September 30, ~~2021~~2022 and ~~2020~~2021

The following table summarizes the results of our operations during the six-month periods ended September 30, ~~2021~~2022 and ~~2020,~~2021, 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,
2021 Six Months Ended
September 30,
2020 Period over Period
Increase (Decrease)
Statement of Income Data: Amount As % of
Sales Amount As % of
Sales Amount %
Revenue $ 75,600 100 % $ 45,793 100 % $ 29,807 65 %
Cost of goods sold 59,864 79 % 36,859 80 % 23,005 62 %
Gross profit 15,736 21 % 8,934 20 % 6,802 76 %

Selling, general and administrative expenses 7,538 10 % 4,704 11 % 2,834 60 %
Stock-based compensation expenses 316 1 % 42 0 % 274 652 %
Other income (expense), net (38 ) 0 % 60 0 % (98 ) (163 )%
Net income before taxation $ 7,844 10 % $ 4,248 9 % $ 3,596 85 %
Taxation 1,468 2 % 874 2 % 594 68 %
Net income $ 6,376 8 % $ 3,374 7 % $ 3,002 89 %

	Six Months Ended September 30, 2022					Six Months Ended September 30, 2021					Period over Period Increase (Decrease)
Statement of Income Data:	Amount		As % of Sales			Amount		As % of Sales			Amount			%
Revenue	$	71,262		100	%	$	75,600		100	%	$	(4,338	)		(6	)%
Cost of goods sold		57,722		81	%		59,864		79	%		(2,142	)		(4	)%
Gross profit		13,540		19	%		15,736		21	%		(2,196	)		(14	)%

Selling, general, and administrative expenses		8,327		12	%		7,463		10	%		864			12	%
Stock-based compensation expenses		295		0	%		316		1	%		(21	)		(7	)%
Other expenses, net		133		0	%		113		0	%		20			18	%
Net income before taxation	$	4,785		7	%	$	7,844		10	%	$	(3,059	)		(39	)%
Income tax expenses		1,272		2	%		1,468		2	%		(196	)		(13	)%
Net income	$	3,513		5	%	$	6,376		8	%	$	(2,863	)		(45	)%

Revenue. Revenue ~~increased~~decreased by approximately ~~$29.8~~$4.3 million, or ~~65%~~6%, to ~~$75.6~~$71.3 million, for the six months ended September 30, ~~2021,~~2022, from approximately ~~$45.8~~$75.6 million for the same period in fiscal ~~2021.~~2022. The ~~increase~~decrease was mainly ~~because of~~due to the ~~increase~~decrease in sales to two of our ~~two~~ major customers in the U.S.

The following table outlines the dollar amount and percentage of total sales to our customers for the six months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

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

	Six Months Ended September 30, 2021					Six Months Ended September 30, 2020					Six Months Ended September 30, 2022					Six Months Ended September 30, 2021
	Sales					Sales					Sales					Sales
	Amount		%			Amount		%			Amount		%			Amount		%
VF Corporation⁽¹⁾	$	56,683		75	%	$	34,619		76	%	$	46,359		65	%	$	56,683		75	%
New Balance		15,685		21	%		2,772		6	%		11,478		16	%		15,685		21	%
Dynamic												4,073		6	%		195		0	%
GIII												3,952		6	%		1,012		1	%
Soriana		1,250		2	%		-		-			954		1	%		1,250		2	%
G-III		1,012		1	%		1,278		3	%
Others		970		1	%		7,124		15	%		4,446		6	%		775		1	%
Total	$	75,600		100	%	$	45,793		100	%	$	71,262		100	%	$	75,600		100	%

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

Revenue by Geographic Area

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

Six Months Ended
September 30,
2021 Six Months Ended
September 30,
2020
Period over Period
Increase (decrease)

Region Amount % Amount % Amount %
United States $ 73,693 97 % $ 40,993 90 % $ 32,700 80 %
Jordan 301 1 % 3,428 7 % (3,127 ) (91 )%
Others 1,606 2 % 1,372 3 % 234 17 %
Total $ 75,600 100 % $ 45,793 100 % $ 29,807 65 %

	Six Months Ended September 30, 2022					Six Months Ended September 30, 2021					Period over Period Increase (Decrease)
Region	Amount		%			Amount		%			Amount			%
United States	$	66,508		93	%	$	73,693		97	%	$	(7,185	)		(10	)%
Jordan		2,756		4	%		301		1	%		2,455			816	%
Others		1,998		3	%		1,606		2	%		392			24	%
Total	$	71,262		100	%	$	75,600		100	%	$	(4,338	)		(6	)%

The ~~increase~~decrease of approximately ~~80%~~10% in sales to the U.S. during the six months ended September 30, ~~2021~~2022 was mainly attributable to the ~~increase~~decrease in sales to our two major customers in the U.S. ~~following the stronger demand amid the reopening of the U.S. economy.~~and higher inflation and general inventory levels.

During the six months ended September 30, ~~2021,~~2022, aggregate sales to Jordan and other locations, such as Hong Kong and China, ~~decreased~~increased by ~~60%~~149% from approximately ~~$4.8~~$1.9 million to ~~$1.9~~$4.8 million from the same period last year as our factories took up more ~~export~~domestic orders to the fill up the production capacity released from lower demands from the U.S.~~, which typically provide higher profit margin.~~

Cost of goods sold. Following the ~~increase~~decrease in sales revenue, our cost of goods sold ~~increased~~decreased by approximately ~~$23.0~~$2.1 million, or ~~62%~~4%, to approximately ~~$59.9~~$57.8 million for the six months ended September 30, ~~2021~~2022 from approximately ~~$36.9~~$59.9 million for the same period in fiscal ~~2021.~~2022. As a percentage of revenue, the cost of goods sold ~~decreased~~increased by approximately 1%2% points to ~~79%~~81% for the six months ended September 30, ~~2021~~2022 from ~~80%~~79% for the same period in fiscal ~~2021.~~2022. The ~~decrease~~increase in cost of goods sold as a percentage of revenue was primarily attributable to ~~the~~a higher proportion of ~~export~~domestic orders ~~which~~that typically ~~provide higher profit~~generate lower margin.

For the six months ended September 30, ~~2021~~2022, we purchased 15% and ~~2020,~~13% of our raw materials from two major suppliers, respectively. For the six months ended September 30, 2021, we purchased 16% ~~and 12%~~ of our garments ~~and raw materials~~ from one major ~~supplier, respectively.~~supplier.

Gross profit margin. Gross profit margin was approximately 19% for the six months ended September 30, 2022, which decreased by 2% points from 21% for the same period in fiscal 2022. The decrease in gross profit margin was primarily driven by a lower proportion of export orders that typically generate higher gross margin.

Operating expenses. Operating expenses increased by approximately 11% from approximately $7.8 million for the six months ended September 30, 2021, which increased by 1% points from 20% for the same period in fiscal 2021. The increase in gross profit margin was primarily driven by the higher proportion of export orders, which typically provide higher profit margin.

~~Selling, general, and administrative expenses.~~ ~~Selling, general, and administrative expenses increased by~~to approximately ~~60% from approximately $4.7~~$8.6 million for the six months ended September 30, ~~2020, to approximately $7.5 million for the six months ended September 30, 2021.~~2022. The increase was primarily due to ~~the~~an increase in ~~recruitment expenses~~headcounts from the acquisition of MK Garments, and ~~medical expenses, and the~~an increase in ~~carriage outward following~~expenses in relation to foreign worker travelling expenses for the ~~increase~~expansion in ~~export sales.~~total group workforce to over 5,600 as of September 30, 2022.

Other expenses net. Other expenses, net ~~were~~was approximately ~~$38,000~~$133,000 for the six months ended September 30, ~~2021,~~2022, as compared to other ~~income,~~expenses, net of approximately ~~$60,000~~$113,000 for the same period in fiscal ~~2021.~~2022. The increase in ~~net~~other expenses was primarily due to ~~no realized gain from short-term investments~~the increase in ~~the current period, compare with a $64,692 realized gain from short-term investments in the corresponding period of fiscal 2021.~~interest expenses by offsetting government subsidies to Jiangmen Treasure Success and Treasure Success.

~~Taxation.~~Income tax expenses. Income tax expenses for the six months ended September 30, ~~2021~~2022 were approximately ~~$1.5~~$1.3 million compared to income tax expenses of approximately ~~$874,000~~$1.5 million for the same period in fiscal ~~2021.~~2022. The ~~decrease~~increase in the effective tax rate mainly resulted from the ~~lower proportion~~increase of ~~loss~~corporate income tax rate in ~~China, Hong Kong,~~Jordan from a combined rate of 17% to 19% or 20% since January 1, 2022, and the ~~U.S.~~increase in valuation allowance provided on deferred tax assets related to increased operating losses in our U.S entities. The effective tax rate was ~~down~~up to 26.6% for the six months ended September 30, 2022, compared to 18.7% for the six months ended September 30, ~~2021, compared to 20.6% for the six months ended September 30, 2020.~~2021.

Net income. Net income for the six months ended September 30, ~~2021~~2022 was approximately ~~$6.4~~$3.5 million compared to net income of approximately ~~$3.4~~$6.4 million for the same period in fiscal ~~2021.~~2022. The ~~increase~~decrease was mainly attributable to ~~the increase in~~lower sales ~~and improvement in gross profit margin discussed above.~~to two of our major export customers.

Liquidity and Capital Resources

~~We are~~Jerash Holdings (US), Inc. is a holding company incorporated in Delaware. As a holding company, we rely on dividends and other distributions from our Jordanian and Hong Kong subsidiaries to satisfy our liquidity requirements. Current Jordanian regulations permit our Jordanian subsidiaries ~~and variable interest entity (“VIE”)~~ to pay dividends to us only out of their accumulated profits, if any, determined in accordance with Jordanian accounting standards and regulations. In addition, our Jordanian subsidiaries ~~and VIE~~ are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds. These reserves are not distributable as cash dividends. We have relied on direct payments of expenses by our subsidiaries ~~and VIE~~ (which generate revenue) to meet our obligations to date. To the extent payments are due in U.S. dollars, we have occasionally paid such amounts in JOD to an entity controlled by our management capable of paying such amounts in U.S. dollars. Such transactions have been made at prevailing exchange rates and have resulted in immaterial losses or gains on currency exchange but no other profit.

As of September 30, ~~2021,~~2022, we had cash of approximately ~~$25.0~~$23.0 million and restricted cash of approximately ~~$1.3~~$1.4 million compared to cash of approximately ~~$21.1~~$25.2 million and restricted cash of approximately ~~$1.7~~$1.4 million as of March 31, ~~2021.~~2022. The ~~increase~~decrease in total cash was mainly a result of ~~the~~ increase in ~~sales~~capital expenditures and ~~the early payment arrangement and supplier chain financing program with our two major customers.~~payments for dividend in this period.

Our current assets as of September 30, ~~2021~~2022 were approximately ~~$66.9~~$68.7 million and our current liabilities were approximately ~~$12.6~~$21.1 million, which resulted in a ratio of approximately ~~5.3~~3.2 to 1. As of March 31, ~~2021,~~2022, our current assets were approximately ~~$64.7~~$69.9 million and our current liabilities were ~~$14.5~~$14.1 million, resulting in a ratio of ~~4.5~~4.9 to 1.

~~The primary drivers in the increase in current assets were the increase in operating profit in the six months and the increase in investment deposits for acquisitions.~~

The primary drivers in the decrease in current ~~liabilities~~assets were ~~the full repayment of all bank borrowings and~~ the decrease in cash for capital investments and dividend payments in this period.

The primary driver in the increase in current liabilities was an increase in accounts ~~payable.~~payable for raw material purchases.

Total equity as of September 30, ~~2021~~2022 was approximately ~~$62.3~~$71.0 million compared to ~~$56.7~~$69.3 million as of March 31, ~~2021.~~2022.

We had net working capital of ~~$54.3~~$47.5 million and ~~$50.1~~$55.7 million as of September 30, ~~2021,~~2022 and March 31, ~~2021,~~2022, respectively. Based on our current operating plan, we believe that cash on hand and cash generated from operating activities will be sufficient to support our working capital needs for the next 12 months from the date of this Quarterly Report. On October 4, 2021, we completed the placement of one million new shares to independent investors with a net proceed of approximately $6.3 million to further bolster our financial position for further growth.Report is released.

Since May and October 2021, we have participated in a supply chain financing ~~program~~programs of ~~one~~two of our major ~~customers.~~customers, respectively. The ~~program allows~~programs allow us to receive early payments for approved sales invoices submitted by us through the bank the customer cooperates with. For any early payments received, we are subject to an early payment charge imposed by the customer’s bank, for which the rate is London Interbank Offered Rate ~~(“LIBOR”)~~ plus a spread. The arrangement allows us to have better liquidity without the need to incur administrative charges and handling fees as in bank financing.

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 first 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”), 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, the 2018 Facility Letter, and the 2019 Facility Letter, the “HSBC Facility”). The 2020 Facility Letter extended the term of the HSBC Facility indefinitely, subject to review at any time by HSBC. Pursuant to the HSBC Facility, we had a total credit limit of $11,000,000.

The HSBC Facility provided 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 included an import facility, import facilities with loan against import, trust receipts, clean import loan, and advances to us against purchase orders. HSBC charged 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. HSBC charged 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 had title to the goods or merchandise released immediately to us. HSBC approved certain of our suppliers that were eligible to use clean import loans. HSBC charged 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 would advance up to 70% of the purchase order value in our favor. HSBC charged 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 was also required to maintain an account at HSBC for receiving payments from VF Sourcing Asia S.A.R.L. and its related companies.

~~Borrowings under the HSBC Facility are due upon demand by HSBC or within 120 days of each borrowing date. On June 30, 2021, we terminated the HSBC Facility with immediately effect.~~

~~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. Under the terms of the HSBC Factoring Agreement, we could borrow up to $12,000,000. In exchange for advances on eligible invoices from HSBC for our approved customers, HSBC charged 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 had 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.

HSBC also provided credit protection and debt services related to each of our preapproved customers. For any approved debts or collections assigned to HSBC, HSBC charged a flat fee of 0.35% on the face value of the invoice for such debt or collection. For any approved debts or collections assigned to HSBC, HSBC charged 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 was subject to the review by HSBC at any time and HSBC had discretion on whether to renew the HSBC Factoring Agreement. Either party could terminate the agreement subject to a 30-day notice period. In fiscal 2021, Treasure Success had no transaction or balance in the invoice discounting/factoring facility granted by HSBC. In May 2021, Treasure Success received a letter from HSBC dated March 30, 2021 that the debts purchase services under the HSBC Factoring Agreement between Treasure Success and HSBC were terminated with immediate effect.

SCBHK Facility Letter

Pursuant to the ~~Standard Chartered Hong Kong (“SCBHK”)~~SCBHK facility letter dated June 15, 2018, and issued to Treasure Success by SCBHK, SCBHK offered to provide an import facility of up to $3.0 million to Treasure Success. The SCBHK facility ~~covers~~covered 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~~charged interest at 1.3% per annum over SCBHK’s cost of funds. ~~In consideration for arranging the~~The SCBHK facility ~~Treasure Success paid SCBHK HKD50,000. We~~was activated on January 31, 2019. In June 2022, we were informed by SCBHK ~~on January 31, 2019~~ that the ~~SCBHK~~ facility ~~had been activated.~~was cancelled due to persistently low usage and zero loan outstanding.

DBSHK Facility Letter

Pursuant to the DBSHK facility letter dated January 12, 2022, DBSHK provided a bank facility of up to $5.0 million to Treasure Success. Pursuant to the agreement, DBSHK agreed to finance cargo receipt, trust receipt, account payable financing, and certain type of import invoice financing up to an aggregate of $5.0 million. The DBSHK facility bears interest at 1.5% per annum over Hong Kong Interbank Offered Rate for HKD bills and 1.3% per annum over DBSHK’s cost of funds for foreign currency bills. The facility is guaranteed by Jerash Holdings and became available to the Company on June 17, 2022. As of September 30, ~~2021, there was no~~2022 and March 31, 2022, we had approximately $1.1 million and $nil outstanding ~~balance~~ under ~~the SCBHK facility.~~this DBSHK facility, respectively.

Six months ended September 30, ~~2021~~2022 and ~~2020~~2021

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,						Six months ended September 30,
	2021			2020			2022			2021
Net cash provided by operating activities	$	10,223		$	1,713		$	9,638		$	10,223
Net cash used in investing activities		(5,075	)		(309	)		(10,451	)		(5,075	)
Net cash used in financing activities		(1,746	)		(200	)		(985	)		(1,746	)
Effect of exchange rate changes on cash		80			-			(334	)		80
Net increase in cash		3,482			1,204
Cash, beginning of six-month period		22,862			26,917
Cash, end of six-month period	$	26,344		$	28,121
Net (decrease) increase in cash								(2,132	)		3,482
Cash and restricted cash, beginning of six-month period								26,583			22,860
Cash and restricted cash, end of six-month period							$	24,451		$	26,342

Operating Activities

Net cash provided by operating activities was approximately ~~$10.2~~$9.6 million for the six months ended September 30, ~~2021,~~2022, compared to cash provided by operating activities of approximately ~~$1.7~~$10.2 million for the same period in fiscal ~~2021.~~2022. The ~~increase~~decrease in net cash ~~used in~~provided by operating activities was primarily attributable to the following factors:

●

~~a decrease~~an increase in inventory of ~~$4.5~~$8.2 million in the six months ended September 30, ~~2021~~2022 compared to a decrease of ~~$12.3~~$4.5 million in the same period in fiscal ~~2021;~~2022;


	●	~~an increase~~a decrease in accounts receivable of ~~$1.4~~$7.0 million in the six months ended September 30, ~~2021~~2022 compared to an increase ~~of $14.6 million in the same period in fiscal 2021;~~

●

~~an increase in prepaid expenses and other current assets of $0.5 million compared to a decrease of $0.7 million the same period in fiscal 2021;~~

●

~~a decrease in advance to suppliers of $1.1 million compared to an increase of $0.7 million in the same period in fiscal 2021;~~

●

~~a decrease in accounts payable of $3.4 million in the six months ended September 30, 2021 compared to a decrease~~ of $1.4 million in the same period in fiscal ~~2021; and~~2022;


	●	an increase of ~~net income~~advance to ~~$6.4~~suppliers of $1.0 million compared to a decrease of $1.1 million in the same period in fiscal 2022;

	●	an increase of accounts payable of $5.7 million in the six months ended September 30, ~~2021 from~~2022 compared to a ~~net income~~decrease of $3.4 million in the same period in fiscal ~~2021.~~2022; and

	●	a decrease of net income to $2.9 million in the six months ended September 30, 2022 from a net income of $6.4 million in the same period in fiscal 2022.

Investing Activities

Net cash used in investing activities was approximately ~~$5.1~~$10.5 million for the six months ended September 30, ~~2021,~~2022, compared to approximately ~~$0.3~~$5.1 million in the same period in fiscal ~~2021.~~2022. The net cash used in investing activities in the six months ended September 30, ~~2021 included primarily deposits paid for~~2022 was mainly used in investment in property, plant, and machinery including the ~~acquisition~~ongoing construction of a ~~garment~~dormitory and factory expansion, and ~~the factory building~~considerations paid to acquire Ever Winland and ~~the land, and the acquisitions of properties and machineries.~~Kawkab Venus.

Financing Activities

Net cash used in financing activities was approximately ~~$1.7~~$1 million for the six months ended September 30, ~~2021,~~2022, including dividend payments of approximately ~~$1.1~~$1.2 million, payments for share repurchase of approximately $0.5 million, and ~~repayments~~settlement to a related party of approximately $0.3 million, offsetting by net proceeds from short-term loans of approximately ~~$0.6~~$1.1 million. There was a net cash outflow of ~~$0.2~~approximately $1.7 million in the same period in fiscal ~~2021~~2022 resulting from dividend payments and ~~proceeds from~~repayment of short-term loans.

Statutory Reserves

In accordance with the corporate ~~laws~~law 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 inof Jordan. Appropriations to the statutory reserve are required to be 10% of net income until the reserve is equal to 100% of the entity’s share capital. Jiangmen Treasure Success is required to set aside 10% of its net income as statutory surplus reserve until such reserve is equal to 50% of its registered ~~capital.~~capital, in accordance with corporate laws in China. These reserves are not available for dividend distribution. The statutory reserve was ~~$346,000~~approximately $0.4 million and ~~$213,000~~approximately $0.3 million as of September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

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, ~~2021~~2022 and ~~2020.~~2021.

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

	As of September 30,						As of September 30,
	2021			2020			2022			2021
Statutory Reserves	$	346		$	213		$	379		$	346
Total Restricted Net Assets	$	346		$	213		$	379		$	346
Consolidated Net Assets	$	62,331		$	57,035		$	70,987		$	62,030
Restricted Net Assets as Percentage of Consolidated Net Assets		0.56	%		0.37	%		0.53	%		0.56	%

Total restricted net assets accounted for approximately ~~0.56%~~0.53% of our consolidated net assets as of September 30, ~~2021.~~2022. As our subsidiaries ~~and VIE~~ in Jordan are only required to set aside 10% of net profits to fund the statutory reserves, we believe the potential impact of such restricted net assets on our liquidity is limited.

Capital Expenditures

We had capital expenditures of approximately ~~$1.6~~$10.3 million and ~~$0.4~~approximately $1.6 million for the six months ended September 30, ~~2021~~2022 and ~~2020, respectively, mainly~~2021, for plant and machinery, the construction of a dormitory and ~~properties. Additions in~~factory expansion, and the acquisitions of Ever Winland and Kawkab Venus, respectively. For the six months ended September 30, 2022, payments for additional plant and machinery, construction of a dormitory and factory expansion, the acquisition of Kawkab Venus, and the acquisition of Ever Winland amounted to approximately $0.4 million, ~~for each of~~$2.6 million, $2.2 million, and $5.1 million, respectively. For the six months ended September 30, 2021, payments for additional plant and ~~2020. Additions~~machinery, and payments to additional properties and leasehold improvements amounted to approximately $0.4 million and $1 million, ~~and $2,000 for the six months ended September 30, 2021 and 2020~~ respectively.

In 2015, we commenced a project to build a 4,800 square foot workshop 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 to house management and supervisory staff for the 54,000 square foot workshop in Al-Hasa County. Construction was temporarily suspended in March 2020 due to the COVID-19 pandemic but subsequently completed, and the building was ready for use as of September 30, 2021.

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 240 workers. Provided that we satisfy certain employment requirements over certain time periods, we do not anticipate incurring any significant costs for the project, which was 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.

On August 7, 2019, we completed a transaction to acquire 12,340 square meters (approximately three 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. We are conducting engineering design and study on this project and we plan to begin construction ~~in early 2022.~~ after a thorough and complete assessment of the impact of the current inflation on customer demands.

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). We expect to spend approximately $8.2 million in capital expenditures to build the dormitory. Due to the ongoing COVID-19 pandemic, management decided to put on hold the construction project in fiscal 2021 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. The preparation work resumed in early 2021 and construction work commenced in April 2021. The dormitory is expected to be completed and ready for use in fiscal 2023.

On July 14, 2021, we, through our wholly owned subsidiary Jerash Garments, entered into a Sale and Purchase Contract (the “Kawkab Agreement”) with Kawkab Venus Dowalyah Lisenaet Albesah (the “Kawkab Seller”). Pursuant to the Kawkab Agreement, the Kawkab Seller agreed to sell, and Jerash Garments agreed to purchase, 100% ownership interests in Kawkab Venus for a consideration of $2.7 million. Kawkab Venus holds land with factory premises only, which are leased to MK Garments. Kawkab Venus had no other significant assets or liabilities and no operation activities or employees at the time of acquisition. We completed this acquisition in August 2022.

On June 22, 2022, Treasure Success entered into a Sale and Purchase Agreement with the Sellers. Pursuant to the agreement, the Sellers agreed to sell, and Treasure Success agreed to purchase, 100% of the ownership interests and the Sellers’ benefit of the shareholder/director loans in Ever Winland for a consideration of HKD39.6 million (approximately $5.1 million). Ever Winland holds office premises, which are leased to Treasure Success. Ever Winland had no other significant assets or liabilities and no operation activities or employees at the time of acquisition. The acquisition was completed on August 29, 2022.

We project that there will be an aggregate of approximately ~~$27~~$16 million and $0.5 million of capital expenditures in ~~both~~ the fiscal years ending March 31, ~~2022~~2023 and ~~2023~~2024, respectively, for further enhancement of production capacity to meet 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.

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 the Securities Exchange Act of 1934, as amended (the “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, ~~2021,~~2022, 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, ~~2021,~~2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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 that 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.

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)					Incorporated by Reference (Unless Otherwise Indicated)
Number	Exhibit Title	Form	File	Exhibit	Filing Date	Exhibit Title	Form	File	Exhibit	Filing Date

3.1	Amended and Restated Certificate of Incorporation	S-1	333-222596	3.1	September 19, 2018	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	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	Specimen Certificate for Common Stock	S-1	333-218991	4.1	June 27, 2017

10.1	Sale and Purchase Contract dated June 24, 2021, by and between Jerash Garments and Kawkab Venus Al Dowalyah Lisenaet Albesah	8-K	001-38474	10.1	July 20, 2021

31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	—	—	—	Filed herewith	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	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	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	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags	—	—	—	Filed herewith

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	—	—	—	Filed 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	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags	—	—	—	Filed herewith

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	—	—	—	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.

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, 2021~~14, 2022	Jerash Holdings (US), Inc.

	By:	/s/ Gilbert K. Lee
		Gilbert K. Lee
		Chief Financial Officer (Principal Financial Officer)

									Additional								Accumulated Other
	Preferred Stock				Common Stock				Paid-in			Statutory		Retained			Comprehensive			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital			Reserve		Earnings			Gain (Loss)			Interest			Equity
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 payment		-		-		-		-		-			-		(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

Balance at March 31, 2021		-	$	-		11,332,974	$	11,333	$	15,301,268		$	346,315	$	40,748,314		$	(15,901	)	$	302,120		$	56,693,449

Stock-based compensation expense for the restricted stock units issued under stock incentive plan		-		-		-		-		315,813			-		-			-			-			315,813
Cashless exercise of warrants		-		-		1,344		1		(1	)		-		-			-			-			-
Net income (loss)		-		-		-		-		-			-		6,376,113			-			(722	)		6,375,391
Dividend payment		-		-		-		-		-			-		(1,133,365	)		-			-			(1,133,365	)
Foreign currency translation gain		-		-		-		-		-			-		-			79,725			-			79,725

Balance at September 30, 2021 (unaudited)		-	$	-		11,334,318	$	11,334	$	15,617,080		$	346,315	$	45,991,062		$	63,824		$	301,398		$	62,331,013

									Additional							Accumulated Other
	Preferred Stock				Common Stock				Paid-in		Statutory		Retained			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 payment		-		-		-		-		-		-		(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

	Preferred Stock				Common Stock				Additional Paid-in		Statutory		Retained			Accumulated Other Comprehensive			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital		Reserve		Earnings			Gain (Loss)			Interest			Equity
Balance at June 30, 2021 (unaudited)		-	$	-		11,334,318	$	11,334	$	15,301,784	$	346,315	$	42,116,348		$	64,087		$	302,103		$	58,141,971

Stock-based compensation expense for the restricted stock units issued under stock incentive plan		-		-		-		-		315,296		-		-			-			-			315,296
Net income (loss)		-		-		-		-		-		-		4,441,430			-			(705	)		4,440,725
Dividend payment		-		-		-		-		-		-		(566,716	)		-			-			(566,716	)
Foreign currency translation loss		-		-		-		-		-		-		-			(263	)		-			(263	)

Balance at September 30, 2021 (unaudited)		-	$	-		11,334,318	$	11,334	$	15,617,080	$	346,315	$	45,991,062		$	63,824		$	301,398		$	62,331,013

	As of September 30, 2021
Right-of-use assets	$	1,601,671

Operating lease liabilities – current	$	550,099
Operating lease liabilities - non-current		905,710
Total operating lease liabilities	$	1,455,809