Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2020 | Aug. 13, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Jerash Holdings (US), Inc. | |
Entity Central Index Key | 0001696558 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --03-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity File Number | 001-38474 | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 11,325,000 | |
Entity Incorporation State Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
Current Assets: | ||
Cash | $ 17,754,673 | $ 26,130,411 |
Accounts receivable, net | 15,867,632 | 5,335,748 |
Inventories | 18,077,080 | 22,633,772 |
Prepaid expenses and other current assets | 2,239,343 | 2,761,877 |
Advance to suppliers, net | 3,168,395 | 2,116,367 |
Total Current Assets | 57,107,123 | 58,978,175 |
Restricted cash | 786,298 | 786,298 |
Long-term deposits | 329,697 | 253,414 |
Deferred tax assets, net | 139,895 | 139,895 |
Property, plant and equipment, net | 5,927,631 | 6,174,164 |
Right of use assets | 1,083,809 | 1,147,090 |
Total Assets | 65,374,453 | 67,479,036 |
Current Liabilities: | ||
Credit facilities | 235 | |
Accounts payable | 3,764,543 | 6,376,320 |
Accrued expenses | 2,127,629 | 2,245,402 |
Income tax payable - current | 1,282,329 | 1,088,497 |
Other payables | 1,088,461 | 929,783 |
Operating lease liabilities - current | 187,909 | 210,081 |
Total Current Liabilities | 8,450,871 | 10,850,318 |
Operating lease liabilities - non-current | 655,598 | 649,935 |
Income tax payable - non-current | 1,227,632 | 1,227,632 |
Total Liabilities | 10,334,101 | 12,727,885 |
Commitments and Contingencies (See Note 15) | ||
Equity | ||
Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding | ||
Common stock, $0.001 par value; 30,000,000 shares authorized; 11,325,000 shares issued and outstanding | 11,325 | 11,325 |
Additional paid-in capital | 15,277,176 | 15,235,025 |
Statutory reserve | 212,739 | 212,739 |
Retained earnings | 39,244,786 | 38,997,177 |
Accumulated other comprehensive loss | (8,877) | (8,324) |
Total Jerash Holdings (US), Inc.’s Stockholder’s Equity | 54,737,149 | 54,447,942 |
Noncontrolling interest | 303,203 | 303,209 |
Total Equity | 55,040,352 | 54,751,151 |
Total Liabilities and Equity | $ 65,374,453 | $ 67,479,036 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2020 | Mar. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 11,325,000 | 11,325,000 |
Common stock, shares outstanding | 11,325,000 | 11,325,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||
Revenue, net | $ 18,706,755 | $ 22,527,325 |
Cost of goods sold | 15,655,185 | 18,014,622 |
Gross Profit | 3,051,570 | 4,512,703 |
Selling, general and administrative expenses | 1,850,827 | 2,623,682 |
Stock-based compensation expenses | 42,151 | |
Total Operating Expenses | 1,892,978 | 2,623,682 |
Income from Operations | 1,158,592 | 1,889,021 |
Other Expense: | ||
Other expense, net | 2,739 | 4,533 |
Total other expense, net | 2,739 | 4,533 |
Net income before provision for income taxes | 1,155,853 | 1,884,488 |
Income tax expense | 342,000 | 335,000 |
Net Income | 813,853 | 1,549,488 |
Net loss attributable to noncontrolling interest | 6 | |
Net income attributable to Jerash Holdings (US), Inc.’s Common Stockholders | 813,859 | 1,549,488 |
Net Income | 813,853 | 1,549,488 |
Other Comprehensive Income | ||
Foreign currency translation (loss) gain | (553) | 811 |
Total Comprehensive Income | 813,300 | 1,550,299 |
Comprehensive loss attributable to noncontrolling interest | ||
Comprehensive Income Attributable to Jerash Holdings (US), Inc.’s Common Stockholders | $ 813,300 | $ 1,550,299 |
Earnings Per Share Attributable to Common Stockholders: | ||
Basic | $ 0.07 | $ 0.14 |
Diluted | $ 0.07 | $ 0.14 |
Weighted Average Number of Shares | ||
Basic | 11,325,000 | 11,325,000 |
Diluted | 11,330,210 | 11,472,363 |
Dividend per share | $ 0.05 | $ 0.05 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Equity - USD ($) | Preferred Stock | Common Stock | Additional Paid-in Capital | Statutory Reserve | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Total |
Balance at Mar. 31, 2019 | $ 11,325 | $ 14,956,767 | $ 212,739 | $ 34,786,735 | $ (14,440) | $ 309,003 | $ 54,751,151 | |
Balance, shares at Mar. 31, 2019 | 11,325,000 | |||||||
Net income (loss) | 1,549,488 | 1,549,488 | ||||||
Dividend distribution | (566,250) | (566,250) | ||||||
Foreign currency translation gain | 811 | 811 | ||||||
Balance at Jun. 30, 2019 | $ 11,325 | 15,235,025 | 212,739 | 38,997,177 | (8,324) | 303,209 | 54,751,151 | |
Balance, shares at Jun. 30, 2019 | 11,325,000 | |||||||
Balance at Mar. 31, 2020 | $ 11,325 | 15,235,025 | 212,739 | 38,997,177 | (8,324) | 303,209 | 54,751,151 | |
Balance, shares at Mar. 31, 2020 | 11,325,000 | |||||||
Stock-based compensation expense for the stock options issued under stock incentive plan. | 42,151 | 42,151 | ||||||
Net income (loss) | 813,859 | (6) | 813,853 | |||||
Dividend distribution | (566,250) | (566,250) | ||||||
Foreign currency translation gain | (553) | (553) | ||||||
Balance at Jun. 30, 2020 | $ 11,325 | $ 15,277,176 | $ 212,739 | $ 39,244,786 | $ (8,877) | $ 303,203 | $ 55,040,352 | |
Balance, shares at Jun. 30, 2020 | 11,325,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income | $ 813,853 | $ 1,549,488 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 412,054 | 338,652 |
Stock-based compensation expenses | 42,151 | |
Bad debt expense | 18,043 | |
Amortization of operating lease right-of-use assets | 131,088 | 110,546 |
Changes in operating assets: | ||
Accounts receivable | (10,531,884) | (9,383,142) |
Inventories | 4,556,693 | 602,719 |
Prepaid expenses and other current assets | 504,484 | (285,165) |
Advance to suppliers | (1,052,028) | (1,345,913) |
Changes in operating liabilities: | ||
Accounts payable | (2,611,778) | (913,522) |
Accrued expenses | (117,773) | 274,333 |
Other payables | 158,678 | 367,959 |
Operating lease liabilities | (84,315) | (50,012) |
Income tax payable | 193,881 | 335,000 |
Net cash used in operating activities | (7,566,853) | (8,399,057) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment | (165,522) | (1,374,139) |
Other long-term assets | (76,283) | |
Net cash used in investing activities | (241,805) | (1,374,139) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Dividend distribution | (566,250) | (566,250) |
Repayment from short-term loan | (235) | (580,447) |
Net cash used in financing activities | (566,485) | (1,146,697) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (595) | 4,295 |
NET DECREASE IN CASH | (8,375,738) | (10,915,598) |
CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD | 26,916,709 | 27,834,468 |
CASH, AND RESTRICTED CASH, END OF THE PERIOD | 18,540,971 | 16,918,870 |
CASH AND RESTRICTED CASH, END OF PERIOD | 18,540,971 | 16,918,870 |
LESS: NON-CURRENT RESTRICTED CASH | 786,298 | 796,876 |
CASH, END OF PERIOD | 17,754,673 | 16,121,994 |
Supplemental disclosure information: | ||
Cash paid for interest | 5,186 | |
Income tax paid | 148,119 | |
Non-cash financing activities | ||
Right of use assets obtained in exchange for operating lease obligations | $ 68,932 | $ 1,292,416 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Jerash Holdings (US), Inc. ("Jerash Holdings") is a corporation incorporated under the laws of the State of Delaware on January 20, 2016. Jerash Holdings is a parent holding company with no operations. Jerash Holdings, and its subsidiaries and Variable Interest Entity ("VIE") are herein collectively referred to as the "Company." Jerash Garments and Fashions Manufacturing Company Limited ("Jerash Garments") is a wholly owned subsidiary of Jerash Holdings and was established in Amman, the Hashemite Kingdom of Jordan ("Jordan"), as a limited liability company on November 26, 2000 with a declared capital of 150,000 Jordanian Dinar ("JOD") (approximately US$212,000) as of June 30, 2020. Jerash for Industrial Embroidery Company ("Jerash Embroidery") and Chinese Garments and Fashions Manufacturing Company Limited ("Chinese Garments") were both incorporated in Amman, Jordan, as limited liability companies on March 11, 2013 and June 13, 2013, respectively, each with a declared capital of JOD50,000 as of June 30, 2020. Jerash Embroidery and Chinese Garments are wholly owned subsidiaries of Jerash Garments. Al-Mutafaweq Co. for Garments Manufacturing Ltd. ("Paramount") was a contract garment manufacturer that was incorporated in Amman, Jordan, as a limited liability company on October 24, 2004 with a declared capital of JOD100,000. On December 11, 2018, Jerash Garments and the sole stockholder of Paramount entered into an agreement pursuant to which Jerash Garments acquired all of the outstanding shares of stock of Paramount. Jerash Garments assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of June 18, 2019, Paramount became a subsidiary of Jerash Garments. Treasure Success International Limited ("Treasure Success") was incorporated on July 5, 2016 in Hong Kong, China, for the primary purpose of employing staff from China to support Jerash Garments' operations and is a wholly-owned subsidiary of Jerash Holdings. Victory Apparel (Jordan) Manufacturing Company Limited ("Victory Apparel") was incorporated as a limited liability company in Amman, Jordan, on September 18, 2005 with a declared capital of JOD50,000. Victory Apparel has no significant assets or liabilities or other operating activities of its own. Although Jerash Garments does not own the equity interest of Victory Apparel, the Company's president, director, and significant stockholder, Mr. Choi Lin Hung ("Mr. Choi"), is also a director of Victory Apparel and controls all decision-making for Victory Apparel along with another significant stockholder of Jerash Garments, Mr. Lee Kian Tjiauw ("Mr. Lee"), who has the ability to control Victory Apparel's financial affairs. In addition, Victory Apparel's equity at risk is not sufficient to permit it to operate without additional subordinated financial support from Jerash Garments. Based on these facts, the Company concluded that Jerash Garments has effective control over Victory Apparel due to Mr. Choi's roles at both organizations and therefore Victory Apparel is considered a VIE under Accounting Standards Codification ("ASC") 810-10-05-08A. Accordingly, Jerash Garments consolidates Victory Apparel's operating results, assets, and liabilities. Jiangmen Treasure Success Business Consultancy Company Limited ("Jiangmen Treasure Success") was incorporated on August 28, 2019 under the laws of the People's Republic of China in Guangzhou City of Guangdong Province in China with a total registered capital of 3 million Hong Kong Dollars ("HKD") (approximately $385,000) to provide support in sales and marketing, sample development, merchandising, procurement, and other areas. Treasure Success owns 100% of the equity interests in Jiangmen Treasure Success. The Company is engaged in the manufacturing and exporting of customized, ready-made sport and outerwear from knitted fabric produced in its facilities in Jordan and sold in the United States, Jordan, and other countries. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The Company's consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). Principles of Consolidation The consolidated financial statements include the financial statements of Jerash Holdings, and its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation. In accordance with accounting standards regarding the consolidation of VIE, 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 three months ended June 30, 2020, and the net assets of the VIE were approximately $0.3 million as of each of June 30, 2020 and March 31, 2020. Use of Estimates The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company's most significant estimates include allowance for doubtful accounts, valuation of inventory reserve, useful lives of buildings and other property, and the measurement of stock-based compensation expenses. Actual results could differ from these estimates. Cash The Company considers all highly liquid investment instruments with an original maturity of three months or less from the original date of purchase to be cash equivalents. As of June 30, 2020, and March 31, 2020, the Company had no cash equivalents. Restricted Cash Restricted cash consists of cash used as security deposits to obtain credit facilities from a bank and to secure customs clearance under the requirements of local regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security deposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a non-current asset since the Company has no intention to terminate these bank facilities within one year. Accounts Receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants extended payment terms to customers with good credit standing and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management's best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Allowance was $22,312 and $4,641 as of June 30, 2020 and March 31, 2020, respectively. Inventories Inventories are stated at the lower of cost or net realizable value. Inventories include cost of raw materials, freight, direct labor, and related production overhead. The cost of inventories is determined using the First in, First-out method. The Company periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value. Advance to Suppliers Advance to suppliers consists of balances paid to suppliers for services or materials purchased that have not been provided or received. Advance to suppliers for services and materials is short term in nature. Advance to Suppliers is reviewed periodically to determine whether its carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance was $2,372 and $2,000 as of June 30, 2020 and March 31, 2020 respectively. Property, Plant and Equipment Property, plant and equipment are recorded at cost, reduced by accumulated depreciation and amortization. Depreciation and amortization expense related to property, plant and equipment is computed using the straight-line method based on estimated useful lives of the assets, or in the case of leasehold improvements, the shorter of the initial lease term or the estimated useful life of the improvements. The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. The estimated useful lives of depreciation and amortization of the principal classes of assets are as follows: Useful life Land Infinite Property and buildings 15 years Equipment and machinery 3-5 years Office and electronic equipment 3-5 years Automobiles 5 years Leasehold improvements Lesser of useful life and lease term Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation or amortization of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and comprehensive income. Impairment of Long-Lived Assets The Company assesses its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Factors which may indicate potential impairment include a significant underperformance relative to the historical or projected future operating results or a significant negative industry or economic trend. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by that asset. If impairment is indicated, a loss is recognized for any excess of the carrying value over the estimated fair value of the asset. The fair value is estimated based on the discounted future cash flows or comparable market values, if available. The Company did not record any impairment loss during the three months ended June 30, 2020 and 2019. Revenue Recognition Substantially all of the Company's revenue is derived from product sales, which consist of sales of the Company's customized ready-made outerwear for large brand-name retailers. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company's contracts are short term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within seven to 120 days of the invoice date, and the contracts do not have significant financing components. Shipping and handling costs associated with outbound freight are not an obligation of the Company. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial. The Company also derives revenue rendering cutting and making services to other apparel vendors who subcontract orders to the Company, and the revenue is recognized when the service is rendered. All of the Company's contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company's historical experience, complete satisfaction of the performance obligation, and the Company's best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted the Company's revenue. The Company does not have any contract assets since the Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment from customers is not contingent on a future event. For the three months ended June 30, 2020, and June 30, 2019, there was no revenue recognized from performance obligations related to prior periods. As of June 30, 2020, there was no revenue expected to be recognized in any future periods related to remaining performance obligations. The Company has one revenue generating reportable geographic segment under ASC Topic 280 "Segment Reporting" and derives its sales primarily from its sales of customized ready-made outerwear. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see "Note 14—Segment Reporting"). Shipping and Handling Proceeds collected from customers for shipping and handling costs are included in revenue. Shipping and handling costs are expensed as incurred and are included in operating expenses, as a part of selling, general and administrative expenses. Total shipping and handling expenses were $183,913 and $208,782 Income Taxes The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Jerash Holdings was incorporated in the State of Delaware and is subject to federal income tax in the United States of America. Treasure Success was registered in Hong Kong and has no operating profit. Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, and Victory Apparel are subject to income tax in Jordan, unless an exemption is granted. The corporate income tax rate is 14% for the businesses classified within the industrial sector. In accordance with the Investment Encouragement Law, Jerash Garments' export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing at the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, the Jordanian government changed some features of its tax incentive programs and Jerash Garments and its subsidiaries and VIE are now qualified for incentives applicable to a Development Zone, a change from the previous incentive program relating to Qualifying Industrial Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE were subject to corporate income tax in Jordan at a rate of 10% plus 1% social contribution. Effective January 1, 2020, income rate increased to 14% plus 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 June 1, 2015 to June 1, 2018 that allowed Jerash Garments to make purchases with no sales tax charge. This exemption has been extended to February 5, 2021. The Company accounts for income taxes in accordance with ASC 740, "Income Taxes," which requires the Company to use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. ASC 740 clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of income and comprehensive income. No significant uncertainty in tax positions relating to income taxes were incurred during three months ended June 30, 2020 and 2019. Foreign Currency Translation The reporting currency of the Company is the U.S. dollar ("US$" or "$"). The Company uses JOD as its functional currency in Jordanian companies, HKD in Treasure Success, and Chinese Yuan ("CNY") in Jiangmen Treasure Success as functional currency of each abovementioned entity. The assets and liabilities of the Company have been translated into US$ using the exchange rates in effect at the balance sheet date, equity accounts have been translated at historical rates, and revenue and expenses have been translated into US$ using average exchange rates in effect during the reporting period. Cash flows are also translated at average translation rates for the periods. Therefore, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income or loss. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. The value of JOD against US$ and other currencies may fluctuate and is affected by, among other things, changes in Jordan's political and economic conditions. Any significant revaluation of JOD may materially affect the Company's financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: June 30, March 31, Period-end spot rate US$1=JOD0.7090 US$1=JOD0.7090 US$1=HKD7.7504 US$1=HKD7.7529 Average rate US$1=JOD0.7090 US$1=JOD0.7090 US$1=HKD7.7514 US$1=HKD7.8163 Stock-Based Compensation The Company measures compensation expense for stock-based awards to non-employee contractors and directors based upon the awards' initial grant-date fair value. The estimated grant-date fair value of the award is recognized as expense over the requisite service period using the straight-line method. The Company estimates the fair value of stock options using a Black-Scholes model. This model is affected by the Company's stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of the option, expected risk-free rates of return, the expected volatility of the Company's common stock, and expected dividend yield, each of which is more fully described below. The assumptions for expected term and expected volatility are the two assumptions that significantly affect the grant date fair value. ● Expected Term: the expected term of a warrant or a sock option is the period of time that the warrant or stock option is expected to be outstanding. ● Risk-free Interest Rate: the Company bases the risk-free interest rate used in the Black-Scholes model on the implied yield at the grant date of the U.S. Treasury zero-coupon issued with an equivalent term to the share-based award being valued. Where the expected term of a stock-based award does not correspond with the term for which a zero-coupon interest rate is quoted, the Company uses the nearest interest rate from the available maturities. ● Expected Stock Price Volatility: the Company utilizes comparable public company volatility over the same period of time as the life of the warrant or stock option. ● Dividend Yield: Until November 2018, the board of directors of Jerash Holdings (the "Board of Directors") had not declared, and the Company had not yet paid, any dividends. Accordingly, stock-based compensation awards granted prior to November 2018 assumed no dividend yield, while any subsequent stock-based compensation awards are valued using the anticipated dividend yield. Earnings per Share The Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260"). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS (See "Note 13—Earnings per Share"). Comprehensive (Loss) Income Comprehensive income consists of two components, net income and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in JOD or HKD or CNY to US$ is reported in other comprehensive income in the consolidated statements of income and comprehensive income. Fair Value of Financial Instruments ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets and liabilities. ● Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash, including restricted cash, accounts receivable, other receivables, credit facilities, accounts payable, accrued expenses, income tax payable, other payables, and operating lease liabilities to approximate the fair value of the respective assets and liabilities at June 30, 2020 and March 31, 2020 based upon the short-term nature of these assets and liabilities. Concentrations and Credit Risk Credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of June 30, 2020, and March 31, 2020, respectively , $4,159,305 and $6,894,641 of the Company's cash was on deposit at financial institutions in Jordan, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. , respectively, $79,625 and $125,830 of the Company's cash was on deposit at financial institutions in China, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of June 30, 2020 and March 31, 2020, respectively, $14,210,256 and $19,847,852 of the Company's cash was on deposit at financial institutions in Hong Kong, which are insured by the Hong Kong Deposit Protection Board subject to certain Accounts receivable are typically unsecured and derived from revenue earned from customers, and therefore are exposed to credit risk. The risk is mitigated by the Company's assessment of its customers' creditworthiness and its ongoing monitoring of outstanding balances. Customer and vendor concentration risk The Company's sales are made primarily in the United States. Its operating results could be adversely affected by U.S. government policies on exporting business, foreign exchange rate fluctuations, and changes in local market conditions. The Company has a concentration of its revenue and purchases with specific customers and suppliers. For the three months ended June 30, 2020, one end-customer accounted for 78% of the Company's total revenue. For the three months ended June 30, 2019, one end-customer accounted for 97% of the Company's total revenue. As of June 30, 2020, two end-customers accounted for 74% and 11% of the Company's total accounts receivable balance, respectively. As of March 31, 2020, four end-customers accounted for 42%, 20%, 20%, and 14% of the Company's total accounts receivable balance, respectively. For the three months ended June 30, 2020, the Company purchased approximately 19% and 10% of its raw materials from two major suppliers, respectively. For the three months ended June 30, 2019, the Company purchased approximately 29% and 13% of its raw materials from two major suppliers, respectively. As of June 30, 2020, accounts payable to the Company's three major suppliers accounted for 45%, 15%, and 14 % of the total accounts payable balance, respectively. As of March 31, 2020, accounts payable to the Company's three major suppliers accounted for 39%, 16%, and 10% of the total accounts payable balance, respectively. Risks and Uncertainties The principal operations of the Company are located in Jordan. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Jordan, as well as by the general state of the Jordanian economy. The Company's operations in Jordan are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic, and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political, regulatory, and social conditions in Jordan. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS The Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews new accounting standards that are issued. The Company adopted ASU No. 2016-02—Leases (Topic 842), as of April 1, 2019, using a modified retrospective transition method permitted under ASU No. 2018-11. This transition approach provides a method for recording existing leases only at the date of adoption and does not require previously reported balances to be adjusted. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities of approximately $1.4 million and $0.9 million, respectively, as of April 1, 2019. The standard did not materially impact consolidated net earnings and had no impact on cash flows. (See "Note 7—Leases.") In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of the Company's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. This ASU is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. The Company adopted ASU 2016-13 and its related amendments effective April 1, 2020, and there was no material effect on its consolidated financial statements for the adoption of this standard. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company does not expect adoption of the new guidance to have a significant impact on its consolidated financial statements. |
Accounts Receivable
Accounts Receivable | 3 Months Ended |
Jun. 30, 2020 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, NET | As of As of June 30, March 31, Trade accounts receivable $ 15,889,944 $ 5,340,389 Less: allowances for doubtful accounts ( 22,312) ( 4,641 Accounts receivable, net $ 15,867,632 $ 5,335,748 |
Inventories
Inventories | 3 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | NOTE 5 – INVENTORIES Inventories consisted of the following: As of As of June 30, March 31, Raw materials $ 9,381,816 $ 12,499,301 Work-in-progress 825,918 1,541,716 Finished goods 7,869,346 8,592,755 Total inventory $ 18,077,080 $ 22,633,772 |
Advance to Suppliers
Advance to Suppliers | 3 Months Ended |
Jun. 30, 2020 | |
Advance to Suppliers [Abstract] | |
ADVANCE TO SUPPLIERS | NOTE 6 – ADVANCE TO SUPPLIERS Advance to suppliers consisted of the following: As of As of June 30, March 31, Advance to suppliers $ 3,170,767 $ 2,118,367 Less: allowances for doubtful accounts ( 2,372) ( 2,000) Advance to suppliers, net $ 3,168,395 $ 2,116,367 |
Leases
Leases | 3 Months Ended |
Jun. 30, 2020 | |
Leases, Operating [Abstract] | |
LEASES | NOTE 7 – LEASES The Company has 34 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 remeasurement 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: June 30, Right-of-use assets $ 1,083,809 Operating lease liabilities - current $ 187,909 Operating lease liabilities - non-current 655,598 Total operating lease liabilities $ 843,507 The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2020: Remaining lease term and discount rate: Weighted average remaining lease term (years) 3.5 Weighted average discount rate 4.06 % During the three months ended June 30, 2020 and 2019, the Company incurred total operation lease expenses of $511,773 and $542,785 respectively. The following is a schedule, by fiscal years, of maturities of lease liabilities as of June 30, 2020: 2021 $ 432,305 2022 317,480 2023 223,043 2024 117,837 2025 12,660 Thereafter 62,503 Total lease payments 1,165,828 Less: imputed interest (82,019 ) Less: prepayments (240,302 ) Present value of lease liabilities $ 843,507 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 3 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: As of As of June 30, March 31, Land (1) $ 1,831,192 $ 1,831,192 Property and buildings 432,562 432,562 Equipment and machinery (2) 7,790,211 7,630,255 Office and electric equipment 798,012 793,405 Automobiles 480,687 480,687 Leasehold improvements 2,766,566 2,765,610 Subtotal 14,099,230 13,933,711 Construction in progress (3) 194,752 194,752 Less: Accumulated depreciation and amortization (4) (8,366,351 ) (7,954,299 ) Property and equipment, net $ 5,927,631 $ 6,174,164 (1) On August 7, 2019 and February 6, 2020, the Company, through Jerash Garments, purchased 12,340 square meters (approximately three acres) and 4,516 square meters (approximately 48,608 square feet) of land in Al Tajamouat Industrial City, Jordan (the "Jordan Properties"), from third parties to construct a factory and a dormitory for the Company's employees, respectively. The aggregate purchase price of the Jordan Properties was JOD1,177,301 (approximately US$1.7 million). (2) On June 18, 2019, the Company acquired all of the outstanding shares of Paramount, a contract manufacturer based in Amman, Jordan. As a result, Paramount became a subsidiary of Jerash Garments, and the Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of acquisition, so this transaction was accounted for as an asset acquisition. $980,000 was paid in cash to acquire all of the machinery and equipment from Paramount and the machinery and equipment were transferred to the Company. (3) The construction in progress account represents costs incurred for constructing a dormitory, which was previously planned to be a sewing workshop. This dormitory is approximately 4,800 square feet in the Tafilah Governorate of Jordan. Construction has been temporarily suspended since March 2020 due to the COVID-19 pandemic and is expected to resume before the end of fiscal 2021. (4) Depreciation and amortization expenses were $412,054 and $338,652 for the three months ended June 30, 2020 and 2019, respectively. |
Equity
Equity | 3 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
EQUITY | NOTE 9 – EQUITY Preferred Stock The Company had 500,000 shares of preferred stock authorized with a par value of $0.001 per share; none were issued and outstanding as of June 30, 2020 and March 31, 2020. The preferred stock can be issued by 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 Prior to September 17, 2018, the Company had 15,000,000 shares of common stock authorized with a par value of $0.001 per share. On September 17, 2018, following approval from its stockholders, the Company filed a certificate of amendment to its certificate of incorporation with the State of Delaware to increase its authorized shares of common stock from 15,000,000 to 30,000,000. The Company had 11,325,000 shares common stock outstanding as of June 30, 2020 and March 31, 2020. Statutory Reserve In accordance with the Corporate Law in Jordan, Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, and Victory Apparel are required to make appropriations to certain reserve funds, based on net income determined in accordance with generally accepted accounting principles of Jordan. Appropriations to the statutory reserve are required to be 10% of net income until the reserve is equal to 100% of the entity's share capital. This reserve is not available for dividend distribution. In addition, PRC companies are required to set aside at least 10% of their after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of their registered capital. The statutory reserves are not distributable in the form of cash dividends to the Company and can be used to make up cumulative prior year losses. Dividends On May 15, 2020, the Board of Directors declared a cash dividend of $0.05 per share of common stock. The cash dividends of $566,250 were paid in full on June 2, 2020. On February 5, 2020, November 4, 2019, July 29, 2019, and May 17, 2019, 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 26, 2020, November 26, 2019, August 19, 2019, and June 5, 2019, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 10 – STOCK-BASED COMPENSATION Warrants issued for services From time to time, the Company issues warrants to purchase its common stock. These warrants are valued using a Black-Scholes model and using the volatility, market price, exercise price, risk-free interest rate, and dividend yield appropriate at the date the warrants were issued. Simultaneous with the closing of the IPO, the Company issued to the underwriter and its affiliates warrants to purchase 57,200 shares of common stock ("IPO Underwriter Warrants") at an exercise price of $8.75 per share with an expiration date of May 2, 2023. The shares underlying the IPO Underwriter Warrants were subject to a 180-day lock-up that expired on October 29, 2018. The fair value of these warrants was estimated as of the grant date using the Black-Scholes model with the major assumptions that expected terms is five years; risk-free interest rate is 1.8-2.8%; and the expected volatility is 50.3-52.2%. There were 264,410 warrants outstanding as of June 30, 2020 and March 31, 2019 with a weighted average exercise price of $6.35. All of the outstanding warrants were fully vested and exercisable as of June 30, 2020 and March 31, 2020. Stock Options On March 21, 2018, the Board of Directors adopted the Jerash Holdings (US), Inc. 2018 Stock Incentive Plan (the "Plan"), pursuant to which the Company may grant various types of equity awards. 1,484,250 shares of common stock of the Company were reserved for issuance under the Plan. In addition, on July 19, 2019, the Board of Directors approved the amendment and restatement of the Plan, which was approved by the Company's stockholders at its annual meeting of stockholders on September 16, 2019. The amended and restated Plan increased the number of shares reserved for issuance under the Plan by 300,000, to 1,784,250, among other changes. On April 9, 2018, the Board of Directors approved the issuance of 989,500 nonqualified stock options under the Plan in accordance with the Plan at an exercise price of $7.00 per share, and a term of five years. The fair value of these options was estimated as of the grant date using the Black-Scholes model with the major assumptions that expected terms is five years; risk-free interest rate is 2.6%; and the expected volatility is 50.3%. All these outstanding options were fully vested and exercisable on issue date. On August 3, 2018, the Board of Directors granted the Company's then Chief Financial Officer and Head of U.S. Operations a total of 150,000 nonqualified stock options under the Plan in accordance with the Plan at an exercise price of $6.12 per share and a term of 10 years. The fair value of these options was estimated as of the grant date using the Black-Scholes model with the major assumptions that expected terms is 10 years; risk-free interest rate is 2.95%; and the expected volatility is 50.3%. All these outstanding options were fully vested and exercisable in August 2019. On November 27, 2019, the Board of Directors granted the Company's Chief Financial Officer 50,000 nonqualified stock options under the amended and restated Plan in accordance with the amended and restated Plan at an exercise price of $6.50 per share and a term of 10 years. All these outstanding options were fully vested and exercisable in May 2020. The fair value of the options granted on November 27, 2019 was $126,454. It is estimated as of the grant date using the Black-Scholes model with the following assumptions: Stock Options November 27, Expected term (in years) 10.0 Risk-free interest rate (%) 1.77 % Expected volatility (%) 48.59 % Dividend yield (%) 3.08 % All stock option activities are summarized as follows: Weighted Average Shares Exercise Stock options outstanding at March 31, 2020 1,189,500 $ 6.87 Granted - - Exercised - - Cancelled - - Stock options outstanding at June 30, 2020 1,189,500 $ 6.87 Total expense related to the stock options issued was $42,151 and nil for the three months ended June 30, 2020 and 2019 respectively. There were no unrecognized compensation costs at June 30, 2020 relating to unvested awards. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11 – RELATED PARTY TRANSACTIONS The relationship and the nature of related party transactions are summarized as follow: Name of Related Party Relationship to the Company Nature of Transactions Ford Glory International Limited ("FGIL") Affiliate, subsidiary of Ford Glory Holdings ("FGH"), which is 49% indirectly owned by the Company's President, Chief Executive Officer and Chairman, a significant stockholder Operating Lease Yukwise Limited ("Yukwise") Wholly owned by the Company's President, Chief Executive Officer, and Chairman, a significant stockholder Consulting Services Multi-Glory Corporation Limited ("Multi-Glory") Wholly owned by a significant stockholder Consulting Services Jiangmen V-Apparel Manufacturing Limited Affiliate, subsidiary of FGH Operating Lease a. Related party lease and purchases agreement On October 3, 2018, Treasure Success and FGIL entered into a lease agreement, pursuant to which Treasure Success leases its office space in Hong Kong from FGIL for a monthly rent in the amount of HKD119,540 (approximately $15,253) and for a one-year term with an option to extend the term for an additional year at the same rent. On October 3, 2019, Treasure Success exercised the option to extend the lease for an additional year at the same rent. On August 31, 2019, Jiangmen Treasure Success and Jiangmen V-Apparel Manufacturing Limited entered into a lease agreement, which was a replacement of a previous lease agreement between Treasure Success and Jiangmen V-Apparel Manufacturing Limited dated August 15, 2019, pursuant to which Treasure Success leases its office space in Jiangmen, China from Jiangmen V-Apparel Manufacturing Limited for a monthly rent in the amount of CNY6,200 (approximately $891). The lease has a 10-year term with a clause to increase the rental amount by 5% annually between the third and fifth years of the lease term and the rental amount will be reviewed by and negotiated between both parties according to the market rental rate. On July 15, 2019, the Company, through Treasure Success, entered into an agreement to purchase office space together with certain parking spaces from FGIL for an aggregate purchase price of HKD63,000,000 (approximately $8.1 million). Pursuant to the agreement, Treasure Success paid an initial deposit of HKD6,300,000 (approximately $0.8 million) upon signing the agreement. On October 31, 2019, this agreement was terminated pursuant to its terms because the conditions precedent to closing under the agreement were not met. As a result of the termination, on November 7, 2019, FGIL repaid in full, without interest, the deposit Treasure Success paid at the time the agreement was signed. b. Consulting agreements On January 16, 2018, Treasure Success and Multi-Glory entered into a consulting agreement, pursuant to which Multi-Glory will provide high-level advisory, marketing, and sales services to the Company for $300,000 per annum. The agreement renews automatically for one-month terms. The agreement became effective as of January 1, 2018. Due to the COVID-19 pandemic, Multi-Glory's compensation was temporarily reduced to $20,000 per month from May 2020 to October 2020. Total consulting fees under this agreement were $65,000 and $75,000 for the three months ended June, 2020 and 2019, respectively. On January 12, 2018, Treasure Success and Yukwise entered into a consulting agreement, pursuant to which Mr. Choi will serve as Chief Executive Officer and provide high-level advisory and general management services for $300,000 per annum. The agreement renews automatically for one-month terms. This agreement became effective as of January 1, 2018. Due to the COVID-19 pandemic, Yukwise's compensation was temporarily reduced to $20,000 per month from May 2020 to October 2020. Total advisory and management expenses under this agreement were $65,000 and $75,000 for the three months ended June, 2020 and 2019, respectively. c. Personal Guarantees Borrowings under the HSBC Credit Facilities (as defined below) were previously secured by the personal guarantees of Mr. Choi and Mr. Ng Tsze Lun ("Mr. Ng"). These guarantees were released as of August 12, 2019. (See "Note 12—Credit Facilities"). |
Credit Facilities
Credit Facilities | 3 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
CREDIT FACILITIES | NOTE 12 – CREDIT FACILITIES Pursuant to a letter agreement dated May 29, 2017, Treasure Success entered into an $8,000,000 import credit facility with Hong Kong and Shanghai Banking Corporation ("HSBC") (the "2017 Facility Letter"),which was amended pursuant to a letter agreement between HSBC, Treasure Success, and Jerash Garments dated June 19, 2018 (the "2018 Facility Letter"), and increased to $11,000,000 pursuant to a letter agreement dated August 12, 2019 (the "2019 Facility Letter," and together with the 2018 Facility Letter and 2017 Facility Letter, the "HSBC Facility"). 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 the Invoice Discounting/Factoring Agreement (together, the "2017 Factoring Agreement") with HSBC for certain debt purchase services related to the Company's accounts receivable. On June 14, 2018, Treasure Success and Jerash Garments entered into another Offer Letter-Invoice Discounting/Factoring Agreement with HSBC, which amended the 2017 Factoring Agreement (the "2018 Factoring Agreement, and together with the 2017 Factoring Agreement, the "HSBC Factoring Agreement," and together with the HSBC Facility, the "HSBC Credit Facilities"). Pursuant to the HSBC Factoring Agreement, HSBC offered to provide Treasure Success with a $12,000,000 factoring facility for certain debt purchase services related to Treasure Success's accounts receivable. The HSBC Credit Facilities are guaranteed by Jerash Holdings, Jerash Garments, and Treasure Success. In addition, the HSBC Credit Facilities required cash and other investment security collateral of $3,000,000 and were secured by the personal guarantees of Mr. Choi and Mr. Ng. As of January 22, 2019, the security collateral of $3,000,000 had been released. HSBC also released the personal guarantees of Mr. Choi and Mr. Ng on August 12, 2019. The HSBC Credit Facilities provide that drawings under the HSBC Credit Facilities are charged interest at the Hong Kong Interbank Offered Rate plus 1.5% for drawings in HKD, and the London Interbank Offered Rate plus 1.5% for drawings in other currencies. In addition, the HSBC Credit Facilities also contain certain service charges and other commissions and fees. Under the HSBC Factoring Agreement, HSBC also provides credit protection and debt services related to each of the Company's preapproved customers. For any approved debts or collections assigned to HSBC, HSBC charges a flat fee of 0.35% on the face value of the invoice for such debt or collection. The Company may assign debtor payments that are to be paid to HSBC within 90 days, defined as the maximum terms of payment. The Company may receive advances on invoices that are due within 30 days of the delivery of its goods, defined as the maximum invoicing period. The HSBC Credit Facilities are subject to review at any time, and HSBC has discretion on whether to renew the HSBC Facility. Either party may terminate the HSBC Factoring Agreement subject to a 30-day notice period. As June 30, 2020 and March 31, 2020, the Company had made nil and $235 in withdrawals, under the HSBC Credit Facilities, which are due within 120 days of each borrowing date or upon demand by HSBC. As of March 31, 2020, $235 was outstanding under the HSBC Factoring Agreement and nil outstanding under the HSBC Facility. 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 June 30, 2020 and March 31, 2020, the Company had no outstanding amount, respectively, in import invoice financing under the SCBHK facility. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 13 – EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the three months ended June 30, 2020 and 2019. 1,403,910 warrants and stock options were anti-dilutive for the three months ended June 30, 2020 and excluded from the EPS calculation. For the three months ended June 30, 2019, 57,200 warrants were anti-dilutive. Three Months Ended June 30, 2020 2019 Numerator: Net income attributable to Jerash Holdings (US), Inc.'s Common Stockholders $ 813,859 $ 1,549,488 Denominator: Denominator for basic earnings per share (weighted-average shares) 11,325,000 11,325,000 Dilutive securities – unexercised warrants and options 5,210 147,363 Denominator for diluted earnings per share (adjusted weighted-average shares) 11,330,210 11,472,363 Basic earnings per share $ 0.07 $ 0.14 Diluted earnings per share $ 0.07 $ 0.14 |
Segment Reporting
Segment Reporting | 3 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 14 – SEGMENT REPORTING ASC 280, "Segment Reporting," establishes standards for reporting information about operating segments on a basis consistent with the Company's internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for details on the Company's business segments. The Company uses the "management approach" in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company's chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company's reportable segments. Management, including the chief operating decision maker, reviews operation results by the revenue of the Company's products. The Company's major product is outerwear. For the three months ended June 30, 2020 and 2019, outerwear accounted for approximately 93.3% and 96.5% The following table summarizes sales by geographic areas for the three months ended June 30, 2020 and 2019, respectively. For the three months ended 2020 2019 United States $ 17,581,173 $ 22,040,945 Jordan 1,125,582 486,380 Total $ 18,706,755 $ 22,527,325 99.9% of long-lived assets were located in Jordan as of June 30, 2020 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 15 – COMMITMENTS AND CONTINGENCIES Commitments On August 28, 2019, Jiangmen Treasure Success, was incorporated under the laws of the People's Republic of China in Jiangmen City, Guangdong Province, China, with a total registered capital of HKD3 million (approximately $385,000). The Company's subsidiary, Treasure Success, is required to contribute HKD3 million (approximately $385,000) as paid-in capital in exchange for 100% ownership interest in Jiangmen Treasure Success. As of June 30, 2020, Treasure Success had made capital contribution of HKD1.3 million (approximately $167,000). Pursuant to Jiangmen Treasure Success's organizational documents, the Company is required to complete the capital contribution before December 31, 2029. 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. |
Income tax
Income tax | 3 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | NOTE 16 – INCOME TAX Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, and Victory Apparel are subject to the regulations of the Income Tax Department in Jordan. The corporate income tax rate is 14% for the industrial sector. In accordance with the Investment Encouragement Law, Jerash Garments' export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing at the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, Jordanian government has changed some features of Jerash Garments and its subsidiaries area to a Development Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE began paying corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020, this rate increased to 14% plus a 1% social contribution. On December 22, 2017, the 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. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS 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 dated August 31, 2019. The new lease has a one-year term with monthly rent amount of CNY28,300 (approximately $4,000) for additional office space and sample production purposes. On July 6, 2020, the Company incorporated a new entity in Jordan, Jerash The First Medical Supplies Manufacturing Company Limited, as a wholly owned subsidiary of Jerash Garments with a total registered capital of JOD150,000 (approximately $212,000), to capture the market potential and contribute to the global effort of stemming COVID-19. The company has received temporary approval to produce medical supplies in Jordan and is applying for the relevant certifications to export products to the U.S. and Europe. The company also started to receive local sub-contracting orders of medical product in July 2020. On August 5, 2020, the Board of Directors approved the payments of a dividend of $0.05 per share payable on August 24, 2020 to stockholders of record as the close of business on August 17, 2020. The spread of COVID-19 around the world since March 2020 has caused significant volatility in U.S. and international markets. The Company's sales declined in the first quarter of fiscal 2021. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, as well as its impact on the U.S. and international economies and, as such, the Company is unable to estimate the impact on the Company's financial condition and operations in the long run. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the financial statements of Jerash Holdings, and its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation. In accordance with accounting standards regarding the consolidation of VIE, 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. As described in Note 1, management of the Company has concluded that Victory Apparel is a VIE, and that Jerash Garments is considered the primary beneficiary because Mr. Choi, the Company's president, director, and significant stockholder controls all decision-making for Victory Apparel along with another significant stockholder of Jerash Garments, Mr. Lee, and Jerash Garments absorbs the risks and rewards of Victory Apparel; therefore, the Company consolidates Victory Apparel for financial reporting purposes. Noncontrolling interests result from the consolidation of Victory Apparel, which is 100% owned by Wealth Choice Limited. The following table sets forth the carrying amounts of the assets and liabilities of the VIE, Victory Apparel, which was included in the Company's consolidated balance sheets: June 30, March 31, Current assets $ 1,274 $ 1,280 Intercompany receivables* 303,692 303,692 Total assets 304,966 304,972 Third party current liabilities 1,763 1,763 Total liabilities 1,763 1,763 Net assets $ 303,203 $ 303,209 * Receivables from Jerash Garments are eliminated upon consolidation. Victory Apparel was inactive for the three months ended June 30, 2020. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the financial statements of Jerash Holdings, and its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation. In accordance with accounting standards regarding the consolidation of VIE, 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 three months ended June 30, 2020, and the net assets of the VIE were approximately $0.3 million as of each of June 30, 2020 and March 31, 2020. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. The Company's most significant estimates include allowance for doubtful accounts, valuation of inventory reserve, useful lives of buildings and other property, and the measurement of stock-based compensation expenses. Actual results could differ from these estimates. |
Cash | Cash The Company considers all highly liquid investment instruments with an original maturity of three months or less from the original date of purchase to be cash equivalents. As of June 30, 2020, and March 31, 2020, the Company had no cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash consists of cash used as security deposits to obtain credit facilities from a bank and to secure customs clearance under the requirements of local regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security deposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a non-current asset since the Company has no intention to terminate these bank facilities within one year. |
Accounts Receivable | Accounts Receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants extended payment terms to customers with good credit standing and determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management's best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. The provision is recorded against accounts receivable balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income. Actual amounts received may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. Allowance was $22,312 and $4,641 as of June 30, 2020 and March 31, 2020, respectively. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Inventories include cost of raw materials, freight, direct labor, and related production overhead. The cost of inventories is determined using the First in, First-out method. The Company periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value. |
Advance to Suppliers | Advance to Suppliers Advance to suppliers consists of balances paid to suppliers for services or materials purchased that have not been provided or received. Advance to suppliers for services and materials is short term in nature. Advance to Suppliers is reviewed periodically to determine whether its carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the advance becomes doubtful. The Company uses the aging method to estimate the allowance for uncollectible balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances. Allowance was $2,372 and $2,000 as of June 30, 2020 and March 31, 2020 respectively. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost, reduced by accumulated depreciation and amortization. Depreciation and amortization expense related to property, plant and equipment is computed using the straight-line method based on estimated useful lives of the assets, or in the case of leasehold improvements, the shorter of the initial lease term or the estimated useful life of the improvements. The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. The estimated useful lives of depreciation and amortization of the principal classes of assets are as follows: Useful life Land Infinite Property and buildings 15 years Equipment and machinery 3-5 years Office and electronic equipment 3-5 years Automobiles 5 years Leasehold improvements Lesser of useful life and lease term Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation or amortization of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and comprehensive income. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company assesses its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Factors which may indicate potential impairment include a significant underperformance relative to the historical or projected future operating results or a significant negative industry or economic trend. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by that asset. If impairment is indicated, a loss is recognized for any excess of the carrying value over the estimated fair value of the asset. The fair value is estimated based on the discounted future cash flows or comparable market values, if available. The Company did not record any impairment loss during the three months ended June 30, 2020 and 2019. |
Revenue Recognition | Revenue Recognition Substantially all of the Company's revenue is derived from product sales, which consist of sales of the Company's customized ready-made outerwear for large brand-name retailers. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company's contracts are short term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within seven to 120 days of the invoice date, and the contracts do not have significant financing components. Shipping and handling costs associated with outbound freight are not an obligation of the Company. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial. The Company also derives revenue rendering cutting and making services to other apparel vendors who subcontract orders to the Company, and the revenue is recognized when the service is rendered. All of the Company's contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company's historical experience, complete satisfaction of the performance obligation, and the Company's best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted the Company's revenue. The Company does not have any contract assets since the Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment from customers is not contingent on a future event. For the three months ended June 30, 2020, and June 30, 2019, there was no revenue recognized from performance obligations related to prior periods. As of June 30, 2020, there was no revenue expected to be recognized in any future periods related to remaining performance obligations. The Company has one revenue generating reportable geographic segment under ASC Topic 280 "Segment Reporting" and derives its sales primarily from its sales of customized ready-made outerwear. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see "Note 14—Segment Reporting"). |
Shipping and Handling | Shipping and Handling Proceeds collected from customers for shipping and handling costs are included in revenue. Shipping and handling costs are expensed as incurred and are included in operating expenses, as a part of selling, general and administrative expenses. Total shipping and handling expenses were $183,913 and $208,782 |
Income Taxes | Income Taxes The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Jerash Holdings was incorporated in the State of Delaware and is subject to federal income tax in the United States of America. Treasure Success was registered in Hong Kong and has no operating profit. Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, and Victory Apparel are subject to income tax in Jordan, unless an exemption is granted. The corporate income tax rate is 14% for the businesses classified within the industrial sector. In accordance with the Investment Encouragement Law, Jerash Garments' export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing at the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, the Jordanian government changed some features of its tax incentive programs and Jerash Garments and its subsidiaries and VIE are now qualified for incentives applicable to a Development Zone, a change from the previous incentive program relating to Qualifying Industrial Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE were subject to corporate income tax in Jordan at a rate of 10% plus 1% social contribution. Effective January 1, 2020, income rate increased to 14% plus 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 June 1, 2015 to June 1, 2018 that allowed Jerash Garments to make purchases with no sales tax charge. This exemption has been extended to February 5, 2021. The Company accounts for income taxes in accordance with ASC 740, "Income Taxes," which requires the Company to use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized. ASC 740 clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of income and comprehensive income. No significant uncertainty in tax positions relating to income taxes were incurred during three months ended June 30, 2020 and 2019. |
Foreign Currency Translation | Foreign Currency Translation The reporting currency of the Company is the U.S. dollar ("US$" or "$"). The Company uses JOD as its functional currency in Jordanian companies, HKD in Treasure Success, and Chinese Yuan ("CNY") in Jiangmen Treasure Success as functional currency of each abovementioned entity. The assets and liabilities of the Company have been translated into US$ using the exchange rates in effect at the balance sheet date, equity accounts have been translated at historical rates, and revenue and expenses have been translated into US$ using average exchange rates in effect during the reporting period. Cash flows are also translated at average translation rates for the periods. Therefore, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income or loss. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. The value of JOD against US$ and other currencies may fluctuate and is affected by, among other things, changes in Jordan's political and economic conditions. Any significant revaluation of JOD may materially affect the Company's financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: June 30, March 31, Period-end spot rate US$1=JOD0.7090 US$1=JOD0.7090 US$1=HKD7.7504 US$1=HKD7.7529 Average rate US$1=JOD0.7090 US$1=JOD0.7090 US$1=HKD7.7514 US$1=HKD7.8163 |
Share-Based Compensation | Stock-Based Compensation The Company measures compensation expense for stock-based awards to non-employee contractors and directors based upon the awards' initial grant-date fair value. The estimated grant-date fair value of the award is recognized as expense over the requisite service period using the straight-line method. The Company estimates the fair value of stock options using a Black-Scholes model. This model is affected by the Company's stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of the option, expected risk-free rates of return, the expected volatility of the Company's common stock, and expected dividend yield, each of which is more fully described below. The assumptions for expected term and expected volatility are the two assumptions that significantly affect the grant date fair value. ● Expected Term: the expected term of a warrant or a sock option is the period of time that the warrant or stock option is expected to be outstanding. ● Risk-free Interest Rate: the Company bases the risk-free interest rate used in the Black-Scholes model on the implied yield at the grant date of the U.S. Treasury zero-coupon issued with an equivalent term to the share-based award being valued. Where the expected term of a stock-based award does not correspond with the term for which a zero-coupon interest rate is quoted, the Company uses the nearest interest rate from the available maturities. ● Expected Stock Price Volatility: the Company utilizes comparable public company volatility over the same period of time as the life of the warrant or stock option. ● Dividend Yield: Until November 2018, the board of directors of Jerash Holdings (the "Board of Directors") had not declared, and the Company had not yet paid, any dividends. Accordingly, stock-based compensation awards granted prior to November 2018 assumed no dividend yield, while any subsequent stock-based compensation awards are valued using the anticipated dividend yield. |
Earnings per Share | Earnings per Share The Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260"). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS (See "Note 13—Earnings per Share"). |
Comprehensive (Loss) Income | Comprehensive (Loss) Income Comprehensive income consists of two components, net income and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in JOD or HKD or CNY to US$ is reported in other comprehensive income in the consolidated statements of income and comprehensive income. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 - Quoted prices in active markets for identical assets and liabilities. ● Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash, including restricted cash, accounts receivable, other receivables, credit facilities, accounts payable, accrued expenses, income tax payable, other payables, and operating lease liabilities to approximate the fair value of the respective assets and liabilities at June 30, 2020 and March 31, 2020 based upon the short-term nature of these assets and liabilities. |
Concentrations and Credit Risk | Concentrations and Credit Risk Credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of June 30, 2020, and March 31, 2020, respectively , $4,159,305 and $6,894,641 of the Company's cash was on deposit at financial institutions in Jordan, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. , respectively, $79,625 and $125,830 of the Company's cash was on deposit at financial institutions in China, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of June 30, 2020 and March 31, 2020, respectively, $14,210,256 and $19,847,852 of the Company's cash was on deposit at financial institutions in Hong Kong, which are insured by the Hong Kong Deposit Protection Board subject to certain Accounts receivable are typically unsecured and derived from revenue earned from customers, and therefore are exposed to credit risk. The risk is mitigated by the Company's assessment of its customers' creditworthiness and its ongoing monitoring of outstanding balances. Customer and vendor concentration risk The Company's sales are made primarily in the United States. Its operating results could be adversely affected by U.S. government policies on exporting business, foreign exchange rate fluctuations, and changes in local market conditions. The Company has a concentration of its revenue and purchases with specific customers and suppliers. For the three months ended June 30, 2020, one end-customer accounted for 78% of the Company's total revenue. For the three months ended June 30, 2019, one end-customer accounted for 97% of the Company's total revenue. As of June 30, 2020, two end-customers accounted for 74% and 11% of the Company's total accounts receivable balance, respectively. As of March 31, 2020, four end-customers accounted for 42%, 20%, 20%, and 14% of the Company's total accounts receivable balance, respectively. For the three months ended June 30, 2020, the Company purchased approximately 19% and 10% of its raw materials from two major suppliers, respectively. For the three months ended June 30, 2019, the Company purchased approximately 29% and 13% of its raw materials from two major suppliers, respectively. As of June 30, 2020, accounts payable to the Company's three major suppliers accounted for 45%, 15%, and 14 % of the total accounts payable balance, respectively. As of March 31, 2020, accounts payable to the Company's three major suppliers accounted for 39%, 16%, and 10% of the total accounts payable balance, respectively. |
Risks and Uncertainties | Risks and Uncertainties The principal operations of the Company are located in Jordan. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Jordan, as well as by the general state of the Jordanian economy. The Company's operations in Jordan are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic, and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political, regulatory, and social conditions in Jordan. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets | Useful life Land Infinite Property and buildings 15 years Equipment and machinery 3-5 years Office and electronic equipment 3-5 years Automobiles 5 years Leasehold improvements Lesser of useful life and lease term |
Schedule of currency exchange rates used in creating consolidated financial statements | June 30, March 31, Period-end spot rate US$1=JOD0.7090 US$1=JOD0.7090 US$1=HKD7.7504 US$1=HKD7.7529 Average rate US$1=JOD0.7090 US$1=JOD0.7090 US$1=HKD7.7514 US$1=HKD7.8163 |
Accounts Receivables (Tables)
Accounts Receivables (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Receivables [Abstract] | |
Schedule of accounts receivable | As of As of June 30, March 31, Trade accounts receivable $ 15,889,944 $ 5,340,389 Less: allowances for doubtful accounts ( 22,312) ( 4,641 Accounts receivable, net $ 15,867,632 $ 5,335,748 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventories | As of As of June 30, March 31, Raw materials $ 9,381,816 $ 12,499,301 Work-in-progress 825,918 1,541,716 Finished goods 7,869,346 8,592,755 Total inventory $ 18,077,080 $ 22,633,772 |
Advance to Suppliers (Tables)
Advance to Suppliers (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Advance to Suppliers [Abstract] | |
Schedule of advance to suppliers | As of As of June 30, March 31, Advance to suppliers $ 3,170,767 $ 2,118,367 Less: allowances for doubtful accounts ( 2,372) ( 2,000) Advance to suppliers, net $ 3,168,395 $ 2,116,367 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Leases, Operating [Abstract] | |
Schedule of supplemental balance sheet information related to operating leases | June 30, Right-of-use assets $ 1,083,809 Operating lease liabilities - current $ 187,909 Operating lease liabilities - non-current 655,598 Total operating lease liabilities $ 843,507 |
Schedule of weighted average remaining lease term and discounts rate of operating leases | Remaining lease term and discount rate: Weighted average remaining lease term (years) 3.5 Weighted average discount rate 4.06 % |
Schedule of maturities of lease liabilities | 2021 $ 432,305 2022 317,480 2023 223,043 2024 117,837 2025 12,660 Thereafter 62,503 Total lease payments 1,165,828 Less: imputed interest (82,019 ) Less: prepayments (240,302 ) Present value of lease liabilities $ 843,507 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment, net | As of As of June 30, March 31, Land (1) $ 1,831,192 $ 1,831,192 Property and buildings 432,562 432,562 Equipment and machinery (2) 7,790,211 7,630,255 Office and electric equipment 798,012 793,405 Automobiles 480,687 480,687 Leasehold improvements 2,766,566 2,765,610 Subtotal 14,099,230 13,933,711 Construction in progress (3) 194,752 194,752 Less: Accumulated depreciation and amortization (4) (8,366,351 ) (7,954,299 ) Property and equipment, net $ 5,927,631 $ 6,174,164 (1) On August 7, 2019 and February 6, 2020, the Company, through Jerash Garments, purchased 12,340 square meters (approximately three acres) and 4,516 square meters (approximately 48,608 square feet) of land in Al Tajamouat Industrial City, Jordan (the "Jordan Properties"), from third parties to construct a factory and a dormitory for the Company's employees, respectively. The aggregate purchase price of the Jordan Properties was JOD1,177,301 (approximately US$1.7 million). (2) On June 18, 2019, the Company acquired all of the outstanding shares of Paramount, a contract manufacturer based in Amman, Jordan. As a result, Paramount became a subsidiary of Jerash Garments, and the Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of acquisition, so this transaction was accounted for as an asset acquisition. $980,000 was paid in cash to acquire all of the machinery and equipment from Paramount and the machinery and equipment were transferred to the Company. (3) The construction in progress account represents costs incurred for constructing a dormitory, which was previously planned to be a sewing workshop. This dormitory is approximately 4,800 square feet in the Tafilah Governorate of Jordan. Construction has been temporarily suspended since March 2020 due to the COVID-19 pandemic and is expected to resume before the end of fiscal 2021. (4) Depreciation and amortization expenses were $412,054 and $338,652 for the three months ended June 30, 2020 and 2019, respectively. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of fair value of the options granted | Stock Options November 27, Expected term (in years) 10.0 Risk-free interest rate (%) 1.77 % Expected volatility (%) 48.59 % Dividend yield (%) 3.08 % |
Schedule of stock option activity | Weighted Average Shares Exercise Stock options outstanding at March 31, 2020 1,189,500 $ 6.87 Granted - - Exercised - - Cancelled - - Stock options outstanding at June 30, 2020 1,189,500 $ 6.87 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of relationship and the nature of related party transactions | Name of Related Party Relationship to the Company Nature of Transactions Ford Glory International Limited ("FGIL") Affiliate, subsidiary of Ford Glory Holdings ("FGH"), which is 49% indirectly owned by the Company's President, Chief Executive Officer and Chairman, a significant stockholder Operating Lease Yukwise Limited ("Yukwise") Wholly owned by the Company's President, Chief Executive Officer, and Chairman, a significant stockholder Consulting Services Multi-Glory Corporation Limited ("Multi-Glory") Wholly owned by a significant stockholder Consulting Services Jiangmen V-Apparel Manufacturing Limited Affiliate, subsidiary of FGH Operating Lease |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended June 30, 2020 2019 Numerator: Net income attributable to Jerash Holdings (US), Inc.'s Common Stockholders $ 813,859 $ 1,549,488 Denominator: Denominator for basic earnings per share (weighted-average shares) 11,325,000 11,325,000 Dilutive securities – unexercised warrants and options 5,210 147,363 Denominator for diluted earnings per share (adjusted weighted-average shares) 11,330,210 11,472,363 Basic earnings per share $ 0.07 $ 0.14 Diluted earnings per share $ 0.07 $ 0.14 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of sales by geographic areas | For the three months ended 2020 2019 United States $ 17,581,173 $ 22,040,945 Jordan 1,125,582 486,380 Total $ 18,706,755 $ 22,527,325 |
Organization and Description _2
Organization and Description of Business (Details) | Jun. 30, 2020JOD (JD) | Jun. 30, 2020USD ($) | Aug. 28, 2019USD ($) | Sep. 18, 2005JOD (JD) | Oct. 24, 2004JOD (JD) |
Chinese Garments [Member] | JOD | |||||
Organization and Description of Business (Textual) | |||||
Capital | JD 50,000 | ||||
Hashemite Kingdom Of Jordan [Member] | |||||
Organization and Description of Business (Textual) | |||||
Capital | $ | $ 212,000 | ||||
Hashemite Kingdom Of Jordan [Member] | JOD | |||||
Organization and Description of Business (Textual) | |||||
Capital | JD 150,000 | ||||
Jiangmen Treasure Success [Member] | |||||
Organization and Description of Business (Textual) | |||||
Capital | $ | $ 385,000 | ||||
Ownership percentage | 100.00% | ||||
Paramount [Member] | JOD | |||||
Organization and Description of Business (Textual) | |||||
Capital | JD 100,000 | ||||
Victory Apparel [Member] | JOD | |||||
Organization and Description of Business (Textual) | |||||
Capital | JD 50,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details 1) | 3 Months Ended |
Jun. 30, 2020 | |
Land [Member] | |
Estimated useful lives, description | Infinite |
Property and Buildings [Member] | |
Estimated useful lives | 15 years |
Equipment and Machinery [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Equipment and Machinery [Member] | Maximum [Member] | |
Estimated useful lives | 5 years |
Office and Electronic Equipment [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Office and Electronic Equipment [Member] | Maximum [Member] | |
Estimated useful lives | 5 years |
Automobiles [Member] | |
Estimated useful lives | 5 years |
Leasehold Improvements [Member] | |
Estimated useful lives, description | Lesser of useful life and lease term |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 2) | Jun. 30, 2020 | Mar. 31, 2020 |
JOD | Period- End Spot Rate [Member] | ||
Foreign currency exchange rate (US$1) | 0.7090 | 0.7090 |
JOD | Average Rate [Member] | ||
Foreign currency exchange rate (US$1) | 0.7090 | 0.7090 |
HKD [Member] | Period- End Spot Rate [Member] | ||
Foreign currency exchange rate (US$1) | 7.7504 | 7.7529 |
HKD [Member] | Average Rate [Member] | ||
Foreign currency exchange rate (US$1) | 7.7514 | 7.8163 |
CNY [Member] | Period- End Spot Rate [Member] | ||
Foreign currency exchange rate (US$1) | 7.0697 | 7.0896 |
CNY [Member] | Average Rate [Member] | ||
Foreign currency exchange rate (US$1) | 7.0863 | 6.9642 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details Textual) | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2020USD ($)CustomerSupplier | Jun. 30, 2019USD ($)Supplier | Mar. 31, 2020USD ($)CustomerSupplier | Mar. 31, 2019Customer | |
Summary of Significant Accounting Policies (Textual) | ||||
Revenue recognized | ||||
Number of supplier | Supplier | 2 | 2 | ||
Cost of goods sold | $ 15,655,185 | $ 18,014,622 | ||
Income tax, description | In accordance with the Investment Encouragement Law, Jerash Garments' export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing at the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, the Jordanian government changed some features of its tax incentive programs and Jerash Garments and its subsidiaries and VIE are now qualified for incentives applicable to a Development Zone, a change from the previous incentive program relating to Qualifying Industrial Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE were subject to corporate income tax in Jordan at a rate of 10% plus 1% social contribution. Effective January 1, 2020, income rate increased to 14% plus 1% social contribution. | |||
FDIC insured amount | $ 250,000 | |||
Income tax realized percentage | 50.00% | |||
Corporate income tax rate | 14.00% | |||
Local sales tax | 16.00% | |||
Allowance for accounts receivable | $ 22,312 | $ 4,641 | ||
Allowance for advance to suppliers | $ (2,372) | (2,000) | ||
Net asset variable interest entity, descritpion | The primary beneficiary is required to consolidate the VIE for financial reporting purposes. The Compay's VIE, Victory Apparel, was inactive for the three months ended June 30, 2020, and the net assets of the VIE were approximately $0.3 million as of each of June 30, 2020 and March 31, 2020. | |||
Wealth Choice Limited [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Ownership percentage by parent | 100.00% | |||
United States [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
FDIC insured amount | $ 91,785 | 48,386 | ||
China [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Deposits | 79,625 | 125,830 | ||
Hong Kong [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Deposits | 14,210,256 | 19,847,852 | ||
Jordan [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Deposits | $ 4,159,305 | $ 6,894,641 | ||
Supplier One [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 19.00% | 29.00% | ||
Supplier Two [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 10.00% | 13.00% | ||
Revenue From Contract With Customer [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Number of customer | Customer | 1 | 1 | ||
Revenue From Contract With Customer [Member] | Customer One [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 78.00% | 97.00% | ||
Accounts Receivable [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Number of customer | Customer | 2 | 4 | ||
Accounts Receivable [Member] | Customer One [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 74.00% | 42.00% | ||
Accounts Receivable [Member] | Customer Two [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 11.00% | 20.00% | ||
Accounts Receivable [Member] | Customer Three [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 20.00% | |||
Accounts Receivable [Member] | Customer Four [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 14.00% | |||
Account Payable [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Number of supplier | Supplier | 3 | 3 | ||
Account Payable [Member] | Supplier One [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 45.00% | 39.00% | ||
Account Payable [Member] | Supplier Two [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 15.00% | 16.00% | ||
Account Payable [Member] | Supplier Three [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Concentration risk | 14.00% | 10.00% | ||
Shipping and Handling [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Cost of goods sold | $ 183,913 | $ 208,782 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right of use assets | $ 1,083,809 | $ 1,147,090 |
Operating lease liability | 843,507 | |
Restatement Adjustment [Member] | Accounting Standards Updates 2016-02 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right of use assets | 1,400,000 | |
Operating lease liability | $ 900,000 |
Accounts Receivables (Details)
Accounts Receivables (Details) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
Receivables [Abstract] | ||
Trade accounts receivable | $ 15,889,944 | $ 5,340,389 |
Less: allowances for doubtful accounts | (22,312) | (4,641) |
Accounts receivables, net | $ 15,867,632 | $ 5,335,748 |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 9,381,816 | $ 12,499,301 |
Work-in-progress | 825,918 | 1,541,716 |
Finished goods | 7,869,346 | 8,592,755 |
Total inventory | $ 18,077,080 | $ 22,633,772 |
Advance to Suppliers (Details)
Advance to Suppliers (Details) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
Advance to Suppliers [Abstract] | ||
Advance to suppliers | $ 3,170,767 | $ 2,118,367 |
Less: allowances for doubtful accounts | (2,372) | (2,000) |
Advance to suppliers, net | $ 3,168,395 | $ 2,116,367 |
Leases (Details)
Leases (Details) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 |
Leases, Operating [Abstract] | ||
Right-of-use assets | $ 1,083,809 | $ 1,147,090 |
Operating lease liabilities - current | 187,909 | 210,081 |
Operating lease liabilities - non-current | 655,598 | $ 649,935 |
Total operating lease liabilities | $ 843,507 |
Leases (Details 1)
Leases (Details 1) | Jun. 30, 2020 |
Leases, Operating [Abstract] | |
Weighted average remaining lease term (years) | 3 years 6 months |
Weighted average discount rate | 4.06% |
Leases (Details 2)
Leases (Details 2) | Jun. 30, 2020USD ($) |
Leases, Operating [Abstract] | |
2021 | $ 432,305 |
2022 | 317,480 |
2023 | 223,043 |
2024 | 117,837 |
2025 | 12,660 |
Thereafter | 62,503 |
Total lease payments | 1,165,828 |
Less: imputed interest | (82,019) |
Less: prepayments | (240,302) |
Present value of lease liabilities | $ 843,507 |
Leases (Details Textual)
Leases (Details Textual) | 3 Months Ended | |
Jun. 30, 2020USD ($)lease | Jun. 30, 2019USD ($) | |
Leases (Textual) | ||
Number of operating leases | lease | 34 | |
Operating lease expenses | $ | $ 511,773 | $ 542,785 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) | Jun. 30, 2020 | Mar. 31, 2020 | |
Subtotal | $ 14,099,230 | $ 13,933,711 | |
Construction in progress | [1] | 194,752 | 194,752 |
Less: Accumulated depreciation and amortization | [2] | (8,366,351) | (7,954,299) |
Property and equipment, net | 5,927,631 | 6,174,164 | |
Land [Member] | |||
Subtotal | [3] | 1,831,192 | 1,831,192 |
Property and buildings [Member] | |||
Subtotal | 432,562 | 432,562 | |
Equipment and machinery [Member] | |||
Subtotal | [4] | 7,790,211 | 7,630,255 |
Office and electric equipment [Member] | |||
Subtotal | 798,012 | 793,405 | |
Automobiles [Member] | |||
Subtotal | 480,687 | 480,687 | |
Leasehold Improvements [Member] | |||
Subtotal | $ 2,766,566 | $ 2,765,610 | |
[1] | The construction in progress account represents costs incurred for constructing dormitory, which was previously planned to be a sewing workshop. This dormitory is approximately 4,800 square feet in the Tafilah Governorate of Jordan, and is expected to be operational before the end of fiscal 2021. | ||
[2] | Depreciation and amortization expenses were $412,054 and $338,652 for the three months ended June 30, 2020 and 2019, respectively. | ||
[3] | On August 7, 2019 and February 6, 2020, the Company, through Jerash Garments, purchased 12,340 square meters (approximately three acres) and 4,516 square meters (approximately 48,608 square feet) of land in Al Tajamouat Industrial City, Jordan (the "Jordan Properties"), from third parties to construct a factory and a dormitory for the Company's employees, respectively. The aggregate purchase price of the Jordan Properties was JOD1,177,301 (approximately US$1.7 million). | ||
[4] | On June 18, 2019, the Company acquired all of the outstanding shares of Paramount, a contract manufacturer based in Amman, Jordan. As a result, Paramount became a subsidiary of Jerash Garments, and the Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of acquisition, so this transaction was accounted for as an asset acquisition. $980,000 was paid in cash to acquire all of the machinery and equipment from Paramount and the machinery and equipment were transferred to the Company. |
Property, Plant and Equipment_4
Property, Plant and Equipment, Net (Details Textual) | Feb. 06, 2020JOD (JD)ft² | Feb. 06, 2020USD ($)ft² | Aug. 07, 2019JOD (JD)ft² | Aug. 07, 2019USD ($)ft² | Jun. 18, 2019USD ($) | Jun. 30, 2020USD ($)ft² | Jun. 30, 2019USD ($) |
Property, Plant and Equipment, Net (Textual) | |||||||
Depreciation and amortization expenses | $ 412,054 | $ 338,652 | |||||
Area of Land | ft² | 4,800 | ||||||
Almutafaweq Co [Member] | |||||||
Property, Plant and Equipment, Net (Textual) | |||||||
Payments to acquire machinery and equipment | $ 980,000 | ||||||
Jordan Property [Member] | |||||||
Property, Plant and Equipment, Net (Textual) | |||||||
Area of Land | ft² | 4,516 | 4,516 | 12,340 | 12,340 | |||
Aggregate purchase price | $ 1,700,000 | $ 1,700,000 | |||||
Jordan Property [Member] | JOD | |||||||
Property, Plant and Equipment, Net (Textual) | |||||||
Aggregate purchase price | JD | JD 1,177,301 | JD 1,177,301 |
Equity (Details)
Equity (Details) - USD ($) | Jun. 02, 2020 | Feb. 26, 2020 | Nov. 26, 2019 | Aug. 19, 2019 | Jun. 05, 2019 | Sep. 17, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | May 15, 2020 | Mar. 31, 2020 | Feb. 05, 2020 | Nov. 04, 2019 | Jul. 29, 2019 | May 17, 2019 |
Equity (Textual) | ||||||||||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||||||||||||
Preferred stock, shares authorized | 500,000 | 500,000 | ||||||||||||
Preferred stock, shares issued | ||||||||||||||
Preferred stock, shares outstanding | ||||||||||||||
Statutory reserve, description | Appropriations to the statutory reserve are required to be 10% of net income until the reserve is equal to 100% of the entity’s share capital. This reserve is not available for dividend distribution. In addition, PRC companies are required to set aside at least 10% of their after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of their registered capital. | |||||||||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||||||||
Common stock, shares authorized | 30,000,000 | 30,000,000 | ||||||||||||
Common stock, shares issued | 11,325,000 | 11,325,000 | ||||||||||||
Common stock, shares outstanding | 11,325,000 | 11,325,000 | ||||||||||||
Dividends | $ 566,250 | $ 566,250 | ||||||||||||
Cash dividends | $ 566,250 | $ 566,250 | $ 566,250 | $ 566,250 | $ 566,250 | |||||||||
Dividends payable, amount per share | $ 0.05 | $ 0.05 | $ 0.05 | $ 0.05 | $ 0.05 | |||||||||
Common Stock [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Common stock, par value | $ 0.001 | |||||||||||||
Common stock, shares authorized | 15,000,000 | |||||||||||||
Common Stock [Member] | Minimum [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Increase in authorized shares of common stock | 15,000,000 | |||||||||||||
Common Stock [Member] | Maximum [Member] | ||||||||||||||
Equity (Textual) | ||||||||||||||
Increase in authorized shares of common stock | 30,000,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | Aug. 03, 2018 | Apr. 09, 2018 | Nov. 29, 2019 |
Risk-free interest rate (%) | 2.95% | 2.60% | |
Expected volatility (%) | 50.30% | 50.30% | |
Stock Options [Member] | |||
Expected term (in years) | 10 years | ||
Risk-free interest rate (%) | 1.77% | ||
Expected volatility (%) | 48.59% | ||
Dividend yield (%) | 3.08% |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) - $ / shares | Nov. 27, 2019 | Aug. 03, 2018 | Apr. 09, 2018 | Jun. 30, 2020 |
Share-based Payment Arrangement [Abstract] | ||||
Stock option outstanding, beginning | 1,189,500 | |||
Granted, Shares | 50,000 | 150,000 | 989,500 | |
Exercised, Shares | ||||
Cancelled, Shares | ||||
Stock options outstanding, ending | 1,189,500 | |||
Weighted Average Exercise Price, beginning | $ 6.87 | |||
Granted, Weighted Average Exercise Price | $ 6.50 | $ 6.12 | $ 7 | |
Exercised, Weighted Average Exercise Price | ||||
Cancelled, Weighted Average Exercise Price | ||||
Weighted Average Exercise Price, ending | $ 6.87 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details Textual) - USD ($) | Nov. 27, 2019 | Oct. 29, 2018 | Aug. 03, 2018 | Apr. 09, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Mar. 30, 2020 | Mar. 21, 2018 |
Stock-Based Compensation (Textual) | |||||||||
Common stock, capital shares reserved for future issuance | 1,484,250 | ||||||||
Stock options | 50,000 | 150,000 | 989,500 | ||||||
Weighted average remaining contractual term | 10 years | 10 years | 5 years | 5 years | |||||
Weighted average exercise price | $ 6.50 | $ 6.12 | $ 7 | ||||||
Fair value of options granted | $ 126,454 | ||||||||
Risk-free interest rate | 2.95% | 2.60% | |||||||
Expected volatility | 50.30% | 50.30% | |||||||
Warrants outstanding | 264,410 | 264,410 | |||||||
Weighted average exercise price | $ 6.35 | $ 6.35 | |||||||
Total expense | $ 42,151 | $ 42,151 | |||||||
Unrecognized compensation costs | |||||||||
Minimum [Member] | |||||||||
Stock-Based Compensation (Textual) | |||||||||
Number of shares authorized | 300,000 | ||||||||
Risk-free interest rate | 1.80% | ||||||||
Expected volatility | 50.30% | ||||||||
Maximum [Member] | |||||||||
Stock-Based Compensation (Textual) | |||||||||
Number of shares authorized | 1,784,250 | ||||||||
Risk-free interest rate | 2.80% | ||||||||
Expected volatility | 52.20% | ||||||||
IPO Underwriter Warrants [Member] | |||||||||
Stock-Based Compensation (Textual) | |||||||||
Class of warrant or right | 57,200 | ||||||||
Lock up period for shares | 180 days | ||||||||
Class of warrant or right, exercise price of warrants or rights | $ 8.75 | ||||||||
Class of warrant or right, date from which warrants or rights exercisable | May 2, 2023 |
Related Party Transactions (Det
Related Party Transactions (Details) | 3 Months Ended |
Jun. 30, 2020 | |
Ford Glory International Limited [Member] | |
Relationship to the Company | Affiliate, subsidiary of Ford Glory Holdings ("FGH"), which is 49% indirectly owned by the Company's President, Chief Executive Officer and Chairman, a significant stockholder |
Nature of Transactions | Operating Lease |
Yukwise Limited [Member] | |
Relationship to the Company | Wholly owned by the Company’s President, Chief Executive Officer, and Chairman, a significant stockholder |
Nature of Transactions | Consulting Services |
Multi-Glory Corporation Limited [Member] | |
Relationship to the Company | Wholly owned by a significant stockholder |
Nature of Transactions | Consulting Services |
Jiangmen V-Apparel Manufacturing Limited [Member] | |
Relationship to the Company | Affiliate, subsidiary of FGH |
Nature of Transactions | Operating Lease |
Related Party Transactions (D_2
Related Party Transactions (Details Textual) | Jul. 15, 2019HKD ($) | Jul. 15, 2019USD ($) | Oct. 03, 2018USD ($) | Oct. 03, 2018HKD ($) | Jan. 12, 2018USD ($) | Aug. 31, 2019CNY (¥) | Aug. 31, 2019USD ($) | Jan. 16, 2018USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) |
Related Party Transactions (Textual) | ||||||||||
Marketing services and advisory, amount | $ 300,000 | $ 300,000 | ||||||||
Consulting Fees | $ 65,000 | $ 75,000 | ||||||||
Aggregate purchase price | 165,522 | 1,374,139 | ||||||||
Operating lease, expense | 511,773 | 542,785 | ||||||||
Operating lease renewal, term | 1 month | 1 month | ||||||||
Advisory and management expenses | $ 65,000 | $ 75,000 | ||||||||
Amount of compensation temporarily reduced | $ 20,000 | $ 20,000 | ||||||||
Temporarily compensation term | May 2020 to October 2020. | May 2020 to October 2020. | ||||||||
Treasure Success International [Member] | ||||||||||
Related Party Transactions (Textual) | ||||||||||
Aggregate purchase price | $ 800,000 | |||||||||
HKD [Member] | Treasure Success International [Member] | ||||||||||
Related Party Transactions (Textual) | ||||||||||
Aggregate purchase price | $ 6,300,000 | |||||||||
Jiangmen V-Apparel Manufacturing Limited [Member] | ||||||||||
Related Party Transactions (Textual) | ||||||||||
Operating lease, expense | $ 891 | |||||||||
Operating lease, term | 10 years | 10 years | ||||||||
Operating lease, percentage by which the lease rent will be increased annually between the third and fifth years | 5.00% | 5.00% | ||||||||
Jiangmen V-Apparel Manufacturing Limited [Member] | CNY [Member] | ||||||||||
Related Party Transactions (Textual) | ||||||||||
Operating lease, expense | ¥ | ¥ 6,200 | |||||||||
Ford Glory International Limited [Member] | ||||||||||
Related Party Transactions (Textual) | ||||||||||
Aggregate purchase price | $ 8,100,000 | |||||||||
Operating lease, expense | $ 15,253 | |||||||||
Operating lease, term | 1 year | 1 year | ||||||||
Ford Glory International Limited [Member] | HKD [Member] | ||||||||||
Related Party Transactions (Textual) | ||||||||||
Aggregate purchase price | $ 63,000,000 | |||||||||
Operating lease, expense | $ 119,540 |
Credit Facilities (Details)
Credit Facilities (Details) - USD ($) | 3 Months Ended | |||||||
Jun. 30, 2020 | Mar. 31, 2020 | Aug. 12, 2019 | Jun. 14, 2019 | Jan. 31, 2019 | Jan. 22, 2019 | Jun. 14, 2018 | May 29, 2017 | |
Credit facility outstanding amount | $ 235 | |||||||
Percentage of flat fee | 0.35% | |||||||
Credit facility due period | 120 days | |||||||
HSBC Factoring Agreement [Member] | ||||||||
Outstanding amount | 235 | |||||||
Credit Facility [Member] | Treasure Success International [Member] | ||||||||
Credit facility borrowing capacity | $ 11,000,000 | $ 12,000,000 | $ 8,000,000 | |||||
Cash and other investment security collateral amount | $ 3,000,000 | $ 3,000,000 | ||||||
Credit facility outstanding amount | $ 235 | |||||||
Credit Facility [Member] | Treasure Success International [Member] | London Interbank Offered Rate L I B O R [Member] | ||||||||
Interest rate of credit facility | 1.50% | |||||||
Credit Facility [Member] | Treasure Success International [Member] | Hongkong Interbank Offered Rate Libor [Member] | ||||||||
Interest rate of credit facility | 1.50% | |||||||
Standard Chartered Bank [Member] | ||||||||
Import invoice financing and pre-shipment financing of export orders | $ 3,000,000 | |||||||
Credit facility bears interest, Percentage | 1.30% | |||||||
Standard Chartered Bank [Member] | Treasure Success International [Member] | ||||||||
Credit facility borrowing capacity | $ 3,000,000 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | ||
Net income attributable to Jerash Holdings (US), Inc.'s Common Stockholders | $ 813,859 | $ 1,549,488 |
Denominator: | ||
Denominator for basic earnings per share (weighted-average shares) | 11,325,000 | 11,325,000 |
Dilutive securities - unexercised warrants and options | 5,210 | 147,363 |
Denominator for diluted earnings per share (adjusted weighted-average shares) | 11,330,210 | 11,472,363 |
Basic earnings per share | $ 0.07 | $ 0.14 |
Diluted earnings per share | $ 0.07 | $ 0.14 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) - shares | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Stock Option [Member] | ||
Earnings Per Share (Textual) | ||
Anti-dilutive basic and diluted earnings per share | 1,403,910 | |
Warrants [Member] | ||
Earnings Per Share (Textual) | ||
Anti-dilutive basic and diluted earnings per share | 1,403,910 | 57,200 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue | $ 18,706,755 | $ 22,527,325 |
United States [Member] | ||
Revenue | 17,581,173 | 22,040,945 |
Jordan [Member] | ||
Revenue | $ 1,125,582 | $ 486,380 |
Segment Reporting (Details Text
Segment Reporting (Details Textual) - segment | 3 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Segment reporting (Textual) | ||
Number of operating segment | 1 | |
Long-lived assets | 99.90% | |
Sales Revenue, Goods, Net [Member] | Customer Concentration Risk [Member] | ||
Segment reporting (Textual) | ||
Concentration risk, Percentage | 93.30% | 96.50% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Jiangmen Treasure Success [Member] | 3 Months Ended | ||
Jun. 30, 2020USD ($) | Aug. 28, 2019HKD ($) | Aug. 28, 2019USD ($) | |
Capital | $ 385,000 | ||
Paid in capital | $ 385,000 | ||
Equity method investment, ownership percentage | 100.00% | 100.00% | |
Capital contribution paid | $ 167,000 | ||
HKD [Member] | |||
Paid in capital | $ 3,000,000 | ||
Capital contribution paid | $ 1,300,000 | ||
Treasure Success International [Member] | |||
Capital | $ 385,000 | ||
Treasure Success International [Member] | HKD [Member] | |||
Capital | $ 3,000,000 |
Income Tax (Details)
Income Tax (Details) | 3 Months Ended |
Jun. 30, 2020 | |
Income Tax (Textual) | |
Income tax holiday, description | In accordance with the Investment Encouragement Law, Jerash Garments’ export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing at the first day of production. This exemption had been extended for five years until December 31, 2018. The effect of the tax exemption on the Company’s 2019 fiscal results is a tax savings of approximately $1,623,717, or $0.14 per share. Effective January 1, 2019, Jordanian government has changed some features of Jerash Garments and its subsidiaries area to a Development Zone. In accordance with Development Zone law, Jerash Garments and its subsidiaries and VIE began paying corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020, this rate increased to 14% plus a 1% social contribution. |
Corporate income tax rate | 14.00% |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - $ / shares | Jul. 06, 2020 | Jul. 02, 2020 | Aug. 05, 2020 |
Subsequent Events (Textual) | |||
Subsequent events, description | The Company incorporated a new entity in Jordan, Jerash The First Medical Supplies Manufacturing Company Limited, as a wholly owned subsidiary of Jerash Garments with a total registered capital of JOD150,000 (approximately $212,000), to capture the market potential and contribute to the global effort of stemming COVID-19. | Jiangmen Treasure Success and Jiangmen V-Apparel Manufacturing Limited entered into a factory lease agreement, which was a replacement of a previous lease agreement dated August 31, 2019. The new lease has a one-year term with monthly rent amount of CNY28,300 (approximately $4,000) for additional office space and sample production purposes. | |
Dividends payable, per share | $ 0.05 |