# EDGAR Filing Document

**Accession Number:** 0001696558
**File Stem:** 0001213900-23-010728
**Filing Date:** 2023-2
**Character Count:** 137282
**Document Hash:** 5524432d4a02a0db946c6ffc9f24c1fb
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-010728.hdr.sgml**: 20230213

**ACCESSION NUMBER**: 0001213900-23-010728

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 79

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230213

**DATE AS OF CHANGE**: 20230213

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Jerash Holdings (US), Inc.
- **CENTRAL INDEX KEY:** 0001696558
- **STANDARD INDUSTRIAL CLASSIFICATION:** APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300]
- **IRS NUMBER:** 814701719
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38474
- **FILM NUMBER:** 23618322

**BUSINESS ADDRESS:**
- **STREET 1:** 260 EAST MAIN STREET
- **STREET 2:** SUITE 2706
- **CITY:** ROCHESTER
- **STATE:** NY
- **ZIP:** 14604
- **BUSINESS PHONE:** 2125759085

**MAIL ADDRESS:**
- **STREET 1:** 260 EAST MAIN STREET
- **STREET 2:** SUITE 2706
- **CITY:** ROCHESTER
- **STATE:** NY
- **ZIP:** 14604

?xml version="1.0" encoding="ASCII"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-Q**

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

**For the quarterly period ended December 31, 2022**

**OR**

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

**For the transition period from&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;** 

**Commission File Number: 001-38474**

**<u>Jerash Holdings (US), Inc.</u>**

**(Exact name of registrant as specified in its charter)**

---

| | |
|:---|:---|
| **Delaware** | **81-4701719** |
| **(State or other jurisdiction of<br> incorporation or organization)** | **(I.R.S. Employer<br> Identification No.)** |

---

**277 Fairfield Road, Suite 338**

**Fairfield, New Jersey 07004**

(Address of principal executive offices) (Zip Code)

**(201) 285-7973**

**(Registrant's telephone number, including area code)**

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

---

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

---

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

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

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

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

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

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

As of February 10, 2023, there were 12,377,725 shares of common stock, par value $0.001 per share, outstanding.

**Jerash Holdings (US), Inc.**

**Form 10-Q**

**For the Quarterly Period Ended December 31, 2022**

**Contents**

---

| | | |
|:---|:---|:---|
| [Part I](#a_001) | [Financial Information](#a_001) | 1 |
| [Item 1](#a_002) | [Financial Statements](#a_002) | 1 |
|  | [Condensed Consolidated Balance Sheets as of December 31, 2022 (Unaudited) and March 31, 2022](#a_019) | 1 |
|  | [Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended December 31, 2022 and 2021 <u>(Unaudited)</u>](#a_003) | 2 |
|  | [Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended December 31, 2022 and 2021 <u>(Unaudited)</u>](#a_004) | 3 |
|  | [Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2022 and 2021 <u>(Unaudited)</u>](#a_005) | 5 |
|  | [Notes to Condensed Consolidated Financial Statements <u>(Unaudited)</u>](#a_006) | 6 |
| [Item 2](#a_007) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#a_007) | 24 |
| [Item 3](#a_008) | [Quantitative and Qualitative Disclosures about Market Risk](#a_008) | 32 |
| [Item 4](#a_009) | [Controls and Procedures](#a_009) | 32 |
| [Part II](#a_010) | [Other Information](#a_010) | 33 |
| [Item 1](#a_011) | [Legal Proceedings](#a_011) | 33 |
| [Item 1A](#a_012) | [Risk Factors](#a_012) | 33 |
| [Item 2](#a_013) | [Unregistered Sales of Equity Securities and Use of Proceeds](#a_013) | 33 |
| [Item 3](#a_014) | [Defaults Upon Senior Securities](#a_014) | 33 |
| [Item 4](#a_015) | [Mine Safety Disclosures](#a_015) | 33 |
| [Item 5](#a_016) | [Other Information](#a_016) | 33 |
| [Item 6](#a_017) | [Exhibits](#a_017) | 34 |
| [Signature](#a_018) | [Signature](#a_018) | 35 |

---

i

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

**PART I - FINANCIAL INFORMATION**

Item 1. <u>Financial Statements</u>

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

**AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

---

| | | |
|:---|:---|:---|
|  | **December 31,<br> 2022** | **March 31,<br> 2022** |
|  | **(Unaudited)** | |
| **<u>ASSETS</u>** | **<u>ASSETS</u>** | **<u>ASSETS</u>** |
| **Current Assets:** | | |
| &nbsp;&nbsp;&nbsp;Cash | $24627009 | $25176120 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 5545946 | 11049069 |
| &nbsp;&nbsp;&nbsp;Tax recoverable | 18911 | 374377 |
| &nbsp;&nbsp;&nbsp;Inventories | 26664044 | 28255179 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 3164196 | 3233592 |
| &nbsp;&nbsp;&nbsp;Investment deposits | - | 500000 |
| &nbsp;&nbsp;&nbsp;Advance to suppliers, net | 6009897 | 1284601 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Assets** | 66030003 | 69872938 |
| &nbsp;&nbsp;&nbsp;Restricted cash - non-current | 1615353 | 1407368 |
| &nbsp;&nbsp;&nbsp;Long-term deposits | 243840 | 419597 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets, net | 352590 | 352590 |
| &nbsp;&nbsp;&nbsp;Property, plant, and equipment, net | 21227296 | 10933147 |
| &nbsp;&nbsp;&nbsp;Goodwill | 499282 | 499282 |
| &nbsp;&nbsp;&nbsp;Right of use assets | 1165141 | 1826062 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Assets** | $**91133505** | $**85310984** |
| &nbsp;&nbsp;&nbsp;**<u>LIABILITIES AND STOCKHOLDERS' EQUITY</u>** |  |  |
| **Current Liabilities:** |  |  |
| &nbsp;&nbsp;&nbsp;Credit facilities | $4406383 | $- |
| &nbsp;&nbsp;&nbsp;Accounts payable | 5948337 | 4840225 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 2849861 | 3115953 |
| &nbsp;&nbsp;&nbsp;Income tax payable - current | 3344183 | 2861272 |
| &nbsp;&nbsp;&nbsp;Other payables | 1395597 | 2278816 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 296985 | - |
| &nbsp;&nbsp;&nbsp;Amount due to a related party | - | 300166 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - current | 689521 | 739101 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Current Liabilities** | 18930867 | 14135533 |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities - non-current | 381397 | 869313 |
| &nbsp;&nbsp;&nbsp;Income tax payable - non-current | 751410 | 1001880 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities** | **20063674** | **16006726** |
| **Commitments and Contingencies (Note 15)** |  |  |
| **Stockholders' Equity** |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding | $- | $- |
| &nbsp;&nbsp;&nbsp;Common stock, $0.001 par value; 30,000,000 shares authorized; 12,534,318 and 12,334,318 shares issued; 12,377,725 and 12,334,318 shares outstanding as of December 31, 2022 and March 31, 2022, respectively | 12534 | 12334 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 22811968 | 22517346 |
| &nbsp;&nbsp;&nbsp;Treasury stock, 156,593 and none shares as of December 31, 2022 and March 31, 2022, respectively | (771894) | - |
| &nbsp;&nbsp;&nbsp;Statutory reserve | 379323 | 379323 |
| &nbsp;&nbsp;&nbsp;Retained earnings | 48806821 | 46268110 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) gain | (168921) | 127145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Jerash Holdings (US), Inc.'s Stockholders' Equity** | 71069831 | 69304258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Liabilities and Stockholders' Equity** | $**91133505** | $**85310984** |

---

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

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

**AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**

(UNAUDITED)

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the<br> Three Months Ended<br> December 31,** | **For the<br> Three Months Ended<br> December 31,** | **For the<br> Nine Months Ended<br> December 31,** | **For the<br> Nine Months Ended<br> December 31,** |
|  | **2022** | **2021** | **2022** | **2021** |
| **Revenue, net** | $43027047 | $36815023 | $114289303 | $112414881 |
| &nbsp;&nbsp;&nbsp;Cost of goods sold | 37230421 | 29904287 | 94952523 | 89768624 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Gross Profit** | 5796626 | 6910736 | 19336780 | 22646257 |
| Selling, general and administrative expenses | 4469967 | 4185812 | 12796749 | 11648591 |
| Stock-based compensation expenses | - | 319101 | 294822 | 634914 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Operating Expenses** | 4469967 | 4504913 | 13091571 | 12283505 |
| **Income from Operations** | 1326659 | 2405823 | 6245209 | 10362752 |
| **Other Income (Expenses):** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Interest expenses | (248894) | (73276) | (500331) | (147677) |
| &nbsp;&nbsp;&nbsp;Other income (expenses), net | 137432 | (6843) | 255481 | (45119) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total other income (expenses), net** | (111462) | (80119) | (244850) | (192796) |
| **Net income before provision for income taxes** | 1215197 | 2325704 | 6000359 | 10169956 |
| &nbsp;&nbsp;&nbsp;Income tax expenses | 324379 | 650907 | 1596407 | 2119046 |
| **Net Income** | $890818 | $1674797 | $4403952 | $8050910 |
| **Other Comprehensive Income (Loss):** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation gain (loss) | 37804 | 42190 | (296066) | 121915 |
| **Comprehensive Income Attributable to Jerash Holdings (US), Inc.'s Common Stockholders** | $928622 | $1716987 | $4107886 | $8172825 |
| **Earnings Per Share Attributable to Common Stockholders:** |  |  |  |  |
| Basic | $0.07 | $0.14 | $0.35 | $0.69 |
| Diluted | $0.07 | $0.13 | $0.35 | $0.69 |
| **Weighted Average Number of Shares** |  |  |  |  |
| Basic | 12412922 | 12290840 | 12414546 | 11654039 |
| Diluted | 12412922 | 12414048 | 12467315 | 11696223 |
| **Dividend per share** | $0.05 | $0.05 | $0.15 | $0.15 |

---

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

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

**AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**

**FOR THE NINE MONTHS ENDED DECEMBER 31, 2022 AND 2021** 

**(Unaudited)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Treasury**<br>**Stock** | **Statutory**<br>**Reserve** | **Retained**<br>**Earnings** | **Accumulated<br> Other<br> Comprehensive**<br>**Gain (Loss)** | **Total**<br>**Equity** |
| **Balance at March 31, 2021** |  | $- | 11332974 | $11333 | $15301268 | $- | $346315 | $40748314 | $(15901) | $56391329 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense for the restricted stock units issued under stock incentive plan |  | - |  | - | 634914 | - | - | - | - | 634914 |
| &nbsp;&nbsp;&nbsp;Cashless exercise of warrants |  | - | 1344 | 1 | (1) | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;Common stock issued net of stock issuance costs of $730,000 |  | - | 1000000 | 1000 | 6269000 | - | - | - | - | 6270000 |
| &nbsp;&nbsp;&nbsp;Net income |  | - |  | - | - | - | - | 8050910 | - | 8050910 |
| &nbsp;&nbsp;&nbsp;Dividend payments |  | - |  | - | - | - | - | (1750081) | - | (1750081) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation gain |  | - | - | - | - | - | - | - | 121915 | 121915 |
| **Balance at December, 2021 (unaudited)** |  | $- | 12334318 | $12334 | $22205181 | $- | $346315 | $47049143 | $106014 | $69718987 |
| **Balance at March 31, 2022** |  | $- | 12334318 | $12334 | $22517346 | $- | $379323 | $46268110 | $127145 | $69304258 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense for the restricted stock units issued under stock incentive plan |  | - |  | - | 294822 | - | - | - | - | 294822 |
| &nbsp;&nbsp;&nbsp;Issuance of common stocks upon vesting of restricted stock units |  | - | 200000 | 200 | (200) | - | - | - | - | - |
| &nbsp;&nbsp;&nbsp;Share repurchase |  | - |  | - | - | (771894) | - | - | - | (771894) |
| &nbsp;&nbsp;&nbsp;Net income |  | - |  | - |  | - | - | 4403952 | - | 4403952 |
| &nbsp;&nbsp;&nbsp;Dividend payments |  | - |  | - | - | - | - | (1865241) | - | (1865241) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation loss |  | - | - | - | - | - | - | - | (296066) | (296066) |
| **Balance at December 31, 2022 (unaudited)** |  | $- | 12534318 | $12534 | $22811968 | $(771894) | $379323 | $48806821 | $(168921) | $71069831 |

---

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

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** | **FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021** |
|  | **Preferred Stock** | **Preferred Stock** | **Common Stock** | **Common Stock** | | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional<br> Paid-in**<br>**Capital** | **Treasury**<br>**Stock** | **Statutory**<br>**Reserve** | **Retained**<br>**Earnings** | **Accumulated<br> Other<br> Comprehensive**<br>**Gain (Loss)** | **Total**<br>**Equity** |
| **Balance at September 30, 2021 (unaudited)** |  | $- | 11334318 | $11334 | $15617080 | $- | $346315 | $45991062 | $63824 | $62029615 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense for the restricted stock units issued under stock incentive plan |  |  |  |  | 319101 |  |  |  |  | 319101 |
| &nbsp;&nbsp;&nbsp;Common stock issued net of stock issuance costs of $730,000 |  |  | 1000000 | 1000 | 6269000 |  |  |  |  | 6270000 |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  | 1674797 |  | 1674797 |
| &nbsp;&nbsp;&nbsp;Dividend payment |  |  |  |  |  |  |  | (616716) |  | (616716) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation gain |  | - | - | - | - | - | - | - | 42190 | 42190 |
| **Balance at December 31, 2021 (unaudited)** |  | $- | 12334318 | $12334 | $22205181 | $- | $346315 | $47049143 | $106014 | $69718987 |
| **Balance at September 30, 2022 (unaudited)** |  | $- | 12534318 | $12534 | $22811968 | $(547713) | $379323 | $48537812 | $(206725) | $70987199 |
| &nbsp;&nbsp;&nbsp;Share repurchase |  |  |  |  |  | (224181) |  |  |  | (224181) |
| &nbsp;&nbsp;&nbsp;Net income |  |  |  |  |  |  |  | 890818 |  | 890818 |
| &nbsp;&nbsp;&nbsp;Dividend payment |  |  |  |  |  |  |  | (621809) |  | (621809) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation gain |  | - | - | - | - | - | - | - | 37804 | 37804 |
| **Balance at December 31, 2022 (unaudited)** |  | $- | 12534318 | $12534 | $22811968 | $(771894) | $379323 | $48806821 | $(168921) | $71069831 |

---

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

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

**AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

(UNAUDITED)

---

| | | |
|:---|:---|:---|
|  | **For the<br> Nine Months Ended<br> December 31,** | **For the<br> Nine Months Ended<br> December 31,** |
|  | **2022** | **2021** |
| CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
| &nbsp;&nbsp;&nbsp;Net Income | $4403952 | $8050910 |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 1753941 | 1511963 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expenses | 294822 | 634914 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bad debt expense | - | 221584 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of operating lease right-of-use assets | 784699 | 569078 |
| Changes in operating assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 5503123 | 3739937 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 1591135 | 3553625 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 69401 | (936695) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance to suppliers | (4725296) | 1229345 |
| Changes in operating liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 1108112 | (5028787) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | (266092) | 944627 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other payables | (883219) | (208649) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 296985 | 444165 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liabilities | (661274) | (612953) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax payable, net of recovery | 588098 | 460805 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by operating activities** | 9858387 | 14573869 |
| CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
| &nbsp;&nbsp;&nbsp;Purchases of property, plant, and equipment | (7887613) | (2317327) |
| &nbsp;&nbsp;&nbsp;Payments for construction of properties | (3414172) | - |
| &nbsp;&nbsp;&nbsp;Acquisition of MK Garments | - | (2700000) |
| &nbsp;&nbsp;&nbsp;Acquisition deposit | - | (500000) |
| &nbsp;&nbsp;&nbsp;Payment for long-term deposits | (70549) | (1544792) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash used in investing activities** | (11372334) | (7062119) |
| CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
| &nbsp;&nbsp;&nbsp;Dividend payments | (1865241) | (1750081) |
| &nbsp;&nbsp;&nbsp;Shares repurchase | (771894) | - |
| &nbsp;&nbsp;&nbsp;Repayments from short-term loan | (1756360) | (612703) |
| &nbsp;&nbsp;&nbsp;Repayment to a related party | (300166) | - |
| &nbsp;&nbsp;&nbsp;Proceeds from short-term loan | 6162743 | - |
| &nbsp;&nbsp;&nbsp;Net proceeds from issuance of common stock | - | 6270000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net cash provided by financing activities** | 1469082 | 3907216 |
| **EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH** | (296261) | 122526 |
| **NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH** | (341126) | 11541492 |
| **CASH, AND RESTRICTED CASH, BEGINNING OF THE PERIOD** | 26583488 | 22860463 |
| **CASH, AND RESTRICTED CASH, END OF THE PERIOD** | $26242362 | $34401955 |
| CASH, AND RESTRICTED CASH, END OF THE PERIOD | 26242362 | 34401955 |
| LESS: NON-CURRENT RESTRICTED CASH | 1615353 | 1301588 |
| CASH, END OF THE PERIOD | $24627009 | $33100367 |
| **Supplemental disclosure information:** |  |  |
| Cash paid for interest | $500331 | $147677 |
| Income tax paid | $1354754 | $1644546 |
| **Non-cash investing and financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Equipment obtained by utilizing long-term deposit | $1111043 | $322143 |
| &nbsp;&nbsp;&nbsp;Right of use assets obtained in exchange for operating lease obligations | $190654 | $821671 |

---

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

**JERASH HOLDINGS (US), INC., AND SUBSIDIARIES** 

**NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS**

Jerash Holdings (US), Inc. ("Jerash Holdings") was incorporated under the laws of the State of Delaware on January 20, 2016. Jerash Holdings is a holding company with no operations. Jerash Holdings and its subsidiaries are herein collectively referred to as the "Company."

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

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

Al-Mutafaweq Co. for Garments Manufacturing Ltd. ("Paramount") is a contract garment manufacturer that was established in Amman, Jordan, as a limited liability company on October 24, 2004 with a declared capital of JOD 100,000. On December 11, 2018, Jerash Garments and the sole shareholder of Paramount entered into an agreement pursuant to which Jerash Garments acquired all of the outstanding shares of stock of Paramount. Jerash Garments assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of June 18, 2019, Paramount became a subsidiary of Jerash Garments.

Jerash The First for Medical Supplies Manufacturing Company Limited ("Jerash The First") was established in Amman, Jordan, as a limited liability company on July 6, 2020, with a registered capital of JOD 150,000. Jerash The First is engaged in the production of medical supplies in Jordan and is a wholly owned subsidiary of Jerash Garments.

Mustafa and Kamal Ashraf Trading Company (Jordan) for the Manufacture of Ready-Make Clothes LLC ("MK Garments") is a garment manufacturer that was established in Amman, Jordan, as a limited liability company on January 23, 2003 with a declared capital of JOD 100,000. On June 24, 2021, Jerash Garments and the sole shareholder of MK Garments entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of MK Garments. As of October 7, 2021, MK Garments became a subsidiary of Jerash Garments.

Kawkab Venus Dowalyah Lisenaet Albesah ("Kawkab Venus") was established in Amman, Jordan, as a limited liability company on January 15, 2015 with a declared capital of JOD 50,000. It holds land with factory premises, which are leased to MK Garments. On July 14, 2021, Jerash Garments and the sole shareholder of Kawkab Venus entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of Kawkab Venus. Apart from the land and factory premises, Kawkab had no other significant assets or liabilities and no operation activities or employees at the time of acquisition, so the acquisition was accounted for an asset acquisition. As of August 21, 2022, Kawkab Venus became a subsidiary of Jerash Garments.

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

Ever Winland Limited ("Ever Winland") was organized in Hong Kong, China, as a limited liability company. It holds office premises, which are leased to Treasure Success. On June 22, 2022, Treasure Success and the shareholders of Ever Winland entered into an agreement, pursuant to which Treasure Success acquired all of the outstanding stock of Ever Winland. Apart from the office premises used by Treasure Success, Ever Winland had no other significant assets or liabilities and no operating activities or employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of August 29, 2022, Ever Winland became a subsidiary of Treasure Success.

Jiangmen Treasure Success Business Consultancy Company Limited ("Jiangmen Treasure Success") was organized on August 28, 2019 under the laws of China in Guangzhou City of Guangdong Province in China with a total registered capital of 15 million Hong Kong Dollars ("HKD") (approximately $1.9 million) to provide support in sales and marketing, sample development, merchandising, procurement, and other areas. Treasure Success owns 100% of the equity interests in Jiangmen Treasure Success.

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

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

**NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis of Presentation and Principles of Consolidation**

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

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

**Use of Estimates**

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

**Cash**

The Company's cash consists of cash on hand and cash deposited in financial institutions. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the original date of purchase to be cash equivalents. As of December 31, 2022 and March 31, 2022, the Company had no cash equivalents.

**Restricted Cash**

Restricted cash consists of cash used as security deposits to obtain credit facilities from a bank and to secure customs clearance under the requirements of local regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security deposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a current asset if the Company intends to terminate these bank facilities within one year, and as a non-current asset if otherwise.

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

**Accounts Receivable, Net**

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

**Inventories**

Inventories are stated at the lower of cost or net realizable value. Inventories include the 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, Net**

Advance to suppliers consists of balances paid to suppliers for services or materials purchased that have not been provided or received. Advance to suppliers for services and materials is short-term in nature. Advance to suppliers is reviewed periodically to determine whether its carrying value has become impaired. The Company considers the assets to be impaired if the performance by the suppliers becomes doubtful. The Company uses the aging method to estimate the allowance for the questionable balances. In addition, at each reporting date, the Company generally determines the adequacy of allowance for doubtful accounts by evaluating all available information, and then records specific allowances for those advances based on the specific facts and circumstances.

**Property, Plant, and Equipment, Net**

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:

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| | |
|:---|:---|
|  | **Useful life** |
| Land | Infinite |
| Property and buildings | 15-25 years |
| Equipment and machinery | 3-5 years |
| Office and electronic equipment | 3-5 years |
| Automobiles | 5 years |
| Leasehold improvements | Lesser of useful life and lease term |

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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 comprehensive income.

**Construction in Progress**

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

**Impairment of Long-Lived Assets**

The Company assesses its long-lived assets, including property 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 nine months ended December 31, 2022 and 2021.

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

**Asset Acquisition** 

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

**Goodwill**

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

**Revenue Recognition**

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

The Company also derives revenue rendering cutting and making services to other apparel vendors who subcontract order to the Company. Revenue is recognized when the service is rendered. All of the Company's contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company's historical experience, complete satisfaction of the performance obligation, and the Company's best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted the Company's revenue.

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

The Company does not have any contract assets since the Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment from customers is not contingent on a future event. The Company had contract liabilities of $296,985 and $nil as of December 31, 2022 and March 31, 2022, respectively. For the nine months ended December 31, 2022 and 2021, there was no revenue recognized from performance obligations related to prior periods. As of December 31, 2022, $296,985 deferred revenue was expected to be recognized within fiscal year 2023.

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

**Shipping and Handling**

Proceeds collected from customers for shipping and handling costs are included in revenue. Shipping and handling costs are expensed as incurred and are included in operating expenses, as a part of selling, general and administrative expenses. Total shipping and handling expenses were $573,249 and $571,749 for the three months ended December 31, 2022 and 2021, respectively. Total shipping and handling expenses were $1,499,052 and $1,557,328 for the nine months ended December 31, 2022 and 2021, respectively.

**Income and Sales Taxes**

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Jerash Holdings and Jerash Supplies are incorporated/formed in the State of Delaware and are subject to federal income tax in the United States of America. Treasure Success and Ever Winland are registered in Hong Kong and are subject to profit tax in Hong Kong. Jiangmen Treasure Success is incorporated in China and is subject to corporate income tax in China. Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash The First, MK Garments, and Kawkab Venue are subject to income tax in Jordan, unless an exemption is granted. In accordance with Development Zone law, Jerash Garments and its subsidiaries were subject to corporate income tax in Jordan at a rate of 16% plus a 1% social contribution between January 1, 2021 and December 31, 2021. Effective January 1, 2022, the income tax rate increased to 18% or 20%, plus a 1% social contribution.

Jerash Garments and its subsidiaries are subject to local sales tax of 16% on purchases. Jerash Garments was granted a sales tax exemption from the Jordanian Investment Commission for the period from June 1, 2015 to June 1, 2018 that allowed Jerash Garments to make purchases with no sales tax charge. The exemption has been extended to February 5, 2024.

The Company accounts for income taxes in accordance with ASC 740, "Income Taxes," which requires the Company to use the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between financial statement carrying amounts and the tax bases of existing assets and liabilities and operating loss and tax credit carry forwards. Under this accounting standard, the effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

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

**Income and Sales Taxes (continued)**

ASC 740 clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of comprehensive income. No significant uncertainty in tax positions relating to income taxes were incurred during the nine months ended December 31, 2022 and 2021.

**Foreign Currency Translation**

The reporting currency of the Company is the U.S. dollar ("US$" or "$"). The Company uses JOD in Jordan companies, HKD in Treasure Success and Ever Winland, and Chinese Yuan ("CNY") in Jiangmen Treasure Success as functional currency of each above-mentioned 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 consolidated statements of comprehensive income as incurred, and the balance of transaction gains and losses were immaterial as of the three and nine months ended December 31, 2022 and 2021.

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

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| | | |
|:---|:---|:---|
|  | **December 31, <br> 2022** | **March 31, <br> 2022** |
| Period-end spot rate | US$1=JOD0.7090 | US$1=JOD0.7090 |
|  | US$1=HKD7.8088 | US$1=HKD7.8325 |
|  | US$1=CNY6.8983 | US$1=CNY6.3393 |
| Average rate | US$1=JOD0.7090 | US$1=JOD0.7090 |
|  | US$1=HKD7.8227 | US$1=HKD7.7844 |
|  | US$1=CNY7.1111 | US$1=CNY6.4180 |

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**Stock-Based Compensation**

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

The Company estimates the fair value of stock options using a Black-Scholes model. This model is affected by the Company's stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of the option, expected risk-free rates of return, the expected volatility of the Company's common stock, and expected dividend yield, each of which is more fully described below. The assumptions for expected term and expected volatility are the two assumptions that significantly affect the grant date fair value.

● Expected Term: the expected term of a warrant or a stock option is the period of time that the warrant or a stock option is expected to be outstanding.

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

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

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

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

**Earnings per Share**

The Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260"). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS (See "Note 13**–**Earnings per Share").

**Comprehensive Income**

Comprehensive income consists of two components, net income and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in JOD or HKD or CNY to US$ is reported in other comprehensive income (loss) in the unaudited condensed consolidated statements of 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 current assets, credit facilities, accounts payable, accrued expenses, income tax payables, other payables, and amounts due to a related party to approximate the fair value of the respective assets and liabilities at December 31, 2022 and March 31, 2022 based upon the short-term nature of these assets and liabilities. Non-current operating lease liabilities approximate the fair value as they are discounted using the incremental borrowing rate.

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

**Concentrations and Credit Risk**

<u>Credit risk</u>

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of December 31, 2022 and March 31, 2022, respectively, $8,223,946 and $12,735,486 of the Company's cash was on deposit at financial institutions in Jordan, where there currently is no rule or regulation requiring such financial institutions to maintain insurance to cover bank deposits in the event of bank failure. As of December 31, 2022, and March 31, 2022, respectively, $83,589 and $351,255 of the Company's cash were on deposit at financial institutions in China, respectively. Cash maintained in banks within China of less than CNY 0.5 million (equivalent to $72,482) per bank is covered by "deposit insurance regulation" promulgated by the State Council of the People's Republic of China. As of December 31, 2022, and March 31, 2022, $17,434,519 and $13,311,340 of the Company's cash was on deposit at financial institutions in Hong Kong, respectively, which are insured by the Hong Kong Deposit Protection Board subject to certain limitations. While management believes that these financial institutions are of high credit quality, it also continually monitors their creditworthiness. As of December 31, 2022, and March 31, 2022, respectively, $346,393 and $37,342 of the Company's cash was on deposit in the United States, respectively, and are insured by the Federal Deposit Insurance Corporation up to $250,000.

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

<u>Customer and vendor concentration risk</u>

The Company's sales are made primarily in the United States. Its operating results could be adversely affected by U.S. government policies on importing business, foreign exchange rate fluctuations, and changes in local market conditions. The Company has a concentration of its revenue and purchases with specific customers and suppliers. For the three months ended December 31, 2022, four end-customers accounted for 43%, 20%, 19%, and 10% of the Company's total revenue, respectively. For the nine months ended December 31, 2022, two end-customers accounted for 57% and 18% of the Company's total revenue, respectively. For the three and nine months ended December 31, 2021, two end-customers accounted for 53% and 27%, and 68% and 23% of the Company's total revenue, respectively. As of December 31, 2022, three end-customers accounted for 32%, 31%, and 10% of the Company's total accounts receivable balance, respectively. As of March 31, 2022, one end-customer accounted for 89% of the Company's total accounts receivable balance.

For the three months ended December 31, 2022, the Company purchased approximately 28% of its garments from one major supplier. For the nine months ended December 31, 2022, the Company purchased approximately 13% and 10% of its garments and raw materials from two major suppliers, respectively. For the three and nine months ended December 31, 2021, the Company purchased approximately 53% and 22%, and 20% and 10% of its garments and raw materials from two major suppliers, respectively. As of December 31, 2022, accounts payable to the Company's three major suppliers accounted for 21%, 12%, and 12% of its total accounts payable balance, respectively. As of March 31, 2022, accounts payable to the Company's three major suppliers accounted for 11%, 11%, and 10% of its total accounts payable balance, respectively.

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

**Risks and Uncertainties**

The principal operations of the Company are located in Jordan. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Jordan, as well as by the general state of the Jordanian economy. The Company's operations in Jordan are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political, regulatory and social conditions in Jordan. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations, including its organization and structure disclosed in Note 1, this may not be indicative of future results.

The spread of COVID-19 around the world since March 2020 has caused significant volatility in U.S. and international markets. However, the sales growth of the Company resumed in the fourth quarter of fiscal year 2021 and has extended well into fiscal year 2022. Since fiscal 2022, the Company's production facilities resumed full operation with additional medical and hygienic measures in place. The Company does not believe the COVID-19 pandemic had a significant impact on its operations during the three and nine months ended December 31, 2022.

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

**Reclassification**

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

**NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS**

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

 

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of the Company's portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In November 2019, the FASB issued ASU 2019-10, which amended the effective dates of ASU 2016-13. For public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies ("SRC") as defined by the SEC, ASU 2016-13 will become effective for the fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, ASU 2016-13 will become effective for the fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As an SRC, the Company plans to adopt this ASU effective April 1, 2023. The Company is currently evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements.

**NOTE 4 – ACCOUNTS RECEIVABLE, NET**

Accounts receivable consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of**<br>**December 31,<br> 2022**<br> **(Unaudited)** | <br>**As of<br> March 31,<br> 2022** |
| Trade accounts receivable | $5767529 | $11270652 |
| Less: allowances for doubtful accounts | 221583 | 221583 |
| Accounts receivable, net | $5545946 | $11049069 |

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**NOTE 5 – INVENTORIES**

Inventories consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of**<br>**December 31,<br> 2022**<br> **(Unaudited)** | <br>**As of<br> March 31,<br> 2022** |
| Raw materials | $14234733 | $17714578 |
| Work-in-progress | 1593382 | 2010417 |
| Finished goods | 10835929 | 8530184 |
| Total inventory | $26664044 | $28255179 |

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

**NOTE 6 – ADVANCE TO SUPPLIERS, NET**

Advance to suppliers consisted of the following:

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| | | |
|:---|:---|:---|
|  | **As of**<br>**December 31,<br> 2022**<br> **(Unaudited)** | <br>**As of<br> March 31,<br> 2022** |
| Advance to suppliers | $6009897 | $1284601 |
| Less: allowances for doubtful accounts | - | - |
| Advance to suppliers, net | $6009897 | $1284601 |

---

**NOTE 7 – LEASES**

The Company has 46 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 the measurement of the right of use ("ROU") assets and lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. ROU assets and related lease obligations are recognized at a 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.

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of December 31, 2022:

---

| | |
|:---|:---|
| Remaining lease term and discount rate: |  |
| Weighted average remaining lease term (years) | 1.8 |
| Weighted average discount rate | 6.10% |

---

During the three months ended December 31, 2022 and 2021, the Company incurred total operation lease expenses of $599,906 and $618,751, respectively. During the nine months ended December 31, 2022 and 2021, the Company incurred total operation lease expenses of $1,866,619 and $1,810,501, respectively.

The following is a schedule, by fiscal years, of maturities of lease liabilities as of December 31, 2022:

---

| | |
|:---|:---|
| 2023 | $210156 |
| 2024 | 706682 |
| 2025 | 226144 |
| 2026 | 90896 |
| 2027 | - |
| Thereafter | - |
| Total lease payments | 1233878 |
| Less: imputed interest | (68737) |
| Less: prepayments | (94223) |
| Present value of lease liabilities | $1070918 |

---

**NOTE 8 – PROPERTY, PLANT, AND EQUIPMENT, NET**

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

---

| | | |
|:---|:---|:---|
|  | **As of**<br>**December 31,<br> 2022**<br> **(Unaudited)** | <br>**As of<br> March 31,<br> 2022** |
| Land | $2221420 | $1831192 |
| Property and buildings | 9287340 | 1911818 |
| Equipment and machinery | 11797586 | 11091566 |
| Office and electric equipment | 956670 | 915686 |
| Automobiles | 858284 | 802399 |
| Leasehold improvements | 4058545 | 4002833 |
| Subtotal | 29179845 | 20555494 |
| Construction in progress <sup>(1)(2)</sup> | 5512495 | 2098323 |
| Less: Accumulated depreciation and amortization | (13465044) | (11720670) |
| Property, plant and equipment, net | $21227296 | $10933147 |

---

(1) In January 2022, the Company commenced a construction project of an expansion of the Company's own premises in Al Tajamouat Industrial City, Jordan. Through December 31, 2022, the Company had paid approximately JOD 728,000 (approximately $1,027,000) and the entire balance was recorded as construction in progress. The estimated construction cost is revised to approximately JOD 870,000 (approximately $1.2 million). The project is expected to be completed and ready to use in fiscal 2023.

(2) In April 2022, the Company commenced a construction project to build a dormitory for employees. The construction is built on a land of 4,516 square meters (approximately 48,608 square feet) in Al Tajamouat Industrial City, Jordan, which was acquired by the Company in 2020. The dormitory is expected to cost $8.2 million. Through December 31, 2022, the Company had spent approximately JOD 3.2 million (approximately $4.5 million) for the construction. The dormitory is expected to be completed and ready for use in fiscal 2024.

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

For the three months ended December 31, 2022 and 2021, depreciation expenses were $569,001 and $631,828 respectively. For the nine months ended December 31, 2022 and 2021, depreciation expenses were $1,753,941 and $1,511,963 respectively.

**NOTE 9 – EQUITY**

**<u>Preferred Stock</u>**

The Company has 500,000 shares of preferred stock, par value of $0.001 per share, authorized; none were issued and outstanding as of December 31, 2022 and March 31, 2022. The preferred stock can be issued by the board of directors of Jerash Holdings (the "Board of Directors") in one or more classes or one or more series within any class, and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, rights, qualifications, limitations, or restrictions of such rights as the Board of Directors may determine from time to time.

**<u>Common Stock</u>**

The Company had 12,377,725 and 12,334,318 shares of common stock outstanding as of December 31, 2022 and March 31, 2022, respectively.

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

On June 13, 2022, the Board of Directors authorized a share repurchase program, under which the Company may repurchase up to $3.0 million of its outstanding shares of common stock. The share repurchase program will be in effect through March 31, 2023. As of December 31, 2022, 156,593 shares had been repurchased at market rate with a total consideration of $771,894. $2,228,106 remaining available for future repurchase.

**<u>Statutory Reserve</u>**

In accordance with the corporate laws in Jordan, Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash The First, MK Garments, and Kawkab Venus are required to make appropriations to certain reserve funds, based on net income determined in accordance with generally accepted accounting principles of Jordan. Appropriations to the statutory reserve are required to be 10% of net income until the reserve is equal to 100% of the entity's share capital. This reserve is not available for dividend distribution. In addition, PRC companies are required to set aside at least 10% of their after-tax net profits each year, if any, to fund the statutory reserves until the balance of the reserves reaches 50% of their registered capital. The statutory reserves are not distributable in the form of cash dividends to the Company and can be used to make up cumulative prior-year losses.

**<u>Dividends</u>**

During the fiscal year ending March 31, 2023, on November 4, 2022, August 5, 2022, and May 16, 2022, the Board of Directors declared a cash dividend of $0.05 per share of common stock, respectively. The cash dividends of $621,809, $626,716, and $616,716 were paid in full on November 28, 2022, August 24, 2022, and June 3, 2022, respectively.

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

**NOTE 10 – STOCK-BASED COMPENSATION**

**<u>Warrants issued for services</u>**

From time to time, the Company issues warrants to purchase its common stock. These warrants are valued using the Black-Scholes model and using the volatility, market price, exercise price, risk-free interest rate, and dividend yield appropriate at the date the warrants were issued. The major assumptions used in the Black Scholes model included the followings: the expected term is five years; the risk-free interest rate is 1.8% to 2.8%; and the expected volatility is 50.3% to 52.2%. 137,210 warrants expired for the nine months ended December 31, 2022 and there were 57,200 warrants outstanding as of December 31, 2022 with a weighted average exercise price of $8.75. All of the outstanding warrants were fully vested and exercisable as of December 31, 2022 and March 31, 2022. The remaining warrants will be expired on May 14, 2023.

All stock warrants activities are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **Option to**<br>**Acquire<br> Shares** | **Weighted <br> Average**<br>**Exercise<br> Price** |
| Stock warrants outstanding at March 31, 2022 | 194410 | $6.71 |
| Granted | - | - |
| Exercised | - | - |
| Expired | (137210) | 5.86 |
| Stock warrants outstanding at December 31, 2022 | 57200 | $8.75 |

---

**<u>Stock Options</u>**

On March 21, 2018, the Board of Directors adopted the Jerash Holdings (US), Inc. 2018 Stock Incentive Plan (the "Plan"), pursuant to which the Company may grant various types of equity awards. 1,484,250 shares of common stock of the Company were reserved for issuance under the Plan. In addition, on July 19, 2019, the Board of Directors approved an amendment and restatement of the Plan, which was approved by the Company's stockholders at its annual meeting of stockholders on September 16, 2019. The amended and restated Plan increased the number of shares reserved for issuance under the Plan by 300,000, to 1,784,250, among other changes. On December 31, 2022, the Company had 447,750 of shares remaining available for future issuance under the Plan.

**NOTE 10 – STOCK-BASED COMPENSATION (continued)** 

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

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 the expected terms are 10 years; risk-free interest rate is 2.95%; and the expected volatility is 50.3%.

On November 27, 2019, the Board of Directors granted the Company's Chief Financial Officer 50,000 nonqualified stock options under the amended and restated Plan in accordance with the amended and restated Plan at an exercise price of $6.50 per share and a term of 10 years. All these outstanding options became fully vested and exercisable in May 2020. The fair value of the options was estimated as of the grant date using the Black-Scholes model with the major assumptions of the expected term of 10 years; risk-free interest rate of 1.77%; expected volatility of 48.59%; and dividend yield of 3.08%.

All these outstanding options were fully vested and exercisable. As of December 31, 2022, there were 1,136,500 stock options outstanding. The weighted average remaining life of the options is one year.

All stock option activities are summarized as follows:

---

| | | |
|:---|:---|:---|
|  | **Option to**<br>**Acquire<br> Shares** | **Weighted <br> Average**<br>**Exercise<br> Price** |
| Stock options outstanding at March 31, 2022 | 1136500 | $6.90 |
| Granted | - | - |
| Exercised | - | - |
| Forfeited | - | - |
| Stock options outstanding at December 31, 2022 | 1136500 | $6.90 |

---

**<u>Restricted Stock Units</u>**

On June 24, 2021, the Board of Directors approved the grant of 200,000 RSUs under the Plan to 32 executive officers and employees of the Company, with a one-year vesting period. The fair value of these RSUs on June 24, 2021 was $1,266,000, based on the market price of the Company's common stock as of the date of the grant. On June 30, 2022, all 200,000 RSUs were vested.

Total expenses related to the restricted stock units issued were $nil and $319,101 for the three months ended December 31, 2022 and 2021, respectively. Total expenses related to the restricted stock units issued were $294,822 and $634,914 for the nine months ended December 31, 2022 and 2021, respectively.

**NOTE 11 – RELATED PARTY TRANSACTIONS**

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

---

| | | |
|:---|:---|:---|
| **Name of Related Party** | **Relationship to the Company** | **Nature of Transactions** |
| Yukwise Limited ("Yukwise") | Wholly owned by the Company's President, Chief Executive Officer, and Chairman, and a significant stockholder | Consulting Services |
| Multi-Glory Corporation Limited ("Multi-Glory") | Wholly owned by a significant stockholder | Consulting Services |
| Jiangmen V-Apparel Manufacturing Limited | Affiliate, subsidiary of Ford Glory Holdings ("FGH"), which is 49% indirectly owned by the Company's President, Chief Executive Officer, and Chairman, and a significant stockholder | Operating Lease |
| Victory Apparel (Jordan) Manufacturing Company Limited ("Victory Apparel") | Affiliate, controlled by the Company's President, Chief Executive Officer, Chairman, and a significant stockholder and another significant stockholder | Borrowings |

---

**NOTE 11 – RELATED PARTY TRANSACTIONS (continued)**

**a.** **Related party lease agreement** 

On July 1, 2020, Jiangmen Treasure Success and Jiangmen V-Apparel Manufacturing Limited entered into a factory lease agreement for office and sample production purposes in Jiangmen, China from Jiangmen V-Apparel Manufacturing Limited for a monthly rent in the amount of CNY 28,300 (approximately $4,400). The lease had a one-year term and could be renewed with a one-month notice. On April 30, 2021, the factory lease agreement between Jiangmen Treasure Success and Jiangmen V-apparel Manufacturing Limited was terminated.

**b.** **Consulting agreements** 

On January 12, 2018, Treasure Success and Yukwise entered into a consulting agreement, pursuant to which Mr. Choi will serve as Chief Executive Officer and provide high-level advisory and general management services for $300,000 per annum. The agreement renews automatically for one-month terms. This agreement became effective as of January 1, 2018. Total consulting fees under this agreement were $75,000 and $225,000 for the three and nine months ended December 31, 2022 and 2021, respectively.

On January 16, 2018, Treasure Success and Multi-Glory entered into a consulting agreement, pursuant to which Multi-Glory will provide high-level advisory, marketing, and sales services to the Company for $300,000 per annum. The agreement renews automatically for one-month terms. The agreement became effective as of January 1, 2018. Total consulting fees under this agreement were $75,000 and $225,000 for the three and nine months ended December 31, 2022 and 2021, respectively.

**c.** **Borrowings from a related party** 

As of December 31, 2022 and March 31, 2022, the Company had outstanding balances due to Victory Apparel of $nil and $300,166, respectively. These advances are non-interest bearing and due on demand. The outstanding balance as of March 31, 2022 was repaid in the first quarter of fiscal 2023.

**NOTE 12 – CREDIT FACILITIES** 

On January 31, 2019, Standard Chartered Bank (Hong Kong) Limited ("SCBHK") offered to provide an import facility of up to $3.0 million to Treasure Success pursuant to a facility letter dated June 15, 2018. Pursuant to the agreement, SCBHK agreed to finance import invoice financing and pre-shipment financing of export orders up to an aggregate of $3.0 million. The SCBHK facility bears interest at 1.3% per annum over SCBHK's cost of funds. As of December 31, 2022 and March 31, 2022, the Company had $nil outstanding in import invoice financing under the SCBHK facility. In June 2022, the Company was informed by SCBHK that the facility was canceled due to persistently low usage and zero loan outstanding.

Starting from May and October 2021, the Company has participated in a financing program with two customers, in which the Company may receive early payments for approved sales invoices submitted by the Company through the bank the customer cooperates with. For any early payments received, the Company is subject to an early payment charge imposed by the customer's bank, for which the rate is based on London Interbank Offered Rate ("LIBOR") plus a spread. In certain scenarios, the Company submits the sales invoice and receives payments prior to the shipment of the relative products. In that case, instead of recording the cash receipts as a reduction to accounts receivables, the Company records the cash receipts as receipts in advance from a customer until products are entitled to transfer. The Company records the early payment charge in interest expenses consolidated statements of comprehensive income. For the three and nine months ended December 31, 2022, the early payment charge was $199,448 and $450,885, respectively. As of December 31, 2022, there was $296,985 in receipts in advance from a customer. The Company recorded the receipts in advance as deferred revenue on the unaudited condensed consolidated balance sheet as of December 31, 2022.

On January 12, 2022, DBS Bank (Hong Kong) Limited ("DBSHK") offered to provide a banking facility of up to $5.0 million to Treasure Success pursuant to a facility letter dated January 12, 2022. Pursuant to the facility, DBSHK agreed to finance cargo receipt, trust receipt, account payable financing, and a certain type of import invoice financing up to an aggregate of $5.0 million. The DBSHK facility bears interest at 1.5% per annum over the Hong Kong Interbank Offered Rate for HKD bills and 1.3% per annum over DBSHK's cost of funds for foreign currency bills. The facility is guaranteed by Jerash Holdings and became available to the Company on June 17, 2022. As of December 31, 2022 and March 31, 2022, the Company had $4,406,383 and $nil outstanding under the DBSHK facility, respectively. The DBSHK facility is reviewed annually.

**NOTE 13 – EARNINGS PER SHARE**

The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended December 31, 2022 and 2021. As of December 31, 2022, 1,193,700 warrants and stock options were outstanding. For the three and nine months ended December 31, 2022, all warrants and stock options were excluded from the EPS calculation, respectively, as a result would be anti-dilutive. For the three and nine months ended December 31, 2021, 1,043,700 warrants and stock options were excluded from the EPS calculation, respectively, as a result would be anti-diluted.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br> December 31,<br> (Unaudited)** | **Three Months Ended<br> December 31,<br> (Unaudited)** | **Nine Months Ended <br> December 31,<br> (Unaudited)** | **Nine Months Ended <br> December 31,<br> (Unaudited)** |
|  | **2022** | **2021** | **2022** | **2021** |
| Numerator: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net income attributable to Jerash Holdings (US), Inc.'s Common Stockholders | $890818 | $1674797 | $4403952 | $8050910 |
| &nbsp;&nbsp;&nbsp;Denominator: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Denominator for basic earnings per share (weighted-average shares) | 12412922 | 12290840 | 12414546 | 11654039 |
| &nbsp;&nbsp;&nbsp;Dilutive securities – unexercised RSUs, warrants and options | - | 123208 | 52769 | 42184 |
| &nbsp;&nbsp;&nbsp;Denominator for diluted earnings per share (adjusted weighted-average shares) | 12412922 | 12414048 | 12467315 | 11696223 |
| &nbsp;&nbsp;&nbsp;Basic earnings per share | $0.07 | $0.14 | $0.35 | $0.69 |
| &nbsp;&nbsp;&nbsp;Diluted earnings per share | $0.07 | $0.13 | $0.35 | $0.69 |

---

**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 December 31, 2022 and 2021, outerwear accounted for approximately 94.1% and 84.1% of the Company's total revenue, respectively. For the nine months ended December 31, 2022 and 2021, outerwear accounted for approximately 93.8% and 92.9% of the Company's total revenue, respectively. Based on management's assessment, the Company has determined that it has only one operating segment as defined by ASC 280.

The following table summarizes sales by geographic areas for the three months ended December 31, 2022 and 2021, respectively.

---

| | | |
|:---|:---|:---|
|  | **For the <br> Three Months Ended<br> December 31,**<br> **(Unaudited)** | **For the <br> Three Months Ended<br> December 31,**<br> **(Unaudited)** |
|  | **2022** | **2021** |
| United States | $33090629 | $32963965 |
| Hong Kong | 8278436 | 3245461 |
| Jordan | 1642015 | 267910 |
| Others | 15967 | 337687 |
| Total | $43027047 | $36815023 |

---

The following table summarizes sales by geographic areas for the nine months ended December 31, 2022 and 2021, respectively.

---

| | | |
|:---|:---|:---|
|  | **For the <br> Nine Months Ended<br> December 31,**<br> **(Unaudited)** | **For the <br> Nine Months Ended<br> December 31,**<br> **(Unaudited)** |
|  | **2022** | **2021** |
| United States | $99599089 | $106657366 |
| Hong Kong | 9020539 | 3251912 |
| Jordan | 4397542 | 568750 |
| Others | 1272133 | 1936853 |
| Total | $114289303 | $112414881 |

---

68.6% and 30.1% of long-lived assets were located in Jordan and Hong Kong, respectively, as of December 31, 2022.

**NOTE 15 – COMMITMENTS AND CONTINGENCIES**

**Commitments**

On August 28, 2019, Jiangmen Treasure Success was incorporated under the laws of the People's Republic of China in Jiangmen City, Guangdong Province, China, with a total registered capital of HKD 3 million (approximately $385,000). On December 9, 2020, shareholders of Jiangmen Treasure Success approved to increase its registered capital to HKD 15 million (approximately $1.9 million). The Company's subsidiary, Treasure Success, as a shareholder of Jiangmen Treasure Success, is required to contribute HKD 15 million (approximately $1.9 million) as paid-in capital in exchange for 100% ownership interest in Jiangmen Treasure Success. As of December 31, 2022, Treasure Success had made capital contribution of HKD 10 million (approximately $1.3 million). Pursuant to the articles of incorporation of Jiangmen Treasure Success, Treasure Success is required to complete the remaining capital contribution before December 31, 2029 as Treasure Success' available funds permit.

**Contingencies**

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

**NOTE 16 – INCOME TAX**

Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash The First, MK Garments, and Kawkab Venue are subject to the regulations of the Income Tax Department in Jordan. In accordance with the Investment Encouragement Law, Jerash Garments' export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing on the first day of production. This exemption had been extended for five years until December 31, 2018. Effective January 1, 2019, the Jordanian government reclassified the area where Jerash Garments and its subsidiaries are to a Development Zone. In accordance with the Development Zone law, Jerash Garments and its subsidiaries were subject to income tax at income tax rate of 16% plus a 1% social contribution between January 1, 2021 and December 31, 2021. Effective from January 1, 2022, the income tax rate raised to 18% or 20% plus 1% social contribution.

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

Interim income tax expenses or benefit is recognized based on the Company's estimated annual effective tax rate, which is based upon the tax rate expected for the full fiscal year applied to the pretax income or loss of the interim period. The Company's consolidated effective tax rate for the three and nine months ended December 31, 2022 was 26.7% and 26.6%, respectively, and differed from the effective statutory federal income tax rate of 21.0%, primarily due to GILTI adjustments, foreign tax rate differentials, and valuation allowance adjustments.

**NOTE 17 – SUBSEQUENT EVENTS** 

On February 3, 2023, the Board of Directors approved the payment of a dividend of $0.05 per share, payable on or about February 21, 2023 to stockholders of record as of the close of business on February 14, 2023.

Item 2. <u>Management's Discussion and Analysis of Financial Condition and Results of Operations</u>

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

**Forward-Looking Statements** 

This Quarterly Report on Form 10-Q contains "forward-looking statements." All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including, but not limited to: any projections of earnings, revenue, or other financial items; any statements regarding the adequacy, availability, and sources of capital, any statements of the plans, strategies, and objectives of management for future operations; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "plan," "project," or "anticipate," and other similar words. In addition to any assumptions and other factors and matters referred to specifically in connection with such forward-looking statements, factors that could cause actual results or outcomes to differ materially from those contained in the forward-looking statements include those factors set forth in the "Risk Factors" section included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 and in subsequent reports that we file with the U.S. Securities and Exchange Commission (the "SEC").

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

The information included in this Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes included in this Quarterly Report, and the audited consolidated financial statements and notes and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed with the SEC on June 27, 2022. References to fiscal 2023 and fiscal 2022 in this Management's Discussion and Analysis of Financial Condition and Results of Operations refer to our fiscal year ending March 31, 2023, and fiscal year ended March 31, 2022, respectively.

**<u>Results of Operations</u>**

 ****

***Three months ended December 31, 2022 and 2021***

The following table summarizes the results of our operations during the three-month periods ended December 31, 2022 and 2021, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

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

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended <br> December 31, 2022** | **Three Months Ended <br> December 31, 2022** | **Three Months Ended <br> December 31, 2021** | **Three Months Ended <br> December 31, 2021** | **Period over Period<br> Increase (Decrease)** | **Period over Period<br> Increase (Decrease)** |
| <br>**Statement of Income Data:** | **Amount** | **As % <br> of Sales** | **Amount** | **As % <br> of Sales** | **Amount** | **%** |
| Revenue | $43027 | 100% | $36815 | 100% | $6212 | 17% |
| Cost of goods sold | 37230 | 87% | 29905 | 81% | 7325 | 24% |
| Gross profit | 5797 | 13% | 6910 | 19% | (1113) | (16)% |
| Selling, general and administrative expenses | 4470 | 10% | 4185 | 12% | 285 | 7% |
| Stock-based compensation expenses |  | -% | 319 | 1% | (319) |  |
| Other expenses, net | 112 | -% | 80 | -% | 32 | 40% |
| Net income before taxation | $1215 | 3% | $2326 | 6% | $(1111) | (48)% |
| Income tax expenses | 324 | 1% | 651 | 1% | (327) | (50)% |
| Net income | $891 | 2% | $1675 | 5% | $(784) | (47)% |

---

***Revenue.*** Revenue increased by approximately $6.2 million, or 17%, to $43.0 million, for the three months ended December 31, 2022, from approximately $36.8 million for the same period in fiscal 2022. The increase was mainly due to substantial increases in local sales in Jordan and sales to Hong Kong customers that more than offset slight decreases in our two major U.S. customers.

The following table outlines the dollar amount and percentage of total sales to our customers for the three months ended December 31, 2022 and 2021.

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br> December 31, 2022** | **Three Months Ended<br> December 31, 2022** | **Three Months Ended<br> December 31, 2021** | **Three Months Ended<br> December 31, 2021** |
|  | **Sales**<br>**Amount** |<br>**%** | **Sales**<br>**Amount** |<br>**%** |
| VF Corporation <sup>(1)</sup> | $18642 | 43% | $19624 | 53% |
| New Balance | 8667 | 20% | 9905 | 27% |
| Jiangsu Guotai Huasheng Industrial Co (HK)., Ltd | 8273 | 19% | 3245 | 9% |
| Dynamic Design Enterprise, Inc | 4103 | 10% | 2013 | 5% |
| G-III | 1007 | 2% | 1422 | 4% |
| Others | 2335 | 6% | 606 | 2% |
| Total | $43027 | 100% | $36815 | 100% |

---

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

**Revenue by Geographic Area**

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

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended <br> December 31, 2022** | **Three Months Ended <br> December 31, 2022** | **Three Months Ended <br> December 31, 2021** | **Three Months Ended <br> December 31, 2021** | **Period over Period<br> Increase (Decrease)** | **Period over Period<br> Increase (Decrease)** |
| <br>**Region** | **Amount** | **%** | **Amount** | **%** | **Amount** | **%** |
| United States | $33091 | 77% | $32964 | 90% | $127 | 0% |
| Hong Kong | 8278 | 19% | $3245 | 9% | 5033 | 155% |
| Jordan | 1642 | 4% | 268 | 0% | 1374 | 513% |
| Others | 16 | 0% | 338 | 1% | (322) | (95)% |
| Total | $43027 | 100% | $36815 | 100% | $6212 | 17% |

---

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

The slight increase of approximately $0.1 million in sales to the U.S. during the three months ended December 31, 2022, was mainly attributable to the diversification of customer base in the market with expansion in sales to an existing customer and introduction of a new customer.

During the three months ended December 31, 2022, aggregate sales to Hong Kong, Jordan, and other locations, increased by 158% from approximately $3.9 million to $9.9 million from the same period last year as more domestic orders were received to fill up capacity released from lower demands from U.S. customers.

***Cost of goods sold***. Following the increase in sales revenue, our cost of goods sold increased by approximately $7.3 million, or 24%, to approximately $37.2 million, for the three months ended December 31, 2022, from approximately $29.9 million for the same period in fiscal 2022. As a percentage of revenue, the cost of goods sold increased by approximately 6% points to 87% for the three months ended December 31, 2022 from 81% for the same period in fiscal 2022. The increase in cost of goods sold as a percentage of revenue was primarily attributable to the higher proportion of non-U.S. orders that typically generate lower margin.

For the three months ended December 31, 2022, we purchased 28%, of our garments from one major supplier. For the three months ended December 31, 2021, we purchased 53% and 22% of our garments and raw materials from two major suppliers, respectively.

***Gross profit margin.*** Gross profit margin was approximately 13% for the three months ended December 31, 2022, which decreased by 6% points from 19% for the same period in fiscal 2022. The decrease in gross profit margin was primarily driven by the lower proportion of export orders to the U.S. that typically generate higher margin.

***Operating expenses.*** Operating expenses maintained to approximately $4.5 million for the three months ended December 31, 2022, as compared for the same period of 2021.

***Other expenses, net.*** Other expenses, net was approximately $112,000 for the three months ended December 31, 2022, as compared to other expenses, net of approximately $80,000 for the same period in fiscal 2022. The increase was primarily due to an increase in interest expenses.

***Income tax expenses.*** Income tax expenses for the three months ended December 31, 2022 were approximately $0.3 million compared to income tax expenses of approximately $0.7 million for the same period in fiscal 2022. The decrease in the effective tax rate mainly resulted from the decrease of net loss in China, offsetting the increase of corporate income tax rate in Jordan from a combined rate of 17% to 19% or 21% since January 1, 2022, and the increase in valuation allowance provided on deferred tax assets related to increased operating losses in our U.S. entities. The effective tax rate was 26.7% for the three months ended December 31, 2022, as compared to 28.0% for the three months ended December 31, 2021.

***Net income.*** Net income for the three months ended December 31, 2022 was approximately $0.9 million compared to net income of approximately $1.7 million for the same period in fiscal 2022. The decrease was mainly attributable to lower sales to two of our major export customers.

***Nine months ended December 31, 2022 and 2021***

The following table summarizes the results of our operations during the nine-month periods ended December 31, 2022 and 2021, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

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

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended <br> December 31, 2022** | **Nine Months Ended <br> December 31, 2022** | **Nine Months Ended <br> December 31, 2021** | **Nine Months Ended <br> December 31, 2021** | **Period over Period<br> Increase (Decrease)** | **Period over Period<br> Increase (Decrease)** |
| <br>**Statement of Income Data:** | **Amount** | **As %<br> of Sales** | **Amount** | **As %<br> of Sales** | **Amount** | **%** |
| Revenue | $114289 | 100% | $112415 | 100% | $1874 | 2% |
| Cost of goods sold | 94952 | 83% | 89769 | 80% | 5183 | 6% |
| Gross profit | 19337 | 17% | 22646 | 20% | (3309) | (15)% |
| Selling, general, and administrative expenses | 12797 | 12% | 11648 | 10% | 1149 | 10% |
| Stock-based compensation expenses | 295 | 0% | 635 | 1% | (340) | (54)% |
| Other expenses, net | 245 | 0% | 193 | 0% | 52 | 27% |
| Net income before taxation | $6000 | 5% | $10170 | 9% | $(4170) | (41)% |
| Income tax expenses | 1596 | 1% | 2119 | 2% | (523) | (25)% |
| Net income | $4404 | 4% | $8051 | 7% | $(3647) | (45)% |

---

 ****

 ****

***Revenue.*** Revenue increased by approximately $1.9 million, or 2%, to $114.3 million, for the nine months ended December 31, 2022, from approximately $112.4 million for the same period in fiscal 2022. The increase was mainly due to an increase of total sales to customers in Hong Kong, Jordan and other locations offsetting the decrease in sales to two of our major customers in the U.S.

The following table outlines the dollar amount and percentage of total sales to our customers for the nine months ended December 31, 2022 and 2021, respectively.

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Nine Months Ended<br> December 31, 2022** | **Nine Months Ended<br> December 31, 2022** | **Nine Months Ended<br> December 31, 2021** | **Nine Months Ended<br> December 31, 2021** |
|  | **Sales**<br>**Amount** |<br>**%** | **Sales**<br>**Amount** |<br>**%** |
| VF Corporation<sup>(1)</sup> | $65001 | 57% | $76308 | 68% |
| New Balance | 20145 | 18% | 25589 | 23% |
| Jiangsu Guotai Huasheng Industrial Co (HK)., Ltd | 9002 | 8% | 3245 | 3% |
| Dynamic Design Enterprise, Inc | 8175 | 7% | 2207 | 2% |
| G-III | 4959 | 4% | 2434 | 2% |
| Classic | 1581 | 1% |  | -% |
| Soriana | 954 | 1% | 1487 | 1% |
| Others | 4472 | 4% | 1145 | 1% |
| Total | $114289 | 100% | $112415 | 100% |

---

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

**Revenue by Geographic Area**

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

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Nine Months Ended <br> December 31, 2022** | **Nine Months Ended <br> December 31, 2022** | **Nine Months Ended <br> December 31, 2021** | **Nine Months Ended <br> December 31, 2021** | **Period over Period<br> Increase (Decrease)** | **Period over Period<br> Increase (Decrease)** |
| <br>**Region** | **Amount** | **%** | **Amount** | **%** | **Amount** | **%** |
| United States | $99599 | 87% | $106657 | 95% | $(7058) | (7)% |
| Hong Kong | 9021 | 8% | 3252 | 3% | 5769 | 177% |
| Jordan | 4398 | 4% | 569 | 0% | 3829 | 673% |
| Others | 1271 | 1% | 1937 | 2% | (666) | (34)% |
| Total | $114289 | 100% | $112415 | 100% | $1874 | 2% |

---

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

The decrease of approximately 7% in sales to the U.S. during the nine months ended December 31, 2022 was mainly attributable to the decrease in sales to our two major customers in the U.S. due to higher inflation and general inventory levels.

During the nine months ended December 31, 2022, aggregate sales to Hong Kong, Jordan, and other locations, increased by 155% from approximately $5.8 million to $14.7 million from the same period last year as our factories took up more domestic orders to fill up the production capacity released from lower demands from the U.S.

***Cost of goods sold***. Following the increase in sales revenue, our cost of goods sold increased by approximately $5.2 million, or 6%, to approximately $95.0 million for the nine months ended December 31, 2022 from approximately $89.8 million for the same period in fiscal 2022. As a percentage of revenue, the cost of goods sold increased by approximately 3% points to 83% for the nine months ended December 31, 2022 from 80% for the same period in fiscal 2022. The increase in cost of goods sold as a percentage of revenue was primarily attributable to a higher proportion of sales to domestic and non-U.S. customers that typically generate lower margin.

For the nine months ended December 31, 2022, we purchased 13% and 10% of our garments and raw materials from two major suppliers, respectively. For the nine months ended December 31, 2021, we purchased 20% and 10% of our garments and raw materials from two major suppliers, respectively.

***Gross profit margin.*** Gross profit margin was approximately 17% for the nine months ended December 31, 2022, which decreased by 3% points from 20% for the same period in fiscal 2022. The decrease in gross profit margin was primarily driven by a lower proportion of export orders to the U.S. that typically generate higher gross margin.

***Operating expenses.*** Operating expenses increased by approximately 6.6% from approximately $12.3 million for the nine months ended December 31, 2021, to approximately $13.1 million for the nine months ended December 31, 2022. The increase was primarily due to an increase in headcounts from the acquisition of MK Garments, and an increase in expenses in relation to foreign worker travelling expenses for the expansion in total group workforce to 5,600 as of December 31, 2022.

***Other expenses net.*** Other expenses, net was approximately $245,000 for the nine months ended December 31, 2022, as compared to other expenses, net of approximately $193,000 for the same period in fiscal 2022. The increase in other expenses was primarily due to the increase in net interest expenses.

***Income tax expenses.*** Income tax expenses for the nine months ended December 31, 2022 were approximately $1.6 million compared to income tax expenses of approximately $2.1 million for the same period in fiscal 2022. The increase in the effective tax rate mainly resulted from the increase of corporate income tax rate in Jordan from a combined rate of 17% to 19% or 21% since January 1, 2022, and the increase in valuation allowance provided on deferred tax assets related to increased operating losses in our U.S. entities. The effective tax rate was up to 26.6% for the nine months ended December 31, 2022, compared to 20.8% for the nine months ended December 31, 2021.

***Net income.*** Net income for the nine months ended December 31, 2022 was approximately $4.4 million compared to net income of approximately $8.1 million for the same period in fiscal 2022. The decrease was mainly attributable to lower sales to two of our major export customers.

**<u>Liquidity and Capital Resources</u>**

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

As of December 31, 2022, we had cash of approximately $24.6 million and restricted cash of approximately $1.6 million compared to cash of approximately $25.2 million and restricted cash of approximately $1.4 million as of March 31, 2022. The slight decrease in total cash was mainly a result of the payments of dividends and investment in capital expenditures in this period.

Our current assets as of December 31, 2022 were approximately $66.0 million and our current liabilities were approximately $18.9 million, which resulted in a ratio of approximately 3.5 to 1. As of March 31, 2022, our current assets were approximately $69.9 million and our current liabilities were $14.1 million, resulting in a ratio of 4.9 to 1.

The primary drivers in the decrease in current assets were the decrease in accounts receivables, inventory, cash for capital investments and dividend payments in this period.

The primary driver in the increase in current liabilities was an increase in outstanding under credit facilities financing the purchases of raw materials for our orders.

Total equity as of December 31, 2022 was approximately $71.1 million compared to $69.3 million as of March 31, 2022.

We had net working capital of $47.1 million and $55.7 million as of December 31, 2022 and March 31, 2022, respectively. Based on our current operating plan, we believe that cash on hand and cash generated from operating activities will be sufficient to support our working capital needs for the next 12 months from the date of this Quarterly Report is released.

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

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

**<u>Credit Facilities</u>**

**DBSHK Facility Letter** 

Pursuant to the DBSHK facility letter dated January 12, 2022, DBSHK provided a bank facility of up to $5.0 million to Treasure Success. Pursuant to the agreement, DBSHK agreed to finance cargo receipt, trust receipt, account payable financing, and certain type of import invoice financing up to an aggregate of $5.0 million. The DBSHK facility bears interest at 1.5% per annum over Hong Kong Interbank Offered Rate for HKD bills and 1.3% per annum over DBSHK's cost of funds for foreign currency bills. The facility is guaranteed by Jerash Holdings and became available to the Company on June 17, 2022. As of December 31, 2022 and March 31, 2022, we had approximately $4.4 million and $nil outstanding under this DBSHK facility, respectively.

 ****

***Nine months ended December 31, 2022 and 2021***

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

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

---

| | | |
|:---|:---|:---|
|  | **Nine months ended <br> December 31,** | **Nine months ended <br> December 31,** |
|  | **2022** | **2021** |
| Net cash provided by operating activities | $9858 | $14574 |
| Net cash used in investing activities | (11372) | (7062) |
| Net cash provided by financing activities | 1469 | 3907 |
| Effect of exchange rate changes on cash | (296) | 122 |
| Net (decrease) increase in cash and restricted cash | (341) | 11541 |
| Cash and restricted cash, beginning of period | 26583 | 22861 |
| Cash and restricted cash, end of period | $26242 | $34402 |

---

 ****

 ****

***Operating Activities***

Net cash provided by operating activities decreased by $4.7 million to $9.9 million for the nine months ended December 31, 2022, compared with $14.6 million for the nine months ended December 31, 2021. It was primarily due to lower net income of $3.6 million, less reduction in inventory of $2.0 million, an increase in advance to suppliers of $5.9 million, partially offset by more reduction in receivables of $1.8 million, and more increases in payables and accruals of $4.9 million.

***Investing Activities***

Net cash used in investing activities was approximately $11.4 million for the nine months ended December 31, 2022, compared to approximately $7.1 million in the same period in fiscal 2022. The net cash used in investing activities in the nine months ended December 31, 2022 was mainly used in investment in property, plant, and machinery including the ongoing construction of a dormitory and factory expansion, and considerations paid to acquire Ever Winland and Kawkab Venus.

***Financing Activities***

Net cash provided by financing activities was approximately $1.5 million for the nine months ended December 31, 2022, including dividend payments of approximately $1.9 million, payments for share repurchase of approximately $0.8 million, and settlement to a related party of approximately $0.3 million, offsetting by net proceeds from short-term loans of approximately $4.4 million. There was a net cash inflow of approximately $3.9 million in the same period in fiscal 2022, resulting from dividend payments and repayment of short-term loans that were offset by a net proceed of $6.3 million from an issuance of common stock.

***Statutory Reserves***

In accordance with the corporate law in Jordan, our subsidiaries in Jordan 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. Jiangmen Treasure Success is required to set aside 10% of its net income as a statutory surplus reserve until such reserve is equal to 50% of its registered capital, in accordance with corporate laws in China. These reserves are not available for dividend distribution. The statutory reserve was approximately $0.4 million and approximately $0.3 million as of December 31, 2022 and 2021, respectively.

The following table provides the amount of our statutory reserves, the amount of restricted net assets, consolidated net assets, and the amount of restricted net assets as a percentage of consolidated net assets, as of December 31, 2022 and 2021.

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

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2022** | **2021** |
| Statutory Reserves | $379 | $346 |
| Total Restricted Net Assets | $379 | $346 |
| Consolidated Net Assets | $71070 | $70020 |
| Restricted Net Assets as Percentage of Consolidated Net Assets | 0.53% | 0.49% |

---

Total restricted net assets accounted for approximately 0.53% of our consolidated net assets as of December 31, 2022. As our subsidiaries in Jordan are only required to set aside 10% of net profits to fund the statutory reserves, we believe the potential impact of such restricted net assets on our liquidity is limited.

 ****

 ****

***Capital Expenditures***

We had capital expenditures of approximately $11.3 million and approximately $5.0 million for the nine months ended December 31, 2022 and 2021, for plant and machinery, the construction of a dormitory and factory expansion, and the acquisitions of Ever Winland and Kawkab Venus, respectively. For the nine months ended December 31, 2022, payments for additional plant and machinery, construction of a dormitory and factory expansion, the acquisition of Kawkab Venus, and the acquisition of Ever Winland amounted to approximately $0.5 million, $3.4 million, $2.7 million, and $5.1 million, respectively. For the nine months ended December 31, 2021, payments for additional plant and machinery, and payments to additional properties and leasehold improvements amounted to approximately $1.9 million and $2.3 million, respectively.

On August 7, 2019, we completed a transaction to acquire 12,340 square meters (approximately three acres) of land in Al Tajamouat Industrial City, Jordan, from a third party to construct a dormitory for our employees with aggregate purchase price JOD 863,800 (approximately $1,218,303). Management has revised the plan to construct both dormitory and production facilities on the land in order to capture the increasing demand for our capacity. We are conducting engineering design and study on this project and we plan to begin construction after a thorough and complete assessment of the impact of the current inflation on customer demands.

On February 6, 2020, we completed a transaction to acquire 4,516 square meters (approximately 48,608 square feet) of land in Al Tajamouat Industrial City, Jordan, from a third party to construct a dormitory for our employee with aggregate purchase price JOD 313,501 (approximately $442,162). We expect to spend approximately $8.2 million in capital expenditures to build the dormitory. Due to the ongoing COVID-19 pandemic, management decided to put on hold the construction project in fiscal 2021 to retain financial resources to support our operations, and also to wait and see how the global economy and customer demand recover after the outbreak. The preparation work resumed in early 2021 and construction work commenced in April 2021. As of December 31, 2022, we have spent approximately $4.5 million on construction. The dormitory is expected to be completed and ready for use in fiscal 2024.

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

In January 2022, we commenced a construction project of an expansion of our own premises in Al Tajamouat Industrial City, Jordan. Through December 31, 2022, we had paid approximately JOD 728,000 (approximately $1,027,000) and the entire balance was recorded as construction in progress. The estimated construction cost is approximately JOD 870,000 (approximately $1.2 million). We expect the project to be completed and ready to use in fiscal 2023.

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

We project that there will be an aggregate of approximately $14 million and $3 million of capital expenditures in the fiscal years ending March 31, 2023 and 2024, respectively, for further enhancement of production capacity to meet future sales growth. We expect that our capital expenditures will increase in the future as our business continues to develop and expand. We have used cash generated from operations of our subsidiaries to fund our capital commitments in the past and anticipate using such funds to fund capital expenditure commitments in the future.

 ****

***Off-balance Sheet Commitments and Arrangements***

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

**<u>Critical Accounting Policies</u>**

We prepare our financial statements in conformity with accounting principles generally accepted by the United States of America ("U.S. GAAP"), which require us to make judgments, estimates, and assumptions that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates.

We believe that our accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates. Accordingly, the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results of operations are summarized in "Note 2—Summary of Significant Accounting Policies" in the notes to our unaudited condensed consolidated financial statements.

 ****

***Recent Accounting Pronouncements***

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

Item 3. <u>Quantitative and Qualitative Disclosures About Market Risk</u>.

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

Item 4. <u>Controls and Procedures</u>

**Disclosure Controls and Procedures**

Disclosure controls and procedures (as defined in the Securities Exchange Act of 1934, as amended (the "Exchange Act") Rule 15d-15(e)) are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), based on their evaluation of our disclosure controls and procedures as of December 31, 2022, concluded that our disclosure controls and procedures were effective as of that date.

**Changes in Internal Control Over Financial Reporting**

There were no changes in our internal control over financial reporting (as the term is defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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

**PART II - OTHER INFORMATION**

Item 1. <u>Legal Proceedings</u>

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

Item 1A. <u>Risk Factors</u>

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

Item 2. <u>Unregistered Sales of Equity Securities and Use of Proceeds</u>

None.

Item 3. <u>Defaults Upon Senior Securities</u>

Not applicable.

Item 4. <u>Mine Safety Disclosures</u>

Not applicable.

Item 5. <u>Other Information</u>

None.

Item 6. <u>Exhibits</u>

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

<u>Index to Exhibits</u>

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Incorporated by Reference<br> (Unless Otherwise Indicated)** | **Incorporated by Reference<br> (Unless Otherwise Indicated)** | **Incorporated by Reference<br> (Unless Otherwise Indicated)** | **Incorporated by Reference<br> (Unless Otherwise Indicated)** |
| **Exhibit**<br>**Number** | <br>**Exhibit Title** | **Form** | **File** | **Exhibit** | **Filing Date** |
| 3.1 | [Amended and Restated Certificate of Incorporation](http://www.sec.gov/Archives/edgar/data/1696558/000114420418049979/tv503062_ex3-1.htm) | S-1 | 333-222596 | 3.1 | September 19, 2018 |
| 3.2 | [Amended and Restated Bylaws](http://www.sec.gov/Archives/edgar/data/1696558/000114420419035751/tv525817_ex3-1.htm) | 8-K | 001-38474 | 3.1 | July 24, 2019 |
| 4.1 | [Specimen Certificate for Common Stock](http://www.sec.gov/Archives/edgar/data/1696558/000114420417034301/v469509_ex4-1.htm) | S-1 | 333-218991 | 4.1 | June 27, 2017 |
| 31.1 | [Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](f10q1222ex31-1_jerashhold.htm) |  |  |  | Filed herewith |
| 31.2 | [Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](f10q1222ex31-2_jerashhold.htm) |  |  |  | Filed herewith |
| 32.1\* | [Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](f10q1222ex32-1_jerashhold.htm) |  |  |  | Furnished herewith |

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| | | |
|:---|:---|:---|
| 32.2\* | [Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](f10q1222ex32-2_jerashhold.htm) | Furnished herewith |
| 101 | The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Income, (iii) Condensed Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags | Filed herewith |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed herewith |

---

\* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-Q and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act.

**SIGNATURES**

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

---

| | | |
|:---|:---|:---|
| Date: February 13, 2023 | Jerash Holdings (US), Inc. | Jerash Holdings (US), Inc. |
|  | By: | /s/ Gilbert K. Lee |
|  |  | Gilbert K. Lee |
|  |  | Chief Financial Officer<br> (Principal Financial Officer) |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Choi Lin Hung, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: February 13, 2023

---

| |
|:---|
| /s/ Choi Lin Hung |
| Choi Lin Hung |
| Chairman of the Board of Directors, Chief Executive Officer, President, and Treasurer<br> (Principal Executive Officer) |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Gilbert K. Lee, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: February 13, 2023

---

| |
|:---|
| /s/ Gilbert K. Lee |
| Gilbert K. Lee |
| Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

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

(1) The
Quarterly Report of the Company on Form 10-Q for the three months ended December 31, 2022 (the "Report") fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Date: February 13, 2023

---

| |
|:---|
| /s/ Choi Lin Hung |
| Choi Lin Hung |
| Chairman of the Board of Directors, Chief Executive Officer, President, and Treasurer<br> (Principal Executive Officer and Director) |

---

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

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

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

(1) The
Quarterly Report of the Company on Form 10-Q for the three months ended December 31, 2022 (the "Report") fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

Date: February 13, 2023

---

| |
|:---|
| /s/ Gilbert K. Lee |
| Gilbert K. Lee |
| Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |

---

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