Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Jun. 30, 2019 | Aug. 12, 2019 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Jerash Holdings (US), Inc. | |
Entity Central Index Key | 0001696558 | |
Current Fiscal Year End Date | --03-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,325,000 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Current Assets: | ||
Cash | $ 16,121,994 | $ 27,182,158 |
Accounts receivable | 13,404,177 | 4,020,369 |
Inventories | 20,471,483 | 21,074,243 |
Prepaid expenses and other current assets | 2,561,853 | 2,630,727 |
Advance to suppliers | 1,789,402 | 443,395 |
Total Current Assets | 54,348,909 | 55,350,892 |
Restricted cash | 796,876 | 652,310 |
Long-term deposits | 0 | 810,172 |
Deferred tax assets | 81,461 | 81,461 |
Property, plant and equipment, net | 4,053,066 | 2,356,262 |
Right of use assets | 1,292,416 | |
Total Assets | 60,572,728 | 59,251,097 |
Current Liabilities: | ||
Credit facilities | 68,222 | 648,711 |
Accounts payable | 2,464,672 | 3,378,258 |
Accrued expenses | 1,813,500 | 1,539,147 |
Income tax payable | 1,499,238 | 1,164,238 |
Other payables | 1,223,511 | 855,527 |
Operating lease liabilities - current | 262,075 | |
Total Current Liabilities | 7,331,218 | 7,585,881 |
Long-term portion of operating lease liabilities | 592,245 | |
Operating lease liabilities - non-current | 1,403,087 | 1,403,087 |
Total Liabilities | 9,326,550 | 8,988,968 |
Commitments and Contingencies (See Note 6 and 14) | ||
Equity | ||
Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock, $0.001 par value; 30,000,000 and 15,000,000 shares authorized; 11,325,000 shares issued and outstanding | 11,325 | 11,325 |
Additional paid-in capital | 14,956,767 | 14,956,767 |
Statutory reserve | 212,739 | 212,739 |
Retained earnings | 35,769,973 | 34,786,735 |
Accumulated other comprehensive loss | (13,629) | (14,440) |
Total Shareholder's Equity | 50,937,175 | 49,953,126 |
Noncontrolling interest | 309,003 | 309,003 |
Total Equity | 51,246,178 | 50,262,129 |
Total Liabilities and Equity | $ 60,572,728 | $ 59,251,097 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2019 | Mar. 31, 2019 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 500,000 | 500,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 30,000,000 | 30,000,000 |
Common Stock, Shares, Issued | 11,325,000 | 11,325,000 |
Common Stock, Shares, Outstanding | 11,325,000 | 11,325,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||
Revenue, net | $ 22,527,325 | $ 18,363,085 |
Cost of goods sold | 18,014,622 | 13,703,294 |
Gross Profit | 4,512,703 | 4,659,791 |
Selling, general and administrative expenses | 2,623,682 | 1,978,640 |
Stock-based compensation expenses | 0 | 3,205,980 |
Total Operating Expenses | 2,623,682 | 5,184,620 |
Income / (Loss) from Operations | 1,889,021 | (524,829) |
Other (Expense)/ Income: | ||
Other (expense)/ income, net | (4,533) | 5,580 |
Total other (expense)/ income , net | (4,533) | 5,580 |
Net Income /(Loss) before provision for income tax | 1,884,488 | (519,249) |
Income tax expense | 335,000 | 366,000 |
Net income /(loss) | 1,549,488 | (885,249) |
Net loss attributable to noncontrolling interest | 0 | 8 |
Net income / (loss) attributable to Jerash Holdings (US), Inc.'s Common Shareholders | 1,549,488 | (885,241) |
Net Income (Loss) | 1,549,488 | (885,249) |
Other Comprehensive Income: | ||
Foreign currency translation gain | 811 | 8,963 |
Total Comprehensive Income (Loss) | 1,550,299 | (876,286) |
Comprehensive gain attributable to noncontrolling interest | 0 | (145) |
Comprehensive Income/ (Loss) Attributable to Jerash Holdings (US), Inc.'s Common Shareholders | $ 1,550,299 | $ (876,431) |
Earnings / (Loss) Per Share Attributable to Common Shareholders: | ||
Basic | $ 0.14 | $ (0.08) |
Diluted | $ 0.14 | $ (0.08) |
Weighted Average Number of Shares | ||
Basic | 11,325,000 | 10,822,143 |
Diluted | 11,472,363 | 10,822,143 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Statutory Reserve [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Noncontrolling Interest [Member] | Total |
Balance at Mar. 31, 2018 | $ 0 | $ 9,895 | $ 2,742,158 | $ 71,699 | $ 30,948,006 | $ (24,502) | $ 309,604 | $ 34,056,860 |
Balance (in shares) at Mar. 31, 2018 | 0 | 9,895,000 | ||||||
Common stock issued net of stock issuance costs of $1,387,879 | $ 0 | $ 1,430 | 8,620,691 | 0 | 0 | 0 | 0 | 8,622,121 |
Common stock issued net of stock issuance costs of $1,387,879 (in shares) | 0 | 1,430,000 | ||||||
Share-based compensation expense for the stock options issued under stock incentive plan | $ 0 | $ 0 | 3,205,980 | 0 | 0 | 0 | 0 | 3,205,980 |
Warrants issued to the underwriter | 0 | 0 | 30 | 0 | 0 | 0 | 0 | 30 |
Net income (loss) | 0 | 0 | 0 | 0 | (885,241) | 0 | (8) | (885,249) |
Foreign currency translation gain | 0 | 0 | 0 | 0 | 0 | 8,810 | 153 | 8,963 |
Balance at Jun. 30, 2018 | $ 0 | $ 11,325 | 14,568,859 | 71,699 | 30,062,765 | (15,692) | 309,749 | 45,008,705 |
Balance (in shares) at Jun. 30, 2018 | 0 | 11,325,000 | ||||||
Balance at Mar. 31, 2019 | $ 0 | $ 11,325 | 14,956,767 | 212,739 | 34,786,735 | (14,440) | 309,003 | 50,262,129 |
Balance (in shares) at Mar. 31, 2019 | 0 | 11,325,000 | ||||||
Net income (loss) | $ 0 | $ 0 | 0 | 0 | 1,549,488 | 0 | 0 | 1,549,488 |
Dividend Distribution | 0 | 0 | 0 | 0 | (566,250) | 0 | 0 | (566,250) |
Foreign currency translation gain | 0 | 0 | 0 | 0 | 0 | 811 | 0 | 811 |
Balance at Jun. 30, 2019 | $ 0 | $ 11,325 | $ 14,956,767 | $ 212,739 | $ 35,769,973 | $ (13,629) | $ 309,003 | $ 51,246,178 |
Balance (in shares) at Jun. 30, 2019 | 0 | 11,325,000 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) | 3 Months Ended |
Jun. 30, 2018USD ($) | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |
Common stock issued net of stock issuance costs | $ 1,387,879 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income /(loss) | $ 1,549,488 | $ (885,249) |
Adjustments to reconcile net income / (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 338,652 | 319,310 |
Shared-based compensation expense | 0 | 3,205,980 |
Changes in operating assets: | ||
Accounts receivable | (9,383,142) | (7,986,340) |
Accounts receivable- related party | 0 | 50,026 |
Inventories | 602,719 | 295,875 |
Prepaid expenses and other current assets | (285,165) | 78,141 |
Advance to suppliers | (1,345,913) | (1,839,199) |
Operating leases- right of use assets | 110,546 | 0 |
Changes in operating liabilities: | ||
Accounts payable | (913,522) | (3,642,986) |
Accrued expenses | 274,333 | (428,783) |
Other payables | 367,959 | 355,199 |
Operating lease liabilities | (50,012) | 0 |
Income tax payable | 335,000 | 366,000 |
Net cash used in operating activities | (8,399,057) | (10,112,026) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment | (1,374,139) | (481,807) |
Net cash used in investing activities | (1,374,139) | (481,807) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Dividend distribution | (566,250) | 0 |
(Repayment) Proceeds from short-term loan | (580,447) | 6,075,835 |
Net proceeds from Common stock | 0 | 8,930,300 |
Warrants issued to the underwriter | 0 | 30 |
Net cash (used in)/ provided by financing activities | (1,146,697) | 15,006,165 |
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 4,295 | (6,176) |
NET (DECREASE)/ INCREASE IN CASH AND RESTRICTED CASH | (10,915,598) | 4,406,156 |
CASH AND RESTRICTED CASH, BEGINNING OF THE PERIOD | 27,834,468 | 12,196,110 |
CASH AND RESTRICTED CASH, END OF THE PERIOD | 16,918,870 | 16,602,266 |
CASH AND RESTRICTED CASH, END OF THE PERIOD | 27,834,468 | 12,196,110 |
LESS: NON-CURRENT RESTRICTED CASH | 796,876 | 3,672,891 |
CASH, END OF PERIOD | 16,121,994 | 12,929,375 |
Supplemental disclosure information: | ||
Cash paid for interest | 5,186 | 42,541 |
Non-cash financing activities | ||
Warrants issued to underwriters in connection with the IPO | 0 | 160,732 |
Prepaid stock issuance cost netted with proceeds from the IPO | 0 | 308,179 |
Right-of-use assets obtained in exchange for operating lease obligations | $ 1,292,416 | $ 0 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 3 Months Ended |
Jun. 30, 2019 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Jerash Holdings (US), Inc. (“Jerash Holdings”) is a corporation established under the laws of the State of Delaware on January 20, 2016. Jerash Holdings is a parent holding company with no operations. 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 declared capital of 150,000 Jordanian Dinar (“JOD”) (approximately US$212,000) as of June 30, 2019. Jerash for Industrial Embroidery Company (“Jerash Embroidery”) and Chinese Garments and Fashions Manufacturing Company Limited (“Chinese Garments”) were both incorporated in Amman, Jordan as limited liability companies on March 11, 2013 and June 13, 2013, respectively, each with declared capital of JOD 50,000 as of June 30, 2019. Jerash Embroidery and Chinese Garments are wholly owned subsidiaries of Jerash Garments. Al-Mutafaweq Co. for Garments Manufacturing Ltd. ("Paramount"), was a contract garment manufacturer that was incorporated in Amman, Jordan as a limited liability company on October 24, 2004 with declared capital of JOD100,000. On December 11, 2018, Jerash Garments and the sole stockholder of Paramount entered into an agreement pursuant to which Jerash Garments acquired all of the outstanding shares of stock of Paramount. The Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of June 18, 2019, Paramount became a subsidiary of Jerash Garments. Treasure Success International Limited (“Treasure Success”) was incorporated on July 5, 2016 in Hong Kong, China, for the primary purpose to employ staff from China to support Jerash Garments' operations and is a wholly-owned subsidiary of Jerash Holdings. Victory Apparel (Jordan) Manufacturing Company Limited (“Victory Apparel”) was incorporated as a limited liability company in Amman, Jordan on September 18, 2005 with declared capital of JOD 50,000. Victory Apparel has no significant assets or liabilities or other operating activities of its own. Although Jerash Garments does not own the equity interest of Victory Apparel, our president, director and significant shareholder, Mr. Choi, is also a director of Victory Apparel and controls all decision-making for Victory Apparel along with our other significant shareholder, Mr. Lee Kian Tjiauw, who have the ability to control Victory Apparel’s financial affairs. In addition, Victory Apparel’s equity at risk is not sufficient to permit it to operate without additional subordinated financial support from Mr. Choi. Based on these facts, we concluded that Jerash Garments has effective control over Victory Apparel due to Mr. Choi’s roles at both organizations and therefore Victory Apparel is considered a Variable Interest Entity (“VIE”) under Accounting Standards Codification (“ASC”) 810‑10‑05‑08A. Accordingly, Jerash Garments consolidates Victory Apparel’s operating results, assets and liabilities. Jerash Holdings, its subsidiaries and VIE (herein collectively referred to as the “Company”) are engaged in manufacturing customized ready-made outerwear from knitted fabric and exporting produced apparel for large brand-name retailers. The Company intends to diversify its range of products to include additional pieces such as trousers and urban styling outerwear using different types of natural and synthetic materials. The Company also plans to expand its workforce in Jordan with workers from other countries, including Bangladesh, Sri Lanka, India, Myanmar and Nepal. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Jun. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, which are normally included in annual financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the fiscal year ended March 31, 2019. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair presentation of the Company’s financial position as of June 30, 2019, its results of operations and its cash flows for each of the three months ended June 30, 2019 and 2018, as applicable, have been made. The unaudited interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods. Principles of Consolidation The unaudited condensed consolidated financial statements include the financial statements of Jerash Holdings, its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation. In accordance with accounting standards regarding the consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIEs. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. As described in Note 1, management of the Company has concluded that Victory Apparel is a VIE, and that Jerash Garments is considered the primary beneficiary because Mr. Choi, the Company’s president, director, and significant stockholder absorbs the risks and rewards of Victory Apparel; therefore, the Company consolidates Victory Apparel for financial reporting purposes. Noncontrolling interests result from the consolidation of Victory Apparel, which is 100% owned by Wealth Choice Limited. As of June 30 and March 31, 2019, the total assets of Victory Apparel were $1,316 and Victory Apparel had no liabilities. These amounts are included in the Company’s consolidated balance sheets after elimination of intercompany transactions and balances. Victory Apparel was inactive for the three months ended June 30, 2019. 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 unaudited condensed consolidated financial statements, and the reported amounts of revenues 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 expense. Actual results could differ from these estimates. Cash The Company considers all highly liquid investment instruments with an original maturity of three months or less from the original date of purchase to be cash equivalents. As of June 30, 2019, and March 31, 2019, the Company had no cash equivalents. Restricted Cash Restricted cash consists of cash used as security deposits to obtain credit facilities of the Company from a bank and to secure custom clearance under the requirements of local regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security deposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a non-current asset since the Company has no intention to terminate these bank facilities within one year. Accounts Receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants credit to customers with good credit standing for a maximum of 90 days 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 unaudited condensed consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. No allowance was considered necessary as of June 30, 2019 and March 31, 2019. Inventories Inventories are stated at the lower of cost or net realizable value. Inventories include cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is determined using the First in, First-out (“FIFO”) method. The Company periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value. Property, Plant and Equipment Property, plant and equipment are recorded at cost, reduced by accumulated depreciation and amortization. Depreciation and amortization expense related to property, plant and equipment is computed using the straight-line method based on estimated useful lives of the assets, or in the case of leasehold improvements, the shorter of the initial lease term or the estimated useful life of the improvements. The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. The estimated useful lives of depreciation and amortization of the principal classes of assets are as follows: Useful life Land Infinite Property and buildings 15 years Equipment and machinery 3-5 years Office and electronic equipment 3-5 years Automobiles 5 years Leasehold improvements Lesser of useful life and lease term Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation or amortization of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the unaudited condensed consolidated statements of income and comprehensive income. Impairment of Long-Lived Assets The Company assesses its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Factors which may indicate potential impairment include a significant underperformance relative to the historical or projected future operating results or a significant negative industry or economic trend. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by that asset. If impairment is indicated, a loss is recognized for any excess of the carrying value over the estimated fair value of the asset. The fair value is estimated based on the discounted future cash flows or comparable market values, if available. The Company did not record any impairment loss during the three months ended June 30, 2019 and 2018. Revenue Recognition Substantially all of the Company’s revenue is derived from product sales, which consist of sales of the Company’s customized ready-made outerwear for large brand-name retailers. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within 30 to 60 days of the invoice date, and the contracts do not have significant financing components. Shipping and handling costs associated with outbound freight are not an obligation of the Company. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial. All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience, complete satisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted the Company’s revenue. The contract assets are recorded on the unaudited condensed consolidated balance sheet as accounts receivable as of June 30, 2019 and March 31, 2019. For the three months ended June 30, 2019 and 2018, there was no revenue recognized from performance obligations related to prior periods. As of June 30, 2019, there was no revenue expected to be recognized in any future periods related to remaining performance obligations. The Company has one revenue generating reportable geographic segment under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its sales of customized ready-made outerwear. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see Note 13). Shipping and Handling Proceeds collected from customers for shipping and handling costs are included in revenues. 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 $208,782 and $134,882 for the three months ended June 30, 2019 and 2018, respectively. Income Taxes 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. Deferred income taxes were immaterial as of June 30, 2019 and March 31, 2019. ASC 740 clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of income and comprehensive income. No significant uncertainty in tax positions relating to income taxes were incurred during the three months ended June 30, 2019 and 2018. On December 22, 2017, the “Tax Cuts and Jobs Act” (the “Tax Act”) was enacted. Under the provisions of the Tax Act, the U.S. corporate tax rate decreased from 35% to 21%. Additionally, the Tax Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation under the new Global Intangible Low-Taxed Income (“GILTI”) regime. Foreign Currency Translation The reporting currency of the Company is the U.S. dollar and the Company uses the Jordanian Dinar (“JOD”) as its functional currency, except Treasure Success, which uses the Hong Kong Dollar (“HKD”) as its functional currency. The assets and liabilities of the Company have been translated into U.S. dollars 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 U.S. dollars 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. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. The value of JOD against US $ and other currencies may fluctuate and is affected by, among other things, changes in the Jordan’s political and economic conditions. Any significant revaluation of JOD may materially affect the Company’s financial condition in terms of US $ reporting. The following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements in this report: June 30, 2019 March 31, 2019 Period-end spot rate US$1=JOD 0.7090 US$1=JOD 0.7090 US$1=HKD 7.8125 US$1=HKD 7.8500 Average rate US$1=JOD 0.7090 US$1=JOD 0.7091 US$1=HKD 7.8370 US$1=HKD7.8420 Stock-Based Compensation The Company measures compensation expense for stock-based awards to non-employee contractors and directors based upon the awards’ initial grant-date fair value. The estimated grant-date fair value of the award is recognized as expense over the requisite service period using the straight-line method. The Company estimates the fair value of stock options and warrants 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 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 issue 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's uses the nearest interest rate from the available maturities. · Expected Stock Price Volatility: the Company utilizes comparable public company volatility over the same period of time as the life of the warrant or stock option. · Dividend Yield: Until November 2018, the Board of Directors had not declared, and the company had not yet paid, and dividends. Accordingly, stock-based compensation awards granted prior to November 2018 assumed no dividend yield, while any subsequent stock-based compensation awards will be valued using the anticipated dividend yield. Earnings (Loss) per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex 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 12). 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 to U.S. Dollars is reported in other comprehensive income in the unaudited condensed consolidated statements of income and comprehensive income. Fair Value of Financial Instruments ASC 825‑10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: · Level 1 - Quoted prices in active markets for identical assets and liabilities. · Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash, including restricted cash, accounts receivable, other receivables, due from related parties, due from shareholders, accounts payable, accrued expenses, other payables and short-term loan to approximate the fair value of the respective assets and liabilities at June 30, 2019 and March 31, 2019 based upon the short-term nature of these assets and liabilities. Concentrations and Credit Risk Credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of June 30, 2019, and March 31, 2019 $5,920,661 and $7,121,161, respectively, 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 June 30, 2019, and March 31, 2019 $10,902,373 and $20,614,581, respectively, of the Company’s cash was on deposit at financial institutions in Hong Kong, which are insured by the Hong Kong Deposit Protection Board subject to certain limitations. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. As of June 30, 2019, and March 31, 2019 $95,836 and $98,726, respectively, of the Company’s cash was on deposit in the United States and are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Accounts receivable are typically unsecured and derived from revenue earned from customers, and therefore are exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. Customer and vendor concentration risk The Company’s sales are made primarily in the United States. Its operating results could be adversely affected by U.S. government policy on exporting business, foreign exchange rate fluctuations, and change of local market conditions. The Company has a concentration of its revenues and purchases with specific customers and suppliers. For the three months ended June 30, 2019 and 2018, one end-customer accounted for 97% and 91% respectively of total revenue. As of June 30, 2019, and March 31, 2019, one end-customer accounted for 97% and 96% of the total accounts receivable balance respectively. For the three months ended June 30, 2019, the Company purchased approximately 29% and 13% of its raw materials from two major suppliers. For the three months ended June 30, 2018, the Company purchased approximately 30% and 13% of its raw materials from two major suppliers. As of June 30, 2019, accounts payable to the three major suppliers accounted for 37% and 12% and 10% of the total accounts payable balance. As of March 31, 2019, accounts payable to three major suppliers separately accounted for 40%, 20% and 14% of the total accounts payable balance. A loss of any of these customers or suppliers could adversely affect the operating results or cash flows of the Company. Risks and Uncertainties The principal operations of the Company are located in Jordan. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Jordan, as well as by the general state of the Jordanian economy. The Company’s operations in Jordan are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in Jordan. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Jun. 30, 2019 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 3 – RECENT ACCOUNTING PRONOUNCEMENTS The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. New Accounting Pronouncements Recently Adopted On April 1, 2018, the Company adopted ASU 2016‑18, Restricted Cash – A Consensus of the FASB Emerging Issues Task Force, (“ASU 2016‑18”), which amends ASC 230, Statement of Cash Flows, to clarify guidance on the classification and presentation of restricted cash in the statement of cash flows using the full retrospective method. Adoption of this standard did not have a material impact on our consolidated financial statements. See our unaudited condensed consolidated statements of cash flows for the reconciliation of cash presented in the statements of cash flows to the cash presented on the balance sheet. In May 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017‑09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017‑09"), which amends the scope of modification accounting for share-based payment arrangements such that an entity would not apply modification accounting if the fair value, vesting conditions and classification of the awards are the same immediately before and after the modification. ASU 2017‑09 became effective for the Company beginning April 1, 2018 for both interim and annual reporting periods. The adoption of ASU 2017‑09 did not have a material impact on the Company’s condensed consolidated financial statements. The Company adopted ASU No. 2016-02-Leases (Topic 842), as of April 1, 2019, using a modified retrospective transition method permitted under ASU No. 2018-11. This transition approach provides a method for recording existing leases only at the date of adoption and does not require previously reported balances to be adjusted. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities of approximately $1.3 million and $0.9 million, respectively, as of April 1, 2019. The standard did not materially impact our consolidated net earnings and had no impact on cash flows. |
ACCOUNTS RECEIVABLES, NET
ACCOUNTS RECEIVABLES, NET | 3 Months Ended |
Jun. 30, 2019 | |
ACCOUNTS RECEIVABLES, NET | |
ACCOUNTS RECEIVABLES, NET | NOTE 4 – ACCOUNTS RECEIVABLES, NET The Company’s net accounts receivable is as follows: As of As of June 30, 2019 March 31, 2019 Trade accounts receivable $ 13,404,177 $ 4,020,369 Less: allowances for doubtful accounts — — Accounts receivables, Net $ 13,404,177 $ 4,020,369 An allowance for doubtful accounts was not considered necessary as of June 30, 2019 and March 31, 2019. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Jun. 30, 2019 | |
INVENTORIES | |
INVENTORIES | NOTE 5 – INVENTORIES Inventories consisted of the following: As of As of June 30, 2019 March 31, 2019 Raw materials $ 9,291,224 $ 11,601,262 Work-in-progress 1,666,104 1,889,329 Finished goods 9,514,155 7,583,652 Total inventory $ 20,471,483 $ 21,074,243 An inventory allowance was not considered necessary as of June 30, 2019 and March 31, 2019. |
LEASES
LEASES | 3 Months Ended |
Jun. 30, 2019 | |
LEASES | |
LEASES | NOTE 6 – LEASES The Company has thirty-two 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 majority of renewals to extend the lease terms are not included in our right of use assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options, and, when it is reasonably certain of exercise, it will include the renewal period in its lease term. New lease modifications result in remeasurement of the right of use asset and lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Effective April 1, 2019, the Company adopted the new lease accounting standard using a modified retrospective transition method which allowed the Company to continue to apply the guidance under the lease standard in effect at the beginning of period of adoption through a cumulative-effect adjustment. In addition, the Company elected the package of practical expedients, which allowed us to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs. The Company has not elected the practical expedient to use hindsight to determine the lease term for its leases at transition. The Company has also elected the practical expedient to not separate the lease and non-lease components for all classes of underlying assets. Adoption of this standard resulted in the recording of operating lease Right of Use ("ROU") assets and corresponding operating lease liabilities as disclosed below and had no impact on accumulated deficit as of June 30, 2019. Financial position for reporting periods beginning on or after March 31, 2019 is presented under the new guidance, while prior period amounts are retrospectively adjusted. All of the Company’s leases are classified as operating leases and primarily include office space and manufacturing facilities. Operating lease ROU assets are presented within other assets-net on the unaudited condensed consolidated balance sheet. The current portion of operating lease liabilities are presented within accrued expenses and other payables, and the non-current portion of operating lease liabilities are presented within other long-term liabilities on the unaudited condensed consolidated balance sheet. Supplemental balance sheet information related to operating leases was as follows: June 30, 2019 (unaudited) Right-of-use assets $ 1,292,416 Operating lease liabilities - current $ 262,075 Operating lease liabilities - non-current 592,245 Total operating lease liabilities $ 854,320 The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2019: Remaining lease term and discount rate: Weighted average remaining lease term (years) 3.6 Weighted average discount rate 4.06 % During the three months ended June 30, 2019 and 2018, the Company incurred total operating lease expenses of $542,785 and $342,343, respectively. The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2019: 2020 $ 373,261 2021 375,908 2022 272,551 2023 211,560 2024 158,670 Thereafter — Total lease payments 1,391,950 Less: imputed interest (99,534) Less: prepayments (438,096) Present value of lease liabilities $ 854,320 |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 3 Months Ended |
Jun. 30, 2019 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consisted of the following: As of As of June 30, 2019 March 31, 2019 Land $ 61,078 $ 61,078 Property and buildings 432,562 432,562 Equipment and machinery (1) 6,698,919 5,560,265 Office and electric equipment 653,122 550,738 Automobiles 453,399 367,332 Leasehold improvements 2,365,682 1,652,038 Subtotal 10,664,762 8,624,013 Construction in progress (2) 194,752 200,042 Less: Accumulated Depreciation and Amortization (3) (6,806,448) (6,467,793) Property and Equipment, Net $ 4,053,066 $ 2,356,262 (1) On June 18, 2019, the Company closed on a transaction whereby it acquired all of the outstanding shares of Paramount, a contract manufacturer based in Amman, Jordan. As a result, Paramount became of subsidiary of Jerash Garments, and the Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of acquisition, so this transaction was accounted for as an asset acquisition. $980,000 was paid in cash to acquire all of the machinery and equipment from Paramount and the machinery and equipment were transferred to the Company. (2) The construction in progress account represents costs incurred for constructing a dormitory, which was previously planned to be a sewing workshop. This dormitory is approximately 4,800 square feet, located in the Tafilah Governorate of Jordan, and is expected to be completed in September 2019. (3) Depreciation and amortization expense was $338,652 and $319,310 for the three months ended June 30, 2019 and 2018, respectively. |
EQUITY
EQUITY | 3 Months Ended |
Jun. 30, 2019 | |
EQUITY | |
EQUITY | NOTE 8 – EQUITY Preferred Stock The Company has 500,000 authorized shares of preferred stock with a par value of $0.001 per share, and with none issued and outstanding as of June 30, 2019 and March 31, 2019. The preferred stock can be issued by the Board of Directors of Jerash Holdings in one or more classes or one or more series within any class, and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, rights, qualifications, limitations or restrictions of such rights as the Board of Directors may determine from time to time. Common Stock The Company has 30,000,000 authorized shares of common stock with a par value of $0.001 per share. Statutory Reserve In accordance with the Corporate Law in Jordan, Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount and Victory Apparel are required to make appropriations to certain reserve funds, based on net income determined in accordance with generally accepted accounting principles of Jordan. Appropriations to the statutory reserve are required to be 10% of net income until the reserve is equal to 100% of the entity’s share capital. This reserve is not available for dividend distribution. As of both June 30, 2019 and March 31, 2019, the consolidated balance of the statutory reserve was $212,739. Dividends On May 17, 2019, the Board of Directors of Jerash Holdings declared a cash dividend of $0.05 per share of common stock, payable to shareholders of record at the close of business on May 28, 2019. The dividend, equal to $566,250 in the aggregate, was paid on June 5, 2019. On February 7, 2019 and November 1, 2018, the Board of Directors of Jerash Holdings also declared a cash dividend of $0.05 per share of common stock, respectively. The cash dividends of $566,250 and $566,250 were paid in full on February 27, 2019 and November 27, 2018, respectively. Initial Public Offering The registration statement on Form S‑1 (File No. 333‑222596) for the Company’s initial public offering (the “IPO”) was declared effective on March 14, 2018. On May 2, 2018 the Company issued 1,430,000 shares of common stock at $7.00 per share and received gross proceeds of $10,010,000. The Company incurred underwriting commissions of $477,341, underwriter offering expenses of $250,200 and additional underwriting expenses of $352,159, yielding net proceeds from the IPO of $8,930,300. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Jun. 30, 2019 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 9 – STOCK-BASED COMPENSATION Warrants issued for services From time to time, the Company issues warrants to purchase its common stock. These warrants are valued using a Black-Scholes model and using the volatility, market price, exercise price, risk-free interest rate and dividend yield appropriate at the date the warrants were issued. Simultaneous with the closing of the IPO, the Company issued to the underwriter and its affiliates warrants to purchase 57,200 shares of common stock (“IPO Underwriter Warrants”) at an exercise price of $8.75 per share with an expiration date of May 2, 2023. The shares underlying the IPO Underwriter Warrants were subject to a 180‑day lock-up that expired on October 29, 2018. During the three months ended June 30, 2019, all of the outstanding warrants were fully vested and exercisable. The fair value of these warrants was estimated as of the grant date using the Black-Scholes model with the following assumptions: Common Stock Warrants June 30, 2019 Expected term (in years) 5.0 Risk-free interest rate (%) 1.8-2.8% Expected volatility (%) 50.3%-52.2% Dividend yield (%) 0.0% Warrant activity is summarized as follows: Weighted Average Shares Exercise Price Warrants outstanding at March 31, 2018 264,410 $ 6.35 Granted — — Exercised — — Cancelled — — Warrants outstanding at June 30, 2019 264,410 $ 6.35 Stock Options On March 21, 2018 the Board of Directors adopted the Jerash Holdings (US), Inc. 2018 Stock Incentive Plan (the “Plan”), pursuant to which the Company may grant various types of equity awards. 1,484,250 shares of common stock were reserved for issuance under the Plan. In addition, on July 19, 2019, the Board of Directors approved the amended and restatement of the Plan, which is being submitted to a vote of the Company's stockholders at its annual meeting of stockholders to be held in September 2019. If approved by the Company's stockholders, the amended and restated Plan would increase the number of shares reserved for issuance under the Plan by 300,000, to 1,784,250 shares, among other changes. On April 9, 2018, the Board of Directors approved the issuance of 989,500 nonqualified stock options under the Plan in accordance with the Plan at an exercise price of $7.00 per share, and a term of five years. As of June 30, 2019, all of these outstanding stock options were fully vested and exercisable. The fair value of these options granted on April 9, 2018 was estimated as of the grant date using the Black-Scholes model with the following assumptions: Stock Options June 30, 2019 Expected term (in years) 5.0 Risk-free interest rate (%) 2.6 % Expected volatility (%) 50.3 % Dividend yield (%) 0.0 % On August 3, 2018, the Board of Directors granted the Company’s 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 ten years. The options vest in three equal six-month installments, on August 3, 2018, February 3, 2019, and on August 3, 2019. The fair value of the options granted on August 3, 2018 was estimated as of the grant date using the Black-Scholes model with the following assumptions: Stock Options June 30, 2019 Expected term (in years) 10.0 Risk-free interest rate (%) 2.95 % Expected volatility (%) 50.3 % Dividend yield (%) 0.0 % Stock option activity is summarized as follows: Weighted Average Shares Exercise Price Stock option outstanding at March 31, 2019 1,139,500 $ 6.88 Granted — — Exercised — — Cancelled — — Stock options outstanding at June 30, 2019 1,139,500 $ 6.88 There was $193,955 of unrecognized compensation costs at June 30, 2019 relating to unvested awards. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Jun. 30, 2019 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 10 – RELATED PARTY TRANSACTIONS The relationship and the nature of related party transactions are summarized as follow: Relationship Nature Name of Related Party to the Company of Transactions Ford Glory International Limited, or (“FGIL”) Affiliate, subsidiary of Ford Glory Holdings (“FGH”) Right of Use Asset, Purchase Agreement Value Plus (Macao Commercial Offshore) Limited (“VPMCO”) Affiliate, subsidiary of FGH Purchases Yukwise Limited (“Yukwise”) Wholly owned by our President, Chief Executive Officer and Chairmen, a significant stockholder Consulting Services Multi-Glory Corporation Limited (“Multi-Glory”) Wholly owned by a significant stockholder Consulting Services a. Related party lease and purchase agreement On October 3, 2018, Treasure Success and FGIL entered into a lease agreement pursuant to which Treasure Success leases its office space in Hong Kong from FGIL by providing for rent in the amount of HK$119,540 (approximately $15,253) per month and having a one-year term with an option to extend the term for an additional year at the same rent. On July 15, 2019, the Company, through Treasure Success, entered into an agreement to purchase this space together with certain parking spaces from FGIL for an aggregate purchase price of HK$63,000,000 or approximately US$8.1 million (see Note 16). b. Consulting agreements On January 16, 2018, Treasure Success and Multi-Glory entered into a consulting agreement, pursuant to which Multi-Glory will provide high-level advisory, marketing and sales services to the Company for $300,000 per annum. The agreement renews automatically for one-month terms. The agreement became effective as of January 1, 2018. Total consulting fees under this agreement were $75,000 for each of the three months ended June 30, 2019 and 2018. 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 a high level of advisory and general management services for $300,000 per annum, with automatic renewal for one-month terms. This agreement became effective as of January 1, 2018. Total advisory and management expense under this agreement were $75,000 for each the three months ended June 30, 2019 and 2018. c. Borrowings under the Credit Facilities, as defined in Note 11, with HSBC have been collateralized by the personal guarantees of Mr. Choi and Mr. Ng Tsze Lun, which are expected to be released in calendar year 2019. |
CREDIT FACILITIES
CREDIT FACILITIES | 3 Months Ended |
Jun. 30, 2019 | |
CREDIT FACILITIES | |
CREDIT FACILITIES | NOTE 11 – CREDIT FACILITIES Pursuant to a letter agreement dated May 29, 2017, Treasure Success entered into an $8,000,000 import credit facility with HSBC (the “2017 Facility Letter”), which was amended pursuant to a letter agreement dated June 19, 2018 (the "2018 Facility Letter", and together with the 2017 Facility Letter, the "Facility Letter"). In addition, pursuant to an offer letter dated June 5, 2017, which was amended pursuant to a letter agreement dated June 14, 2018, HSBC offered to provide Treasure Success with a $12,000,000 factoring facility for certain debt purchase services related to our accounts receivables (the “Factoring Agreement” and together with the Facility Letter, the “Credit Facilities”). The Credit Facilities are guaranteed by Jerash Holdings, Jerash Garments and Treasure Success, as well as two of the Company’s individual shareholders. In addition, the Credit Facilities required cash and other investment security collateral of $3,000,000. As of January 22, 2019, the security collateral of $3,000,000 was released. HSBC has agreed to release the personal guarantees of the individual shareholders, which the Company expects to occur during calendar year 2019. The Credit Facilities provide that drawings under the Credit Facilities are charged interest at the Hong Kong Interbank Offered Rate (“HIBOR”) plus 1.5% for drawings in Hong Kong dollars, and the London Interbank Offered Rate (“LIBOR”) plus 1.5% for drawings in other currencies. In addition, the Credit Facilities also contain certain service charges and other commissions and fees. Under the Factoring Agreement, HSBC also provides credit protection and debt services related to each of our preapproved customers. For any approved debts or collections assigned to HSBC, HSBC charges a flat fee of 0.35% on the face value of the invoice for such debt or collection. We may assign debtor payments that are to be paid to HSBC within 90 days, defined as the maximum terms of payment. We may receive advances on invoices that are due within 30 days of the delivery of our goods, defined as the maximum invoicing period. The Credit Facilities are subject to review at any time, and HSBC has discretion on whether to renew the Facility Letter. Either party may terminate the Factoring Agreement subject to a 30‑day notice period. As of June 30, 2019, and March 31, 2019, the Company had made $68,222 and $360,401 in withdrawals, respectively, under the Credit Facilities, which are due within 120 days of each borrowing date or upon demand by HSBC. As of June 30, 2019, $68,222 was outstanding under the Factoring Agreement. As of March 31, 2019, $85,421 was outstanding under the Factoring Agreement and $274,980 outstanding under the Facility Letter. 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 June 30, 2019, and March 31, 2019, the Company had an outstanding amount of $0 and $288,310 respectively in import invoice financing. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 3 Months Ended |
Jun. 30, 2019 | |
EARNINGS (lOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | NOTE 12 – EARNINGS (LOSS) PER SHARE The following table sets forth the computation of basic and diluted earnings per share for the three months ended June 30, 2019 and 2018. 57,200 IPO Underwriter Warrants were anti-dilutive for the three months ended June 30, 2019 and excluded from the EPS calculation. For the three months ended June 30, 2018, there was no dilutive effect. Three Months Ended June 30, (in $000s except share and per share information) 2019 2018 Numerator: Net income (loss) attributable to Jerash Holdings (US), Inc.'s Common Shareholders $ 1,549 $ (885) Denominator: Denominator for basic earnings per share (weighted-average shares) 11,325,000 10,822,143 Dilutive securities – unexercised warrants and options 147,363 — Denominator for diluted earnings per share (adjusted weighted-average shares) 11,472,363 10,822,143 Basic earnings (loss) per share $ 0.14 $ (0.08) Diluted earnings (loss) per share $ 0.14 $ (0.08) |
SEGMENT REPORTING
SEGMENT REPORTING | 3 Months Ended |
Jun. 30, 2019 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 13 – 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 operating results by the revenue of the Company’s products. The Company’s major product is outerwear. For the three months ended June 30, 2019 and 2018, outerwear accounted for approximately 96.5% and 99.3% of 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 years ended June 30, 2019 and 2018, respectively. For the three months ended June 30, 2019 June 30, 2018 United States $ 22,040,945 $ 17,809,361 Jordan 486,380 130,213 Other countries — 423,511 Total $ 22,527,325 $ 18,363,085 All long-lived assets were located in Jordan as of June 30, 2019 and March 31, 2019. |
CONTINGENCIES
CONTINGENCIES | 3 Months Ended |
Jun. 30, 2019 | |
CONTINGENCIES | |
CONTINGENCIES | NOTE 14 –CONTINGENCIES From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company’s management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would not have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows. |
INCOME TAX
INCOME TAX | 3 Months Ended |
Jun. 30, 2019 | |
INCOME TAX | |
INCOME TAX | NOTE 15 – INCOME TAX Jerash Garments, Jerash Embroidery, Chinese Garments and Paramount and Victory Apparel are subject to the regulations of the Income Tax Department in Jordan. The corporate income tax rate is 14% for the industrial sector. In accordance with the Investment Encouragement Law, Jerash Garments' export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing at the first day of production. This exemption had been extended for 5 years until December 31, 2018. The effect of the tax exemption on the Company's 2019 fiscal results is a tax saving of approximately $1,623,717, or $0.14 per share. Effective January 1, 2019, the Hashemite Kingdom of Jordan government has changed some features of Jerash Garments and its subsidiaries area to a Development Zone. In accordance with Development law, Jerash Garments and its subsidiaries began paying corporate income tax in Jordan at a rate of 10% plus a 1% social contribution. Effective January 1, 2020 this rate will increase to 14% plus a 1% social contribution. On December 22, 2017, the Tax Act was enacted. Under the provisions of the Tax Act, beginning in fiscal 2019, the foreign earnings of Jerash Garments and its subsidiaries became subject to U.S. taxation at the Jerash Holdings level under the GILTI rules. However, Jerash Holdings is eligible to claim a deduction of up to 50% of GILTI income and is eligible to claim a foreign tax credit on the foreign taxes paid by Jerash Garments and its subsidiaries which are attributable to GILTI. Furthermore, the GILTI income is effectively exempt from tax in the states in which Jerash Holdings operates. As a result of these provisions, Jerash Holdings is not expected to have an incremental U.S. tax cost as a result of the GILTI rules during fiscal 2020. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Jun. 30, 2019 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS On July 15, 2019, the Company, through Treasure Success entered into an agreement (the “Hong Kong Agreement”) to purchase office space in Hong Kong, and certain parking spaces (the “Hong Kong Property”), for use by Treasure Success. The Hong Kong Agreement provides for Treasure Success to purchase the Hong Kong Property from FGIL, which is 49% owned by the Company’s Chairman of the Board of Directors and Chief Executive Officer, Choi Lin Hung, through Merlotte Enterprise Limited, an entity wholly owned by Mr. Choi. The aggregate purchase price of the Hong Kong Property is HK$63,000,000, or approximately $8.1 million. Pursuant to the Hong Kong Agreement, Treasure Success paid an initial deposit of HK$6,300,000, or approximately $0.8 million, upon signing the Hong Kong Agreement. The purchase of the Hong Kong Property will only be completed if a special committee, consisting of the Company’s independent directors, approves Treasure Success’s purchase of the Hong Kong Property. The deposit is refundable in full, without interest, if the conditions precedent to the Hong Kong Agreement are not fulfilled on or prior to 5:00 p.m., Hong Kong time, on October 31, 2019. The remaining balance of the aggregate purchase price will be due after all conditions precedent to the Hong Kong Agreement are fulfilled. On July 29, 2019, our Board of Directors approved the payment of a dividend of $0.05 per share payable on August 19, 2019 to shareholders of record on August 11, 2019. On August 1, 2019, the Company, through Jerash Garments, entered into an agreement (the “Jordan Agreement”) to purchase 12,340 square meters (approximately 3 acres) of land in Al Tajamouat Industrial City, Jordan (the “Jordan Property”) for use as the future location of a dormitory for the Company’s employees. Jerash Garments is purchasing the Jordan Property from Specialized Investment Compounds Co. plc. The aggregate purchase price of the Jordan Property is JOD863,800, or approximately $1.2 million. Pursuant to the Jordan Agreement, Jerash Garments paid JOD345,520, or approximately $0.5 million upon signing the Jordan Agreement. The remaining balance of the aggregate purchase price was paid upon the transfer of ownership of the Property to Jerash Garments, which occurred on August 7, 2019. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Jun. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | 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”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, which are normally included in annual financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the fiscal year ended March 31, 2019. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair presentation of the Company’s financial position as of June 30, 2019, its results of operations and its cash flows for each of the three months ended June 30, 2019 and 2018, as applicable, have been made. The unaudited interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the financial statements of Jerash Holdings, its subsidiaries and VIE. All significant intercompany balances and transactions have been eliminated in consolidation. In accordance with accounting standards regarding the consolidation of variable interest entities, VIEs are generally entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIEs. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. As described in Note 1, management of the Company has concluded that Victory Apparel is a VIE, and that Jerash Garments is considered the primary beneficiary because Mr. Choi, the Company’s president, director, and significant stockholder absorbs the risks and rewards of Victory Apparel; therefore, the Company consolidates Victory Apparel for financial reporting purposes. Noncontrolling interests result from the consolidation of Victory Apparel, which is 100% owned by Wealth Choice Limited. As of June 30 and March 31, 2019, the total assets of Victory Apparel were $1,316 and Victory Apparel had no liabilities. These amounts are included in the Company’s consolidated balance sheets after elimination of intercompany transactions and balances. Victory Apparel was inactive for the three months ended June 30, 2019. |
Use of Estimates | 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 unaudited condensed consolidated financial statements, and the reported amounts of revenues 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 expense. Actual results could differ from these estimates. |
Cash | Cash The Company considers all highly liquid investment instruments with an original maturity of three months or less from the original date of purchase to be cash equivalents. As of June 30, 2019, and March 31, 2019, the Company had no cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash consists of cash used as security deposits to obtain credit facilities of the Company from a bank and to secure custom clearance under the requirements of local regulations. The Company is required to keep certain amounts on deposit that are subject to withdrawal restrictions. These security deposits at the bank are refundable only when the bank facilities are terminated. The restricted cash is classified as a non-current asset since the Company has no intention to terminate these bank facilities within one year. |
Accounts Receivable | Accounts Receivable Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually grants credit to customers with good credit standing for a maximum of 90 days 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 unaudited condensed consolidated statements of income and comprehensive income. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. No allowance was considered necessary as of June 30, 2019 and March 31, 2019. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Inventories include cost of raw materials, freight, direct labor and related production overhead. The cost of inventories is determined using the First in, First-out (“FIFO”) method. The Company periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost, reduced by accumulated depreciation and amortization. Depreciation and amortization expense related to property, plant and equipment is computed using the straight-line method based on estimated useful lives of the assets, or in the case of leasehold improvements, the shorter of the initial lease term or the estimated useful life of the improvements. The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. The estimated useful lives of depreciation and amortization of the principal classes of assets are as follows: Useful life Land Infinite Property and buildings 15 years Equipment and machinery 3-5 years Office and electronic equipment 3-5 years Automobiles 5 years Leasehold improvements Lesser of useful life and lease term Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation or amortization of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the unaudited condensed consolidated statements of income and comprehensive income. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company assesses its long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Factors which may indicate potential impairment include a significant underperformance relative to the historical or projected future operating results or a significant negative industry or economic trend. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by that asset. If impairment is indicated, a loss is recognized for any excess of the carrying value over the estimated fair value of the asset. The fair value is estimated based on the discounted future cash flows or comparable market values, if available. The Company did not record any impairment loss during the three months ended June 30, 2019 and 2018. |
Revenue Recognition | Revenue Recognition Substantially all of the Company’s revenue is derived from product sales, which consist of sales of the Company’s customized ready-made outerwear for large brand-name retailers. The Company considers purchase orders to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year, and virtually all of the Company’s contracts are short-term. The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods. Generally, payment is due from customers within 30 to 60 days of the invoice date, and the contracts do not have significant financing components. Shipping and handling costs associated with outbound freight are not an obligation of the Company. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial. All of the Company’s contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as a price per unit. All estimates are based on the Company’s historical experience, complete satisfaction of the performance obligation, and the Company’s best judgment at the time the estimate is made. Historically, sales returns have not significantly impacted the Company’s revenue. The contract assets are recorded on the unaudited condensed consolidated balance sheet as accounts receivable as of June 30, 2019 and March 31, 2019. For the three months ended June 30, 2019 and 2018, there was no revenue recognized from performance obligations related to prior periods. As of June 30, 2019, there was no revenue expected to be recognized in any future periods related to remaining performance obligations. The Company has one revenue generating reportable geographic segment under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its sales of customized ready-made outerwear. The Company believes disaggregation of revenue by geographic region best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see Note 13). |
Shipping and Handling | Shipping and Handling Proceeds collected from customers for shipping and handling costs are included in revenues. 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 $208,782 and $134,882 for the three months ended June 30, 2019 and 2018, respectively. |
Income Taxes | Income Taxes 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. Deferred income taxes were immaterial as of June 30, 2019 and March 31, 2019. ASC 740 clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of income and comprehensive income. No significant uncertainty in tax positions relating to income taxes were incurred during the three months ended June 30, 2019 and 2018. On December 22, 2017, the “Tax Cuts and Jobs Act” (the “Tax Act”) was enacted. Under the provisions of the Tax Act, the U.S. corporate tax rate decreased from 35% to 21%. Additionally, the Tax Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation under the new Global Intangible Low-Taxed Income (“GILTI”) regime. |
Foreign Currency Translation | Foreign Currency Translation The reporting currency of the Company is the U.S. dollar and the Company uses the Jordanian Dinar (“JOD”) as its functional currency, except Treasure Success, which uses the Hong Kong Dollar (“HKD”) as its functional currency. The assets and liabilities of the Company have been translated into U.S. dollars 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 U.S. dollars 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. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. The value of JOD against US $ and other currencies may fluctuate and is affected by, among other things, changes in the Jordan’s political and economic conditions. Any significant revaluation of JOD may materially affect the Company’s financial condition in terms of US $ reporting. The following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements in this report: June 30, 2019 March 31, 2019 Period-end spot rate US$1=JOD 0.7090 US$1=JOD 0.7090 US$1=HKD 7.8125 US$1=HKD 7.8500 Average rate US$1=JOD 0.7090 US$1=JOD 0.7091 US$1=HKD 7.8370 US$1=HKD7.8420 |
Share-Based Compensation | Stock-Based Compensation The Company measures compensation expense for stock-based awards to non-employee contractors and directors based upon the awards’ initial grant-date fair value. The estimated grant-date fair value of the award is recognized as expense over the requisite service period using the straight-line method. The Company estimates the fair value of stock options and warrants 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 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 issue 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's uses the nearest interest rate from the available maturities. · Expected Stock Price Volatility: the Company utilizes comparable public company volatility over the same period of time as the life of the warrant or stock option. · Dividend Yield: Until November 2018, the Board of Directors had not declared, and the company had not yet paid, and dividends. Accordingly, stock-based compensation awards granted prior to November 2018 assumed no dividend yield, while any subsequent stock-based compensation awards will be valued using the anticipated dividend yield. |
Earnings (Loss) per Share | Earnings (Loss) per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex 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 12). |
Comprehensive Income | Comprehensive Income Comprehensive income consists of two components, net income and other comprehensive income. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in JOD or HKD to U.S. Dollars is reported in other comprehensive income in the unaudited condensed consolidated statements of income and comprehensive income. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 825‑10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: · Level 1 - Quoted prices in active markets for identical assets and liabilities. · Level 2 - Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the recorded value of its financial assets and liabilities, which consist primarily of cash, including restricted cash, accounts receivable, other receivables, due from related parties, due from shareholders, accounts payable, accrued expenses, other payables and short-term loan to approximate the fair value of the respective assets and liabilities at June 30, 2019 and March 31, 2019 based upon the short-term nature of these assets and liabilities. |
Concentrations and Credit Risk | Concentrations and Credit Risk Credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of June 30, 2019, and March 31, 2019 $5,920,661 and $7,121,161, respectively, 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 June 30, 2019, and March 31, 2019 $10,902,373 and $20,614,581, respectively, of the Company’s cash was on deposit at financial institutions in Hong Kong, which are insured by the Hong Kong Deposit Protection Board subject to certain limitations. While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness. As of June 30, 2019, and March 31, 2019 $95,836 and $98,726, respectively, of the Company’s cash was on deposit in the United States and are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. Accounts receivable are typically unsecured and derived from revenue earned from customers, and therefore are exposed to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. Customer and vendor concentration risk The Company’s sales are made primarily in the United States. Its operating results could be adversely affected by U.S. government policy on exporting business, foreign exchange rate fluctuations, and change of local market conditions. The Company has a concentration of its revenues and purchases with specific customers and suppliers. For the three months ended June 30, 2019 and 2018, one end-customer accounted for 97% and 91% respectively of total revenue. As of June 30, 2019, and March 31, 2019, one end-customer accounted for 97% and 96% of the total accounts receivable balance respectively. For the three months ended June 30, 2019, the Company purchased approximately 29% and 13% of its raw materials from two major suppliers. For the three months ended June 30, 2018, the Company purchased approximately 30% and 13% of its raw materials from two major suppliers. As of June 30, 2019, accounts payable to the three major suppliers accounted for 37% and 12% and 10% of the total accounts payable balance. As of March 31, 2019, accounts payable to three major suppliers separately accounted for 40%, 20% and 14% of the total accounts payable balance. A loss of any of these customers or suppliers could adversely affect the operating results or cash flows of the Company. |
Risks and Uncertainties | Risks and Uncertainties The principal operations of the Company are located in Jordan. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Jordan, as well as by the general state of the Jordanian economy. The Company’s operations in Jordan are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in Jordan. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of estimated useful lives of depreciation and amortization of the principal classes of assets | The estimated useful lives of depreciation and amortization of the principal classes of assets are as follows: Useful life Land Infinite Property and buildings 15 years Equipment and machinery 3-5 years Office and electronic equipment 3-5 years Automobiles 5 years Leasehold improvements Lesser of useful life and lease term |
Schedule of currency exchange rates used in creating consolidated financial statements | The following table outlines the currency exchange rates that were used in creating the unaudited condensed consolidated financial statements in this report: June 30, 2019 March 31, 2019 Period-end spot rate US$1=JOD 0.7090 US$1=JOD 0.7090 US$1=HKD 7.8125 US$1=HKD 7.8500 Average rate US$1=JOD 0.7090 US$1=JOD 0.7091 US$1=HKD 7.8370 US$1=HKD7.8420 |
ACCOUNTS RECEIVABLES, NET (Tabl
ACCOUNTS RECEIVABLES, NET (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
ACCOUNTS RECEIVABLES, NET | |
Schedule of accounts receivable , net | The Company’s net accounts receivable is as follows: As of As of June 30, 2019 March 31, 2019 Trade accounts receivable $ 13,404,177 $ 4,020,369 Less: allowances for doubtful accounts — — Accounts receivables, Net $ 13,404,177 $ 4,020,369 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
INVENTORIES | |
Schedule of components of inventories | Inventories consisted of the following: As of As of June 30, 2019 March 31, 2019 Raw materials $ 9,291,224 $ 11,601,262 Work-in-progress 1,666,104 1,889,329 Finished goods 9,514,155 7,583,652 Total inventory $ 20,471,483 $ 21,074,243 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
LEASES | |
Schedule of supplemental balance sheet information related to operating leases | Supplemental balance sheet information related to operating leases was as follows: June 30, 2019 (unaudited) Right-of-use assets $ 1,292,416 Operating lease liabilities - current $ 262,075 Operating lease liabilities - non-current 592,245 Total operating lease liabilities $ 854,320 |
Schedule of weighted average remaining lease term and discounts rate of operating leases | The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of June 30, 2019: Remaining lease term and discount rate: Weighted average remaining lease term (years) 3.6 Weighted average discount rate 4.06 % |
Schedule of maturities of lease liabilities | The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2019: 2020 $ 373,261 2021 375,908 2022 272,551 2023 211,560 2024 158,670 Thereafter — Total lease payments 1,391,950 Less: imputed interest (99,534) Less: prepayments (438,096) Present value of lease liabilities $ 854,320 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
Schedule of property, plant and equipment, net | Property, plant and equipment, net consisted of the following: As of As of June 30, 2019 March 31, 2019 Land $ 61,078 $ 61,078 Property and buildings 432,562 432,562 Equipment and machinery (1) 6,698,919 5,560,265 Office and electric equipment 653,122 550,738 Automobiles 453,399 367,332 Leasehold improvements 2,365,682 1,652,038 Subtotal 10,664,762 8,624,013 Construction in progress (2) 194,752 200,042 Less: Accumulated Depreciation and Amortization (3) (6,806,448) (6,467,793) Property and Equipment, Net $ 4,053,066 $ 2,356,262 (1) On June 18, 2019, the Company closed on a transaction whereby it acquired all of the outstanding shares of Paramount, a contract manufacturer based in Amman, Jordan. As a result, Paramount became of subsidiary of Jerash Garments, and the Company assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of acquisition, so this transaction was accounted for as an asset acquisition. $980,000 was paid in cash to acquire all of the machinery and equipment from Paramount and the machinery and equipment were transferred to the Company. (2) The construction in progress account represents costs incurred for constructing a dormitory, which was previously planned to be a sewing workshop. This dormitory is approximately 4,800 square feet, located in the Tafilah Governorate of Jordan, and is expected to be completed in September 2019. (3) Depreciation and amortization expense was $338,652 and $319,310 for the three months ended June 30, 2019 and 2018, respectively. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
Schedule of fair value of the warrants granted | The fair value of these warrants was estimated as of the grant date using the Black-Scholes model with the following assumptions: Common Stock Warrants June 30, 2019 Expected term (in years) 5.0 Risk-free interest rate (%) 1.8-2.8% Expected volatility (%) 50.3%-52.2% Dividend yield (%) 0.0% |
Schedule of warrant activity | Warrant activity is summarized as follows: Weighted Average Shares Exercise Price Warrants outstanding at March 31, 2018 264,410 $ 6.35 Granted — — Exercised — — Cancelled — — Warrants outstanding at June 30, 2019 264,410 $ 6.35 |
Schedule of fair value of the options granted | The fair value of these options granted on April 9, 2018 was estimated as of the grant date using the Black-Scholes model with the following assumptions: Stock Options June 30, 2019 Expected term (in years) 5.0 Risk-free interest rate (%) 2.6 % Expected volatility (%) 50.3 % Dividend yield (%) 0.0 % |
Schedule of stock option activity | Stock option activity is summarized as follows: Weighted Average Shares Exercise Price Stock option outstanding at March 31, 2019 1,139,500 $ 6.88 Granted — — Exercised — — Cancelled — — Stock options outstanding at June 30, 2019 1,139,500 $ 6.88 |
Nonqualified Stock Options [Member] | |
Schedule of fair value of the options granted | The fair value of the options granted on August 3, 2018 was estimated as of the grant date using the Black-Scholes model with the following assumptions: Stock Options June 30, 2019 Expected term (in years) 10.0 Risk-free interest rate (%) 2.95 % Expected volatility (%) 50.3 % Dividend yield (%) 0.0 % |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
RELATED PARTY TRANSACTIONS | |
Schedule of relationship and the nature of related party transactions | The relationship and the nature of related party transactions are summarized as follow: Relationship Nature Name of Related Party to the Company of Transactions Ford Glory International Limited, or (“FGIL”) Affiliate, subsidiary of Ford Glory Holdings (“FGH”) Right of Use Asset, Purchase Agreement Value Plus (Macao Commercial Offshore) Limited (“VPMCO”) Affiliate, subsidiary of FGH Purchases Yukwise Limited (“Yukwise”) Wholly owned by our President, Chief Executive Officer and Chairmen, a significant stockholder Consulting Services Multi-Glory Corporation Limited (“Multi-Glory”) Wholly owned by a significant stockholder Consulting Services |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
EARNINGS (lOSS) PER SHARE | |
Schedule of computation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share for the three months ended June 30, 2019 and 2018. 57,200 IPO Underwriter Warrants were anti-dilutive for the three months ended June 30, 2019 and excluded from the EPS calculation. For the three months ended June 30, 2018, there was no dilutive effect. Three Months Ended June 30, (in $000s except share and per share information) 2019 2018 Numerator: Net income (loss) attributable to Jerash Holdings (US), Inc.'s Common Shareholders $ 1,549 $ (885) Denominator: Denominator for basic earnings per share (weighted-average shares) 11,325,000 10,822,143 Dilutive securities – unexercised warrants and options 147,363 — Denominator for diluted earnings per share (adjusted weighted-average shares) 11,472,363 10,822,143 Basic earnings (loss) per share $ 0.14 $ (0.08) Diluted earnings (loss) per share $ 0.14 $ (0.08) |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 3 Months Ended |
Jun. 30, 2019 | |
SEGMENT REPORTING | |
Summary of sales by geographic areas | The following table summarizes sales by geographic areas for the years ended June 30, 2019 and 2018, respectively. For the three months ended June 30, 2019 June 30, 2018 United States $ 22,040,945 $ 17,809,361 Jordan 486,380 130,213 Other countries — 423,511 Total $ 22,527,325 $ 18,363,085 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details) | Jun. 30, 2019JOD (JD)shares | Jun. 30, 2019USD ($)$ / sharesshares | Mar. 31, 2019$ / sharesshares | Sep. 18, 2005JOD (JD) | Oct. 24, 2004JOD (JD) |
Common Stock, Shares, Outstanding | shares | 11,325,000 | 11,325,000 | 11,325,000 | ||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | $ 0.001 | |||
Hashemite Kingdom of Jordan [Member] | |||||
Capital | JD 150,000 | $ 212,000 | |||
Chinese Garments [Member] | |||||
Capital | JD 50,000 | $ 50,000 | |||
Victory Apparel [Member] | |||||
Capital | JD 50,000 | ||||
AlMutafaweq Co [Member] | |||||
Capital | JD 100,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Estimated Useful Lives of Depreciation and Amortization of the Principal Classes of Assets (Details) | 3 Months Ended |
Jun. 30, 2019 | |
Land [Member] | |
Estimated useful lives | Infinite |
Property and buildings [Member] | |
Estimated useful lives | P15Y |
Equipment and machinery [Member] | Maximum [Member] | |
Estimated useful lives | P-5Y |
Equipment and machinery [Member] | Minimum [Member] | |
Estimated useful lives | P3Y |
Office and electronic equipment [Member] | Maximum [Member] | |
Estimated useful lives | P-5Y |
Office and electronic equipment [Member] | Minimum [Member] | |
Estimated useful lives | P3Y |
Automobiles [Member] | |
Estimated useful lives | P5Y |
Leasehold improvements [Member] | |
Estimated useful lives | Lesser of useful life and lease term |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Currency Exchange Rates Used in Creating Consolidated Financial Statements (Details) | Jun. 30, 2019 | Mar. 31, 2019 |
JOD [Member] | Period- End Spot Rate [Member] | ||
Foreign currency exchange rate | 0.7090 | |
JOD [Member] | Average rate [Member] | ||
Foreign currency exchange rate | 0.7090 | 0.7091 |
HKD [Member] | Period- End Spot Rate [Member] | ||
Foreign currency exchange rate | 7.8125 | 7.8500 |
HKD [Member] | Average rate [Member] | ||
Foreign currency exchange rate | 7.8370 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | Dec. 22, 2017 | Jun. 30, 2019USD ($)segment | Jun. 30, 2018USD ($) | Mar. 31, 2019USD ($) |
Cash Equivalents, at Carrying Value | $ 0 | $ 0 | ||
Contract with Customer, Liability, Revenue Recognized | 0 | $ 0 | ||
Revenue, Remaining Performance Obligation, Amount | $ 0 | |||
Number of Reportable Segments | segment | 1 | |||
Cost of Goods and Services Sold | $ 18,014,622 | $ 13,703,294 | ||
Cash, FDIC Insured Amount | $ 250,000 | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | 21.00% | ||
Minimum [Member] | ||||
Period for Payment Due from Customers | 30 days | |||
Maximum [Member] | ||||
Period for Payment Due from Customers | 60 days | |||
Wealth Choice Limited [Member] | ||||
Noncontrolling Interest, Ownership Percentage by Parent | 100.00% | |||
Supplier One [Member] | ||||
Concentration Risk, Percentage | 29.00% | 30.00% | ||
Supplier Two [Member] | ||||
Concentration Risk, Percentage | 13.00% | 13.00% | ||
Sales Revenue, Net [Member] | Customer One [Member] | ||||
Concentration Risk, Percentage | 97.00% | 91.00% | ||
Accounts Receivable [Member] | Customer One [Member] | ||||
Concentration Risk, Percentage | 97.00% | 96.00% | ||
Account Payable [Member] | Supplier One [Member] | ||||
Concentration Risk, Percentage | 37.00% | 40.00% | ||
Account Payable [Member] | Supplier Two [Member] | ||||
Concentration Risk, Percentage | 12.00% | 20.00% | ||
Account Payable [Member] | Supplier Three [Member] | ||||
Concentration Risk, Percentage | 10.00% | 14.00% | ||
JORDAN | ||||
Deposits | $ 5,920,661 | $ 7,121,161 | ||
HONG KONG | ||||
Deposits | 10,902,373 | 20,614,581 | ||
UNITED STATES | ||||
Cash, FDIC Insured Amount | 95,836 | 98,726 | ||
Shipping and Handling [Member] | ||||
Cost of Goods and Services Sold | 208,782 | $ 134,882 | ||
Victory Apparel [Member] | ||||
Total assets | 1,316 | 1,316 | ||
Current liabilities | $ 0 | $ 0 |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) | Jun. 30, 2019 | Apr. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right of use assets | $ 1,292,416 | |
Operating lease liability | $ 854,320 | |
Restatement Adjustment [Member] | ASU 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Right of use assets | $ 1,300,000 | |
Operating lease liability | $ 900,000 |
ACCOUNTS RECEIVABLES, NET (Deta
ACCOUNTS RECEIVABLES, NET (Details) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
ACCOUNTS RECEIVABLES, NET | ||
Trade accounts receivable | $ 13,404,177 | $ 4,020,369 |
Less: allowances for doubtful accounts | 0 | 0 |
Accounts receivables, Net | $ 13,404,177 | $ 4,020,369 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
INVENTORIES | ||
Raw materials | $ 9,291,224 | $ 11,601,262 |
Work-in-progress | 1,666,104 | 1,889,329 |
Finished goods | 9,514,155 | 7,583,652 |
Total inventory | $ 20,471,483 | $ 21,074,243 |
LEASES - Supplemental Balance S
LEASES - Supplemental Balance Sheet Information (Details) | Jun. 30, 2019USD ($) |
LEASES | |
Right of use assets | $ 1,292,416 |
Operating right-of-use assets - Extensible list | us-gaap:OperatingLeaseRightOfUseAsset |
Operating lease liabilities - current | $ 262,075 |
Operating lease liabilities, current - Extensible list | us-gaap:OperatingLeaseLiabilityCurrent |
Operating lease liabilities non-current | $ 592,245 |
Operating lease liabilities long-term - Extensible list | us-gaap:OperatingLeaseLiabilityNoncurrent |
Total operating lease liabilities | $ 854,320 |
Total operating lease liabilities - Extensible list | us-gaap:OperatingLeaseLiability |
LEASES - Summary of Weighted Av
LEASES - Summary of Weighted Average Remaining Lease Term, Discount Rate and Expenses of Operating Leases (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
LEASES | ||
Weighted average remaining lease term (years) | 3 years 7 months 6 days | |
Weighted average discount rate | 4.06% | |
Operating Lease, Cost | $ 542,785 | $ 342,343 |
LEASES - Schedule of Maturities
LEASES - Schedule of Maturities of Lease Liabilities (Details) | Jun. 30, 2019USD ($) |
LEASES | |
2020 | $ 373,261 |
2021 | 375,908 |
2022 | 272,551 |
2023 | 211,560 |
2024 | 158,670 |
Total lease payments | 1,391,950 |
Less: imputed interest | (99,534) |
Less: prepayments | (438,096) |
Total operating lease liabilities | $ 854,320 |
LEASES - Additional Information
LEASES - Additional Information (Details) | 3 Months Ended |
Jun. 30, 2019lease | |
LEASES | |
Number of Operating Leases | 32 |
Lessee, Operating Lease, Existence of Option to Extend [true false] | true |
Lease, Practical Expedients, Package [true false] | true |
Lease, Practical Expedient, Use of Hindsight [true false] | false |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET - Schedule of Components of Property, Plant and Equipment, Net (Details) - USD ($) | Jun. 30, 2019 | Mar. 31, 2019 |
Subtotal | $ 10,664,762 | $ 8,624,013 |
Construction in progress | 194,752 | 200,042 |
Less: Accumulated Depreciation and Amortization | (6,806,448) | (6,467,793) |
Property and Equipment, Net | 4,053,066 | 2,356,262 |
Land [Member] | ||
Subtotal | 61,078 | 61,078 |
Property and buildings [Member] | ||
Subtotal | 432,562 | 432,562 |
Equipment and machinery [Member] | ||
Subtotal | 6,698,919 | 5,560,265 |
Office and electronic equipment [Member] | ||
Subtotal | 653,122 | 550,738 |
Automobiles [Member] | ||
Subtotal | 453,399 | 367,332 |
Leasehold improvements [Member] | ||
Subtotal | $ 2,365,682 | $ 1,652,038 |
PROPERTY, PLANT AND EQUIPMENT_4
PROPERTY, PLANT AND EQUIPMENT, NET - Additional Information (Details) | Jun. 18, 2019USD ($) | Jun. 30, 2019USD ($)ft² | Jun. 30, 2018USD ($) |
Depreciation, Depletion and Amortization | $ 338,652 | $ 319,310 | |
Area of Land | ft² | 4,800 | ||
AlMutafaweq Co [Member] | |||
Payments to Acquire Machinery and Equipment | $ 980,000 |
EQUITY (Details)
EQUITY (Details) - USD ($) | Nov. 27, 2018 | May 02, 2018 | Feb. 27, 2018 | Jun. 05, 2019 | Feb. 27, 2019 | Nov. 27, 2017 | Jun. 30, 2019 | Jun. 30, 2018 | May 17, 2019 | Mar. 31, 2019 | Feb. 07, 2019 | Nov. 01, 2018 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||||||||||
Preferred Stock, Shares Authorized | 500,000 | 500,000 | ||||||||||
Preferred Stock, Shares Issued | 0 | 0 | ||||||||||
Preferred Stock, Shares Outstanding | 0 | 0 | ||||||||||
Retained Earnings, Appropriation Description | Appropriations to the statutory reserve are required to be 10% of net income until the reserve is equal to 100% of the entity's share capital. | |||||||||||
Retained Earnings, Appropriated | $ 212,739 | $ 212,739 | ||||||||||
Stock Issued During Period, Shares, New Issues | 1,430,000 | |||||||||||
Stock Issued During Period, Value, New Issues | $ 8,622,121 | |||||||||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||||||||||
Common Stock, Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||
Dividends | $ 566,250 | $ 566,250 | ||||||||||
Cash dividends | $ 566,250 | $ 566,250 | ||||||||||
Dividends Payable, Amount Per Share | $ 0.05 | $ 0.05 | $ 0.05 | |||||||||
Dividends Payable, Date Declared | May 17, 2019 | Feb. 7, 2019 | Nov. 1, 2018 | |||||||||
Dividends Payable, Date of Record | May 28, 2019 | |||||||||||
IPO [Member] | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 10,010,000 | |||||||||||
Underwriting Commissions | 477,341 | |||||||||||
Underwriter Offering Expenses | 250,200 | |||||||||||
Additional Underwriting Expenses | 352,159 | |||||||||||
Proceeds from Issuance Initial Public Offering | $ 8,930,300 | |||||||||||
Common Stock, Par or Stated Value Per Share | $ 7 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Assumptions Used in Estimating Fair Value of Warrants Granted (Details) | 3 Months Ended |
Jun. 30, 2019 | |
Measurement Input, Expected Term [Member] | |
Fair value assumptions, term | 5 years |
Measurement Input, Expected Dividend Rate [Member] | |
Fair value assumptions, rate | 0.00% |
Minimum [Member] | Measurement Input, Risk Free Interest Rate [Member] | |
Fair value assumptions, rate | 1.80% |
Minimum [Member] | Measurement Input, Price Volatility [Member] | |
Fair value assumptions, rate | 50.30% |
STOCK-BASED COMPENSATION - Su_2
STOCK-BASED COMPENSATION - Summary of Warrant Activity (Details) - Warrant [Member] | 3 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Warrants outstanding, Shares | shares | 264,410 |
Granted, Shares | shares | 0 |
Exercised, Shares | shares | 0 |
Cancelled, Shares | shares | 0 |
Warrants outstanding, Shares | shares | 264,410 |
Warrants outstanding, Weighted Average Exercise Price | $ / shares | $ 6.35 |
Granted, Weighted Average Exercise Price | $ / shares | 0 |
Exercised, Weighted Average Exercise Price | $ / shares | 0 |
Cancelled, Weighted Average Exercise Price | $ / shares | 0 |
Warrants outstanding, Weighted Average Exercise Price | $ / shares | $ 6.35 |
STOCK-BASED COMPENSATION - Su_3
STOCK-BASED COMPENSATION - Summary of Assumptions Used in Estimating Fair Value Of Options Granted (Details) | 3 Months Ended |
Jun. 30, 2019 | |
Nonqualified Stock Options [Member] | |
Expected term (in years) | 10 years |
Risk-free interest rate | 2.95% |
Expected volatility | 50.30% |
Dividend yield | 0.00% |
Employee Stock Option [Member] | |
Expected term (in years) | 5 years |
Risk-free interest rate | 2.60% |
Expected volatility | 50.30% |
Dividend yield | 0.00% |
STOCK-BASED COMPENSATION - Su_4
STOCK-BASED COMPENSATION - Summary of Stock Option Activity (Details) - $ / shares | Aug. 03, 2018 | Jun. 30, 2019 |
STOCK-BASED COMPENSATION | ||
Stock option outstanding, Shares | 1,139,500 | |
Granted, Shares | 150,000 | 0 |
Exercised, Shares | 0 | |
Cancelled, Shares | 0 | |
Stock options outstanding, Shares | 1,139,500 | |
Stock option outstanding, Weighted Average Exercise Price | $ 6.88 | |
Granted, Weighted Average Exercise Price | $ 6.12 | 0 |
Exercised, Weighted Average Exercise Price | 0 | |
Cancelled, Weighted Average Exercise Price | 0 | |
Stock options outstanding, Weighted Average Exercise Price | $ 6.88 |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information (Details) | Oct. 29, 2018 | Aug. 03, 2018installment$ / sharesshares | Apr. 09, 2018$ / sharesshares | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2018USD ($) | Jun. 19, 2019shares | Jun. 18, 2019shares | Mar. 21, 2018shares |
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition | $ | $ 3,205,980 | |||||||
Common Stock, Capital Shares Reserved for Future Issuance | 1,484,250 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,784,250 | 300,000 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 150,000 | 0 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 10 years | 5 years | ||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares | $ 6.12 | $ 0 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | $ | $ 193,955 | |||||||
Employee Stock Option [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Number of Installments | installment | 3 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period Per Installment | 6 months | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 989,500 | |||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ / shares | $ 7 | |||||||
IPO Underwriter Warrants [Member] | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 57,200 | |||||||
Lock Up Period For Shares | 180 days | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares | $ 8.75 | |||||||
Class of Warrant or Right, Date from which Warrants or Rights Exercisable | May 2, 2023 |
RELATED PARTY TRANSACTIONS - Su
RELATED PARTY TRANSACTIONS - Summary of Relationship and the Nature of Related Party Transactions (Details) | 3 Months Ended |
Jun. 30, 2019 | |
Ford Glory International Limited [Member] | |
Relationship to the Company | Affiliate, subsidiary of Ford Glory Holdings ("FGH") |
Nature of Transactions | Right of Use Asset, Purchase Agreement |
Value Plus Macao Commercial Offshore Limited [Member] | |
Relationship to the Company | Affiliate, subsidiary of FGH |
Nature of Transactions | Purchases |
Yukwise Limited [Member] | |
Relationship to the Company | Wholly owned by our President, Chief Executive Officer and Chairmen, a significant stockholder |
Nature of Transactions | Consulting Services |
Multi-Glory Corporation Limited [Member] | |
Relationship to the Company | Wholly owned by a significant stockholder |
Nature of Transactions | Consulting Services |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) | Oct. 03, 2018HKD ($) | Oct. 03, 2018USD ($) | Jan. 12, 2018USD ($) | Jan. 16, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jul. 15, 2019HKD ($) | Jul. 15, 2019USD ($) | Mar. 31, 2019USD ($) |
Marketing Services and Advisory, Amount | $ 300,000 | $ 300,000 | |||||||
Consulting Fees | $ 75,000 | $ 75,000 | |||||||
Property, Plant and Equipment, Gross | 10,664,762 | $ 8,624,013 | |||||||
Operating Lease Renewal Term | 1 month | 1 month | |||||||
Ford Glory International Limited [Member] | |||||||||
Property, Plant and Equipment, Gross | $ 63,000,000 | $ 8,100,000 | |||||||
Operating Lease, Expense | $ 119,540 | $ 15,253 | |||||||
Operating Lease Term | 1 year | 1 year | |||||||
Multi-Glory Corporation Limited [Member] | |||||||||
Consulting Fees | $ 75,000 | $ 75,000 |
CREDIT FACILITIES (Details)
CREDIT FACILITIES (Details) - USD ($) | Jun. 05, 2017 | Jun. 30, 2019 | Jun. 14, 2019 | Mar. 31, 2019 | Jan. 31, 2019 | Jun. 14, 2018 | May 29, 2017 |
Line of Credit, Current | $ 68,222 | $ 648,711 | |||||
Percentage of Flat fee | 0.35% | ||||||
Line of Credit Facility, Expiration Period | 120 days | ||||||
Credit Facility [Member] | Treasure Success International [Member] | |||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 12,000,000 | $ 8,000,000 | |||||
Debt Instrument, Collateral Amount | $ 3,000,000 | ||||||
Debt Instrument, Description of Variable Rate Basis | As of January 22, 2019, the security collateral of $3,000,000 was released. HSBC has agreed to release the personal guarantees of the individual shareholders, which the Company expects to occur during calendar year 2019. The Credit Facilities provide that drawings under the Credit Facilities are charged interest at the Hong Kong Interbank Offered Rate ("HIBOR") plus 1.5% for drawings in Hong Kong dollars, and the London Interbank Offered Rate ("LIBOR") plus 1.5% for drawings in other currencies. | ||||||
Line of Credit, Current | $ 68,222 | 360,401 | |||||
Credit Facility [Member] | Treasure Success International [Member] | London Interbank Offered Rate (LIBOR) [Member] | |||||||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||||||
Credit Facility [Member] | Treasure Success International [Member] | Hongkong Interbank Offered Rate LIBOR [Member] | |||||||
Debt Instrument, Basis Spread on Variable Rate | 1.50% | ||||||
Facility Letter [Member] | |||||||
Line of Credit, Current | 274,980 | ||||||
SCBHK Credit Facility [Member] | |||||||
Long-term Line of Credit | 0 | 288,310 | |||||
Line of Credit Facility, Capacity Available for Specific Purpose Other than for Trade Purchases | $ 3,000,000 | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.30% | ||||||
SCBHK Credit Facility [Member] | Treasure Success International [Member] | |||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 3,000,000 | ||||||
Factoring Agreement [Member] | |||||||
Long-term Line of Credit | $ 68,222 | $ 85,421 |
EARNINGS (LOSS) PER SHARE - Sch
EARNINGS (LOSS) PER SHARE - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator: | ||
Net income (loss) attributable to Jerash Holdings (US), Inc.'s Common Shareholders | $ 1,549 | $ (885) |
Denominator: | ||
Denominator for basic earnings per share (weighted-average shares) | 11,325,000 | 10,822,143 |
Dilutive securities - unexercised warrants and options | 147,363 | 0 |
Denominator for diluted earnings per share (adjusted weighted-average shares) | 11,472,363 | 10,822,143 |
Basic earnings (loss) per share | $ 0.14 | $ (0.08) |
Diluted earnings (loss) per share | $ 0.14 | $ (0.08) |
EARNINGS (LOSS) PER SHARE - Add
EARNINGS (LOSS) PER SHARE - Additional Information (Details) | 3 Months Ended |
Jun. 30, 2019shares | |
Warrant [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 57,200 |
SEGMENT REPORTING - Summary of
SEGMENT REPORTING - Summary of Sales by Geographic Areas (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | $ 22,527,325 | $ 18,363,085 |
UNITED STATES | ||
Revenue | 22,040,945 | 17,809,361 |
JORDAN | ||
Revenue | 486,380 | 130,213 |
Other Countries [Member] | ||
Revenue | $ 0 | $ 423,511 |
SEGMENT REPORTING - Additional
SEGMENT REPORTING - Additional Information (Details) - segment | 3 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Number of operating segments | 1 | |
Sales Revenue, Goods, Net [Member] | Customer Concentration Risk [Member] | ||
Concentration Risk, Percentage | 96.50% | 99.30% |
INCOME TAX (Details)
INCOME TAX (Details) - USD ($) | Jan. 01, 2020 | Dec. 22, 2017 | Jun. 30, 2019 | Jun. 30, 2018 |
Income Tax Expense (Benefit) | $ 335,000 | $ 366,000 | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | 21.00% | ||
Effective Income Tax Rate of Social Contribution, Percent | 1.00% | 1.00% | ||
Income Tax Holiday, Description | In accordance with the Investment Encouragement Law, Jerash Garments' export sales to overseas customers were entitled to a 100% income tax exemption for a period of 10 years commencing at the first day of production. This exemption had been extended for 5 years until December 31, 2018. | |||
Income Tax Holiday, Aggregate Dollar Amount | $ 1,623,717 | |||
Income Tax Holiday, Income Tax Benefits Per Share | $ 0.14 | |||
Wealth Choice Limited [Member] | ||||
Noncontrolling Interest, Ownership Percentage by Parent | 100.00% | |||
Tax Authority Jordan [Member] | ||||
Effective Income Tax Rate Reconciliation, Percent | 14.00% | |||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 14.00% | 10.00% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ / shares in Units, $ in Millions | Aug. 11, 2019 | Jun. 05, 2019 | Aug. 01, 2019JOD (JD) | Aug. 01, 2019a | Aug. 01, 2019ft² | Aug. 01, 2019USD ($) | Jul. 29, 2019$ / shares | Jul. 15, 2019HKD ($) | Jul. 15, 2019USD ($) | Jun. 30, 2019ft² | May 17, 2019$ / shares | Feb. 07, 2019$ / shares | Nov. 01, 2018$ / shares |
Dividends Payable, Date of Record | May 28, 2019 | ||||||||||||
Dividends Payable, Amount Per Share | $ 0.05 | $ 0.05 | $ 0.05 | ||||||||||
Area of Land | ft² | 4,800 | ||||||||||||
Subsequent Event [Member] | |||||||||||||
Dividends Payable, Date to be Paid | Aug. 19, 2019 | ||||||||||||
Dividends Payable, Date of Record | Aug. 11, 2019 | ||||||||||||
Dividends Payable, Amount Per Share | $ 0.05 | ||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets | JD 863,800 | $ 1.2 | $ 63,000,000 | $ 8.1 | |||||||||
Subsequent Event [Member] | Treasure Success International [Member] | |||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets | $ 6,300,000 | $ 0.8 | |||||||||||
Subsequent Event [Member] | Ford Glory International Limited [Member] | Chairman of the Board of Directors and Chief Executive Officer [Member] | |||||||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 49.00% | 49.00% | |||||||||||
Subsequent Event [Member] | Garment Manufacturing Factory Facility [Member] | |||||||||||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets | JD 345,520 | $ 0.5 | |||||||||||
Area of Land | 3 | 12,340 |