Revenue and Income - Revenue for the fiscal 2025 second quarter increased 20.6 percent to $40.2 million, up from $33.4 million in the same period last year[6]. - Net income for the fiscal 2025 second quarter increased 80.1 percent to $665,000, compared to $369,000 for the prior-year quarter, with net income per diluted share rising to $0.05 from $0.03[9]. - Revenue for the fiscal 2025 third quarter is expected to increase by 35-38 percent from the same quarter last year, with full-year revenue projected to rise by 30-35 percent[4]. Gross Profit and Margin - Gross profit for the fiscal 2025 second quarter rose 31.4 percent to $7.1 million, compared to $5.4 million in the same quarter last year, with a gross margin increase to 17.5 percent from 16.1 percent[7]. - Gross margin goal for fiscal year 2025 is expected to be approximately 14-15 percent, subject to logistics and shipping charges and product mix[5]. Operating Income and Expenses - Operating income increased to $1.1 million in the fiscal 2025 second quarter, up from $888,000 in the same period last year[8]. - Operating expenses totaled $5.9 million in the fiscal 2025 second quarter, compared with $4.5 million in the same period last year, primarily due to higher logistics costs[8]. Cash and Working Capital - Cash and restricted cash totaled $17.9 million, and net working capital was $35.2 million as of September 30, 2024[13]. - Cash and restricted cash at the end of the period amounted to $17,884,035, down from $22,809,716 a year earlier, indicating a decrease of 21.7%[21]. - Net cash provided by operating activities for the six months ended September 30, 2024, was $2,426,620, a decline of 70.3% compared to $8,178,880 for the same period in 2023[21]. Comprehensive Income and Equity - Comprehensive income attributable to the Company's common stockholders totaled $663,000 in the fiscal 2025 second quarter, compared with $306,000 in the same period last year[10]. - Total equity decreased to $63,458,550 as of September 30, 2024, from $64,430,663, indicating a decline of 1.5%[19]. Assets and Liabilities - Total current assets increased to $51,583,883 as of September 30, 2024, compared to $50,919,660 on March 31, 2024, reflecting a growth of 1.3%[19]. - Total liabilities increased to $16,889,385 as of September 30, 2024, from $15,814,903 on March 31, 2024, representing a rise of 6.8%[19]. Inventory and Accounts Payable - Inventories decreased significantly to $20,206,799 from $27,241,573, reflecting a reduction of 25.8%[19]. - The company’s accounts payable decreased to $4,394,732 from $6,340,237, a reduction of 30.7%[19]. Additional Financial Metrics - The company reported a net loss of $702,148 for the six months ended September 30, 2024, compared to a net income of $864,059 in the prior year[21]. - Cash paid for interest was $983,352 for the six months ended September 30, 2024, compared to $748,185 in the previous year, an increase of 31.3%[21]. - The company’s additional paid-in capital rose to $24,860,117, up from $23,917,094, marking an increase of 4.4%[19]. Demand and Production Capacity - Jerash's factories are fully booked through the first half of calendar year 2025, indicating strong demand from global customers[2].

Revenue and Profitability - Revenue for the three months ended June 30, 2024, was $40,935,716, an increase of 17.5% compared to $34,735,657 for the same period in 2023[7] - Net loss attributable to Jerash Holdings (US), Inc.'s common stockholders was $1,345,216, compared to a net income of $496,526 in the prior year[7] - The company's net loss for the three months ended June 30, 2024, was $1.367 million, compared to a net income of $495,000 for the same period in 2023, representing a 376% decrease[111] - For the three months ended June 30, 2024, the gross profit margin decreased to approximately 11%, down 5 percentage points from 16% in the same period of fiscal 2023[118] - Net loss for June 2024 was $1,366,697 compared to a net income of $495,115 in June 2023, indicating a significant decline in profitability[11] Expenses and Costs - Gross profit decreased to $4,639,871, down 16.6% from $5,567,540 year-over-year[7] - Total operating expenses increased to $5,468,679 from $4,475,720, an increase of 22.2% year-over-year[7] - Cost of goods sold increased by approximately $7.1 million, or 24%, to approximately $36.3 million for the three months ended June 30, 2024, resulting in a gross profit decrease of 17%[117] - The company incurred total operating lease expenses of $648,241 for the three months ended June 30, 2024, compared to $650,774 for the same period in 2023, showing a slight decrease[75] Cash Flow and Assets - Cash flows from operating activities showed a net cash used of $2,200,948 in June 2024, a stark contrast to a net cash provided of $24,772 in June 2023[11] - Total current assets decreased to $47,642,671 from $50,919,660, a decline of 6.5%[5] - Cash and cash equivalents decreased to $11,366,228 from $12,428,369, a decline of 8.6%[5] - Total cash and restricted cash at the end of June 2024 was $12,973,872, down from $20,071,233 at the end of June 2023[11] - As of June 30, 2024, total cash was approximately $11.4 million, down from $12.4 million as of March 31, 2024, primarily due to an operational loss and a dividend payment[124] Equity and Liabilities - Total liabilities decreased to $13,732,704 from $15,814,903, a reduction of 13.1%[5] - Total equity as of June 30, 2024, was $62,927,072, down from $64,430,663[6] - As of June 30, 2024, total equity was approximately $62.9 million, down from $64.4 million as of March 31, 2024[125] Investments and Capital Expenditures - The company plans to invest approximately $29.9 million to establish a fabric facility in Jordan through its joint venture Jerash Newtech[19] - Capital expenditures for the three months ended June 30, 2024, were approximately $0.4 million, down from $1.8 million in the same period in fiscal 2023[136] - The company projects capital expenditures of approximately $4.1 million and $8.8 million for the fiscal years ending March 31, 2025, and 2026, respectively, to enhance production capacity[138] Customer Concentration and Sales - For the three months ended June 30, 2024, two customers accounted for 73% of total revenue, indicating a significant customer concentration risk[61] - Sales to the United States increased by approximately 13% during the three months ended June 30, 2024, primarily due to increased sales to a major customer[115] - Sales to Germany increased by 152% from $444,000 in 2023 to $1.120 million in 2024, reflecting expanded business relationships[114] Tax and Regulatory Matters - The Company’s effective income tax rate in Jordan increased to 20% plus a 1% social contribution starting January 1, 2024, impacting future tax liabilities[46] - The effective tax rate for the three months ended June 30, 2024, was (8.9%), a significant decrease from 37.6% in the same period of 2023[105] Internal Controls and Compliance - As of March 31, 2024, the company's internal control over financial reporting was deemed ineffective due to material weaknesses, particularly in period-end financial reporting related to income taxes and account balance reconciliation[143] - The company has implemented remedial actions, including enhanced communication with U.S. GAAP advisors and external consultants to strengthen compliance and address identified weaknesses[145] - Despite the material weaknesses, the unaudited condensed consolidated financial statements present fairly the company's financial position and results of operations in accordance with U.S. GAAP[147]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 increased by 17.8% to $40.9 million from $34.7 million in the same quarter last year, marking an all-time high [9][10] - Gross profit was $4.6 million, down from $5.6 million in the same quarter last year, with gross margin decreasing to 11.3% from 16.0% [10] - Net loss was $1.4 million, or $0.11 per share, compared to net income of $495,000, or $0.04 per share, in the same period last year [11] - Operating loss totaled $829,000 in Q1 2025, compared to operating income of $1.1 million in the same period last year [11] Business Line Data and Key Metrics Changes - The company experienced delays in approximately 16% to 18% of orders from the previous quarter, which were shipped in Q1 2025 [6] - The company is ramping up production to catch up on delivery schedules, with manufacturing facilities operating at full capacity [6][8] Market Data and Key Metrics Changes - Purchase orders from long-term global customers are increasing, with additional trial orders from major brands through the joint venture with Busana Apparel Group [5][8] - Orders from two European high-end apparel brands, including Armani, are steadily increasing [8] Company Strategy and Development Direction - The company is diversifying its customer base, which is expected to position it well for growth as the economic environment improves [5] - Contingency plans are in place to minimize disruptions due to geopolitical uncertainties in the region [5][8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about positive momentum heading into fiscal 2025, with a record number of purchase orders [5] - The company anticipates revenue growth of 20% to 25% for the full year 2025, with gross margin expected to be approximately 12% to 14% [12] Other Important Information - Operating expenses for Q1 2025 were $5.5 million, up from $4.5 million in the same quarter last year, including additional air freight costs of approximately $300,000 [10] - The Board of Directors approved a regular quarterly dividend of $0.05 per share, payable on August 23, 2024 [12] Q&A Session Summary Question: Revenue guidance increase - The company raised its revenue guidance for the full year from 15%-18% to 20%-25%, attributing this to new customer orders and strong demand [14][15] Question: Gross margin expectations - Management acknowledged that gross margin was below expectations due to supply chain disruptions but anticipates stabilization in the second half of the year [18][19] Question: Customer compensation for additional costs - Customers generally do not directly compensate for additional costs incurred due to disruptions, but they may allow for a margin increase on future orders [19][20] Question: Supply chain financing usage - The company is cautious about using supply chain financing due to high interest rates but may tap into it as needed to maintain cash flow [21][22]

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FORM 10-K Commission file number 001-38474 Income and Sales Taxes UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 or | --- | --- | |----------------------------------------------------------------------------|-------| | Delaware | | | (State or other jurisdiction of incorporation or organization) | | | --- | --- | --- | --- | |----------------------------------------------------------------------------------------------------------- ...

● Gross margin goal for fiscal 2025 year is currently expected to be around 13-15 percent, subject to logistics and shipping charges and final product mix of shipments. Fiscal 2024 Fourth Quarter Results Fiscal 2024 fourth quarter revenue was $21.6 million, down 9.3 percent from $23.8 million in the same quarter last year, primarily due to reduced shipments to our major customers in the U.S. caused by inadequate materials for production due to logistical disruptions and extended supply chain lead times in t ...

Jerash Holdings (US), Inc. (NASDAQ:JRSH) Q3 2024 Earnings Conference Call February 8, 2024 9:00 AM ET Company Participants Roger Pondel - IR Sam Choi - Chairman and CEO Eric Tang - Executive Director Gilbert Lee - CFO Conference Call Participants Mike Baker - D.A. Davidson Mark Argento - Lake Street Todd Felte - AGES Financial Operator Greetings. Welcome to Jerash Holdings Fiscal 2024 Third Quarter Financial Results. A question-and-answer session will follow the formal presentation. Please note that this co ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38474 Jerash Holdings (US), Inc. (Exact name of registrant as specified in its charter) Delaware 81-4701719 (State or other jurisdictio ...

Part I: Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Jerash Holdings' unaudited financial statements for Q2 and H1 FY2024 show decreased assets, revenue, and net income [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$79.1 million** by September 30, 2023, driven by a significant reduction in inventories Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 (Unaudited) | Mar 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $21,202 | $17,802 | | Inventories | $18,714 | $32,657 | | Total Current Assets | $50,693 | $57,284 | | Property, plant and equipment, net | $24,683 | $22,356 | | **Total Assets** | **$79,105** | **$83,719** | | **Liabilities & Equity** | | | | Accounts payable | $4,252 | $5,783 | | Total Current Liabilities | $10,211 | $14,446 | | **Total Liabilities** | **$10,875** | **$15,485** | | **Total Equity** | **$68,230** | **$68,234** | [Condensed Consolidated Statements of Income and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Revenue and net income significantly declined for both Q2 and H1 FY2024 due to lower gross margins Performance Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | Change | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $33,357 | $37,826 | -11.8% | $68,093 | $71,262 | -4.4% | | Gross Profit | $5,372 | $6,918 | -22.3% | $10,940 | $13,540 | -19.2% | | Income from Operations | $888 | $2,610 | -66.0% | $1,980 | $4,919 | -59.7% | | Net Income | $369 | $1,792 | -79.4% | $864 | $3,513 | -75.4% | | Basic and Diluted EPS | $0.03 | $0.14 | -78.6% | $0.07 | $0.28 | -75.0% | [Condensed Consolidated Statements of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity remained stable for H1 FY2024, influenced by net income, dividends, and stock-based compensation - Dividend payments of **$1,229,484** were made during the six months ended September 30, 2023[13](index=13&type=chunk) - Stock-based compensation expense for the six-month period was **$484,250**[13](index=13&type=chunk) - The company established a noncontrolling interest of **$33,281** related to its **51%** stake in the J&B joint venture[13](index=13&type=chunk)[34](index=34&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to **$8.2 million** for H1 FY2024, with significant cash used in investing and financing Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended Sep 30, 2023 | Six Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,179 | $9,638 | | Net cash used in investing activities | ($3,459) | ($10,451) | | Net cash used in financing activities | ($1,198) | ($985) | | **Net increase (decrease) in cash** | **$3,398** | **($2,132)** | - A significant source of cash from operations was a **$13.9 million** decrease in inventories[19](index=19&type=chunk) - Investing activities included **$3.2 million** for purchases and construction of property, plant, and equipment[19](index=19&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail company structure, customer concentration, geopolitical risks, and subsequent events like a new joint venture - The company is primarily engaged in manufacturing and exporting customized sportswear and outerwear from its facilities in Jordan[31](index=31&type=chunk) - For the six months ended September 30, 2023, two customers accounted for **69%** and **13%** of total revenue, respectively[72](index=72&type=chunk) - The company has a contingency plan to relocate production to alternate regions if its shipping ports in Aqaba and Haifa are impacted by regional conflict[75](index=75&type=chunk) - On October 10, 2023, the company's subsidiary Treasure Success entered into an agreement to form a new joint venture, Jerash Newtech, to establish a fabric facility in Jordan with a forecasted capital expenditure of approximately **$29.9 million**[127](index=127&type=chunk) - On November 3, 2023, the Board of Directors approved a dividend of **$0.05** per share[126](index=126&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue decline, gross margin contraction, strong liquidity, and capital expenditures for expansion [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Revenue decreased by **4%** for H1 FY2024, driven by lower U.S. sales and a **3-point** decline in gross profit margin Revenue by Customer (Six Months Ended Sep 30, in thousands) | Customer | 2023 Sales | % of Total | 2022 Sales | % of Total | | :--- | :--- | :--- | :--- | :--- | | VF Corporation | $47,183 | 69% | $46,359 | 65% | | New Balance | $8,680 | 13% | $11,478 | 16% | | G-III | $4,715 | 7% | $3,952 | 6% | Revenue by Geographic Area (Six Months Ended Sep 30, in thousands) | Region | 2023 Sales | % of Total | 2022 Sales | % of Total | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | United States | $61,887 | 91% | $66,508 | 93% | -7% | | Hong Kong | $2,556 | 4% | $742 | 1% | +244% | | Germany | $1,290 | 2% | $0 | 0% | N/A | | Jordan | $625 | 1% | $2,756 | 4% | -77% | - The decrease in gross profit margin from **19%** to **16%** for the six-month period was primarily driven by a shift in customer mix with more orders that generate lower profit margin[165](index=165&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$21.2 million** cash, pursuing new credit facilities, and investing in expansion - The company had cash of **$21.2 million** and net working capital of **$40.5 million** as of September 30, 2023[172](index=172&type=chunk)[175](index=175&type=chunk) - The company is finalizing a **$10 million** credit facility with Capital Bank of Jordan, which was not yet effective as of the report date[179](index=179&type=chunk) - Capital expenditures for the six months ended September 30, 2023, were approximately **$3.5 million**, mainly for the construction of a dormitory and factory expansion[189](index=189&type=chunk) - A new employee dormitory, costing approximately **$8.8 million**, is expected to be completed and ready for use by the end of 2023[192](index=192&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Jerash Holdings is exempt from providing quantitative and qualitative market risk disclosures - The company is a smaller reporting company and is not required to provide information for this item[199](index=199&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective due to material weaknesses, with ongoing remediation efforts - The CEO and CFO concluded that disclosure controls and procedures were ineffective as of September 30, 2023[202](index=202&type=chunk) - Material weaknesses were identified in controls over period-end financial reporting (income taxes, account reconciliation) and IT general controls (user access)[206](index=206&type=chunk) - Remediation efforts are underway but require validation over a sustained period; financial statements are believed to be fairly presented despite weaknesses[203](index=203&type=chunk)[204](index=204&type=chunk) Part II: Other Information [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company reports no current material legal proceedings[208](index=208&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Jerash Holdings is exempt from providing detailed risk factor disclosures - As a smaller reporting company, this item is not required[209](index=209&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) No unregistered sales of equity securities, use of proceeds, or issuer purchases were reported for the period - None reported for the period[210](index=210&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) The report includes standard officer certifications, XBRL data, and a Shareholders' Agreement for a new joint venture - Exhibits filed include CEO/CFO certifications under SOX 302 and 906, and Inline XBRL documents[217](index=217&type=chunk) - A Shareholders' Agreement with Newtech Textile (HK) Limited, dated October 10, 2023, was incorporated by reference[217](index=217&type=chunk)

Financial Data and Key Metrics Changes - Revenue for the fiscal 2024 second quarter was $33.4 million, down from $37.8 million in the same period last year, primarily due to fewer shipments to major US customers [7] - Net income decreased to $369,000 or $0.03 per share, compared to $1.8 million or $0.14 per diluted share in the same period last year [8] - Gross profit was $5.4 million with a gross margin of 16.1%, down from $6.9 million and 18.3% respectively, driven by a shift in customer mix towards lower profit margin orders [38] - Operating income totaled $888,000, down from $2.6 million in the same period last year [38] - Net cash provided by operating activities was approximately $8.2 million for the six months ended September 30, 2023, compared to $9.6 million for the same period last year [39] Business Line Data and Key Metrics Changes - The joint venture with Busana is projected to generate about $8 million to $9 million in new orders over the next 12 months, with significant contributions expected starting in the fiscal fourth quarter [2][12] - Timberland has significantly increased its orders, becoming the second largest brand for the company, while the first European-based high-end apparel brand is also expected to double orders in the second half of fiscal 2024 [13][36] Market Data and Key Metrics Changes - The retail market conditions in the US and Europe have been slow to recover, impacting the company's business compared to the prior year [12] - Orders from existing customers are shifting towards lower-margin products, affecting overall revenue and margins [20][21] Company Strategy and Development Direction - The company is focusing on vertical integration and sustainable textile solutions, positioning itself as a leader in ESG textile manufacturing [3][6] - Plans to build a state-of-the-art fabric facility in Jordan are set to begin construction in 2024, with an estimated capital expenditure of $25 million to $30 million [3][22] - The company aims to maintain its workforce by accepting lower-margin orders to keep production capacity intact for when higher-margin orders return [50] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer spending in the US remains weak, affecting order volumes and product mix [20][21] - The company is taking a conservative approach to revenue guidance for fiscal 2024, projecting a decline of about 3% to 5% from the previous fiscal year [39] - Management expressed optimism about future growth driven by the Busana joint venture and the potential for higher-margin orders [59] Other Important Information - The company maintains a strong balance sheet with $22.8 million in cash and restricted cash, and net working capital of $40.5 million as of September 30, 2023 [8] - A quarterly dividend of $0.05 per share was approved by the Board of Directors, payable on November 28, 2023 [19] Q&A Session Summary Question: What are you hearing from your big customers in the US regarding consumer spending and holiday outlook? - Management indicated that the slow recovery of the consumer market is primarily causing results to be less than expected, with orders shifting towards lower-margin products [20][21] Question: Can you provide details on the new joint venture for textiles, including construction timelines and funding? - Construction is expected to begin in calendar year 2024, with total projected capital expenditures of $25 million to $30 million, funded proportionally by the joint venture partners [22][23] Question: What is the expected revenue from the Busana partnership in Q4? - Management projected a few million in orders from Busana in Q4, with total expected revenue from the partnership being $8 million to $9 million over the next 12 months [27][47] Question: How is the company managing production capacity and staffing? - The company is fully booked through the end of the fiscal year and is maintaining production staff by accepting lower-margin orders to ensure capacity for future higher-margin orders [49][50]

[Part I - Financial Information](index=3&type=section&id=Part%20I%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements for Q2 2023 show slight revenue growth, a significant profit decline due to higher costs, and positive operating cash flow with continued capital investments [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets slightly decreased to **$82.4 million** due to reduced inventories, while total liabilities also decreased, and total equity remained stable at **$68.3 million** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | June 30, 2023 ($) | March 31, 2023 ($) | | :--- | :--- | :--- | | **Total Current Assets** | 54,800,520 | 57,284,226 | | Inventories | 23,800,407 | 32,656,833 | | **Total Assets** | **82,366,916** | **83,719,333** | | **Total Current Liabilities** | 13,337,565 | 14,446,442 | | **Total Liabilities** | **14,074,801** | **15,485,099** | | **Total Equity** | **68,292,115** | **68,234,234** [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) For Q2 2023, revenue grew **3.9%** to **$34.7 million**, but a **9%** rise in COGS led to a **15.9%** gross profit decrease and a **71.2%** drop in net income to **$0.5 million** Q1 FY2024 vs Q1 FY2023 Performance (Unaudited) | Metric | Three Months Ended June 30, 2023 ($) | Three Months Ended June 30, 2022 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue, net | 34,735,657 | 33,436,561 | +3.9% | | Gross Profit | 5,567,540 | 6,622,367 | -15.9% | | Income from Operations | 1,091,820 | 2,308,847 | -52.7% | | Net Income Attributable to Common Stockholders | 496,526 | 1,721,382 | -71.2% | | Basic and Diluted EPS | 0.04 | 0.14 | -71.4% | - The company maintained its quarterly dividend at **$0.05 per share**, consistent with the prior year's quarter[12](index=12&type=chunk) [Condensed Consolidated Statements of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity slightly increased from **$68.23 million** to **$68.29 million**, driven by net income and stock-based compensation, partially offset by dividends and foreign currency translation losses - A cash dividend of **$614,742** was paid during the three months ended June 30, 2023[15](index=15&type=chunk) - Stock-based compensation expense for the quarter amounted to **$240,802**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly improved to **$24,772**, while investing activities used **$1.8 million** for construction, and financing provided **$2.5 million**, resulting in a net cash increase of **$0.66 million** Summary of Cash Flows (Unaudited) | Cash Flow Activity | Three Months Ended June 30, 2023 ($) | Three Months Ended June 30, 2022 ($) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 24,772 | (472,736) | | Net cash used in investing activities | (1,772,721) | (3,380,712) | | Net cash provided by financing activities | 2,502,595 | 213,164 | | **Net Increase (Decrease) in Cash** | **659,630** | **(3,758,136)** | - The positive operating cash flow was primarily driven by an **$8.9 million** decrease in inventories, which offset a **$4.2 million** increase in accounts receivable[17](index=17&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section details company structure, accounting policies, and financial items, noting significant customer concentration, ongoing dormitory construction, new credit facilities, and post-quarter events including a dividend and a potential new fabric facility - The company is highly dependent on a few major customers, with two customers accounting for **66%** and **21%** of total revenue for the three months ended June 30, 2023[70](index=70&type=chunk) - The company is constructing an employee dormitory in Jordan, expected to cost **$8.8 million** and be completed by the end of 2023, with approximately **$7.4 million** spent through June 30, 2023[85](index=85&type=chunk) - On August 4, 2023, the Board of Directors approved a dividend of **$0.05 per share**, and on July 12, 2023, the company entered into a non-binding MOU for the possible establishment of a fabric facility in Jordan[119](index=119&type=chunk)[120](index=120&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **4%** revenue growth to increased U.S. shipments, but a less favorable product mix caused gross margin to decline to **16%** and net income to drop **71%**, while liquidity remains strong with **$18.5 million** cash and **$41.5 million** working capital, supporting ongoing capital expenditures [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Revenue increased **4%** to **$34.7 million**, but COGS rose **9%**, contracting gross margin to **16%** and causing net income to decline to **$0.5 million**, with VF Corporation and New Balance remaining key customers Sales by Major Customer (in thousands) | Customer | Q1 FY2024 Sales ($) | % of Total | Q1 FY2023 Sales ($) | % of Total | | :--- | :--- | :--- | :--- | :--- | | VF Corporation | 22,780 | 66% | 22,067 | 66% | | New Balance | 7,292 | 21% | 7,597 | 23% | | G-III | 2,182 | 6% | 1,470 | 4% | | Others | 2,482 | 7% | 2,303 | 7% | | **Total** | **34,736** | **100%** | **33,437** | **100%** | - The decrease in gross profit margin from **20%** to **16%** was primarily driven by a shift in product mix towards orders that generate lower profit margins[139](index=139&type=chunk) - Net income decreased by **71%** to **$0.5 million**, mainly due to the lower gross margin and increases in SG&A and interest expenses[143](index=143&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company maintained strong liquidity with **$18.5 million** cash and **$41.5 million** working capital, utilizing existing credit facilities and securing a new **$10 million** facility, with management confident in sufficient funds for the next 12 months - The company had cash of approximately **$18.5 million** and working capital of **$41.5 million** as of June 30, 2023[145](index=145&type=chunk)[148](index=148&type=chunk) - The company had approximately **$3.1 million** outstanding under its **$5.0 million** DBSHK credit facility as of June 30, 2023[152](index=152&type=chunk) - A new **$10 million** credit facility with Capital Bank of Jordan was entered into on June 1, 2023, but is not yet effective[153](index=153&type=chunk) [Capital Expenditures](index=29&type=section&id=Capital%20Expenditures) Capital expenditures for the quarter were **$1.8 million**, primarily for an employee dormitory nearing completion at an **$8.8 million** total cost, with projected expenditures of **$2.6 million** for FY2024 and **$8.5 million** for FY2025 to enhance production capacity - Capital expenditures for the quarter were approximately **$1.8 million**, mainly for the construction of a dormitory and factory expansion[163](index=163&type=chunk) - The employee dormitory is expected to be completed by the end of 2023[166](index=166&type=chunk) - Projected capital expenditures are approximately **$2.6 million** for fiscal 2024 and **$8.5 million** for fiscal 2025[167](index=167&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Jerash Holdings is exempt from providing disclosures on market risk - The company is exempt from this disclosure requirement due to its status as a smaller reporting company[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of June 30, 2023, due to identified material weaknesses in financial reporting and IT general controls, with ongoing remediation efforts - The CEO and CFO concluded that disclosure controls and procedures were ineffective as of June 30, 2023[174](index=174&type=chunk) - Material weaknesses were identified in controls over period-end financial reporting, specifically income taxes and account reconciliations, and IT general controls, particularly user access[178](index=178&type=chunk) - Remediation efforts are underway, including improving account reconciliation, consulting with tax professionals, and implementing better password controls[175](index=175&type=chunk) [Part II - Other Information](index=31&type=section&id=Part%20II%20Other%20Information) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - As of the report date, there are no material legal proceedings involving the company[180](index=180&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, Jerash Holdings is exempt from providing disclosures on risk factors - The company is exempt from this disclosure requirement due to its status as a smaller reporting company[181](index=181&type=chunk) [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information) On July 12, 2023, the company's subsidiary entered a non-binding MOU with Newtech Textile (HK) Limited for a potential fabric facility in Jordan - A non-binding MOU was signed with Newtech Textile (HK) Limited on July 12, 2023, to explore setting up a fabric facility in Jordan[184](index=184&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including officer certifications and Inline XBRL data files