Jerash Holdings (US), Inc.

Previous wording

A significant portion of our revenue is received during the first six months of our fiscal year. The majority of our VF Corporation orders are derived from winter season fashions, the sales of which occur in Spring and Summer and are merchandized by VF Corporation during the months of September through November. As such, the second half of our fiscal years reflect lower sales in anticipation of the spring and summer seasons. One of our strategies is to increase sales with other customers where clothing lines are stronger during the spring months. This strategy also reflects our current plan to increase our number of customers to mitigate our current concentration risk with VF Corporation.

Current wording

We used to have strong seasonality due to higher values of fall and winter orders, which are normally shipped in the first two quarters of our fiscal years. We have been working on smoothing out seasonality through expansions of customer base and product offerings. In fiscal 2026, we managed to reverse the trend to have higher sales in the second half of the year through introduction of a new customer and expansion in sales of some existing customers for spring and summer season orders. We will continue our efforts in this direction in order to produce more consistent results throughout a fiscal year. One of our strategies is to increase sales with other customers where clothing lines are stronger during the spring months. This strategy also reflects our current plan to increase our number of customers to mitigate our current concentration risk with VF Corporation.

Previous wording

The following table presents certain information from our consolidated statements of operations and comprehensive loss for the fiscal years ended March 31, 2025 and 2024 and should be read, along with all of the information in this management’s discussion and analysis, in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report.

Current wording

The following table presents certain information from our consolidated statements of operations and comprehensive income (loss) for the fiscal years ended March 31, 2026 and 2025 and should be read, along with all of the information in this management’s discussion and analysis, in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report.

Previous wording

***Revenue.***Our revenue was $145.8 million for fiscal 2025, compared to $117.2 million for fiscal 2024, an increase of $28.6 million, or 24%, primarily due to increases in shipments to two of our major customers in the U.S., which is our main export market.

Current wording

***Revenue.***Our revenue was $166.3 million for fiscal 2026, compared to $145.8 million for fiscal 2025, an increase of $20.5 million, or 14%, primarily due to increases in shipments to businesses from new customers such as Hansoll Group and growth in sales from some of the customers introduced in the past few years such as Acushnet and Tharanco.

Previous wording

Since January 2010, all apparel manufactured in Jordan can be exported to the U.S. without customs duty being imposed, pursuant to the United States-Jordan Free Trade Agreement entered into in December 2001. This free trade agreement provides us with substantial competitiveness and benefit that allowed us to expand our garment export business in the U.S. Effective from April 5, 2025, the U.S. imposed a baseline tariff of 10% on imports from almost all countries, including Jordan. Then, effective from April 9, 2025, it had announced “reciprocal” tariffs of imports from specified countries, amongst them Jordan with a prevailing rate of then 20%. These “reciprocal” tariffs are postponed for 90 days, whilst the 10% baseline tariff persists. Up to the date of this annual report, the 90 days postponement of the “reciprocal” tariff has not expired. Impact of the tariff would also be affected by the comparative levels of the tariffs of Jordan and other countries.

Current wording

Since January 2010, all apparel manufactured in Jordan can be exported to the U.S. without customs duty being imposed, pursuant to the United States-Jordan Free Trade Agreement entered into in December 2001. This free trade agreement provides us with substantial competitiveness and benefit that allowed us to expand our garment export business in the U.S. Effective from April 5, 2025, the U.S. imposed a baseline tariff of 10% on imports from almost all countries, including Jordan. Then, effective from April 9, 2025, it had announced “reciprocal” tariffs of imports from specified countries, amongst them Jordan with a prevailing rate of then 20%. These “reciprocal” tariffs are postponed for 90 days, whilst the 10% baseline tariff persists. The tariff had been modified to 15% according to an executive order of presidential actions on July 31, 2025. In February 2026, the U.S. Supreme Court ruled that the “reciprocal” tariffs were illegal, and the U.S. Customs has since then stopped to impose the “reciprocal” tariff and established a new process to refund importers for voided “reciprocal” tariff. Following the ruling, the U.S. Government then invoked Section 122 of the Trade Act of 1974 to impose an across the board 10% tariff for a period of 150 days expiring in July 2026, including on the imports from Jordan. While the payment of the tariff is typically the responsibility of the importer (Jerash’s customers), the impact of the tariff on customers’ demand would be affected by the comparative levels of the tariffs on imports from Jordan compared to other.

Previous wording

During fiscal 2025, aggregate sales to Jordan, China and Hong Kong, Germany, and other locations, such as Mexico and Indonesia, increased by 18% from approximately $14.7 million in fiscal 2024 to $17.2 million. This increase can be attributed to growth in businesses with customers in these countries introduced in the past few years.

Current wording

During fiscal 2026, aggregate sales to Jordan, China and Hong Kong, Korea, and other locations, such as Germany, and Mexico, increased by 63% from approximately $17.2 million in fiscal 2025 to $28.1 million. This increase can be attributed mainly to the introduction of a new customer, Hansoll Group and an increase in revenue from Suzhou Unitex.

Previous wording

Cost of goods sold*.* Our cost of goods sold experienced an increase of approximately $23.2 million to approximately $123.5 million in fiscal 2025 from approximately $100.3 million in fiscal 2024. As a percentage of revenue, the cost of goods sold decreased by approximately 1 percentage point to 85% in fiscal 2025 from 86% in fiscal 2024. The decrease in the cost of goods sold as a percentage of revenue was primarily attributable to higher production and shipment volume that generated higher margin through economy of scale.

Current wording

Cost of goods sold*.* Our cost of goods sold experienced an increase of approximately $16.0 million to approximately $139.5 million in fiscal 2026 from approximately $123.5 million in fiscal 2025. As a percentage of revenue, the cost of goods sold decreased by approximately 1 percentage point to 84% in fiscal 2026 from 85% in fiscal 2025. The decrease in the cost of goods sold as a percentage of revenue was primarily attributable to improved efficiency from economy of scale, continued automation such as installation of hanging systems, and better control of import costs.

Previous wording

For the fiscal year ended March 31, 2025 and 2024, we purchased approximately 10% of our garments from one major supplier.

Current wording

For the fiscal year ended March 31, 2026 and 2025, we purchased approximately 13% and 10% of our garments and raw materials from one major supplier, respectively.

Previous wording

Gross profit margin. Our gross profit margin was approximately 15% in fiscal 2025, representing an increase by approximately 1 percentage point from 14% in fiscal 2024. The increase in gross profit margin was primarily influenced by better planning and execution of logistic and production that resulted in higher production and shipment volume that brought down unit cost of production.

Current wording

Gross profit margin. Our gross profit margin was approximately 16% in fiscal 2026, representing an increase by approximately 1 percentage point from 15% in fiscal 2025. The increase in gross profit margin was primarily influenced by our improvements in efficiency through automation and economy of scale.

Previous wording

***Selling, general, and administrative expenses.***Selling, general, and administrative expenses increased by approximately 19% from approximately $17.6 million in fiscal 2024 to $20.9 million in fiscal 2025. The increase was mainly attributable to higher shipment costs due to higher sales volume and also some air shipping costs for garments in the first quarter of fiscal 2025 due to logistic hiccups in early 2024 and an increase in share-based compensation expenses of $772,000.

Current wording

***Selling, general, and administrative expenses.***Selling, general, and administrative expenses decreased by approximately 2% from approximately $20.9 million in fiscal 2025 to $20.5 million in fiscal 2026. The decrease was mainly attributable to better control of the export logistic expenses and lower share-based payment expenses in fiscal 2026.

Previous wording

Other expenses, net*.* Other expenses, net were approximately $1.3 million in fiscal 2025, compared to other expenses, net of approximately $0.7 million in fiscal 2024. The increase in other expenses from fiscal 2024 to fiscal 2025 was primarily due to increase in interest expenses from the supply chain financing programs of our major customers, more proceeds from short-term loan from credit facility and higher interest rate in fiscal 2025.

Current wording

Other expenses, net*.* Other expenses, net were approximately $1.6 million in fiscal 2026, compared to other expenses, net of approximately $1.3 million in fiscal 2025. The increase in other expenses from fiscal 2025 to fiscal 2026 was primarily due to a currency exchange loss and lower interest income in 2026.

Previous wording

***Taxation.***Income tax expenses for fiscal 2025 were approximately $1.0 million, compared to income tax expenses of approximately $0.7 million for fiscal 2024. The effective tax rate for fiscal 2025 increased to 656%, compared to -49.1% for fiscal 2024. The increase in the effective tax rate mainly resulted from the increase in operating profit in a Hong Kong subsidiary and $175,290 amendment of federal tax returns for the fiscal years ended March 31, 2022 and March 31, 2023, related to the inclusion of Subpart F income during the fiscal year.

Current wording

***Taxation.***Income tax expenses for fiscal 2026 were approximately $1.1 million, compared to income tax expenses of approximately $1.0 million for fiscal 2025. The effective tax rate for fiscal 2026 decreased to 24%, compared to 656% for fiscal 2025. The decrease in the effective tax rate mainly resulted from lower Subpart F income impacts, favorable foreign tax rate differentials, favorable return-to-provision and valuation allowance adjustments, and the absence of uncertain tax position adjustments related to amended tax returns that were recorded in fiscal 2025.

Previous wording

As of March 31, 2025, our cash balance was approximately $13.3 million and restricted cash was approximately $1.7 million, compared to cash of approximately $12.4 million and restricted cash of approximately $1.6 million as of March 31, 2024. The increase in total cash during fiscal 2025 was primarily due to the utilization of the supply chain financing programs of our major customers that expedited receivable collections and also the drawdown of $4.5 million of short-term bank financing to support purchases of raw materials for orders to be shipped in fiscal 2026.

Current wording

As of March 31, 2026, our cash and cash equivalents balance was approximately $10.8 million and restricted cash was approximately $1.7 million, compared to cash and cash equivalents of approximately $13.3 million and restricted cash of approximately $1.7 million as of March 31, 2025. The decrease in total cash and cash equivalents during fiscal 2026 was primarily due to the payment for new factory premises and plant and equipment, offsetting the bank loan of $2.8 million related to the premises in fiscal 2026.

Previous wording

Our current assets as of March 31, 2025 were approximately $54.4 million, and our current liabilities were approximately $19.8 million, which resulted in a current ratio of approximately 2.7 to 1. Our current assets as of March 31, 2024 were approximately $50.9 million, and our current liabilities were approximately $14.8 million, which resulted in a current ratio of approximately 3.4:1. For fiscal 2025, the increase in current assets were primarily due to increases in advances to suppliers to support raw material purchases, prepaid expenses, cash, and inventory, which was offset partially by decreases in accounts receivable balance due to the use of customers’ supply chain financing programs.

Current wording

Our current assets as of March 31, 2026 were approximately $58.4 million, and our current liabilities were approximately $21.6 million, which resulted in a current ratio of approximately 2.7 to 1. Our current assets as of March 31, 2025 were approximately $54.4 million, and our current liabilities were approximately $19.8 million, which resulted in a current ratio of approximately 2.7:1. For fiscal 2026, the increase in current assets were primarily due to increases in accounts receivable from shipments close to the year end, and increases in inventory and advances to suppliers for the shipments mostly planned in early to mid-fiscal 2027, offsetting the decrease in cash balance.

Previous wording

We had net working capital of $34.6 million and $36.1 million as of March 31, 2025 and 2024, respectively. Based on our current operating plan, we believe that cash on hand and cash generated from operation will be sufficient to support our working capital needs for the next 12 months from the date of this Annual Report.

Current wording

We had net working capital of $36.7 million and $34.6 million as of March 31, 2026 and 2025, respectively. Based on our current operating plan, we believe that cash on hand and cash generated from operation will be sufficient to support our working capital needs for the next 12 months from the date of this Annual Report.

Previous wording

Since May and October 2021, we have participated in supply chain financing programs of two of our major customers, respectively. The programs allow us to receive early payments for approved sales invoices submitted by us through the bank the customer cooperates with. For any early payments received, we are subject to an early payment charge imposed by the customer’s bank, for which the rate is Secured Overnight Financing Rate (“SOFR”) plus a spread. The arrangement allows us to have better liquidity without the need to incur administrative charges and handling fees as in bank financing. In March 2024, we participated in an additional supply chain financing program with one customer.

Current wording

Since May and October 2021, we have participated in supply chain financing programs of two of our major customers, respectively. The programs allow us to receive early payments for approved sales invoices submitted by us through the bank the customer cooperates with. For any early payments received, we are subject to an early payment charge imposed by the customer’s bank, for which the rate is SOFR plus a spread. The arrangement allows us to have better liquidity without the need to incur administrative charges and handling fees as in bank financing. In March 2024, we participated in an additional supply chain financing program with one customer.

Previous wording

Pursuant to the DBS facility letter dated January 12, 2022, DBSHK provided a bank facility of up to $5.0 million to Treasure Success, which was amended pursuant to a facility letter dated January 4, 2024. Pursuant to the amended agreement, DBSHK agreed to finance cargo receipt, trust receipt, account payable financing, and certain types of import and export invoice financing up to an aggregate of $5.0 million, subject to certain financial covenants. The DBSHK facility bears interest at 1.5% per annum over HIBOR for HKD bills and 1.1% to 1.3% per annum over DBSHK’s cost of funds for foreign currency bills. The facility is guaranteed by Jerash Holdings and became available to the Company on June 17, 2022. As of March 31, 2025 and 2024, the outstanding balances were $4.5 million and $nil, respectively, under this DBSHK facility. The increase in short-term bank financing was to support purchases of raw materials to support orders to be shipped in fiscal 2026.

Current wording

Pursuant to the DBS facility letter dated January 12, 2022, DBSHK provided a bank facility of up to $5.0 million to Treasure Success, which was amended pursuant to a facility letter dated January 4, 2024. Pursuant to the amended agreement, DBSHK agreed to finance cargo receipt, trust receipt, account payable financing, and certain types of import and export invoice financing up to an aggregate of $5.0 million, subject to certain financial covenants. The DBSHK facility bears interest at 1.5% per annum over HIBOR for HKD bills and 1.1% to 1.3% per annum over DBSHK’s cost of funds for foreign currency bills. The facility is guaranteed by Jerash Holdings and became available to the Company on June 17, 2022. As of March 31, 2026 and 2025, the outstanding balances were $4.9 million and $4.5 million, respectively, under this DBSHK facility.

Previous wording

Net cash provided by operating activities was approximately $1.4 million in fiscal 2025, compared to net cash provided by operating activities of approximately $2.5 million in fiscal 2024. The decrease in net cash provided by operating activities was primarily attributable to the following factors:

Current wording

Net cash provided by operating activities was approximately $2.5 million in fiscal 2026, compared to net cash provided by operating activities of approximately $1.4 million in fiscal 2025. The increase in net cash provided by operating activities was primarily attributable to the following factors:

Previous wording

Net cash used in investing activities was approximately $2.4 million and $5.1 million for fiscal 2025 and 2024, respectively. The decrease in net cash used in fiscal year 2025 compared to 2024 was primarily due to the capital expenditures for the dormitory construction of $3.6 million and $1.1 million in fiscal 2024 and fiscal 2025, respectively. There was a slight decrease in capital expenditures in property, plant, and equipment for expansions in fiscal 2025.

Current wording

Net cash used in investing activities was approximately $5.8 million and $2.4 million for fiscal 2026 and 2025, respectively. The increase in net cash used in fiscal year 2026 compared to 2025 was primarily due to acquisition of a factory premises in Jordan in fiscal 2026 for approximately $3.6 million.

Previous wording

Cash provided by financing activities was $2.1 million in fiscal 2025, which was primarily related to the net draw down of short-term bank financing of $4.5 million, which was offset by the distribution of dividends of $2.4 million. Net cash used in financing activities was approximately $2.4 million for fiscal 2024, mainly due to dividend payments in the period.

Current wording

Net cash provided by financing activities was $0.7 million in fiscal 2026, which was primarily related to the increase in long-term loan of approximately $2.8 million to finance the acquisition of a factory premises in fiscal 2026 and the net draw down of short-term bank financing of approximately $0.4 million, offset by the distribution of dividend of $2.5 million. Net cash provided by financing activities was approximately $2.1 million for fiscal 2025, mainly due to the net draw down of short-term bank financing of $4.5 million, which was offset by the distribution of dividends of $2.4 million.

Previous wording

Total restricted net assets accounted for approximately 0.66% of our consolidated net assets as of March 31, 2025. As our subsidiaries in Jordan are only required to set aside 10% of net profits to fund the statutory reserves with the maximum reserve equal to 100% of the entity’s capital, we believe the potential impact of such restricted net assets on our liquidity is limited.

Current wording

Total restricted net assets accounted for approximately 0.64% of our consolidated net assets as of March 31, 2026. As our subsidiaries in Jordan are only required to set aside 10% of net profits to fund the statutory reserves with the maximum reserve equal to 100% of the entity’s capital, we believe the potential impact of such restricted net assets on our liquidity is limited.

Previous wording

We had capital expenditures of approximately $2.4 million and $5.1 million in fiscal 2025 and 2024, respectively. For the fiscal year ended March 31, 2025, our capital expenditures included payments for additional plant and machinery of approximately $1.0 million and payments for construction of properties of approximately $1.1 million. For the fiscal year ended March 31, 2024, payments for additional plant and machinery, and construction of a dormitory and factory expansion, amounted to approximately $1.2 million and $3.6 million, respectively.

Current wording

We had capital expenditures of approximately $5.8 million and $2.4 million in fiscal 2026 and 2025, respectively. For the fiscal year ended March 31, 2026, our capital expenditures included payments for additional plant and machinery of approximately $1.5 million and payments for acquisition of properties of approximately $3.6 million. For the fiscal year ended March 31, 2025, our capital expenditures included payments for additional plant and machinery of approximately $1.0 million and payments for construction of properties of approximately $1.1 million.

Previous wording

We project that there will be an aggregate of approximately $1.3 million and $7.8 million of capital expenditures in the fiscal years ending March 31, 2026 and 2027, respectively, for further enhancement of production capacity to meet future sales growth. The realization of these investments depends on the progress of our business development, including expanding our client base and securing increased commitments from existing customers. We expect that our capital expenditures will increase in the future as our business continues to develop and expand. We have used cash generated from operations of our subsidiaries to fund our capital commitments in the past and anticipate using such funds to fund capital expenditure commitments in the future.

Current wording

We expect that our capital expenditures will increase in the following two fiscal years to create additional capacity to underpin our long-term business plan. The realization of these investments depends on the progress of our business development, including expanding our client base and securing increased commitments from existing customers. We have used cash generated from operations of our subsidiaries to fund our capital commitments in the past. Our capital expenditure plan is highly related to customer commitments and market responses to the demand of our capacity. If growth in demand is in line with our projection, other than cash generated from the operations of our subsidiaries, we may also obtain further bank financing and raise funds from the capital market to meet our capital expenditure plan and fund our capital commitments. As of the date of this report, no material commitment has been made for the capital expenditure projections above.