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, 2025

☐ 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 jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

277 Fairfield Road, Suite 338

Fairfield, New Jersey 07004

(Address of principal executive offices) (Zip Code)

(201) 285-7973

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

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

As of February 10, 2026, there were 12,699,940 shares of common stock, par value $0.001 per share, outstanding.

Jerash Holdings (US), Inc.

Form 10-Q

For the Quarterly Period Ended December 31, 2025

Contents

Part I	Financial Information	1

Item 1	Financial Statements	1

	Condensed Consolidated Balance Sheets as of December 31, 2025 (Unaudited) and March 31, 2025	1

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended December 31, 2025 and 2024	2

	Unaudited Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended December 31, 2025 and 2024	3

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2025 and 2024	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3	Quantitative and Qualitative Disclosures about Market Risk	32

Item 4	Controls and Procedures	33

Part II	Other Information	34

Item 1	Legal Proceedings	34

Item 1A	Risk Factors	34

Item 2	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	34

Item 3	Defaults Upon Senior Securities	34

Item 4	Mine Safety Disclosures	34

Item 5	Other Information	34

Item 6	Exhibits	35

Signatures		36

JERASH HOLDINGS (US), INC.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

JERASH HOLDINGS (US), INC.,

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	December 31, 2025			March 31, 2025
	(Unaudited)
ASSETS
Current Assets:
Cash	$	11,454,016		$	13,346,791
Accounts receivable, net		7,831,553			3,076,074
Inventories		26,030,818			27,704,829
Prepaid expenses and other current assets		3,360,827			3,648,321
Advances to suppliers, net		8,092,421			6,644,194
Total Current Assets		56,769,635			54,420,209

Restricted cash - non-current		1,701,752			1,717,248
Long-term deposits		604,511			464,934
Property, plant, and equipment, net		23,995,370			25,023,681
Goodwill		499,282			499,282
Operating lease right of use assets		644,380			850,172
Total Assets	$	84,214,930		$	82,975,526
LIABILITIES AND EQUITY

Current Liabilities:
Credit facilities	$	9,339,758		$	4,512,462
Accounts payable		3,587,871			6,507,308
Accrued expenses		3,963,303			4,342,436
Income tax payable - current		1,124,150			1,305,386
Uncertain tax provision		-			175,290
Other payables		1,888,950			2,149,185
Deferred revenue		294,616			487,004
Operating lease liabilities - current		180,040			339,699
Total Current Liabilities		20,378,688			19,818,770

Deferred tax liabilities, net		120			120
Operating lease liabilities - non-current		184,914			287,527
Total Liabilities		20,563,722			20,106,417

Commitments and Contingencies (Note 16)

Equity
Preferred stock, $0.001 par value; 500,000 shares authorized; none issued and outstanding	$	-		$	-
Common stock, $0.001 par value; 30,000,000 shares authorized; 12,939,418 shares issued; 12,699,940 shares outstanding as of December 31, 2025 and March 31, 2025, respectively		12,939			12,939
Additional paid-in capital		26,355,155			25,674,835
Treasury stock, 239,478 shares		(1,169,046	)		(1,169,046	)
Statutory reserve		413,821			413,821
Retained earnings		38,442,766			38,396,901
Accumulated other comprehensive loss		(465,745	)		(513,122	)
Total Jerash Holdings (US), Inc. Stockholders’ Equity		63,589,890			62,816,328

Noncontrolling interest		61,318			52,781
Total Equity		63,651,208			62,869,109

Total Liabilities and Equity	$	84,214,930		$	82,975,526

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

JERASH HOLDINGS (US), INC.,

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	2025			2024			2025			2024

Revenue, net	$	41,769,186		$	35,384,737		$	123,367,028		$	116,560,580
Cost of goods sold		34,720,025			30,001,947			103,939,307			99,480,036
Gross Profit		7,049,161			5,382,790			19,427,721			17,080,544

Selling, general, and administrative expenses		4,877,501			4,200,975			14,756,182			14,650,105
Stock-based compensation expenses		228,825			474,088			680,320			1,417,111
Total Operating Expenses		5,106,326			4,675,063			15,436,502			16,067,216

Income from Operations		1,942,835			707,727			3,991,219			1,013,328

Other Income (Expenses):
Interest expenses		(393,190	)		(364,939	)		(1,242,520	)		(1,348,291	)
Other (expenses) income, net		(25,250	)		113,240			61,217			306,441
Total other expenses, net		(418,440	)		(251,699	)		(1,181,303	)		(1,041,850	)

Net income (loss) before provision for income taxes		1,524,395			456,028			2,809,916			(28,522	)

Income tax expenses		367,935			449,714			850,523			667,312

Net income (loss)		1,156,460			6,314			1,959,393			(695,834	)

Net (loss) income attributable to noncontrolling interest		(14,115	)		12,120			8,537			(100	)
Net income (loss) attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$	1,170,575		$	(5,806	)	$	1,950,856		$	(695,734	)

Net income (loss)	$	1,156,460		$	6,314		$	1,959,393		$	(695,834	)
Other Comprehensive Income (Loss):
Foreign currency translation income (loss)		55,028			(140,969	)		47,377			(124,473	)
Total Comprehensive Income (Loss)		1,211,488			(134,655	)		2,006,770			(820,307	)
Comprehensive (loss) income attributable to noncontrolling interest		(14,115	)		12,120			8,537			(100	)
Comprehensive Income (Loss) Attributable to Jerash Holdings (US), Inc.’s Common Stockholders	$	1,225,603		$	(146,775	)	$	1,998,233		$	(820,207	)

Earnings (Loss) Per Share Attributable to Common Stockholders:
Basic and diluted	$	0.09		$	(0.00	)	$	0.15		$	(0.06	)

Weighted Average Number of Shares
Basic		12,699,940			12,294,840			12,699,940			12,294,840
Diluted		13,221,380			12,294,840			13,158,039			12,294,840

Dividend per share	$	0.05		$	0.05		$	0.15		$	0.15

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

JERASH HOLDINGS (US), INC.,

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE NINE MONTHS ENDED DECEMBER 31, 2025 AND 2024

	Preferred Stock				Common Stock				Additional Paid-in		Treasury			Statutory		Retained			Accumulated Other Comprehensive			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital		Stock			Reserve		Earnings			Income (Loss)			interest			Equity
Balance at March 31, 2024		-	$	-		12,534,318	$	12,534	$	23,917,094	$	(1,169,046	)	$	413,821	$	41,704,238		$	(492,319	)	$	44,341		$	64,430,663

Stock-based compensation expense for the restricted stock units issued under stock incentive plan		-		-		-		-		1,417,111		-			-		-			-			-			1,417,111
Net loss		-		-		-		-		-		-			-		(695,734	)		-			(100	)		(695,834	)
Dividend payments		-		-		-		-		-		-			-		(1,844,226	)		-			-			(1,844,226	)
Foreign currency translation loss		-		-		-		-		-		-			-		-			(124,473	)		-			(124,473	)
Balance at December 31, 2024 (unaudited)		-	$	-		12,534,318	$	12,534	$	25,334,205	$	(1,169,046	)	$	413,821	$	39,164,278		$	(616,792	)	$	44,241		$	63,183,241

Balance at March 31, 2025		-	$	-		12,939,418	$	12,939	$	25,674,835	$	(1,169,046	)	$	413,821	$	38,396,901		$	(513,122	)	$	52,781		$	62,869,109

Stock-based compensation expense for the restricted stock units issued under stock incentive plan		-		-		-		-		680,320		-			-		-			-			-			680,320
Net income		-		-		-		-		-		-			-		1,950,856			-			8,537			1,959,393
Dividend payments		-		-		-		-		-		-			-		(1,904,991	)		-			-			(1,904,991	)
Foreign currency translation income		-		-		-		-		-		-			-		-			47,377			-			47,377
Balance at December 31, 2025 (unaudited)		-	$	-		12,939,418	$	12,939	$	26,355,155	$	(1,169,046	)	$	413,821	$	38,442,766		$	(465,745	)	$	61,318		$	63,651,208

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

FOR THE THREE MONTHS ENDED DECEMBER 31, 2025 AND 2024 (UNAUDITED)

									Additional										Accumulated Other
	Preferred Stock				Common Stock				Paid-in		Treasury			Statutory		Retained			Comprehensive			Noncontrolling			Total
	Shares		Amount		Shares		Amount		Capital		Stock			Reserve		Earnings			Income (Loss)			interest			Equity
Balance at September 30, 2024 (unaudited)		-	$	-		12,534,318	$	12,534	$	24,860,117		(1,169,046	)	$	413,821	$	39,784,826		$	(475,823	)	$	32,121		$	63,458,550

Stock-based compensation expense for the restricted stock units issued under stock incentive plan		-		-		-		-		474,088		-			-		-			-			-			474,088
Net (loss) income		-		-		-		-		-		-			-		(5,806	)		-			12,120			6,314
Dividend payment		-		-		-		-		-		-			-		(614,742	)		-			-			(614,742	)
Foreign currency translation loss		-		-		-		-		-		-			-		-			(140,969	)		-			(140,969	)
Balance at December 31, 2024 (unaudited)		-	$	-		12,534,318	$	12,534	$	25,334,205	$	(1,169,046	)	$	413,821	$	39,164,278		$	(616,792	)	$	44,241		$	63,183,241

Balance at September 30, 2025 (unaudited)		-	$	-		12,939,418	$	12,939	$	26,126,330	$	(1,169,046	)	$	413,821	$	37,907,188		$	(520,773	)	$	75,433		$	62,845,892

Stock-based compensation expense for the restricted stock units issued under stock incentive plan		-		-		-		-		228,825		-			-		-			-			-			228,825
Net income (loss)		-		-		-		-		-		-			-		1,170,575			-			(14,115	)		1,156,460
Dividend payment		-		-		-		-		-		-			-		(634,997	)		-			-			(634,997	)
Foreign currency translation income		-		-		-		-		-		-			-		-			55,028			-			55,028
Balance at December 31, 2025 (unaudited)		-	$	-		12,939,418	$	12,939	$	26,355,155	$	(1,169,046	)	$	413,821	$	38,442,766		$	(465,745	)	$	61,318		$	63,651,208

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

JERASH HOLDINGS (US), INC.,

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Nine Months Ended December 31,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,959,393		$	(695,834	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		2,274,388			1,968,992
Stock-based compensation expenses		680,320			1,417,111
Credit loss recovery, net		-			(17,054	)
Amortization of operating lease right-of-use assets		451,890			447,646
Uncertain tax provision		-			(273,582	)

Changes in operating assets:
Accounts receivable		(4,755,479	)		(1,803,392	)
Inventories		1,674,011			8,123,439
Prepaid expenses and other current assets		287,497			(930,084	)
Advances to suppliers		(1,448,228	)		(4,776,571	)
Changes in operating liabilities:
Accounts payable		(2,919,438	)		(2,452,154	)
Accrued expenses		(379,132	)		(335,251	)
Other payables		(260,235	)		(408,900	)
Deferred revenue		(192,388	)		48,442
Operating lease liabilities		(508,370	)		(505,317	)
Income tax payable		(355,724	)		(388,766	)
Net cash used in operating activities		(3,491,495	)		(581,275	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant, and equipment		(936,444	)		(491,676	)
Payments for construction of properties		-			(585,715	)
Payment for long-term deposits		(435,650	)		(594,442	)
Net cash used in investing activities		(1,372,094	)		(1,671,833	)

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments		(1,904,991	)		(1,844,226	)
Repayment from short-term loan		(16,118,301	)		(9,288,656	)
Proceeds from short-term loan		20,945,597			14,256,600
Net cash provided by financing activities		2,922,305			3,123,718

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND RESTRICTED CASH		33,013			(124,559	)

NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH		(1,908,271	)		746,051

CASH AND RESTRICTED CASH, BEGINNING OF THE PERIOD		15,064,039			14,036,867

CASH AND RESTRICTED CASH, END OF THE PERIOD	$	13,155,768		$	14,782,918

CASH AND RESTRICTED CASH, END OF THE PERIOD	$	13,155,768		$	14,782,918
LESS: NON-CURRENT RESTRICTED CASH		1,701,752			1,563,809
CASH, END OF THE PERIOD	$	11,454,016		$	13,219,109

Supplemental disclosure information:
Cash paid for interest	$	1,242,520		$	1,348,291
Income tax paid	$	1,214,074		$	1,329,150

Non-cash investing and financing activities
Equipment obtained by utilizing long-term deposit	$	296,099		$	289,451
Operating lease right of use assets obtained in exchange for operating lease obligations	$	242,493		$	186,726

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

JERASH HOLDINGS (US), INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

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

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

Jerash for Industrial Embroidery Company (“Jerash Embroidery”) and Chinese Garments and Fashions Manufacturing Company Limited (“Chinese Garments”) were both established in Amman, Jordan, as limited liability companies on March 11, 2013 and June 13, 2013, respectively, each with a declared capital of JOD 50,000 (approximately US$71,000). Jerash Embroidery and Chinese Garments are wholly owned subsidiaries of Jerash Garments.

Al-Mutafaweq Co. for Garments Manufacturing Ltd. (“Paramount”) is a contract garment manufacturer that was established in Amman, Jordan, as a limited liability company on October 24, 2004 with a declared capital of JOD 100,000 (approximately US$141,000). On December 11, 2018, Jerash Garments and the sole shareholder of Paramount entered into an agreement pursuant to which Jerash Garments acquired all of the outstanding shares of stock of Paramount. Jerash Garments assumed ownership of all of the machinery and equipment owned by Paramount. Paramount had no other significant assets or liabilities and no operating activities or employees at the time of this acquisition, so this transaction was accounted for as an asset acquisition. As of June 18, 2019, Paramount became a subsidiary of Jerash Garments.

Jerash The First for Medical Supplies Manufacturing Company Limited (“Jerash The First”) was established in Amman, Jordan, as a limited liability company on July 6, 2020, with a registered capital of JOD 150,000 (approximately US$212,000). Jerash The First is engaged in the production of medical supplies in Jordan and is a wholly owned subsidiary of Jerash Garments.

Mustafa and Kamal Ashraf Trading Company (Jordan) for the Manufacture of Ready-Make Clothes LLC (“MK Garments”) is a garment manufacturer that was established in Amman, Jordan, as a limited liability company on January 23, 2003 with a declared capital of JOD 100,000 (approximately US$141,000). On June 24, 2021, Jerash Garments and the sole shareholder of MK Garments entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of MK Garments. As of October 7, 2021, MK Garments became a subsidiary of Jerash Garments.

Kawkab Venus Dowalyah Lisenaet Albesah (“Kawkab Venus”) was established in Amman, Jordan, as a limited liability company on January 15, 2015 with a declared capital of JOD 50,000 (approximately US$71,000). It holds land with factory premises, which are leased to MK Garments. On July 14, 2021, Jerash Garments and the sole shareholder of Kawkab Venus entered into an agreement, pursuant to which Jerash Garments acquired all of the outstanding stock of Kawkab Venus. Apart from the land and factory premises, Kawkab Venus had no other significant assets or liabilities and no operation activities or employees at the time of acquisition, so the acquisition was accounted for as an asset acquisition. As of August 21, 2022, Kawkab Venus became a subsidiary of Jerash Garments.

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

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

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS (continued)

J&B International Limited (“J&B”) is a joint venture company established in Hong Kong on January 10, 2023. On March 20, 2023, Treasure Success and P. T. Eratex (Hong Kong) Limited (“Eratex”) entered into a Joint Venture and Shareholders’ Agreement, pursuant to which Treasure Success acquired 51% of the equity interests in J&B on April 11, 2023. The declared capital is 500,000 Hong Kong Dollars (“HKD”) (approximately $64,000). J&B engages in the garment trading and manufacturing business for orders from customers. On June 16, 2025, Treasure Success and Eratex attended a meeting of shareholders of J&B and approved the termination of J&B’s business operations and the dissolution of J&B, which is expected to complete in April 2027.

Jerash Newtech (Hong Kong) Holdings Limited (“Jerash Newtech”) is a joint venture company established in Hong Kong on November 3, 2023. On October 10, 2023, Treasure Success and Newtech Textile (HK) Limited entered into a Joint Venture and Shareholder’s Agreement to establish a new joint venture for the establishment of a fabric facility in Jordan. On November 3, 2023, Jerash Newtech was established according to the aforementioned Joint Venture and Shareholder’s Agreement. Treasure Success owns 51% of the equity interests in Jerash Newtech. The declared capital of Jerash Newtech is US$100,000. On August 20, 2025, Treasure Success and Newtech Textile (HK) Limited attended a meeting of shareholders of Jerash Newtech and agreed to and authorized an application to be made for the deregistration of Jerash Newtech.

Jiangmen Treasure Success Business Consultancy Company Limited (“Jiangmen Treasure Success”) was organized on August 28, 2019 under the laws of China in Jiangmen City of Guangdong Province in China with a total registered capital of HKD15 million (approximately $1.9 million) to provide support in sales and marketing, sample development, merchandising, procurement, and other areas. Treasure Success owns 100% of the equity interests in Jiangmen Treasure Success.

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

The Company is engaged primarily in the manufacturing and exporting of customized, ready-made sportswear and outerwear produced in its facilities in Jordan and sold in the United States, Jordan, and other countries.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included in the Company’s unaudited condensed consolidated financial statements. The consolidated balance sheet as of March 31, 2025 has been derived from the audited consolidated balance sheet at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025, as filed with the U.S. Securities and Exchange Commission (the “SEC”). Operating results for the three and nine months ended December 31, 2025 are not necessarily indicative of the results that may be expected for the year ending March 31, 2026.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the financial statements of Jerash Holdings, its wholly owned subsidiaries, and two non-wholly owned subsidiaries.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Principles of Consolidation (continued)

Non-wholly owned subsidiaries are entities that the reporting parent entity does not own equity interests in full. Noncontrolling interest is evaluated with a depiction of the portion of a non-wholly owned subsidiary’s net assets, net income, and net comprehensive income that is attributable to holders of equity-classified ownership interests other than the reporting parent entity. As mentioned in Note 1, the Company holds 51% of equity interest in J&B and Jerash Newtech through its wholly owned subsidiary, Treasure Success. The Company consolidates J&B and Jerash Newtech and reports noncontrolling interest to reflect the portion of their equity that is not attributable to the Company as the controlling shareholder. As of December 31, 2025 and 2024, noncontrolling interest was $61,318 and $44,241, respectively.

All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Cash

The Company’s cash consists of cash on hand and cash deposited in financial institutions. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the original date of purchase to be cash equivalents. As of December 31, 2025 and March 31, 2025, the Company had no cash equivalents.

Restricted Cash

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

Accounts Receivable, Net

Accounts receivable are recognized and carried at the original invoiced amount less an estimated allowance for credit loss. The Company usually grants extended payment terms to customers with good credit standing and determines the adequacy of credit losses based on the historical level of credit loss, current economic trends, and reasonable and supportable forecasts that affect the collectability of the future cash flows.

Inventories

Inventories are stated at the lower of cost or net realizable value. Inventories include the cost of raw materials, freight, direct labor, and related production overhead. The cost of inventories is determined using the First-in, First-out method. The Company periodically reviews its inventories for excess or slow-moving items and makes provisions as necessary to properly reflect inventory value.

Advances to Suppliers, Net

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

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Credit Loss

The Company maintains expected loss methodology that is referred to as the current expected credit loss methodology. The expected credit loss impairment model requires the entity to recognize its estimate of expected credit losses for affected financial assets using an allowance for credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.

The Company’s accounts receivable and other receivables, which are included in prepaid expenses and other current assets line items in the consolidated balance sheets, are within the scope of ASC Topic 326. The Company measures expected credit losses of account receivables and other receivables, on a collective basis when similar risk characteristics exist. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses based upon assessment of various factors, including historical experience, the age of the receivables, creditworthiness of the customers and other debtors, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from the customers and other debtors. The Company also provides specific provisions for allowance when facts and circumstances indicate that the receivable is unlikely to be collected.

Expected credit losses are included in general and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss). After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

Property, Plant, and Equipment, Net

Property, plant, and equipment are recorded at cost, reduced by accumulated depreciation and amortization. Depreciation and amortization expense related to property, plant, and equipment is computed using the straight-line method based on the 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		15-25 years
Equipment and machinery		3-5 years
Office and electronic equipment		3-5 years
Automobiles		5 years
Leasehold improvements		Lesser of useful life and lease term

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 operations and comprehensive income (loss).

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 that 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 and nine months ended December 31, 2025 and 2024.

Goodwill

Goodwill represents the excess purchase price paid over the fair value of the net assets of acquired companies. Goodwill is not amortized. As of December 31, 2025 and March 31, 2025, the carrying amount of goodwill was $499,282. Goodwill is tested for impairment on an annual basis, or in interim periods if indicators of potential impairment exist, based on the one reporting unit. The Company has the option to perform a qualitative assessment to determine whether it is necessary to perform the quantitative goodwill impairment test. When performing the quantitative impairment test, the Company compares the fair value of its only reporting unit with the carrying amounts. The Company would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company concluded that no impairment of its goodwill occurred for the three and nine months ended December 31, 2025 and 2024.

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. Virtually all of the Company’s contracts are short-term. The Company has minimal incremental costs of obtaining a contract, which are expensed when incurred. 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 14 to 150 days of the invoice date. The contracts do not have significant financing components. Shipping and handling costs associated with outbound freight from Jordan export dock are not an obligation of the Company. Returns and allowances are not a significant aspect of the revenue recognition process as historically they have been immaterial.

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

The Company applies the “distinct” guidance in ASC 606-10-25-19 through ASC 606-10-25-22 to identify the specified goods or services. The Company evaluates the indicators in ASC 606-10-55-39 along with all relevant facts and circumstances in relation to our assessment. As the Company is primarily responsible for fulfilling the promise to provide the specified good and service; the Company has inventory risk before the specified good or service has been transferred to a customer, or after transfer of control to the customer; and the Company has discretion in establishing the prices for the specified goods or service, the Company concluded that it is the principal of the sales transactions and revenue should be recognized on a gross basis.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue Recognition (continued)

The Company does not have any contract assets since the Company recognizes accounts receivable and revenue for the transfer of promised goods to customer in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods. The Company has an unconditional right to consideration when the Company has satisfied its performance obligation and payment to the accounts receivable from customers is not contingent on a future event. The Company had contract liabilities of $294,616 and $487,004 as of December 31, 2025 and March 31, 2025, respectively. As of December 31, 2025, $294,616 deferred revenue was expected to be recognized within fiscal 2026.

Segment

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. Chief Operational Decision Makers (“CODM”), including Chief Executive Officer and Chief Financial Officer, are making operating decisions and assessing performance as the source for determining the Company’s reportable segments. CODM reviews operation results on the consolidated revenue, gross profit, selling, general, and administrative expenses, interest expenses, stock-based compensation expense, and net income or loss regularly. In selling, general, and administration expense, CODM reviews staff payroll and other related expenses, inventory export and related costs, depreciation, and others major items. 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 15—Segment Reporting”).

Shipping and Handling

Proceeds collected from customers for shipping and handling costs are included in revenue. Shipping and handling costs are expensed as incurred and are included in operating expenses, as a part of selling, general, and administrative expenses. Total shipping and handling expenses were $640,252 and $557,344 for the three months ended December 31, 2025 and 2024, respectively. Total shipping and handling expenses were $2,152,986 and $2,528,487 for the nine months ended December 31, 2025 and 2024, respectively.

Income and Sales Taxes

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled. Jerash Holdings and Jerash Supplies are incorporated/formed in the State of Delaware and are subject to federal income tax in the United States of America. Treasure Success, Ever Winland, J&B, and Jerash Newtech are registered in Hong Kong and are subject to Profits Tax in Hong Kong. Jiangmen Treasure Success is incorporated in China and is subject to corporate income tax in China. Jerash Garments, Jerash Embroidery, Chinese Garments, Paramount, Jerash The First, MK Garments, and Kawkab Venus are subject to income tax in Jordan, unless an exemption is granted. In accordance with Development Zone law, Jerash Garments and its subsidiaries were subject to corporate income tax in Jordan at a rate of 20% plus a 1% social contribution starting effective from January 1, 2024. Effective from October 1, 2025, Jerash Garments has been granted tax concession at a corporate income tax rate 10% plus a 1% social contribution in accordance with the Jordanian Income Tax Law.

Jerash Garments and its subsidiaries are subject to local sales tax of 16% on purchases. Jerash Garments was granted a sales tax exemption from the Jordanian Investment Commission for the period from June 1, 2015 to June 1, 2018 that allowed Jerash Garments to make purchases with no sales tax charge. The exemption has been extended to February 5, 2026 and further extension is being processed.

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 the 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, any changes in tax rates and the impact on deferred income taxes are recognized in the unaudited condensed consolidated statements of operations and comprehensive income (loss) in the period when the new rates are enacted. A valuation allowance is recognized if it is more likely than not that some portion, or all of, a deferred tax asset will not be realized.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income and Sales Taxes (continued)

The Company applies the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes,” which provides clarification related to the process associated with accounting for uncertain tax positions recognized in the financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of the date of this filing, the Company is current on all corporate, federal, and state tax returns. The Company’s policy is to record interest and penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2025 and March 31, 2025, uncertain tax provision was $nil and $175,290, respectively.

Foreign Currency Translation

The reporting currency of the Company is the U.S. dollar (“US$” or “$”). The Company uses JOD in Jordan companies, HKD in Treasure Success, Ever Winland, J&B, and Jerash Newtech, and Chinese Yuan (“CNY”) in Jiangmen Treasure Success as the functional currency of each above-mentioned entity. The assets and liabilities of the Company have been translated into US$ using the exchange rates in effect at the balance sheet date, equity accounts have been translated at historical rates, and revenue and expenses have been translated into US$ using average exchange rates in effect during the reporting period. Cash flows are also translated at average translation rates for the periods. Therefore, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income or loss. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the unaudited condensed consolidated statements of operations and comprehensive income (loss) as incurred, and the total amount of transaction gains and losses were immaterial for the three and nine months ended December 31, 2025 and 2024.

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

	December 31, 2025	March 31, 2025
Period-end spot rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.8002	US$1=HKD7.7790
	US$1=CNY6.9949	US$1=CNY7.2572
Average rate	US$1=JOD0.7090	US$1=JOD0.7090
	US$1=HKD7.8002	US$1=HKD7.7925
	US$1=CNY7.1589	US$1=CNY7.2150

Stock-Based Compensation

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

The Company estimates the fair value of stock options using a Black-Scholes model. This model is affected by the Company’s stock price on the date of the grant as well as assumptions regarding a number of 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 the expected term and expected volatility are the two assumptions that significantly affect the grant date fair value.

●

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

●

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

●

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

●

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

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Earnings or 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, warrants, and restricted stock units (“RSUs”)) 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 14–Earnings (Loss) per Share”).

Comprehensive Income or Loss

Comprehensive income or loss consists of two components, net income or loss and other comprehensive income or loss. The foreign currency translation gain or loss resulting from translation of the financial statements expressed in JOD or HKD or CNY to US$ is reported in other comprehensive income or loss in the unaudited condensed consolidated statements of operations and comprehensive income (loss).

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

SEC Form 10-Q filed by Jerash Holdings (US) Inc.