HIGHWAY HOLDINGS RESTATES UNAUDITED FINANCIAL STATEMENTS FOR 3 AND 9 MONTHS ENDED DECEMBER 31, 2023 RESULTING IN HIGHER NET INCOME FOR BOTH PERIODS

Rhea-AI Summary

Highway Holdings (NASDAQ: HIHO) announced the restatement of its unaudited financial statements for the quarters ending December 31, 2023, due to a revenue recognition error caused by a change in a customer's inventory procedures. The adjustment includes removing $1.875 million in net sales and $1.921 million in cost of sales, identified during the preparation of the annual report for the fiscal year ending March 31, 2024.

Despite the adjustments, net income has increased: for Q3 of fiscal 2024, it rose from $302,000 ($0.07 per diluted share) to $348,000 ($0.08 per diluted share), and for the first nine months, it increased from $177,000 ($0.04 per diluted share) to $223,000 ($0.05 per diluted share).

The announcement reflects the company's dedication to maintaining financial accuracy and integrity.

Positive

• Net income for Q3 of fiscal 2024 increased from $302,000 to $348,000.
• Net income for the first nine months of fiscal 2024 increased from $177,000 to $223,000.

Negative

• Restatement due to a revenue recognition error related to customer inventory fulfillment changes.
• Adjustment required removal of $1.875 million in net sales.
• Adjustment required removal of $1.921 million in cost of sales.
• Investors should no longer rely on previously released financial statements.

HONG KONG, July 12, 2024 /PRNewswire/ -- Highway Holdings Limited (Nasdaq: HIHO) (the "Company" or "Highway Holdings") today announced it has restated its unaudited quarterly financial statements for the three and nine months ended December 31, 2023, which were released in an earnings press release on February 1, 2024. The decision to restate the financial statements was approved on July 12, 2024 by Highway Holdings' Board of Directors upon the recommendation of the Audit Committee of the Board of Directors and after consultation with management.

Investors should no longer rely upon the previously released financial statements cited above. Similarly, any other press releases and investor communications containing information derived from such financial statements should no longer be relied upon.

The Company has concluded that the interim financial statements cannot be relied upon due to the misapplication of a revenue recognition accounting standard following a change in inventory fulfillment and transfer procedures by one of the Company's customers. The inventory adjustment resulted in the erroneous inclusion of $1,875,000 in net sales and $1,921,000 in cost of sales from the transfers of certain parts to be included in products manufactured by the Company for its customer. This misapplication was identified during the preparation of Highway Holdings' Annual Report on Form 20-F for the fiscal year ended March 31, 2024. The restated financial statements for the three and nine months ended December 31, 2023 are attached to this press release.

The adjustments to net sales and other line items resulting from the changed inventory transfer policies resulted in an increase in net income for the third quarter of fiscal year 2024 from $302,000, or $0.07 per diluted share, to $348,000, or $0.08 per diluted share, and resulted in an increase in net income for the first nine months of fiscal year 2024 from $177,000, or $0.04 per diluted share, to $223,000, or $0.05 per diluted share in the restated financial statements

Today's announcement reiterates Highway Holdings' continued commitment to improve its practices and uphold the highest standards of financial reporting.

About Highway Holdings 

Highway Holdings is an international manufacturer of a wide variety of quality parts and products for blue chip equipment manufacturers based primarily in Germany. Highway Holdings' administrative offices are located in Hong Kong and its manufacturing facilities are located in Yangon, Myanmar and Shenzhen, China. For more information visit website www.highwayholdings.com.

Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements, which involve risks and uncertainties, including but not limited to economic, competitive, governmental, political and technological factors affecting the company's revenues, operations, markets, products and prices, the impact of the worldwide COVID-19 pandemic, and other factors discussed in the company's various filings with the Securities and Exchange Commission, including without limitation, the company's annual reports on Form 20-F.

(Financial Tables Follow)

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statement of Income
(Dollars in thousands, except per share data)
(Unaudited)
	Three Months Ended					Nine Months Ended
	December 31,					December 31,
	2023 Announced		2023 Restated		2023 Announced			2023 Restated
Net sales	$4,107		$2,232		$6,776			$4,901
Cost of sales	3,231		1,310		5,140			3,219
Gross profit	876		922		1,636			1,682
Selling, general and administrative expenses	679		679		1,728			1,728
Operating income/(loss)	197		243		(92)			(46)
Non-operating items
Exchange gain /(loss), net	27		27		58			58
Interest income	63		63		156			156
Gain/(Loss) on disposal of Asset	3		3		16			16
Other income/(expenses)	8		8		14			14
Total non-operating income/ (expenses)	101		101		244			244
Net income before income tax and non-controlling interests	298		344		152			198
Income taxes	1		1		7			7
Net income before non-controlling interests	299		345		159			205
Net loss attributable to non-controlling interests	3		3		18			18
Net income attributable to Highway Holdings Limited's shareholders	302		348		177			223
Net Gain/ (loss) per share – Basic	$0.07		$0.08		$0.04			$0.05
Net Gain/ (loss) per share - Diluted	$0.07		$0.08		$0.04			$0.05
Weighted average number of shares outstanding
Basic	4,386		4,386		4,314			4,314
Diluted	4,396		4,396		4,323			4,323

 

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(Dollars in thousands, except per share data)
	Dec 31		Dec 31
	2023 Announced		2023 Restated
Current assets:
Cash and cash equivalents	$6,186		$6,186
Accounts receivable, net of doubtful accounts	3,533		1,658
Inventories	1,812		1,858
Prepaid expenses and other current assets	200		200
Income tax recoverable	-		-
Total current assets	11,731		9,902
Property, plant and equipment, (net)	379		379
Operating lease right-of-use assets	2,004		2,004
Long-term deposits	205		205
Long-term loan receivable	95		95
Investments in equity method investees	-		-
Total assets	$14,414		$12,585
Current liabilities:
Accounts payable	$2,477		$602
Operating lease liabilities, current	586		586
Other liabilities and accrued expenses	1,845		1,845
Income tax payable	551		551
Dividend payable	46		46
Total current liabilities	5,505		3,630
Long term liabilities:
Operating lease liabilities, non-current	1,013		1,013
Deferred income taxes	98		98
Long terms accrued expenses	17		17
Total liabilities	6,633		4,758
Shareholders' equity:
Preferred shares, $0.01 par value	-		-
Common shares, $0.01 par value	44		44
Additional paid-in capital	12,140		12,140
Accumulated deficit	(3,879)		(3,833)
Accumulated other comprehensive income/(loss)	(517)		(517)
Non-controlling interest	(7)		(7)
Total shareholders' equity	7,781		7,827
Total liabilities and shareholders' equity	$14,414		$12,585

 

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SOURCE Highway Holdings Limited

FAQ

Why did Highway Holdings restate its financial statements for Q3 and the first nine months ended December 31, 2023?

Highway Holdings restated its financial statements due to a revenue recognition error caused by changes in a customer's inventory fulfillment procedures.

How did the restatement affect Highway Holdings' net income for Q3 of fiscal 2024?

The restatement increased Highway Holdings' net income for Q3 of fiscal 2024 from $302,000 ($0.07 per diluted share) to $348,000 ($0.08 per diluted share).

What was the impact on Highway Holdings' net income for the first nine months of fiscal 2024 after the restatement?

After the restatement, Highway Holdings' net income for the first nine months of fiscal 2024 increased from $177,000 ($0.04 per diluted share) to $223,000 ($0.05 per diluted share).

What financial adjustments were made in Highway Holdings' restated financial statements?

The restatement included the removal of $1.875 million in net sales and $1.921 million in cost of sales.

Should investors rely on the previously released financial statements of Highway Holdings for Q3 and the first nine months ended December 31, 2023?

No, investors should no longer rely on the previously released financial statements for those periods.