A small California-based company that runs mass transit operations in Africa said it will restate its results for the first two quarters of fiscal 2007. The adjustment stems from several financing transactions.
Transnational Automotive Group said it will reduce net income by $600,000 to $700,000 for the three months ended May 31, 2006 and August 31, 2006 as a result of accounting for the valuation of several securities transactions and tax accruals. The transactions include: the beneficial conversion feature of convertible debentures, the valuation of warrants issued in connection with the convertible debentures, and the interest accrual on outstanding convertible debentures.
In addition, the company, which runs mass transit operations in Cameroon and other sub-Saharan African countries, expects that total assets and total liabilities will increase by about $900,000 to $1 million to reflect the accrual of custom duty and value-added taxes owed to the government of Cameroon for the company’s first shipment of 28 inter-city and city buses.
The company added that it is unable to provide the precise impact of the restatement since it has not concluded its review of the issues. “We are committed to maintaining the highest possible standards of financial reporting and have expanded our detailed accounting review to ensure compliance with all applicable requirements of accounting principles generally accepted in the United States and local business and tax laws governing our subsidiaries’ operations in Cameroon,” said chief financial officer Seid Sadat. He noted that the restatement does not affect the bus operator’s “business prospects” or the expansion of the company’s mass transit operations.
The Los Angeles-based company, which sports a $67 million market capitalization, has operating units in Cameroon, and what it calls early-stage business development efforts in other Sub-Saharan African nations.