SHENZHEN, China, Oct. 17 /PRNewswire-Asia-FirstCall/ -- Universal Travel Group (NYSEAmex: UTA) (the “Company”), a growing travel services provider in China offering packaged tours, air ticketing, and hotel reservation services both online and via customer service representatives, today announced that the Company expects to restate its previously issued financial statements for the first two quarters of fiscal 2009 to reflect the proper adoption of non-cash related accounting treatment of warrants the Company issued in connection with the “Securities Purchase Agreement” dated August 28, 2008, based on Emerging Issues Task Force Issue No. 07-05, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” ("EITF 07-05").
EITF 07-05 requires issuers to record as liabilities financial instruments which provide "down round" protection in the form of a "hard ratchet" adjustment mechanism to the relevant exercise or conversion price, which was originally designed to protect holders from dilutive issuances of a company's stock. EITF 07-05 was implemented for fiscal years beginning after December 15, 2008 and requires that warrants with such provisions no longer be recorded as equities and instead be recorded as liabilities since a hard ratchet provision may be considered a type of guarantee provided to the holder of the financial instrument. Universal Travel Group adopted EITF 07-05 to properly account for the value of warrants the Company issued in August 2008.
As a result of this change in accounting treatment, the Company anticipates making a positive non-cash adjustment to its income statement of $113,000 for the first quarter of fiscal 2009 and a negative non-cash adjustment of $5.7 million for the second quarter of fiscal 2009. The Company also expects to record non-cash adjustments in subsequent reporting periods, depending on the changes in the fair value of the Company’s warrants, which will be subject to, among other factors, changes in the Company's share price.
Upon completing its assessment of the adoption of EITF 07-05, the Company expects to file amendments to its Form 10-Q for the affected quarterly periods as soon as possible.
About Universal Travel Group
Universal Travel Group, a growing travel services provider in China, is engaged in providing reservation, booking, and domestic and international travel and tourism services via the Internet and through customer service representatives. Under the theme “Wings towards a more colorful life” the company's core services include package tours for customers and reservation services for airline tickets and hotels. In 2007, Universal Travel Group completed the acquisitions of Shenzhen Speedy Dragon, specializing in air cargo transportation; Xi’an Golden Net, specializing in travel packaged tours; Shanghai LanBao, specializing in hotel reservation and Foshan Overseas International, a China-based company that handles domestic and international travel inquiries. In 2009, Universal Travel Group sold Shenzhen Speedy Dragon to focus on more profitable travel related businesses and its cost effective TRIPEASY Kiosks expansion. Universal Travel Group's goal is to become China’s leading travel services provider in all fields of the tourism industry. For more information about the Company, please visit us.cnutg.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains certain statements that may include “forward-looking statements” within the meaning of federal securities laws. All statements, other than statements of historical facts, included herein are “forward-looking statements”. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the Company’s ability to successfully expand its market presence and those discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Company Contact:
Mr. Jing Xie
Secretary of Board and Vice President
Universal Travel Group
Phone: +86-755-8366-8489
Email: 06@cnutg.cn
us.cnutg.com
Investor Relations Contact:
Mr. Crocker Coulson, President
CCG Investor Relations
Phone: +1-646-213-1915 (NY office)
Email: crocker.coulson@ccgir.com
Web: www.ccgirasia.com
