HIGHWAY HOLDINGS REPORTS SECOND QUARTER FISCAL YEAR 2026 RESULTS

Financial Performance - Net sales for the second quarter of fiscal year 2026 were $1.18 million, a decrease from $2.11 million in the same quarter of fiscal year 2025, representing a decline of approximately 44% [2][9] - The net loss for the second quarter of fiscal year 2026 was $373,000, or $0.08 per diluted share, compared to a net income of $231,000, or $0.05 per diluted share in the second quarter of fiscal year 2025 [2][9] - Gross profit for the second quarter of fiscal year 2026 was $301,000, down from $834,000 in the prior year, with gross profit as a percentage of sales decreasing to 25.5% from 39.4% [2][9] Operational Challenges - The company faced adverse pressure on its long-term OEM business due to a reorganization of a customer's production plant, which shifted a significant portion of its motor OEM business to the customer's own manufacturing in Czechia [3] - Despite the reduction in revenue from one OEM customer, another OEM customer has approved mass production of its motor product, which is expected to compensate for the loss over time [3] - The company is also experiencing a workforce reduction in its Myanmar plant due to the shift in motor manufacturing to China [3] Strategic Initiatives - The company is exploring mergers and acquisitions to ease its dependency on existing customers, having identified a suitable target for negotiation that is expected to create synergies [3] - There is an ongoing effort to enter the Chinese market, focusing on manufacturing for local demand and exploring new revenue streams related to services for the elderly population [3] - These new initiatives are aimed at reinvigorating revenue and profit growth while building a more stable business model [3] Balance Sheet Strength - The company's balance sheet remains strong, with total assets of $8.37 million and cash and cash equivalents exceeding $5.6 million, equating to approximately $1.21 per diluted share [6] - Total shareholders' equity at September 30, 2025, was $6.0 million, or $1.30 per diluted share, indicating a solid financial position despite recent operational challenges [6]