Tongxin International Ltd (OTC:TXIC)

TONGXIN INTERNATIONAL, LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(US$ amounts expressed in thousands)

Item 4.01, Changes in Registrant’s Certifying Accountant.

Tongxin entertains proposals from new auditors to complete audits

Changsha, China, Feb 19, 2014 - Tongxin International Ltd. (PINKSHEETS: TXIC), a China-based manufacturer of engineered vehicle body structures (“EVBS” or truck cabs) and stamped parts for the commercial automotive industry, received confirmation from BDO USA, LLP on February 19, 2014 regarding the cessation of the mutual client-auditor relationship. BDO was the auditor for Tongxin International since 2009. The Tongxin Board of Directors is currently entertaining proposals from several new auditors to fill the vacancy to complete all outstanding and future audits.

Full Year 2012 Results

• Total revenues for the year ended December 31, 2011 of $101.8 million, compared to $104.7 million of total revenues which were previously reported (unaudited) for the year ended December 31, 2010.
• The Company has reported an operating loss of $(5.4) million for the year ended December 31, 2011, less than the unaudited operating loss of $(9.4) million for the year ended December 31, 2010.

The Company believes that a major factor affecting the production of cabs was the Chinese governmental actions tightening monetary policy. The Company also believes that the decrease in its total revenue reflects slower economic growth in China in 2011 and reduced credit availability for the purchase of commercial vehicles in China. 

CHANGSHA, CHINA--(Marketwire - Jul 23, 2012) - Tongxin International Ltd. (PINKSHEETS: TXIC), a China-based manufacturer of engineered vehicle body structures ("EVBS") and stamped parts for the commercial automotive industry, today reported that the United States District Court for the Central District of California granted final approval of the settlement agreement entered between Tongxin and the plaintiffs in the class-action lawsuits against the Company filed in January 2011.

A tentative settlement agreement with the plaintiffs of the shareholder lawsuits was reached earlier this year, and the Court previously granted preliminary approval of the settlement. The hearing on the motion for final approval of the settlement was held on July 9, 2012 and approval was granted by the Court.

Under the settlement agreement, all shareholder lawsuits against the Company will be terminated in return for payment of a total settlement amount of $3 million, which is to be paid by the Company's D&O insurance carrier.

The class covered by the lawsuits consists of all persons who purchased Tongxin common stock during the period from May 18, 2009 through December 17, 2010. Plaintiffs had alleged that Tongxin and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing, between May 18, 2009 and December 17, 2010, allegedly materially false and misleading statements regarding Tongxin International's business and financial results. Under the terms of the settlement as approved by the Court, there is no admission of any validity of the claims, no admission of any wrongdoing, no admission of any liability, and no admission of any fault.

Six Month Results For Period Ended June 30, 2011

• Net revenue for the six months ended June 30, 2011 was $55.3 million, a 3% increase from net revenue of $53.7 million reported for the prior six-month period ended June 30, 2010.
• The Company reported a net loss of $(2.63) million for the six months ended June 30, 2011, compared to net income of $1.7 million for the prior year period.

Duanxiang Zhang, Chairman of Tongxin International, stated, "Tongxin continues to demonstrate its leadership position within the commercial vehicle market with the introduction of new EVBS models for all types of trucks. We are pleased with the initial demand for our latest model in the medium duty truck sector and believe we will see continued demand throughout the year as growth in the sector remains strong and our cabs have proven to be of the highest level of quality while remaining most cost efficient. We look forward to providing a further update on our progress as we introduce new products to a widened customer base and further build upon our already strong market position."

CHANGSHA, CHINA--(Marketwire - 07/25/11) - Tongxin International Ltd. (Pinksheets:TXIC - News), a China-based manufacturer of engineered vehicle body structures ("EVBS") and stamped parts for the commercial automotive industry, today provided a preliminary summary of its expected financial results for the year ended December 31, 2010.

Preliminary Financial Results:

Tongxin International Ltd. (the "Company") expects total revenues for the year ended December 31, 2010 to be $106.5 million, a 12.1% decrease from the $121.1 million of total revenues for the year ended December 31, 2009. Such decrease in total revenues reflects the reduction of original equipment manufacturer production of mini and light commercial vehicles and the increase in production of heavy duty commercial vehicles.

For the year ended December 31, 2010, the Company expects cost of goods sold to be $99.8 million and selling, general and administrative expenses to be $14.0 million. As a result, the Company expects to have an operating loss of $7.3 million for the year ended December 31, 2010 as compared to operating income of $5.5 million for the year ended December 31, 2009.

The Company expects total stockholders' equity for the year ended December 31, 2010 to be approximately $92.1 million compared to $83.8 million for the year ended December 31, 2009.

Liquidity:

At December 31, 2010, cash, cash equivalents, and restricted cash (security deposit) totaled approximately $10.8 million. Total current assets at December 31, 2010 totaled approximately $64.2 million compared to $67.5 million at December 31, 2009. Total current liabilities totaled approximately $71.4 million at December 31, 2010 compared to $79.7 million at December 31, 2009.

The Company is evaluating its goodwill for impairment in accordance with the Financial Accounting Standards Board's Statement of Financial Accounting Standard No. 142, "Goodwill and Intangible Assets." The determination as to whether a write-down of goodwill is necessary involves significant judgment based on the short-term and long-term projections of the future performance of the reporting unit to which the goodwill is attributed. To the extent that the Company incurs such an impairment charge, it will be non-cash in nature. The Company expects to complete the impairment evaluation of its goodwill and intangible assets by September 30, 2011.

The Company cautions that all of these financial results are preliminary and subject to change, possibly materially, following the completion and analysis of its financial statements for 2010. Consequently, actual results may differ significantly from the above estimates. The Company also reiterates that the above preliminary and unaudited financial information does not represent all of the information that would normally be included in an Annual Report on Form 20-F with respect to the Company's financial results for the year ended December 31, 2010.

For the fiscal year ended December 31, 2009, the Company reported revenue of $121 million, representing a 24% increase from $98.4 million in the comparable period of 2008.

The Company also reported, however, a net loss of $(16.8 million) for the year ended December 31, 2009, compared to net income of $20.5 million for the consolidated results of the prior year period ended December 31, 2008.

Fully Diluted EPS loss of $(1.38)

William E. Zielke, Chief Executive Officer and Chief Administrative Officer of the Company, commented, "While we have made considerable efforts in the past year to strengthen our internal operations, we have also maintained our market position as the largest independent Chinese supplier of commercial EVBS. The Hunan Tongxin brand is well established and recognized for its high quality and reliable products, and we enjoy both brand name and trademark protection in the PRC."

Mr. Zielke continued, "Our new management team intends to vigorously maintain our market leadership, even as we anticipate lower revenues for 2010. In 2009, we increased the number of our product programs and we intend to expand further the diversity of our products, while curbing our costs and expenses. Going forward, we are targeting the North American and European collision-parts after-markets, leveraging the cost advantages of our high quality components versus those of other international OEM suppliers."

TXIC issued a release on Sat. Nov. 20 in which they said there was no veracity to the rumors that the company would be going private.  They also lowered guidance and made some management changes:

1. Lowered revenue guidance of $100 million - $110 million for the fiscal year ended December 31, 2010.  The previous revenue guidance was $150 million -$160 million provided on February 23, 2010.

The lowered revenue guidance is based on a decrease in market share due to in-house production of cabs, and anticipated drop in orders from international customers in Vietnam. Additionally, the impact of the cessation of certain government sponsored stimulus programs throughout 2010, the slower than anticipated startup of the new medium duty model ("model 1120 Tianrui") with substantially higher content than conventional cabs, and a drop in sales especially in the mini and light commercial truck segments contributed to the revised revenue guidance. The Company also anticipates a later than anticipated start-up on its new medium-heavy duty model ("model 1260 Tianjiao").

Tongxin previously announced on September 17, 2010 unaudited revenues of $121.6 million for the fiscal year ended December 31, 2009.

2. Rudy Wilson was removed as Chief Executive Officer (although he remains as a director) of the Company, and Jackie Chang was removed as Chief Financial Officer and Chief Accounting Officer of the Company.

3. William E. Zielke has been appointed Chief Executive Officer and Chief Administrative Officer of Tongxin International Ltd.  In connection with Mr. Zielke's appointment, Mr. Zhang Duanxiang was appointed Chairman of the Company.

4. There was no truth to the rumors that the Board of Directors was currently considering a "going private" transaction.

Tongxin International Ltd. announced the following:

1. Lowered revenue guidance of $100 million - $110 millionfor the fiscal year ended December 31, 2010.  The previous revenue guidance was $150 million -$160 millionprovided on February 23, 2010. The lowered revenue guidance is based on a decrease in market share due to:

• in-house production of cabs, and anticipated drop in orders from international customers in Vietnam.
• The impact of the cessation of certain government sponsored stimulus programs throughout 2010.
• The slower than anticipated startup of the new medium duty model ("model 1120 Tianrui") with substantially higher content than conventional cabs.
• A drop in sales especially in the mini and light commercial truck segments contributed to the revised revenue guidance.

The Company also anticipates a later than anticipated start-up on its new medium-heavy duty model ("model 1260 Tianjiao").

Tongxin previously announced on September 17, 2010 unaudited revenues of $121.6 million for the fiscal year ended December 31, 2009.

2. Rudy Wilson was removed as Chief Executive Officer (although he remains as a director) of the Company, and Jackie Chang was removed as Chief Financial Officer and Chief Accounting Officer of the Company.

3. William E. Zielke has been appointed Chief Executive Officer and Chief Administrative Officer of Tongxin International Ltd.  In connection with Mr. Zielke's appointment, Mr. Zhang Duanxiang was appointed Chairman of the Company.

4. There was no truth to the rumors that the Board of Directors was currently considering a "going private" transaction.

by Maj Soueidan

Tongxin Shareholders Urged to Take Action

Over the last couple of weeks I have written several articles regarding an attempt by ChinaHybrids to regain their lost glory. I have talked about how investment banks are finally beginning to perform proper due diligence. I have talked about companies beginning to enact shareholder friendly moves such as stock buyback programs and the release of EPS guidance. Finally, we witnessed instances of companies’ desires to potentially go private. The next logical step in the purification process is to realign company participants with shareholders' goals. This brings us to Tongxin Intl Ltd Com (PINK:TXIC).

Tongxin was at one time listed on the NASDAQ, but has now joined the graveyard of companies on the Pink Sheets. At a time when investors desire quality, the Pink Sheets is the wrong place for a ChinaHybrid firm to trade.  Since July 15, 2010, the company’s reputation has been tarnished by allegations that money has been inappropriately siphoned off to interests other than TXIC, and specifically to a company that has ties to TXIC China-based management.  The good news is that according to my sources this indiscretion has not jeopardized Tongxin’s future.  However, my source does assert that the future of the company’s shareholders are clearly in jeopardy due to an unwillingness of the majority of the current Board of Directors to take steps to bring TXIC back into the good graces of investors. My source has speculated that the current board is corrupt and content with treating TXIC as a private company. This means no more SEC filings, no improvement in internal controls, not addressing the related party transaction issue and an eventual lack of communication with investors.

Hope for Retribution does Exist

If you desire to remain a TXIC shareholder you do have an option to influence the future of the company. You must replace the current Board with individuals who may be better aligned with investors’ interests. As it stands now, I am told that the current board is not cooperating with attempts by  Jackie Chang, CFO and Rudy Wilson, CEO to take necessary steps to bring TXIC back into compliance with the SEC. Rumors have been circulating that the current Board is plotting an imminent attempt to oust Mr. Wilson and Ms. Chang from their positions within the company. In response to this rumored coup, Rudy Wilson has drafted a Shareholder Rights Resolution that would unseat current Board members and replace them with individuals who he feels would be more shareholder friendly. In order to pass the resolution, 51% of TXIC shareholders must approve it. Currently, my source told me that he has around 35% shares in favor of Rudy’s proposal. He also assured me that if the resolution is approved, TXIC would be led by a team who would:

• File a 2009 20F
• Stay current with SEC filings
• Discuss the declaration of a dividend
• Address related party transaction issues
• Improve internal controls
• Become Sarbanes-Oxley compliant
• Take steps to re-list TXIC on the NASDAQ 

Time is of the Essence

I have been told that the current Board will attempt to oust Jackie and Rudy any day now; before the Annual Shareholders meeting scheduled for December 16, 2010. As a TXIC shareholder, you have two choices

1. You can maintain your support for the current Board that has very little ownership stake in TXIC, or
2. Make a calculated gamble on a team of individuals that claims to have a clear vision on TXIC’s responsibility as a U.S. listed public company.

If you choose the latter of the options, you will also be sending a message to other companies in similar predicaments; the ultimate goal is to clean up the China Hybrid space. As a leader in the cause to bring transparency and trust back to the ChinaHybrid space, GeoInvesting encourages investors to immediately email Rudy Wilson to review a copy of the shareholder rights resolution. It estimated that investors have only 20 hours to proclaim their support of the resolution.  The quicker shareholders respond, the less chance there is for the current board to undermine Mr. Wilson’s initiatives.

    Mr. Rudy Wilson, CEO
    Tel:   +1-248-593-8330
    Email: rudy@txicint.com

Disclosure: No position in TXIC

Disclaimer:

You acknowledge that GeoInvesting is not registered as an exchange, broker-dealer or investment advisor under any federal or state securities laws, and that GeoInvesting has not provided you with any individualized investment advice or information. Nothing in the website should be construed to be an offer or sale of any security. You should consult your financial advisor before making any investment decision or engaging in any securities transaction as investing in any securities mentioned in the website may or may not be suitable to you or for your particular circumstances.  We have not expressed an opinion on the information provided to us in this article, nor have we verified the accuracy or existence of claims made by our "source." 

Rodman & Rensahw on TXIC

Termination of Coverage: Effective immediately, we are terminating coverage on Tongxin International Ltd (Nasdaq: TXIC) due to the restructuring of our coverage universe. We currently have the company under review from a ratings stand point. 

Company Description 

Tongxin International Ltd. (TXIC) is the largest independent and the only integrated supplier of engineered vehicle body structures (EVBS) in China. The company designs, manufactures and sells EVBS for light, medium and heavy duty commercial vehicles. The company also designs, fabricates, and tests stamping dies that are used in the fabrication of vehicle body structures. The company conducts operations through its wholly owned subsidiary Hunan Tongxin Enterprise Co., Ltd. (Hunan Tongxin), with limited exports to Vietnam and Middle East. The company is strategically located in Changsha, one of the main centers of Chinese automotive production, and has regional manufacturing facilities in Dali, Ziyang and Zhucheng. 

Recent Financial Updates 

The most recent update was the company’s preliminary FY09 results and FY10 revenue guidance.In February 2010, the company announced a preliminary unaudited FY09 revenue for $121MM to $124MM, with 4Q09 revenue ranging from $29.5MM ~ $32.5MM. FY2010 revenue guidance was within the range of $150MM ~ $160MM, an approximately 25% growth from FY2009.

Missed Extension Date For Filings

TXIC was unable to file its Audited Consolidated Financial Statements within the extended timeframe of July 15, 2010. Management stated that it was still in the process of obtaining adequate documentation to support and determine the appropriate accounting treatment of certain related-party transactions of approximately $7.7 MM with a related party, Meihua Bus. Meihua Bus was incorporated in July 2007 by the company’s operating subsidiary, Hunan Tongxin Enterprise Co. when Tongxin International attempted to acquire Hunan Tongxin. Hunan Tongxin spun off its bus manufacturing business in order to obtain approval from government for being acquired by Tongxin International.

Valuation

On July 16, 2010, we put our rating under review, mainly due to the unavailability of financial statements from the company for over six months due to auditing related delays. We also removed our financial projections for 2010.

Risk: a) Price volatility in steel prices b) lack of long-term supply contracts, and c) highly competitive nature of the market.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

The following issue is still lingering:

As disclosed on July 15, 2010 the Company was in the process of obtaining adequate documentation to support and determine the appropriate accounting treatment of certain related-party transactions of approximately $7.7 million with a related party, Meihua Bus ("MB"). As a result of the foregoing, the Company's completion of its annual consolidated financial statements and required disclosures were delayed pending the Company's review of these related-party matters. The Company's Audit Committee has obtained a third-party, KPMG, LLP on April 26, 2010, to assist in obtaining adequate documentation for this review. The Company has completed this review and has accounted for the transactions on its income statement and balance sheet. See Extraordinary Net Income Items Incurred During 4th Quarter 2009 for further details.

The Company is discussing with its subsidiary, Hunan Tongxin Enterprise Co Ltd. the resolution of certain related party transactions of $7.7 million and anticipates resolving these issues as soon as possible allowing the company to file its 2009 audited financial statements. While these discussions are on going, the Company has elected to provide to its investors unaudited financial statements. The Company does not anticipate any material changes between the unaudited and audited financial statements when filed.