UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 or 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-147086-01
TONGXIN INTERNATIONAL LTD.
_____________________________________________________________________
(Translation of Registrant's Name into English)
199 Pierce Street,Suite 202
Birmingham, Michigan 48009
_____________________________________________________________________
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T
Rule 101(b)(1): ____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper
of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T
Rule 101(b)(7): ____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper
of a Form 6-K if submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the
laws of the jurisdiction in which the registrant is incorporated, domiciled
or legally organized (the registrant's "home country"), or under the rules
of the home country exchange on which the registrant's securities are
traded, as long as the report or other document is not a press release, is
not required to be and has not been distributed to the registrant's
security holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
This form 6-K consists of the following exhibits attached hereto:
1. Tongxin International, Ltd. Reports Fiscal Year Unaudited 2009
Financial Results
- -------------------------------------------------------------------------
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TONGXIN INTERNATIONAL LTD.
----------------------------------
(Registrant)
By: /s/ Rudy Wilson
-----------------------------
Name: Rudy Wilson
Title: Chairman of the Board
and Chief Executive Officer
/s/ Jackie Chang
-----------------------------
Name: Jackie Chang
Title: Chief Financial and
Accounting Officer
Date: September 17, 2010
=================================================================
EXHIBIT
Exhibit Number Description
1. Tongxin International, Ltd. Reports Fiscal Year Unaudited 2009
Financial Results
=================================================================
Tongxin International, Ltd. Reports Full Year Unaudited 2009
Financial Results
- - Revenues increased 23.7% to $121.6 million from $98.4 million
meeting pre-announced revenues of $121 to $124 million
- - Non GAAP "adjusted" net income excluding non-cash charges was
$8.1 million for the year with adjusted EPS of $0.68 per share
versus guidance of $16.7 million in 2008
- - Company files Compliance Plan with Nasdaq
NEW YORK and CHANGSHA, China, September 17, 2010 Xinhua-
PRNewswire- FirstCall - Tongxin International Ltd. ("Tongxin")
("Company") (NASDAQ:TXIC-News) a manufacturer of engineered
commercial vehicle body structures ("EVBS" or "Cabs"), SUV
passenger vehicle bodies and stamped body parts for the Chinese
commercial vehicle market, today announced the Company's 2009
full year unaudited financial results for the period ended
December 31, 2009 and the filing of a Plan of Compliance ("Plan")
with NASDAQ.
Compliance with NASDAQ Listing Requirements
On July 23, 2010 TXIC announced it received a NASDAQ Staff
Deficiency Letter on July 19, 2010 indicating that TXIC no
longer complies with NASDAQ Listing Rules (the "Rules") for
continued listing set forth in NASDAQ Listing Rule 5810(c)(2)
(the "Rule") due to TXIC's failure to file its Form 20-F for
the period ended December 31, 2009, by the due date, as
extended by TXIC's filing under SEC Rule 12b-25, of July, 15,
2010, as indicated above. The Company today submitted to
NASDAQ a Plan to regain compliance with the Rules.
If the plan is accepted by NASDAQ, the Company will receive
an extension of up to 180 calendar days from the due date,
as extended, or until January 11, 2011, to establish evidence
of compliance. There can be no assurance that these actions
will be successful in maintaining the Company's listing on
NASDAQ for the Company's common stock. If NASDAQ does not
accept the Company's plan for compliance or if the Company
is unable to comply with all applicable listing requirements
of NASDAQ, then the Company's common stock could be delisted
from NASDAQ Global Markets. This could impair the liquidity
and market price of the Company's common stock. In addition,
the delisting of the Company's common stock could materially
adversely affect the Company's access to the capital markets,
and any limitation on market liquidity or reduction in the
price of the Company's common stock as a result of that
delisting could adversely affect the Company's ability to
raise capital, if needed, on terms acceptable to the Company
or at all.
Accounting Treatment of Certain Related Party Transactions
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.
2009 Fiscal Year Financial Results
Net revenues for the year ended December 31, 2009 reached
$121.6 million, an approximate $23.3 million or 23.7%
increase over the same period of the prior year. According
the RL Polk, a total of 12.8 million vehicles were built
in China during 2009, representing a 50% year-over-year
increase.
Exports to Vietnam reached $12.5 million, or 21.4% increase
over the same period in 2008 due to shipments of 4,810 EVBS
(including 5 different EVBS models). The Vietnamese
automotive market began to show signs of returning to
annual growth trend of approximately 15% in 2009 versus
2008. The Company expects that this emerging market will
continue to grow in 2010. Cost of goods sold were $102.8
million in 2009, an increase of $19.3 million or 23.2%
versus the same period in 2008. The increase in costs
was primarily due to increased sales volume. Costs of
goods as a percentage of revenues was 84.6% in 2009
compared to 84.9% in 2008. Overall, steel prices decreased
by approximately 10% on average from 2008 to 2009. The
decrease in steel prices was offset by higher operational
costs including labor costs of $1.2 million, transportation
costs of $1 million, costs for cab components and
accessories, reserves for related party transactions of
$3.3 million and related party purchases of $7.7 million
which the company is in discussions with the related party
and plans to settle the amount in 2010. As a result, gross
margin only increased a minimal 40 basis points to 15.5% in
2009 from 15.1 % for the prior period ended December 31,
2008.
Total operating expenses for the year 2009 were $9.4 million
versus $7.0 million for the same period in 2008. As a
percentage of revenues, operating expenses were 7.7% compared
with 7.2% for the same period, 2008. Included in the 2009
operating expenses was approximately $0.5 million in costs
reflecting SOX and ERP expenses. Excluding onetime costs,
total operating expenses were 7.3% of revenue for 2009.
The Company is reporting a non GAAP "adjusted" operating and
net income as a result of the non-cash warrant loss of $20.8
million reported in its 20-F and financial tables below.
The non-cash loss and SOX expenses are excluded from the
"adjusted" numbers reported for the year. Considering the
effect the warrant loss have on the reported GAAP financials,
the management of Tongxin believes adjusted numbers provide
more visibility in its operational performance.
GAAP operating income was $9.4 million versus $7.8 million
the period ended December 31st, 2008. Tongxin is subject to
the standard Chinese corporate tax rate of 25% and rate
reduction of 10% from High Tech. Enterprise tax. GAAP net
loss was $13.3 million and Non GAAP adjusted net income was
$8.1 million, representing a decrease of 10% from $9.0
million reported in the same period prior year. Adjusted
net profit margins were 6.7% for the year versus 9.1%
reported for the same period of 2008.
2009 GAAP earnings per share were ($1.12) while Non GAAP
adjusted earnings per share were $0.68.
Extraordinary Net Income Items Incurred Accounted in the
Fourth Quarter 2009
1. Related Parties Accounts Receivables
On December 31, 2008, the Company had approximately
$17.3 million in receivables from related parties.
Related parties to Hunan Tongxin include; Meihua Bus
Manufacture Co. , $14.1 million and Hunan Tongxin
Development and Construction Company $3.2 million.
During 2009, related party receivables decreased due
to a combination of sales of steel and exports of $14.6
million and cash collections, offsetting purchases from
related parties and bad debt reserves associated to
related party transactions. Specifically, $21.9 million
were collected as cash from related parties, $3.3
million was a bad debt reserve and $7.7 million in
related party payables were used to offset the remaining
balance of related party receivables. As a result,
payable to related parties of approximately $0.9 million
is recorded on the Company's unaudited financials.
Management believes, based upon its collection history
of related party receivables, that the Company will be
able to resolve any collection disputes with its related
parties.
2. Related Party Accounts Payable to Meihua Bus
Adjustment of the Company's 2008 $17.3 million in related
party receivables were offset by trade payables of
approximately $7.7 million resulting from component
purchases from Meihua Bus throughout 2009. The payables
were used to offset accounts receivables related to sale
of steel, export sales and miscellaneous. items due the
Company from Meihua Bus. The Company has recorded the
$7.7 million as a cost against net income resulting in
an unfavorable variance to net income for fiscal 2009.
Of the $7.7 million purchase, $3.1 million was recorded
in the 4th quarter 2009.
3. Inventory Reconcilement
The Company did not have adequate internal controls in
place to ensure that inventories purchased for production
and assembly purpose were timely and completely recorded
and accrued upon receipt and quality inspection.
Substantial resources had to be devoted at period end to
quantify the purchase accrual for financial reporting
purposes, which resulted in a material adjustment of
approximately $4.6 million to accrued purchases and
cost of goods sold during the 4th quarter and an
unfavorable variance to net income for fiscal 2009.
Balance Sheet and Cash Flow Discussion
As of December 31, 2009, Tongxin International had
approximately $16.5 million in cash and cash equivalents
compared to $11.3million on December 31st, 2008. The
company maintained a non-GAAP current ratio of 1.03 and
GAAP current ratio of 0.88 and $16.6 million in accounts
receivable on December 31, 2009. Corresponding days sales
outstanding were 50 days. Stockholders' equity was
$87.3 million on December 31, 2009 versus $79.8 million
reported December 31st, 2008. The increase is a result
of exercised warrant of $10.7 million. Cash Flow from
operations was $17.3 million for 2009 vs. $12.5 million
in 2008. Total capital expenditures were $18.1 million
in 2009 vs. $9.6 million in 2008. Total non weighted
common shares outstanding were 13,455,453 as of
December 31, 2009.
Tongxin further recognizes it has yet to resolve the
reported $17.4 million of prior year income tax payable
reported on its balance sheet. It has petitioned the
local tax authorities to remove this line item from
Tongxin International's liabilities since the taxes
in question preceded its merger with Hunan Tongxin.
The Company has approximately 2.88 million warrants
outstanding with strike price of $5.00 and callable
at $10.00. At the Company's option, and in the event
the selling price of the Company's common shares trades
at an average price of $10.00 for twenty days out of a
thirty day selling period, it may redeem the warrants
on an all on none basis. The warrants expire on
April 10, 2011.
This press release and the Form 6-K contain forward-looking
statements, including (without limitation) statements
related to the Company's intentions to regain compliance
with NASDAQ rules. Words such as "will", "plans to" and
similar expressions are intended to identify forward-looking
statements. These forward-looking statements are based upon
the Company's current expectations. Forward-looking statements
involve risks and uncertainties. These and other risk factors
are discussed under "Risk Factors" and elsewhere in the
Company's filings with the Securities and Exchange Commission.
The Company expressly any obligation or undertaking to release
publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in its
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statements are
based.
For more information, please contact:
COMPANY:
Mr. Rudy Wilson, CEO
Ms. Jackie Chang, CFO
Tel: 248-593-8330
Email: rudy@txicint.com
jackie@txicint.com
Web: www.txicint.com
TONGXIN INTERNATIONAL, LTD.
CONSOLIDATED BALANCE SHEETS
As of December 31, 2009 and 2008 and December 31, 2008
(US$ amounts expressed in thousands, except for share data and earnings per share)
December 31,2009 December 31,2008
---------------- -------------------
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 16,493 $ 11,313
Restricted cash-Security deposit 4,692 5,836
Notes receivable 5,769 2,939
Accounts receivable - Trade, net of
allowance for doubtful accounts of
$2,957 and $3,856, respectively 10,865 10,214
Other receivable - net of allowance
for doubtful accounts of
$406 and $407, respectively 2,103 1,600
Due from related party, net of valuation
allowance of $3,391 in 2009 (947) 17,313
Inventories 25,070 19,096
Prepaid expenses 421 1,331
Advance to suppliers 1,960 3,012
Deferred income tax assets 2,211 2,067
--------------- --------------
Total current assets 68,638 74,721
--------------- --------------
Investments in non-consolidated
subsidiaries and affiliates 209 208
Property,plant and equipment, net of
depreciation of $5,709 and $1,927,
respectively 47,303 36,918
Land occupancy rights 13,274 9,633
Goodwill 36,880 36,696
--------------- --------------
Total assets 166,303 158,176
--------------- --------------
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable 13,273 15,201
Notes payable 4,692 5,836
Accrued expenses and other liabilities 7,080 7,393
Income taxes payable 16,196 17,418
Short-term loans 24,876 16,669
Short-term loans from shareholders - 8,591
Warrant liabilitt 11,649 452
--------------- --------------
Totoal current liabilities 77,766 71,560
Long-term Liabilities:
Long-term loans - 4,523
Deferred income tax liability 1,283 2,243
Other - 25
--------------- --------------
Total liabilities 79,049 78,351
Shareholders' equity:
Successor Preferred stock - $0.001
par value,authorized, 1,000,000 shares;
none issued
Common stock-successor, $0.001
par value, authorized 39,000,000 shares;
issued 15,044,875 shares and
outstanding 13,455,453 shares 15 13
Additional paid-in capital 97,420 77,081
Successor Treasury stock, 1,589,422 shares (7,682) (7,682)
Accumulated other comprehensive income 788 426
Retained earnings (3,287) 9,987
--------------- --------------
Total shareholders' equity 87,254 79,825
--------------- --------------
Total liabilities and shareholders' equity 166,303 158,176
--------------- --------------
====================================================
TONGXIN INTERNATIONAL, LTD.
CONSOLIDATED INCOME STATEMENT
(US$ amounts expressed in thousands, except for share data and earnings per share)
Successor Predecessor company
company for --------------------------------------
the eight- for the
month four-month
Year ended Period from Period from Year ended Year ended
May 1, 2008 Jan.1, 2008
December31, to Dec.31, to April 30, December 31, December 31,
2009 2008 2008 2008 2007
------------ ------------ ----------- ----------- ------------
(unaudited) (audited) (audited) (audited) (audited)
Revenues $ 121,629 $ 55,770 $ 42,588 $ 98,358 $ 89,873
Cost of Goods Sold 102,847 35,516 31,463 66,979 60,543
Cost of goods sold from
related party purchase - 11,691 4,847 16,538 9,322
------------ ------------ ----------- ----------- ------------
Total cost of goods sold 102,847 47,207 36,310 83,517 69,865
Gross Profit 18,782 8,563 6,278 14,841 20,008
Operating expenses:
Selling and
General and administrative 9,400 5,248 1,793 7,041 5,372
expenses
------------ ------------ ----------- ----------- ------------
Operating income 9,382 3,315 4,485 7,800 14,636
Other income, net
Nonoperating income 27 78 4,111 4,189 -
Subsidy income 702 469 212 681 -
(loss)gain on warrants (20,806) 13,535 - 13,535 -
Investment income 15 15 - 15 -
Equity earnings from
equity investee - - - - 19
------------ ------------ ------------ ----------- ------------
Total Other Income (20,062) 14,097 4,323 18,420 19
Other Expenses
Nonoperating expenses - 183 6 189 -
Interest expense 1,753 1,095 1,607 2,702 1,723
----------- ------------ ------------ ---------- ------------
Total Other Expenses 1,753 1,278 1,613 2,891 1,723
Income(loss) before income taxes (12,433) 16,134 7,195 23,329 12,932
Income taxes expense 841 627 2,216 2,843 3,853
----------- ------------ ------------ ---------- ------------
Net(loss)income (13,274) 15,507 4,979 20,486 9,079
Other comprehensive income-
Foreign translation
adjustment 362 426 721 1,147 940
----------- ------------ ------------ ---------- ------------
Comprehensive income (12,912) 15,933 5,700 21,633 10,019
----------- ------------ ------------ ---------- ------------
Net Income per common share-basic (1.12) 1.37 0.07 1.81 0.13
Net Income per common share-diluted (1.12) 1.37 0.07 1.81 0.13
=========== ============ ============ ========== ============
Weighted average shares
outstanding-basic 11,846,273 11,294,633 72,521,705 11,294,633 72,521,705
Weighted average shares
outstanding-diluted 11,846,273 11,294,633 72,521,705 11,294,633 72,521,705
==================================================
Consolidated Statements of Cash Flows
(US$ amounts expressed in thousands)
Successor Predecessor company
company for --------------------------------------
the eight- for the
month four-month
Year ended Period from Period from Year ended Year ended
May 1, 2008 Jan.1, 2008
December31, to Dec.31, to April 30, December 31, December 31,
2009 2008 2008 2008 2007
------------ ------------ ----------- ----------- ------------
(unaudited) (audited) (audited) (audited) (audited)
Cash flows from operating activities:
Net(loss) income $ (13,274) $ 15,507 $ 4,979 $ 20,486 $ 9,079
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Reversal of bad debt allowance - (944) - (944) (409)
Depreciation expense 3,782 1,927 901 2,828 2,080
Amortization expense 318 39 15 54 42
Deferred income taxes (1,104) (105) 297 192 -
Loss(gain) on warrant 20,806 (13,535) - (13,535) -
Changes in operating assets and liabilities:
(Increase)/decrease in inventories (5,974) (3,291) (1,821) (5,112) (4,980)
(Increase)/decrease in trade accounts
receivable (3,481) 6,835 4,618 11,453 (14,684)
(Increase)/decrease in Due from related
party 18,260 7,751 (9,475) (1,724) -
(Increase)/decrease of prepaid expenses
and other current assets 1,459 (872) (401) (1,273) (324)
Increase/(decrease)in accounts payable (1,929) (1,610) 2,577 967 15,976
Increase/(decrease)of accrued expenses,
and other liabilities (339) (2,937) 1,994 (943) 321
Increase/(decrease)in income taxes payble (1,222) - - - -
------------ ------------ ----------- ----------- ------------
Net cash provided by operating activities 17,302 8,765 3,684 12,449 7,101
------------ ------------ ----------- ----------- ------------
Cash flows from investing activities:
Acquisition of Hunan Tongxin Enterprise
Co., Ltd., net of cash acquired of
$5,319 - (7,700) - (7,700) -
Purchase of property and equipment and
land occupancy rights (18,125) (8,434) (1,134) (9,568) (6,390)
------------ ------------ ----------- ----------- ------------
Net cash used in investing activities (18,125) (16,134) (1,134) (17,268) (6,390)
------------ ------------ ----------- ----------- ------------
Cash folws from financing activities:
Proceeds from loans payable 25,733 16,559 7,090 23,649 17,437
Proceeds from loans-related parties - 4,638 5,256 9,894 -
Dividends paid - - - - (1,054)
Payments to loans payable (22,049) (18,252) (5,192) (23,444) (20,343)
Payments to loans-related parties (8,591) (9,343) (7,082) (16,425) -
Cash received from warrant redemption 10,732 - - - -
------------ ------------ ----------- ----------- ------------
Net cash (used in) provided by financing
activities 5,825 (6,398) 72 (6,326) (3,960)
------------ ------------ ----------- ----------- ------------
Effect of foreign exchange rate changes 178 (837) 1,036 199 1,329
Net increase(decrease)in cash and cash
equivalents 5,180 (14,604) 3,658 9,651 (1,920)
Cash and cash equivalents at beginning of
year 11,313 25,917 1,662 1,662 3,582
------------ ------------ ----------- ----------- ------------
Cash and cash equivalents at end of year 16,493 11,313 5,320 11,313 1,662
------------ ------------ ----------- ----------- ------------
Supplemental information:
Income taxes paid 1,104 439 373 812 936
Interest paid 2,083 1,451 1,458 2,909 2,424
Shares issued for acquisition of Hunan
Tongxin Enterprise Co., Ltd. - 51,546 - - -
Debt extinguishment via sale of
equity investment - - 686 - -
Capitalized Interest - 324 - - -
Non-cash investing and financing activities:
Long-term loans from shareholders - - - - 10,476
Dividends to shareholders - - - - (10,476)