Tongxin Shareholders Urged to Take Action

by Maj Soueidan

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. (OTC: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: [phone]
Email: [e-mail]

Disclosure: No Positions