MICHAEL A. LITTMAN
Attorney at Law
7609 Ralston Road
Arvada, CO 80002
(303) 422-8127
Fax (303) 431-1567
December 18, 2008
VIA EDGAR AND FEDERAL EXPRESS
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Securities and Exchange Commission
Attn: John Zitko
Larry Spirgel, Assistant Director
Mail Stop 3720
Washington, D.C. 20549
Re: China Wi-Max Communications, Inc.
Amendment No. 3 to Registration Statement on Form 10
Filed on November 28, 2008
File No. 000-53268
Dear Messrs. Zitko and Spirgel,
We have received your correspondence dated December 8, 2008, regarding
Amendment No. 3 to Registration Statement on Form 10, filed on November 25, 2008
and we respond to each of your comments as follows:
FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, PAGE 90
REVENUE RECOGNITION, PAGE 91
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1. WE NOTE YOUR STATEMENTS THAT "REVENUE RECOGNIZED THROUGH SEPTEMBER
30, 2008 REPRESENTS BROADBAND SERVICE REVENUE WHICH HAS BEEN RECOGNIZED AS THE
SERVICE WAS PURCHASED." PLEASE TELL US SPECIFICALLY HOW THIS STATEMENT RELATES
TO SAB 104. TELL US WHEN THE SERVICE IS PROVIDED IN RELATION TO WHEN REVENUE IS
RECOGNIZED.
Response:
The Company's accounting policy for recognition of broadband service
revenue provides that the Company is to recognize revenue when the service is
provided, not purchased. The Company's revenue recognition policy presented in
the summary of significant accounting policies contains a clerical error. The
word "purchased" was inadvertently used instead of the word "provided". The
Company will correct this clerical error in its future filings.
December 18, 2008
China Wi-Max Communications, Inc.
Amendment No. 3 to Form 10
File No. 000-53268
Page 2 of 3
7. COMMITMENT, PAGE 96.
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2. TELL US HOW YOU CONSIDERED FIN 46R WITH REGARD TO GAO DA. IT IS NOT
CLEAR FROM YOUR DISCLOSURE WHETHER OR NOT YOU CONSOLIDATE GAO DA.
Response:
As of and through September 30, 2008, the Company has not consolidated
Gao Da Yang Guang Communication Technology Ltd ("Gao Da"). Gao Da is a Chinese
limited liability company formed in August 2007, for the purpose of acquiring
telecommunications licenses and wireless spectrum licenses in China. Gao Da was
formed and is wholly-owned by a Chinese citizen.
As of September 30, 2008, the Company does not have any debt or equity
investments in Gao Da. At September 30, 2008, the Company has a $368,042 deposit
with Gao Da, and in September 2008, the Company entered into a 20-year contract
with Gao Da, which entitles the Company to utilize certain value added
telecommunications and wireless communications licenses of Gao Da. As
consideration for such use, the Company is to pay Gao Da a quarterly fee based
on net revenue generated by the Company and is to reimburse Gao Da for licensing
fees and license renewals, as defined.
The Company evaluated if Gao Da was a VIE subject to consolidation at
September 30, 2008, pursuant to FIN 46(R), paragraph 5 and paragraph 11, and
determined that Gao Da was not a VIE subject to consolidation. The Company made
a determination that Gao Da was a Development Stage Enterprise pursuant to FASB
No. 7, ACCOUNTING AND REPORTING BY DEVELOPMENT STAGE ENTERPRISES, in that from
inception, Gao Da has been devoting substantially all of its efforts to
establishing a new business, and in which planned principal operations had not
yet commenced. Therefore, the Company considered the provisions of FIN 46(R),
paragraph 11. FIN 46(R), paragraph 11 states that a development stage entity is
a variable interest entity if it meets one of the conditions in paragraph 5. FIN
46(R), paragraph 11 also states that a development stage entity does not meet
the condition in paragraph 5(a) if it can be demonstrated that the equity
invested in the entity is sufficient to permit it to finance the activities it
is currently engaged in and provisions in the entity's governing documents and
contractual arrangements allow additional equity investments.
December 18, 2008
China Wi-Max Communications, Inc.
Amendment No. 3 to Form 10
File No. 000-53268
Page 3 of 3
The Company has been advised by Gao Da that the sole owner of Gao Da
invested approximately US$140,000 in Gao Da, which represented the initial
equity investment at risk. This initial equity investment at risk was determined
to be sufficient to permit Gao Da to finance the activities it was currently
engaged in, which has been acquiring initial provincial telecommunications
licenses and wireless licenses in China in order to begin marketing its value
added telecommunications services. In addition, the Company has been advised by
Gao Da that Gao Da's governing documents and contractual agreements allow for
additional equity investments.
The Company also considered the provisions of FIN 46(R), paragraph 5(b)
and paragraph 5(c), and determined that as a group, the holders of the equity
investment at risk did not lack any one of the characteristics outlined in FIN
46(R), paragraph 5(b) and paragraph 5(c). Therefore, Gao Da was not considered
to be a VIE subject to consolidation at September 30, 2008.
We understand that it is not clear from our disclosure that Gao Da is
not consolidated; therefore, we propose to make this clear in our future
filings.
If you can review our responses above, and let us know if they are
satisfactory and in compliance with your comments, we would appreciate it. If
you have any questions, please let me know.
Thank you for your attention to this matter.
Sincerely,
/s/Michael A. Littman
Michael A. Littman
MAL:kjk