Michael A. Littman
Attorney at Law
7609 Ralston Road
Arvada, CO 80002
(303) 422-8127
Fax (303) 431-1567
January 6, 2009
Kyle Moffat
Accounting Branch Chief
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549
Re: SEC comments dated 12/23/08 to
China Wi-Max Communications, Inc.
Amendment #3 to Form 10
Dear Mr. Moffat,
My client is very confused by your comment. It appears as an
"Accounting Comment" to the Financial Statements but is more directed, based on
my 25 years of experience with SEC filings, at Registration Statement "Business
disclosure / Material contracts."
In responding we will treat your unnumbered bullet points as if
numbered sequentially.
Bullet point number one: The Chinese citizen who owns Gao Da is Wang
Zheng. He is neither an affiliate of the company, nor a shareholder. China
Wi-Max must respond that it has no idea how he financed his investment in GAO DA
and it is not China Wi-Max's business, as long as it did not come from China
Wi-Max. Frank Jia, a 9.6% shareholder of China Wi-Max, Inc. manages GAO DA
activities.
Bullet point number two: China Wi-Max has advanced $368,042 to Gao Da
in order to procure ISP access and access to wireless licenses, via contract,
which is not available to non-Chinese owned entities (under the Chinese Telecom
rules), for use by China Wi-Max' sub
January 6, 2009
Kyle Moffat
Re: China Wi-Max Communications, Inc.
Page 2 of 3
Da Chaun. As indicated in our most recent Amendment #3 to China Wi-Max Form 10
in response to previous SEC comments, China Wi-Max advanced funds to Gao Da to
help provide capital to acquire ISP licenses and wireless licenses in China.
China Wi-Max holds a pledge of the stock of Gao Da as collateral for its
advances under a amended Trust Agreement (Filed as Exhibit to the Amendment #3).
Bullet point number three: If there were any other material contractual
arrangements, with either Gao Da or Mr. Zheng, they would be disclosed. In fact,
there are no other contracts of any type with Gao Da (except as previously
disclosed) or Mr. Zheng (no contracts to disclose).
Bullet point number four: Details - We believe Gao Da cannot be
classified as a "pass through" entity because China Wi-Max cannot control or own
Gao Da because of the restrictions on ownership of ISP and wireless licenses for
Chinese majority owned entities (or citizens) only. Also, we cannot find any
reference in the FASB rules about "Pass Through" entities. It appears in the
literature only in context of IRS taxation issues.
Bullet point number five: We do not understand the comment about the
"business purpose" of Gao Da. In response to previous SEC comments we made many
changes to the text and clarified the business description to the legal
examiner's satisfaction (p. 4, 5 of Amendment #3). Gao Da is in charge of its
own destiny and business which it is free to expand in other areas. While Gao
Da's agreement provides Da Chuan and China Wi-Max access (via its contract
arrangement) to ISP licenses to support Da Chuan and China Wi-Max' access to
wireless internet services, Da Chuan and China Wi-Max have no exclusivity with
Gao Da for all business. Gao Da may not build and operate its own network in
competition with Da Chuan and China Wi-Max. The Agreement says that Da Chuan, in
conjunction with Shi Dai will develop networks and there could be an expansion
beyond these companies in the future if it makes sense. The Agreement clearly
states that Da Chuan will market any services that are provided related to the
ISP or wireless licenses. The Agreement does not say Gao Da may not enter into
other business outside of this area. The Business Plan of the Company is
centered around using a combination of fiber and wireless licenses to provide
services such as internet connections to businesses. The critical key is China
Wi-Max' core fiber. Using the wireless lets China Wi-Max connect businesses to
its fiber wirelessly, when the business it too far from the fiber to provide a
physical connection or other hard wire limitation exist.
Bullet point number six: China Wi-Max, thru Da Chuan will charge the
customers it serves for wired and wireless access services to the internet and
pay fees to companies such as Gao Da, Long Teng and Shi Dai for use of assets
and licenses. Da Chuan will generate profits from the difference between sales
charges and expenses and contract fees charged to Gao Da.
January 6, 2009
Kyle Moffat
Re: China Wi-Max Communications, Inc.
Page 3 of 3
We respectfully submit that our business discussion in the text on
Amendment #3 to the Form 10 is adequate. Are you suggesting amplification in our
footnotes to the financial statements are required to comply with your comments?
If so, within the limits of the information provided above, we can amend the
financial statement notes, however, in many years of SEC experience I have never
seen financial statement notes that have a number of negative or disclaimer
statements about a non-affiliate. While we understand the need to disclose
material contract terms and affiliate transactions and have no disagreement with
that concept, we do not believe that such disclosure is required in the
financial statement notes in this instance.
If you decide to reissue any part of your comments after this response,
please specify whether we are to amend financial statement notes only or text
throughout the Form 10.
Sincerely,
/s/ Michael A. Littman
Michael A. Littman
MAL:cs