China Wi-Max (fka CHWM)

[Bucks4Buckeyes]

A brief summary of recent events for CHWME after this story broke yesterday, Dec. 1:
http://www.sec.gov/news/press/2011/2011-251.htm

1. CHWM was looking for a private placement to keep production going in China projects. (Fairly common ‘boilerplate language’ for penny stocks)
http://www.sec.gov/Archives/edgar/data/1434667/000114420411049103/v232095_10q.htm

The Company's continuance as a going concern is dependent on its future profitability and on the on-going support of its shareholders and creditors. In order to mitigate the going concern issues, the Company is continuing its efforts to raise capital. The Company raised approximately $133,500 during the six-months ended June 30, 2011, in exchange for notes payable (Note 5).

During the six-months ended June 30, 2011, the Company entered into various agreements with third-party consulting firms to assist the Company in obtaining debt or equity financing. Subsequent to June 30, 2011, the Company obtained financing of $16,000, net of applicable fees. There can be no assurance that the Company will be successful in any future fundraising efforts.

The Company is also pursuing other financing options; however, these options may not be available in amounts or on terms acceptable to the Company, or at all. As a consequence, if the Company is unable to obtain any additional financing in the near term, the Company will be required to delay its business plan implementation, and/or the Company may be required to cease operations in order to offset the lack of available funding, which would have a material adverse impact on the Company.

2. According to reports, Steven Berman, CEO of CHWM, listens to someone who brings an FBI undercover agent, posing as an individual from a hedge fund, and agrees for a private placement of $5M, and will kickback some money to the agent himself (up to 1/2 of the placement, I think!).
http://highlandcountypress.com/m/Articles.aspx?ArticleID=10750

3. According to the reports, Richard Kranitz, board member and attorney for CHWM, delivers fraudulent papers agreeing to the whole deal.
http://www.jsonline.com/business/feds-file-fraud-charges-in-microcap-stock-case-s139avr-134844058.html

4. An 8-K is issued , Berman resigns for 'personal reasons.'
http://www.sec.gov/Archives/edgar/data/1434667/000114420411067218/v241792_8k.htm

5. Eric Hager, VP, is now acting CEO

6. Announcement of arrest from FBI and halting of various securities.

Shareholder/Investor Concerns:

1. While some companies were halted in their trading by the FBI, it appears that CHWM never actually received these funds, so they were not halted.

2. I would assume they made business plans BASED ON receiving these funds, so it is possible their business plans could be in jeapordy – based on the recent statement in the 8-K:

The corporation is currently seeking funding for operations to complete its third quarter Form 10-Q and strategic development of projects in China.

3. I am sure the company will not be able to make very many comments on the total event due to 'ongoing investigations' other than some kind of statement – however one is desperately needed from the company.

4. Hopefully the agreements they have signed in China will not be affected by the purported illegal acts of the former CEO and their legal representative (no resignation from him is public, yet).

5. Further investigation must be going on by the company examing all documents now.

6. The 10-Q (an audited form for SEC) may be even later than we expect due to this investigation.

What will happen?

Obviously no one knows, but if CHWM is not affected in the contracts, they are back to square one in an attempt to find financing. Unfortunately in this economy and with the cloud of uncertainty over these affairs, that may prove extremely difficult and nearly impossible.

It will be very vital that if funding does come, the company needs to expound on the terms of that note.

All The Best