Attached files

file filename
EX-99.1 - China Wi-Max Communications, Inc.v191878_ex99-1.htm
EX-99.2 - China Wi-Max Communications, Inc.v191878_ex99-2.htm
EX-99.3 - China Wi-Max Communications, Inc.v191878_ex99-3.htm
 
EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): July 28, 2010
 
(Exact name of registrant as specified in its charter)

Nevada
(State or other jurisdiction of incorporation)
000-53268
 
61-1504884
(Commission File Number)
 
(I.R.S. Employer
   
Identification No.)

1905 Sherman Street, Suite 335, Denver, Colorado 80203
(Address of principal executive offices)(Zip Code)
 
Registrant's telephone number, including area code: 303-993-8028
 
____n/a_____
(Former name, former address and former fiscal year,
if changed since last report)
 
Total number of pages in this document: 4
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.
 
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR240.14d-2(b))
 
¨ Soliciting material pursuant to Rule 14a-12 under Exchange Act (17 CFR240.14a-12)
 
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))
 
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c))
 
 
 

 
SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS
 
Item 1.01.  Entry into a Material Definitive Agreement
 
 
The following is a summary of the REF and the registration rights agreement, is not complete, and is qualified in its entirety by reference to the full text of those agreements, each of which are attached as an exhibit to this Current Report on Form 8-K. Readers should review those agreements for a complete understanding of the terms and conditions associated with this financing. The provisions of the REF and registration rights agreement, including without limitation the representations and warranties contained therein, are not intended as documents for investors and the public to obtain factual information about the current state of affairs of the parties to those documents and agreements. Rather, investors and the public should look to other disclosures contained in the Company’s reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
 
Reserve Equity Financing Agreement
 
For a period of 24 months from the effectiveness of a registration statement filed pursuant to the registration rights agreement (the “Registration Statement”), we may, from time to time, at our discretion, and subject to certain conditions that we must satisfy, draw down funds under the REF by selling shares of our common stock to AGS. The purchase price of these shares will be 92% of the “VWAP” of the common stock during the five consecutive trading days after we give AGS a notice of an advance of funds (an “Advance”) under the REF (the “Pricing Period”). “VWAP” generally means, as of any date, the daily dollar volume weighted average price of our common stock as reported by Bloomberg, L.P. or comparable financial news service.  The amount of an Advance will automatically be reduced by 50% if on any day during the Pricing Period, the VWAP for that day does not meet or exceed 85% of the VWAP for the five trading days prior to the notice of Advance (the “Floor Price”). The REF does not prohibit the Company from raising additional debt or equity financings, other than financings similar to the REF.
 
Our ability to require AGS to purchase our common stock is subject to various limitations. The maximum amount of each Advance is 100% of the average daily trading volume for the five days immediately preceding the notice of Advance, as reported by Bloomberg or comparable financial news service (the “Maximum Advance Amount”).  In addition, unless AGS agrees otherwise, a minimum of five calendar days must elapse between each notice of Advance.
 
In addition, before AGS is obligated to buy any shares of our common stock pursuant to a notice of Advance, the following conditions, none of which is in AGS’s control, must be met:
 
 
·
The Company shall have filed with the SEC a Registration Statement with respect to the resale of the shares of common stock issued to AGS in accordance with and subject to the terms of the registration rights agreement.
 
 
·
The Company shall have obtained all permits and qualifications required by any applicable state in accordance with the registration rights agreement for the offer and sale of the shares of common stock, or shall have the availability of exemptions therefrom. The sale and issuance of the shares of common stock shall be legally permitted by all laws and regulations to which the Company is subject.
 
 
·
There shall not be any fundamental changes to the information set forth in the Registration Statement which are not already reflected in a post-effective amendment to the Registration Statement.
 
 
·
The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the REF agreement and the registration rights agreement to be performed, satisfied or complied with by the Company.
 
 
·
No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of or which would materially modify or delay any of the transactions contemplated by the REF agreement, and no proceeding shall have been commenced that may have the effect of prohibiting the consummation of or materially modify or delay any of the transactions contemplated by the REF Agreement.
 
 
·
The common stock is trading on a principal market (as defined in the REF, and including the OTC Bulletin Board). The trading of the common stock is not suspended by the SEC or the principal market. The issuance of shares of common stock with respect to the applicable closing will not violate the shareholder approval requirements of the principal market. The Company shall not have received any notice threatening the continued quotation of the common stock on the principal market and the Company shall have no knowledge of any event which would be more likely than not to have the effect of causing the common stock to not be trading or quoted on a principal market.
 
 
·
The amount of an Advance shall not exceed the Maximum Advance Amount. In no event shall the number of shares issuable to AGS pursuant to an Advance cause the aggregate number of shares of common stock beneficially owned by AGS and its affiliates to exceed 9.99% of the then outstanding shares of common stock of the Company (“Ownership Limitation”). Any portion of an Advance that would cause AGS exceed the Ownership Limitation shall automatically be withdrawn. For the purposes of this provision, beneficial ownership is calculated in accordance with Section 13(d) of the Exchange Act.

 
 

 
 
 
·
The Company has no knowledge of any event which would be more likely than not to have the effect of causing such Registration Statement to be suspended or otherwise ineffective at Closing.
 
 
·
AGS shall have received an Advance notice executed by an officer of the Company and the representations contained in such Advance notice shall be true and correct.
 
There is no guarantee that we will be able to meet the foregoing conditions or any other conditions under the REF agreement or that we will be able to draw down any portion of the amounts available under the REF.
 
 
The REF contains representations and warranties of the Company and AGS which are typical for transactions of this type. AGS agreed that during the term of the REF, neither AGS nor any of its affiliates, nor any entity managed or controlled by it, will, or cause or assist any person to, enter into or execute any short sale of any shares of our common stock as defined in Regulation SHO promulgated under the Exchange Act.  The representations and warranties made by the Company in the REF are qualified by reference to certain exceptions contained in disclosure schedules delivered to AGS. The REF also contains a variety of covenants on the part of the Company which are typical for transactions of this type, as well as the obligation, without the prior written consent of AGS, not to enter into any other equity line of credit agreement with a third party during the term of the REF. 
 
The REF obligates the Company to indemnify AGS for certain losses resulting from a misrepresentation or breach of any representation or warranty made by the Company or breach of any obligation of the Company. AGS also indemnifies the Company for similar matters.
 
The Company and AGS will each pay its own fees and expenses (including the fees of any attorneys, accountants, appraisers or others engaged by such party) in connection with the REF and the transactions contemplated hereby.  The Company shall transfer to AGS freely tradable Common Stock equal to 7% of the Commitment Amount upon signing the REF (“Commitment Shares”), however, the Company shall issue to AGS no more than 9.99% of the current outstanding share account.  The balance of the Commitment Shares shall be delivered to AGS as soon as possible in accordance with the 9.99% threshold limitation.  The pricing for the Commitment Shares will be based on the average closing price for the 10 trading days preceding the date of this Agreement.
 
The Company may terminate the REF effective upon fifteen trading days’ prior written notice to AGS; provided that (i) there are no Advances outstanding, and (ii) the Company has paid all amounts owed to AGS pursuant to the REF. The obligation of AGS to make an Advance to the Company pursuant to the REF shall terminate permanently if (i) there shall occur any stop order or suspension of the effectiveness of the Registration Statement for an aggregate of fifty (50) trading days or (ii) the Company shall at any time fail materially to comply with certain covenants specified in the REF and such failure is not cured within thirty (30) days after receipt of written notice from AGS, subject to exceptions.
 
Registration Rights Agreement
 
The shares of common stock that may be issued to AGS under the REF will be issued pursuant to an exemption from registration under the Securities Act of 1933, as amended, or the Securities Act of 1933, as amended (the “Securities Act”). Pursuant to the registration rights agreement, we will file a registration statement, covering the possible resale by AGS of the shares that we may issue to AGS under the REF (the “Registration Statement”). The Registration Statement may cover only a portion of the total shares of our common stock issuable pursuant to the REF with AGS. We may file subsequent Registration Statements covering the resale of additional shares of our common stock issuable pursuant to the REF.  As described above, the effectiveness of this Registration Statement is a condition precedent to our ability to sell common stock to AGS under the REF. We intend to file the Registration Statement within 30-45 days from the date hereof.
 
Placement Agent
 
If so required by the SEC, the Company agrees to pay a registered broker dealer to act as placement agent, a percentage of the Put Amount on each draw toward the fee.  AGS shall have no obligation with respect to any claims made by or on behalf of other persons or entities for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Reserve Equity Financing Documents.  The Company shall indemnify and hold harmless AGS, its employees, officers, directors, agents, and partners, and their respective affiliates, from and against all claims, loses, damages, costs (including the costs of preparation and attorney’s fees) and expenses incurred in respect of any such claimed or existing fees, as such fees and expenses are incurred.
 
The securities sold in this transaction have not been registered under the Securities Act of 1933, as amended (the “Act”) and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements under the Act. CHWM believes that the issuance of the foregoing securities was exempt from registration under Section 4(2) of the Act as transactions not involving a public offering.  The facts relied upon to claim the exemption include: (i) the purchaser represented that he purchased shares from the Company for investment and not with a view to distribution to the public; (ii) the certificate issued for unregistered securities contains a legend stating that the securities have not been registered under the Securities Act and setting forth the restrictions on the transferability and the sale of the securities; (iii) the purchaser represented that he is an accredited investor and sophisticated and is familiar with our business activities; and (iv) the purchaser was given full and complete access to any corporate information requested by them.

 
 

 
 
Item 3.02.    Unregistered Sales of Equity Securities.
 
 The information set forth under Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 3.02.
 
On July 23, 2010 we entered into a Convertible Promissory Note for $50,000 bearing interest at 8% per annum, due on April 27, 2011, and  related Securities Purchase Agreement with Asher Enterprises, Inc.. The conversion price will be at 58% of the lowest of three closing bid prices during the ten trading day period ending one trading day prior to the date the holder sends a conversion notice to us. We have instructed our transfer agent to reserve shares in an amount deemed sufficient to meet this conversion right.
 
Item 7.01. Regulation FD Disclosure

The  information in this Item 7.01 of this Current Report is furnished  pursuant to Item 7.01 and shall not be deemed "filed" for any purpose,  including for the purposes of  Section  18 of the  Exchange  Act, or otherwise subject  to the liabilities of that Section.  The information in this Current Report on Form 8-K shall not be deemed  incorporated  by reference into any filing under the Securities  Act or the Exchange Act regardless of any general incorporation language in such filing.

On July 28, 2010, the Company issued a press release regarding recent events. The text of the press release is attached as Exhibit 99.3.
 
 Item 9.01.   Financial Statements and Exhibits
 
(d) Exhibits

99.1
Reserve Equity Financing Agreement, dated July 23, 2010, by and between AGS Capital Group, LLC and China Wi-Max Communications, Inc.
   
99.2
Registration Rights Agreement, dated July 23, 2010, by and between AGS Capital Group, LLC and China Wi-Max Communications, Inc.
   
99.3
Press Release of China WI-Max Communications, Inc. dated July 28, 2010.

 
 

 
 
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.
 
CHINA WI-MAX COMMUNICATIONS, INC. (Registrant)
 
 
Dated: July 28, 2010
 
     
 
/s/ Steven Berman
 
 
Steven Berman, President