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WIMI: How a Low-Quality China Hustle Duped Retail Investors to Sinkhole $160 Million.


WiMi Hologram Cloud - Sep 2021 - FINAL
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· WiMi Hologram Cloud is a China-based “Hologram company” that has raised $160 million since IPO in 2020. Astonishingly, $100 million appears mis-appropriated, leaving us to conclude this “company” exists to extract capital from US markets.

· WiMi Hologram deployed at least $17 million into dozens of PRC-based entities, with minimal disclosure; Chinese filings unearth investments with often little-to-zero relevance to WiMi Hologram’s business, including an apparent Chinese military enterprise.

· WiMi Hologram spent $35 million acquiring “existing artificial intelligence and cloud computing technologies”. However, the acquisition manually assembles kiosks and wholesales electronics, confirmed with Singaporean government documents, deleted websites, and industry resources. Our mid-week site visit found no activity at a warehouse in downtown Singapore.

· WiMi Hologram spent another $27 million on an undisclosed Hong Kong-listed stock and $22 million on real estate in Guangdong “for investment purposes”.

· While WiMi Hologram is a highly promotional company, it’s primary use of cash (these investments) is seldom, if ever, referenced in press releases or SEC disclosures. We ask, why would a “tech company” spend multiples of annual R&D on these “investments”? Why, since IPO one year ago, have five board members have resigned, including two audit committee chairs?

· WiMi Hologram’s credibility relies on a Hong Kong-based investment bank and fintech advisory; these entities have averaged 2-3 PRs per week since IPO, ludicrously claiming WiMi possesses technologies such as “AR/VR”, “AI”, “LiDAR”, “5G”, “Big Data”, “cloud, “semiconductors”, and “NFTs”. Yet, these entities are either undisclosed related parties or paid promoters: both were created around IPO, and neither have material operations ex-promoting WiMi.

· We believe WiMi Hologram is far more interested in nonsensically stringing together unrelated buzzwords, raising capital, and quietly deploying cash into suspect “investments”, than in building any “technology” business. Our research concludes WiMi Hologram is not a high-tech company, but actually:

o a low-growth, low-margin, unprofitable advertising and electronics wholesale business,

o with a shoestring R&D budget of US$5m in the three years prior to IPO,

o headquarters on the first floor of a plastic surgery hospital,

o Is a failed RTO on China’s OTC exchange (NEEQ) due to disclosure deficiencies,

o Has negligible operations and a recent bankruptcy found among its largest customers,

· FT Global, a banker with extensive ties to alleged frauds Kandi (Nasdaq: KNDI) and CBAK (Nasdaq: CBAT), was the primary broker for WiMi Hologram’s $160 million capital raised.

· WiMi Hologram filed a $500 million shelf in June 2021, and continues to promote the stock, most recently promoting a “mEtaVErse” technology, which we don’t believe exists. WiMi Hologram will shovel as many shares into the market as Western Investors are willing to bid.


Disclosure: We are short shares of WiMi Hologram Cloud (Nasdaq: WIMI).



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