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10-K
1 of 61
01/14/2020 09:53 AM
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2019
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 000-55017
MOXIAN, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada
(State or Other Jurisdiction of
Incorporation or Organization)
Units 9B&C, Block D, Fuhua Tower, 8
Chaoyangmen North Street,
Chaoyang District, Beijing 100027, China
(Address of Principal Executive Offices and Zip Code)
27-3729742
(I.R.S. Employer
Identification No.)
Tel: +86 (0) 010 5332 0602
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act
Title of Each Class
Common Stock
Trading Symbol(s)
MOXC
Name of Each Exchange on Which Registered
Nasdaq Capital Market
Securities registered pursuant to Section 12(g) of the Securities Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2
of the Exchange Act.
Large accelerated filer
[ ]
Non-accelerated filer
[X]
Emerging growth Company[ ]
Accelerated filer
[ ]
Smaller reporting company[X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]
The aggregate market value of the voting common equity held by non-affiliates based upon the price at which Common Stock was last sold as of March 31, 2019,
the last business day of the registrant’s most recently completed second fiscal quarter was approximately $23.7 million.
As of December 31, 2019, the number of shares of the registrant’s common stock outstanding was 16,191,529.
FORM 10-K
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2019
TABLE OF CONTENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
SIGNATURES
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosure
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
1
11
11
11
11
11
12
13
14
18
18
19
19
21
22
26
27
28
29
30
34
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical
facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,”
“foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual
results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:
● The availability and adequacy of our cash flow to meet our requirements;
● Changes or developments in laws, regulations or taxes in our industry;
● Competition in our industry;
● The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business;
● Changes in our business strategy, capital improvements or development plans;
● The availability of additional capital to support capital improvements and development; and
● Other risks identified in this report and in our other filings with the Securities and Exchange Commission or the SEC.
This report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking
statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this
report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward-
looking statements, whether as a result of new information, future events or otherwise.
Use of Defined Terms
Except as otherwise indicated by the context, references in this report to:
● The “Company,” “we,” “us,” “our” or “Moxian” are references to the combined business of
Moxian, Inc., a company incorporated under the laws of the State of Nevada,
(i)
Moxian CN Group Limited, a company incorporated under the laws of Samoa (“Moxian CN Samoa”),
(ii)
Moxian Intellectual Property Limited, a company incorporated under the laws of Samoa (“Moxian IP Samoa”);
(iii)
Moxian Group Limited, a company incorporated under the laws of the British Virgin Islands (“Moxian BVI”),
(iv)
Moxian (Hong Kong) Limited, a limited liability company incorporated under the laws of Hong Kong (“Moxian HK”),
(v)
Moxian Technologies (Shenzhen) Co., Ltd., a company incorporated under the laws of the People’s Republic of China (“Moxian Shenzhen”),
(vi)
(vii)
Moxian Malaysia Sdn. Bhd. (“Moxian Malaysia”), a company incorporated under the laws of Malaysia (“Moxian Malaysia”),
(viii) Moxian Technologies (Beijing) Co., Ltd., a company incorporated under the laws of the People’s Republic of China (“Moxian Beijing”),
Moxian Technologies (Shanghai) Co. Ltd., a company under the laws of the People’s Republic of China (“Moxian Shanghai”),
(ix)
Shenzhen Moyi Technologies Co. Ltd., a contractually controlled affiliate of Moxian Shenzhen formed under the laws of People’s Republic
(x)
of China (“Moyi”) and
Woodland Corporation Limited, a company incorporated under the laws of Hong Kong (“Woodland”).
(xi)
● “Common Stock” refers to the Company’s common stock, par value $0.001;
● “PRC” refers to the People’s Republic of China;
● “HK” refers to Hong Kong;
● “U.S. dollar,” “$” and “US$” refer to the legal currency of the United States;
● “Securities Act” refers to the Securities Act of 1933, as amended; and
● “Exchange Act” refers to the Securities Exchange Act of 1934, as amended.
Unless otherwise noted, all currency figures in this filing are in U.S. dollars. References to “yuan” or “RMB” are to the Chinese yuan (also known as the Renminbi).
ITEM 1. BUSINESS
Corporate History and Corporate Structure
PART I
Moxian, Inc. (“the Company”) was incorporated in the State of Nevada on October 12, 2010 and was formerly known as SECURE NetCheckIn Inc. in the business
of offering a cloud-based scheduling and notification product for the medical industry. The Company changed its name to Moxian China, Inc. on December 13,
2013 and to Moxian, Inc. on July 19, 2015.
On February 17, 2014, the Company incorporated Moxian CN Samoa under the laws of Samoa.
On February 21, 2014, the Company acquired Moxian BVI, together with its subsidiaries, Moxian HK, Moxian Shenzhen, and Moxian Malaysia through its wholly
owned subsidiary, Moxian CN Samoa from Rebel Group, Inc. (“REBL”), a company incorporated in the State of Florida and of which our director, James Tan, was
a promoter as the term is defined under Rule 405 of Regulation C promulgated under the Securities Act, by entering into a License and Acquisition Agreement (the
“License and Acquisition Agreement”) in consideration of $1,000,000 (“Moxian BVI Purchase Price”).
As a result, Moxian BVI, together with its subsidiaries, Moxian HK, Moxian Shenzhen, and Moxian Malaysia, became our subsidiaries. Under the License and
Acquisition Agreement, REBL also agreed to grant us the exclusive right to use REBL’s intellectual property rights (collectively, the “IP Rights”) in Mainland
China, Malaysia, and other countries and regions where REBL conducts its business (the “Licensed Territory”), and the exclusive right to solicit, promote, distribute
and sell REBL products and services in the Licensed Territory for five years (the “License,”) and in consideration of such License, the Company agreed to pay to
REBL (i) $1,000,000 as license maintenance royalty each year commencing on the first anniversary of the date of the License Agreement; and (ii) 3% of the gross
profits resulting from the distribution and sale of the products and services on behalf of the Company as an earned royalty.
Moxian BVI was incorporated on July 3, 2012 under the laws of the British Virgin Islands.
Moxian HK was incorporated on January 18, 2013 and became Moxian BVI’s subsidiary on February 14, 2013.
Moxian Shenzhen was incorporated on April 8, 2013 as a wholly-owned subsidiary of Moxian HK and is engaged in the business of internet technology, computer
software, and commercial information consulting.
Moxian Malaysia was incorporated on March 1, 2013 and became Moxian HK’s subsidiary on April 2, 2013.
Shenzhen Moyi Technologies Co., Ltd. (“Moyi”) was incorporated on July 19, 2013 under the laws of the People’s Republic of China. On July 15, 2014, Moxian
Shenzhen entered into a series of agreements with Shenzhen Moyi Technologies Co., Ltd., a company incorporated under the laws of People’s Republic of China
(“Moyi”), and its shareholders which permit us to operate Moyi and the right to purchase all of its equity interests from its shareholders as described below (the
“Moyi Agreements”).
1
Moxian Technologies (Beijing) Co., Ltd. (“Moxian Beijing”) was incorporated on December 10, 2015 under the laws of the People’s Republic of China as a wholly-
owned subsidiary of Moxian Shenzhen. Moxian Beijing is engaged in the business of internet technology, computer software, and commercial information
consulting.
On February 17, 2014, Moxian IP Samoa was incorporated in Samoa as a wholly-owned subsidiary of REBL. On February 19, 2014, Moxian HK and Moxian
Shenzhen entered into an Assignment and Assumption Agreement with Moxian IP Samoa, whereby Moxian HK and Moxian Shenzhen assigned and transferred all
of the intellectual property rights that they respectively owned in connection with the Moxian business to Moxian IP Samoa in consideration of $1,000,000.
On January 30, 2015, the Company entered into an Equity Transfer Agreement (the “Equity Transfer Agreement,” such transaction, the “Equity Transfer
Transaction”) with REBL, to acquire from REBL 100% of the equity interests of Moxian IP Samoa for $6,782,000 (the “Moxian IP Samoa Purchase Price”).
Moxian IP Samoa owns all the intellectual property rights relating to the operation, use and marketing of the Moxian Platform, including all of the trademarks,
patents and copyrights that are used in the Company’s business. As a result of the Equity Transfer Transaction, Moxian IP Samoa became a wholly-owned
subsidiary of the Company.
2
In addition, under the Equity Transfer Agreement, the Company and REBL agreed to terminate the License and Acquisition Agreement. Immediately prior to the
execution of the Equity Transfer Agreement, the Moxian BVI Purchase Price was not yet paid and no license maintenance royalty or earned royalty under the
License and Acquisition Agreement had accrued.
Under the Equity Transfer Agreement, the Company and REBL agreed to extinguish all of the Company’s liabilities owed to REBL under the License and
Acquisition Agreement, other than the Moxian BVI Purchase Price.
The Company agreed to issue to REBL a convertible promissory note for $7,782,000 (the “Rebel Note”), representing the sum of the Moxian IP Samoa Purchase
Price and the Moxian BVI Purchase Price. The Rebel Note was due and payable on October 30, 2015 without any interest. The Company had the option to cause
REBL to convert any and all amounts due under the Rebel Note into shares of the Company’s Common Stock at the conversion price of $1.00 per share (the
“Conversion Price”), if the volume weighted average price (the “VWAP”) of the Company’s Common Stock for a period of 30 trading days immediately prior to the
date of conversion was higher than the Conversion Price. The Company also had a right of first refusal to purchase the shares issuable upon conversion of the Rebel
Note at the price of 80% of the VWAP for 30 trading days immediately prior to the date of the proposed repurchase by the Company.
On August 14, 2015, the VWAP of the Company’s Common Stock for 30 trading days prior to August 14, 2015 was higher than $1.00, which triggered the
conversion of the Rebel Note. The Company notified REBL that it elected to cause it to convert $3,891,000 of the Rebel Note into 3,891,000 shares of its Common
Stock (the “August Conversion”). As a result of the August Conversion, the remaining amount of the Rebel Note was $3,891,000.
On September 30, 2015, the Company notified REBL that it elected to cause it to convert the remainder of the Rebel Note into 3,891,000 shares of the Company’s
Common Stock (the “September Conversion”). After the August Conversion and September Conversion, the entire balance of the Rebel Note was converted into a
total of 7,782,000 shares of the Company’s Common Stock.
On November 14, 2016, the Company announced the completion of a public offering of 2,501,250 shares of its Common Stock at a public offering price of $4.00
per share. The net proceeds from the offering were approximately $8.5 million after deducting placement agents’ commissions and other estimated offering
expenses. In connection with the offering, the Company’s Common Stock began trading on the NASDAQ Capital Market on November 15, 2016 under the symbol
“MOXC”.
On December 18, 2017, the Company entered into a Tripartite Agreement with the original shareholders of Moyi and the new shareholders of Moyi wherein the
Company agrees to the transfer o the equity interests of Moyi and all related rights, liabilities and obligations under the Moyi Agreements such that the new
shareholders stand in place of the old shareholders in all aspects of the Moyi Agreements.
Moyi, which is owned solely by Chinese shareholders, is granted an Internet Content Provider license (“ICP License”). Businesses in China that are engaged in the
business of Internet information services, including online advertisement and e-commerce services, are required to obtain an ICP License. Due to Chinese regulatory
restrictions on foreign investments in the Internet sector, we operate our marketing platform and conduct our business through Moyi pursuant to the Moyi
Agreements. Under the Moyi Agreements, Moyi will be treated as a variable interest entity in which the Company does not have direct or controlling equity interest
but the historical financial results of such entity will be consolidated in our financial statements in accordance with U.S. generally accepted accounting principles
(“U.S. GAAP”).
Due to the transfer of interests from the Original Moyi Shareholders to the New Moyi Shareholders, the Company’s Board of Directors determined that it was
appropriate to terminate such Moyi Agreements as the original Moyi Agreements had executed and to execute substantially similar Moyi Agreements with the New
Moyi Shareholders. Because the Exclusive Business Cooperation Agreement did not include the Original Moyi Shareholders as a party, it has not been terminated.
The Share Pledge Agreement, Power of Attorney and Exclusive Option Agreement were officially terminated as to the Original Moyi Shareholders as of January 8,
2018 and new Share Pledge Agreement, Power of Attorney and Exclusive Option Agreement were entered into with the New Moyi Shareholders at the same date.
The parties’ intent throughout has been to maintain control of Moyi by Shenzhen Moxian and, by extension, the Company.
On April 5, 2019, the Board approved a reverse share split of 1 for 5 which became effective on April 22, 2019. As a result, the authorized and outstanding shares of
the Company was reduced to 13,471,529 from 67,357,222. Concurrently, the authorized number of shares of Common Stock was reduced to 50,000,000 common
shares from 250,000,000 common shares.
On May 2, 2019, the Company announced that it had reached agreement with three of its loan creditors regarding settlement of their loans to the Company which
totaled $7,323,439, Pursuant to these agreements, each of the loan creditors, which are unrelated parties, wrote off approximately 85% of the amounts due from the
Company, and on September 30, 2019, the Company issued a total of 720,000 new shares of common stock, par value $0.001, as full and complete settlement of the
remaining outstanding loans.
On May 8, 2019, Woodland Corporation Limited (“Woodland”) was incorporated under the laws of Hong Kong as a wholly-owned subsidiary of Moxian, Inc.
Woodland is engaged in the business of investment holding but has yet to commence operations as of September 30, 2019.
On September 30, 2019, the Company issued 2,000,000 new shares of its Common Stock to Joyful Corporation Limited, a company incorporated in Samoa,
pursuant to an agreement entered into on June 21, 2019. As a result of these new issues during this fiscal year, the number of outstanding shares of Common Stock
of the Company increased to 16,191,529 as of September 30, 2019.
3
The following diagram sets forth the structure of the Company as of the date of this report:
Our web site address is www.moxianglobal.com. Information contained on our web site is not part of this report on Form 10-K or our other filings with the
Securities and Exchange Commission (“SEC”).
Overview
We are in the O2O (“Online-to-Offline”) business. While there are many definitions of O2O, with respect to our business, O2O means providing an online platform
for small and medium sized enterprises (“SMEs”) with physical stores to conduct business online, interact with existing customers and obtain new customers. We
refer to our customers as “Merchant Clients” and the existing and potential users of our platform as “Users.” Through our platform and the products and services
offered through it, we seek to create interaction between our Users and Merchant Clients by allowing Merchant Clients to study consumer behavior. Our products
and services are designed to allow Merchant Clients to conduct targeted advertising campaigns and promotions which are more effective because they are geared for
those customers that a Merchant Client wishes to reach. Our platform is designed to encourage Users to return and to recruit new Users, each of which is a potential
customer for our Merchant Clients. We believe we are different from other companies in that our plan is to sign up merchants first and build our user base utilizing
their customers.
On December 31, 2015, the Company entered into an Exclusive Partnership Agreement with Xinhua New Media Culture Communication Co. Ltd. (“Xinhua New
Media”). Xinhua New Media is part of the Xinhua News Agency, the official news agency of the Peoples” Republic of China. It has developed an App that has a
user population in the region of 120 million, many of whom are government employees and senior executives of quasi-government bodies and agencies.
Under the Agreement, the Company has the exclusive rights to operate the gaming channel on the Xinhua New Media app and can sell advertisement space on any
part of the App. The revenue from the sale of advertisement space forms the second part of our revenue.
4
Moxian principally operates in Shenzhen and Beijing.
As of September 30, 2019, and September 30, 2018, our accumulated deficiency was approximately $40.7 million and $47.3 million, respectively. We have not
generated any significant recurrent revenue since we started operations and our losses have grown to a level where the Company’s continued operations is
dependent on fresh injections of capital or new funding.
Going Concern
In assessing the Company’s liquidity and its ability to continue as a going concern, the Company monitors and analyzes its cash and cash equivalents and its
operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital
expenditure obligations. As of September 30, 2019, the Company has halted operations on its own App but continues to operate the advertising and creative
activities in the Games channel of the Xinhua App.
If the Company is unable to obtain the additional funding in the immediate future, it will have to cease operations on a permanent basis. The consolidated financial
statements for the years ended September 30, 2019 and 2018 have been prepared on a going concern basis and do not include any adjustments to reflect the possible
future effects on the recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the inability of the Company to
continue as a going concern.
5
Employees
As of September 30, 2019, we had a total of 9 full-time employees and outsourced services as and when required.
Foreign Exchange
Operating in foreign countries also subjects us to risk from currency fluctuations. Our primary exposure to movements in foreign currency exchange rates relates to
non-U.S. dollar denominated sales and operating expenses. The weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of
our foreign currency-denominated sales and earnings.
PRC Law
Overview
The telecommunications and internet industry in China is highly regulated through various government agencies such as the Ministry of Industry and Information
Technology (“MIIT”) and the State Administration of Press, Publication, Radio, Film and Television (“SAPPRFT”), the State Council Information Office (“SCIO”),
the General Administration for Press and Publication (“GAPP”), and the Ministry of Public Security.
Among all the regulations, the Telecommunications Regulations of the People’s Republic of China, promulgated on September 25, 2000, is the primary governing
law. The Telecom Regulations set out the general framework under which domestic Chinese companies such as the Company’s subsidiaries and VIE may engage in
various types of telecommunications services in the PRC. They reiterate the long-standing principle that telecommunications service providers need to obtain
operating licenses as a mandatory precondition to begin operation.
The Chinese government restricts foreign investment in Internet-related businesses. Accordingly, we operate our Internet-related businesses in China through Moyi,
our VIE operating in Shenzhen, China.
Internet Information Services
The governing law for Internet information service is the Measures for the Administration of Internet Information Services, or the Internet Content Provider (“ICP”)
Measures, which went into effect on September 25, 2000. Under the ICP Measures, any entity that provides information to online Internet users must obtain an
operating license from Ministry of Industry and Information Technology (“MIIT”) or its local branch at the provincial level in accordance with the Telecom
Regulations described above. The ICP Measures further stipulate that entities providing online information services in areas of news, publishing, education,
medicine, health, pharmaceuticals and medical equipment must obtain permission from responsible national authorities prior to applying for an operating license
from MIIT or its local branch at the provincial or municipal level. Moreover, ICPs must display their operating license numbers in a conspicuous location on their
websites. ICPs must police their websites to remove categories of harmful content. Many of these requirements mirror Internet content restrictions that have been
announced previously by PRC measures such as the MIIT and the SAPPRFT that derive their authority from the State Council.
Currently, Moyi holds an ICP license that was issued on January 22, 2014.
6
Online Privacy
Chinese law does not prohibit internet service providers from collecting and analyzing personal information from their users if the users agree to do so. The PRC
government, however, has the power and authority to order internet service providers to submit personal information of an internet user if such user posts any
prohibited content or engages in illegal activities on the internet.
Under the Several Provisions on Regulating the Market Order of Internet Information Services (“Order”) promulgated by the MIIT which became effective on
March 15, 2012, internet service providers may not, without a user’s consent, collect the user’s personal information that can be used, alone or in combination with
other information, to identify the user, and may not provide any user’s personal information to third parties without the prior consent of the user. Internet service
providers may only collect users’ personal information necessary to provide their services and must expressly inform the users of the method, scope and purpose of
the collection and processing of such information. They are also required to ensure the proper security of users’ personal information, and take immediate remedial
measures if such information is suspected to have been inappropriately disclosed. When a User registers to our application, we require our users to accept a user
agreement whereby they agree to provide certain personal information to us. We will take other measures as necessary to comply with these provisions.
ICPs are also required to establish and publish their rules relating to personal information collection or use, keep any collected information strictly confidential, and
take technological and other measures to maintain the security of such information. ICP operators are required to cease any collection or use of the user personal
information, and de-register the relevant user account, when a given user stops using the relevant Internet service. ICP operators are further prohibited from
divulging, distorting or destroying any such personal information, or selling or providing such information unlawfully to other parties. In addition, if an ICP operator
appoints an agent to undertake any marketing and technical services that involve the collection or use of personal information, the ICP operator is still required to
supervise and manage the protection of the information. As to penalties, in very broad terms, the Order states that violators may face warnings, fines, and disclosure
to the public and, in most severe cases, criminal liability.
Currently, our collection of the information from the Users is agreed to by the Users when they sign up. In addition, any data mining or analyzing of the user data is
for internal use only. We also take steps to ensure that the data collected is stored securely.
Internet Publishing
On February 4, 2016, the SAPPRFT and MIIT jointly issued the Rules for the Administration for Internet Publishing Services, or the Internet Publishing Rules,
which took effect on March 10, 2016, to replace the Provisional Rules for the Administration of Internet Publishing that had been jointly issued by the SAPPRFT
and MIIT on June 27, 2002. The Internet Publishing Rules define “Internet publications” as digital works that are edited, produced or processed to be published and
provided to the public through the Internet, including (a) original digital works, such as pictures, maps, games and comics; (b) digital works with content that is
consistent with the type of content that, prior to the Internet age, typically was published in media such as books, newspapers, periodicals, audio-visual products and
electronic publications; (c) digital works in the form of online databases complied by selecting, arranging and compiling other types of digital works; and (d) types
of digital works identified by the SAPPRFT. Under the Internet Publishing Rules, Internet operators distributing such Internet publications via information network
are required to apply for an Internet publishing license with the relevant governmental authorities and submit the application, if approved, to the SAPPRFT for
approval before distributing Internet publications. Moxian plans to apply for an Internet publishing license.
Online Games
On May 10, 2003, the Provisional Regulations for the Administration of Online Culture were issued by the Ministry of Culture (“MCPRC”) and went into effect on
July 1, 2003 (these regulations were revised by MCPRC on July 1, 2004). According to these regulations, commercial entities are required to apply to the relevant
local branch of MCPRC for an Online Culture Operating Permit to engage in online games services.
On July 27, 2004, GAPP and the State Copyright Bureau jointly promulgated the Notice on Carrying out the Decision from the State Council Regarding the
Approval of Electronic and Online Games Publications, or the Games Notice. According to the Games Notice, the Internet Publications Distribution License is
required for publishing online games.
From year 2004 to 2016, MCPRC had issued several measures or regulations regulating the Online Games industry and thus we are subject to more strict
regulations.
Currently, Moxian holds the appropriate license that was issued by the Administration of Online Culture on November 25, 2015.
7
Encryption Software
On October 7, 1999, the State Encryption Administration Commission published the Regulations for the Administration of Commercial Encryption, followed by the
first Notice of the General Office of the State Encryption Administration Commission on November 8, 1999. Both these regulations address the use of software in
China with encryption functions. According to these regulations, purchase of encryption products must be reported. Violation of the encryption regulations may
result in a warning, penalty, confiscation of the encryption product, or criminal liabilities.
On March 18, 2000, the Office of the State Commission for the Administration of Cryptography issued a public announcement regarding the implementation of
those regulations. The announcement clarifies the encryption regulations as below:
● Only specialized hardware and software, the core functions of which are encryption and decoding, fall within the administrative scope of the
regulations as “encryption products and equipment containing encryption technology.” Other products such as wireless telephones, Windows software
and browsers do not fall within the scope of this regulation.
● The PRC government has already begun to study the laws in question in accordance with WTO rules and China’s external commitments, and will
make revisions wherever necessary. The Administrative Regulations on Commercial Encryption will also be subject to such scrutiny and revision.
In late 2005, the Administration Bureau of Cryptography further issued a series of regulations to regulate the development, production and sales of commercial
encryption products, which all came into effect on January 1, 2006.
We believe that the Company is in proper compliance with these requirements.
Foreign Exchange
Foreign exchange regulation in China is primarily governed by the following regulations:
● Foreign Exchange Administration Rules, or the Exchange Rules of the PRC, promulgated by the State Council on January 29, 1996, which was
amended on January 14, 1997 and on August 5, 2008 respectively; and
● Administration Rules of the Settlement, Sale and Payment of Foreign Exchange, or the Administration Rules promulgated by China People’s Bank on
June 20, 1996.
Under the Exchange Rules of the PRC, Renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and
service-related foreign exchange transactions. Conversion of Renminbi for capital account items, such as direct investment, loans, securities investment and
repatriation of investment, however, is still generally subject to the approval or verification of SAFE.
Under the Administration Rules, enterprises may only buy, sell or remit foreign currencies at banks that are authorized to conduct foreign exchange business after
the enterprise provides valid commercial documents and relevant supporting documents and, in the case of certain capital account transactions, after obtaining
approval from SAFE or its competent local branches. Capital investments by enterprises outside of China are also subject to limitations, which include approvals by
the Ministry of Commerce, SAFE and the National Development and Reform Commission, or their respective competent local branches.
8
On October 21, 2005, SAFE issued the Circular on Several Issues concerning Foreign Exchange Administration for Domestic Residents to Engage in Financing and
in Return Investments via Overseas Special Purpose Companies, or Circular No. 75, which went into effect on November 1, 2005. Circular No. 75 provides that if
PRC residents use assets or equity interests in their PRC entities to establish offshore companies or inject assets or equity interests of their PRC entities into offshore
companies for the purpose of overseas capital financing, they must register with local SAFE branches with respect to their investments in offshore companies.
Circular No. 75 also requires PRC residents to file changes to their registration if their special purpose companies undergo material events such as capital increase or
decrease, share transfer or exchange, merger or division, long-term equity or debt investments, provision of guaranty to a foreign party, etc. SAFE further
promulgated the Implementing Rules for Circular No. 75, or Circular No. 106, clarifying and supplementing the concrete operating rules that shall be followed
during the implementation and application of Circular No. 75.
On August 29, 2008, the Notice of the General Affairs Department of the State Administration of Foreign Exchange on the Relevant Operating Issues concerning
the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-funded Enterprises, or the Improvement Notice, was
promulgated by SAFE. Pursuant to the Improvement Notice, the foreign currency capital of Foreign Investment Entities, after being converted to Renminbi, can
only be used for doing business within the business scope approved by relevant governmental authorities, and shall not be used for domestic equity investment
except as otherwise explicitly provided by laws and regulations.
On July 14, 2014, SAFE issued a new Circular on Several Issues concerning Foreign Exchange Administration for Domestic Residents to Engage in Investing and
Financing and in Return Investments via Overseas Special Purpose Companies, or Circular No. 37, which enlarges the definition of SPV comparing to the Circular
No. 75, which can invest in China under Circular No. 37. The method of investment include forming a new entity in China and through merging or acquiring a
domestic company in China.
In March 2015, SAFE released the Circular on Reforming the Management Approach regarding the Foreign Exchange Capital Settlement of Foreign-invested
Enterprises, or FIEs, or the Foreign Exchange Capital Settlement Circular, which became effective from June 1, 2015. This circular replaced SAFE’s previous
related circulars, including the Circular on Issues Relating to the Improvement of Business Operation with Respect to the Administration of Foreign Exchange
Capital Payment and Settlement of Foreign Invested Enterprises. The Foreign Exchange Capital Settlement Circular clarifies that FIEs may settle a specified
proportion of their foreign exchange capital in banks at their discretion, and may choose the timing for such settlement. The proportion of foreign exchange capital
to be settled at FIEs’ discretion for the time being is 100% and the SAFE may adjust the proportion in due time based on the situation of international balance of
payments. The circular also stipulates that FIEs’ usage of capital and settled foreign exchange capital shall comply with relevant provisions concerning foreign
exchange control and be subject to the management of a negative list. The FIEs’ capital and Renminbi capital gained from the settlement of foreign exchange capital
may not be directly or indirectly used for expenditure beyond the business scope of the FIEs or as prohibited by laws and regulations of the PRC. Such capital also
may not be directly or indirectly used for issuing Renminbi entrusted loans except as permitted by the business scope of the FIE, for repaying inter-enterprise
borrowings including any third party advance, or for repaying the bank loans denominated in RMB that have been sub-lent to a third party.
On June 9, 2016, SAFE issued the Circular on Reform and Regulating of the Administrative Policy of the Settlement under Capital Accounts, or SAFE Circular 16,
which became effective on the same date. Pursuant to SAFE Circular 16, FIEs may either continue to follow the current payment-based foreign currency settlement
system or choose to follow the “conversion-at-will” system for foreign currency settlement. Where a foreign-invested enterprise elects the conversion-at-will system
for foreign currency settlement, it may convert, in part or in whole, the amount of the foreign currency in its capital account into Renminbi at any time. The
converted Renminbi will be kept in a designated account labeled as settled but pending payment, and if such FIE needs to make payment from such designated
account, it does not need to go through a lengthy approval process, but instead is only required to declare its intended use for such converted Renminbi. Although
Circular 16 effectively simplifies the administrative process for converting foreign currencies into Renminbi for settlement of capital account items, the Notice on
Further Promoting the Reform of Foreign Exchange Administration and Improving Authenticity and Compliance Review (Hui Fa [2017] No.3), or the Notice of
No.3, released by SAFE on January 26, 2017, requires a domestic company to provide explanations to the banks through which it seeks to exchange currency of the
sources of funds for investment and the intended use of such funds. Under Notice No.3, submission of relevant corporate documents, including board resolutions
and relevant contracts is also required to support a domestic company’s claim of intended use.
9
Hong Kong Law
Our website is maintained through a server in the Special Administrative Region of Hong Kong (“HKSAR”). Therefore, our data usage policy and regular terms of
service for both our users and merchants must comply with the applicable rules and regulations in HKSAR. As information from our Merchant Clients and Users are
preserved in the HKSAR, the law applicable to the Company is the Hong Kong Personal Data (Privacy) Ordinance (Cap 486). Non-compliance of such rules in
Hong Kong may result in a fines of up to HKD 500,000. Directors of Moxian Hong Kong may also be personally liable for the Company’s violation of Hong Kong
Personal Data (Privacy) Ordinance.
We believe we are in compliance with the laws in the HKSAR.
Intellectual Property
Trademarks
We have registered or applied to register the following trademarks in Mainland China, Hong Kong, and the U.S.:
Mark
Country of
Registration
Application
Number
Hong Kong
302534274
America
85931344
China
13460852
business management,
Class/Description
Class 9: Magnetic data carries, recording discs, data
processing equipment and computers Class 35:
business
Advertising,
administration Class 38: Telecommunications Class
40: Treatment of materials Class 41: Entertainment
Class 42: Design and development of computer
hardware and software
Class 009: Magnetic data carries, recording discs,
data processing equipment and computers Class 035:
Advertising,
business
administration Class 038: Telecommunications Class
040: Treatment of materials Class 041: Entertainment
Class 042: Design and development of computer
hardware and software
Class 9: Magnetic data carries, recording discs, data
processing equipment and computers
business management,
魔线
China
China
13461178
Class 38: Telecommunications
13460714
Class 42: Design and development of computer
hardware and software
Current
Owner
Moxian (Hong Kong)
Limited
Status
Registered
Moxian (Hong Kong)
Limited
Registered
Moxian Shenzhen
Technologies Co Ltd
Registered
Moxian Shenzhen
Technologies Co Ltd
Moxian Shenzhen
Technologies Co Ltd
Registered
Registered
China
10624504
Class 42: Design and development of computer
hardware and software
Moxian Shenzhen
Technologies Co Ltd
Registered
10
Patents
The Company has terminated its applications for the patents which have previously been reported.
Available Information
The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to
Sections 13(a) and 15(d) of the Exchange Act, are filed with the SEC. The Company is subject to the informational requirements of the Exchange Act and files or
furnishes reports, proxy statements, and other information with the SEC. Such reports and other information filed by the Company with the SEC are available via
the Company’s website at www.moxian.com when such reports are available on the SEC’s website at www.sec.gov. The public may read and copy any materials
filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy
and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not
incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.
Executive Office
Our principal executive offices are located at Units 9B&C, Block D, Fuhua Tower, 8 Chaoyangmen North Street, Chaoyang District, Beijing 100027, China. We
maintain a website at www.moxianglobal.com. The information contained on our website is not, and should not be interpreted to be, a part of this report.
ITEM 1A. RISK FACTORS
Disclosure in response to this item is not required of a smaller reporting company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Disclosure in response to this item is not required of a smaller reporting company. Nevertheless, the Company does not have any unresolved staff comments as of
the date of this report.
ITEM 2. PROPERTIES
The Company currently does not own any real property. We are currently renting office spaces in Beijing and Shenzhen. The total monthly rent is RMB 150,000
(approximately $21,000 per month). The Company believes that such office spaces are sufficient for its current needs.
ITEM 3. LEGAL PROCEEDINGS
As of the date hereof, we know of no material pending legal proceedings to which we, or any of our subsidiaries, are a party.
There are no proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our interest. From time to time, we may be subject to various claims, legal actions and regulatory proceedings arising in the ordinary
course of business.
ITEM 4. MINE SAFETY DISCLOSURES
None.
11
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
Our common stock was quoted under the symbol “MOXC” on the OTCQB until November 14, 2016. The Company’s common stock began trading on the
NASDAQ Capital Market on November 15, 2016 under the symbol “MOXC”.
For the periods indicated, the following table sets forth the high and low prices per share of Common Stock. These prices have been adjusted to reflect a 1-for-5
reverse stock split which became effective on April 22, 2019.
Fiscal Year 2019
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year 2018
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Holders
$
$
$
$
$
$
$
$
High
Low
High
5.15
5.10
4.45
2.50
20.00
19.75
16.39
12.05
$
$
$
$
$
$
$
$
Low
1.51
1.60
1.00
1.01
10.03
11.85
8.70
3.80
As of September 30, 2019 and 2018, we had 16,191,529 and 67,357,222 shares of our Common Stock issued and outstanding, respectively. As described in Note 8
(a), the Company implemented a reverse stock split of 1 for every 5 on April 29, 2019. There were approximately 500 registered owners of our Common Stock as of
December 31, 2019.
Transfer Agent
The transfer agent for our capital stock is Island Stock Transfer, located at 15500 Roosevelt Boulevard, Suite 301, Clearwater, FL 33760. Their telephone number is
+1 727-289-0010 and fax number is+1 727-289-0069.
Dividend Policy
Any future determination as to the declaration and payment of dividends on shares of our Common Stock will be made at the discretion of our Board of Directors
out of funds legally available for such purpose. We are under no contractual obligations or restrictions to declare or pay dividends on our shares of Common Stock.
In addition, the Company has incurred losses since inception and is in no position to pay any dividends.
Upon payments of dividends by Moxian BVI, no British Virgin Islands withholding tax is imposed.
12
Equity Compensation Plan Information
Currently, there is no equity compensation plan in place.
Unregistered Sales of Equity Securities
On September 30, 2019, we issued 720,000 new shares of our Common Stock in settlement of the outstanding loans due to three unrelated parties as described in
Note 8(b).
On the same date, the Company further issued 2,000,000 new shares of Common Stock to a third party for cash at a price of $1.25 per share, as described in Note 8
(c). As of September 30, 2019, the Company had received $400,000 in cash as part payment of the proceeds of this issuance.
The above issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act and/or Regulation S promulgated
under the Securities Act.
Purchases of Equity Securities by the Registrant and Affiliated Purchasers
We have not repurchased any shares of our common stock during the fiscal year ended September 30, 2019.
ITEM 6. SELECTED FINANCIAL DATA
Disclosure in response to this item is not required of a smaller reporting company.
13
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and
the notes to those consolidated financial statements appearing elsewhere in this report.
Certain statements in this report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties,
regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future
financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,”
“anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” or the
negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.
The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence
of unanticipated events.
The “Company,” “we,” “us,” “our” or “Moxian” are references to the combined business of the (i) Moxian, Inc., a company incorporated under the laws of
Nevada; (ii) Moxian CN Group Limited, a company incorporated under the laws of Independent State of Samoa (“Moxian CN Samoa”), (iii) Moxian Intellectual
Property Limited, a company incorporated under the laws of Independent State of Samoa (“Moxian IP Samoa”); (iv) Moxian Group Limited, a company
incorporated under the laws of British Virgin Islands (“Moxian BVI”), (v) Moxian (Hong Kong) Limited, a limited liability company incorporated under the laws of
Hong Kong (“Moxian HK”), (vi) Moxian Technologies (Shenzhen) Co., Ltd., a company incorporated under the laws of People’s Republic of China (“Moxian
Shenzhen”), (vii) Moxian Malaysia Sdn.Bhd. (“Moxian Malaysia”), a company incorporated under the laws of Malaysia (“Moxian Malaysia”), (viii) Moxian
Technologies (Beijing) Co., Ltd., a company incorporated under the laws of People’s Republic of China (“Moxian Beijing”), (ix) Moxian Technologies (Shanghai)
Co. Ltd., (“Moxian Shanghai”), (x) Shenzhen Moyi Technologies Co. Ltd., a contractually controlled affiliate of Moxian Shenzhen formed under the laws of
People’s Republic of China (“Moyi”), and (xi) Woodland Corporation Limited, a company incorporated under the laws of Hong Kong (“Woodland”).
14
Financial Condition
As of September 30, 2019, and September 30, 2018, our accumulated deficiency was approximately $38.8 million and $47.3 million, respectively. The consolidated
financial statements for the years ended September 30, 2019 and 2018 have been prepared on a going concern basis. They do not include any adjustments to reflect
the possible future effects on the recoverability and classifications of assets, or the amounts and classifications of liabilities that may result from the inability of the
Company to continue as a going concern.
Results of Operations
For the year ended September 30, 2019 compared with the year ended September 30, 2018
Overview
The results for the year ended September 30, 2019 are not strictly comparable to that of the year ended September 30, 2018. This is because from the first quarter of
the year, the Company began to cease the part of its operations relating to its mobile applications whilst its advertising business continued. This is primarily because
the Company was in shortage of funds to support the mobile applications business and its co-operation with a strategic partner, the Shanghai Shewn Wine Company
Limited (“Shanghai entity”) terminated. During the year ended September 30, 2018 the Company relied on the funding provided by this Shanghai entity to conduct
its business and managed to develop a lite version of its App by the last quarter of that financial year. However, due to the termination of the co-operation agreement
with the Shanghai entity, there were insufficient funds for the Company to go beyond the beta testing of this new product. It was previously hoped that the lite
version of its App will achieve more commercial success.
The advertising part of the Company’s business which continued during the year ended September 30, 2019 required less manpower and the Company achieved
limited success, working with industry players introduced through the auspices of its business associate, the Xinhua New Media Culture Communication Limited
(“Xinhua”). Mr. Hao Qinghu, the CEO of the Company, is also a partner in Beijing Huifeng Xinhua Equity Partnership, an affiliate of Xinhua.
The difference in the business nature of the operations for the two fiscal years explained why operating expenses in the year ended September 30, 2019 were
substantially lower compared to that of the previous year, particularly as there were no further research and development expenditure.
15
Critical Accounting Policies and Estimates
Fair value of financial instruments
The Company follows the provisions of ASC 820, “Fair Value Measurements and Disclosures.” ASC 820 clarifies the definition of fair value, prescribes methods
for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs other than quoted prices that are observable for the asset or liability in active markets, quoted prices for identical or similar assets and liabilities in
markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs that reflect management’s assumptions based on the best available information.
The carrying value of cash and cash equivalents, prepayments, deposits and other receivables, accruals and other payables, loans from related parties and unrelated
party approximate their fair values because of the short-term nature of these instruments.
Use of estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the accompanying consolidated financial statements, and
the reported amounts of revenues and expenses during the reporting period. Significant estimates required to be made by management include but not limited to,
useful lives of property and equipment, intangible assets valuation, inventory valuation and deferred tax assets. Actual results could differ from those estimates.
Deferred offering costs
Deferred offering costs consisted principally of legal, underwriting and registration costs in connection with the IPO of the Company’s ordinary shares. Such costs
are deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds.
Impairment of long-lived Assets
The Company classifies its long-lived assets into: (i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite – lived
intangible assets.
Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such
assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology, economy or other industry changes. If
circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be
generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash
flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques,
including discounted cash flow models, relief from royalty income approach, quoted market values and third-party independent appraisals, as considered necessary.
The Company makes various assumptions and estimates regarding estimated future cash flows and other factors in determining the fair values of the respective
assets. The assumptions and estimates used to determine future values and remaining useful lives of long-lived assets are complex and subjective. They can be
affected by various factors, including external factors such as industry and economic trends, and internal factors such as the Company’s business strategy and its
forecasts for specific market expansion.
16
Revenue recognition
On January 1, 2019, the Company adopted ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that
an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company
expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more
judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP, including identifying performance obligations in
the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance
obligation.
The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if
any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial statements as of the date of
adoption. As a result, a cumulative effect adjustment was not required.
The Company currently recognizes revenue from the sale of merchandise through its online platforms. Revenue is recognized when persuasive evidence of an
arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectability is reasonably assured. Revenue was
recorded on a gross basis, net of surcharges and value added tax (“VAT”) of gross sales. The Company recorded revenue on a gross basis because the Company has
the following indicators for gross reporting: it is the primary obligor of the sales arrangements, is subject to inventory risks of physical loss, has latitude in
establishing prices, has discretion in suppliers’ selection and assumes credit risks on receivables from customers.
Revenue from advertising is recognized as advertisements are displayed. Revenue from software development services comprises revenue from time and material
and fixed price contracts. Revenue from time and material contracts are recognized as related services are performed. Revenue on fixed price contracts is recognized
in accordance with percentage of completion method of accounting.
Foreign currency transactions and translation
The reporting currency of the Company is United States Dollars (the “USD”). The functional currency of Moxian Shenzhen, Moyi and Moxian Beijing is the
Renminbi (the “RMB”). The functional currency of Moxian HK is Hong Kong Dollar (the “HKD”), and the functional currency of Moxian Malaysia is Malaysia
Ringgit (the “RM”).
For financial reporting purposes, the financial statements of Moxian Shenzhen, Moyi, Moxian Beijing, Moxian HK and Moxian Malaysia, which are prepared using
their respective functional currencies, are translated into the reporting currency, United States dollar (“USD”) so to be consolidated with the Company’s. Monetary
assets and liabilities denominated in currencies other than the reporting currency are translated into the reporting currency at the rates of exchange ruling at the
balance sheet date. Revenues and expenses are translated using average rates prevailing during the reporting period. Adjustments resulting from the translation are
recorded as a separate component of accumulated other comprehensive loss in stockholders’ deficiency. A translation gain of $406,351 and $164,758 are recognized
in the statements of operations and comprehensive loss for the year ended September 30, 2019 and 2018, respectively.
The exchange rates applied are as follows:
Balance sheet items, except for equity accounts
RMB:USD
HKD:USD
RM:USD
Items in the statements of operations and comprehensive loss, and statements cash flows
RMB:USD
HKD:USD
17
September 30, 2019
September 30, 2018
7.1484
7.8391
4.1889
Years Ended
September 30,
2019
2018
6.8766
7.8363
6.8686
7.8259
4.1370
6.5368
7.8324
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize assets and liabilities
arising from a lease for both financing and operating leases. ASU 2016-02 will also require new qualitative and quantitative disclosures to help investors and other
financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for private companies
and emerging growth public companies for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15,
2020. Early application is permitted. The Company is currently evaluating ASU 2016-02 and its impact on its combined financial statements.
In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments - Credit Losses (Topic 326)” and also issued subsequent amendments to the initial
guidance under ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively Topic 326). Topic 326 requires the measurement and recognition of expected credit
losses for financial assets held at amortized cost. This replaces the existing incurred loss model with an expected loss model and requires the use of forwardlooking
information to calculate credit loss estimates. The Company will be required to adopt the provisions of this ASU on January 1, 2020, with early adoption permitted
for certain amendments. Topic 326 must be adopted by applying a cumulative effect adjustment to retained earnings. The Company is currently evaluating Topic
326, including its potential impact to its process and controls.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-
15”). The new standard will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. The
new standard is effective for fiscal years beginning after December 15, 2018. The Company will require adoption on a retrospective basis unless it is impracticable
to apply, in which case the Company would be required to apply the amendments prospectively as of the earliest date practicable. The Company will require
adoption on a retrospective basis unless it is impracticable to apply, in which case the Company would be required to apply the amendments prospectively as of the
earliest date practicable. The adoption of ASU 2016-15 is not expected to have a material impact on the Company’s condensed consolidated financial statements or
disclosures.
In July 2018, the FASB issued ASU No. 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”). The amendments in ASU 2018-10 provide
additional clarification and implementation guidance on certain aspects of the previously issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) and have
the same effective and transition requirements as ASU 2016-02. Upon the effective date, ASU 2018-10 will supersede the current lease guidance in ASC Topic 840,
Leases. Under the new guidance, lessees will be required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s
obligation to make lease payments arising from a lease, measured on a discounted basis. Concurrently, lessees will be required to recognize a right-of-use asset,
which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2018-10 is effective for private companies
and emerging growth public companies for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The guidance is
required to be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods
presented in the financial statements. The Company is currently assessing the impact this guidance will have on its combined financial statements.
In July 2018, the FASB issued ASU No. 2018-09, “Codification Improvements” (“ASU 2018-09”). These amendments provide clarifications and corrections to
certain ASC subtopics including the following: Income Statement Reporting Comprehensive Income – Overall (Topic 220-10), Debt - Modifications and
Extinguishments (Topic 470-50), Distinguishing Liabilities from Equity – Overall (Topic 480-10), Compensation - Stock Compensation - Income Taxes (Topic
718-740), Business Combinations - Income Taxes (Topic 805-740), Derivatives and Hedging – Overall (Topic 81510), and Fair Value Measurement – Overall
(Topic 820-10). The majority of the amendments in ASU 2018-09 will be effective in annual periods beginning after December 15, 2019. The Company is currently
evaluating and assessing the impact this guidance will have on its combined financial statements.
In July 2018, the FASB issued ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements,” (“ASU 201811”). The amendments in ASU 2018-11 related to
transition relief on comparative reporting at adoption affect all entities with lease contracts that choose the additional transition method and separating components
of a contract affect only lessors whose lease contracts qualify for the practical expedient. The amendments in ASU 2018-11 are effective for private companies and
emerging growth public companies for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company is currently
assessing the impact this guidance will have on its combined financial statements.
In March 2019, the FASB issued ASU 2019-02, which aligns the accounting for production costs of episodic television series with the accounting for production
costs of films. In addition, ASU 2019-02 modifies certain aspects of the capitalization, impairment, presentation and disclosure requirements in Accounting
Standards Codification (“ASC”) 926-20 and the impairment, presentation and disclosure requirements in ASC 920-350. This ASU must be adopted on a prospective
basis and is effective for annual periods beginning after December 15, 2020, including interim periods within those years, with early adoption permitted. The
Company is currently evaluating the impact that this pronouncement will have on its consolidated financial statements.
Off-Balance Sheet Arrangements
As of September 30, 2019, we did not have any off-balance sheet arrangements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Disclosure in response to this item is not required of a smaller reporting company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company’s consolidated financial statements, together with the report of the independent registered public accounting firm thereon and the notes thereto, are
presented beginning at page F-1. The Company’s balance sheets as of September 30, 2019 and September 30, 2018 and the related statements of operations and
comprehensive loss, changes in stockholders’ deficiency and cash flows for the years then ended have been audited by Centurion ZD CPA & Co. Centurion ZD
CPA & Co.is an independent registered public accounting firm.. These consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America and pursuant to Regulation S-K as promulgated by the Securities and Exchange Commission and are
included herein pursuant to Part II, Item 8 of this Form 10-K. The consolidated financial statements have been prepared assuming the Company will continue as a
going concern.
18
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Effective November 30, 2018, the Company appointed Centurion ZD CPA & Co as the Company’s independent registered public accounting firm.
Friedman LLP served as the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2017 and 2016. On November 30,
2018, Friedman LLP resigned. Friedman LLP’s report on the Company’s financial statements did not contain an adverse opinion or disclaimer of opinion, nor were
such reports qualified or modified as to uncertainty, audit scope, or accounting principles. During the period of Friedman LLP’s engagement by the Company, there
were no disagreements with Friedman LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which
if not resolved to the satisfaction of Friedman LLP, would have caused it to make a reference to the subject matter of the disagreement(s) in connection with its
reports covering such periods. In addition, no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K, occurred within the period of Friedman LLP’s
engagement and the subsequent interim period preceding Friedman LLP’s dismissal.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of September 30, 2019, our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the year covered by this report. Disclosure controls and
procedure include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required
disclosure. Our Management is responsible for monitoring the process pursuant to which information is gathered and analyzing such information to determine the
extent to which such information requires disclosure, in the reports filed with the Securities and Exchange Commission.
Based on such evaluation, our CEO and CFO have concluded that as of September 30, 2019, the Company’s disclosure controls and procedures were ineffective due
to the Company’s lacks of formal documented controls and procedures applicable to all officers and directors to disclose the required information under the
Exchange Act.
The Company has begun adopting some formal documented controls and anticipates all of them to be in place by the fiscal year end of 2018. We have appointed
outside independent directors, established board committees, strengthened the financial personnel and introduced written policies and procedures.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act. It is a process designed by, or under the supervision of, the company’s principal
executive and principal financial officers and effected by the company’s board of directors, management and other personnel. The objective is to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles
generally accepted in the United States of America and includes those policies and procedures that:
● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the
company;
● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and
● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal
control, there is a risk that material misstatements may not be prevented or detected on a timely basis by the internal controls over financial reporting. However,
these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not
eliminate, this risk.
19
As of September 30, 2019, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control
over financial reporting established in by the Committee of Sponsoring Organizations of the Treadway Commission’s 2013 Internal Control Integrated Framework
and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls
and procedures were not effective to detect the inappropriate application of US GAAP rules. This was primarily due to deficiencies that existed in the design or
operation of our internal controls over financial reporting that adversely affected our internal controls. These deficiencies may be considered to be material
weaknesses.
Identified Material Weakness
A material weakness in internal control over financial reporting is a control deficiency, or combination of control deficiencies, that results in more than a remote
likelihood that a material misstatement of the financial statements will not be prevented or detected.
Management identified the following material weaknesses during its assessment of internal controls over financial reporting as of September 30, 2019:
(1) A lack of understanding of the requirements of NASDAQ, made worse by a poor or no command of the English language
(2) Lack of timely communication between the CEO and the Board of Directors
(3) There are no written policies and procedures covering such operational activities such as sales and procurement due to a lack of staff stability, especially at
senior management levels
(4) Chinese accounting rules require standard official invoices to be issued before they can be recognized in the accounting records so cut-offs remain an issue
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial
reporting as of September 30, 2019 based on criteria established in Internal Control—Integrated Framework issued by COSO (2013 framework). However,
management does not believe that any of our annual or interim financial statements issued to date contain a material misstatement as a result of the aforementioned
weaknesses in our internal control over financial reporting.
20
Management’s Remediation Initiatives
To mediate the identified material weaknesses and other deficiencies, we have introduced the following measures:
(1) Continue to educate senior management on the requirements of NASDAQ
(2) Hold quarterly board meetings, with telephone participation for those unable to attend in person.
(3) Design and monitor controls over financial reporting, including the introduction of a proper checklist of cut-off procedures to ensure proper accounting of
accruals and payables.
(4) Continue to provide training to financial staff on U.S. GAAP and educate management staff and directors on NASDAQ Listing Rules and SEC Reporting
Requirements.
Changes in internal controls over financial reporting
There have been no changes in our internal controls over financial reporting that occurred during the period covered by this Report, which has materially affected, or
is reasonably likely to materially affect, our internal controls over financial reporting.
This annual report does not include an attestation report of the Company’s registered independent public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by the Company’s registered independent public accounting firm pursuant to rules of the Securities
and Exchange Commission that permit the Company to provide only management’s report in this annual report on Form 10-K.
ITEM 9B. OTHER INFORMATION
None.
21
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the name and position of our current executive officers and directors.
PART III
Name
Hao Qinghu
Tan Wanhong
James Tan Meng Dong
Choong Khuat Leok, Lionel
William Yap Guan Hong
Wendy Wang Yingjie
David Cheang Sin Chan
Age
58
65
58
56
55
43
42
Position
Chief Executive Officer and Non-Independent Director
Chief Financial Officer
Non-Independent Director
Independent Director and Chair of Audit Committee
Non-Executive Chairman, Independent Director and Chair of Compensation Committee
Independent Director and Chair of Corporate Governance and Nominating Committee
Independent Director
Mr. Hao Qinghu has served as a director of the Company since January 1, 2016. Mr. Hao has more than 20 years of experience in managing business operations
and business strategy. Since September 30, 2015 he has been the General Manager of Moxian Beijing — a subsidiary of Moxian, Inc., in charge of Moxian
Beijing’s overall operations. From June 2014 until September 2015, Mr. Hao was a Deputy General Manager of Xinhua Huamei Investment Management Co., Ltd.
From 2005 until May 2014, Mr. Hao was a General Manager of Shandong Debang Construction Science and Technology Co., Ltd, where he was responsible for
day-to-day operations and business development. Mr. Hao received his EMBA from Tsinghua University. Mr. Hao was a board appointee of Xinhua Huifeng Equity
Centre (Limited Partnership). The Board of Directors reached a conclusion that Mr. Hao should serve as a Director of the Company based on his extensive
experience in PRC Company management.
Pursuant to the terms of the Subscription Agreement with Xinhua Huifeng Investment Center Co., Ltd. (Beijing), or Xinhua, upon the completion of the
subscription, Xinhua had the right to nominate one member to the Board of Directors. Mr. Hao Qing Hu, who is a nominee of Xinhua, has since served as the
nominee director of Xinhua. He is also the Chief Executive Officer since November, 2018.
Mr. Tan Wanhong has served as our Chief Financial Officer since July 25, 2016. Mr. Tan trained with Grant Thornton in Liverpool, UK and was admitted as an
Associate of the Institute of Chartered Accountants (England and Wales) in 1980. He started his career with KPMG Kuala Lumpur in 1981 and in July that year,
was promoted to be the Resident Manager of the Penang Office. In 1983, Mr. Tan joined a listed client as the Group Financial Controller before leaving for Sime
Darby, Malaysia’s largest Asian-based conglomerate in 1986 as the Group Chief Accountant. He had a successful career with Sime Darby, holding various senior
positions over a span of 18 years but left in 2004 following a reorganization of the group. In 2007, Mr. Tan joined Hong Leong Asia, Singapore on a specific
assignment in China which he completed in 2009. He then took the post of Head of Investor Relations with 361 Degrees International, a Mainland sportswear group
listed on the Stock Exchange of Hong Kong. where he stayed for a further six years.
22
Mr. Lionel Choong Khuat Leok (Lionel Choong), was appointed to the Board on May 11, 2018. He has over 33 years of working experience in accounting,
auditing, internal control, corporate finance and corporate governance. Mr. Choong started his working career with BDO Binder Hamlyn (“BDO”) in London in
1984 where he was later promoted as the supervisor and manager for the banking and financial services team which managed various projects in structured finance
as well as consultation projects for BDO’s client’s initial public offerings. During his term with BDO, Mr. Choong gained the Institute of Chartered Accountants in
England and Wales (ICAEW) Certification as a certified accountant.
In 1992, Mr. Choong joined Deloitte & Touche (“Deloitte”) as a manager of assurance and advisory department where he was responsible for consulting and audit
work for clients. Mr. Choong was then promoted to principal and later partner of Deloitte where he focused on public company capital raising and mergers and
acquisitions (“M&A”). In 2002, Deloitte & Touche Corporate Finance Ltd was established to provide strategic M&A advisory services, at which Mr. Choong was
responsible for business development.
In 2003, Mr. Choong left Deloitte to provide corporate advisory services to the major shareholder of Byford International Ltd (“Byford”), the global brand owner of
Byford, Baby-Q and related trademarks, where he first served as a non-executive director and was later appointed as executive director, Chief Financial Officer
(“CFO”), company secretary and authorised representative of Byford to the Stock Exchange of Hong Kong Ltd (“HKX”). During his three years of services with
Byford, Mr. Choong has facilitated the listing of Byford on the Growth Enterprise Market of the HKX, the acquisition of Byford by Roly International Holdings Ltd
(“Roly”), a company listed on the main board of Singapore Exchange Securities Trading Limited, as well as the post-acquisition integration of Byford with Roly.
William Yap Guan Hong was appointed as a director of the Company on May 16, 2019. He has over 30 years of working experience in corporate finance,
investment management and business development. Mr. Yap is currently the Chief Financial Officer of 8i Enterprises Acquisition Corporation, which is listed on
Nasdaq. Mr. Yap was a Director in Singapore Telecoms from 1998 to 2001, overseeing various portfolios, including Regional Internet Investment and Business
Marketing. He then joined the Ascendas Group, a subsidiary of the Jurong Town Hall Corporation, the largest industrial land developer in Singapore with an asset
base of more than US$1 billion, as its Executive Vice-President (New Business). In 2004, he founded the Newton Group of Companies based in Shanghai, focusing
on business opportunities in the education and training sectors in China. Between 2006-2011, he was responsible for originating proprietary private equity and
venture deals in China for investment funds in Singapore (Hupomone Capital Partners (Singapore) Pte. Ltd (2009-2011) and Evia Capital Partners Pte. Ltd. (2006-
2009). Between 2016-2019, he was the Head of Investment Banking Division of Shanghai Pingmei Shenma Finance Leasing Private Limited. Mr. Yap obtained his
Bachelor of Arts (Physics) (Hons – 2nd Upper) and Master of Arts from the University of Oxford, United Kingdom. He is also a Chartered Financial Analyst (CFA).
Ms Wendy Wang Yingjie was appointed a director of the Company on January 4, 2019. Previously she was a director from September 28, 2017 to January 4, 2018.
She has been the President and Chief Executive Officer of Wetland Media, Inc. since July 2016. She is also a director of Dinghaoyicheng Technology (Shanghai)
Ltd. Co. Ms Wang was the Chief Executive Officer of BZM Innovation Technology, a Fin-tech company from November 2014 to June 2016. From October 2011 to
October 2014, Ms. Wang was a business partner at Shiatang Technology where she was responsible for operational and business strategies. Ma Wang received her
Master’s degree in Scientific, Technical and Medical Translation and Translation Technology from Imperial College, London in 2004 and her Bachelor’s degree in
Foreign Languages, Literature and International Business from Tianjin Foreign Languages University in 1998. The Board of Directors believes that Ms Wang
should serve as an Independent Director of the Company based on her experience.
Mr. David Cheang Sin Chan became a director of the Company on July 1, 2019. He has over 20 years of working experience in business development and
entrepreneurship. Dr. Cheang has been recognized in the sales and real estate industries with awards including the SME One Asia Award (2014), JCI Top Ten
Outstanding Young Persons (TOYP) of the World Award (2015), Teochew Entrepreneur Award (2016), and Asia Pacific Entrepreneurship Award (APEA) 2019.
He is the Entrepreneur-in-Residence in Temasek Polytechnic, Singapore. He is also a Council Member of the Singapore Institute of Purchasing and Materials
Management (SIPMM). Dr. Cheang obtained his BSc (Hons) Economics & Management from the University of London in 2001. He has also been conferred a
Doctorate of Science in Business from the Edison World College (2017) and an Associate Professorship from the World Certification Institute (2018).
Mr. James Tan Meng Dong was appointed as a director on October 22, 2019. He is the present Chairman and CEO of 8i Enterprises Acquisition Corp, a
NASDAQ listed company, as well as 8i Capital Limited, a company focusing on investments and merger and acquisitions. Mr. Tan has more than 20 years’
experience in managing private and public companies based in Asia and in the USA. He served as the Chairman and Chief Executive Officer of Moxian Inc. from
2013 to 2017. From 2003 to 2006, he was the Chairman and CEO of Vashion Group Ltd, a company listed on the Singapore Stock Exchange, and from 2005 to
2008, he was the CEO and director of Vantage Corporation Limited, a company listed on the Singapore Stock Exchange. From 2006 to 2009, he served as a director
on the Board of Pacific Internet Limited, a company listed on NASDAQ, until its sale to Connect Holdings Limited, a group comprising of Ashmore Investment
Management Limited, Spinnaker Capital Limited and Clearwater Capital Partners, LLC. Mr. Tan graduated from the National University of Singapore (NUS) with a
Bachelor of Arts in 1985.
None of the events listed in Item 401(f) of Regulation S-K has occurred during the past ten years that is material to the evaluation of the ability or integrity of any of
our directors, director nominees or executive officers.
Board of Directors
All directors hold office until the next annual meeting of shareholders or until their successors have been duly elected and qualified. Directors are elected at the
annual meetings to serve for a one-year term.
Executive Officers are elected by, and serve at the discretion of, the Board of Directors.
As a smaller reporting company under the NASDAQ rules, we are only required to maintain a board of directors comprised of at least 50% independent directors,
and an audit committee of at least two members, comprised solely of independent directors who also meet the requirements of Rule 10A-3 under the Securities
Exchange Act of 1934. We have complied with these requirements in all aspects.
23
Director Independence
The Board of Directors has reviewed the independence of our directors, applying the NASDAQ independence standards. Based on this review, the Board of
Directors determined that each of Lionel Choong, William Yap, Wendy Wang and Dr. David Cheang are independent within the meaning of the NASDAQ rules. In
making this determination, our Board of Directors considered the relationships that each of these non-employee directors has with us and all other facts and
circumstances our Board of Directors deemed relevant in determining their independence. As required under applicable NASDAQ rules, we anticipate that our
independent directors will meet on a regular basis as often as necessary to fulfill their responsibilities, including at least annually in executive session without the
presence of non-independent directors and management.
Board Committees
Our Board of Directors has established standing committees in connection with the discharge of its responsibilities. These committees include an Audit Committee,
a Compensation Committee and a Nominating and Corporate Governance Committee. Our Board of Directors has adopted written charters for each of these
committees. All our three independent directors are members of the board committees. Copies of the charters are available on our website. Our Board of Directors
may establish other committees as it deems necessary or appropriate from time to time.
Audit Committee
Lionel Choong, Wendy Wang Yingjie and William Yap Guan Hong currently serve on the Audit Committee, which is chaired by Lionel Choong.
The Audit Committee will be responsible for, among other matters:
●
appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm;
● discussing with our independent registered public accounting firm the independence of its members from its management;
●
reviewing with our independent registered public accounting firm the scope and results of their audit;
●
approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;
● overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and
annual financial statements that we file with the SEC;
●
reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory
requirements;
●
coordinating the oversight by our board of directors of our code of business conduct and our disclosure controls and procedures;
●
establishing procedures for the confidential and/or anonymous submission of concerns regarding accounting, internal controls or auditing matters; and
●
reviewing and approving related-party transactions.
Our Board of Directors has affirmatively determined that each of the members of the Audit Committee meets the definition of “independent director” for purposes
of serving on an Audit Committee under Rule 10A-3 of the Exchange Act and NASDAQ rules. In addition, our Board of Directors has determined that Lionel
Choong qualifies as an “audit committee financial expert” as such term is currently defined in Item 407(d)(5) of Regulation S-K and meets the financial
sophistication requirements of the NASDAQ rules.
24
Compensation Committee
William Yap, Wendy Wang Yingjie and Lionel Choong currently serve on the Compensation Committee, which is chaired by William Yap.
The Compensation Committee will be responsible for, among other matters:
●
reviewing and approving, or recommending to the board of directors to approve the compensation of our CEO and other executive officers and
directors;
●
reviewing key employee compensation goals, policies, plans and programs;
● administering incentive and equity-based compensation;
● reviewing and approving employment agreements and other similar arrangements between us and our executive officers; and
● appointing and overseeing any compensation consultants or advisors.
Corporate Governance and Nominating Committee
Wendy Wang, Lionel Choong and William Yap currently serve on the Corporate Governance and Nominating Committee, which is chaired by Wendy Wang.
The Corporate Governance and Nominating Committee will be responsible for, among other matters:
● selecting or recommending for selection candidates for directorships;
● evaluating the independence of directors and director nominees;
●
reviewing and making recommendations regarding the structure and composition of our board and the board committees;
● developing and recommending to the board corporate governance principles and practices;
●
reviewing and monitoring the Company’s Code of Business Conduct and Ethics; and
● overseeing the evaluation of the Company’s management.
Board Oversight
The Board of Directors will oversee a company-wide approach to risk management. Our Board of Directors will determine the appropriate risk level for us
generally, assess the specific risks faced by us and review the steps taken by management to manage those risks. While our Board of Directors will have ultimate
oversight responsibility for the risk management process, its committees will oversee risk in certain specified areas.
Specifically, our Compensation Committee will be responsible for overseeing the management of risks relating to our executive compensation plans and
arrangements, and the incentives created by the compensation awards it administers. Our Audit Committee will oversee management of enterprise risks and
financial risks, as well as potential conflicts of interests. Our Board of Directors will be responsible for overseeing the management of risks associated with the
independence of our Board of Directors.
25
Code of Business Conduct and Ethics
On September 7, 2016, our Board of Directors adopted a code of business conduct and ethics that applies to our directors, officers and employees. We intend to
disclose on our website any amendments to the Code of Business Conduct and Ethics and any waivers of the Code of Business Conduct and Ethics that apply to our
principal executive officer, principal financial officer, principal accounting officer and executive officers.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our common stock, to file reports of ownership
and changes in ownership with the SEC. They are also required under the SEC Regulations to furnish to the Company copies of all Section 16(a) forms they file.
To the best of our knowledge, based solely upon review of the copies of such reports received or written representations from the reporting persons, we believe that
during our 2019 fiscal year, our directors and executive officers who owned more than 10% of our common stock complied with Section 16(a) filing requirements.
We do not however, believe that all other such persons who own more than 10% of our common stock complied with Section 16(a).
ITEM 11. EXECUTIVE COMPENSATION
Set forth below is information regarding the compensation paid during the year ended September 30, 2019 and 2018 to our principal executive officer, principal
financial officer, who are collectively referred to as “named executive officers” elsewhere in this annual report.
Name and Principal Position
Hao Qinghu
CEO
Tan Wanhong
CFO
FS Year
2019
2018
2019
2018
Salary
($)
Total
($)
Nil
Nil
69,802
73,430
Nil
Nil
69,802
73,430
26
Outstanding Equity Incentive Awards At Fiscal Year-End
None.
Employment Agreement with Mr. Hao Qinghu
Mr. Hao does not have an employment Agreement with the Company. He is entitled to a fee of $60,000 per year as a director of the Company.
Employment Agreement with Mr. Tan Wanhong
On July 25, 2016, Moxian HK entered into an agreement with Mr. Tan Wanhong to serve in the role of Chief Financial Officer. Pursuant to the terms of such
employment agreement, Mr. Tan’s monthly base salary is RMB 40,000 (approximately $6,000). The employment agreement may be terminated by either party by
giving one month’s prior written notice, or payment in lieu of appropriate notice. Mr. Tan’s employment may be terminated immediately without notice or payment
in lieu, if among other things, Mr. Tan conducts himself in a way that is inconsistent with the due and faithful discharge of his duties. The Company shall reimburse
Mr. Tan for all reasonable out of pocket expenses in connection with travel, entertainment and other expenses incurred in the performance of his duties. The
payment in lieu of notice of termination is calculated as one month’s salary equal to RMB 40,000 (approximately $6,000).
DIRECTORS’ COMPENSATION
Name
Hao Qinghu
Lionel Choong
Wendy Wang
William Yap
Dr. David Cheang
James Tan
Dr. Yu Lin
Liu Tao
Fees
FS 2019
FS 2018
0
36,000
13,500
Nil
Nil
Nil
13,500
0
60,000
14,000
13,500
N/A
N/A
N/A
18,000
N/A
Compensation Committee Interlocks and Insider Participation
None of our officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity
that has one or more officers serving as a member of our board of directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of December 31, 2019, certain information concerning the beneficial ownership of our common stock by (i) each stockholder
known by us to own beneficially five percent or more of our outstanding common stock; (ii) each director; (iii) each named executive officer; and (iv) all of our
executive officers and directors as a group, and their percentage ownership and voting power.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and
Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a
security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is
deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within sixty (60) days through
the conversion or exercise of any convertible security, warrant, option, or other right. More than one (1) person may be deemed to be a beneficial owner of the same
securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such
person, which includes the number of shares as to which such person has the right to acquire voting or investment power within sixty (60) days, by the sum of the
number of shares outstanding as of such date. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner.
Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have
sole voting and investment power with respect to the shares shown.
The column entitled “Percentage of Shares Beneficially Owned” is based on a total of 16,191,529 shares of our common stock outstanding as of December 31,
2019.
Name of Beneficial Owner(1)
Officers and Directors
Hao Qinghu (1)
Director and CEO
He Weisu (2)
Manager
Wang Yingjie, Wendy
Independent Director
Choong Khuat Leok, Lionel
Independent Director
Dr. David Cheang Sin Chan
Independent Director
William Yap
Independent Director
Tan Wanhong
Chief Financial Officer
James Tan Mengdong
Non-Independent Director (3)
All officers and directors as a group
(7 persons named above)
Number of
Shares
Beneficially
Owned
Percentage of
Shares
Beneficially
Owned
409,502
409,501
Nil
Nil
Nil
Nil
Nil
5,132.365
5.951,367
2.529%
2.529%
0%
0%
0%
0%
0%
31.696%
36.754%
(1) Hao Qinghu is a partner in Beijing Xinhua Huifeng Equity Investment Center (Limited Partnership) which is a registered shareholder of the 409,502 shares and
an affiliate of Hao Qinghu
(2) He Weisu is a manager in Beijing Moxian and the Managing Partner of Beijing Xinhua Huifeng Investment Center (Limited Partnership). He is also an affiliate
of Hao Qinghu
(3) James Tan owns or controls the following entities which are his affiliates:
27
Name of Beneficial Owner
Good Eastern Investment Holdings Limited
8i Capital Limited
Ace Keen Limited
Vertical Venture Capital Group Limited
Joyful Corporation Limited
Shenzhen Bayi Enterprises Limited
5% Securities Holders
Global Innovative Investment Group Limited
Clear Blossom Limited
Number of
Shares
Beneficially
Owned
Percentage of
Shares
Beneficially
Owned
998,000
1,000,000
65,522
160.643
2,778,200
130,000
5,132,365
1,983,000
1,983,000
6.164%
6.176%
0.405%
0.992%
17.156%
0.803%
31.696%
12.247%
12.247%
Total
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE
There are no transactions since October 1, 2017, in which the amount involved in the transaction exceeded or will exceed the lesser of $120,000 or one percent of
the average of our total assets as at the year-end for the last two completed fiscal years, and to which any of our directors, executive officers or beneficial holders of
more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or
indirect material interest.
Our policy is that a contract or transaction either between the Company and a director, or between a director and another company in which he is financially
interested is not necessarily void or void-able if the relationship or interest is disclosed or known to the board of directors and the stockholders are entitled to vote on
the issue, or if it is fair and reasonable to our company
As described in Note 8 (c), on June 21, 2019, the Company entered into a share placement agreement with Joyful Corporation Limited for the issuance of 2,000,000
shares of Common Stock at a price of $1.25 per share. Pursuant to this agreement, the shares were issued on September 30, 2019. James Tan, who is affiliated with
Joyful Corporation, Limited became a director of the Company on October 22, 2019 and by virtue of this appointment is deemed to be an interested party in this
transaction as of the date of this Report.
28
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The following table sets forth the aggregate fees billed to the Company by its independent registered public accounting firm, for the fiscal years indicated.
ACCOUNTING FEES AND SERVICES
Audit fees
Audit-related fees
Tax fees
All other fees
Total
$
$
2019
2018
$
93,750
-
-
-
93,750
$
198,000
-
-
-
198,000
The category of “Audit fees” (excluding out of pocket expenses) includes fees for our annual audit, quarterly reviews and services rendered in connection with
regulatory filings with the SEC, such as the issuance of comfort letters and consents.
The category of “Audit-related fees” includes employee benefit plan audits, internal control reviews and accounting consultation.
On November 8, 2018 Friedman LLP resigned as the independent auditors of the Company and on November 30, 2018, Centurion ZD CPA & Co were appointed.
All above audit services and audit related services were pre-approved by the Board of Directors and Audit Committee for the fiscal years ended September 30, 2019
and 2018, which concluded that the provision of such service by each of Centurion ZD CPA & Co. and Friedman LLP respectively were compatible with
maintenance of the firm’s independence in the conduct of its audits.
29
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(a) Financial Statements
The following are filed as part of this report:
Financial Statements
The following financial statements of Moxian, Inc. and Reports of Independent Registered Public Accounting Firms are presented in the “F” pages of this report:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(b) Exhibits
The following exhibits are filed or “furnished” herewith:
PAGES
F-2
F-3
F-4
F-5
F-6
F-7 – F-24
Exhibit
Number
3.1
3.2
3.4
4.1
10.1
10.2
10.3
Description
Restated Articles of Incorporation of the Company filed on May 2, 2011 (incorporated by reference herein to Exhibit 3.1 to the Company’s
Registration Statement on Form S-1 filed with the SEC on May 9, 2011).
Certificate of Amendment to the Company’s Articles of Incorporation filed on December 9, 2013 (incorporated by reference herein to Exhibit 3.1 to
the Company’s Current Report on Form 8-K filed with the SEC on December 19, 2013).
Bylaws (incorporated by reference herein to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 filed with the SEC on March 30,
2011).
Specimen Stock Certificate of Common Stock of Moxian, Inc. (incorporated by reference herein to Exhibit 4.1 to the Company’s Annual Report on
Form 10-K filed with the SEC on December 22, 2015).
Subscription Agreement dated as of April 24, 2015 by and between the Company and Zhongtou Huifeng Investment Management (Beijing) Co. Ltd.
(incorporated by reference herein to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on May 15, 2015).
Form of Termination Agreement dated as of June 4, 2015 by and between the Company and Zhongtou Huifeng Investment Management (Beijing)
Co. Ltd. (incorporated by reference herein to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on July 14, 2015).
Form of Subscription Agreement dated as of June 4, 2015 by and between the Company and Xinhua Huifeng Investment Center Co., Ltd. (Beijing).
(incorporated by reference herein to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission
on July 14, 2015).
30
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
Form of Amendment Agreement dated as of August 14, 2015 by and between the Company and Xinhua Huifeng Investment Center Co., Ltd.
(Beijing) Co. Ltd.( (incorporated by reference herein to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on August 14, 2015)
Form of Second Amendment Agreement dated as of December 16, 2015 by and between the Company and Xinhua Huifeng Investment Center Co.,
Ltd. (Beijing) Co. Ltd. (incorporated by reference herein to Exhibit 10.5 to the Company’s Annual Report on Form 10-K filed with the Securities and
Exchange Commission on December 22, 2015).
Loan Agreement dated May 4, 2015 by and between Jet Key Limited and Moxian Malaysia SDN BHD (incorporated by reference herein to Exhibit
10.6 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 22, 2015).
Loan Agreement dated May 4, 2016 by and between Jet Key Limited and Moxian Malaysia SDN BHD (incorporated by reference herein to Exhibit
10.7 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 22, 2016).
Loan Agreement by and between the Moxian Technologies (Shenzhen) Co., Ltd., and Shenzhen Bayi Consulting Co. Ltd. dated June 30, 2015
(incorporated by reference herein to Exhibit 10.7 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange
Commission on December 22, 2015).
Loan Agreement by and between Moxian Technologies (Shenzhen) Co., Ltd., and Shenzhen Bayi Consulting Co. Ltd. dated September 30, 2015
(incorporated by reference herein to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange
Commission on December 22, 2015).
Exclusive Business Cooperation Agreement by and between Moxian Shenzhen and Moyi, dated July 15, 2014 (incorporated by reference herein to
Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 31, 2014).
Loan Agreement by and among Moxian Shenzhen, Zhang Guo Hui and Guan Fen Sheng, dated July 15, 2014 (incorporated by reference herein to
Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 31, 2014) .
Share Pledge Agreement by and among Moxian Shenzhen, Zhang Guo Hui and Guan Fen Sheng, dated July 15, 2014 (incorporated by reference
herein to Exhibit 10.5 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 31, 2014).
Exclusive Option Agreement by and among Moxian Shenzhen, Zhang Guo Hui and Guan Fen Sheng, dated July 15, 2014 (incorporated by reference
herein to Exhibit 10.7 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 31, 2014).
Moxian Technologies (Shenzhen) Co., Ltd. Oracle Product Supply Contract, by and between Moxian Technologies (Shenzhen) Co., Ltd. and
Guangzou SIE Consulting Co., Ltd., dated April 27, 2015 (incorporated by reference herein to Exhibit 10.13 to the Company’s Registration
Statement on Form S-1 filed with the Securities and Exchange Commission on March 16, 2016)
31
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
Share Cancellation Agreement by and among Moxian, Inc., and each of Good Eastern Investments Holdings, Moxian China Limited and Stellar Elite
Limited, dated February 22, 2016 (incorporated by reference herein to Exhibit 10.14 to the Company’s Registration Statement on Form S-1/A filed
with the Securities and Exchange Commission on June 17, 2016).
Independent Director Agreement by and between Moxian, Inc. and Yang Nan, dated January 1, 2016 (incorporated by reference herein to Exhibit
10.15 to the Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on August 12, 2016).
Independent Director Agreement by and between Moxian, Inc. and Liew Kwong Yeow, dated January 1, 2016 (incorporated by reference herein to
Exhibit 10.16 to the Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on September 9, 2016).
Lease Agreement by and between Moxian Technologies (Shenzhen) Co., Ltd. and Cai Bingquan, dated July 22, 2015 (incorporated by reference
herein to Exhibit 10.17 to the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on March 16,
2016).
Lease Agreement by and between Moxian Technologies (Beijing) Co., Ltd. and Beijing Zhongjia Real Estate Broker Co., Ltd., dated August 27,
2015. (incorporated by reference herein to Exhibit 10.20 to the Company’s Registration Statement on Form S-1 filed with the Securities and
Exchange Commission on March 16, 2016).
Director Agreement by and between Moxian, Inc. and Hao Qing Hu, dated January 1, 2016 (incorporated by reference herein to Exhibit 10.21 to the
Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on September 19, 2016).
Employment Agreement by and between Moxian (Hong Kong) Limited and Mr. Luo Xiaoyuan, dated October 1, 2014, as amended on March 1,
2016 (incorporated by reference herein to Exhibit 10.22 to the Company’s Registration Statement on Form S-1/A filed with the Securities and
Exchange Commission on June 17, 2016).
Advertising Sole Agency Agreement of Xinhua New Media Culture Communication Co., Ltd., dated December 31, 2015 (incorporated by reference
herein to Exhibit 10.24 to the Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on August 12,
2016).
Employment Agreement by and between Moxian (Hong Kong) Limited and Mr. Tan Wan Hong, dated July 25, 2016 (incorporated by reference
herein to Exhibit 10.25 to the Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on August 12,
2016).
Independent Director Agreement by and between Moxian, Inc. and Ajay Rajpal (incorporated by reference herein to Exhibit 10.26 to the Company’s
Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on September 9, 2016).
Note Conversion Agreement by and between Moxian, Inc. and the note holders named therein, dated September 7, 2016 (incorporated by reference
herein to Exhibit 10.29 to the Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on September
19, 2016).
Loan Agreement by and between the Moxian Technologies (Shenzhen) Co., Ltd. and Shenzhen Bayi Consulting Co. Ltd. dated December 25, 2015
(Incorporated by reference herein to Exhibit 10.26 to the Company’s Registration Statement on Form 10-K filed with the Securities and Exchange
Commission on December 22, 2016).
Schedule of Loan Agreements substantially identical in all material respects to the Loan Agreement filed as Exhibit 10.26 to this Annual Report on
Form 10-K, pursuant to Instruction 2 To Item 601 of Regulation S-K (Incorporated by reference herein to Exhibit 10.27 to the Company’s
Registration Statement on Form 10-K filed with the Securities and Exchange Commission on December 22, 2016).
Tripartite Agreement by and among Moxian Shenzhen, Zhang Guo Hui, Guan Fen Sheng, Liu Shu Juan and Yin Yi Jun, dated December 18, 2017
(incorporated by reference herein to Exhibit 99.1 to the Company’s filing on Form 8-K, filed with the Securities and Exchange Commission on
January 8, 2018).
32
10.29
10.30
10.31
10.32
Share Pledge Agreement by and among Moxian Shenzhen, Liu Shu Juan and Yin Yi Jun, dated January 8, 2018 (incorporated by reference herein to
Exhibit 99.2 to the Company’s filing on Form 8-K, filed with the Securities and Exchange Commission on January 8, 2018).
Power of Attorney granted to Moxian Shenzhen by Liu Shu Juan and Yin Yi Jun, dated January 8, 2018 (incorporated by reference herein to Exhibit
99.3 to the Company’s filing on Form 8-K, filed with the Securities and Exchange Commission on January 8, 2018).
Exclusive Option Agreement by and among Moxian Shenzhen, Liu Shu Juan and Yin Yi Jun, dated January 8, 2018 (incorporated by reference here
in to Exhibit 99.4 to the Company’s filing on Form 8-K, filed with the Securities and Exchange Commission on January 8, 2018).
Convertible Loan Agreement among Moxian, Inc., Junsheng Tang and Moxian Technologies (Beijing) Co., Ltd., dated January 29, 2019
(incorporated by reference herein to Exhibit 10.1 to the Company’s filing on Form 8-K filed with the Securities and Exchange Commission on
February 1, 2019),
10.33*
Debt Conversion Agreement between Moxian Inc. and Shenzhen Bayi Consulting Co. Ltd, dated May 2, 2019
10.34*
Debt Conversion Agreement between Moxian Inc. and Liu Shu Juan, dated May 2, 2019
10.35*
Debt Conversion Agreement between Moxian Inc. and Vertical Venture Capital Group Limited, dated May 2, 2019
10.36
14.1
21.1*
31.1*
31.2*
32.1*
32.2*
Subscription Agreement between Moxian, Inc. and Joyful Corporation Limited, dated June 20, 2019 (incorporated by reference herein to Exhibit
10.1 to the Company’s filing on Form 8-K/A filed with the Securities and Exchange Commission on June 25, 2019),
Code of Ethics of Moxian, Inc. Applicable To Directors, Officers And Employees (incorporated by reference herein to Exhibit 14.1 to the
Company’s Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on September 9, 2016).
List of Subsidiaries
Certification of Principal Executive Officer pursuant to Rules 13a-14 and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
Certification of Principal Financial Officer pursuant to Rules 13a-14 and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Principal Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
XBRL Instance Document.*
XBRL Taxonomy Extension Schema Document.*
XBRL Taxonomy Extension Calculation Linkbase Document.*
XBRL Taxonomy Extension Definition Linkbase Document.*
XBRL Taxonomy Extension Label Linkbase Document.*
XBRL Taxonomy Extension Presentation Linkbase Document.*
* Filed herewith
33
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
Date: January 14, 2020
MOXIAN, INC.
/s/ Hao Qinghu
By:
Name: Hao Qinghu
Title: Chief Executive Officer
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: January 14, 2020
MOXIAN, INC.
/s/ Tan Wanhong
By:
Name: Tan Wanhong
Title: Chief Financial Officer
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
34
MOXIAN, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018
(Stated in US Dollars)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
PAGES
F-2
F-3
F-4
F-5
F-6
F-7 – F-23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Moxian, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Moxian, Inc. (the “Company”) as of September 30, 2019 and 2018, and the related consolidated
statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year ended September 30, 2019 and 2018, and the related notes
(collectively referred to as the “financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2019 and
2018, and the results of its operations and its cash flows for year ended September 30, 2019 and 2018 in conformity with accounting principles generally accepted in
the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its
ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express
no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Centurion ZD CPA & Co.
Centurion ZD CPA & Co.
Hong Kong, 14 January, 2020
We have served as the Company’s auditor since 2018
F-2
MOXIAN, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2019
September 30, 2018
As of
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Restricted cash
Other Receivable – Share Subscription
CURRENT ASSETS
CURRENT LIABILITIES
Accruals and other payables
Loans payable
NET CURRENT ASSETS
Commitments and contingencies
STOCKHOLDERS’ EQUITY (DEFICIENCY)
Preferred stock, $0.001 par value, authorized 100,000,000 shares. Nil shares issued and
outstanding
Common stock, $0.001 par value, authorized: 50,000,000 shares, 16,191,529 and outstanding
(September 30, 2018: 67,357,222 shares issued and outstanding – see Note 8a)
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)
$
$
$
$
425,632
-
2,100,000
2,525,632
-
-
1,879,652
497,293
$
2,376,945
148,687
-
16,191
40,114,606
(40,734,066)
751,956
148,687
129,737
170,000
-
299,737
3,357,856
7,323,439
10,681,295
(10,381,558)
-
67,357
36,483,440
(47,277,960)
345,605
(10,381,558)
See accompanying notes to consolidated financial statements
F-3
MOXIAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Year
Ended
September 30, 2019
For the Year
Ended
September 30, 2018
Revenues
Cost of revenues
Gross profit
Depreciation and amortization
Research and development
Advertising agency fee
Selling, general and administrative
Loss from operations
Finance expense
Interest income
Foreign exchange loss
Other income (expenses)
Loss before income tax
Net loss
Adjustment for accrued expenses no longer required
Net gain/(loss) for the year
Basic and diluted gain (loss) per common share
$
$
$
$
370,411
-
370,411
-
-
-
900,105
(529,694)
-
-
-
-
(529,694)
(529,694)
830,149
300,455
0.006
$
$
339,947
(8,328)
331,619
681,596
2,247,170
1,145.519
4,796,788
(8,539,454)
(60,657)
160
(1,789)
6,326
(8,595,414)
(8,595,414)
-
(8,595,414)
(0.13)
Basic and diluted average number of common shares outstanding
43,563,291
67,357,222
See accompanying notes to consolidated financial statements
F-4
MOXIAN, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the years ended September 30, 2019 and 2018
Balance, September 30, 2017
Issuance of shares for convertible debt
Net loss
Foreign currency translation adjustment
Balance, September 30, 2018
Reverse share split - Note 8 (a)
Debt Exchange - Note 8(b)
New share placement - Note 8 (c)
Foreign currency translation
adjustment
Net gain
Balance, September 30, 2019
Additional
paid-in
capital
Accumulated
deficit
Accumulated
other
comprehensive
income
Common Stock
Shares
67,007,199 $ 67,007 $35,475,722 $ (38,682,546) $
Amount
350,023
350
1,007,718
-
(8,595,414)
-
-
-
67,357,222 $ 67,357 $36,483,440 $ (47,277,960) $
(53,885,693)
720,000
2,000,000
-
6,243,439
-
53,886
1,079,280
2,498,000
(53,886)
720
2,000
-
-
-
300,455
Total
180,407 $ (2,958.970)
-
-
164,758
1,008,068
(8,595,414)
164,758
345,605 $(10,381,558)
-
7,323,439
2,500,000
-
-
-
406,351
406,351
300,455
16,191,529 $ 16,191 $40,114,606 $ (40,734,066) $
751,956 $
148,687
See accompanying notes to consolidated financial statements
F-5
MOXIAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Net gain/(loss)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization
Adjustment on write-back of accruals and other payables no longer required
Bad debt provision
Changes in operating assets and liabilities:
Prepayments, deposits and other receivables
Accruals and other payables
Net cash used in operating activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans from unrelated third parties
Cash advances from issuance of new shares
Releases from escrow account, restricted cash
Net cash provided by financing activities
Effect of exchange rates on translation on opening liabilities:
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental cash flow disclosures:
Issuance of shares in Debt Exchange
Issuance of shares in Share Placement
For the Year
Ended
September 30, 2019
For the Year
Ended
September 30, 2018
$
300,455
$
(8,595,414)
-
(830,149)
-
-
(648,055)
(1,177,749)
497,293
400,000
170,000
1,067,293
406,351
295,895
129,737
425,632
1,080,000
2,500,000
$
$
$
701,816
(25,916)
166,912
1,620,087
(6,130,332)
5,152,534
1,008,068
330,000
6,490,602
(249,027)
111,243
18,494
129,737
-
-
$
$
$
See accompanying notes to consolidated financial statements
F-6
1.
Organization and nature of operations
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Moxian, Inc. (formerly known as Moxian China, Inc., hereinafter referred as “Moxian,” together with its subsidiaries and variable interest entity, the “Company”),
was incorporated under the laws of the State of Nevada on October 12, 2010. The Company, through its subsidiaries and variable interest entity, engages in the
business of operating a social network platform that integrates social media and business into one single platform. The Company is currently devoting its efforts to
develop mobile application and online platform that facilitate the small to medium size businesses to attract more clients. The Company’s ability to generate
sufficient funds to meet its working capital requirements is dependent upon its ability to develop additional sources of capital, develop apps and websites, generate
servicing income, and ultimately, achieve profitable operations (see Note 2).
On February 17, 2014, the Company incorporated Moxian CN Group Limited (“Moxian CN Samoa”) under the laws of Samoa.
On February 21, 2014, Moxian acquired Moxian Group Limited (“Moxian BVI”), together with its subsidiaries, Moxian (Hong Kong) Limted (“Moxian HK”),
Moxian Technology (Shenzhen) Co., Ltd. (“Moxian Shenzhen”), and Moxian Malaysia Sdn. Bhd.(“Moxian Malaysia”) through our wholly owned subsidiary,
Moxian CN Samoa from Rebel Group, Inc. (“REBL”), a company incorporated in the State of Florida and of which our previous Chief Executive Officer, Tan
Meng Dong, is a promoter as the term is defined under Rule 405 of Regulation C promulgated under the Securities Act, by entering into a License and Acquisition
Agreement (the “License and Acquisition Agreement”) in consideration of $1,000,000 (“Moxian BVI Purchase Price”). As a result, Moxian BVI, together with its
subsidiaries, Moxian HK, Moxian Shenzhen, and Moxian Malaysia, became the Company’s subsidiaries. Under the License and Acquisition Agreement, REBL also
agreed to grant us the exclusive right to use REBL’s intellectual property rights (collectively, the “IP Rights”) in Mainland China, Malaysia, and other countries and
regions where REBL conducts its business (the “Licensed Territory”), and the exclusive right to solicit, promote, distribute and sell REBL products and services in
the Licensed Territory for five years (the “License,”) and in consideration of such License, the Company agreed to pay to REBL (i) $1,000,000 as license
maintenance royalty each year commencing on the first anniversary of the date of the License Agreement; and (ii) 3% of the gross profits resulting from the
distribution and sale of the products and services on behalf of the Company as an earned royalty.
Moxian BVI was incorporated on July 3, 2012 under the laws of British Virgin Islands. REBL owned 100% equity interests of Moxian BVI prior to the closing of
the License and Acquisition Agreement, among the Company, Moxian BVI and REBL.
Moxian HK was incorporated on January 18, 2013 and became Moxian BVI’s subsidiary since February 14, 2013. Moxian HK is currently engaged in the business
of online social media. Moxian HK operates through two wholly owned subsidiaries: Moxian Shenzhen and Moxian Malaysia.
Moxian Shenzhen was invested and wholly owned by Moxian HK. Moxian Shenzhen was incorporated on April 8, 2013 and is engaged in the business of internet
technology, computer software, commercial information consulting
Moxian Malaysia was incorporated on March 1, 2013 and became Moxian HK’s subsidiary since April 2, 2013. Moxian Malaysia was previously in the business of
IT services and media advertising but have ceased operations since June 2015..
Shenzhen Moyi Technologies Co., Ltd. (“Moyi”) was incorporated on July 19, 2013 under the laws of the People’s Republic of China and became a variable interest
entity (“VIE”) of Moxian Shenzhen since July 15, 2014. Moxian Shenzhen controls Moyi through arrangement that absorbs operations risk, as if Moyi is a wholly
owned subsidiary of Moxian Shenzhen.
On December 18, 2017, the Company entered into a Tripartite Agreement with the original shareholders of Moyi and the new shareholders of Moyi wherein the
Company agrees to the transfer o the equity interests of Moyi and all related rights, liabilities and obligations under the Moyi Agreements such that the new
shareholders stand in place of the old shareholders in all aspects of the Moyi Agreements.
On April 22, 2019, the Company implemented a 1:5 reverse share split and concurrently reduced its authorized shares of common stock from 250,000,000
to 50,000,000 (See Note 8(a) Reverse Share Split).
On May 2, 2019, the Company reached an agreement with each of the three loan creditors as of September 30,2018 regarding settlement of their loans to
the Company. (“Debt Exchange”). Under the agreements, the loan creditors, all three loan creditors, which were unrelated parties as of the date of the agreements,
would write off a total of $6,243,439 of the loans due from the Company and would accept a total of 720,000 shares of Common Stock in settlement of the
remaining balances of the loans. The 720,000 new shares of Common Stock were issued on September 30, 2019.
On June 21, 2019, the Company entered into an Agreement (the “Agreement”) with Joyful Corporation Limited (the “Investor”) a company incorporated in
Samoa whereby the Investor will (a) purchase from the Company 2,000,000 shares of the Company’s common stock at a price of $1.25 per share for aggregate gross
proceeds of $2,500,000 and (b) acquire from the Company a call option to purchase up to 690,000 shares of the Company’s common stock at a price per share of
$1.25, which option will expire if not exercised on or before September 30, 2019 (together, the “Offering”).
F-7
1.
Organization and nature of operations (continued)
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Moxian Technologies (Beijing) Co., Ltd. (“Moxian Beijing”) was incorporated on December 10, 2015 under the laws of the People’s Republic of China and is a
wholly owned subsidiary of Moxian Shenzhen. Moxian Shenzhen made the capital injection of RMB 10 million (approximately USD $1.5 million) to Moxian
Beijing during the year ended September 30, 2017.
On January 30, 2015, the Company entered into an Equity Transfer Agreement (the “Equity Transfer Agreement,” such transaction, the “Equity Transfer
Transaction”) with REBL, to acquire from REBL 100% of the equity interests of Moxian Intellectual Property Limited, a company incorporated under the laws of
Samoa and a wholly owned subsidiary of REBL (“Moxian IP Samoa”) for $6,782,000 (the “Moxian IP Samoa Purchase Price”) (see Note 9). Moxian IP Samoa
owns all the intellectual property rights relating to the operation, use and marketing of the Moxian Platform, including all of the trademarks, patents and copyrights
that are used in the Company’s business. As a result of the Equity Transfer Transaction, Moxian IP Samoa became a wholly owned subsidiary of the Company.
As of September 30, 2018. only Moxian Shenzhen, Moyi and Moxian Beijing have business operations. The other companies are all dormant.
On November 14, 2016, the Company announced the completion of a public offering of 2,501,250 shares of its common stock at a public offering price of $4.00 per
share. The gross proceeds from the offering were approximately $10,005,000 before deducting placement agents’ commissions and other offering expenses,
resulting in net proceeds of approximately $8.5 million. In connection with the offering, the Company’s common stock began trading on the NASDAQ Capital
Market beginning on November 15, 2016 under the symbol “MOXC”.
On January 30, 2018, a wholly-owned subsidiary of Moxian Shenzhen, Moxian Information Technologies (Shanghai) Co. Ltd. (“Moxian Shanghai”) was
incorporated under the laws of the People’s Republic of China.
F-8
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2.
Summary of principal accounting policies
Basis of presentation and consolidation
The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United
States of America (“U.S. GAAP”) and reflect the activities of the following subsidiaries and VIE: Moxian CN Samoa, Moxian BVI, Moxian HK, Moxian Shenzhen,
Moxian Malaysia, Moyi, Moxian Beijing and Moxian IP Samoa. All intercompany transactions and balances have been eliminated in the consolidation.
On May 24, 2016, the Board of approved a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.001 per share (the
“Common Stock”), at a ratio of 1-for-2 (the “Reverse Stock Split”). The Reverse Stock Split was effective on June 20, 2016 (the “Effective Date”). Simultaneously
with the Reverse Stock Split, the number of shares of the Company’s authorized Common Stock was reduced from 500,000,000 shares to 250,000,000 shares
without changes in par value per share. The Company has retroactively restated all shares and per share data for all the periods presented.
In accordance with U.S. GAAP, variable interest entities (“VIEs”) are generally entities that lack sufficient equity to finance their activities without additional
financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs with which the Company is involved must be evaluated
to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.
Accounting Standards Codification (“ASC”) 810-10 “Consolidation” addresses whether certain types of entities referred to as VIEs, should be consolidated in a
company’s consolidated financial statements. Pursuant to an Exclusive Business Cooperation Agreement by and between Moxian Shenzhen and Moyi, dated July
15, 2014, Moxian Shenzhen has the exclusive right to provide to Moyi technical and systems support, marketing consulting services, training for technical personnel
and technical consulting services. As payment for these services, Moyi has agreed to pay Moxian Shenzhen a service fee equal to 100% Moyi’s pre-tax profit. In
addition, Moxian Shenzhen will also absorb losses from Moyi, if any, based on the service agreement. In accordance with the provisions of ASC 810, the Company
has determined that Moyi is a VIE of Moxian Shenzhen and that the Company is the primary beneficiary, and accordingly, the financial statements of Moyi are
consolidated into the results of the Company.
The following assets and liabilities of the VIE are included in the accompanying consolidated financial statements of the Company as of September 30, 2019 and
2018:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Going Concern
September 30, 2019
September 30, 2018
$
$
$
$
-
-
-
-
$
$
$
$
-
-
-
In assessing the Company’s liquidity and its ability to continue as a going concern, the Company monitors and analyzes its cash and cash equivalents and its
operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital
expenditure obligations. As of September 30, 2018, the Company’s current liabilities exceeded the current assets by approximately $10 million, its accumulated
deficit was approximately $47.3 million and the Company has incurred losses since inception.
F-9
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2.
Summary of principal accounting policies (continued)
Going Concern (continued)
On November 14, 2016, the Company completed its initial public offering (“IPO”) with net proceeds of $8.50 million after deducting placement agents’ commission
and other offering costs, which helped the Company’s cash flow in fiscal 2017. However, as of the date of this report, the Company has utilized all of the IPO
proceeds and is not generating sufficient revenue to support its operations. The Company hopes to fund its cash flow shortfalls as follows:
● Financial support commitments from the Company’s major stockholders
● Seeking additional public and/or private issuance of securities.
On November 10, 2017, the Company and Ms. Liu Shu Juan, a director of the Company, entered into a convertible loan agreement of $1,000,000 or its RMB
equivalent. Pursuant to the loan agreement, the Company issued an unsecured convertible promissory note, carrying an interest rate of 4.75% per annum and due in
one year. On May 8, 2018, Liu converted the total outstanding of $1,008,068 into 350,023 shares of the Company’s common stock at a price of $2.88 per share. The
conversion price was calculated using the price of daily volume weighted average price per share for the 20 consecutive business days prior to the conversion.
On May 11, 2018, the Company and Ms. Liu entered into a loan agreement for a line of credit of $4,000,000 or its RMB equivalent, bearing interest of 4.75% per
annum and due in two years. As of September 30, 2018, the line has been fully drawn down and the total outstanding to Ms. Liu is $ 5,032,760. This amount
exceeded the agreed loan of $4,000,000 and is not covered by any agreement.
If the Company is unable to obtain the necessary additional capital on a timely basis and on acceptable terms, it will be unable to implement its current plans for
expansion, repay debt obligations or respond to competitive pressures. Any of these factors would have a material adverse effect on its business, prospects, financial
condition and results of operations and raise substantial doubts about the ability of the Company to continue as a going concern. The consolidated financial
statements for the years ended September 30, 2018 and 2017 have been prepared on a going concern basis and do not include any adjustments to reflect the possible
future effects on the recoverability and classifications of assets or the amounts and classifications of liabilities that may result from the inability of the Company to
continue as a going concern.
Risks and Uncertainties
The Company’s operations are substantially carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations maybe
substantially influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. The Company’s operations in
the PRC are subject to specific considerations and significant risks not typically associated with companies in North America These include risks associated with,
among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in
governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of
taxation, among other things.
Fair value of financial instruments
The Company follows the provisions of ASC 820, “Fair Value Measurements and Disclosures.” ASC 820 clarifies the definition of fair value, prescribes methods
for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1-Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2-Inputs other than quoted prices that are observable for the asset or liability in active markets, quoted prices for identical or similar assets and liabilities in
markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3-Inputs are unobservable inputs that reflect management’s assumptions based on the best available information.
F-10
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2.
Summary of principal accounting policies (continued)
Fair value of financial instruments (continued)
The carrying value of cash and cash equivalents, prepayments, deposits and other receivables, accruals and other payables, loans from related parties and unrelated
party approximate their fair values because of the short-term nature of these instruments.
Use of estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the accompanying consolidated financial statements, and
the reported amounts of revenues and expenses during the reporting period. Significant estimates required to be made by management include but not limited to,
useful lives of property and equipment, provision for doubtful accounts, intangible assets valuation, inventory valuation, value added recoverable valuation and
deferred tax assets valuation. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months
or less to be cash equivalents. As of September 30, 2018 and 2017, substantially all of the Company’s cash and cash equivalents were deposited in financial
institutions located in the PRC. To limit exposure to credit risk relating to bank deposits, the Company primarily places bank deposits with large financial
institutions in the PRC with acceptable credit rating.
Restricted cash
Restricted cash represented cash held by depository banks in order to comply with the provisions of certain debt agreements, as well as the cash held in an
indemnification escrow account pursuant to the financing agreement signed with the placement agents.
Under the terms of the placement agreement, the cash of $500,000 in the escrow account must be kept for a period of two years after the completion of the IPO,
therefore, recorded as restricted cash, long-term as of September 30, 2017. On November 9, 2017, $330,000 was released from this account with the approval of the
placement agents and the escrow agents. On January, the balance of $170,000 was released.
Inventories
Inventories consist of merchandise and are stated at the lower of cost or market value, and cost is calculated on the moving weighted average basis. The cost of
inventories comprises all costs of purchases and other costs incurred in bringing the inventories to their present condition. As of September 30, 2018 and 2017, there
was no lower of cost or market adjustment because the carrying value of the Company’s inventories was lower than the current and expected market price.
Prepayments, deposits and other receivables
Prepayments and deposits represent amounts advanced to suppliers. The suppliers usually require advance payments or deposits when the Company makes purchase
or orders service and the prepayments and deposits will be utilized to offset the Company’s future payments. Other receivables mainly consist of various cash
advances to employees for business needs. These amounts are unsecured, non-interest bearing and generally short-term in nature.
Allowances are recorded when utilization and collection of amounts due are in doubt. Delinquent prepayments, deposits and other receivables are written-off after
management has determined that the likelihood of utilization or collection is not probable and known bad debts are written off against the allowances when
identified.
F-11
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2.
Summary of principal accounting policies (continued)
Deferred offering costs
Deferred offering costs consisted principally of legal, underwriting and registration costs in connection with the IPO of the Company’s ordinary shares. Such costs
are deferred until the closing of the offering, at which time the deferred costs are offset against the offering proceeds.
Property and Equipment, net
Property and equipment are recorded at cost less accumulated depreciation and amortization. Significant additions or improvements extending useful lives of assets
are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation and amortization are computed using the straight-line method over the
estimated useful lives as follows:
Electronic equipment
Furniture and fixtures
Leasehold improvements
Intangible assets, net
3-6 years
3-6 years
Shorter of estimated useful life or term of lease
Intangible assets, comprising Intellectual property rights (“IP rights”) and software, which are separable from property and equipment, are stated at cost less
accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of 3- 10 years.
Impairment of long-lived Assets
The Company classifies its long-lived assets into: (i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite – lived
intangible assets.
Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such
assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology, economy or other industry changes. If
circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be
generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash
flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques,
including discounted cash flow models, relief from royalty income approach, quoted market values and third-party independent appraisals, as considered necessary.
The Company makes various assumptions and estimates regarding estimated future cash flows and other factors in determining the fair values of the respective
assets. The assumptions and estimates used to determine future values and remaining useful lives of long-lived assets are complex and subjective. They can be
affected by various factors, including external factors such as industry and economic trends, and internal factors such as the Company’s business strategy and its
forecasts for specific market expansion.
Due to the continuing losses from operations with minimal revenues, the Company recognized impairment losses of $3,009,732 for the IP rights and other intangible
assets during the years ended September 30, 2017 resulting in a nil value as of September 30, 2018 and 2017.
F-12
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2.
Summary of principal accounting policies (continued)
Revenue recognition
The Company currently recognizes revenue from the sale of merchandise through its online platforms. Revenue is recognized when persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and collectability is reasonably assured. Revenue is
recorded on a gross basis, net of surcharges and value added tax (“VAT”). The Company recorded revenue on a gross basis because the Company has the following
indicators for gross reporting: it is the primary obligor of the sales arrangements, is subject to inventory risks of physical loss, has latitude in establishing prices, has
discretion in suppliers’ selection and assumes credit risks on receivables from customers.
Revenue from advertising is recognized as advertisements are displayed. Revenue from software development services comprises revenue from time and material
and fixed price contracts. Revenue from time and material contracts are recognized as related services are performed. Revenue on fixed price contracts is recognized
in accordance with percentage of completion method of accounting.
Income taxes
The Company utilizes ASC Topic 740 (“ASC 740”) “Income taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred income taxes are recognized for
the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 “Income taxes” clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in the financial statements the
impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized
income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the
period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when
required, as part of income tax expense in the consolidated statements of operations. The Company evaluate the level of authority for each uncertain tax position
(including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions.
As of September 30, 2019 and 2018, the Company did not have any unrecognized tax benefits. The Company does not anticipate any significant increase to its
liability for unrecognized tax benefit within the next 12 months.
As of September 30, 2019, the tax years ended December 31, 2011 through to December 31, 2018 for the Company’s PRC entities remain open for statutory
examination by the PRC tax authorities.
F-13
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2.
Summary of principal accounting policies (continued)
Foreign currency transactions and translation
The reporting currency of the Company is United States Dollars (the “USD”) and the functional currency of Moxian Shenzhen, Moyi and Moxian Beijing is
Renminbi (the “RMB”).The functional currency of Moxian HK is Hong Kong Dollar (the “HKD”), and the functional currency of Moxian Malaysia is Malaysia
Ringgit (the “RM”).
For financial reporting purposes, the financial statements of Moxian Shenzhen, Moyi, Moxian Beijing, Moxian HK and Moxian Malaysia, which are prepared using
their respective functional currencies, are translated into the reporting currency, USD so to be consolidated with the Company’s. Monetary assets and liabilities
denominated in currencies other than the reporting currency are translated into the reporting currency at the rates of exchange ruling at the balance sheet date.
Revenues and expenses are translated using average rates prevailing during the reporting period. Adjustments resulting from the translation are recorded as a
separate component of accumulated other comprehensive income in stockholders’ deficiency. Translation losses of $ and $42,522 are recognized in the statements
of operations and comprehensive loss for the years ended tember 30, 2019 and 2018, respectively.
The exchange rates applied are as follows:
Balance sheet items, except for equity accounts
RMB:USD
HKD:USD
RM:USD
Items in the statements of operations and comprehensive loss, and statements cash flows:
RMB:USD
HKD:USD
F-14
September 30, 2019
September 30, 2018
7.1484
7.8391
4.1889
Years Ended
September 30,
2019
2018
6.8766
7.8363
6.8686
7.8259
4.1370
6.5368
7.8324
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2.
Summary of principal accounting policies (continued)
Research and Development
Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other related expenses associated with product
development. Research and development expenses also include third-party development, programming costs, and localization costs incurred to translate software for
local markets. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached.
Once technological feasibility is reached, such costs are capitalized and amortized as part of the cost of revenue over the estimated lives of the products.
Loss per share
Basic loss per share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares
outstanding during the period are included in diluted earnings per share.
FASB Accounting Standard Codification Topic 260 (“ASC 260”), “Earnings Per Share,” requires that employee equity share options, non-vested shares and similar
equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share. Diluted earnings per share should be based
on the actual number of options or shares granted and not yet forfeited, unless doing so would be anti-dilutive. The Company uses the “treasury stock” method for
equity instruments granted in share-based payment transactions provided in ASC 260 to determine diluted earnings per share. Antidilutive securities represent
potentially dilutive securities which are excluded from the computation of diluted earnings or loss per share as their impact was antidilutive. Due to the Company’s
net loss for the years ended September 30, 2018 and 2017, the basic and diluted loss per share are same for the years ended September 30, 2018 and 2017.
Recent accounting pronouncements
On October 2, 2017, The FASB has issued Accounting Standards Update (ASU) No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with
Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017
EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The ASU adds SEC paragraphs to the new revenue and leases sections
of the Codification on the announcement the SEC Observer made at the 20 July 2017 Emerging Issues Task Force (EITF) meeting. The SEC Observer said that the
SEC staff would not object if entities that are considered public business entities only because their financial statements or financial information is required to be
included in another entity’s SEC filing use the effective dates for private companies when they adopt ASC 606, Revenue from Contracts with Customers, and ASC
842, Leases. This would include entities whose financial statements are included in another entity’s SEC filing because they are significant acquirees under Rule
3-05 of Regulation S-X, significant equity method investees under Rule 3-09 of Regulation S-X and equity method investees whose summarized financial
information is included in a registrant’s financial statement notes under Rule 4-08(g) of Regulation S-X. The ASU also supersedes certain SEC paragraphs in the
Codification related to previous SEC staff announcements and moves other paragraphs, upon adoption of ASC 606 or ASC 842. The Company does not expect that
the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements.
On November 22, 2017, the FASB ASU No. 2017-14, “Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and
Revenue from Contracts with Customers (Topic 606): Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release 33-10403.”
The ASU amends various paragraphs in ASC 220, Income Statement — Reporting Comprehensive Income; ASC 605, Revenue Recognition; and ASC 606,
Revenue From Contracts With Customers, that contain SEC guidance. The amendments include superseding ASC 605-10-S25-1 (SAB Topic 13) as a result of SEC
Staff Accounting Bulletin No. 116 and adding ASC 606-10-S25-1 as a result of SEC Release No. 33-10403. The Company does not expect that the adoption of this
guidance will have a material impact on its unaudited condensed consolidated financial statements.
In February 2018, the FASB issued ASU No. 2018-02, “Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income.” The ASU
amends ASC 220, Income Statement — Reporting Comprehensive Income, to “allow a reclassification from accumulated other comprehensive income to retained
earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act.” In addition, under the ASU, an entity will be required to provide certain disclosures
regarding stranded tax effects. The ASU is effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.
The Company does not expect that the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements.
In March 2018, the FASB issued ASU 2018-05 — Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118
(“ASU 2018-05”), which amends the FASB Accounting Standards Codification and XBRL Taxonomy based on the Tax Cuts and Jobs Act (the “Act”) that was
signed into law on December 22, 2017 and Staff Accounting Bulletin No. 118 (“SAB 118”) that was released by the Securities and Exchange Commission. The Act
changes numerous provisions that impact U.S. corporate tax rates, business-related exclusions, and deductions and credits and may additionally have international
tax consequences for many companies that operate internationally. The Company does not believe this guidance will have a material impact on its unaudited
condensed consolidated financial statements.
In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases.” The ASU addresses 16 separate issues which include, for
example, a correction to a cross reference regarding residual value guarantees, a clarification regarding rates implicit in lease contracts, and a consolidation of the
requirements about lease classification reassessments. The guidance also addresses lessor reassessments of lease terms and purchase options, variable lease
payments that depend on an index or a rate, investment tax credits, lease terms and purchase options, transition guidance for amounts previously recognized in
business combinations, and certain transition adjustments, among others. For entities that early adopted Topic 842, the amendments are effective upon issuance of
this Update, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition
requirements will be the same as the effective date and transition requirements in Topic 842. The Company does not believe this guidance will have a material
impact on its unaudited condensed consolidated financial statements.
In July 2018, the FASB issued ASU 2018-11 - Leases (Topic 842): Targeted Improvements. The ASU simplifies transition requirements and, for lessors, provides a
practical expedient for the separation of nonlease components from lease components. Specifically, the ASU provides: (1) an optional transition method that entities
can use when adopting ASC 842 and (2) a practical expedient that permits lessors to not separate nonlease components from the associated lease component if
certain conditions are met. For entities that have not adopted Topic 842 before the issuance of this Update, the effective date and transition requirements for the
amendments in this Update are the same as the effective date and transition requirements in Update 2016-02. For entities that have adopted Topic 842 before the
issuance of this Update, the transition and effective date of the amendments in this Update are as follows: 1) The practical expedient may be elected either in the
first reporting period following the issuance of this Update or at the original effective date of Topic 842 for that entity. 2) The practical expedient may be applied
either retrospectively or prospectively. All entities, including early adopters, that elect the practical expedient related to separating components of a contract in this
Update must apply the expedient, by class of underlying asset, to all existing lease transactions that qualify for the expedient at the date elected. The Company does
not believe this guidance will have a material impact on its unaudited condensed consolidated financial statements.
F-15
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2.
Summary of principal accounting policies (continued)
Recent accounting pronouncements (continued)
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the
consolidated financial position, statements of operations and cash flows.
3.
Other Receivables
On September, 30, 2019 the Company issued 2,000,000 new shares of Common Stock to a Joyful Corporation Limited, a Samoa-based company at a price
of $1.25 per share, for cash with total proceeds of $2.5 million. Of this amount, a sum of $400,000 has been received by the Company, leaving the balance
to be settled by December 30, 2019 as provided for in the Subscription Agreement.
Other prepayments, deposits and receivables had been written off as at September 30, 2018 to reflect the non-collective nature of these assets associated
with the app part of the Company’s business which has ceased as of September 30, 2018. Details are as follow:
Prepayments to suppliers
Rental and other deposits
Employee advances and others
Sub total
Less: allowance for doubtful accounts
Prepayments, deposits and other receivable, net
September 30, 2019
September 30, 2018
$
$
567,934
341,674
32,240
941,848
(941,848)
-
$
$
567,934
341,674
32,240
941,848
(941,848)
-
The bad debt provision for the years ended September 30, 2019 and 2018 was $ Nil and $908,412 respectively.
F-16
4.
Property and equipment, net
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
September 30, 2018
Electronic equipment
Furniture and fixtures
Leasehold improvements
Total property and equipment
Less: Accumulated depreciation and amortization
Total property and equipment, net
$
$
2,319,545
70.596
263,609
2,653,750
(2,653,750)
-
Depreciation and amortization for the years ended September 30, 2019 and 2018 were $Nil and $, respectively.
5.
Intangible assets, net
As of September 30, 2019 and 2018, the Company has the following amounts related to intangible assets:
IP rights
Other intangible assets
Less: accumulated amortization
Net intangible assets
September 30, 2019
$
$
1,410,335
394,883
1,805,218
(1,805,218)
-
$
$
$
$
$
2,333,401
80,780
361,544
2,775,725
(2,089,429)
686,296
September 30, 2018
1,410,355
394,883
1,805,218
(1,805,218)
-
No significant residual value is estimated for these intangible assets. There was no amortization expense for the years ended September 30, 2019 and 2018 as the
intangible assets had been fully provided for in the year ended September 30, 2017 due to continuing losses from operations. The impairment loss then recognized
was $3,009,792.
6.
Accruals and other payables
Salary payable
Accrued expenses
Other payables
Total
7.
Loans payable
Liu Shu Juan
Shenzhen Bayi Consulting Co. Ltd.
Vertical Venture Group Limited
Total
September 30, 2019
September 30, 2018
$
$
32,400
-
-
540,600
322,500
895,500
$
$
-
-
-
-
403,986
-
-
2,691,684
285,482
3,381,152
5,032,760
1,310,772
979,907
7,323,439
On May 2, 2019, the Company reached an agreement with each of the three loan creditors as of September 30,2018 regarding settlement of their loans to the
Company. (“Debt Exchange”). Under the agreements, the loan creditors, all three loan creditors, which were unrelated parties as of the date of the agreements,
would write off a total of $6,243,439 of the loans due from the Company and would accept a total of 720,000 shares of Common Stock at a price of $1.50 per share,
in settlement of the remaining balances of the loans. The 720,000 new shares of Common Stock were issued on September 30, 2019.
F-17
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8.
Capital Stock
(a) Reverse Share Split
On April 5, 2019, the Board of Directors approved a Split of 1 for 5 which became effective on April 22, 2019. As a result of this reverse stock split, the number of
outstanding shares of Common Stock of the Company was reduced from 67,357,222 to 13,471,529. Concurrently, the authorized share capital of the Company was
reduced to 50,000,000 shares of Common Stock from 250,000,000 shares.
(b) Debt Exchange
On May 2, 2019, the Company reached an agreement with each of the three loan creditors as of September 30,2018 regarding settlement of their loans to the
Company. (“Debt Exchange”). Under the agreements, the loan creditors, all three loan creditors, which were unrelated parties as of the date of the agreements,
would write off a total of $6,243,439 of the loans due from the Company and would accept a total of 720,000 shares of Common Stock at a price of $1.50 per share,
in settlement of the remaining balances of the loans. The 720,000 new shares of Common Stock were issued on September 30, 2019.
(c) New Share Placement
On June 21, 2019, the Company entered into an Agreement with Joyful Corporation Limited (the “Investor”) a company incorporated in Samoa whereby the
Investor would (a) purchase from the Company 2,000,000 shares of the Company’s Common Stock at a price of $1.25 per share for aggregate gross proceeds of
$2,500,000 and (b) acquire from the Company a call option to purchase up to 690,000 shares of the Company’s Common Stock at a price per share of $1.25, which
option would expire if not exercised on or before September 30, 2019.
The shares were issued to Joyful Corporation on September 30, 2019 by which date a sum of $400,000 had been received by the Company. The balance had to be
paid within 90 days from the date of issue of the shares as provided for in the Agreement. The call option was not exercised and expired on September 30, 2019.
F-18
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(d) Note Conversion
On September 7, 2016, the Company entered into a conversion agreement with each of Shenzhen Bayi Consulting Co. Ltd. and Moxian China Limited. The note
conversion agreements permitted the conversion of promissory notes in the aggregate amount of $2 million payable by the Company into shares of the Company’s
Common Stock at the IPO price. The Company announced a successful completion of its IPO on November 14, 2016 with an IPO price of $4.00 per share. As of
September 30, 2016, the Company included the $2 million worth of shares to be issued as stock subscription payable in accordance with ASC 480-10-25-14. On
January 3, 2017, the Company issued 500,000 shares of its Common Stock to Bayi and Moxian China Limited at a price of $4.00 per share in full settlement.
On November 10, 2017, the Company and Ms. Liu Shu Juan, then a director of the Company, entered into a convertible loan agreement of $1,000,000 or its RMB
equivalent. Pursuant to the loan agreement, the Company issued an unsecured convertible promissory note, carrying an interest rate of 4.75% per annum and due in
one year. On May 8, 2018, Liu converted the total outstanding of $1,008,068 into 350,023 shares of the Company’s Common Stock at a price of $2.88 per share.
F-19
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(e) Public Offering Warrants
In connection with and upon closing of the Public Offering on November 14, 2016, the Company issued warrants equal to four percent (4%) of the shares issued in
the Public Offering, totaling 100,050 units to the placement agents for the offering. The warrants carry a term of five years and shall be exercisable at a price equal
to $4.60 per share. Management determined that these warrants meet the definition of a derivative under ASC 815-40, however, they fall under the scope exception
which states that contracts issued that are both (a) indexed to its own stock; and (b) classified in stockholders’ equity are not considered derivatives. The warrants
were recorded at their fair value on the date of grant as a component of stockholders’ deficiency.
The aggregated fair value of the Public Offering Warrants on November 14, 2016 was $280,042. The fair value has been estimated using the Black-Scholes pricing
model with the following weighted-average assumptions: market value of underlying stock of $4.09; risk free rate of 1.66%; expected term of 5 years; exercise price
of the warrants of $4.60; volatility of 90.7%; and expected future dividends of Nil. As of September 30, 2019, 100,060 shares of warrants were issued and
outstanding; and none of the warrants has been exercised.
F-20
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9.
Income taxes
The Company and its subsidiaries file separate income tax returns.
The United States of America
Moxian is incorporated in the State of Nevada in the U.S. and is subject to U.S. federal corporate income taxes. The State of Nevada does not impose any state
corporate income tax. As of September 30, 2018, future net operation losses of approximately $8.9 million are available to offset future operating income through
2036.
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes
include, but are not limited to, a U.S. corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S.
international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign
earnings as of December 31, 2017. As the Company has a September 30 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S.
statutory federal rate of approximately 24.5% for our fiscal year ending September 30, 2018, and 21% for subsequent fiscal years. Accordingly, we have to
remeasure our deferred tax assets on net operating loss carryforward in the U.S. at the lower enacted cooperated tax rate of 21%. However, this re-measurement has
no effect on the Company’s income tax expenses as the Company has provided a 100% valuation allowance on its deferred tax assets previously.
Additionally, the Tax Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are
subject to U.S. taxation. The change in rate has caused us to remeasure all U.S. deferred income tax assets and liabilities for temporary differences and net operating
loss (NOL) carryforwards and recorded a one time income tax payable in 8 years. However, this one-time transition tax has no effect on the Company’s income tax
expenses as the Company has no undistributed foreign earnings prior to September 30, 2018, and further, the Company has cumulative foreign losses as of
September 30, 2018.
British Virgin Islands
Moxian BVI is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Moxian BVI is not subject to tax on income or capital
gains. In addition, upon payments of dividends by Moxian BVI, no British Virgin Islands withholding tax is imposed.
Hong Kong
Moxian HK is incorporated in Hong Kong and Hong Kong’s profits tax rate is 16.5%. Moxian HK did not earn any income that was derived in Hong Kong for the
years ended September 30, 2018 and 2017 and therefore, Moxian HK was not subject to Hong Kong profits tax.
Malaysia
Moxian Malaysia did not have taxable income for the years ended September 30, 2018 and 2017. The management estimated that Moxian Malaysia will not
generate any taxable income in the future.
F-21
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9.
Income taxes (continued)
PRC
Effective from January 1, 2008, the PRC’s statutory income tax rate is 25%. The Company’s PRC subsidiaries are subject to income tax rate of 25%, unless
otherwise specified.
As of September 30, 2019, the Company had net operating loss carry forwards of approximately of $20.2 million in PRC tax Jurisdiction, which expires in the years
2019 through 2022.
Moxian Shenzhen was incorporated in the People’s Republic of China. Moxian Shenzhen did not generate taxable income in the People’s Republic of China for the
period from April 8, 2013 (date of inception) to September 30, 2019. Management estimated that Moxian Shenzhen will not generate any taxable income in the
future.
Moyi was incorporated in the People’s Republic of China. Moyi did not generate taxable income in the People’s Republic of China for the period from July 19,
2013 (date of inception) to September 30, 2019.
Moxian Beijing was incorporated in the People’s Republic of China. Moxian Beijing did not generate taxable income in the People’s Republic of China for the
period from December 10, 2015 (date of inception) to September 30, 2019.
The Company’s effective income tax rates were 0% and 0.7% for the years ended September 30, 2019 and 2018, respectively. Income tax mainly consists of foreign
income tax at statutory rates and the effects of permanent and temporary differences.
U.S. statutory rate
Foreign income not registered in the U.S.
PRC statutory rate
Changes in valuation allowance and others
Effective tax rate
September 30,
2019
September 30,
2018
34.0%
(34.0)%
25.0%
(25.0)%
0%
34.0%
(34.0)%
25.0%
(24.3)%
0.7%
Because of the uncertainty regarding the Company’s ability to realize its deferred tax assets, a 100% valuation allowance has been established in the year ended
September 30, 2017 and carried forward since. As of September 30, 2019 and 2018, the valuation allowance has remained unchanged at approximately $9.0 million.
Deferred tax asset from net operating loss and carry-forwards
Valuation allowance
Deferred tax asset, net
F-22
September 30,
2019
September 30,
2018
$
$
9,032,129
(9,032,129)
-
$
$
9,032,129
(9,032,129)
-
MOXIAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10.
Commitments and contingencies
Operating Lease
The Company leases a number of properties under operating leases. Rental expenses under operating leases for the years ended September 30, 2019 and 2018 were
$253,000 and $652,315 respectively. As of September 30, 2019, the Company was obligated under non-cancellable operating leases minimum rentals of $231,000
(2018: $483,000).
Arrangement with Xinhua New Media Co., Ltd
The Company has entered into an exclusive advertising agency agreement and sponsor agreement with Xinhua New Media Co., Ltd (“Xinhua New Media”).
Pursuant to the agreements, the Company, as an exclusive agent, is authorized to operate and sell advertisements in the gaming channel of Xinhua New Media’s
mobile application and sponsor related advertising events. The exclusive advertising agency agreement expires on December 31, 2020 and the sponsor agreement
expired on December 31, 2017,
The Company entered into amendments with Xinhua New Media for both the agency agreement and sponsor agreement during the year ended December 31, 2017.
The fees payable under the amended exclusive advertising agency agreement and sponsor agreement have been reduced. In April 2018, the Company further
negotiated with Xinhua New Media and the fees for the remaining periods of the agreement have been waived.
Legal Proceeding
As of September 30, 2019, the Company is not aware of any material outstanding claim and litigation against them.
11.
Subsequent events
On October 22, 2019 the Company appointed James Tan Mengdong to the Board of Directors. Mr. James Tan is a Founder of the Company and a former
CEO of the Company. For the year ended September 30, 2019 and 2018, the transactions with Mr. Tan and his affiliates were not regarded as related party
transactions and were in the best interests of the Company. From the date of his appointment, any new and originating transactions involving him and his
affiliates will be considered as related party transactions.
F-23
ex10-33.htm
EX-10.33
1 of 4
01/14/2020 09:53 AM
Exhibit 10.33
This Debt Conversion Agreement (the “Agreement”) is entered into effective as of May 2, 2019 by and between Shenzhen Bayi Consulting Co. Ltd
(“Investor”) and Moxian, Inc., a Nevada corporation(the “Company”), with reference to the following facts:
DEBT CONVERSION AGREEMENT
WHEREAS,
(i) Investor has loaned $1,310,772 to the Company as described in the Loan Agreement dated May 15, 2017 (the “Loan Agreement”).
(ii) Investor has agreed to waive its right to a repayment of $1,115,772 of the amount owed by the Company and
(iii) The Company and Investor now desire to convert the remaining balance of $195,000 (the “Debt”) into shares of Common Stock .
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Investor and the Company agree as
follows:
1. Conversion to Common Stock. Effective as of May 2, 2019, $195,000 of the Debt shall be converted into shares of Common Stock at a price per share of
$1.50 for an aggregate number of shares of 130,000. Upon execution of this Agreement, the Company shall instruct its transfer agent to issue a total of 130,000
shares of Common Stock to the Investor, and the Investor shall acknowledge the repayment of the entire amount under the Loan Agreement.
2. Investor Representations. The Company is issuing the Common Stock to Investor in reliance upon the following representations made by Investor:
(a) Investor acknowledges and agrees that the shares of Common Stock are characterized as “restricted securities” under the Securities Act of 1933 (as
amended and together with the rules and regulations promulgated thereunder, the “Securities Act”) and that, under the Securities Act and applicable regulations
thereunder, such securities may not be resold, pledged or otherwise transferred without registration under the Securities Act or an exemption therefrom. Investor
acknowledges and agrees that (i) the shares of Common Stock are being offered in a transaction not involving any public offering in the United States within the
meaning of the Securities Act, and the shares of Common Stock have not yet been registered under the Securities Act, and (ii) such shares of Common Stock may be
offered, resold, pledged or otherwise transferred only in a transaction registered under the Securities Act, or meeting the requirements of Rule 144, or in accordance
with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company so requests) and in
accordance with any applicable securities laws of any State of the United States or any other applicable jurisdiction.
(b) Investor acknowledges and agrees that (i) the registrar or transfer agent for the shares of Common Stock will not be required to accept for registration of
transfer any shares except upon presentation of evidence satisfactory to the Company that the restrictions on transfer under the Securities Act have been complied
with and (ii) any shares of Common Stock in the form of definitive physical certificates will bear a restrictive legend.
(c) Investor acknowledges and agrees that:
(a) the shares of Common Stock have not been registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering;
(b) Investor is acquiring the shares of Common Stock solely for its own account for investment purposes, and not with a view to the distribution thereof in a
transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction;
(c) Investor is a sophisticated purchaser with such knowledge and experience in business and financial matters that it is capable of evaluating the merits and risks of
purchasing the shares of Common Stock;
(d) Investor has had the opportunity to obtain from the Company such information as desired in order to evaluate the merits and the risks inherent in holding the
shares of Common Stock;
(e) Investor is able to bear the economic risk and lack of liquidity inherent in holding the shares of Common Stock;
(f) Investor is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act; and
(g) Investor either has a pre-existing personal or business relationship with the Company or its officers, directors or controlling persons, or by reason of Investor’s
business or financial experience, or the business or financial experience of their professional advisors who are unaffiliated with and who are not compensated by the
Company, directly or indirectly, have the capacity to protect their own interests in connection with the purchase of the Common Stock.
(d) Investor’s investment in the Company pursuant to this Common Stock is consistent, in both nature and amount, with Investor’s overall investment program
and financial condition.
(e) Investor’s principal residence is in the Peoples’ Republic of China.
3. Miscellaneous.
(a) This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada.
(b) This Agreement constitutes the entire agreement between the parties and supersedes all prior oral or written negotiations and agreements between the
parties with respect to the subject matter hereof. No modification, variation or amendment of this Agreement (including any exhibit hereto) shall be effective unless
made in writing and signed by both parties.
(c) Each party to this Agreement hereby represents and warrants to the other party that it has had an opportunity to seek the advice of its own independent
legal counsel with respect to the provisions of this Agreement and that its decision to execute this Agreement is not based on any reliance upon the advice of any
other party or its legal counsel. Each party represents and warrants to the other party that in executing this Agreement such party has completely read this
Agreement and that such party understands the terms of this Agreement and its significance. This Agreement shall be construed neutrally, without regard to the
party responsible for its preparation.
(d) Each party to this Agreement hereby represents and warrants to the other party that (i) the execution, performance and delivery of this Agreement has been
authorized by all necessary action by such party; (ii) the representative executing this Agreement on behalf of such party has been granted all necessary power and
authority to act on behalf of such party with respect to the execution, performance and delivery of this Agreement; and (iii) the representative executing this
Agreement on behalf of such party is of legal age and capacity to enter into agreements which are fully binding and enforceable against such party.
(e) This Agreement may be executed in any number of counterparts and may be delivered by facsimile transmission, all of which taken together shall
constitute a single instrument.
This Agreement is entered into and effective as of the date first written above.
COMPANY:
Moxian, Inc.
Hao Qinghu, CEO
INVESTOR:
Shenzhen Bayi Consulting Co. Ltd.
Director
ex10-34.htm
EX-10.34
1 of 4
01/14/2020 09:53 AM
Exhibit 10.34
This Debt Conversion Agreement (the “Agreement”) is entered into effective as of May 2, 2019 by and between Liu Shu Juan (“Investor”) and Moxian, Inc., a
Nevada corporation(the “Company”), with reference to the following facts:
DEBT CONVERSION AGREEMENT
WHEREAS,
(i) Investor has loaned certain funds to the Company totaling $5,032,760, of which $4,000,000 is described in the Loan Agreement dated May 11, 2018 (the
“Loan Agreement”), and $1,032,760 is in the form of unsecured advances to the Company.
(ii) Investor has agreed to waive its right to a repayment of $4,272,760 of the amount owed by the Company and
(iii) The Company and Investor now desire to convert the remaining balance of $750,000 (the “Debt”) into shares of Common Stock .
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Investor and the Company agree as
follows:
1. Conversion to Common Stock. Effective as of May 2, 2019, $750,000 of the Debt shall be converted into shares of Common Stock at a price per share of
$1.50 for an aggregate number of shares of 500,000. Upon execution of this Agreement, the Company shall instruct its transfer agent to issue a total of 500,000
shares of Common Stock to the Investor, and the Investor shall acknowledge the repayment of the entire amount under the Loan Agreement.
2. Investor Representations. The Company is issuing the Common Stock to Investor in reliance upon the following representations made by Investor:
(a) Investor acknowledges and agrees that the shares of Common Stock are characterized as “restricted securities” under the Securities Act of 1933 (as
amended and together with the rules and regulations promulgated thereunder, the “Securities Act”) and that, under the Securities Act and applicable regulations
thereunder, such securities may not be resold, pledged or otherwise transferred without registration under the Securities Act or an exemption therefrom. Investor
acknowledges and agrees that (i) the shares of Common Stock are being offered in a transaction not involving any public offering in the United States within the
meaning of the Securities Act, and the shares of Common Stock have not yet been registered under the Securities Act, and (ii) such shares of Common Stock may be
offered, resold, pledged or otherwise transferred only in a transaction registered under the Securities Act, or meeting the requirements of Rule 144, or in accordance
with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company so requests) and in
accordance with any applicable securities laws of any State of the United States or any other applicable jurisdiction.
(b) Investor acknowledges and agrees that (i) the registrar or transfer agent for the shares of Common Stock will not be required to accept for registration of
transfer any shares except upon presentation of evidence satisfactory to the Company that the restrictions on transfer under the Securities Act have been complied
with and (ii) any shares of Common Stock in the form of definitive physical certificates will bear a restrictive legend.
(c) Investor acknowledges and agrees that:
(a) the shares of Common Stock have not been registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering;
(b) Investor is acquiring the shares of Common Stock solely for its own account for investment purposes, and not with a view to the distribution thereof in a
transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction;
(c) Investor is a sophisticated purchaser with such knowledge and experience in business and financial matters that it is capable of evaluating the merits and risks of
purchasing the shares of Common Stock;
(d) Investor has had the opportunity to obtain from the Company such information as desired in order to evaluate the merits and the risks inherent in holding the
shares of Common Stock;
(e) Investor is able to bear the economic risk and lack of liquidity inherent in holding the shares of Common Stock;
(f) Investor is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act; and
(g) Investor either has a pre-existing personal or business relationship with the Company or its officers, directors or controlling persons, or by reason of Investor’s
business or financial experience, or the business or financial experience of their professional advisors who are unaffiliated with and who are not compensated by the
Company, directly or indirectly, have the capacity to protect their own interests in connection with the purchase of the Common Stock.
(d) Investor’s investment in the Company pursuant to this Common Stock is consistent, in both nature and amount, with Investor’s overall investment program
and financial condition.
(e) Investor’s principal residence is in the Peoples’ Republic of China.
3. Miscellaneous.
(a) This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada.
(b) This Agreement constitutes the entire agreement between the parties and supersedes all prior oral or written negotiations and agreements between the
parties with respect to the subject matter hereof. No modification, variation or amendment of this Agreement (including any exhibit hereto) shall be effective unless
made in writing and signed by both parties.
(c) Each party to this Agreement hereby represents and warrants to the other party that it has had an opportunity to seek the advice of its own independent
legal counsel with respect to the provisions of this Agreement and that its decision to execute this Agreement is not based on any reliance upon the advice of any
other party or its legal counsel. Each party represents and warrants to the other party that in executing this Agreement such party has completely read this
Agreement and that such party understands the terms of this Agreement and its significance. This Agreement shall be construed neutrally, without regard to the
party responsible for its preparation.
(d) Each party to this Agreement hereby represents and warrants to the other party that (i) the execution, performance and delivery of this Agreement has been
authorized by all necessary action by such party; (ii) the representative executing this Agreement on behalf of such party has been granted all necessary power and
authority to act on behalf of such party with respect to the execution, performance and delivery of this Agreement; and (iii) the representative executing this
Agreement on behalf of such party is of legal age and capacity to enter into agreements which are fully binding and enforceable against such party.
(e) This Agreement may be executed in any number of counterparts and may be delivered by facsimile transmission, all of which taken together shall
constitute a single instrument.
This Agreement is entered into and effective as of the date first written above.
COMPANY:
Moxian, Inc.
By:
INVESTOR:
Hao Qinghu, CEO
Liu Shu Juan
ex10-35.htm
EX-10.35
1 of 4
01/14/2020 09:53 AM
Exhibit 10.35
This Debt Conversion Agreement (the “Agreement”) is entered into effective as of May 2, 2019 by and between Vertical Venture Capital Group Limited
(“Investor”) and Moxian, Inc., a Nevada corporation (the “Company”), with reference to the following facts:
DEBT CONVERSION AGREEMENT
WHEREAS,
(i) Investor has loaned $979,907 to the Company as described in the Loan Agreement dated August 1, 2017.
(ii) Investor has agreed to waive its right to a repayment of $844,907 of the amount owed by the Company and
(iii) The Company and Investor now desire to convert the remaining balance of $135,000 (the “Debt”) into shares of Common Stock .
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Investor and the Company agree as
follows:
1. Conversion to Common Stock. Effective as of May 2, 2019, $135,000 of the Debt shall be converted into shares of Common Stock at a price per share of
$1.50 for an aggregate number of shares of 90,000. Upon execution of this Agreement, the Company shall instruct its transfer agent to issue a total of 90,000 shares
of Common Stock to the Investor, and the Investor shall acknowledge the repayment of the entire amount under the Loan Agreement.
2. Investor Representations. The Company is issuing the Common Stock to Investor in reliance upon the following representations made by Investor:
(a) Investor acknowledges and agrees that the shares of Common Stock are characterized as “restricted securities” under the Securities Act of 1933 (as
amended and together with the rules and regulations promulgated thereunder, the “Securities Act”) and that, under the Securities Act and applicable regulations
thereunder, such securities may not be resold, pledged or otherwise transferred without registration under the Securities Act or an exemption therefrom. Investor
acknowledges and agrees that (i) the shares of Common Stock are being offered in a transaction not involving any public offering in the United States within the
meaning of the Securities Act, and the shares of Common Stock have not yet been registered under the Securities Act, and (ii) such shares of Common Stock may be
offered, resold, pledged or otherwise transferred only in a transaction registered under the Securities Act, or meeting the requirements of Rule 144, or in accordance
with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company so requests) and in
accordance with any applicable securities laws of any State of the United States or any other applicable jurisdiction.
(b) Investor acknowledges and agrees that (i) the registrar or transfer agent for the shares of Common Stock will not be required to accept for registration of
transfer any shares except upon presentation of evidence satisfactory to the Company that the restrictions on transfer under the Securities Act have been complied
with and (ii) any shares of Common Stock in the form of definitive physical certificates will bear a restrictive legend.
(c) Investor acknowledges and agrees that:
(a) the shares of Common Stock have not been registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering;
(b) Investor is acquiring the shares of Common Stock solely for its own account for investment purposes, and not with a view to the distribution thereof in a
transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction;
(c) Investor is a sophisticated purchaser with such knowledge and experience in business and financial matters that it is capable of evaluating the merits and risks of
purchasing the shares of Common Stock;
(d) Investor has had the opportunity to obtain from the Company such information as desired in order to evaluate the merits and the risks inherent in holding the
shares of Common Stock;
(e) Investor is able to bear the economic risk and lack of liquidity inherent in holding the shares of Common Stock;
(f) Investor is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act; and (g) Investor either has a pre-existing personal or business
relationship with the Company or its officers, directors or controlling persons, or by reason of Investor’s business or financial experience, or the business or
financial experience of their professional advisors who are unaffiliated with and who are not compensated by the Company, directly or indirectly, have the capacity
to protect their own interests in connection with the purchase of the Common Stock.
(d) Investor’s investment in the Company pursuant to this Common Stock is consistent, in both nature and amount, with Investor’s overall investment program
and financial condition.
(e) Investor’s principal residence is in the Peoples’ Republic of China.
3. Miscellaneous.
(a) This Agreement shall be construed and enforced in accordance with the laws of the State of Nevada.
(b) This Agreement constitutes the entire agreement between the parties and supersedes all prior oral or written negotiations and agreements between the
parties with respect to the subject matter hereof. No modification, variation or amendment of this Agreement (including any exhibit hereto) shall be effective unless
made in writing and signed by both parties.
(c) Each party to this Agreement hereby represents and warrants to the other party that it has had an opportunity to seek the advice of its own independent
legal counsel with respect to the provisions of this Agreement and that its decision to execute this Agreement is not based on any reliance upon the advice of any
other party or its legal counsel. Each party represents and warrants to the other party that in executing this Agreement such party has completely read this
Agreement and that such party understands the terms of this Agreement and its significance. This Agreement shall be construed neutrally, without regard to the
party responsible for its preparation.
(d) Each party to this Agreement hereby represents and warrants to the other party that (i) the execution, performance and delivery of this Agreement has been
authorized by all necessary action by such party; (ii) the representative executing this Agreement on behalf of such party has been granted all necessary power and
authority to act on behalf of such party with respect to the execution, performance and delivery of this Agreement; and (iii) the representative executing this
Agreement on behalf of such party is of legal age and capacity to enter into agreements which are fully binding and enforceable against such party.
(e) This Agreement may be executed in any number of counterparts and may be delivered by facsimile transmission, all of which taken together shall
constitute a single instrument.
This Agreement is entered into and effective as of the date first written above.
COMPANY:
Moxian, Inc.
Hao Qinghu, CEO
INVESTOR:
Vertical Venture Capital Group Limited.
Director
ex21-1.htm
EX-21.1
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Exhibit 21.1
Name
Moxian Intellectual Property Limited
Moxian CN Group Limited
Moxian Group Limited
Moxian (Hong Kong) Limited
Moxian Technologies (Shenzhen) Co., Ltd.
Moxian Malaysia SDN BHD
Moxian Technologies (Shanghai) Co. Ltd.
Moxian Technologies (Beijing) Co., Ltd.
Shenzhen Moyi Technologies Co. Ltd.
List of Subsidiaries
Jurisdiction
Samoa
Samoa
Equity Owners and Percentage
of Equity Securities Held / VIE
100% owned by Moxian, Inc.
100% owned by Moxian, Inc.
British Virgin Islands
100% owned by the Moxian CN Group Limited
Hong Kong
PRC
Malaysia
PRC
PRC
PRC
100% owned by Moxian Group Limited
100% owned by Moxian (Hong Kong) Limited
100% owned by Moxian (Hong Kong) Limited
100% owned by Moxian Technologies (Shenzhen) Co., Ltd.
100% owned by Moxian Technologies (Shenzhen) Co., Ltd.
A contractually controlled affiliate of Moxian Technologies
(Shenzhen) Co., Ltd.
Woodland Corporation Limited
Hong Kong
100% owned by Moxian, Inc
ex31-1.htm
EX-31.1
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Exhibit 31.1
Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
and Securities and Exchange Commission Release 34-46427
I, Hao Qinghu, certify that:
(1) I have reviewed this Form 10-K of Moxian, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: January 14, 2020
/s/ Hao Qinghu
Hao Qinghu
Chief Executive Officer (Principal Executive Officer)
ex31-2.htm
EX-31.2
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Exhibit 31.2
Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
and Securities and Exchange Commission Release 34-46427
I, Tan Wanhong, certify that:
(1) I have reviewed this Form 10-K of Moxian, Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: January 14, 2020
/s/ Tan Wanhong
Tan Wanhong
Chief Financial Officer (Principal Financial Officer)
ex32-1.htm
EX-32.1
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Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Form 10-K report of Moxian, Inc. for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the
date hereof and pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Hao Qinghu, certify that:
(1) This report containing the financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in this period report fairly presents, in all material respects, the financial condition and results of operations of Moxian, Inc.
Date: January 14, 2020
/s/ Hao Qinghu
Hao Qinghu
Chief Executive Officer (Principal Executive Officer)
ex32-2.htm
EX-32.2
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Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Form 10-K report of Moxian, Inc. for the period ended September 30, 2019 as filed with the Securities and Exchange Commission on the
date hereof and pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Tan Wanhong, certify that:
(1) This report containing the financial statements fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in this period report fairly presents, in all material respects, the financial condition and results of operations of Moxian, Inc.
Date: January 14, 2020
/s/ Tan Wanhong
Tan Wanhong
Chief Financial Officer (Principal Financial Officer)