Hall of Shame

Consumer Discretionary

Moxian, Inc. (MOXC US)

Year: 2021


Moxian, Inc. operates online-to-offline business. It builds a one-stop comprehensive solution with social customer relation management tool that tie with data analysis capabilities to allow business owners to engage in precision marketing. Moxian+ App provides its users a social media platform that integrates entertainment, commerce, shopping, and customer loyalty reward.  The company’s products and services focuses on creating interaction between users and merchant clients by allowing merchant clients to study consumer behavior. It serves small and medium sized enterprises. The company was formerly known as Moxian China, Inc. and changed its name to Moxian, Inc. in July 2015. Moxian, Inc. was founded in 2010.

The Company listed on the NASDAQ in November 2016 and raised US$10.01M.

July 27, 2021 Wolfpack Research published a Short report on the company; "Moxian - A Failed Business Turned Stock Promotion". Wolfpack's research showed that Moxian did not have a viable business and pumping the stock using a promotion with no substance behind it. The main points covered in the report were:

  • The Company's subsidiary, Moxian Shenzhen, and its VIE, Moyi Shenzhen, did not have the national licenses required to operate an online advertising business in China.
  • Moxian’s SEC filings referred to Moyi Shenzhen as a “VIE”, Wolfpack's research found none of the requisite contracts, share pledge agreements or share pledge public records that make up the VIE.
  • Wolfpack's research indicated that it was highly unlikely that Moxian Shenzhen, or its VIE Moyi Shenzhen, could be actively operating an online advertising business in China because:
    • listed phone numbers were not active and their email server did not function,
    • Moxian failed to disclose that (i) its purported VIE Moyi Shenzhen’s 2014 “Internet Content Provider License” was only good for the Guangdong province of China and (ii) Moyi Shenzhen’s 2015 granted “Information Service Business License” actually “excludes internet information services” and was cancelled by the Chinese government on February 2021.
    • Moxian Shenzhen, the main operating entity in China did not have an actual General Manager. It had ignored a court order to remove its former GM from its government records for nearly a year,
    • There are at least seven severe court sanctions against the common legal representative of Moxian Shenzhen and its Purported VIE Moyi Shenzhen
    • Moxian Shenzhen, its VIE Moyi Shenzhen, and its 100% subsidiary Moxian Shanghai had all been repeatedly sanctioned by the PRC government for failing to file basic annual reports and for “uncontactable” registered or operational business addresses.
  • For FY2020 Moxian reported $946,466 in revenue, primarily from one client, Bi Er. The agreement with Bi Er was terminated in Q2 2021, and the Company wrote down its entire receivables balance due from Bi Er of $1,345,080; ~$400,000 more than the revenue recorded. Wolfpack believed it was possible that management used this extra write-down as a way to cover up cash that was siphoned out of the public company.
  • In H1 FY 2021 Moxian recorded only $22,890 in total revenue while racking up $627,207 in SG&A expenses. In addition, Moxian recorded zero revenue in Q1 2021, despite spending $387,160 on SG&A. Wolfpack believed this level of SG&A expense, for a company generating zero or near zero revenue, reeked of embezzlement or a genuinely inept management team.
  • In August of 2020, Moxian announced it was attempting to acquire a new business and entered into an agreement with Btab Group, Inc. Over the following months, it issued various press releases providing positive information about Btab Group and the progress of the deal. Wolfpack believed that it appeared to be nothing more than stock promotion with no substance behind them, as the deal was terminated on March 3, 2021.
  • Moxian had almost zero net working capital, and its auditor had required a going concern disclosure in every annual report since 2017.
  • Moxian had only remained technically solvent through debt/equity swaps with related party lenders who were willing to take the stock already knowing the Company had little-to-no assets to claim in bankruptcy and given their inside knowledge of the company (Vertical Venture Capital Group is owned by Moxian’s CEO, for example) it seems to Wolfpack that they swapped this debt for equity in May 2019 knowing that the company would start issuing promotional press releases soon after.  The related parties involved in the debt swaps at $1.50 per share saw gross returns as high as ~2,000%, which equates to a 298% IRR (compounded annualized rate of return). 

Wolfpack concluded that Moxian had not operated a legitimate business since it shuttered its O2O business in September 2018. Since then, it appearrd to Wolfpack that management had spent its time dodging delisting notices from NASDAQ and raising capital whenever possible. Aside from that, even the most basic corporate functions did not seem to be taking place at the Company.


Wolfpack Research: Moxian: A Failed Business Turned Stock Promotion, 27 Jul 2021
Moxian: Annual Report - YE Sep. 2020
Moxian: Annual Report - YE Sep. 2019
Moxian: Annual Report - YE Sep. 2018


AUDITORS

Company  From To

Friedman LLP

2-Apr/16

5-Nov-18

Centurion ZD CPA & Co.

30-Nov-18

-

ADVISORS

(IPO - Initial Public Offering, ASO - Additional Share offerings)

tYPE rOLE pARTY
IPO

Co-Agent(s)

Axiom Capital Management Inc

IPO

Co-Agent(s)

Cuttone & Co Inc

IPO

Transfer Agent(s)

Island Stock Transfer Inc

IPO

Auditor(s)

Dominic K F Chan

IPO

Legal Adviser to the Issuer(s)

Loeb & Loeb LLP

IPO

Legal Adviser to the Manager(s)

Schiff Hardin LLP

DIRECTORS

(CAC/MAC Chairman / Member Audit Committee  -  NC Nomination /Governance Comm.  -  CC Compensation/Remuneration Committee)

tYPE nAME rOLE fROM tO

Executive

Hao Qinghu

CEO, Chairman (from Apr 1, 2021)

1-Jan-16

-

Senior Management

Tan Wanhong

CFO

25-Jul-16

-

Executive

Liu Tao

Chairman

28-Sep-18

2019?

Independent

Choong Khuat Leok, Lionel

CAC, MCC, MNC

5-Nov-18

-

Independent

Yu Lin

CCC, MAC, MNC

4-Jan-19

28-Sep-19

Independent

Wang Yingjie, Wendy

CNC, MAC, MCC

4-Jan-19

-

Non-Executive

Tan Meng Dong, James 

 

22-Oct-19

28-Feb-21

Independent

Cheang Sin Chan, David

 

1-Jul-19

28-Feb-21

Independent

Yap Guan Hon, William

Chairman, CCC, MAC, MNC

16-May-19

-

Independent

Zhao Yahui

 

1-Apr-21

-

 


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