UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended September 30, 2015

 

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. 333-173172

 

  MOXIAN, INC.  
(Exact Name of Registrant as Specified in its Charter)

 

  Nevada   27-3729742
(State or Other Jurisdiction of
Incorporation or Organization)
  (I.R.S. Employer
Identification No.)

 

Block A, 9/F, Union Plaza, 5022 Binjiang Avenue, Futian District Shenzhen City, Guangdong Province, China   Tel: +86 (0)755-66803251
(Address of Principal Executive Offices and Zip Code)   (Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Securities Exchange Act: None

 

Securities registered pursuant to Section 12(g) of the Securities Exchange Act: Common Stock, par value $.001

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐   No ☒

 

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 ☒

 

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 ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐   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 or a smaller reporting company. See definition of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐  Accelerated filer ☐ 
Non-accelerated filer Smaller reporting company

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐   No ☒

 

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, 2015, the last business day of the registrant’s most recently completed second fiscal quarter was approximately $68,400,000.

 

As of December 22, 2015, the number of shares of the registrant’s common stock outstanding was 214,666,944.

 

 

 

 

 

 

FORM 10-K

 

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015

 

TABLE OF CONTENTS

 

Cautionary Note Regarding Forward-Looking Statements

 

PART I      
Item 1. Business   1
Item 1A. Risk Factors   13
Item 1B. Unresolved Staff Comments   13
Item 2. Properties   13
Item 3. Legal Proceedings   13
Item 4. Mine Safety Disclosure   13
       
PART II      
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities   14
Item 6. Selected Financial Data   15
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations   15
Item 7A. Quantitative and Qualitative Disclosures about Market Risk   17
Item 8. Financial Statements and Supplementary Data   17
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure   17
Item 9A. Controls and Procedures   17
Item 9B. Other Information   19
       
PART III      
Item 10. Directors, Executive Officers and Corporate Governance   20
Item 11. Executive Compensation   22
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters   24
Item 13. Certain Relationships and Related Transactions, and Director Independence   25
Item 14. Principal Accountant Fees and Services   25
       
PART IV      
Item 15. Exhibits and Financial Statement Schedules   26
SIGNATURES 28

 

i
 

 

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 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”) and (viii)Shenzhen Moyi Technologies Co. Ltd., a contractually controlled affiliate of Moxian Shenzhen formed under the laws of People’s Republic of China (“Moyi”).
     
  “Common Stock” refers to the Company’s common stock, par value $.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). References to “RM” are to the Malaysian Ringgit. According to the currency exchange website www.xe.com, as of December 22, 2015, US$1.00 = 6.47941 yuan; 1 yuan= US$0.154338. US$1.00=4.30150 RM; 1 RM=US$0.232477.

 

ii
 

 

PART I

 

ITEM 1. BUSINESS

 

Corporate History and Corporate Structure

 

Moxian, Inc. (the “Company,” “Moxian,” “we,” “us,” or “our”) was incorporated in the State of Nevada on October 12, 2010 and was formerly known as SECURE NetCheckIn Inc. We previously engaged in the business of offering a cloud-based scheduling and notification product targeted to urgent care facilities and medical offices to increase the satisfaction of patients in the scheduling and timing of appointments.

 

On February 17, 2014, the Company incorporated Moxian CN Samoa under the laws of the Independent State of Samoa.

 

On February 21, 2014, we acquired Moxian BVI, together with its subsidiaries, Moxian HK, Moxian Shenzhen, and 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 Chief Executive Officer, James Mengdong Tan, 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 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 HK is currently engaged in the business of online social media and plans to launch its business in China.

 

Moxian Shenzhen was invested in 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, and commercial information consulting.

 

Moxian Malaysia was incorporated on March 1, 2013 and became Moxian HK’s subsidiary on April 2, 2013. Moxian Malaysia is conducting its business in the IT Services and Media Advertising industries.

 

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 were a wholly-owned subsidiary of Moxian Shenzhen.

 

On February 17, 2014, Moxian IP Samoa was incorporated in the State of 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.

 

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.

 

  1  

 

 

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 total of 7,782,000 shares of the Company’s Common Stock.

 

The following diagram sets forth the structure of the Company as of the date of this Report:

 

 

 

Our web site address is www.moxian.com . Information contained on our web site is not part of this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission (“SEC”).

 

  2  

 

 

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 users of our mobile application and platform that are the Merchant Clients’ existing and potential customers 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 the consumer behavior. Our products and services are designed to allow Merchant Clients to conduct targeted advertising campaigns and promotions which we believe are more effective because they are geared for the customers that a Merchant Client wishes to reach. Our platform is also designed and built to encourage Users to return and attract 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. Many companies utilize a different strategy of building up a user base and then signing up paid merchants and other clients to access that user base.

 

The current version of our platform is called “Moxian+” which consists of our user mobile application (the “App” and collectively the “Apps”) called the Moxian+ User App and a separate App for our Merchant Clients called the Moxian+ Business App. Both versions of the App are currently available in the Google Play Store and the Apple App Store. There is no charge to download either App. We also have a website that can be accessed at www.moxian.com where either App can also be downloaded.

 

Moxian principally operates in mainland China with its headquarters in Shenzhen, China. We launched Moxian version 1.0 in Malaysia in June 2013 and subsequently in China in July 2014. In 2015, we developed the Apps as part of “Moxian+,” the successor to Moxian version 1.0 which was officially launched in October 2015 in China.

 

We are currently in the process of expanding our operations to Beijing, Shanghai and Guangzhou.

 

Our Merchant Clients and Users

 

Moxian+’s users include Merchant Clients and App Users, who are existing and potential customers of the Merchant Clients.

 

Merchant Clients – Merchant Clients can choose between a free and paid account. With a free account, Merchant Clients get a “Do It Yourself” webpage and can add different modules into their account, including the address of the business, the phone number of the business, and a listing of up to 5 products. When a Merchant Client purchases one of our subscription packages described below, it gets access to a number of robust add-on features. The services provided to paid Merchant Clients include:

 

  Social Customer Relationship Management (‘SCRM’)
     
  Targeted Marketing
     
  Analytic Reports
     
  Fan Rewards
     
  Events Hosting
     
  Vouchers and Product Listing
     
  Many-store features

 

There are different accounts for the Merchant Clients to choose from, including a basic account, a gold account and a diamond account, which provide different features to the Merchant Clients. Current pricing of these accounts ranges from no charge for a basic account, to $2,000 per year for a diamond account.

 

App Users -- our App Users, which are called “MO-Pals” within the User App, can download and use the User App for free. Users provide basic information to sign up for a Moxian+ account and then can invite friends and family members to join Moxian+, search and join different interest groups, and participate in social media such as sharing activities, stories, photos and videos, send micro-blog messages, play online games in Moxian+’s game center, and earn MO-Coins, a virtual currency similar to credit card reward points which are explained further below.

 

  3  

 

 

Our Platform

 

There are five components in our Moxian+ platform, which is the backend of our application. The Moxian+ platform include the social media engine, the e-commerce engine, the rewards engine, the gamification engine, and the analytical engine.

 

Social Media Engine

 

Our data use policy governs the use of information that users have chosen to share and present. We also design our products to include robust safety tools. These tools are coupled with partnerships with online safety experts to offer protection for all users, particularly teenagers. We work with law enforcement to help promote the safety of our users as required by law. To the extent permissible, and with prior consent from the Users, we analyze User’s information to understand the Users behavior.

 

E-Commerce

 

Utilizing our e-commerce features, Merchant Clients are able to conduct business by posting products, offering coupons and sales as well as creating events and blogs through the Moxian+ Business App. On the other hand, Users can shop at the Merchant Clients’ shops like at any other e-commerce platform by ordering online and receiving the products by express delivery.

 

Rewards

 

Users are rewarded with MO-Points and MO-Coins. MO-Points are points granted to Users when they shop at Merchant Clients, play games on our platform or engage in other activities sponsored by the Merchant Clients. MO-Points can be redeemed at the Merchant Clients’ shops as determined by the Merchant Clients, or can be redeemed for MO-Coins which are virtual currency and can be used at any Merchant Client’s stores. MO-Coins are backed by cash paid by Merchant Clients which is held in an escrow account. They can be redeemed for cash, or used to purchase more MO-Points. The ratio of MO-Coins to actual currency is currently set at 10:1. A Merchant Client who pays for MO-Coins can also redeem them for cash.

 

MO-Points and MO-Coins are traceable and trackable on the Moxian+ platform through designated serial number so that we can see exactly what Users do with them and use that information to assist our Merchant Clients to determine customer behaviors

 

From time to time, the Company may also give away MO-Points or MO-Coins as a promotion to increase our User base.

 

We also plan to have our own “shopping mall” with merchandise that Users can purchase with MO-Points and MO-Coins in the upcoming year.

 

Gamification

 

The Company, together with outside contractors, develops games for Users to earn MO-Points and MO-Coins and other rewards which may be specific to a certain Merchant Client.

 

Currently, Users can use MO-Points to play games offered in our game center.

 

Analytical Engine

 

Moxian provides analytics to each Merchant Client for the consumer behavior Moxian learns through its platform to assist our Merchant Clients to better design their promotions and reach their target audience.

 

  4  

 

 

Our Products

 

Moxian+ User App

 

The Moxian+ User App is free to use and download. Many features are provided to attract and retain Users. The Moxian+ User App also provides access to a social media platform with a package of services to provide interaction with other Users and Merchant Clients.

 

  MO-Talk: MO-Talk is a voice chat service which allows Users to communicate with anyone by using the Moxian+ User App. Mo-Talk also allows for group chats.
     
 

News Center: When opening the User App, Users are presented with a home page with items relevant to them under the headings “Hot Topics,” ‘Hot Events” and “Nearby People.” On “Hot Topics,” the most popular topics and related blogs, news, and journals being discussed among Users will be displayed, so that Users can stay informed in real time. “Hot Events” provide information about events to be hosted by Merchant Clients, and they are categorized by different interests. In addition, Users will be able to see the list of other nearby Users, with information that a User may be willing to have displayed.

     
  Game Center: Users can play different games to earn MO-Points. MO-Points, as explained above, can be redeemed for merchandise or prizes and we can track how and when they are used by each User.
     
  Merchants’ Stores: Users can shop at Merchant Clients’ stores using their mobile device, with payment by credit card or MO-Coins. Merchant Clients can provide for discounts, offers or rewards connected to MO-Points.
     
  MO-Shake : Users can shake their phone to win: i) Merchant sponsored vouchers; ii) Moxian sponsored MO-Coins or MO-Points; iii) coupons, discounts or admission to other events hosted by Merchant Clients which are in the vicinity of the User.

 

Moxian+ Business App

 

The Moxian+ Business App is solely for the use of Merchant Clients, which allows them to manage their presence within the Moxian+ platform, plan a campaign, offer discounts, manage payments and receive analytics. Merchant Clients utilizing our free service can:

 

  Open a shop: A Merchant Client can create a shop. In a Merchant Client’s account, there is an “add shop” button--by pressing it, one can add a shop’s logo, its category, telephone number, and other relevant information. Once the shop’s identification is verified, it will show in the Moxian+ User App. A Merchant Client can manage its own shop by adding more information, posting events, offers, discounts or other information.
     
  Interact with customers: Through MO-Talk, Merchant Clients are able to communicate directly with Users in order to answer product inquiries or other questions. Merchant Clients can also post events and promotions, discounts or conduct product surveys.
     
  Receive Analytics: Merchant Client’s receive reports on their marketing activities and products.
     
  Provide rewards to Users: Merchant Clients can provide customized discount vouchers, which are coupons to attract and retain customers. Vouchers can be redeemed by customers by using MO-Points.

 

Paid Merchant Clients have access to a more extensive set of tools on our platform, which allows them to:

 

 

Send out message to targeted customers: Paying Merchant Clients have the ability to contact their targeted Users directly by sending messages and materials through our platform. We also provide targeted marketing to assist Merchant Clients to reach customers more efficiently. For example, we can generate a list of customers who have browsed a Merchant Client’s products over the past two months more than once, but not made a purchase, and a discount can be offered to them for certain products.

     
 

Receive more detailed analytics: Merchant Clients with a free account receive only basic analytics, such as how many MO-points have been distributed. However, for paid accounts, Merchant Clients receive more detailed analytics regarding the buying patterns and likes of current and potential customers.

 

Our Services

 

Social Customer Relationship Management (‘SCRM’)

 

Our SCRM is built to allow Merchant Clients to input their customer details into the system. The SCRM can then follow the customers’ activities, and allows Merchant Clients to send the promotional messages and advertisements to Users through our platform.

 

  5  

 

 

Targeted Marketing

 

Our Targeted Marketing tool is offered to paid Merchant Clients only. Its feature allows our Merchant Clients to send messages, promotions and vouchers to a specific range of customers, such as, customers who have visited their store in the past week or month or customers who have their birthday in the following month. Merchant Clients can send Users discounts or messages and target people by age, gender or other criteria. In addition, Merchants Clients can find Moxian users near their physical shops (within 1,000 meters) and invite them to their stores.

 

Actionable Reports

 

Actionable reports are provided to paid Merchant Clients. These reports allow Merchant Clients to see the number of followers they have, the number of points redeemed and rewarded, and the number of vouchers purchased or redeemed offline.

 

Merchant Clients’ staffs can provide rewards to customers by including their customer’s mobile number. Customers who have installed the Moxian+ User App can then receive rewards on the platform in the form of MO-Points or discount vouchers. Customers who do not have the Moxian+ User App installed will receive a text message informing them of their rewards and that they can download the Moxian+ User App to redeem them.

 

Event Hosting

 

Merchant Clients can host events through the platform and invite Users within a selected range, such as by proximity, common interest, or gender to participate in the event.

 

Vouchers and Product Listings

 

Merchant Clients can customize coupons or vouchers on the platform, daily or with whatever frequency they wish, or list available products.

 

Many-store features

 

For those Merchant Clients which have multiple stores in different locations, our platform allows different stores to access to the same account. Moreover, different stores may be differentiated for which information they can access to by entering their location in the app.

 

Subscription Packages for Moxian+ Business App

 

We offer the following packages for our Merchant Clients in using the Moxian+ Business App: basic account, gold account and diamond account. Current pricing ranges from free for a basic account to $2,000 per year for the diamond account.

 

Marketing Strategy

 

Our success is dependent upon signing up paid Merchant Clients. The Merchant Clients, in turn, build up our base of Users by encouraging their customers to download our User App and they can offer MO-Points and MO-Coins to attract people to download our App. In order to attract more Merchant Clients, we also need to have an established base of Users. Therefore, we are currently making efforts to sign up more Merchant Clients, as well as attempting to get more Users to download our User App.

 

We initially are marketing to merchants in Shenzhen, China only where we launched Moxian version 1.0. Although this was a beta test, we were able to get 30,000 merchants to sign up. We are currently targeting these same merchants for Moxian+ and expanding the user base.

 

We currently have a sales force of 20 people based in Shenzhen, China. In addition, we will open an office in Beijing and plan to have a sales force of 80 people there by the end of 2016.

 

We are currently scheduling sales events in Shenzhen for the Christmas and Chinese New Year seasons to promote our products and services to our initial Merchant Clients and give away MO-Points and MO-Coins.

 

During 2016, we also plan to utilize third party distributors with an existing base of merchants to market our products.

 

  6  

 

 

Market Opportunities

 

China currently has more than 850 million users actively utilizing mobile applications (http://news.xinhuanet.com/english/2015-11/10/c_134802668.htm). In 2014, the China Internet Network Information Center reported that there were approximately 618 million internet users throughout Asian countries, representing a penetration rate of approximately 46 percent. Among these internet users, over 90 percent have a social media account. For comparison, just 67 percent of U.S. internet users engage in social media. However, the opportunity in China extends beyond the ability to reach a large target audience. According to the Data Center of China Internet, 38 percent of users claim they are more likely to buy items recommended by other social media users (Statistical Report on Internet Development in China by China Internet Network Information Center, 2014).

 

O2O platforms serve to substantially enhance marketing and commerce performance for brands and retailers compared to traditional digital marketing approaches. O2O refers to any and all activities that originate online and eventually result in a shopper going to a physical store. Forrester Research predicts that by 2016, more than half of the $3.5 trillion spent in offline US retail will be influenced by the websites (Forrester’s US Cross-Channel Retail Forecast, 2011 To 2016).

 

The O2O platform model has been recognized as a trillion dollar opportunity (http://techcrunch.com/2010/08/07/why-online2offline-commerce-is-a-trillion-dollar-opportunity/). According to official statistics, China’s O2O market reached 98.7 billion yuan (approximately US$9 billion) in 2011. Industry analysts anticipate that the China O2O market will quadruple to 418 billion yuan (approximately US$67 billion) in 2016 (http://www.prnewswire.com/news-releases/chinas-o2o-market-the-path-to-success-is-not-uni-directional-201906281.html). Moxian is able to capture a share in this market by offering its platform to merchants. Our platform allows users to be aware of their interested merchants’ on-going promotions so as to attract them to make purchases offline.

 

Competition

 

Although major global social network platform providers have the advantage of an existing user base, we believe Moxian has a unique social business model and social media features that can enable us to stand out among the competition. Other major social networking platforms usually focus on personal photo sharing, video sharing, chat features, group chatting, micro-blogging, following groups’ online activities, rating and commenting on products and services. What we believe makes Moxian stand out is that our Merchant Clients have: (i) their own promotion pages, (ii) local event programs for their customer Users, (iii) location-based promotion information, (iv) mobile chat applications, (v) give-away free prizes for the Users, (vi) advertising on Moxian’s social pages, (vii) a social customer relationship management systems, (viii) a loyalty program using MO-Points and MO-Coins, and (ix) customized online games to promote merchants’ brands and group sales promotions. Therefore, by establishing our Merchant Client base, we believe that our user acquisition will be easy to build up.

 

In China, we face stiff competition. Our major competitor in China is Dazong Dianping (“Dianping”). Dianping targets merchant clients as we do. In addition, Dianping also offers merchants a customized page, location based promotion information and a relationship management tool. The other principal competitors are Nuomi, Meituan and WeChat.

 

However, we believe Moxian+ is superior for SMEs because our SCRM offers Merchant Clients the ability to interact with their customers via instant messenger. In addition, we offer virtual currencies that can entice and encourage repeated visits by the Users.

 

Our Technology

 

Technology is the key to our success in achieving efficiency for our business, improving the user experience, and enabling innovation. We employ a team of over 80 engineering and data analytics personnel to build our technology platform and develop new online and mobile products. Key components of our technology include:

 

Data Science

 

Our data science technology serves various types of data-intensive computational needs, including deep learning, high-volume batch processing and multi-variable and multi-dimensional real-time analytics. Data mining and transaction, payment and behavioral data science capabilities are used extensively in numerous applications such as search and online marketing.

 

Security

 

The Company takes various steps to ensure the security of the Moxian+ platform and the personal information of users of the platform, as well as the ecommerce transactions conducted on the platform. We conduct daily testing and have engaged an outside security consultant to conduct further testing and make recommendations as to additional security measures.

 

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Foreign Operations

 

Substantially all of our business operations are conducted in Mainland China. Accordingly, our results of operations, financial condition and prospects are subject to a significant degree to economic, political and legal developments in the PRC. We also have operations in Hong Kong. Operating in foreign countries involves substantial risk. For example, our business activities subject us to a number of Chinese laws and regulations, such as anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, data privacy and security requirements, labor laws, intellectual property laws, privacy laws, and anti-competition regulations, which have uncertainties. Any failure to comply with the PRC laws and regulations could subject us to fines and penalties, make it more difficult or impossible to do business in China and harm our reputation.

 

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. This could either reduce the U.S. dollar value of our prices or, if we raise prices in the local currency, it could reduce the overall demand for our offerings. Either could adversely affect our revenue. Conversely, a rise in the price of local currencies relative to the U.S. dollar could adversely impact our profitability because it would increase our costs denominated in those currencies, thus adversely affecting gross margins.

 

Research and Development

 

There are 120 people in the Research & Development department, which is responsible to develop and improve the mobile application, Moxian platform and customer experience in using our products. During the past two fiscal years, we have spent $2,176,963 in 2014 and $5,443,815 in 2015, respectively on research and development.

Regulation

 

As our platform is established in China and the targeted clients are located mainly in China and our server are located in Hong Kong, the following discussion summarizes the regulations that govern our operations in Mainland China and Hong Kong.

 

PRC Law

 

Overview

 

Extensive regulatory schemes governing the operation of business with respect to telecommunications and Internet information services were published by the Chinese government. Besides the Ministry of Industry and Information Technology and State Administration of Radio, Film and Television, which regulates radio and television stations in China (“SARFT”), the various services of the PRC Internet industry are also regulated by various other governmental authorities, such as 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 VIEs 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 that are broadly defined.

 

Currently, Moyi holds an ICP license which was issued on January 22, 2014.

 

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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’ 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, the 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 June 27, 2002, SPPA and MIIT jointly released the Provisional Rules for the Administration of Internet Publishing, or the Internet Publishing Rules, which define “Internet publications” as works that are either selected or edited to be published on the Internet or transmitted to end-users through the Internet for the purposes of browsing, reading, using or downloading by the general public. Such works mainly include content or articles formally published by press media such as: (i) books, newspapers, periodicals, audio-visual products and electronic publications; and (ii) literature, art and articles on natural science, social science, engineering and other topics that have been edited.

 

According to the Internet Publishing Rules, web portals like Moxian are required to apply to and register with GAPP before distributing Internet publications. Therefore, the Company will apply for a license by December 31, 2015 to comply with the Internet Publishing Rules.

 

Moxian will be applying this license by the end of 2015.

 

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.

 

Currently, Moxian holds the appropriate license which was issued by the Administration of Online Culture on November 25, 2015.

 

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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 of 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. As for capital account items, such as direct investments, loans, security investments and the repatriation of investment returns, however, the reservation or conversion of foreign currency incomes is still subject to the approval of SAFE or its competent local branches; while for the foreign currency payments for capital account items, the SAFE approval is not necessary for the conversion of Renminbi except as otherwise explicitly provided by laws and regulations.

 

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 SAFE and the National Development and Reform Commission, or their respective competent local branches.

 

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.

 

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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.

 

Hong Kong Law

 

Our website is maintained through a server in Hong Kong. Therefore, our data usage policy and regular terms of service for both our users and merchants must to comply with the applicable rules and regulations in Hong Kong SAR. As information from our Merchant Clients and Users are preserved in Hong Kong, with 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 Hong Kong.

 

Employees

 

As of the date of this Annual Report, the Company had over 170 employees, with 12 persons working in managerial positions, 35 persons working in the product development and technical department, 10 people working in the administrative department and over 120 people working in our sales and marketing department. The Company considers its employee relations to be good, and to date has not experienced a work stoppage due to a labor dispute.

 

Intellectual Property

 

Trademarks

 

We have obtained and/or registered for the following trademarks in Mainland China, Hong Kong, and the U.S.:

 

Mark   Country of Registration   Application Number   Class/Description   Current Owner   Status
  Hong Kong   302534274   Class 9: Magnetic data carries, recording discs, data processing equipment and computers Class 35: Advertising, business management, business administration Class 38: Telecommunications Class 40: Treatment of materials Class 41: Entertainment Class 42: Design and development of computer hardware and software   Moxian (Hong Kong) Limited   Registered
    America   85931344   Class 009: Magnetic data carries, recording discs, data processing equipment and computers Class 035: Advertising, business management, business administration Class 038: Telecommunications Class 040: Treatment of materials Class 041: Entertainment Class 042: Design and development of computer hardware and software   Moxian (Hong Kong) Limited   Registered
    China   13460852   Class 9: Magnetic data carries, recording discs, data processing equipment and computers   Moxian Shenzhen Technologies Co Ltd   Registered
魔线   China   13461178   Class 38: Telecommunications   Moxian Shenzhen Technologies Co Ltd   Registered
    China   13460714   Class 42: Design and development of computer hardware and software   Moxian Shenzhen Technologies Co Ltd   Pending
    China   10624504   Class 42: Design and development of computer hardware and software   Moxian Shenzhen Technologies Co Ltd   Pending

 

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Patents

 

The patents we applied are listed as follows:

 

Patent   Country of Registration   Application Number   Description   Application Date   Status
A business promotion method based on internet platform for users to access the information independently   China   201310734492.2   Including background identifying steps giving feedbacks on the demands sent by terminal application steps, access end-user's real-time location information and search nearby merchants, push merchant's information and free rewards to users   27th December 2013   Pending
A method based on internet platform to achieve interactive information through QR code   China   201410235257.5   Including terminal application steps, start the application terminal of internet platform, access the merchant's ID and IP on the platform through scanned QR code   30th May 2014   Pending
The method and system of pushing targeted advertising based on consumption patterns   China   201510628706.7   Including access user's chat session content, analyze and abstract user's interested information, send the corresponding targeted advertising to users through data analysis   28th September 2015   Pending
The method and system of pushing targeted advertising based on chat session   China   201510628708.6   Including access user's consumption record, analyze and understand user's consumption mode, send the corresponding targeted advertising to users through data analysis   28th September 2015   Pending

 

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Copyright

 

A copyright application for Moxian’ s mascot “Moya” was submitted by Moxian Shenzhen on December 2, 2013 (Application No. 201330592230.8). Moya is a mascot representing the Moxian Platform. Below are some pictures of Moya with different expressions :

 

         

 

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.

 

Principal Executive Offices

 

Our principal executive offices are located at Block A, 9/F, Union Plaza, 5022 Binjiang Avenue, Futian District, Shenzhen City, Guangdong Province, China. Our telephone number at this location is +86 (0)755-66803251.

 

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 space in Shenzhen. The monthly rent is RMB 200,000 (or approximately $31,237). We are also renting an office in Malaysia. The monthly rent for the Malaysia office is RM 20,000 (or approximately $4,727). The Company believes that such office space will be sufficient for its current needs.

 

ITEM 3. LEGAL PROCEEDINGS

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. There are currently no legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

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PART II

 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Our common stock is not quoted on any exchange. Our common stock was traded under the symbol “SNEC” until December 13, 2013 and is currently quoted on the OTCQB under the trading symbol “MOXC.” Our common stock did not trade prior to April 10, 2014. Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.

 

OTCQB securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTCQB securities transactions are conducted through a telephone and computer network connecting dealers in stocks.

 

For the periods indicated, the following table sets forth the high and low bid prices per share of common stock. The following quotations reflect the high and low bids for our shares of common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

    High     Low  
Fiscal Year 2014   Bid     Bid  
First Quarter   $ -     $ -  
Second Quarter   $ -     $ -  
Third Quarter*   $ 5.20     $ 3.00  
Fourth Quarter*   $ 11.00     $ 4.30  

 

    High     Low  
Fiscal Year 2015   Bid     Bid  
First Quarter   $ 5.85     $ 5.25  
Second Quarter   $ 5.90     $ 5.10  
Third Quarter   $ 6.30     $ 5.70  
Fourth Quarter   $ 6.50     $ 5.70  

 

* The Company’s Common Stock did not trade until April 10, 2014.

 

As of December 22, 2015, the last sale price reported on the OTCQB for the Company’s Common Stock was approximately $5.00 per share.

 

Holders

 

As of September 30, 2015, we had 214,666,944 shares of our Common Stock par value, $.001 issued and outstanding. There were approximately 70 registered owners of our Common Stock.

 

Transfer Agent

 

The transfer agent for our capital stock is Island Stock Transfer, located at 15500 Roosevelt Boulevard, Suite 301. Their telephone number is 727-289-0010 and fax: number is 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, we currently have no plans to pay such dividends. Our board of directors currently intends to retain all earnings for use in the business for the foreseeable future.

 

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Equity Compensation Plan Information

 

Currently, there is no equity compensation plan in place.

 

Unregistered Sales of Equity Securities

 

All unregistered sales of the Company’s securities for the past three years have been disclosed on the Company’s current reports on Form 8-K and the Company’s quarterly reports on Form 10-Q.

 

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, 2015.

 

ITEM 6. SELECTED FINANCIAL DATA

 

Disclosure in response to this item is not required of a smaller reporting company.

 

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 unaudited condensed consolidated financial statements and the notes to those 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," and "our," refer to (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, accompany incorporated under the laws 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. (“Moxian Shenzhen”), a company incorporated under the laws of the People’s Republic Of China, (vii) Moxian Malaysia SDN BHD (“Moxian Malaysia”), and (viii) Shenzhen Moyi Technologies Co. Ltd., a contractually controlled affiliate of Moxian Shenzhen formed under the laws of People’s Republic of China (“Moyi”).

 

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 users of our platform that are their existing and potential customers 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 the Merchant Clients to conduct targeted advertising campaigns and promotions which we believe are more effective because they are geared for the customers that a Merchant Client wishes to reach. Our platform is also designed and built to encourage Users to return and attract new Users, each of which is a potential customer for our Merchant Clients.

 

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Where 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. Many companies utilize a different strategy of building up a user base and then signing up paying merchants and other clients to access that user base.

 

The current version of our platform is called “Moxian+” which consists of our user mobile application (“App”) called the Moxian+ User App and a separate App for our Merchant Clients called the Moxian+ Business App. Both versions of the App are currently available in the Google Play Store and the Apple App Store. There is no charge to download either App. We also have a website that can be accessed at www.moxian.com where either App can also be downloaded.

 

Moxian principally operates in mainland China with its headquarters in Shenzhen, China. We launched Moxian version 1.0 in Malaysia in June 2013 and subsequently in China in July 2014. In 2015, we developed the Apps as part of “Moxian+,” the successor to Moxian version 1.0 which was officially launched in October 2015 in China.

 

We are currently in the process of expanding our operations to Beijing, Shanghai and Guangzhou.

 

As of September 30, 2015 and September 30, 2014, our accumulated deficits were $(9,939,511) and $(5,001,166), respectively. Our stockholders’ equity (deficiency) was $6,740,392 and $(4,587,023), respectively. We have generated $83,870 in revenue for the year ended September 30, 2015. Net loss for the year ended September 30, 2015 and year ended September 30, 2014, were $(6,398,063) and $(4,791,342), respectively. Our losses have principally been attributed to operating expenses, administrative and other operating expenses .

 

Recent Development

 

As of December 16, 2015, we entered into a Second Amendment Agreement to the Subscription Agreement (the “Second Amendment Agreement”) with Xinhua Huifeng Investment Center Co., Ltd. (Beijing) (“Xinhua”) to amend the Subscription Agreement entered by the Company and Xinhua (“Xinhua Subscription Agreement”) dated as of June 4, 2015. Under the Xinhua Subscription Agreement, the Company agreed to sell an aggregate of 8,169,000 shares of the Company’s Common Stock at a per share price of $1.00 for gross proceeds of $8,190,000 (approximately RMB50,000,000) (the “Purchase Price”) and to issue to Xinhua for no additional consideration a warrant (the “Warrant”) to purchase in the aggregate of 32,000,000 shares of Common Stock at an exercise price of $2.00 per share, exercisable on or prior to July 31, 2015 (the “Expiration Date”)(such transaction, the “Transaction”).

 

On August 13, 2015, Xinhua and the Company entered into an Amendment Agreement (the “First Amendment Agreement”) to amend certain terms under the Xinhua Subscription Agreement. Pursuant to the First Amendment Agreement, the closing date (“Closing Date”) of the transaction was extended to September 30, 2015 and the Expiration Date of the Warrant was extended to September 30, 2015.

 

Under the Second Amendment Agreement, the Closing Date of the transaction was extended to December 31, 2015 and the Expiration Date of the Warrant was extended to December 31, 2015 as well. As of the date of this Annual Report, the Transaction has not closed yet and there are no shares or warrants issued to Xinhua.

 

Results of Operations

 

For the year ended September 30, 2015 compared with the year ended September 30, 2014

 

Gross Revenues

 

The Company received sales revenues of $83,870 in the year ended September 30, 2015 compared to $56,122 being generated in the year ended September 30, 2014 .

 

Operating Expenses

 

Operating expenses for the year ended September 30, 2015 and year ended September 30, 2014 were $5,443,815 and $2,176,963, respectively. The expenses consisted of our leases, filing fees, professional fees, payroll and benefits and other general expenses.

 

We expect that our general and administrative expenses will continue to increase as we incur additional costs to support the growth of our business.

 

Net Profit/(Loss)

 

Net loss for the year ended September 30, 2015 and year ended September 30, 2014, were $(6,395,805) and $(4,791,342), respectively. Basic and diluted net income (loss) per share amounted $(0.02) and $(0.02) respectively for the year ended September 30, 2015 and year ended September 30, 2014.

 

The increase in net loss for the year ended September 30, 2015 compared to the year ended September 30, 2014 was due to an increase in general and administrative expenses.

 

Liquidity and Capital Resources

 

Cash Assets

 

At year ended September 30, 2015, we had working capital deficit of $(2,805,082) consisting of cash on hand of $2,398,713 as compared to working capital deficit of $(4,935,692) and cash on hand of $1,770,196 as of September 30, 2014.

 

Net cash provided by (used in) operating activities for the year ended September 30, 2015 was $(5,244,096) as compared to net cash used in operating activities of $(2,106,329) for the year ended September 30, 2014. The cash used in operating activities are mainly for our leases, filing fees, professional fees, payroll and benefits and general expenses.

 

  16  

 

 

Net cash provided by (used in) investing activities for the year ended September 30, 2015 was $(3,459,770) as compared to $667,730 for the year ended September 30, 2014.

 

Net cash provided by financing activities for the year ended September 30, 2015 was $9,236,028 as compared to $3,155,839 for the year ended September 30, 2015.

 

During the fiscal year ended September 30, 2015, the burn rate for the Company was approximately $400,000 per month, consisting of cost of research and development, marketing, operation expenditures, and professional fees.

 

The Company anticipates utilizing approximately $450,000 monthly for capital expenditures during the fiscal year ended September 30, 2016, including approximately $250,000 for mobile application development and approximately $200,000 for other capital expenditures, including corporate facilities and infrastructure, information systems hardware, software and enhancements.

 

Financing

 

As of December 16, 2015, we entered into a Second Amendment Agreement to the Subscription Agreement (the “Second Amendment Agreement”) with Xinhua to amend the Xinhua Subscription Agreement dated as of June 4, 2015. Under the Xinhua Subscription Agreement, the Company agreed to sell an aggregate of 8,169,000 shares of the Company’s Common Stock at a per share price of $1.00 for gross proceeds of $8,190,000 (approximately RMB50,000,000) (the “Purchase Price”) and to issue to Xinhua for no additional consideration a warrant (the “Warrant”) to purchase in the aggregate of 32,000,000 shares of Common Stock at an exercise price of $2.00 per share, exercisable on or prior to July 31, 2015 (the “Expiration Date”)(such transaction, the “Transaction”).

 

On August 13, 2015, Xinhua and the Company entered into an Amendment Agreement (the “First Amendment Agreement”) to amend certain terms under the Xinhua Subscription Agreement. Pursuant to the First Amendment Agreement, the closing date of the transaction was extended to September 30, 2015 and the Expiration Date of the Warrant was extended to September 30, 2015.

 

Under the Second Amendment Agreement, the Closing date of the transaction was extended to December 31, 2015 and the Expiration Date of the Warrant was extended to December 31, 2015 as well. As of the date of this Annual Report, the Transaction has not closed yet and there are no shares or warrants issued to Xinhua.

 

For the fiscal year of 2016, the Company will likely require additional capital of $18 million to $20 million to continue to operate our business, and to further expand our business. Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. Management has plans to seek additional capital from private equity funds in Asia in the next 12 months. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means, such as conducting a public offering of our common stock. Our inability to raise additional funds when required may have a negative impact on our operations, business development and financial results.

 

Loan

 

As of September 30, 2015, the Company borrowed loans from certain third parties and shareholders of the Company for an aggregate of $1,462,525.

 

Critical Accounting Policies and Estimates

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the financial statements and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. Our significant estimates and assumptions include depreciation and the fair value of our stock, stock-based compensation, debt discount and the valuation allowance relating to the Company’s deferred tax assets.

 

Recently Issued Accounting Pronouncements

 

Reference is made to the “Recent Accounting Pronouncements” in Note 2 to the Financial Statements included in this Report for information related to new accounting pronouncement, none of which had a material impact on our consolidated financial statements, and the future adoption of recently issued accounting pronouncements, which we do not expect will have a material impact on our consolidated financial statements.

 

Off-Balance Sheet Arrangements

 

As of September 30, 2015, 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, 2015 and 2014 and the related statements of operations, changes in stockholders’ deficit and cash flows for the years then ended have been audited by Dominic K.F. Chan & Co. Dominic K.F. Chan & Co is an independent registered public accounting firm. These 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 financial statements have been prepared assuming the Company will continue as a going concern.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

As of September 30, 2015, our CEO 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 Annual Report on Form 10-K. 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 analyze 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 has concluded that as of September 30, 2015, 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 is in the process of adopting formal documented controls and anticipates having them in place by the fiscal year end of 2016.

 

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 as 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, 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;

 

  17  

 

 

  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 internal control 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.

 

As of September 30, 2015, 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 due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that 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 weakness during its assessment of internal controls over financial reporting as of September 30, 2015:

 

  (1) Lack of internal audit function. The Company discovered that some subsidiaries of the Company borrowed loans from third parties and certain shareholders of the Company in May and September 2015 without written approval of the Board of Directors. Management believes that the foregoing is due to the fact that the Company lacks qualified resources to perform the internal audit functions properly and that the scope and effectiveness of the internal audit function are yet to be developed. Specifically, the reporting mechanism between the accounting department and the Board of Directors and the CEO was not effective, therefore resulting in the delay of recording, reporting and the failure to comply with the Company’s Code of Ethics.

 

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  (2) No Segregation of Duties Ineffective controls over financial reporting : As of September 30, 2015, we had no full-time employees with the requisite expertise in the key functional areas of finance and accounting. As a result, there is a lack of proper segregation of duties necessary to insure that all transactions are accounted for accurately and in a timely manner.
     
  (3) Lack of a functioning audit committee : Due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, and no audit committee has been elected, the oversight in the establishment and monitoring of required internal controls and procedures is inadequate.
     
  (4) Written Policies & Procedures : Due to lack of written policies and procedures for accounting and financial reporting, the Company did not establish a formal process to close our books monthly and account for all transactions and thus failed to properly record the loan agreement or disclose such transactions in its SEC filings in a timely manner.

 

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, 2015 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.

 

Management’s Remediation Initiatives

 

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:

 

(1) We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. The accounting personnel is responsible for reviewing the financing activities, facilitate the approval of the financing, record the information regarding the financing, and submit SEC filing related documents to our legal counsel in order to comply with the filing requirements of SEC.
     
(2) We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.
     
(3) We will add financial personnel to our management team. These additional staff members will be responsible for making sure that information required to be disclosed in our reports filed and submitted under the Exchange Act is recorded, processed, summarized and reported as and when required and will the staff members will have segregated responsibilities with regard to these responsibilities.
     
(4) We plan to prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity and debt transactions.

 

We anticipate that these initiatives will be at least partially, if not fully, implemented by the end of fiscal year of 2016. Additionally, we plan to test our updated controls and remediate our deficiencies by the end of fiscal year of 2016.

 

Changes in internal controls over financial reporting

 

Except for the following, there was no change 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:

 

On February 13, 2015, Mr. Ng Kian Yong resigned as Chief Executive Officer, President, Treasurer, Secretary and director of the Company. Also on the same day, Mr. James Mengdong Tan was appointed as interim Chief Executive Officer, President, Treasurer, and Secretary of the Company.

 

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.

 

  19  

 

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

The following table sets forth the name and position of our current executive officers and directors.

 

Name   Age   Position
Liew Kwong Yoew   58   Director
         
James Mengdong Tan   52   CEO, President, Treasurer, Secretary, and Director

 

Mr. Liew Kwong Yeow, age 58, has more than 25 years of experience in several multi-national organizations, such as Matsushita Denki, General Motors, Intel as well as Urmet Telecoms Italy. He served as the President, Chief Executive Officer and director of Rebel Group, Inc. from February 27, 2013 to January 30, 2015. He also held senior positions and mainly responsible for quality, engineering and procurement of related products and services. In 2006, Mr. Liew was instrumental in setting up the first manufacturing plant of Urmet telecommunications Torino Italy in China and fine-tuning its supply chains, and with Mr. Liew’s assistance, the entire operations of Urmet became significantly competitive in the China markets. Prior to that, Mr. Liew was the General Manager of Aztech Singapore’s plant in China from 2001 through 2005. During 1992 through 2001, he served as the head of QA Operations of the manufacturing facilities of Phoenix Mecano Switzerland in Singapore. Mr. Liew received his diploma in Electrical Engineering from Singapore Polytechnics University in 1974. He also completed the management study programs in: City and Guilds regarding Electrical and Electronics in 1974, Industrial Training Board at MOE Singapore in 1976, Matsushita DENKI Management Development Program in 1978, General Motors Institute in 1983 and Intel University in 1987. Mr. Liew is fluent in English and Chinese.

 

The Board of Directors reached a conclusion that Mr. Liew should serve as a Director of the Company based on his extensive experience in management.

 

Mr. James Mengdong Tan , age 52, has more than 20 years’ experience in managing private and public companies based in Asia and USA. Mr. Tan is currently the Director and CEO of 8iCapital. Until 2009, he was the Chairman and CEO of Vashion Group, a company listed on the Singapore Stock Exchange. Until 2009, he was the Executive Director and CEO of Vantage Corporation Limited, a company listed on the Singapore Stock Exchange departing. At the same time, he served as a director on the Board of Pacific Internet Ltd, a company listed on NASDAQ until its sale to Connect Holdings, a group comprising of Ashmore Investment Management Limited, Spinnaker Capital Limited and Clearwater Capital Partners. James graduated from the National University of Singapore (NUS) with a Bachelor of Arts in 1985.

 

The Board of Directors reached a conclusion that Mr. Tan should serve as a Director of the Company based on his extensive experience in managing publicly traded companies.

 

All directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified. Directors are elected at the annual meetings to serve for one-year terms.  Any non-employee director of the Company or its subsidiaries is reimbursed for expenses incurred for attendance at meetings of the Board and any committee of the board of directors although no such committee has been established.

  

Each officer is appointed by the board of directors and holds his office at the pleasure and discretion of the board of directors or until his earlier resignation, removal or death.

 

There are no material proceedings to which any director, officer or affiliate of the Company, any owner of record or beneficially of more than five percent of any class of voting securities of the Company, or any associate of any such director, officer, affiliate of the Company or security holder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

 

  20  

 

 

Director Independence

 

Our securities are not listed on a national securities exchange or in an inter-dealer quotation system which has requirements that directors be independent.  We do not have majority of independent directors.

 

Committees of the Company’s Board of Directors

 

Because our board of directors currently consists of two members, we do not have a standing nominating, compensation or audit committee.  Rather, our full board of directors performs the functions of these committees. Also, we do not have a “financial expert” on our board of directors as that term is defined by Item 401(e)(2) of Regulation S-K. We do not believe it is necessary for our board of directors to appoint such committees because the volume of matters that come before our board of directors for consideration permits the Board of Directors to give sufficient time and attention to such matters to be involved in all decision making. Additionally, because our Common Stock is not listed for trading or quotation on a national securities exchange, we are not required to have such committees. In considering candidates for membership on the Board of Directors, the Board of Directors will take into consideration the needs of the Board of Directors and the candidate's qualifications. The Board of Directors will request such information as:

 

  The name and address of the proposed candidate;

 

  The proposed candidates resume or a listing of his or her qualifications to be a director of the Company;
     
  A description of any relationship that could affect such person's qualifying as an independent director, including identifying all other public company board and committee memberships;
       
  A confirmation of such person's willingness to serve as a director if selected by the Board of Directors; and

  

  Any information about the proposed candidate that would, under the federal proxy rules, be required to be included in the Company's proxy statement if such person were a nominee.

 

Once a person has been identified by the Board of Directors as a potential candidate, the Board of Directors may collect and review publicly available information regarding the person to assess whether the person should be considered further. Generally, if the person expresses a willingness to be considered and to serve on the Board of Directors and the Board of Directors believes that the candidate has the potential to be a good candidate, the Board of Directors would seek to gather information from or about the candidate, including through one or more interviews as appropriate and review his or her accomplishments and qualifications generally, including in light of any other candidates that the Board of Directors may be considering. The Board of Director's evaluation process does not vary based on whether the candidate is recommended by a shareholder.

 

The Board of Directors will, from time to time, seek to identify potential candidates for director nominees and will consider potential candidates proposed by the Board of Directors and by management of the Company.

 

Meetings of the Board of Directors

 

During its fiscal year ended September 30, 2015, the Board of Directors did not meet on any occasion, but rather transacted business by unanimous written consent.

 

Board Leadership Structure and Role in Risk Oversight

 

Our Board recognizes that the leadership structure and combination or separation of the chief executive officer and chairman roles is driven by the needs of the Company at any point in time.  Currently, Mr. Tan serves as the sole officer of the Company as well as a director of our Board, and Mr. Liew serves as a director of our board.  We have no policy requiring the combination or separation of leadership roles and our governing documents do not mandate a particular structure.  This has allowed, and will continue to allow, our Board the flexibility to establish the most appropriate structure for our company at any given time.

 

Code of Ethics

 

Our Board of Directors plans to adopt a new code of ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. The new code will address, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code. 

 

  21  

 

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Except as set forth below, no person who, during the year ended September 30, 2015, was a director, officer or beneficial owner of more than ten percent of the Company’s Common Stock (which is the only class of securities of the Company registered under Section 12 of the Securities Exchange Act of 1934 (the “Act”) failed to file on a timely basis, reports required by Section 16 of the Exchange Act during such fiscal year or, except as reported above, prior years.  The foregoing is based solely upon a review by the Company of Forms 3 and 4 and amendments thereto during such fiscal year as furnished to the Company under Rule 16a-3(e) under the Act, and Forms 5 and amendments thereto furnished to the Company with respect to such fiscal year, and any written representation received by the Company from any reporting person that no Form 5 is required.

 

Name   Date of Reporting Event   Required Filing Date   Date of Filing
Ng Kian Yong   11/14/2013 (1)   11/24/2013   Form 3 to be filed on 12/31/2015
Qin Changjian   11/14/2013 (2)   11/24/2013   Form 3 to be filed on 12/31/2015
James Mengdong Tan   02/13/2015(3)    02/23/2015   Form 3 to be filed on 12/31/2015
Liew Kwong Yeow   06/30/2015(4)    07/10/2015   Form 3 to be filed on 12/31/2015

 

(1) Date of appointment as an officer and director of the Company.
   
(2) Date of appointment as a director of the Company.
   
(3) Date of appointment as a director of the Company.
   
(4) Date of appointment as a director of the Company.

 

ITEM 11. EXECUTIVE COMPENSATION

 

The following table sets forth all compensation earned or awarded by our Chief Executive Officer, Chief Financial Officer and other “named executive officers” for our last two completed fiscal years:

 

Name and

Principal Position

    Year      

Salary

($)

     

Bonus

($)

     

Stock

Awards

($)

     

Option

Awards

($)

   

Non-Equity

Incentive

Plan

Compensation

($)

   

Change in

Pensions Value and Non-Qualified Compensation Earnings

   

All

Other Compensation

($)

 

Total

($)

 
Ng Kian Yong (1)     2015                                          
President and CEO     2014                                          
                                                                 
James Mengdong Tan (2)     2015                                          
President and CEO     2014                                          

 

(1) Mr. Ng was the Company’s President and CEO from November 14, 2013 to February 13, 2015.
   
(2) Ms. Tan is the Company’s President, CEO and Director since February 13, 2015.  

 

  22  

 

 

The Company does not have an employment agreement with Mr. Tan. Mr. Tan has not received any compensation during the fiscal year of 2015. We do not provide any employee benefit programs to our employees other than a periodic grant of warrants.  

 

Outstanding Equity Awards at Fiscal Year-End

 

No unexercised options or warrants were held by any of our named executive officers at September 30, 2015. No equity awards were made during the fiscal year ended September 30, 2015.

 

Director Compensation

 

The following table sets forth the compensation paid to our directors during the years ended September 30, 2015, and 2014.

 

DIRECTOR COMPENSATION
 
Name and Position   Year  

Fees Earned or

Paid in Cash

($)

   

Option

Awards

($)

   

All Other
Compensation

($)

   

Total

($)

 
                             
Ng Kian Yong (1)   2015     0       0       0       0  
    2014     0       0       0       0  
                                     
Qin Chang Jian (2)   2015     0       0       0       0  
    2014     0       0       0       0  
                                     
James Mengdong Tan (3)   2015     0       0       0       0  
    2014     0       0       0       0  
                                     
Liew Kwong Yeow (4)   2015     0       0       0       0  
    2014     0       0       0       0  

  

(1) Mr. Ng served as the Company’s director from November 14, 2013 to February 13, 2015.
   
(2) Mr. Qin served as the Company’s director from November 14, 2013 to June 30, 2015.
   
(3) Mr. Tan is serving as the Company’s director since February 13, 2015 .
   
(4) Mr. Yeow is serving as the Company’s director since June 30, 2015.

 

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ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of the date herein by (i) each stockholder known by the Company to be the beneficial owner of more than 5% of the Company's Common Stock and (ii) by the directors and executive officers of the Company. The person or company named in the table has sole voting and investment power with respect to the shares beneficially owned.

 

Name of
Beneficial Owner
  Positions with
the Company
  Title of Class   Amount and 
Nature
of Beneficial
 Ownership (1)
    Percent of
Class (2)
 
Officers and Directors

James Mengdong Tan(3)

Room 2001, Building B,

KingKey 100, Hongbao Road, Luohu District, Shenzhen

518000, China

  CEO and Director   Common Stock, $0.001 par value     119,280,000       55.5 %
                         

Liew Kwong Yeow

Room 2001, Building B,

KingKey 100, Hongbao Road, Luohu District, Shenzhen

518000, China

  Director   Common Stock, $0.001 par value     0       0 %
                         
All officers and directors as a group
(2 persons named above)
      Common Stock, $0.001 par value     119,280,000       55.5 %
5% Securities Holders                        

Good Eastern Investment Holding Limited (4)

10 Anson Road #35-11 International Plaza

Singapore 079903

      Common Stock, $0.001 par value     39,960,000       18.6 %
                         

Moxian China Limited

Unit No 304, New East Ocean Centre, No 9

Science Museum Road, T.S.T., Kowloon, Hong Kong

      Common Stock, $0.001 par value     70,410,162       32.8 %
                         

Stellar Elite Limited (5)

Unit No 304, New East Ocean Centre, No 9

Science Museum Road, T.S.T., Kowloon, Hong Kong

      Common Stock, $0.001 par value     79,320,000       36.9 %

 

(1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Beneficial ownership also includes shares of stock subject to options and warrants currently exercisable or exercisable within 60 days of the date of this table. In determining the percent of common stock owned by a person or entity as of the date of this Report, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities, and (b) the denominator is the sum of (i) the total shares of common stock outstanding on as of the date of this Annual Report (214,666,944 shares), and (ii) t he total number of shares that the beneficial owner may acquire upon exercise of the derivative securities.  Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.
   
(2) Based on the total issued and outstanding shares of 214,666,944 as of the date of this Report.
   
(3) Includes (i) 79,320,000 shares of Common Stock that Stellar Elite Limited owns and (ii) 39,960,000 shares of Common Stock that Good Eastern Investment Holding Limited owns. James Mengdong Tan, the Company’s Chief Executive Officer and President, is the Chief Executive Officer of Amazing Wave Limited, a Samoa company and the sole shareholder of Stellar Elite Limited. James Mengdong Tan is also the sole member and director of Good Eastern Investment Holding Limited.
   
(4) James Mengdong Tan, the Company’s Chief Executive Officer and President, is the sole member and director of Good Eastern Investment Holding Limited.
   
(5) James Mengdong Tan, the Company’s Chief Executive Officer and President, is the Chief Executive Officer of Amazing Wave Limited, a Samoa company and the sole shareholder of Stellar Elite Limited.

 

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ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE

 

Except as set forth below, we have not been a party to any transaction since October 1, 2012, 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 in 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.

 

Shareholder Loan

 

On May 4, 2015, Moxian Malaysia and Jet Key Limited (“Jet Key”), a shareholder of the Company, entered into a loan agreement whereby Jet Key agreed to provide a loan to Moxian Malaysia in an aggregate of $122,144 without any interests and with a term of repayment of 12 months.

 

On June 30, 2015, Moxian Shenzhen and Shenzhen Bayi Consulting Co. Ltd. (“Bayi”), a shareholder of the Company, entered into a loan agreement whereby Bayi agreed to provide a loan to Moxian Shenzhen in an aggregate of RMB 6,100,000 (approximately $998,559) without any interests and with a term of repayment of 12 months, as previously disclosed in the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2015, filed with the Securities and Exchange Commission on August 14, 2015.

 

On September 30, 2015, Moxian Shenzhen and Bayi entered into a loan agreement whereby Bayi agreed to provide a loan to Moxian Shenzhen in an aggregate of RMB2,080,000 (approximately $332,480) without any interests and with a term of repayment of 12 months.

 

The above transactions were proceeded without consent of the Board of Directors.

 

Service and Consultancy Agreement with REBL

 

On March 1, 2014, 8i Capital Limited (“8i Capital”), a company incorporated under the laws of the British Virgin Islands and of which our CEO, James Mengdong Tan is a sole member and director, and SCA Capital Limited (“SCA Capital”), a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of REBL, of which Mr. Tan is a promoter as that term is defined under Rule 405 of Regulation C promulgated under the Securities Act, entered into a service and consultancy agreement (the “Consultancy Agreement”). Under the Consultancy Agreement, 8i Capital agreed to provide corporate service to SCA Capital to assist it with the reverse merger acquisition of a listing company in the OTCQB (“Listco,”) matters related to listing on OTCQB, and general business advisory service. In consideration, SCA Capital agreed to (i) pay $500,000 in total to 8i Capital, (ii) issue 5% of total shares of the Listco on a fully-diluted basis after the reverse acquisition, and (iii) pay a retainer fee of $240,000 to 8i Capital per year.

 

In February 2013, Mr. Tan assisted in the negotiation of the acquisition of approximately 77.26% of the then outstanding shares of REBL by three purchasers from the former shareholder of REBL. Mr. Tan also later offered consulting and business advisory services to REBL in connection with REBL’s reverse acquisition of Moxian BVI and its operating business in April 2013. In February 2014, Mr. Tan assisted in structuring the sale of all of the equity interests of Moxian BVI, a former direct subsidiary of REBL, and the license of the intellectual property rights of REBL to the Company pursuant to a License and Acquisition Agreement.

 

In January 2015, Mr. Tan, through 8i Capital, assisted with the share exchange transaction among REBL, Rebel Holdings Limited, a company incorporated under the laws of the British Virgin Islands and a wholly-owned subsidiary of REBL (“Rebel FC”) and the Rebel FC Stockholder.

 

8i Capital also provided business advisory service to REBL regarding the sale of Moxian IP Samoa to the Company in January 2015 and the issuance of Rebel Note by the Company, which was converted into 7,782,000 shares of the Company’s Common Stock by September 30, 2015.

 

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, Dominic K.F. Chan & Co., for the fiscal years indicated.

 

ACCOUNTING FEES AND SERVICES   2015     2014  
             
Audit fees   $ 45,500     $ 35,000  
Audit-related fees     -       -  
Tax fees   $ -     $ -  
All other fees     -       -  
                 
Total   $ 45,500     $ 35,000  

 

The category of  “Audit fees”  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.

 

All above audit services and audit-related services were pre-approved by the Board of Directors, which concluded that the provision of such services by Dominic K.F. Chan & Co. was compatible with the maintenance of the firm’s independence in the conduct of its audits.

 

  25  

 

 

PART IV

 

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

  (a) Financial Statements

 

The following are filed as part of this report:

 

Financial Statements

 

The following financial statements of Moxian, Inc. and Report of Independent Registered Public Accounting Firm are presented in the “F” pages of this Report:

 

     Page
     
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   F-1
     
CONSOLIDATED FINANCIAL STATEMENTS    
     
Audited Consolidated Balance Sheets as of September 30, 2015 and September 30, 2014   F-2
     
Audited Consolidated Statements of Operations for the year ended September 30, 2015, for the Period from October 12, 2010 (inception) to September 30, 2014, and for the Period from October 12, 2010 (inception) to September 30, 2015   F-3
     
Audited Consolidated Statements of Changes in Stockholders’ Deficiency for the Period from October 12, 2010 (inception) to September 30, 2015   F-4
     
Audited Consolidated Statements of Cash Flows for the year ended September 30, 2015, for the Period from October 12,2010 (inception) to September 30, 2015, and for the Period from October 12, 2010 (inception) to September 30, 2014   F-5
     
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS   F-6 to F-16

 

  26  

 

  (b) Exhibits

 

The following exhibits are filed or “furnished” herewith:

 

Exhibit

Number

  Description
     
3.1   Articles of Incorporation of the Company filed on October 12, 2010 (incorporated by reference herein to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 filed with the SEC on March 30, 2011).
     
3.2   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).
     
3.3   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).
     
3.4   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).
     
4.1   Specimen Stock Certificate of Common Stock of Moxian, Inc.*
     
10.1   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).
     
10.2   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).
     
10.3   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).
     
10.4   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)
     
10.5   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.*
     
10.6   Loan Agreement dated May 4, 2015 by and between Jet Key Limited and Moxian Malaysia SDN. BHD.*
     
10.7   Loan Agreement by and between the Moxian Technologies (Shenzhen) Co., Ltd., and Shenzhen Bayi Consulting Co. Ltd. dated June 30, 2015*.
     
10.8   Loan Agreement by and between Moxian Technologies (Shenzhen) Co., Ltd., and Shenzhen Bayi Consulting Co. Ltd. dated September 30, 2015.*
     
21.1   List of Subsidiaries.*
     
31.1   Certification of Chief Executive Officer and Chief Accounting Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
     
32.1   Certification of Chief Executive Officer and Chief Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
     
101.INS   XBRL Instance Document.*
     
101.SCH   XBRL Taxonomy Extension Schema Document.*
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document.*
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document.*
     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document.*
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document.*

 

* Filed herewith.
   

  27  

 

 

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.

 

MOXIAN, INC.
     
Date: December 22, 2015  By: /s/ James Mengdong Tan
  Name: James Mengdong Tan
  Title:  

Chief Executive 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.

 

/s/ Liew Kwong Yeow   Date: December 22, 2015
Liew Kwong Yeow    
Director    
     
/s/ James Mengdong Tan   Date: December 22, 2015
James Mengdong Tan       
CEO, President, Treasurer, Secretary, Director    

 

  28  

 

 

MOXIAN, INC. (formerly known as Moxian China, Inc.)

(A CORPORATION IN THE DEVELOPMENT STAGE)

 

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014

(Stated in US Dollars)

   

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

  PAGES
   
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-1
   
AUDITED CONSOLIDATED BALANCE SHEETS F-2
   
AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME F-3
   
AUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY F-4
   
AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS F-5
   
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS F-6 – F-16

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To: The Board of Directors and Shareholders of
  Moxian, Inc.

 

We have audited the accompanying consolidated balance sheets of Moxian, Inc. and its subsidiaries (collectively, the “Company”) as of September 30, 2015 and 2014, and the related consolidated statements of operations and comprehensive income, shareholders' equity and cash flows for each of the years ended September 30, 2015 and 2014. These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

 

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2015 and 2014, and the results of its operations and comprehensive income, and its cash flows for each of the years ended September 30, 2015 and 2014 in conformity with accounting principles generally accepted in the United States of America.

 

Dominic K.F. Chan & Co

Certified Public Accountants

Hong Kong, December 15, 2015

 

  F- 1  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

AUDITED CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

 

    As of  
    September 30, 2015     September 30, 2014  
ASSETS            
CURRENT ASSETS            
Cash and cash equivalents   $ 2,398,713     $ 1,770,196  
Prepayments, deposits and other receivables     1,042,727       741,645  
Inventory     38,310       -  
Deferred tax assets     1,457,460       -  
Total current assets     4,937,210       2,511,841  
Property and equipment, net (Note 3)     2,941,562       348,669  
Intangible assets  (Note 9)     6,603,912       -  
TOTAL ASSETS   $ 14,482,684     $ 2,860,510  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
CURRENT LIABILITIES                
Accruals and other payables   $ 773,852     $ 295,601  
Payable for acquisition  (Note 8)     -       1,000,000  
Loans from shareholders  (Note 4)     1,462,525       6,151,932  
Subscription payment     5,505,915       -  
Total current liabilities     7,742,292       7,447,533  
Total liabilities   $ 7,742,292     $ 7,447,533  
                 
STOCKHOLDERS’ EQUITY                
Capital stock  (Note 5)                
Preferred stock, $0.001 par value, authorized: 100,000,000 shares. Nil shares issued and outstanding as of September 30, 2015 and September 30, 2014 respectively     -       -  
Common stock, $0.001 par value, authorized: 500,000,000 shares. 214,666,944 shares and 198,300,000 shares issued and outstanding as of September 30, 2015 and September 30, 2014 respectively     214,667       198,300  
Additional paid-in capital     16,350,577       162,914  
Deficit accumulated during the development stage     (9,939,511 )     (5,001,166 )
Accumulated other comprehensive income     114,659       52,929  
Total stockholders’ equity/ (deficit)     6,740,392       (4,587,023)  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 14,482,684     $ 2,860,510  

 

See accompanying notes to consolidated financial statements

 

  F- 2  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

AUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Stated in US Dollars)

 

                For the period  
    For the     For the     from Inception  
    Year     Year     October 12,  
    Ended     Ended     2010 to  
    September 30, 2015     September 30, 2014     September 30, 2015  
                   
Revenues, net   $ 83,870     $ 56,122     $ 139,992  
                         
Cost and expenses                        
Cost of sales     25,269       15,514       48,694  
Depreciation and amortization expenses     1,012,849       78,571       1,091,420  
Selling, general and administrative expenses     5,443,815       2,176,963       7,822,691  
Impairment of goodwill     -       2,600,315       2,600,315  
Loss from operations     (6,398,063 )     (4,815,241 )     (11,423,128 )
                         
Interest expenses     -       -       -  
Interest income     2,258       23,899       26,157  
Loss before income tax     (6,395,805 )     (4,791,342 )     (11,396,971 )
                         
Income tax expenses     1,457,460       -       1,457,460  
Net loss     (4,938,345 )     (4,791,342 )     (9,939,511 )
                         
Foreign currency translation adjustments     61,730       52,929       114,659  
Comprehensive loss   $ (4,876,615 )   $ (4,738,413 )   $ (9,824,852 )
                         
Earnings per share (note 6)                        
                         
Basic and diluted loss per common share   $ (0.02 )   $ (0.02 )        
                         
Basic and diluted weighted average common shares outstanding     199,996,173       198,300,000          
                         

 

See accompanying notes to consolidated financial statements

 

  F- 3  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

AUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’EQUITY

(Stated in US Dollars)

 

                Accumulated     Accumulated        
          Additional     deficit     other        
    Common Stock*     paid-in     development     comprehensive        
    Shares     Amount     Capital     Stage     income     Total  
                                     
Balance at inception,
October 12, 2010
                                   
Common shares issued -                                    
Founder for property and equipment     186,000,000     $ 186,000     $ -     $ (182,900 )   $ -     $ 3,100  
Additional paid in capital by founder     -       -       -       169       -       169  
Net loss     -       -       -       (21 )     -       (21 )
                                     
Balance, December 31, 2010     186,000,000     $ 186,000     $ -     $ (182,752 )   $ -     $ 3,248  
                                                 
Additional paid in capital by founder     -       -       -       2,146       -       2,146  
Issue of common stock     12,300,000       12,300       -       28,700       -       41,000  
Net loss     -       -       -       (12,606 )     -       (12,606 )
                                     
Balance, December 31, 2011     198,300,000     $ 198,300     $ -     $ (164,512 )   $ -     $ 33,788  
                                                 
Net loss     -       -       -       (33,572 )     -       (33,572 )
                                     
Balance, December 31, 2012     198,300,000     $ 198,300     $ -     $ (198,084 )   $ -     $ 216  
                                                 
Additional paid in capital by founder     -       -       -       2,950       -       2,950  
Net loss     -       -       -       (14,690 )     -       (14,690 )
                                     
Balance, September 30, 2013     198,300,000     $ 198,300     $ -     $ (209,824 )   $ -     $ (11,524 )
                                                 
Inclusion of Moyi (See Note 1 )     -       -       162,914       -       -       162,914  
Net loss     -       -       -       (4,791,342 )     -       (4,791,342 )
Foreign currency adjustment     -       -       -       -       52,929       52,929  
                                     
Balance, September 30, 2014     198,300,000     $ 198,300     $ 162,914     $ (5,001,166 )   $ 52,929     $ (4,587,023 )
                                                 
Issuance of shares     16,366,944       16,367       16,350,577       -       -       16,366,944  
Inclusion of Moyi (See Note 1 )     -       -       (162,914 )     -       -       (162,914 )
Net loss     -       -       -       (4,938,345 )     -       (4,938,345 )
Foreign currency adjustment     -       -       -       -       61,730       61,730  
                                     
Balance, September 30, 2015     214,666,944     $ 214,667     $ 16,350,577     $ (9,939,511 )   $ 114,659     $ 6,740,392  

 

*The number of shares of common stock has been retroactively restated to reflect the 60-for-1 forward stock split effected on December 13, 2013.

 

See accompanying notes to consolidated financial statements

 

  F- 4  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in US Dollars)

 

                For the period  
                from Inception  
    Year     Year     October 12,  
    Ended     Ended     2010 to  
    September 30, 2015     September 30, 2014     September 30, 2015  
OPERATING ACTIVITIES                  
Net loss   $ (4,938,345 )   $ (4,791,342 )   $ (9,939,511 )
Depreciation and amortization expense     1,012,849       78,571       1,091,420  
Impairment of goodwill     -       2,600,315       2,600,315  
Changes in operating assets and liabilities:                        
Increase in deposits, prepayments and other receivables     (317,016 )     (167,032 )     (760,235 )
Increase in inventories     (22,375 )     -       (21,246 )
Increase in deferred tax assets     (1,457,460 )     -       (1,457,460 )
Increase in accruals and other payables     478,251       173,159       728,062  
Net cash used in operating activities     (5,244,096 )     (2,106,329 )     (7,758,655 )
                         
INVESTING ACTIVITIES                        
Acquisition of property and equipment     (2,931,838 )     (229,723 )     (2,975,767 )
Acquisition of Intangible asset     (527,932 )     -       (527,932 )
Net cash inflow on acquisition of subsidiaries (Note 9)     -       897,453       897,453  
Net cash (used in) provided by investing activities     (3,459,770 )     667,730       (2,606,246 )
                         
FINANCING ACTIVITIES                        
Subscription payment     5,505,915               5,505,915  
Loan borrowings     3,730,113       3,155,839       7,116,045  
Capital stock issued for cash     -       -       49,365  
Net cash provided by financing activities     9,236,028       3,155,839       12,671,325  
                         
Effect of foreign currency translation     96,355       52,928       92,289  
                         
Net increase in cash and cash equivalents     628,517       1,770,168       2,398,713  
Cash and cash equivalents, beginning of year     1,770,196       28       -  
Cash and cash equivalents, end of year   $ 2,398,713     $ 1,770,196     $ 2,398,713  
                         
Supplemental cash flow disclosures:                        
Cash paid for interest expense   $ -     $ -     $ -  
Cash paid for income taxes   $ -     $ -     $ -  
                         
Major items for non-cash transaction:                        
Issuance of shares (Note 5)   $ 16,366,944     $ -     $ 16,366,944  
IP rights acquired through business combination (Note 8)   $ 6,782,000     $ -     $ 6,782,000  

 

See accompanying notes to consolidated financial statements

 

  F- 5  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

1. Organization and nature of operations

 

Moxian, Inc. (formerly known as Moxian China, Inc., hereinafter referred as “Moxian,” together with its subsidiaries, 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.

 

On February 17, 2014, the Company incorporated Moxian CN Group Limited (“Moxian CN Samoa”) under the laws of Independent State of Samoa.

 

On February 21, 2014, the Company completed the acquisition of Moxian Group Limited (“Moxian BVI”) and its subsidiaries from Rebel Group, Inc., a Florida Corporation (“REBL”) pursuant to a License and Acquisition Agreement (the “License and Acquisition Agreement”).

 

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 (Hong Kong) Limited (“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 Technologies (Shenzhen) Co., Ltd. (“Moxian Shenzhen”) and Moxian Malaysia SDN BHD (“Moxian Malaysia”).

 

Moxian Shenzhen was invested and wholly owned by Moxian HK. Moxian Shenzhen was incorporated on April 8, 2013 and was 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 is conducting its business in IT services and media advertising industry.

 

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 were a wholly-owned subsidiary of Moxian Shenzhen.

 

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”). 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.

 

The Company is in the development stage as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915. Among the disclosures required by FASB ASC 915 are that the Company’s unaudited consolidated financial statements be identified as those of a development stage company, and that the statements of earnings, retained earnings and stockholders’ equity and cash flows disclose activity since the date of the Company’s inception. The fiscal year end is September 30.

 

  F- 6  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

1. Organization and nature of operations (Continued)

 

The Company's audited consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated significant revenue since inception and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. Since October 12, 2010 (inception), the Company has generated revenue of $139,992 and has incurred an accumulated deficit of $9,939,511.

 

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 continue as a going concern is dependent upon its ability to develop additional sources of capital, develop apps and websites, generate servicing income, and ultimately, achieve profitable operations. The accompanying unaudited consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

2. Summary of principal accounting policies

 

Basis of presentation

 

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and reflect the activities of the following subsidiaries and VIE. All material intercompany transactions and balances have been eliminated in the consolidation.

 

In accordance with the interpretation of Generally Accepted Accounting Principles (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.

 

ASC 810 (Financial Accounting Standards Board (“FASB”) Interpretation Number (“FIN”) 46 (revised December 2003), “Consolidation of Variable Interest Entities, and Interpretation of ARB No. 51” (“FIN 46R”), addresses whether certain types of entities referred to as variable interest entities (“VIEs”), should be unaudited consolidated in a company’s unaudited 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 accordance with the provisions of ASC 810, the Company has determined that Moyi is a VIE and that the Company is the primary beneficiary, and accordingly, the financial statements of Moyi are unaudited consolidated into the financial statements of the Company.

 

Revenue recognition

 

Revenue are 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.

 

  F- 7  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

2. Summary of principal accounting policies (Continued)

 

Use of estimates

 

The preparation of the unaudited consolidated financial statements in conformity with generally accepted accounting principles 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 unaudited consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Income taxes

 

The Company utilizes FASB Accounting Standard Codification Topic 740 (“ASC 740”) “Income taxes” (formerly known as SFAS No. 109, "Accounting for 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 unaudited 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” (formerly known as Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of Statement of Financial Accounting Standards No. 109 (“FIN 48”)) clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in the unaudited consolidated 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 statements of operations. The adoption of ASC 740 did not have a significant effect on the unaudited consolidated financial statements.

 

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.

 

Fair value of financial instruments

 

The carrying values of the Company’s financial instruments, including cash and cash equivalents, trade and other receivables, deposits, trade and other payables approximate their fair values due to the short-term maturity of such instruments. The carrying amounts of borrowings approximate their fair values because the applicable interest rates approximate current market rates.

 

  F- 8  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

2. Summary of principal accounting policies (Continued)

 

Earnings per share

 

Basic earnings 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.  The average market price during the year is used to compute equivalent shares.

 

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.

 

Plant and equipment

 

Plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

 

  Computers 3 years
  Office equipment 3 years
  Furniture and fixtures 3 years
  Leasehold improvements Shorter of estimated useful life or term of lease

 

Intangible assets

 

Intellectual property rights and other intangible assets are initially measured based on their fair values. Intellectual property rights and other intangible assets are being amortized on a straight-line basis over a period of 3-10 years and are stated net of accumulated amortization of $706,020 at September 30, 2015 and nil at September 30, 2014. Amortization expense charged to operations was $706,020 for 2015 and nil for 2014.

 

  F- 9  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

2. Summary of principal accounting policies (continued)

 

Comprehensive income

 

The Company has adopted FASB Accounting Standard Codification Topic 220 (“ASC 220”) “Comprehensive income” (formerly known as SFAS No. 130, “Reporting Comprehensive Income”), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments of the Company.

 

Recent accounting pronouncements

 

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.

 

3. Property and equipment, net

 

      As of  
      September 30, 2015     September 30, 2014  
               
  Computers   $ 227,886     $ 213,600  
  Office equipment     2,129,199       68,623  
  Furniture and fixtures     22,752       32,011  
  Construction in progress     796,996       -  
  Leasehold improvements     193,225       156,101  
  Total property and equipment     3,370,058       470,335  
  Less:  Accumulated depreciation     (428,496 )     (121,666 )
  Total property and equipment, net   $ 2,941,562     $ 348,669  

 

The depreciation expenses for the years ended September 30, 2015 and 2014 were $306,829 and $78,571, respectively.

 

  F- 10  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

4. Loans from shareholders

 

The loans are made to Moxian HK, Moxian Shenzhen, Moyi, and Moxian Malaysia are unsecured, interest free and will be due and payable in 12 months. Details of the loans are analyzed as follows:

 

      As of  
  Repayable   September 30, 2015     September 30, 2014  
               
  Within 1 month   $ -     $ -  
  1 to 3 months     -       -  
  More than 3 months but less than 12 months     1,462,525       6,151,932  
      $ 1,462,525     $ 6,151,932  

 

On May 4, 2015, Moxian Malaysia and Jet Key Limited (“Jet Key”), a shareholder of the Company, entered into a loan agreement whereby Jet Key agreed to provide a loan to Moxian Malaysia in an aggregate of $122,144 without any interests and with a term of repayment of 12 months. 

 

On June 30, 2015, Moxian Shenzhen and Shenzhen Bayi Consulting Co. Ltd. (“Bayi”), a shareholder of the Company, entered into a loan agreement whereby Bayi agreed to provide a loan to Moxian Shenzhen in an aggregate of RMB6,100,000 (approximately $998,559) without any interests and with a term of repayment of 12 months, as previously disclosed in the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2015, filed with the Securities and Exchange Commission on August 14, 2015.

 

On September 30, 2015, Moxian Shenzhen and Bayi entered into a loan agreement a loan agreement whereby Bayi agreed to provide a loan to Moxian Shenzhen in an aggregate of RMB2,080,000 (approximately $332,480) without any interests and with a term of repayment of 12 months.

 

5. Shareholders’ equity

 

As of the date of this annual report, the number of total outstanding shares is 214,666,944 shares of Common Stock, par value $.001 per share (“Common Stock”) and nil share of Preferred Stock, par value $.001per share (“Preferred Stock”).

 

As previously disclosed in the Quarterly Report on Form 10-Q for the period ended March 31, 2015 filed with the Securities and Exchange Commission on May 15, 2015, the Company entered into a subscription agreement (“Zhongtou Subscription Agreement”) with Zhongtou Huifeng Investment Management (Beijing) Co. Ltd. (“Zhongtou”) on April 24, 2015, whereby we agreed to sell an aggregate of 8,169,000 shares of the Company’s Common Stock at a per share price of $1.00 for gross proceeds of $8,190,000 (approximately RMB50,000,000) and to issue to Zhongtou for no additional consideration a warrant (the “Warrant”) to purchase in the aggregate of 32,000,000 shares (“Warrant Shares”) of Common Stock at an exercise price of $2.00 per share, exercisable on or prior to July 31, 2015. On June 4, 2015, the Company and Zhongtou entered into a Termination Agreement to terminate the Zhongtou Subscription Agreement as Zhongtou’s principals have determined to make the investment described in the Zhongtou Subscription Agreement through a different entity, Beijing Xinhua Huifeng Equity Investment Center (Limited Partnership) (“Xinhua”).

 

On June 4, 2015, the Company and Xinhua entered into a new Subscription Agreement (“Xinhua Subscription Agreement”) on substantially the same terms as the Zhongtou Subscription Agreement (the “Transaction”). Pursuant to the Xinhua Subscription Agreement, if the Company fails to contract with 25,000 new paying merchants by September 30, 2016, the Company shall issue an additional number of shares of Common Stock to Xinhua, equal to 50% of the accumulated number of Warrant Shares exercised and acquired by Xinhua as of September 30, 2016, for no additional consideration (“Make Good Provision”). The Make Good Provision will be available only if Xinhua has exercised the Warrant and acquired more than 16,000,000 Warrant Shares (the “Condition”). Further, the Company shall issue 4,000,000 shares of Common Stock to Xinhua for no additional consideration if the Company fails to publish its full working version of the Moxian mobile application version 2.0 by September 30, 2015, or if the Company fails to uplist to a national securities exchange in the U.S. by June 30, 2017. Xinhua shall also have the right to nominate (i) one member of the Company’s accounting department; and (ii) one member of the board of directors provided that the Condition has been met.

 

On August 13, 2015, Xinhua and the Company entered into an Amendment Agreement (the “Amendment Agreement”) to amend certain terms under the Xinhua Subscription Agreement between the Company and Xinhua dated June 4, 2015 to September 30, 2015. Pursuant to the Xinhua Subscription Agreement, the Company will issue 8,190,000 shares of the Company’s Common Stock to Xinhua for $8,190,000 and grant the warrant (the “Warrant”) to purchase up to 32,000,000 shares of the Company’s Common Stock on or before July 31, 2015 (the “Expiration Date”)(such transaction, the “Transaction”). Pursuant to the Amendment Agreement (the “First Amendment Agreement”), the closing date of the Transaction was extended to September 30, 2015 and the Expiration Date of the Warrant was extended to September 30, 2015. As of the date of this Annual Report, the Transaction has not closed yet and there are no shares or warrants issued to Xinhua.

   

  F- 11  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

5. Shareholders’ equity (continued)

 

On August 14, 2015, the Company issued an aggregate of 8,584,944 shares of Common Stock to Ace Keen Limited, Jet Key Limited, Morolling International HK Limited, and Shenzhen Bayi Consulting Co., Ltd (the “Noteholders”) as a result of the conversion of $8,584,944 of convertible promissory notes held by the Noteholders at $1.00 per share.

 

On August 14, 2015, due to the VWAP of 30 trading day prior to August 14, 2015 is higher than $1.00, which triggered the clause of conversion under the convertible promissory note (the “Rebel Note”) in the principal amount of $7,782,000 issued to REBL dated January 30, 2015, the Company provided a notice of conversion to REBL and elected to convert the amount of $3,891,000 under the Rebel Note into 3,891,000 shares of the Company’s Common Stock at the conversion price of $1.00.

 

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 Common Stock (“September Conversion”). After the August Conversion and September Conversion, the entire Rebel Note was converted into the total of 7,782,000 shares of the Common Stock without any balance outstanding.

 

As of September 30, 2015, there were no warrants or options outstanding to acquire any additional shares of Common Stock of the Company.

 

6. Earnings per share

 

      For the years ended
September 30,
 
      2015     2014  
               
  Net loss attributable to ordinary shareholders for computing basic net loss per ordinary share   $ (4,938,345 )   $ (4,791,342 )
                   
  Weighted average number of common shares outstanding – Basic and diluted     199,996,173       198,300,000  
                   
  Basic earnings per share   $ (0.02 )     (0.02 )
  Diluted earnings per share   $ (0.02 )     (0.02 )

 

  F- 12  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

7 Income taxes

 

The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the net operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. For the period October 12, 2010 (date of inception) through June 30, 2015, the Company incurred losses, resulting from operating activities, which result in deferred tax assets at the effective statutory rates. The deferred tax asset has been off-set by an equal valuation allowance.

 

Moxian BVI is incorporated in the British Virgin Islands. Moxian BVI did not generate taxable income in the British Virgin Islands for the period from July 3, 2012 (date of inception) to September 30, 2015.

 

Moxian HK was incorporated in Hong Kong and is subject to Hong Kong profits tax at 16.5%. No provision for Hong Kong income or profit tax has been made as the Company has no assessable profit for the period from January 18, 2013 (date of inception) to September 30, 2015. The cumulative tax losses will represent a deferred tax asset.

 

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, 2015.

 

Moxian Malaysia was incorporated in Malaysia. Moxian Malaysia did not generate taxable income in Malaysia for the period from March 1, 2013 (date of inception) to September 30, 2015.

 

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, 2015.

 

Moxian IP Samoa was incorporated in Samoa. Moxian IP Samoa did not generate taxable income in Samoa for the period from January 30, 2015 (date of acquisition) to September 30, 2015.

 

Moxian CN Samoa was incorporated in Samoa. Moxian CN Samoa did not generate taxable income in Samoa for the period from February 17, 2014 (date of inception) to September 30, 2015.

 

As stipulated by the Taxation Law of PRC, the Company is subject to PRC income tax rate of 25%.

 

Income tax expenses for the years ended September 30, 2015 and 2014 are summarized as follows:

 

      September 30,  
      2015     2014  
               
  Current   $ -     $ -  
  Deferred tax benefit     1,457,460       -  
      $ 1,457,460     $ -  

 

A reconciliation between taxes computed at the PRC statutory rate of 25% and the Company’s effective tax rate for the years ended September 30, 2015 and 2014 is as follows:

 

      September 30,  
      2015     2014  
               
  At the PRC statutory rate of 25%   $ -     $ -  
  Valuation allowances     1,457,460       -  
      $ 1,457,460     $ -  

 

  F- 13  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

7. Income taxes (Continued)

 

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the years ended December 31, 2014 and 2013, the Company had no unrecognized tax benefits.

 

The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company will classify interest and penalties related to income tax matters, if any, in income tax expense.

 

Deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. The tax effects of temporary differences that give rise to the following approximate deferred tax assets and liabilities as of September 30, 2015 and 2014 are presented below.

 

      September 30,  
      2015     2014  
               
  Deferred tax assets                
  Operating loss carry forward   $ 1,457,460     $ -  
      $ 1,457,460     $ -  

 

The Company had net operating losses carry forward of $5,829,838 as of September 30, 2015 which will expire on various dates between September 30, 2018 and September 30, 2019.

 

8. Acquisition

 

On February 21, 2014, the Company entered into a License and Acquisition Agreement with REBL, whereby the Company (i) acquired all the equity interests of Moxian BVI, and (ii) obtained the license to use the intellectual property rights (as define below) of REBL. Pursuant to the License and Acquisition Agreement, REBL agreed to sell, convey, and transfer 100% of the equity interests of Moxian BVI to Moxian CN Samoa, a newly incorporated wholly-owned subsidiary of the Company, in consideration of an aggregate of $1,000,000. 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”). In exchange for such License, the Company agreed to pay to REBL: (i) $1,000,000 as a license maintenance royalty each year commencing from the second year from the date of the agreement; and (ii) 3% of the gross profit of distribution and sale of REBL products and services as an earned royalty. Pursuant to the License and Acquisition Agreement, the Company has the right to acquire the new IP Rights that are developed by REBL and sub-license such rights to a third party. The Company also has the obligation to develop the social media market in the Licensed Territory of REBL products and services.

 

On January 30, 2015, Company entered into an Equity Transfer Agreement with REBL to acquire from REBL 100% of the equity interests of Moxian IP Samoa for $6,782,000. Moxian IP Samoa owns all the intellectual property rights IP 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.

 

  F- 14  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

8. Acquisition

 

      2015  
           
  Intellectual property rights   $ 6,782,000  

 

9. Intangible assets

 

As of September 30, 2015 and 2014, the Company has the following amounts related to intangible assets:

 

     

September 30,

2015
Gross

          September 30, 2014
Gross
       
      Carrying Amount     Accumulated Amortization     Carrying Amount     Accumulated Amortization  
  Amortized intangible assets:                        
  IP rights   $ 6,782,000     $ (678,200 )   $ -     $ -  
  Other intangible assets     527,932       (27,820 )     -       -  
  Total   $ 7,309,932     $ (706,020 )   $ -     $ -  

 

No significant residual value is estimated for these intangible assets. Aggregate amortization expense for the years ended September 30, 2015, and September 30, 2014, totaled $706,020 and nil, respectively. The following table represents the total estimated amortization of intangible assets for the five succeeding years:

 

  For the Year Ending September 30   Estimated Amortization Expense  
  2016   $ 854,200  
  2017     854,200  
  2018     854,200  
  2019     678,200  
  2020 and thereafter     3,391,000  

 

Intangible assets consist of the following at September 30:

 

      2015     2014  
  IP rights   $ 6,782,000     $ -  
  Other intangible assets     527,932       -  
      $ 7,309,932     $ -  
  Less: accumulated amortization     (706,020 )     -  
  Net intangible assets   $ 6,603,912     $ -  

 

Amortization of intangible assets amounted to $706,020 for 2015 and nil for 2014.

 

  F- 15  

 

 

MOXIAN, INC.

(A DEVELOPMENT STAGE COMPANY)

 

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Stated in US Dollars)

 

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, 2015 and 2014 were $1,548,958 and $134,436 respectively.

 

As of September 30, 2015, the Company was obligated under non-cancellable operating leases minimum rentals as follows:

 

  Twelve months ended September 30, 2015,      
  2016   $ 652,912  
  2017     546,037  
  2018     356,333  
  Thereafter     -  
  Total minimum lease payments   $ 1,555,282  

 

Legal Proceeding

 

There has been no legal proceeding in which the Company is a party for the year ended September 30, 2015.

 

11. Subsequent events

 

As of December 16, 2015, we entered into a Second Amendment Agreement to the Subscription Agreement (the “Second Amendment Agreement”) with Xinhua. Under the Second Amendment Agreement, the closing date of the transaction was extended to December 31, 2015 and the Expiration Date of the Warrant was extended to December 31, 2015 as well. As of the date of this Annual Report, the transaction has not closed yet and there are no shares or warrants issued to Xinhua.

 

Except the above, there were no events or transactions other than those disclosed in this report, if any, that would require recognition or disclosure in our consolidated financial statements for the year ended September 30, 2015.

 

 

F-16

 

Exhibit 4.1

 

 

Exhibit 10.5

 

SECOND AMENDMENT AGREEMENT

TO

SUBSCRIPTION AGREEMENT

 

THIS SECOND AMENDMENT AGREEMENT TO SUBSCRIPTION AGREEMENT (this “Agreement”) is made as of the 16th of December, 2015 by and between Moxian, Inc., a Nevada corporation (the “Company”), and Beijing Xinhua Huifeng Equity Investment Centre, a limited partnership formed under the laws of People’s Republic of China (“Xinhua”). Each of the capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Xinhua Subscription Agreement dated June 4, 2015 as defined below.

 

RECITALS:

 

WHEREAS , on April 24, 2015, the Company entered into a subscription agreement (“Zhongtou Subscription Agreement”) with Zhongtou Huifeng Investment Management (Beijing) Co. Ltd. (“Zhongtou”), whereby the Company agreed to sell 8,169,000 shares of the Company’s common stock par value $.001 per share (“Common Stock”) at a per share price of $1.00 for gross proceeds of $8,190,000 (approximately RMB50,000,000)(the “Purchase Price”) and to issue to Zhongtou for no additional consideration a warrant (the “Warrant”) to purchase 32,000,000 shares (“Warrant Shares”) of Common Stock at an exercise price of $2.00 per share, exercisable on or prior to July 31, 2015. On June 4, 2015, the Company and Zhongtou entered into a Termination Agreement to terminate the Zhongtou Subscription Agreement as Zhongtou’s principals determined to make the investment described in the Zhongtou Subscription Agreement through a different entity, Xinhua. Also on June 4, 2015, the Company and Xinhua entered into a new Subscription Agreement (“Xinhua Subscription Agreement”) on substantially the same terms as the Zhongtou Subscription Agreement (the “Transaction”), which is attached hereto as Exhibit A . Pursuant to the Xinhua Subscription Agreement, Xinhua was to pay the Purchase Price to the Company on or before May 31, 2015 (the “Closing Date”) and the Warrant was to be exercised by Xinhua on or before July 31, 2015 (the “Expiration Date”); and

 

WHEREAS, on August 13, 2015, Xinhua and the Company entered into an Amendment Agreement attached hereto as Exhibit B to extend the Closing Date of the Transaction to September 30, 2015 and the expiration date of the Warrant to September 30, 2015 (such amendments, the “First Amendment”); and

 

WHEREAS, the parties hereto desire to further amend the Xinhua Subscription Agreement as set forth herein.

 

NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

Section 1.           Amendment of the Xinhua Subscription Agreement .

 

(a) The Closing Date of the Transaction shall be extended to December 31, 2015.
     
(b) The Expiration Date of the Warrant shall be extended to December 31, 2015.

 

 

 

 

Section 2.           Miscellaneous.

 

(a)           Expenses . Each party shall bear its own costs and expenses, including legal fees, incurred or sustained in connection with the preparation of this Agreement and related matters.

 

(b)          Waiver of Defaults . The Company hereby waives any and all defaults arising under the Xinhua Subscription Agreement and the First Amendment, to release Xinhua from the obligations of such defaults and to waive any claims against Xinhua in connection with such defaults or the transactions contemplated hereby,

 

(c)          Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and Xinhua.

 

(d)          Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Xinhua Subscription Agreement.

 

(e)          Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties

 

(f)           Execution and Counterparts . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

(g)          Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Xinhua Subscription Agreement.

 

(h)          Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

(i)           Headings . The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

(j)          Except as specifically contemplated by this Agreement, the Xinhua Subscription Agreement shall remain in full force and effect, unaffected by this Agreement.

 

  2  

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

 

  Moxian, Inc.
     
  By:  
  Name: James Mengdong Tan
  Title: CEO
     
  Beijing Xinhua Huifeng Equity Investment Centre
     
  By:  
  Name:  
  Title:  

  

  3  

 

 

Exhibit A

 

Subscription Agreement

 

 

 

 

MOXIAN CHINA, INC.

 

Investor Package

 

This Investor Package contains the documents listed below in connection with an offering by Moxian China, Inc., a Nevada corporation (the “ Company ”), of common stock, par value $.001 per share (“Common Stock”) for gross proceeds of up to $8,190,000 (or RMB 50,000,000) or such other amount as may be determined by the Company’s board of directors.

 

Subscription Agreement; Schedules & Exhibits

Disclosure Schedules

Exhibit A Common Stock Purchase Warrant

 

Please deliver your investment amount via wire or check payable to the Company’s account as attached herein as follows:

 

Bank’s Name:  
Bank Address:  
Account #:  
Account Title:  
   

A signature page package containing segregated signature pages for each of the following documents: (i) the Subscription Agreement together with the Exhibits and Schedules thereto (collectively, the “ Transaction Documents ”) has been provided in a separate Adobe PDF file for your convenience.

 

Moxian China, Inc.     

 

  A- 1  

 

 

Moxian China, Inc.

 

SUBSCRIPTION AGREEMENT

 

Mr. James Mengdong Tan

CEO

Moxian China, Inc.

Room 2313-2315 , Block B, Zhongshen Garden

Caitian South Road, Futian District, Shenzhen

Guangdong Province, China 518101

 

This Subscription Agreement (this “Agreement” ) is dated as of _____________ by and between Moxian China, Inc., a Nevada corporation , and all predecessors thereof (the “Company” ), and the investor identified on the signature pages hereto (the “ Investor ”). The undersigned investorhereby irrevocably subscribes for and agrees to purchase the number of shares (the “ Shares ”) of the Company’s common stock, par value $.001 per share (“ Common Stock ”), set forth on the signature page hereto from Moxian China, Inc., a Nevada corporation (the “ Company ”) for the purchase price of $1.00 per share in connection with the Company’s offering of $8,190,000 (or approximately RMB 50,000,000) (the “ Investment Amount ) in Common Stock together with a warrant for no additional consideration (the “ Offering ”) in the form of Exhibit A hereto (the “ Warrant ”), granting the Investor the right to purchase up to 32,000,000 shares of Common Stock of the Company ( Warrant Shares ,” together with the Shares and Warrant Shares, referred to as the “ Securities ”). The Warrants will have an initial exercise price equal to $2.00 per share and shall be exercisable on or prior to July 31, 2015 (the “ Expiration Date ”).

 

This Subscription Agreement together with the Exhibits and Schedules thereto constitutes the “ Offering Documents .”

 

NOW THEREFORE , in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investor hereby agree as follows:

 

1. DEFINITIONS

 

1.1. Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1:

 

“Action” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting the Company, any subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory or self-regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility.

 

  A- 2  

 

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

 

“Business Day” means any day except Saturday, Sunday and any day which is a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Article 2.

 

“Closing Date” means the Trading Day on which all of the conditions set forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date as the parties may agree.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any securities into which such common stock may hereafter be reclassified or for which it may be exchanged as a class.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“Company Deliverables” has the meaning set forth in Section 2.2(a).

 

“Disclosure Materials” has the meaning set forth in Section 3.2(d).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“GAAP” means U.S. generally accepted accounting principles.

 

“Investment Amount” means shall have the definition set forth in the Recitals above.

 

“Investor Deliverables” has the meaning set forth in Section 2.2(b).

 

“Lien” means any lien, charge, encumbrance, security interest, pre-emptive right, right of first refusal, right of participation or any other restrictions of any kind.

 

“Losses” means any loss, liability, obligation, claim, contingency, damage, cost or expense, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation related thereto.

 

  A- 3  

 

 

“Material Adverse Effect” means any of (i) a material and adverse effect on the legality, validity or enforceability of any Transaction Documents, (ii) a material and adverse effect on the results of operations, assets, properties, prospects, business or condition (financial or otherwise) of the Company, or (iii) an adverse impairment to the Company’s ability to perform on a timely basis its obligations under any Transaction Documents; provided however , that none of the following shall be deemed in and of themselves, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect: (i) any change, event, state of facts or development generally affecting the general political, economic or business conditions of the United States; (ii) any change, event, state of facts or development generally affecting the medical device industry; (iii) any change, event, state of facts or development arising from or relating to compliance with the terms of this Agreement; (iv) acts of war (whether or not declared), the commencement, continuation or escalation of a war, acts of armed hostility, sabotage or terrorism or other international or national calamity or any material worsening of such conditions; (v) changes in laws or GAAP after date hereof or interpretation thereof; or (vi) any matter set forth in the Transaction Documents or the Schedules or Exhibits thereto.

 

“New York Courts” means the state and federal courts sitting in the City of New York, Borough of Manhattan.

 

“Per Share Purchase Price” shall mean $1.00 per share.

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such rule.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Securities” shall have the meaning as set forth in the recital of this Agreement.

 

“Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers.

 

“Subsidiary” of any Person means any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation S-X promulgated by the Commission under the Exchange Act of such Person.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

  A- 4  

 

 

“Trading Market” any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the OTCQB Marketplace of OTC Markets Group Inc., the NYSE MKT, the New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Warrant and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

2. PURCHASE AND SALE

 

  2.1. Purchase and Sale; Closing. The closing of the purchase and sale of the Securities for the Investment Amount (the “ Closing ”) shall take place as soon as practicable following the satisfaction of the conditions to the Closing set forth herein (or such later date as is mutually agreed to by the Company and the Investor) (the date of any such Closing is hereinafter referred to as a “ Closing Date ”). The Closing shall take place at the offices of the Company at Room 2313-2315, Block B, Zhongshen Garden, Caitian South Road, Futian District, Shenzhen, Guangdong Province, China 518101 on the Closing Date or at such other location or time as the parties may agree.

 

  2.2. Closing Deliveries.

 

(a) The Company shall deliver or cause to be delivered to the Investor the following (the “Company Deliverables” ):

 

(i) this Agreement, duly executed by the Company; and

 

(ii) the Warrant duly executed by the Company.

 

(iii) Executed resolution by the Board of Directors authorizing the Company to offer its common shares for subscription by the Investor at the price of $1.00 per share and granting the Investor a warrant at no additional consideration to purchase up to 32,000,000 common shares at $2.00 per shares.

 

(b) At the Closing, Investor shall deliver or cause to be delivered the following to the Company (collectively, the “ Investor Deliverables ”):

 

(i) this Agreement, duly executed by the Investor;

 

(ii) Wire proof of the Investment Amount to the designated account as specified under this Agreement before 30 th May 2015. The Company agrees and acknowledges that the investment funds, once they are wired to the Company, or one of its subsidiaries, will be valid consideration for the subscribed securities.

 

  A- 5  

 

 

WIRING INSTRUCTIONS

 

Bank’s Name:

China Merchants Bank, Anlian Branch

Bank Address:

1 st Floor, Area B Anlian Building, 4081-1 Jintian Rd, Futian District, Shenzhen

Account #:

7559 2020 9810 803

Account Title:

Moxian Technologies (Shenzhen) Co, Ltd

  魔线科技(深圳)有限公司

 

3. REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules attached hereto (the “ Disclosure Schedules ”), the Company hereby represents and warrants to the Investor the following:

 

(a) Organization and Standing. The Company is duly incorporated and validly existing under the laws of the State of Nevada, and has all requisite corporate power and authority to own or lease its properties and assets and to conduct its business as it is presently being conducted. The Company does not own any equity interest, directly or indirectly, in any other Person or business enterprise. The Company is in good standing in the State of Nevada and is qualified to do business and is in good standing in each jurisdiction in which the failure to so qualify could reasonably be expected to have a Material Adverse Effect upon its assets, properties, financial condition, results of operations or business. Except as provided in Schedule 3.1(a) attached herein, the Company does not own or control any subsidiaries as of the date of this Agreement.

 

(b) Authorization; Enforcement. The Company has full corporate power and authority to execute and deliver this Agreement, and any documents and instruments related to or contemplated by each of the Transaction Documents to which it is or will be a party and to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Company of each of the Transaction Documents and the performance by the Company of its obligations thereunder, have been duly and validly authorized by the Board of Directors, no other corporate action on the part of the Company or its stockholders being necessary. Each of the Transaction Documents has been or will be duly and validly executed and delivered by the Company, and constitutes, or will constitute a legal, valid and binding obligation of the Company enforceable against the Company in accordance with their respective terms except as enforceability may be limited by bankruptcy, insolvency and other laws of general application affecting the enforcement of creditors’ rights and except that any granting of equitable relief is in the discretion of the court.

 

  A- 6  

 

 

(c) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including United States federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

 

(d) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization, approval or order of, give any notice to, or make any filing or registration with, any federal, provincial, state, local or other governmental authority or any other Person in connection with the execution, delivery and performance by the Company to the extent a party thereto of the Transaction Documents, other than (i) filings required by state securities laws, (ii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iii) filings, consents and approvals required by the rules and regulations of the applicable Trading Market and (iv) those that have been made or obtained prior to the date of this Agreement.

 

(e) Issuance of the Securities. The Securities have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of any and all Liens. For the issuance of the Securities, the Company has reserved from its duly authorized capital stock the number shares of Common Stock representing the Securities that are issuable pursuant to this Agreement. In addition, attached in Schedule 3(e) is the Company s legal counsel opinion for that the issuance of Securities complies with the relevant legal rules and regulations and in reliance to the applicable federal and state law.

 

(f) Capitalization. The number of shares of all authorized, issued and outstanding capital stock of the Company are specified in Schedule 3.1(f) . No securities of the Company are entitled to preemptive or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on Schedule 3.1(f) , there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issue and sale of the Securities hereunder will not, immediately or with the passage of time, obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of the Company’s securities to adjust the exercise, conversion, exchange or reset price under such securities.

 

  A- 7  

 

 

(g) Litigation. There is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

 

The Investor hereby acknowledges and agrees that the Company does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.1.

 

3.2 Representations and Warranties of the Investors. The Investor hereby, for itself and for no other Investor, represents and warrants to the Company as follows:

 

(a) Organization; Authority. The Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by the Investor of the transactions contemplated by this Agreement has been duly authorized by all necessary corporate or, if the Investor is not a corporation, such partnership, limited liability company or other applicable like action, on the part of such Investor. Each of this Agreement and other Transaction Documents has been duly executed by the Investor, and when delivered by such Investor in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Investor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

 

(b) Investment Intent. Such Investor is acquiring the Securities as principal for its own account of the limited partnership of which the Investor is the general partner and manager and for investment purposes only and not with a view to or for distributing or reselling such Securities or any part thereof, without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal and state securities laws. Subject to the immediately preceding sentence, nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Securities for any period of time. Such Investor is acquiring the Securities hereunder in the ordinary course of its business. Such Investor does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.

 

  A- 8  

 

 

(c) Investor Status.

 

(i) The Investor agrees and acknowledges that it was not, a “U.S. Person” (as defined below) at the time the Investor was offered the Securities and as of the date hereof:

 

(A) any natural person resident in the United States;

 

(B) any partnership or corporation organized or incorporated under the laws of the United States;

 

(C) any estate of which any executor or administrator is a U.S. person;

 

(D) any trust of which any trustee is a U.S. person;

 

(E) any agency or branch of a foreign entity located in the United States;

 

(F) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;

 

(G) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident of the United States; and

 

(H) any partnership or corporation if (i) organized or incorporated under the laws of any foreign jurisdiction and (ii) formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited Investors (as defined in Rule 501(a) of Regulation D promulgated under the Securities Act) who are not natural persons, estates or trusts.

 

United States ” or “ U.S. ” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia.

 

(ii) The Investor understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the Securities in any country or jurisdiction where action for that purpose is required.

 

(iii) The Investor (i) as of the execution date of this Agreement is not located within the United States, and (ii) is not purchasing the Securities for the account or benefit of any U.S. Person, except in accordance with one or more available exemptions from the registration requirements of the Securities Act or in a transaction not subject thereto.

 

(iv) The Investor will not resell the Securitiess except in accordance with the provisions of Regulation S (Rule 901 through 905 and Preliminary Notes thereto), pursuant to a registration statement under the Securities Act, or pursuant to an available exemption from registration; and agrees not to engage in hedging transactions with regard to such securities unless in compliance with the Securities Act.

 

  A- 9  

 

 

(v) The Investor will not engage in hedging transactions with regard to shares of the Company prior to the expiration of the distribution compliance period specified in Category 2 or 3 (paragraph (b)(2) or (b)(3)) in Rule 903 of Regulation S, as applicable, unless in compliance with the Securities Act; and as applicable, shall include statements to the effect that the securities have not been registered under the Securities Act and may not be offered or sold in the United States or to U.S. persons (other than distributors) unless the securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available.

 

(vi) No form of “directed selling efforts” (as defined in Rule 902 of Regulation S under the Securities Act), general solicitation or general advertising in violation of the Securities Act has been or will be used nor will any offers by means of any directed selling efforts in the United States be made by the Investor or any of their representatives in connection with the offer and sale of the Securities.

 

(d) Access to Information. The Investor acknowledges that it has reviewed the disclosure materials provided by the Company and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and its respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in the Transaction Documents.

 

(e) The Investor understands that the offering of the Securities has not been registered under the Securities Act, in reliance on an exemption for private offerings provided pursuant to Section 4(2) of the Securities Act and that, as a result, the Securities will be “restricted securities” as that term is defined in Rule 144 under the Securities Act. UNTIL ONE YEAR AFTER THE COMPANY FILES “Form 10” information with the commission and the other provisins of rule 144 are satisfied , RULE 144 WILL BE UNAVAILABLE AND THE SECURITIES MAY NOT BE SOLD OTHER THAN IN A PRIVATE TRANSACTION. Once Rule 144 is available, the Securities must be held for the time period required by Rule 144 (or indefinitely if the Investor is deemed an “affiliate” within the meaning of such rule) unless the Securities is subsequently registered under the Securities Act and qualified under any other applicable securities law or exemptions from such registration and qualification are available. The Investor understands that the Company is under no obligation to register the Securities under the Securities Act or to register or qualify the Securities under any other applicable securities law, or to comply with any other exemption under the Securities Act or any other securities law, and that the Investor has no right to require such registration. The Investor understands that the Company has no present intention to register any of the Securities for re-sale by Investor. The Investor further understands that the Offering of the Securities has not been qualified or registered under any foreign or state securities laws in reliance upon the representations made and information furnished by the Investor herein and any other documents delivered by the Investor in connection with this subscription; that the Offering has not been reviewed by the Commission or by any foreign or state securities authorities; that the Investor’s rights to transfer the Securities will be restricted, which includes restrictions against transfers unless the transfer is not in violation of the Securities Act and applicable state securities laws (including investor suitability standards); and that the Company may in its sole discretion require the Investor to provide at Investor’s own expense an opinion of its counsel to the effect that any proposed transfer is not in violation of the Securities Act or any state securities laws.

 

  A- 10  

 

 

(f) Independent Investment Decision. The Investor has independently evaluated the merits of its decision to purchase the Securities pursuant to the Transaction Documents, and such Investor confirms that it has not relied on the advice of any other Investor’s business and/or legal counsel in making such decision. The Investor has not relied on the business or legal advice of the Company or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such Persons has made any representations or warranties to such Investor in connection with the transactions contemplated by the Transaction Documents, other than the representations made by the Company.

 

(g) Trading Activities. Neither the Investor nor its Affiliates has an open short position in the Company’s Common Stock, and the Investor agrees that it shall not, and it will cause its Affiliates not to, engage in any Short Sales of or hedging transactions with respect to the Company’s Common Stock.

 

The Company acknowledges and agrees that no Investor has made or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2.

 

4. OTHER AGREEMENTS OF THE PARTIES

 

4.1 Securities may only be disposed of in compliance with U.S. state and federal securities laws. In connection with any transfer of the Securities other than pursuant to an effective registration statement, to the Company, to an Affiliate of an Investor or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act.

 

(a) Certificates evidencing the Securities will contain the following legend:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

 

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4.2 Integration. The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Investors, or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market in a manner that would require stockholder approval of the sale of the Securities to the Investors.

 

4.3 Use of Proceeds. The Company will use the net proceeds from the sale of the Securities hereunder for working capital purposes and such other purposes as set forth on Schedule 4.6 hereto.

 

4.4 Make Good Provision. If and only if the Investor exercises no less than16,000,000 of the Warrant and purchases shares of Common Stock pursuant to such exercise prior to the Expiration Date, the Investor shall be entitled to the following rights:

 

(a) In the event that the Company does not contract with 25,000 new Paying Merchants (the Make Good Condition ) between May 30, 2015 and September 30, 2016 ( Measurement Date ), the Company shall issue and deliver to the Investor, without additional consideration, a number of shares of Common Stock in addition to the Shares, which is calculated as the following: the total number of Warrant Shares issued upon exercise of the Warrants by the Investor, multiplied by 50% (the Make Good Shares ).

 

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(b) For the purpose of determining the satisfaction of Make Good Condition on the Measurement Date, the Company shall produce and provide to the Investor a list of paying merchants, generated from its online platform no later than 15 days after the Measurement Date (the “ Make Good Notice ”). If the Company satisfies the Make Good Condition on the Measurement Date, the Company shall so state in the Make Good Notice and it shall have no further obligation to issue Make Good Shares to the Investor. If the Company fails to satisfy the Make Good Condition, the Company shall so state in the Make Good Notice and set forth the number of Make Good Shares to be issued to the Investor. The Company shall issue and deliver to the Investor the Make Good Shares no later than thirty (30) days after the Measurement Date.

 

4.5 Board Representation. As long as the Investor completes the subscription of US$8,190,000 subscription under this Agreement, the Investor shall have the right to nominate up to one memberto the Board of Directors (the Investor Nominees ). The Investor may notify the Company of the Investor Nominees to be elected or appointed as directors of the Company immediately after the Closing and the Board of Directors of the Company shall take such steps as may be necessary to add the Investor Nominees to the Company s Board of Directors. As long as the Investor subscribes no less than 16,000,000 warrant on this Agreement, the Investor will have the right to appoint one additional member to the Board of Directors.

 

4.6 Accounts Representation. As long as the Investor completes the subscription of US$8,190,000 subscription under this Agreement, the Investor shall have the right to nominate up to one member to the Company accounting department (the Account Nominees ). The Investor shall notify the Company of the Account Nominees to be elected or appointed to the Company immediately after the Closing and the Company shall take such steps as may be necessary to employ the Account Nominees to the Company.

 

4.7 Moxian Version 2.0. The Company hereby covenants and agrees to use its reasonable best efforts to release the Moxian Version 2.0 Beta App by June 30, 2015 and a full working version of Moxian 2.0 App as described under Schedule 1.7 by September 30, 2015. If the Company fails to deliver Moxian Version 2.0 by September 30, 2015, the Company shall issue to the Investor 4,000,000 shares at no cost.(such amount may be adjusted as a result of a stock split or a similar event).

 

4.8 Uplisting. The Company hereby covenants and agrees to use its reasonable best efforts to list its Common Stock on a national stock exchange in the U.S., including but not limited to, the NYSE MKT, the New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market (or any successors to any of the foregoing)( Exchange ), prior to June 30, 2017. If the Company fails to uplift to an Exchange by June 30, 2017, the Company shall issue to the Investor 4,000,000 shares at no cost.(such amount may be adjusted as a result of a stock split or a similar event).

 

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4.9 Further Assurances. The Company shall use its reasonable best efforts to satisfy all of the closing conditions under Section 5.1, and will not take any action which could frustrate or delay the satisfaction of such conditions. In addition, either prior to or following the Closing, the Company signatory hereto will perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. The Company will also inform its legal counsel to provide a confirmation of the Investors full payment of the subscribed shares upon receipt of funds from the Investor.

 

4.10 Covenants of the Company . The Company hereby agrees to make reasonable and practicable efforts to assist the Investor with the following:

 

(a) In the event the Investoris dissolved for reasons other than bankruptcy, upon written request from the Investor, the Company shall use its commercially reasonable efforts to assist the Assignee by providing necessary documentation for the assignment and the transfer of the Shares and Warrant Shares, if any,to the partners of the Investorin proportion their respectiveownership interest in the Investor; provided that such transfer and assignment complies with all applicable federal and state securities laws and that such transferees agree in writing with the Company to be bound, with respect to the transferred Shares and Warrant Shares, if any, by the provisions of the Subscription Agreement that apply to the Investor. ” 

 

(b) As an accommodation to the Investor, the Company hereby agrees that upon written request by the Investor, the Company shall use its commercially reasonable efforts to provide the Investorwith a list of recommended United States broker-dealers that the Company reasonably believes to be suitable to assist Chinese entities or individuals in executing stock sales in the U.S. The Company shall not indicate to the Investorits preference to any of the recommended broker-dealers and the Investorshall have the right to engage other broker-dealers that are not on the recommended list.The Company will not provide any advice or direction with respect to the sale of stock nor the timing of such sales.

 

(c) The Company hereby agrees that it shall use its commercially reasonable efforts to assist the Investor to provide written draft instructions to provide to the chosen broker-dealer of the Investor to wire the funds derived from the execution of stock sales in U.S. to their home country bank account.

 

5. CONDITIONS PRECEDENT TO CLOSING

 

5.1 Conditions Precedent to the Obligations of the Investors to Purchase Securities . The obligation of the Investor to acquire Securities at the Closing is subject to the satisfaction or waiver by the Investor, at or before the Closing, of each of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date;

 

(b) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing;

 

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(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents;

 

(d) Adverse Changes. Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably could have or result in a Material Adverse Effect or a material adverse change with respect to the Company; and

 

(e) Company Deliverables. The Company shall have delivered the Company Deliverables in accordance with Section 2.2(a).

 

5.2 Conditions Precedent to the Obligations of the Company to Sell Securities. The obligation of the Company to sell Securities at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:

 

(a) Representations and Warranties. The representations and warranties of the Investor contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date;

 

(b) Performance. The Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Investor at or prior to the Closing;

 

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents; and

 

(d) Investors Deliverables. The Investor shall have delivered the Investor Deliverables in accordance with Section 2.2(b).

 

6. MISCELLANEOUS

 

6.1 Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

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6.2 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, or (c) upon actual receipt by the party to whom such notice is required to be given, if sent by any means other than facsimile transmission, or (d) by registered mail and or by private courier with the date of confirmation of receipt to the office desk.

 

6.3 The address for such notices and communications shall be as follows:

 

  If to the Company: Moxian China, Inc.
    Room 2313-2315 , Block B, Zhongshen Garden
    Caitian South Road, Futian District, Shenzhen
    Guangdong Province, China 518101
    Attn: Mr. James Mengdong Tan

 

  With a copy to: Ofsink, LLC
    230 Park Ave, Suite 851
    New York, NY 10169
    Facsimile: 646-224-9844
    Attn.: Darren Ofsink, Esq.
     
  If to an Investor: To the address set forth under such Investor’s name on the signature pages hereof;

 

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

 

6.4 Amendments; Waivers; No Additional Consideration. No provision of this Agreement may be waived or amended except in a written instrument signed by the Company and the Investor. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. No consideration shall be offered or paid to the Investor to amend or consent to a waiver or modification of any provision of any Transaction Document unless the same consideration is also offered to all Investors who then hold Securities.

 

6.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents.

 

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6.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investors. The Investor may assign any or all of its rights under this Agreement to any Person to whom such Investor assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the “Investors.” Notwithstanding anything to the contrary herein, for the avoidance of doubt, each Investor may freely transfer any Securities to any Person (including its Affiliates or any investment fund sponsored or advised by such Investor) without the consent of any of the Company or any other Investor.

 

6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

6.8 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Agreement shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in New York, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Agreement.

 

6.9 Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing and the delivery of the Securities.

 

6.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

 

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6.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

6.12.1 Replacement of Securities . If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities . If a replacement certificate or instrument evidencing any Securities is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement. Language and Copies of Agreement. This Agreement shall be executed in English and Chinese in duplicate, and in case of any conflict the English version shall prevail. Each of the original English and Chinese versions of this Agreement shall be executed in 2 duplicate copies. Each party shall hold two originals of each version.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Subscription Agreement to be duly executed by their respective authorized signatories as of date first written above.

 

  Moxian China, Inc.
   
  By:  
    Name: James Mengdong Tan
    Title:   Interim Chief Executive Officer

 

  A- 19  

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Subscription Agreement to be duly executed by their respective authorized signatories as the date set forth above.

 

  INVESTOR
     
  BEIJING XINHUA HUIFENG EQUITY INVESTMENT CENTRE (LIMITED PARTNERSHIP)
     
  By:  
    Name:
    Title:

 

  Investment Amount:  $_____________
  Total Number of Subscribed Shares: ____________________
   
  If a U.S. Person, Tax ID or SSN No.:___________
  If not a U.S. Person, country of incorporation or citizenship: _____________________
   
  ADDRESS FOR NOTICE
  Beijing City, Haiding Qu, Zhongguan Village
  66NorthRoad, Block 1, Level 2, Commercial Centre 5-079
   
  Attention:  He Weisu
  Tel: +86 139-0136-8633
  Email:   weisuhe@163.com
   
  MAILING ADDRESS
  (if different from above)
   
   
   
   
  Attention:  _______________________ ______
  Tel:
  Email:   _________________________________

 

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DISCLOSURE SCHEDULES

Schedule 3.1(a)

 

Subsidiaries

 

As of the date of this Agreement herein, the Company has the following subsidiaries:

 

Name   Jurisdiction  

Equity Owners and Percentage

of Equity Securities Held

         
Moxian CN Group Limited   Samoa   100% owned by Moxian China, Inc.
         
Moxian Group Limited   British Virgin Islands   100% owned by the Moxian CN Group Limited
         
Moxian (Hong Kong) Limited   Hong Kong   100% owned by Moxian Group Limited
         
Moxian Technologies (Shenzhen) Co., Ltd.   PRC   100% owned by Moxian (Hong Kong) Limited
         
Moxian Malaysia SDN BHD   Malaysia   100% owned by Moxian (Hong Kong) Limited

 

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Schedule 3.1(f)

 

Capitalization

 

As of the date of this Agreement, the Company is authorized to issue a total of 500,000,000 shares of Common Stock, with 198,300,000 shares issued and outstanding and the Company is authorized to issue 100,000,000 shares of preferred stock, par value $0.001 per share with no share issued or outstanding.

 

There are no warrants or options or any obligation to issue the Company’s securities issued and outstanding as of the date of this Agreement.

 

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Schedule 4.6

 

Use of Proceeds

 

We intend to use the estimated net proceeds of the Offering for working capital.

 

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EXHIBIT A

 

For U.S. Investors

 

these securities have not been registered with the united states securities and exchange commission or the securities commission of any state pursuant to an exemption from registration under regulation d promulgated under the securities act of 1933, as amended (the “ act ”). this warrant shall not constitute an offer to sell nor a solicitation of an offer to buy the securities in any jurisdiction in which such offer or solicitation would be unlawful. the securities are “restricted” and may not be resold or transferred except as permitted under the act pursuant to registration or exemption therefrom.

 

For Non-U.S. Investors:

 

THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S) PURSUANT TO REGULATION S PROMULGATED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). ACCORDINGLY, NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE SECURITIES ACT.

 

COMMON STOCK PURCHASE WARRANT

 

To Purchase Shares of $0.001 Par Value Common Stock (“ Common Stock ”) of

 

No. [W-__]

 

MOXIAN CHINA, INC.

 

THIS CERTIFIES that, for value received, BEIJING XINHUA HUIFENG EQUITY INVESTMENT CENTRE (LIMITED PARTNERSHIP) (the “ Purchaser ” or “ Holder ”) is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date hereof and on or prior to 8:00 p.m. New York City Time on July 31, 2015 (the “ Termination Date ”), but not thereafter, to subscribe for and purchase from Moxian China, Inc., a Nevada corporation (the “ Company ”) up to 32,000,000 shares of the Company’s common stock (“ Warrant Shares ”) at an initial exercise price of $2.00 per share (as adjusted from time to time pursuant to the terms hereof, the “ Exercise Price ”).

 

The Exercise Price and the number of shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. This Warrant is being issued in connection with the Subscription Agreement dated _________ (the “ Subscription Agreement ”), entered into between the Company and accredited investors in connection with the Company’s offering by the Company of its Common Stock (the “ Common Stock ,” and such offering, the “ Offering ”).

 

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Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Subscription Agreement.

 

1. Title of Warrant . Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant together with (a) the Assignment Form annexed hereto properly endorsed, and (b) any other documentation reasonably necessary to satisfy the Company that such transfer is in compliance with all applicable securities laws. The term “ Holder ” shall refer to the Purchaser or any subsequent transferee of this Warrant.

 

2. Authorization of Shares . The Company covenants that all shares of Common Stock which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant and payment of the Exercise Price as set forth herein, be duly authorized, validly issued, fully paid and non-assessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue or otherwise specified herein).

 

3. Exercise of Warrant .

 

a. The Holder may exercise this Warrant, in whole or in part, at any time and from time to time by delivering (which may be by facsimile) to the offices of the Company or any transfer agent for the Common Stock this Warrant, together with a Notice of Exercise in the form annexed hereto specifying the number of Warrant Shares with respect to which this Warrant is being exercised, together with payment in cash to the Company of the Exercise Price therefore.

 

b. In the event that the Warrant is not exercised in full, the number of Warrant Shares shall be reduced by the number of such Warrant Shares for which this Warrant is exercised and/or surrendered, and the Company, if requested by Holder and at its expense, shall within five (5) Trading Days (as defined below) issue and deliver to the Holder a new Warrant of like tenor in the name of the Holder or as the Holder (upon payment by Holder of any applicable transfer taxes) may request, reflecting such adjusted Warrant Shares. Notwithstanding anything to the contrary set forth herein, upon exercise of any portion of this Warrant in accordance with the terms hereof, the Holder shall not be required to physically surrender this Warrant to the Company unless such Holder is purchasing the full amount of Warrant Shares represented by this Warrant. The Holder and the Company shall maintain records showing the number of Warrant Shares so purchased hereunder and the dates of such purchases or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Warrant upon each such exercise. The Holder and any assignee, by acceptance of this Warrant or a new Warrant, acknowledge and agree that, by reason of the provisions of this Section, following exercise of any portion of this Warrant, the number of Warrant Shares which may be purchased upon exercise of this Warrant may be less than the number of Warrant Shares set forth on the face hereof. Certificates for shares of Common Stock purchased hereunder shall be delivered to the Holder hereof within ten (10) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. The Holder may withdraw its Notice of Exercise at any time if the Company fails to timely deliver the relevant certificates to the Holder as provided in this Agreement. A Notice of Exercise shall be deemed sent on the date of delivery if delivered before 8:00 p.m. New York Time on such date, or the day following such date if delivered after 8:00 p.m. New York Time; provided that the Company is only obligated to deliver Warrant Shares against delivery of the Exercise Price from the holder hereof and, if the Holder is purchasing the full amount of Warrant Shares represented by this Warrant, surrender of this Warrant (or appropriate affidavit and/or indemnity in lieu thereof).

 

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The Company’s obligations to issue and deliver Warrant Shares upon an exercise in accordance with Section 3 above are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

4. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu of issuance of a fractional share upon any exercise hereunder, the Company will either round up to nearest whole number of shares or pay the cash value of that fractional share, which cash value shall be calculated on the basis of the average closing price of the Common Stock during the five (5) Trading Days immediately preceding the date of exercise.
     
5. Charges, Taxes and Expenses . Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder of this Warrant or in such name or names as may be directed by the Holder of this Warrant; provided, however, that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder of this Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder hereof; and provided further, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance of any Warrant certificates or any certificates for the Warrant Shares other than the issuance of a Warrant Certificate to the Holder in connection with the Holder’s surrender of a Warrant Certificate upon the exercise of all or less than all of the Warrants evidenced thereby.

 

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6. Closing of Books . The Company will at no time close its shareholder books or records in any manner which interferes with the timely exercise of this Warrant.
     
7. No Rights as Shareholder until Exercise . Subject to Section 13 of this Warrant and the provisions of any other written agreement between the Company and the Purchaser, the Purchaser shall not be entitled to vote or receive dividends or be deemed the holder of Warrant Shares or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Purchaser, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised as provided herein. However, at the time of the exercise of this Warrant pursuant to Section 3 hereof, the Warrant Shares so purchased hereunder shall be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been exercised.
     
8. Assignment and Transfer of Warrant . This Warrant may not be assigned or transfer without the written consent with the Company.
     
9. Loss, Theft, Destruction or Mutilation of Warrant; Exchange . The Company represents, warrants and covenants that (a) upon receipt by the Company of evidence and/or indemnity reasonably satisfactory to it of the loss, theft, destruction or mutilation of any Warrant or stock certificate representing the Warrant Shares, and in case of loss, theft or destruction, of indemnity reasonably satisfactory to it, and (b) upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of this Warrant or stock certificate, without any charge therefor. This Warrant is exchangeable at any time for an equal aggregate number of Warrants of different denominations, as requested by the holder surrendering the same, or in such denominations as may be requested by the Holder following determination of the Exercise Price. No service charge will be made for such registration or transfer, exchange or reissuance.

 

  10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a legal holiday.

 

  A- 27  

 

 

  11. Effect of Certain Events . If at any time while this Warrant or any portion thereof is outstanding and unexpired there shall be a transaction (by merger or otherwise) in which more than 50% of the voting power of the Company is disposed of (collectively, a “ Sale or Merger Transaction ”), the Holder of this Warrant shall have the right thereafter to purchase, by exercise of this Warrant and payment of the aggregate Exercise Price in effect immediately prior to such action, the kind and amount of shares and other securities and property which it would have owned or have been entitled to receive after the happening of such transaction had this Warrant been exercised immediately prior thereto, subject to further adjustment as provided in Section 12.
     
  12. Adjustments of Exercise Price and Number of Warrant Shares . The number of and kind of securities purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as set forth in this Section 12.
     
a. Subdivisions, Combinations, Stock Dividends and other Issuances . If the Company shall, at any time while this Warrant is outstanding, (i) pay a stock dividend or otherwise make a distribution or distributions on any equity securities (including instruments or securities convertible into or exchangeable for such equity securities) in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock into a larger number of shares, or (iii) combine outstanding Common Stock into a smaller number of shares, then the Exercise Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding before such event and the denominator of which shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section 12(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination. The number of shares which may be purchased hereunder shall be increased proportionately to any reduction in Exercise Price, or decreased proportionately to any increase in Exercise Price, pursuant to this paragraph 12(a), so that after such adjustments the aggregate Exercise Price payable hereunder for the applicable number of shares shall be the same as the aggregate Exercise Price in effect just prior to such adjustments.

 

b. Other Distributions . If at any time after the date hereof the Company distributes to holders of its Common Stock, other than as part of its dissolution, liquidation or the winding up of its affairs, any shares of its capital stock, any evidence of indebtedness or any of its assets (other than Common Stock), then the number of Warrant Shares for which this Warrant is exercisable shall be increased to equal: (i) the number of Warrant Shares for which this Warrant is exercisable immediately prior to such event, (ii) multiplied by a fraction, (A) the numerator of which shall be the Fair Market Value (as defined below) per share of Common Stock on the record date for the dividend or distribution, and (B) the denominator of which shall be the Fair Market Value price per share of Common Stock on the record date for the dividend or distribution minus the amount allocable to one share of Common Stock of the value (as jointly determined in good faith by the Board of Directors of the Company and the Holder) of any and all such evidences of indebtedness, shares of capital stock, other securities or property, so distributed. For purposes of this Warrant, “ Fair Market Value ” shall equal the average closing trading price of the Common Stock on the Principal Market for the five (5) Trading Days preceding the date of determination or, if the Common Stock is not listed or admitted to trading on any Principal Market, and the average price cannot be determined as contemplated above, the Fair Market Value of the Common Stock shall be as reasonably determined in good faith by the Company’s Board of Directors and the Holder. If the Fair Market Value of the Common Stock cannot be determined by the Company’s Board of Directors and the Holder after five (5) business days, such determination shall be made by a third party appraisal firm mutually agreeable by the Board of Directors and the Holder, at the expense of the Company (the “ Independent Appraiser ”). The fair market value as determined by the Independent Appraiser shall be final. The Exercise Price shall be reduced to equal: (i) the Exercise Price in effect immediately before the occurrence of any event (ii) multiplied by a fraction, (A) the numerator of which is the number of Warrant Shares for which this Warrant is exercisable immediately before the adjustment, and (B) the denominator of which is the number of Warrant Shares for which this Warrant is exercisable immediately after the adjustment.

 

  A- 28  

 

 

c. Merger, etc. If at any time after the date hereof there shall be a merger or consolidation of the Company with or into or a transfer of all or substantially all of the assets of the Company to another entity, then the Holder shall be entitled to receive upon or after such transfer, merger or consolidation becoming effective, and upon payment of the Exercise Price then in effect, the number of shares or other securities or property of the Company or of the successor corporation resulting from such merger or consolidation, which would have been received by the Holder for the shares of stock subject to this Warrant had this Warrant been exercised just prior to such transfer, merger or consolidation becoming effective or to the applicable record date thereof, as the case may be. The Company will not merge or consolidate with or into any other corporation, or sell or otherwise transfer its property, assets and business substantially as an entirety to another corporation, unless the corporation resulting from such merger or consolidation (if not the Company), or such transferee corporation, as the case may be, shall expressly assume in writing the due and punctual performance and observance of each and every covenant and condition of this Warrant to be performed and observed by the Company.
     
d. Reclassification, etc. If at any time after the date hereof there shall be a reorganization or reclassification of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, then the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the number of shares or other securities or property resulting from such reorganization or reclassification, which would have been received by the Holder for the shares of stock subject to this Warrant had this Warrant at such time been exercised.

 

  A- 29  

 

 

  13. Notice of Adjustment . Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, the Company, at its expense, shall promptly mail to the Holder of this Warrant a notice setting forth the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares after such adjustment and setting forth the computation of such adjustment and a brief statement of the facts requiring such adjustment.
     
  14. Authorized Shares . The Company covenants that during the period the Warrant is outstanding and exercisable, it will reserve and keep available from its authorized and unissued Common Stock a sufficient number of shares to provide solely for the issuance of the Warrant Shares upon the exercise of any and all purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law, regulation, or rule of any applicable market or exchange.
     
  15. Compliance with Securities Laws . The Holder hereof acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered (or if no exemption from registration exists), will have restrictions upon resale imposed by state and federal securities laws. Each certificate representing the Warrant Shares issued to the Holder upon exercise (if not registered, for resale or otherwise, or if no exemption from registration exists) will bear substantially the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), AND, ACCORDINGLY, MAY NOT BE OFFERED, TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

  16. Purpose of Warrant Shares . Without limiting the Purchaser’s right to transfer, assign or otherwise convey the Warrant or Warrant Shares in compliance with all applicable securities laws, the Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are being acquired solely for the Purchaser’s own account and not as a nominee for any other party, and that the Purchaser will not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of applicable federal and state securities laws.

 

  A- 30  

 

 

  17. Miscellaneous .

 

a. Issue Date; Choice of Law; Venue; Jurisdiction . The provisions of this Warrant shall be construed and shall be given effect in all respects as if it had been issued and delivered by the Company on the date hereof. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant will be construed and enforced in accordance with and governed by the laws of the State of New York, except for matters arising under the Act, without reference to principles of conflicts of law. Each of the parties consents to the exclusive jurisdiction of the Federal and State Courts sitting in the County of New York in the State of New York in connection with any dispute arising under this Warrant and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forumnonconveniens or venue, to the bringing of any such proceeding in such jurisdiction.

 

b. Modification and Waiver . This Warrant and any provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. Any amendment effected in accordance with this paragraph shall be binding upon the Purchaser, each future holder of this Warrant and the Company. No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision.

 

c. Notices . Any notice or other communication required or permitted to be given hereunder shall be in writing by facsimile, mail or personal delivery and shall be effective upon actual receipt of such notice. The addresses for such communications shall be to the addresses as shown on the books of the Company or to the Company at the address set forth for Moxian China, Inc. in the Offering Documents. A party may from time to time change the address to which notices to it are to be delivered or mailed hereunder by notice in accordance with the provisions of this Section 19(c).

 

d. Severability . Whenever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Warrant in such jurisdiction or affect the validity, legality or enforceability of any provision in any other jurisdiction, but this Warrant shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

e. Specific Enforcement . The Company and the Holder acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Warrant were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Warrant and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which either of them may be entitled by law or equity.

 

  A- 31  

 

 

f. Counterparts/Execution . This Warrant may be executed by facsimile and in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute one agreement. Execution and delivery of this Warrant by facsimile transmission (including delivery of documents in Adobe PDF format) shall constitute execution and delivery of this Warrant for all purposes, with the same force and effect as execution and delivery of an original manually signed copy hereof.

 

[SIGNATURE PAGE TO FOLLOW]

 

  A- 32  

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officers thereunto duly authorized.

 

Dated: April __, 2015

 

MOXIAN CHINA, INC.  
   
By:    
Name: James Mengdong Tan  
Title: Interim Chief Executive Officer  

 

  A- 33  

 

 

NOTICE OF EXERCISE

 

To:        MOXIAN CHINA, INC.

 

(1)        The undersigned hereby elects to exercise the attached Warrant for and to purchase thereunder, ________________ shares of Common Stock, and herewith makes payment therefor of $______________.

 

(2)        Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

 

     
  (Name)  
     
     
  (Address)  
     
     

 

(3)        Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersignedas is specified below:

 

    BEIJING XINHUA HUIFENG EQUITY INVESTMENT CENTRE (LIMITED PARTNERSHIP)
     
    (Name)
     
____________________    
(Date)   (Signature)
     
     
    (Address)
     
Dated:    
     
     
Signature    

 

  A- 34  

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

  

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_________________________________________________ whose address is

 

_______________________________________________________________.

 

_______________________________________________________________

 

                                                                         Dated: ______________,

 

 

                                          Holder’s Signature:    _____________________________

 

                                          Holder’s Address:      _____________________________

 

                                                                              _____________________________

 

Signature Guaranteed: ___________________________________________

  

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

 

 

  A- 35  

 

 

Exhibit B

 

Amendment Agreement

 

 

 

 

   

AMENDMENT AGREEMENT

 

THIS AMENDMENT AGREEMENT (this “Agreement”) is made as of the 13th of August, 2015 by and between Moxian, Inc., a Nevada corporation (the “Company”), and Beijing Xinhua Huifeng Equity Investment Centre, a limited partnership formed under the laws of People’s Republic of China (the “Xinhua”). Each of the capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Xinhua Subscription Agreement dated June 4, 2015 as defined below.

 

RECITALS:

 

WHEREAS , the Company entered into a subscription agreement (“Zhongtou Subscription Agreement”) with Zhongtou Huifeng Investment Management (Beijing) Co. Ltd. (“Zhongtou”) on April 24, 2015, whereby the Company agreed to sell an aggregate of 8,169,000 shares of the Company’s common stock par value $.001 per share (“Common Stock”) at a per share price of $1.00 for gross proceeds of $8,190,000 (approximately RMB50,000,000)(the “Purchase Price”) and to issue to Zhongtou for no additional consideration a warrant (the “Warrant”) to purchase in the aggregate of 32,000,000 shares (“Warrant Shares”) of Common Stock at an exercise price of $2.00 per share, exercisable on or prior to July 31, 2015. On June 4, 2015, the Company and Zhongtou entered into a Termination Agreement to terminate the Zhongtou Subscription Agreement as Zhongtou’s principals have determined to make the investment described in the Zhongtou Subscription Agreement through a different entity, Xinhua. Also on June 4, 2015, the Company and Xinhua entered into a new Subscription Agreement (“Xinhua Subscription Agreement”) on substantially the same terms as the Zhongtou Subscription Agreement (the “Transaction”), substantially in the form of Exhibit A attached hereto. Pursuant to the Xinhua Subscription Agreement, Xinhua shall remit the Purchase Price of $8,190,000 to the Company on or before May 31, 2015 (the “Closing Date”) and the Warrant shall be exercised by Xinhua on or before July 31, 2015 (the “Expiration Date”);

 

WHEREAS , the parties hereto desire to amend the Xinhua Subscription Agreement as set forth herein;

 

NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

Section 1.                    Amendment of the Xinhua Agreement .

 

(a) The Closing Date of the Transaction shall be extended to September 30, 2015.

 

(b) The Expiration Date of the Warrant shall be extended to September 30, 2015.

  

 

  B- 1  

 

 

Section 2.                    Miscellaneous.

 

(a)                 Expenses . Each party shall bear its own costs and expenses, including legal fees, incurred or sustained in connection with the preparation of this Agreement and related matters.

(b)                Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and Xinhua.

(c)                 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Xinhua Subscription Agreement.

(d)                Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties

(e)                 Execution and Counterparts . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

(f)                 Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Xinhua Subscription Agreement.

(g)                Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(h)                Headings . The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.

(i)                  Except as specifically contemplated by this Agreement, the Xinhua Subscription Agreement shall remain in full force and effect, unaffected by this Agreement. 

  B- 2  

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

 

  Moxian, Inc.
     
  By:
  Name: James Mengdong Chen
  Title: CEO
     
  Beijing Xinhua Huifeng Equity Investment Centre
     
  By:  
  Name:  
  Title:  

  

 

B-3

 

Exhibit 10.6

 

THIS LOAN AGREEMENT (executed as a deed) is made May 4, 2015

 

BETWEEN

 

(1)   Jet Key Limited of Room 2807, 28/F., Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong (hereinafter referred to "the Lender")

 

and

 

(2)   Moxian Malaysia Sdn Bhd of Suite 13.02, Level 13, Centrepoint South, Mid Valley City, Lingkaran Syed Putra, 59200, Kuala Lumpur. (hereinafter referred to as "the Borrower").

 

(hereinafter together referred to as "the Parties")

 

1. RECITALS

 

1.1   The Lender lent the Borrower the Loan in May 4, 2015 in contemplation of and upon prior agreement to the terms and conditions contained in this Agreement and at the express request of the Borrower.
     
1.3   The Borrower has agreed to repay the Loan and interest accrued on the Loan in accordance with the terms of this Agreement.
     
1.4 In consideration of the Lender continuing to make the Loan available to the Borrower,   the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto hereby agree to the terms and conditions set out in this Agreement.

 

2. DEFINITIONS

 

The following words shall have the meanings set opposite them, except where the context otherwise requires:

 

“Default Interest” fixed interest rate of 0% per month from the date of the occurrence of an Event of Default.
   
"Event of Default" any of the events referred to in paragraph 5

 

  1  

 

 

"Interest Sum"

fixed interest rate on the Loan at the rate of 0% per month from the date of this Agreement until repayment

   

"Loan"

the aggregate sum of US$122,144.41 lent to the Borrower by the Lender in May 4, 2015

   
"Maturity Date" one year from the date of this Agreement

 

3. THE LOAN

 

Loan Payment

 

3.1 The Lender lent the Loan to the Borrower and the Borrower acknowledges receipt of the same.

 

Repayment of the Loan

 

3.2   The Borrower shall repay the Loan to the Lender in full together with the Interest Sum accrued on or before the Maturity Date.
     
3.3   The Borrower is entitled to make repayment of the Loan before the Maturity Date.
     
3.4   The Parties may by mutual consent in writing extend the Maturity Date.
     
3.5   All payments by the Borrower under this Agreement shall so far as the law permits be made in full without any deduction or withholding (whether in respect of a set off, counterclaim, duties, tax, charges, levies or otherwise howsoever).

 

4. EVENTS OF DEFAULT

 

4.1 The Loan shall be immediately due and repayable to the Lender by the Borrower together with the Interest Sum accrued and any other liabilities, and Default Interest shall be payable on the same by the Borrower from the date of occurrence of any of the events of default as described below:

 

a. if the Borrower shall fail to pay on the due date any amount due hereunder;
     
b. if the Borrower shall fail to observe or comply with any of the covenants, conditions, obligations, agreements and stipulations herein contained;

 

  2  

 

 

c. if the Borrower shall become bankrupt or enter or seek to enter in any other form of composition or arrangement with its creditors whether in whole or in part; or
     
d. a petition is presented for bankruptcy of the Borrower.

 

5 . REPRESENTATIONS, WARRANTIES AND UNDERTAKING

 

5.1 The Borrower represents, warrants and undertakes to the Lender that:

 

(a) it's a corporation and is not involved in any court and bankruptcy proceedings as of the date of this Agreement; and
     
(b) this Agreement constitutes legal, valid and binding obligations which shall be enforceable to the maximum extent permitted by the law.

 

6. NO JOINT VENTURE OR PARTNERSHIP

 

6.1 Nothing in this Agreement shall create a partnership or joint venture between the Parties hereto and save as expressly provided in this Agreement neither party shall enter into or have authority to enter into any engagement or make any representation or warranty on behalf of or pledge the credit of or otherwise bind or oblige the other party hereto.

 

7. MISCELLANEOUS

 

7.1 No waiver, alteration, variation or addition to this Agreement shall be effective unless made in writing on or after the date of signature of this Agreement by the Parties and accepted by an authorised signatory of the Parties.

 

7.2 All notices, documents, consents, approvals or other communications (a 'Notice') to be given hereunder shall be in writing and shall be transmitted by registered or recorded delivery mail or courier or personal delivery to the party being served at the relevant address for that party shown at the head of this Agreement. Any Notice sent by mail or courier shall be deemed to have been duly served three working days after the date of posting or dispatch.

 

7.3 The headings in this Agreement shall not affect its interpretation.

 

  3  

 

 

7.4 Throughout this Agreement, whenever required by the context, the use of the singular number shall be construed to include the plural, and the use of the plural the singular, and the use of any gender shall include all genders.

 

7.5 Reference in this Agreement to a clause or Schedule is to a clause or Schedule of this Agreement.

 

7.6 If any term or provision in this Agreement shall be held to be illegal or unenforceable, in whole or in part, under any enactment or rule of law, such term or provision or part shall to that extent be deemed not to form part of this Agreement but the validity and enforceability of the remainder of this Agreement shall not be affected.

 

7.7 The waiver or forbearance or failure of a party in insisting in any one or more instances upon the performance of any provisions of this Agreement shall not be construed as a waiver or relinquishment of that party's rights to future performance of such provision and the other party's obligations in respect of such future performance shall continue in full force and effect.

 

7.8 This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof, and except as stated herein or in the instruments and documents to be executed and delivered pursuant hereto, contains all the representations and warranties of the Parties relating to the subject matter hereof.

 

7.9 The Borrower hereby acknowledges that he has obtained independent legal advice on all and every aspect of this Agreement.

 

7.10 Time shall be of the essence of this Agreement.

 

8. APPLICABLE LAW

 

8.1 This Agreement shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region.

 

8.2 Any disputes arising from this Agreement shall be determined according to the exclusive jurisdiction of the Hong Kong Courts.

 

  4  

 

 

IN WITNESS WHEREOF the parties hereto have signed, sealed, delivered and executed this Agreement as a Deed of the date first above.

 

 
The lender, Jet Key Limited  
   
 
The Borrower, Moxian Malaysia SDN. BHD.  

 

 

 

5

 

 

Exhibit 10.7

 

THIS LOAN AGREEMENT (executed as a deed) is made on June 30, 2015

 

BETWEEN

 

(1)  

Shenzhen Bayi Consulting Co., Ltd of Room 2003, 20/F, Tower B KingKey 100 Building, 5016 Shennan East Road, Luohu District, Shenzhen, China (hereinafter referred to as “the Lender” )

 

and

 

(2)   Moxian Technologies (Shenzhen) Co., Limited of Room 2313-2315, Block B, Zhongshen Garden, Caitian South Road, Futian District, Shenzhen, China (hereinafter referred to as “the Borrower”).

 

(hereinafter together referred to as “the Parties”)

 

1. RECITALS

 

1.1   The Lender lent the Borrower the Loan in June 30, 2015 in contemplation of and upon prior agreement to the terms and conditions contained in this Agreement and at the express request of the Borrower.
     
1.3   The Borrower has agreed to repay the Loan and interest accrued on the Loan in accordance with the terms of this Agreement.
     
1.4 In consideration of the Lender continuing to make the Loan available to the Borrower,   the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto hereby agree to the terms and conditions set out in this Agreement.

 

2. DEFINITIONS

 

The following words shall have the meanings set opposite them, except where the context otherwise requires:

 

“Default Interest” fixed interest rate of 0% per month from the date of the occurrence of an Event of Default.
   
Event of Default” any of the events referred to in paragraph 5
   

Interest Sum”

fixed interest rate on the Loan at the rate of 0% per month from the date of this Agreement until repayment

 

  1  

 

  

“Loan”

the aggregate sum of RMB 6,100,000.00(approximately U.S. $998,559.46) lent to the Borrower by the Lender in June 30, 2015

   
Maturity Date” one year from the date of this Agreement

 

3. THE LOAN

 

Loan Payment

 

3.1 The Lender lent the Loan to the Borrower and the Borrower acknowledges receipt of the same.

 

Repayment of the Loan

 

3.2   The Borrower shall repay the Loan to the Lender in full together with the Interest Sum accrued on or before the Maturity Date.
     
3.3   The Borrower is entitled to make repayment of the Loan before the Maturity Date.
     
3.4   The Parties may by mutual consent in writing extend the Maturity Date.
     
3.5   All payments by the Borrower under this Agreement shall so far as the law permits be made in full without any deduction or withholding (whether in respect of a set off, counterclaim, duties, tax, charges, levies or otherwise howsoever).

 

4. EVENTS OF DEFAULT

 

4.1 The Loan shall be immediately due and repayable to the Lender by the Borrower together with the Interest Sum accrued and any other liabilities, and Default Interest shall be payable on the same by the Borrower from the date of occurrence of any of the events of default as described below:

 

a. if the Borrower shall fail to pay on the due date any amount due hereunder;
     
b. if the Borrower shall fail to observe or comply with any of the covenants, conditions, obligations, agreements and stipulations herein contained;
     
c. if the Borrower shall become bankrupt or enter or seek to enter in any other form of composition or arrangement with its creditors whether in whole or in part; or
     
d. a petition is presented for bankruptcy of the Borrower.

 

  2  

 

   

5 . REPRESENTATIONS, WARRANTIES AND UNDERTAKING

 

5.1 The Borrower represents, warrants and undertakes to the Lender that:

 

(a) it's a corporation and is not involved in any court and bankruptcy proceedings as of the date of this Agreement; and
     
(b) this Agreement constitutes legal, valid and binding obligations which shall be enforceable to the maximum extent permitted by the law.

 

6. NO JOINT VENTURE OR PARTNERSHIP

 

6.1 Nothing in this Agreement shall create a partnership or joint venture between the Parties hereto and save as expressly provided in this Agreement neither party shall enter into or have authority to enter into any engagement or make any representation or warranty on behalf of or pledge the credit of or otherwise bind or oblige the other party hereto.

 

7. MISCELLANEOUS

 

7.1 No waiver, alteration, variation or addition to this Agreement shall be effective unless made in writing on or after the date of signature of this Agreement by the Parties and accepted by an authorised signatory of the Parties.

 

7.2 All notices, documents, consents, approvals or other communications (a 'Notice') to be given hereunder shall be in writing and shall be transmitted by registered or recorded delivery mail or courier or personal delivery to the party being served at the relevant address for that party shown at the head of this Agreement. Any Notice sent by mail or courier shall be deemed to have been duly served three working days after the date of posting or dispatch.

 

7.3 The headings in this Agreement shall not affect its interpretation.

 

7.4 Throughout this Agreement, whenever required by the context, the use of the singular number shall be construed to include the plural, and the use of the plural the singular, and the use of any gender shall include all genders.

 

7.5 Reference in this Agreement to a clause or Schedule is to a clause or Schedule of this Agreement.

 

7.6 If any term or provision in this Agreement shall be held to be illegal or unenforceable, in whole or in part, under any enactment or rule of law, such term or provision or part shall to that extent be deemed not to form part of this Agreement but the validity and enforceability of the remainder of this Agreement shall not be affected.

 

  3  

 

 

7.7 The waiver or forbearance or failure of a party in insisting in any one or more instances upon the performance of any provisions of this Agreement shall not be construed as a waiver or relinquishment of that party's rights to future performance of such provision and the other party's obligations in respect of such future performance shall continue in full force and effect.

 

7.8 This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof, and except as stated herein or in the instruments and documents to be executed and delivered pursuant hereto, contains all the representations and warranties of the Parties relating to the subject matter hereof.

 

7.9 The Borrower hereby acknowledges that he has obtained independent legal advice on all and every aspect of this Agreement.

 

7.10 Time shall be of the essence of this Agreement.

 

8. APPLICABLE LAW

 

8.1 This Agreement shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region.

 

8.2 Any disputes arising from this Agreement shall be determined according to the exclusive jurisdiction of the Hong Kong Courts.

 

  4  

 

 

IN WITNESS WHEREOF the parties hereto have signed, sealed, delivered and executed this Agreement as a Deed of the date first written above.

 

 
The Lender, Shenzhen Bayi Consulting Co., Ltd.  
   
 
The Borrower, Moxian Technologies (Shenzhen) Co., Ltd.  

 

 

 

5

 

 

Exhibit 10.8

 

THIS LOAN AGREEMENT (executed as a deed) is made on September 30, 2015

 

BETWEEN

 

(1)  

Shenzhen Bayi Consulting Co., Ltd of Room 2003, 20/F., Tower B KingKey 100 Building, 5016 Shennan East Rd, Luohu District, Shenzhen, China (hereinafter referred to as “the Lender”)

 

and

 

(2)  

Moxian Technologies (Shenzhen) Co., Limited of 9/F, Tower A, United Plaza, No.5022 Binhe Avenue, Futian District, Shenzhen, China (hereinafter referred to as “the Borrower” ).

 

(hereinafter together referred to as “the Parties”)

 

1. RECITALS

 

1.1   The Lender lent the Borrower the Loan in September 30, 2015 in contemplation of and upon prior agreement to the terms and conditions contained in this Agreement and at the express request of the Borrower.
     
1.3   The Borrower has agreed to repay the Loan and interest accrued on the Loan in accordance with the terms of this Agreement.
     
1.4 In consideration of the Lender continuing to make the Loan available to the Borrower,   the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto hereby agree to the terms and conditions set out in this Agreement.

 

2. DEFINITIONS

 

The following words shall have the meanings set opposite them, except where the context otherwise requires:

 

“Default Interest” fixed interest rate of 0% per month from the date of the occurrence of an Event of Default.
   
Event of Default” any of the events referred to in paragraph 5

 

Interest Sum”

fixed interest rate on the Loan at the rate of 0% per month from the date of this Agreement until repayment

 

  1  

 

 

Loan”

the aggregate sum of RMB 2,080,000 lent to the Borrower by the Lender in September 30, 2015

   
Maturity Date” one year from the date of this Agreement

 

3. THE LOAN

 

Loan Payment

 

3.1 The Lender lent the Loan to the Borrower and the Borrower acknowledges receipt of the same.

 

Repayment of the Loan

 

3.2   The Borrower shall repay the Loan to the Lender in full together with the Interest Sum accrued on or before the Maturity Date.
     
3.3   The Borrower is entitled to make repayment of the Loan before the Maturity Date.
     
3.4   The Parties may by mutual consent in writing extend the Maturity Date.
     
3.5   All payments by the Borrower under this Agreement shall so far as the law permits be made in full without any deduction or withholding (whether in respect of a set off, counterclaim, duties, tax, charges, levies or otherwise howsoever).

 

4. EVENTS OF DEFAULT

 

4.1 The Loan shall be immediately due and repayable to the Lender by the Borrower together with the Interest Sum accrued and any other liabilities, and Default Interest shall be payable on the same by the Borrower from the date of occurrence of any of the events of default as described below:

 

a. if the Borrower shall fail to pay on the due date any amount due hereunder;
     
b. if the Borrower shall fail to observe or comply with any of the covenants, conditions, obligations, agreements and stipulations herein contained;
     
c. if the Borrower shall become bankrupt or enter or seek to enter in any other form of composition or arrangement with its creditors whether in whole or in part; or
     
d. a petition is presented for bankruptcy of the Borrower.

 

  2  

 

  

5 . REPRESENTATIONS, WARRANTIES AND UNDERTAKING

 

5.1 The Borrower represents, warrants and undertakes to the Lender that:

 

(a) it's a corporation and is not involved in any court and bankruptcy proceedings as of the date of this Agreement; and
     
(b) this Agreement constitutes legal, valid and binding obligations which shall be enforceable to the maximum extent permitted by the law.

 

6. NO JOINT VENTURE OR PARTNERSHIP

 

6.1 Nothing in this Agreement shall create a partnership or joint venture between the Parties hereto and save as expressly provided in this Agreement neither party shall enter into or have authority to enter into any engagement or make any representation or warranty on behalf of or pledge the credit of or otherwise bind or oblige the other party hereto.

 

7. MISCELLANEOUS

 

7.1 No waiver, alteration, variation or addition to this Agreement shall be effective unless made in writing on or after the date of signature of this Agreement by the Parties and accepted by an authorised signatory of the Parties.

 

7.2 All notices, documents, consents, approvals or other communications (a 'Notice') to be given hereunder shall be in writing and shall be transmitted by registered or recorded delivery mail or courier or personal delivery to the party being served at the relevant address for that party shown at the head of this Agreement. Any Notice sent by mail or courier shall be deemed to have been duly served three working days after the date of posting or dispatch.

 

7.3 The headings in this Agreement shall not affect its interpretation.

 

7.4 Throughout this Agreement, whenever required by the context, the use of the singular number shall be construed to include the plural, and the use of the plural the singular, and the use of any gender shall include all genders.

 

7.5 Reference in this Agreement to a clause or Schedule is to a clause or Schedule of this Agreement.

 

7.6 If any term or provision in this Agreement shall be held to be illegal or unenforceable, in whole or in part, under any enactment or rule of law, such term or provision or part shall to that extent be deemed not to form part of this Agreement but the validity and enforceability of the remainder of this Agreement shall not be affected.

 

  3  

 

 

7.7 The waiver or forbearance or failure of a party in insisting in any one or more instances upon the performance of any provisions of this Agreement shall not be construed as a waiver or relinquishment of that party's rights to future performance of such provision and the other party's obligations in respect of such future performance shall continue in full force and effect.

 

7.8 This Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof, and except as stated herein or in the instruments and documents to be executed and delivered pursuant hereto, contains all the representations and warranties of the Parties relating to the subject matter hereof.

 

7.9 The Borrower hereby acknowledges that he has obtained independent legal advice on all and every aspect of this Agreement.

 

7.10 Time shall be of the essence of this Agreement.

 

8. APPLICABLE LAW

 

8.1 This Agreement shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region.

 

8.2 Any disputes arising from this Agreement shall be determined according to the exclusive jurisdiction of the Hong Kong Courts.

 

  4  

 

 

IN WITNESS WHEREOF the parties hereto have signed, sealed, delivered and executed this Agreement as a Deed of the date first written above.

 

 
The Lender, Shenzhen Bayi Consulting Co., Ltd.  
   
 
The Borrower, Moxian Technologies (Shenzhen) Co., Ltd.  

 

 

5

 

 

Exhibit 21.1

 

List of Subsidiaries

 

Name   Jurisdiction  

Equity Owners and Percentage

of Equity Securities Held

         
Moxian Intellectual Property Limited   Samoa   100% owned by Moxian, Inc.
         
Moxian CN Group Limited   Samoa   100% owned by Moxian, Inc.
         
Moxian Group Limited   British Virgin Islands   100% owned by the Moxian CN Group Limited
         
Moxian (Hong Kong) Limited   Hong Kong   100% owned by Moxian Group Limited
         
Moxian Technologies (Shenzhen) Co., Ltd.   PRC   100% owned by Moxian (Hong Kong) Limited
         
Moxian Malaysia SDN BHD   Malaysia   100% owned by Moxian (Hong Kong) Limited

Exhibit 31.1

 

CERTIFICATION

 

I, James Mengdong Tan, hereby certify that:

 

  1. I have reviewed this Annual Report on Form 10-K for the year ended September 30, 2015 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;

 

  c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

 

  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 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 registrant's board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

  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: December 22, 2015 By: /s/ James Mengdong Tan
  Name: James Mengdong Tan
  Title: President and Chief Executive Officer
    (Principal Accounting Officer)

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 the Annual Report of Moxian, Inc. (the “Company”) on Form 10-K for the year ending September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

 

  (1) The Report 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 the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

  

Dated: December 22, 2015 By: /s/ James Mengdong Tan
  Name: James Mengdong Tan
  Title: President and Chief Executive Officer
    (Principal Accounting Officer)

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.