We are short Moxian, Inc. (Nasdaq: MOXC).
MOXC’s main operating subsidiary in China, Moxian Shenzhen, and its purported VIE, Moyi Shenzhen, do not have the national licenses required to operate an online advertising business in China: MOXC claims that Moxian Technology (Shenzhen) Co., Ltd. (“Moxian Shenzhen”) is its main operating entity in China, selling online advertising services in China to foreign companies through its purported VIE, Shenzhen Moyi Technologies Co. Ltd. (“Moyi Shenzhen”). MOXC claims that Moyi Shenzhen holds the essential Internet Content Provider (“ICP”) License issued by the Chinese government that is required to operate an online advertising business in China.
We found numerous issues with MOXC’s claims. Most importantly, Moxian failed to disclose that Moyi’s national license, issued in 2015, specifically “excludes internet information services” which is interpreted to mean that Moyi Shenzhen may only push advertising through non internet platforms (such as mobile phones). To make things worse, even this “non internet” 2015 license was cancelled by the Ministry of Industry and Information Technology of China (“China MIIT”) in February 2021. Therefore, it appears to us that Moyi Shenzhen and Moxian are no longer able to provide information services or legally generate revenue through placing ads on non-internet platforms. Secondly, though Moxian did disclose a 2014 “ICP License” in its SEC filings, our research shows that such 2014 license was issued by the Guangdong Provincial government and by our understanding cannot be used for “cross-regional” (i.e., beyond the Guangdong Province) services. Moxian failed to disclose this crucial territorial limitation on its 2014 ICP license.
Further, while MOXC’s SEC filings refer to Moyi Shenzhen as a “VIE”, we found none of the requisite contracts, share pledge agreements or share pledge public records that make up the VIE structure commonly used by China-based U.S. listed companies. Unless MOXC can provide the share pledge agreements and other contracts that make up a VIE structure, Moyi Shenzhen does not have an enforceable VIE relationship with Moxian Shenzhen due to key components being missing. This tells us that MOXC could not legally be operating an online advertising business in China. Our research indicates that it is highly unlikely that Moxian Shenzhen or its “VIE” Moyi Shenzhen could be actively operating an online advertising business in China for five main reasons:
We attempted to inquire about the process to become a MOXC customer, and were unable to get a response to a submission on its website (moxianglobal.com), and found that both their listed phone numbers were not active and their email server did not function.
MOXC failed to disclose that (i) its “VIE” Moyi Shenzhen’s 2014 “Internet Content Provider License” was only good for the Guangdong province of China (as compared to all territories in China) and (ii) Moyi Shenzhen’s 2015 granted “Information Service Business” License actually “excludes internet information services” and was canceled by the Chinese government on February 2021.
Moxian Shenzhen, MOXC’s main operating entity in China doesn’t have an actual General Manager and has ignored a court order to remove its former GM from its government records for nearly a year.
There are at least 7 severe court sanctions against the common legal representative of Moxian Shenzhen and its VIE Moyi Shenzhen.
Moxian Shenzhen, its VIE Moyi Shenzhen and its 100% subsidiary Moxian Shanghai have all been repeatedly sanctioned by the PRC government for failing to file basic annual reports, and for “uncontactable” registered or operational business addresses (for once we agree with the PRC Government, we weren’t able to contact them either).