DESCRIPTION OF BUSINESS

EXECUTIVE SUMMARY

Moxy OID Technology Management LTD is a manufacturing company registered in British Columbia, Canada. This company has developed a propietary construction material called CERLOS. The company claims that this material is:

  • Fire-resistant, achieving a Class-A rating.
  • Termite, insect, rodent and bird-resistant.
  • Mould-resistant.
  • Water-resistant and stable in all weathers, without shrinking or swelling.
  • Able to be cut, machined, drilled, and otherwise worked in-field.
  • Ready to be molded to almost any shape in manufacturing.
  • Created from raw agricultural waste, and therefore virtually unlimitedly available.
  • Recyclable.

The management team is comprised of seasoned professionals with decades of experience in the construction material industry. Similarly, the advisor team is experienced in the fields of blockchain and marketing, with a solid track record and expertise. The team lacks a legal department or a legal advisor/company to support it. Besides, a customer relations director could be necessary for fluid customer engagement and grievances handling. Our researchers’ background checks for the management team members and advisors could not return any evidence of participation in illegal, controversial, or legally troubled projects in the past.

Moxy aims to raise $20,800,000 in three rounds, by selling 25 million ERC1400 tokens via an Initial Exchange Offering. CERLOS tokens are asset-backed security tokens. These tokens are issued and distributed by CERLOS Inc, a company registered in Labuan Malaysia. Owners of CERLOS tokens are not shareholders of either CERLOS Inc or MOXY OID, but can contractually claim the rights to the income distributed by CERLOS Inc. CERLOS Inc owns a 25% equity in MOXY OID, thus has the rights to 25% of the profits distributed by the Canadian company. The company decided to pause its crowdfunding campaign due to the COVID-19 pandemic-related market disruptions. Labuan, Malaysia is considered to be a mid-shore jurisdiction, meaning it is a particular sandbox jurisdiction within Malaysia. It is known for its relaxed financial laws and low taxes, such as a 3% corporate tax. The jurisdiction offers Blockchain Licences for crypto exchanges, e-wallet payment systems, ICOs and STOs. CERLOS also has strategic partnerships with VDL Technologies (tech), Earth & Eternity BV (custodial services), and Kingspan (construction). Separate letters of intent have also been signed with VDL Technologies and Kingspan, respectively.

Our researchers gave Cerlos a final rating of 61.7%. The breakdown of this rating is available at the end of our report.

PRODUCT & COMPANY DESCRIPTION

Moxy OID developed CERLOS, a proprietary building material that is fire, mould, rot, and insect-resistant. CERLOS is 100% made with natural ingredients, such as wood fibres and agricultural residues. Its main advantage over traditional products is that the raw materials that are used for its design and construction are deemed as unlimited. At the end of each use cycle, CERLOS can be recycled. CERLOS is also cheaper and more durable than similar products. This company is headquartered in Vancouver, Canada, and intends to build a facility in the Pacific Northwest to manufacture CERLOS products.

Objectives

  • Patent applications.
  • Building a high-capacity manufacturing facility.
  • Using traditional media to market CERLOS.
  • Using influencer marketing to introduce CERLOS to homeowners.
  • Creating a strong salesforce around the world.

Vision

As stated on the project’s website:

“MOXY OID will become a global supplier of sustainable building products, initially accelerating High-Capacity manufacturing operations in North America, followed by Europe, Latin America, and Asia-Pacific.”

Success Factors

  • Innovative product.
  • Big potential market.
  • Experienced executive team.
  • Solid partnerships.

MARKET CONDITIONS AND COMPETITION

Market Conditions

The COVID-19 pandemic and the subsequent lockdowns that governments imposed to prevent the spread of the virus have severely affected the construction industry. The road to recovery, as it happens with many industries, is not yet clear. A PWC report mentions a few problems caused by the pandemic, such as supply chain bottlenecks of equipment and material from Asia, as well as widespread construction site shutdowns. This has caused subcontractors to become especially vulnerable to bankruptcy.

Despite the COVID-19 crisis, the global market for construction materials is estimated at $1 Trillion in 2020 and is projected to reach a revised size of $1.5 Trillion by 2027, growing at a CAGR of 5.6% over this period.

According to Grand View Research, the green buildings material market will be worth $364.6 billion by 2022. Their reports state that insulation (against fire mostly) will be the fastest-growing aspect of sustainable construction, due to the market demand for fire-resistant shelters, which makes CERLOS products, in theory, a good fit for the market. 

Competition

CERLOS’ competition consists of multi-billion dollar international companies that have operated in the construction industry for decades, such as Saint-Gobain, LP, and James Hardie. All of these companies have existing supply chains worldwide and reach consistent with their age and size. Within this market, CertainTeed is North America’s leading brand. CertainTeed and its affiliates have more than 6,300 employees, and more than 60 manufacturing facilities.

Other significant competitors are:

LP’s Canexel, with $2.3 billion net sales in 2019 ( with $963m originating from their siding business), EBITDA $165m. Louisiana-Pacific Corporation, a leading manufacturer of quality-engineered wood building materials with facilities in the U.S., Canada, Chile and Brazil.

James Hardie: A global leader in the production of interior and exterior building products, generating more than $2.5 billion in net sales and employing more than 4,900 people in North America, Australia, New Zealand, the Philippines, and Europe.

How is CERLOS different from its competition? 

Moxy OID claims that the CERLOS material is fire, mould, water, termite, insect, rodent and bird-resistant and that it can be shaped into almost any form in manufacturing. The company’s whitepaper, at a point, focuses on comparing CERLOS product with the competition, as seen below:

TECHNOLOGY REVIEW

Product

CERLOS was created based on research by Moxy OID Founder and CTO, Alan Heywood. Alan used a process called mineralisation, which happens when organic fibres strengthen, as the porous gaps in the threads or cells are filled. This process can occur naturally under certain conditions, resulting in petrified wood or fossils and can also happen biologically with the formation of bones, eggshells, teeth or coral. 

The primary ingredient of CERLOS is lignocellulosic fibre, which is present in almost every living plant. Therefore, this fibre can be sourced from agricultural waste and other organic material sources, even those currently considered unusable in the production of building materials. The company recognises using two other ingredients but does not disclose their names. One of them is ‘a commonly available, inexpensive, non-toxic mineral’ and the other is ‘also a commonly available non-toxic liquid’. Both are inexpensive and can be found in large quantities, as the company states in their whitepaper. 

A $7 million, four-year design, engineering, and development program took place between 2012 and 2017. The program resulted in several proprietary processing steps, with unique equipment for a large-scale Pilot plant production facility, and validated commercial quality and quantity for CERLOS production. The Pilot plant was built in Holland in collaboration with VDL Enabling Technologies Group, an engineering and equipment manufacturing firm. 

The results of these extensive investigations will be implemented in a high-volume manufacturing line.

Blockchain

Moxy OID uses the Ethereum network to issue ERC1400 tokens, otherwise called ‘Security Tokens’. ERC1400 is considered a hybrid standard since it shares characteristics of both fungible (ERC20) and non-fungible tokens (ERC721). Security tokens represent complete or fractional ownership of assets and entities. While utility tokens have no limitations as to who can send or receive them, security tokens are subject to many restrictions based on identity, jurisdiction and asset category. 

Since CERLOS tokens will be security and not utility tokens used for payments, scalability of the token model is not an issue for this project. On the other hand, choosing the Ethereum network means the highest security, with this project being governed in terms of ETH’s consensus mechanisms.

ROADMAP

The project’s roadmap starts 35 years ago, when Alan Heywood purchased a patent and formed C-Max Technologies. It continues by mentioning important technology developments until 2017, when a Pilot plant is built in Holland. From then on, the roadmap is divided into quarterly points with Q3,20, Q4,20 & Q1,21 missing.

TEAM

  • Robert Bedard, CEO: Several years of professional experience, with over two decades specifically in the construction and insurance industries.
  • Alan Heywood, CTO: Several years of professional experience, with over 30 years in the space of innovation and technology.
  • Robert Gagne, CIO: About a decade of experience in the field of Information Technologies.
  • Mark Solomon, Business Dev & Marketing: More than 10 years’ professional experience in business development and marketing. His resume prominently shows blockchain-related activities and involvement in similar projects.
  • Antoon Eggenhuizen, EU Advisor: Over 30 years of professional experience, holding managerial roles for over two decades.

Advisors

  • Don Asok, Technology Advisor: A specialist in big data, ecosystem strategy, collaboration and implementation. He has worked for several IT firms in Singapore for the last ten years. His background is in IT. 
  • Vin Menon, Blockchain Advisor: An entrepreneur and advisor, leading several startups across continents. He has worked as an advisor for a couple of blockchain projects, and founded several IT solution companies. His academic background concerns International Business.
  • Kate Alippa, Marketing Advisor: Kate has carried over ten marketing campaigns for blockchain startups. Besides this, she has led several communication and marketing teams in different companies. Her background is in Psychology.

General Comments on the Team & Advisors

The management team includes professionals with decades of experience in the construction material industry. Similarly, the advisor team is experienced in the fields of blockchain and marketing, with a solid track record and expertise. All three of the advisors list CERLOS on their LinkedIn profile, none of them, however, has published an article or supported the project on social media. 

As a result of our researchers’ background check of the management team members and advisors, there is no evidence of any of them participating in any illegitimate, controversial or legally troubled projects in the past. 

What skills does the team lack? 

The team lacks a legal department or a legal advisor/company. Without sound legal guidance, it would be too challenging to navigate the complex token legal landscape. In general, it can be said that the team could benefit from general blockchain expertise, as well as ongoing activities that reflect the viability of their project.

LEGAL AND COMPLIANCE SPECIFICS

Jurisdiction

Moxy OID Technology Management LTD is the parent company of CERLOS Inc. It is registered under the Business Number (BN): 824914808 in British Columbia and their offices reside at 1021 West Hastings Street, 9th Floor, Vancouver, British Columbia, Canada, V6E 0C3.

CERLOS Inc. is the company in charge of issuing tokens and raising funds on behalf of Moxy OID. It is registered in Labuan, Malaysia under the registration number LL16518 and their offices are registered under this address: Lot A020, Level 1, Podium Level Financial Park Jalan Merdeka 87000, Federal Territories of Labuan, Malaysia.

Labuan, Malaysia is considered to be a mid-shore jurisdiction, meaning it is a special jurisdiction within Malaysia that enables international companies to deal with Malaysian ones. It is known for its relaxed financial laws and low taxes, such as a 3% corporate tax.

This jurisdiction offers Blockchain Licences for crypto exchanges, e-wallet payment systems, ICOs and STOs.

Legal Risks

In the project’s whitepaper, specifically in pages 70–73 some risks are identified, such as financial risks, company structure risks between CERLOS/Moxy OID, and limited operational history. Many of these risks could have legal implications and result in legal risks. Some of the identified risks are standard risks associated with the construction industry. 

In regard to the IEO offering, several points are noteworthy: 

  • KYC/AML checks are required for investors (as per section below). 
  • ERC1400 tokens necessarily imply defined restrictions, such as in-wallet holding period, KYC, etc. 
  • The project’s website privacy policy was updated on January 8, 2020, explicitly mentioning compliance with “Regulation (EU) 2016/679 of the European Parliament and of the Council, of April 27 2016, on the protection of natural persons with regard to the processing of personal data”. It also mentions the GDPR in the context of “…meeting the requirements of the GDPR, guaranteeing the protection of data subjects rights.”

Legal Advisors

CERLOS does not report any legal advisors in their team. However, they declare in their whitepaper to have spent $60,000/year on legal affairs. It is very likely that they have engaged ad-hoc external legal advisor(s), who are not integrated as part of the team. 

Even though the leadership and advisor team, as presented on the website, does not have a legal background, there is clear evidence of active legal assistance based on:

  1. Heavy use of legal verbiage in the 80-page white paper, including pages 70-73 and 76-79, with legal verbiage for every team member, and special legal verbiage for specific countries (Singapore, UAE, Bahrain), and an exclusionary list of countries for investors (including countries like Malaysia, USA, Canada) as well as countries with political conflicts (e.g. Venezuela, Sudan, Ukraine, Iran, Libya, Congo etc.) 
  2. Significant legal disclaimers on pages 4-5 of the whitepaper.

Additionally, 10% of the allocation of all funds raised will go to legal, business development, and administrative expenses.

Partnerships and Legal Agreements

CERLOS has strategic partnerships with VDL Technologies, Earth & Eternity BV, and Kingspan. A letter of intent has been signed with VDL Technologies and Kingspan. 

VDL Technologies provides services to CERLOS by helping to bring a CERLOS production line to the level of manufacturing sellable boards. 

Earth & Eternity BV and Kingspan, in cooperation with CERLOS, research the technical and economical applicabilities of CERLOS products for their manufacturing. 

Some other companies that are listed as CERLOS Certified Representatives and that can be considered as CERLOS’ partners are: Tims Team, Seacrest Builders, Tristar Roofing and Gutters, Novastar Contracting LTD.

KYC & AML

According to the whitepaper, only accredited investors can participate in the token sale. Besides, without the KYC procedure, it is basically impossible to use the acquired CERLOS token to attain profits. The document states:

‘Only holders of the CERLOS token who can prove legal ownership can claim their rights to the profit. To ensure the legitimacy of the investors, KYC/AML checks are required. This ensures that the identity of the investors and the trustworthiness of the nature of their business, thus preventing illegitimate funds from participating in the offering.’ 

And also: ‘Investors from the following countries are not allowed to participate: Malaysia, USA, Canada, Syria, Iran, Iraq, Congo, Libya, North Korea, Somalia, Sudan, Ukraine, Venezuela, Yemen, Zimbabwe, Belarus, Cuba.’

Corporate Structure

Token Classifications

CERLOS classifies tokens as asset-backed, therefore, securities. 

Owners of CERLOS tokens are not shareholders of either CERLOS Inc or MOXY OID, but can contractually claim rights to the income distributed by CERLOS Inc according to their percentage share. Only holders of the CERLOS token who can prove legal ownership can claim their rights to these profits.

TOKEN OFFERING

CERLOS Inc owns 25% equity in MOXY OID, thus has the rights to 25% of the profits distributed by the Canadian company. They plan to raise up to $20,800,000 in three rounds by selling 25 million ERC1400 tokens via the CGCX.io in the form of an Initial Exchange Offering. CERLOS will retain unsold tokens as treasury tokens, which means that the company can offer them for funding in the future. 

Given the underlying unique construction material product, its cost-efficiency, and a colossal $1 trillion global addressable market, the company valuation should be quite high. The funding target, therefore, seems reasonable, considering that the business requires a large amount of funds to set up, build production lines and maintain offices in Canada, a considerably expensive country. Additionally, they claim to have spent $20 million in the past 20 years on Research and Development. If accurate and justifiable through existing Assets, this figure, makes for a reasonable funding target. 

Use of Funds

SOCIAL MEDIA AND VIRALITY

The project has 394 followers on Twitter and they tweet actively about their construction material product, but hardly anything about the upcoming token sale. 

CERLOS is relatively active on LinkedIn with a considerable number of posts per week, and several reactions to them. The account has 1,729 followers. 

  1. CERLOS counts with a small number of mentions on Facebook, 21 in total. Furthermore, it has 513 followers on this social network, posting at least three times per week.
  2. The project counts 591 Telegram members and some activity from the team, mainly from Marketing Advisor Kate Alippa and CIO Robert Gagne. 
  3. CERLOS has 21 subscribers on Youtube with 10 videos uploaded. Besides the project’s own YouTube channel, there is practically no other mention of MOXY OID. or CERLOS on YouTube.

Bounty Campaign

CERLOS has an extensive bounty campaign posted on the BitcoinTalk forum, which can be found using the following link: https://bitcointalk.org/index.php?topic=5226965.msg53870343#msg53870343 

The bounty funds amount to $300,000 in CGCX tokens, native token of the exchange that the IEO will be carried on. The bound allocation, destined to pay users to promote the project on social media sites, is distributed as follows:

  • LinkedIn 10% ($30K)
  • Facebook 10% ($30K)
  • Twitter 10% ($30K) 
  • Blog and Media 35% ($105K) 
  • Bitcoin signature 25% ($75K) 
  • Translation and Moderation 10% ($30K)

ICO Reviews

Cerlos has received reviews on a number of websites dedicated to compile ICO evaluations. 

The most notable are:

  • ICOholder: 7.0 /10 
  • ICOmarks: 7.0 /10 
  • CryptoTotem: 8.5 /10

RATINGS

DISCLAIMER

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