NFT Subscription Agreement

THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR OTHER JURISDICTION IN WHICH AN OFFER OR SOLICITATION IS NOT AUTHORIZED. 

Notice to investors in the United States

The NFTs and OilXCoins have not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or any United States state securities laws or the laws of any foreign jurisdiction. The NFTs and OilXCoins that will be received by investors will be offered and sold only (A) outside the United States to non-U.S. Persons who are not purchasing for the account or benefit of a U.S. Person as defined under Regulation S under the Securities Act (“Regulation S”) or (B) in the United States to “accredited investors” (as defined in Regulation D under the Securities Act (“Regulation D”) pursuant to Rule 506(c) thereof, and other exemptions of similar import in the laws of the states and other jurisdictions where an offering of NFTs and OilXCoins will be made. NFTs and OilXCoins sold to U.S. investors or in the United States will be subject to the transfer restrictions set forth in the applicable subscription document, and each investor that is a U.S. person or in the United States must provide proof to the Issuer that such investor is an "accredited investor” as defined in Regulation D prior to any purchase. The Issuer will not be registered as an investment company under the United States Investment Company Act of 1940, as amended (the “Investment Company Act”), and investors will not be afforded the protections of the Investment Company Act.

Notice to investors in Switzerland

Neither this document nor any other offering or marketing material relating to the NFTs and OilXCoins or the transaction described herein (the “Transaction Documents”) constitutes a prospectus pursuant to the Swiss Financial Services Act (“FinSA”), and the Transaction Documents have not been and will not be reviewed or approved by a Swiss prospectus review office in accordance with Article 51 FinSA. The Transaction Documents may not be distributed or otherwise made available in Switzerland in a manner that would require the publication of a prospectus in Switzerland pursuant to FinSA.

The NFTs and OilXCoins are not and may not be publicly offered or marketed directly or indirectly in or into Switzerland within the meaning of FinSA, except under circumstances where such offer does not require the publication of a prospectus pursuant to FinSA. Subject to the foregoing, the Issuer may offer the NFTs and OilXCoins in or into Switzerland to the public if such offer does not exceed a total value of CHF 8 million over a 12-month period.

Agreement for the Sale of NFTs
(the "Agreement")

dated as of the Effective Date (as defined herein)

by and among

DeXentra GmbH, Landis + Gyr-Strasse 1, 6300 Zug

(the "Issuer")

and

Each Buyer (as defined herein)

(the "Buyer" and
together with the Seller and the Company
the "Parties" and each a "Party")

regarding the sale and purchase of the OilXCoin NFT.

(a)  The Issuer is a limited liability company incorporated under the laws of Switzerland (Gesellschaft mit beschränkter Haftung / société à responsabilité limitée, articles 772 et seq. of the Swiss Code of Obligations) having its principal office in Zug, Switzerland.

(b)  The Issuer expects to conduct, directly or through affiliates, business activities which mainly include (a) the purchase or lease of oil reserves (oil-in-place), natural gas reserves (gas-in-place), or land that has been identified as being atop of oil-in-place or gas-in-place, or (b) investments (including joint ventures) and operational expenses to extract the oil or natural gas.

(c)  To finance its operations, the Issuer intends to issue a token that will be linked to the value of those of Issuer's assets which will be used to conduct the Issuer's oil and gas business (this token, the "OilXCoin").

(d)  Prior to the Issuance of the OilXCoin, the Issuer is issuing non-fungible tokens (the "NFTs") which provide their holders with, among others, (a) a one-time right to receive OilXCoins and (b) the right to receive royalty payments based on transaction fees levied on certain transfers of OilXCoins. The NFTs are offered to a restricted number of prospective buyers qualifying as Eligible Persons (as defined hereunder).

(e)  Subject to the terms and conditions of this Agreement, the Eligible Person wishing to purchase one or several NFTs from the Seller accepts to enter into this Agreement in accordance with the procedures described herein (the "Buyer").

(f)   Both the OilXCoin and the NFT are or will be subject to terms and conditions which will be binding on the Issuer and the Buyer.

In addition to the other terms defined elsewhere in this Agreement, the following words and terms shall have the meaning set forth below:

(a)  "Business Day" means any day, other than a Saturday or a Sunday, on which commercial banks are opened for normal business in Zug, Switzerland.

(b)  "Buyer Wallet" means the Digital Wallet of the Buyer on which the Buyer has asked to receive any NFT purchased pursuant to this Agreement. The Buyer Wallet must be able to receive ERC-721 tokens.

(c)  "Digital Wallet" means a technological means of exercising control over a certain quantity of digital tokens, such as NFTs or cryptocurrencies. A Digital Wallet may involve a pair of alphanumeric strings called "keys", comprised of a public key and a private key.

(d)  "Eligible Person" means a person or entity for whom the warranties and representation listed in section 3) are true.

(e)  "Issuer Wallet" means the following Digital Wallet on the Ethereum Blockchain: 0xa7F52C08F3b9784241FaaF58753E8f90814bc2eB

(f)   "Platform" means the password-protected webpage or series of webpages accessible through https://oilxcoin.ch/login or https://oilxcoin.us/login.

(g)  "Purchase Price" means the price (denominated in ETH, the native cryptocurrency of the Ethereum blockchain or in fiat currency, at the option of the Issuer) at which the NFTs are sold to the Buyer, as displayed on the Platform at the final step of the order process.

(h) "Sanction" means any sanction or embargo administered by the Swiss government, the United States, the European Union or the United Nations, the United Kingdom, and any other applicable sanctions regime.

(i) "Term Sheets" the term sheets relating to the NFTs (Schedule 1) and to the OilXCoin (Schedule 2). 

(a)  This Agreement applies to the sale of NFTs by the Issuers to the Buyer, i.e. a person or entity that (a) has expressed the will to purchase one or several NFTs via the Platform and (b) is an Eligible Person. No person or entity who is not an Eligible Person is permitted to acquire any NFT.

(b)  The NFTs are subject binding terms and conditions (the "NFT Terms"). The NFT Terms are available on the Platform and provided as Schedule 1 to this Agreement.

(c)  The Issuer shall not accept any deviating terms and conditions of the Buyer. This also applies if the Issuer does not expressly object to their inclusion.

(a)  The Buyer represents and warrants as of the date of this Agreement and will be deemed to repeat these representations and warranties as of the Closing Date (as defined below) that:

  (i)  The Buyer has the necessary legal capacity, authority and power (if applicable) to enter into this Agreement and perform the Buyer's undertakings under or in connection with this Agreement.

  (ii)  The obligations of the Buyer under this Agreement constitute binding obligations of the Buyer in accordance with its terms.

  (iii)  The Buyer acquires any NFT for its own account and is not acting for any third party as agent, fiduciary, nominee or in any other capacity.

  (iv)  The Buyer is the sole beneficial owner of the funds used to pay the Purchase Price.

  (v)  The Buyer has read, reviewed and understood the Term Sheets as well as all such information which the Buyer deems necessary or appropriate concerning (1) the Buyer's commitment to invest and its purchase of any NFT, (2) the Issuer and (3) any other matter relevant to its decision to enter into this Agreement.

  (vi)  In agreeing to invest in and to purchase the NFTs, the Buyer is not relying on any representation, warranty, confirmations, promises or agreements by the Issuer or any of the Issuer's affiliates or any of its or their directors, employees, advisers or agents or any other person acting on their behalf.

  (vii)  In making its decision to purchase the NFTs, the Buyer (1) has made its own investment decision regarding the NFTs based on its own knowledge (including any information it may have or which is publicly available) with respect to the NFTs, the OilXCoins and the Issuer ; (2) has sufficient knowledge and experience in financial and business matters and expertise in assessing credit, market and all other relevant risks and is capable of evaluating, and has evaluated, independently the merits, risks and suitability of purchasing the NFTs; (3) understands and has significant experience of cryptocurrencies, blockchain systems and services, and that fully understands the risks associated with the NFTs as well as the mechanism related to the use of cryptocurrencies and blockchain purchase address; (4) recognizes that an investment in the NFTs involves substantial risk and could result in the complete loss of such investment; and (5) can afford the complete loss of such investment.

  (viii)  The Buyer became aware that the NFTs were being offered to it solely by means of direct contact between the Buyer and the Issuer, and not by any other means, including by any form of general solicitation or general advertising.

  (ix)  With respect to offers and sales outside the United States, the Buyer is not a person who has a registered address in, or is a resident, citizen or national of, a country or countries in which it is unlawful to accept an offer to purchase the NFTs, including but not limited to the United States. With respect to offers and sales in the United States, the Buyer is an "accredited investor” as defined in Regulation D and will provide the Issuer with proof of its status as accredited investor.

  (x)  The Buyer has not taken any action in any country or jurisdiction that would constitute a public offering of the NFTs or the OilXCoin, or which would require the Buyer or any other person or entity to submit any filing to, or take any action to register the NFTs or the OilXCoin with, any governmental, regulatory or legal authority, or to perform any additional action in relation to the NFTs or the OilXCoin.

  (xi)  The Buyer is not subject to any Sanction, and is not acting on behalf of any person or entity that is subject to Sanctions, and is not an officer, director or owner of any entity that is subject to Sanctions.

  (xii)  The Buyer has reviewed, understands and accepts the risks as set out in Exhibit 1.

  (xiii)  The Buyer understands and expressly accepts that the NFTs will be transferred to the Buyer at the sole risk of the Buyer on an "as is" basis. The Issuer makes no warranty whatsoever with respect to the purchased NFTs. In particular, the Issuer makes no warranty whatsoever regarding:

    a.  any ability to trade the NFTs on any marketplace;

    b.  any future performance of the NFTs;

    c.  the amount of any payments (if any) to be made to the Buyer as holder of any NFT;

    d. the technical functioning of the NFTs, including whether they are free of defects;

    e. the timing of delivery of the OilXCoins and any features, tax treatment or performance of the OilXCoins.

(a)  The Buyer undertakes to the Issuer:

  (i)  not to take any action in any country or jurisdiction that would constitute a public offering of the NFTs or the OilXCoin, or which would require the Buyer or any other person or entity, including but not limited to the Issuer, to submit any filing to, or take any action to register the NFTs or the OilXCoin with, any governmental, regulatory or legal authority, or to perform any additional action in relation to the NFTs or the OilXCoin;

  (ii)  to immediately inform the Issuer in the event any of the representations and warranties set forth herein would cease to be true and correct in all material respects.

  (iii) to comply with any sales and transfer restrictions set forth herein, including but not limited Section 8(a) below, and not to undertake any offer, sale or transfer of the NFTs or OilXCoin that would violate the provisions of the Agreement or the terms of the NFTs or OilXCoin;

  (iv) to provide copies of this Agreement and its schedules and exhibits to any person buying any NFT from the Buyer and specifically inform such person that (x) the final terms of the NFT have been or will only be notified to such person through the Issuer's website indicated in the Term Sheet relating to the NFTs, (y) by buying the NFT, the purchaser agrees to be bound by the provisions of the Agreement and the terms of the NFTs and OilXCoin, including but not limited to any restrictions on transfer or the manner of offer and sale of the NFTs and OilXCoin,  and (z) by holding any NFT, such person accepts to be so notified.

(a)  Upon confirming on the Platform that the Buyer intends to purchase one or several NFTs and accepting to be bound by this Agreement (the "Acceptance"), the Buyer shall be required to complete the purchase by paying the Purchase Price, subject to any right of the Issuer to terminate this Agreement. This Agreement shall be deemed to be entered into upon the date of the Acceptance (the "Effective Date").

(b)  The Buyer shall be deemed to have complied with its obligation to pay the Purchase Price if:

• with respect to a payment in ETH, the Buyer (i) has validly initiated a transfer of sufficient ETH to the Issuer Wallet, and (ii) the transfer has been confirmed by the validation of at least 30 additional blocks of transactions on the Ethereum blockchain;
• with respect to a payment in fiat currency, if permitted by the Issuer, the Purchase Price has been actually received in full by the Issuer on the Issuer's account indicated on the Platform.

(c)  Within three Business Days from the completion of the formalities of (a) and (b), the Seller will initiate the transfer of the purchased NFT(s) to the Buyer Wallet (the date when the transfer is initiated being the "Closing Date").

(a)  The Buyer acknowledges that the NFT Terms, as appearing in Schedule 1 are binding but are not in their definitive form. NFTs in the form of ledger-based securities in accordance with articles 973d ff. of the Swiss Code of Obligations is further be subject tokenization terms (Registrierungsvereinbarung) which governs, among others, the holding, the transfer, and the cancellation of the tokens, as well as the effects of such operations.

(a)  The Issuer will conduct know-your-customer ("KYC") verifications in connection with the transactions contemplated in this Agreement. Therefore, the Issuer may request information about the Buyer, such as the Buyer's name, address, email, phone number, and identification document, as well as any supporting or additional documentation that the Issuer considers necessary. The Issuer may also request additional details regarding the Buyer's background, the background and origin of the Buyer's funds used to pay the Purchase Price.

(b)  The Issuer decides at its sole discretion whether the Buyer meets the Issuer's KYC standards. If the Buyer does not meet the Issuer's KYC standards, the Buyer will not be able to purchase an NFT on the Platform. In addition to the termination rights set out in clause 10), the Issuer may, without prior notice restrict the Buyer's access to the Platform. In addition, if the Issuer deems it necessary to comply with applicable law following the advice of counsel, the Issuer shall be entitled to delay any repayment of funds already received by the Issuer as payment of the Purchase Price for as long as necessary.

(a)  The NFTs sold to U.S. Holders and any OilXCoin Tokens issued to holders of NFTs are deemed to be securities for U.S. purposes and cannot be offered, sold or transferred in the United States or to a U.S. Person (as defined in Regulation S) for up to one year after the purchase of the NFT except in a transaction exempt from the registration requirements of the Securities Act, such as a private transaction under Regulation D, that also complies with any applicable state securities laws. Any hedging or shortsale transactions involving the NFTs or OilXCoins issued to a holder of an NFT much comply with the provisions of applicable federal and state securities laws.

(b)  Each NFT will be deemed to carry the following legend, which will be deemed binding on any holder of NFTs:

THE NFTs AND ANY OILXCOINS DISTRIBUTED TO HOLDERS OF NFTs HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION. PRIOR TO THE ONE YEAR ANNIVERSARY FROM THE PURCHASE OF THE NFTs BY A BUYER, THE NFTs AND ANY OILXCOINS DISTRIBUTED TO HOLDERS OF NFTs MAY NOT BE OFFERED OR SOLD (INCLUDING OPENING A SHORT POSITION IN SUCH NFTs) IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED BY RULE 902(k) OF REGULATION S ADOPTED UNDER THE ACT), OTHER THAN TO DISTRIBUTORS, UNLESS THE NFTs (OR OILXCOINS, AS APPLICABLE) ARE REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS AVAILABLE. PRIOR TO THE ONE YEAR ANNIVERSARY FROM THE DATE OF PURCHASE, HOLDERS OF NFTs AND ANY OILXCOINS DISTRIBUTED TO HOLDERS OF NFTs MAY RESELL SUCH NFTs OR OILXCOINS ONLY PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR OTHERWISE IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S OF THE SECURITIES ACT.  HEDGING TRANSACTIONS INVOLVING THESE NFTs OR OILXCOINS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. A HOLDER OF THE NFTs WHO IS A DISTRIBUTOR, DEALER, SUB-UNDERWRITER OR OTHER SECURITIES PROFESSIONAL, IN ADDITION, CANNOT, PRIOR TO THE ONE YEAR ANNIVERSARY FROM THE GRANT DATE, RESELL THE NFTs AND ANY OILXCOINS DISTRIBUTED TO HOLDERS OF NFTs TO A U.S. PERSON AS DEFINED BY RULE 902(k) OF REGULATION S UNLESS THE NFTs (OR OILXCOINS, AS APPLICABLE) ARE REGISTERED UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.

(a)  Each Party shall bear its own costs in relation to this Agreement and the consummation of the transactions contemplated herein (including any "gas" fee, taxes and fees of professional advisors).

(b)  Should individual provisions of this Agreement be or become invalid, unenforceable or unenforceable in whole or in part, this shall not affect the validity, enforceability and enforceability of the remaining provisions of this Agreement. The invalid, illegal, unenforceable and/or unenforceable provision shall be deemed to be replaced by a valid, legal and enforceable provision which corresponds as far as possible to the spirit and economic purpose of this Agreement and the original intention of the parties.

(c)  All notices and other communications to be given under or in connection with this Agreement shall be made in writing (which shall include an email) in German or English as follows:

  if to the Buyer, using the contact details provided by the Buyer on the Platform.

  if to the Issuer:

    DeXentra GmbH
    Landis + Gyr Strasse 1
    6300 Zug
    Email: office@oilxcoin.io

(d)  The contractual language is German and English. The English version of this Agreement shall be decisive for the interpretation.

(a)  The Issuer's liability is limited in all cases (contractual and non-contractual liability) to liability for wilful misconduct and gross negligence. Insofar as tasks are assigned to third parties, the Issuer's responsibility shall be limited to the careful selection and instruction of the third parties. In no event shall the Issuer be liable for indirect or consequential damages.

(b)  Specifically, the Issuer shall not be liable for:

  (i)  the use by the Buyer of any Digital Wallet, including of any Digital Wallet operated by or with the help of third parties, and regardless of whether the Issuer has indicated that such Digital Wallets would be compatible with the Platform, or otherwise displayed logos, names and instructions to this effect;

  (ii) obligations not fulfilled or not satisfactorily fulfilled or for losses due to force majeure, unrest, war and natural disasters or other events beyond its control or technical problems not caused by the Issuer, in particular system failures, or which are the result of measures taken by the authorities in Switzerland or abroad. This also applies to losses resulting from technical problems or the partial or complete failure of IT equipment or IT systems used by third parties or in the event of data transmission errors. Furthermore, the Seller shall not be liable for any indirect or consequential losses, including, without limitation, lost profits or loss of earnings, unrealized savings and additional expenses, regardless of the legal grounds.

(a)  The Issuer shall be entitled to terminate this Agreement at any time by notifying the Buyer:

  (i)  If the Buyer has failed to pay the Purchase Price within the timeframe specified in clause 5);

  (ii)  If the Buyer does not meet the Issuer's KYC standards as described in clause 7);

  (iii)  If the supply of NFTs has been exhausted by the time the Purchase Price is paid by the Buyer.

(b)  If the Issuer terminates this Agreement, the Issuer shall no longer be required to deliver any NFTs to the Buyer. To the extent the Issuer has actually received (as the case may be partial) payment for the Purchase Price, the Issuer shall initiate the transfer of the ETH received back to the Buyer, provided however that the Issuer shall in such a case be entitled to pay for any fees (including "gas" fees of the Ethereum blockchain) using the ETH received from the Buyer, such that the Buyer may receive less ETH than it has sent to the Issuer.

(a)  This Agreement shall be governed by Swiss law to the exclusion of the conflict of laws provisions of Swiss international private law and the UN Convention on Contracts for the International Sale of Goods.

(b)  Any dispute, controversy, or claim arising out of, or in relation to, this Agreement, including regarding the validity, invalidity, breach or termination thereof, shall be resolved by arbitration in accordance with the Swiss Rules of International Arbitration of the Swiss Arbitration Centre in force on the date on which the Notice of Arbitration is submitted in accordance with those Rules.

(c)  The number of arbitrators shall be three. The seat of the arbitration shall be Zug, Switzerland. The language of the arbitration proceedings shall be German.

The NFTs and the OilXCoins involve a number of significant risks. Before purchasing NFTs, the Buyer must carefully consider the risks of such a purchase. The below risks are presented in an order that does not reflect their likelihood of occurrence or magnitude. Further, the risks below are some, but not all, the risks associated with the NFTs. Further risks about the NFTs and OilXCoins may be found on their respective term sheets. Investment decisions should not be made solely on the basis of the risk warnings set out below since such information cannot serve as a substitute for individual advice and information which is tailored to the requirements, objectives, experience, knowledge and circumstances of each investor individually.

No representation on tax treatment and no tax ruling

The NFTs and the OilXCoins are complex and novel instruments. Their treatment under applicable tax laws is untested and generally subject to a level of uncertainty considerably higher than traditional financial instruments such as equity securities or bonds. The Issuer does not make any representation as to the tax treatment of the NFTs and/or the OilXCoins, whether from a Swiss or foreign perspective. The Buyer is responsible for assessing, as the case may be with the advice of a tax advisor or counsel, the consequences of purchasing and holding NFTs / OilXCoins.

The Issuer has not obtained any confirmation or "ruling" from any tax authority regarding the treatment of the NFTs and/or the OilXCoins under Swiss tax law. Even if the Issuer later obtains such a ruling (something the Issuer does not undertake to do), the Buyer should expect this ruling to apply only to transactions entered into after the issuance of the ruling, meaning that the Buyer and any person acquiring the NFTs before such ruling has been issued will not be able to benefit from the ruling.

The final terms of the NFTs may differ significantly from the NFT Terms as set out in Schedule 1

The NFT Terms are set out in the Term Sheet provided as Schedule 1 to the Agreement, but are not in their final, long form. The Issuer expects to issue the final and long form terms of the NFTs after execution of the Agreement. The Issuer is entitled to make significant changes to the NFT Terms when issuing the final terms. As a result, the final terms may diverge in material respects from the terms set out in Schedule 1.

The value of NFTs is expected to be highly dependent on the OilXCoins

The NFTs give their Holder a one-time entitlement to acquire a certain number of OilXCoins, and any Royalty payment will depend on certain fees levied when transferring OilXCoins. The NFTs are therefore closely tied to the OilXCoins and the value of the NFTs may depend in large part (if not entirely) on the OilXCoin.

There is no guarantee as to the value of the OilXCoin and the OilXCoin is, for the time being, only described in general and non-binding terms in the Term Sheet appearing as Schedule 2 to this Agreement. The actual terms of the OilXCoin may diverge significantly from this Term Sheet.

The Royalty entitlement incorporated in the NFTs depends on the occurrence of transfers of OilXCoins. There can however be no assurance as to the number of transfers of OilXCoins that will occur. In particular, there can be no assurance that any secondary market will develop for the OilXCoins. The Issuer has not undertaken to have the OilXCoins admitted to any marketplace.

OilXCoin holders may cancel the Native Transaction Fee

The Issuer expects that the terms of the OilXCoin will allow the holders of OilXCoins to resolve on certain matters, including changes to the Native Transaction Fee. It is possible that holders of OilXCoins will resolve that the Native Transaction Fee shall be zero. In these circumstances, the Royalty entitlement incorporated in the NFTs will be of no use and of no value, at least until the OilXCoin holders resolve that a Native Transaction Fee shall again be levied.

Not all investors may pay the same Purchase Price

The Purchase Price can differ from the price initially displayed on the Platform before the Buyer reaches the final step of the order process, for reasons that may include (but are not limited to) changes in the Ethereum/US dollar exchange rate of reference.

The NFTs are complex and involve a high degree of risk

The NFTs are innovative and complex instruments. The purchase of NFTs involves a high degree of risk, including the risk that the NFTs may become valueless. Potential purchasers should be prepared to suffer a total loss of the capital invested in the purchase of the NFT under certain circumstances. The value of NFTs is difficult to assess and may be extremely volatile.

The NFTs may be prone to fraud

The characteristics of the NFTs (e.g., they only exist virtually on a computer network, transactions in NFTs are usually not reversible and are done largely anonymously) make them an attractive target for fraud, theft and cyber-attacks. Each purchaser is therefore urged to make its own independent investigation and to make its own decisions with respect to the purchase of NFTs. Prospective NFT holders are expected to consult a blockchain specialist, counsel, accountant and/or tax advisor, as necessary, to understand the risks involved. Potential purchasers that are not satisfied with their understanding of the risks associated with NFTs should refrain from acquiring NFTs.

The NFTs and OilXCoins may have a “bug” or other technical defect

While the Issuer intends to take commercially reasonable efforts to ensure the functionality of the NFTs and the OilXCoin token, it is possible that the NFT or the tokens have a technical defect that may enable others to “exploit” the NFTs and/or the OilXCoin token, which could lead to a partial or complete loss of a purchaser’s investment.

Legislative and regulatory changes may impact the NFTs

NFTs have been in existence for only a few years and have been under scrutiny from various regulatory bodies in Switzerland and globally. The regulatory regimes relating to NFTs and blockchain technology may be subject to rapid legislative and regulatory change, which could impact NFTs, be in conflict with the current design of NFTs, and/or lead to their loss. There is a risk that NFTs may be subject to additional regulations in Switzerland or in other jurisdictions, and that NFTs may be adversely qualified or re-qualified by a court or a supervisory authority under the applicable legislation. If the NFT or the OilXCoin are deemed to be securities in any jurisdiction, they will be subject to applicable securities laws and owners of such NFTs or OilXCoins will have to comply with such laws.

Blockchain technology and smart contracts are associated with risks

Distributed ledger technology (i.e. blockchains) and the smart contract concept underlying NFTs are still at an early stage of development and have not yet been sufficiently tested. The functioning of blockchains relies on the collaboration and consensus of various stakeholders ("miners" or "validators") that may exercise control on the relevant blockchain and may be empowered to make changes to its content or to block certain transactions. Blockchains are vulnerable to mining attacks, including but not limited to double-spend attacks, majority attacks, "selfish mining" attacks, timestamp manipulation and race condition attacks. Successful attacks lead to risks relating to the NFTs, the expected orderly execution and sequencing of transactions involving NFTs, and the expected orderly execution and sequencing of contract calculations, and may result in the loss of NFTs. It is possible that hacker attacks and other unexpected activities may occur that could result in the theft or loss of NFTs. Smart contracts are nontrivial pieces of computer code and their interactions with the relevant blockchain are complex. There is no guarantee that the process of creating, receiving, holding, using and storing NFTs will be uninterrupted or error-free and there is an inherent risk that the smart contract may contain weaknesses, vulnerabilities or bugs that could lead to, among other things, the complete loss of NFTs.

NFTs may be lost or stolen

NFTs may be lost or become inaccessible if the holder of NFTs loses the respective private key allowing access to NFTs, or due to malfunctions or incompatibilities of the wallet in which the NFTs are stored. This can also lead to the loss of the NFTs. In addition, it is the responsibility of the NFT holder not to lose the key or password that enables access to the wallet. NFTs can also be stolen or lost if the private keys or necessary (computer) addresses are stolen.

NFTs are exposed to risks associated with cryptocurrencies

NFTs are stored on blockchain, and therefore in a relationship of interdependence with their associated cryptocurrencies. Potential purchasers may have to pay transaction fees denominated in cryptocurrencies or associated units of account. The fair value of cryptocurrencies is subjective, extremely difficult to assess and therefore highly volatile. Their market price may also be inflated by temporary bouts of speculation, and they may lose all of their market value very quickly. There is no guarantee that cryptocurrencies will be liquid or that services allowing NFTs holders to exchange them for fiat currency will continue to be accessible.

The Issuer is an early stage company with no operating history or historical financial information 

The Issuer is an early stage company in a very competitive field and has no operating history or historical financial information.  This makes it difficult for investors to evaluate the Issuer’s business and future prospects.  The Issuer’s success will depend in part on its ability to deal with the problems, expenses and delays frequently associated with establishing a new business venture and the extraction of oil and gas.

In addition, although the Issuer’s management has significant experience in the area of oil exploration, the past performance of the management is no indication of its ability to continue to successfully manage the Issuer.  If the experience of the management is inadequate or unsuitable, the operations of the Issuer may be adversely affected.

The Issuer can make no assurances that it will be successful in addressing these risks, and the failure to meet these challenges could have a material adverse effect on the performance of the Issuer, the value of the NFTs, OilXCoins and your investment.

Investments in startups involve a high degree of risk. Financial and operating risks confronting startups are significant, and establishing new operations brings a significant number of challenges.  The startup market in which the Issuer competes is highly competitive and the percentage of companies that survive and prosper is small.  Startups often experience unexpected problems in the areas of product development, marketing, financing, and general management, among others, which frequently cannot be solved.  Failure to overcome such problems may mean that the Isser will not be able to successfully operate OilXCoins or extract oil and gas, and it is possible that the OilXCoins may not be minted.  Even if the Issuer is successful in operating and extracting oil and gas, it may not be able to operate at a profit, which may affect the long-term viability of the Issuer and the value of the NFTs and OilXCoins.

It is possible that, due to any number of reasons, including, but not limited to, failure to successfully extract oil and gas, unfavorable market prices for oil and gas, the inability by the Company to establish a viable financial ecosystem for the utility of OilXCoins, the failure of commercial relationships, or regulatory issues, the Issuer may no longer be viable to operate, and may dissolve or take actions that result in a dissolution event.

Material U.S. Federal Income Tax Considerations

The following is a discussion of certain material U.S. federal income considerations relevant to a U.S. Holder and a Non-U.S. Holder, each as defined below, with respect to the NFTs. This discussion does not purport to deal with the tax consequences of owning NFTs to all categories of purchasers, some of which (such as dealers in securities or currencies, investors whose functional currency is not the U.S. dollar, financial institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, insurance companies, persons holding our NFTs as part of a hedging, integrated, conversion or constructive sale transaction or a straddle, persons liable for an alternative minimum tax, persons subject to the “base erosion and anti-avoidance” tax, persons required to recognize income for U.S. federal income tax purposes no later than when such income is included on an “applicable financial statement” and persons who are investors in pass-through entities) may be subject to special rules. This discussion deals only with holders (i) who acquire NFTs in connection with this Offering, (ii) who hold the NFTs as capital assets within the meaning of Section 1221(a) of the Internal Revenue Code of 1986, as amended (the “Code”) (generally, property held for investment) and (iii) who own less than 10%, actually or constructively, of our NFTs.

You are encouraged to consult your own tax advisors concerning the overall tax consequences arising in your own particular situation under U.S. federal, state, local or non-U.S. law of acquiring, owning or disposing of NFTs. The following discussion of U.S. federal income tax considerations is based on the Code, judicial decisions, administrative pronouncements, and existing and proposed regulations issued by the U.S. Department of the Treasury, all of which are subject to change, possibly with retroactive effect. There can be no assurance that the Internal Revenue Service (“IRS”) will accept the determinations in the following discussion about the taxation consequences of NFT activity. The U.S. federal income tax consequences for U.S. Holders and Non-U.S. Holders may differ from the determinations in the below discussion if the IRS successfully challenges our anticipated characterization of the NFTs.

As used herein, the term "U.S. Holder" means a beneficial owner of NFTs that is a U.S. citizen or resident for U.S. federal income tax purposes, U.S. corporation or other U.S. entity taxable as a corporation, an estate the income of which is subject to U.S. federal income taxation regardless of its source, or a trust, if either (A) a court within the United States is able to exercise primary jurisdiction over the administration of the trust or one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) the trust has an election in place to be treated as U.S. person. A “Non-U.S. Holder” means a beneficial owner of NFTs that is not a U.S. Holder.

If a partnership holds NFTs, the tax treatment of a partner of such partnership will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership that holds NFTs, you are encouraged to consult your tax advisors.

Treatment of NFTs

The NFTs shall be treated as equity interests of the Issuer solely for U.S. federal income tax purposes.  There is limited guidance issued by the IRS pertaining to cryptocurrencies. The IRS generally treats “convertible virtual currencies”, which are virtual currencies that have an equivalent value in fiat currency, as property and not as currency for U.S. federal income tax purposes. It is not always clear as to the proper U.S. federal income tax classification or treatment of certain cryptocurrencies in all situations or transactions. The Issuer shall endeavor to apply general U.S. federal income tax principles to the NFTs where there is uncertainty from a U.S. federal income tax perspective. The Issuer may take positions on its tax returns that have not been address by existing Treasury regulations, administrative guidance or case law. The IRS may not agree with the positions taken by the Issuer with respect to the NFTs.

Treatment of the Issuer

The Issuer is a corporation for U.S. federal income tax purposes. The Issuer or its subsidiaries may be subject to U.S. federal income taxation on its net taxable income, currently imposed at a rate of 21%, to the extent that the Issuer is engaged or deemed to be engaged in the conduct of a trade of business in the United States.  In addition, the Issuer may be subject to an additional tax on branch profits and this may depend on how it structures its investments and activities.

U.S. Holder Considerations

U.S. Holder Tax Considerations – Distributions

Subject to the discussion below of passive foreign investment companies (“PFIC”), any distributions, which for this purpose includes both any royalty payments and a distribution of OilXCoin Tokens to the extent treated as a taxable stock dividend for U.S. federal income tax purposes, made by us with respect to our NFTs to a U.S. Holder will generally constitute dividends, which may be taxable as ordinary income or “qualified dividend income,” as described in more detail below, to the extent of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions made in kind will be valued at the time of distribution. Distributions in excess of our earnings and profits will be treated first as a non-taxable return of capital to the extent of the U.S. Holder’s tax basis in his NFTs on a dollar-for-dollar basis and thereafter as capital gain. Because we are not a U.S. corporation, U.S. Holders that are corporations will generally not be entitled to claim a dividends received deduction with respect to any distributions they receive from us. Dividends paid with respect to our NFTs will generally be treated as “passive category income” or, in the case of certain types of U.S. Holders, “general category income” for purposes of computing allowable foreign tax credits for U.S. foreign tax credit purposes.

Assuming the Issuer is not a PFIC, dividends paid on our NFTs to a U.S. Holder who is an individual, trust or estate may generally be treated as “qualified dividend income” that is taxable to such U.S. Holders at preferential tax rates provided that the Issuer is a qualified foreign corporation for U.S. federal income tax purposes. There is no assurance that any dividends paid on our NFTs will be eligible for these preferential rates in the hands of a U.S. Holder. Any dividends paid by us which are not eligible for these preferential rates will be taxed as ordinary income to a U.S. Holder.

If we pay an “extraordinary dividend” on our NFTs (generally, a dividend in an amount which is equal to or in excess of 10% of n investor’s adjusted tax basis (or fair market value in certain circumstances) in the NFTs or dividends received within a one-year period that, in the aggregate, equal or exceed 20% of an U.S. Holder’s adjusted tax basis (or fair market value upon the U.S. Holder’s election)) that is treated as “qualified dividend income,” then any loss derived by a U.S. Holder from the sale or exchange of such NFTs will be treated as long-term capital loss to the extent of such dividend.

U.S. Holders Sale, Exchange or other Disposition of NFTs.

Assuming the Issuer does not constitute a PFIC, a U.S. Holder generally will recognize taxable gain or loss upon a sale, exchange or other disposition of our NFTs in an amount equal to the difference between the amount realized by the U.S. Holder from such sale, exchange or other disposition and the U.S. Holder’s tax basis in such NFTs. Such gain or loss will be treated as long-term capital gain or loss if the U.S. Holder’s holding period is greater than one year at the time of the sale, exchange or other disposition. Such capital gain or loss will generally be treated as United States source income or loss, as applicable, for U.S. foreign tax credit purposes. A U.S. Holder’s ability to deduct capital losses is subject to certain limitations.

Passive Foreign Investment Company Considerations. 

Special U.S. federal income tax rules apply to a U.S. Holder that holds NFTs in a foreign corporation classified as a PFIC for U.S. federal income tax purposes. In general, we will be treated as a PFIC with respect to a U.S. Holder if, for any taxable year in which such Holder held our NFTs, either

• at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business), or
• at least 50% of the average value of the assets held by us during such taxable year produce, or are held for the production of, such passive income.

For purposes of determining whether we are a PFIC, we will be treated as earning and owning our proportionate share of the income and assets, respectively, of any of our subsidiary corporations in which we own at least 25% of the value of the subsidiary’s. equity. Cash is a per se passive asset. In addition, it is possible that we or our subsidiaries may structure our activities in a manner that generates passive income in certain years. Although we intend to conduct our affairs in a manner to avoid being classified as a PFIC, we cannot assure you that the nature of our operations will not change in the future.

As discussed more fully below, if we were to be treated as a PFIC for any taxable year which included a U.S. Holder’s holding period in our NFTs, then such U.S. Holder would be subject to different U.S. federal income taxation rules depending on whether the U.S. Holder makes an election to treat us as a “qualified electing fund” (a “QEF Election”). As an alternative to making a QEF election, a U.S. Holder should be able to make a “mark-to-market” election with respect to our NFTs, as discussed below. 

(a)     U.S. Holders Making a Timely QEF Election. 

Pass-Through of Ordinary Earnings and Net Capital Gain. A U.S. Holder who makes a timely QEF Election with respect to our NFTs (an “Electing Holder”) would report for U.S. federal income tax purposes his pro rata share of our “ordinary earnings” (i.e., the net operating income determined under U.S. federal income tax principles) and our net capital gain, if any, for our taxable year that ends with or within the taxable year of the Electing Holder. Our “net capital gain” is any excess of any of our net long term capital gains over our net short term capital losses and is reported by the Electing Holder as long-term capital gain. Our net operating losses or net capital losses would not pass through to the Electing Holder and will not offset our ordinary earnings or net capital gain reportable to Electing Holders in subsequent years (although such losses would ultimately reduce the gain, or increase the loss, if any, recognized by the Electing Holder on the sale of his NFTs).

In general, an Electing Holder would not be taxed twice on his share of our income. Thus, distributions received from us by an Electing Holder are excluded from the Electing Holder’s gross income to the extent of the Electing Holder’s prior inclusions of our ordinary earnings and net capital gain. The Electing Holder’s tax basis in his NFTs would be increased by any amount included in the Electing Holder’s income. Distributions received by an Electing Holder, which are not includible in income because they have been previously taxed, would decrease the Electing Holder’s tax basis in the NFTs. Distributions, if any, in excess of such tax basis would be treated as capital gain (which gain will be treated as long-term capital gain if the Electing Holder held its NFTs for more than one year at the time of distribution).

A U.S Holder makes a QEF Election for a taxable year by completing and filing IRS Form 8621 (Return by a Holder of a Passive Foreign Investment Company or Qualified Electing Fund) in accordance with the instructions thereto. If we were aware that we were to be treated as a PFIC for any taxable year, we would provide each U.S. Holder with all necessary information to make the QEF Election described above.

Disposition of NFTs.  An Electing Holder would generally recognize capital gain or loss on the sale or exchange of NFTs in an amount equal to the difference between the amount realized by the Electing Holder from such sale or exchange and the Electing Holder’s tax basis in the NFTs. Such gain or loss would generally be treated as long-term capital gain or loss if the Electing Holder’s holding period in the NFTs at the time of the sale or exchange is more than one year. A U.S. Holder’s ability to deduct capital losses may be limited.

(b)     Mark-to-Market Election.

A U.S. Holder is not expected to make the mark-to-market election with respect to NFTs.

(c)     U.S. Holders Not Making a Timely QEF Election or Mark-to-Market Election. 

A U.S. Holder who does not make a timely QEF Election or a timely mark-to-market election (a “a Non-Electing Holder”) would be subject to special rules with respect to (i) any “excess distribution” (generally, the portion of any distributions received by the Non-Electing Holder on the NFTs in a taxable year in excess of 125% of the average annual distributions received by the Non-Electing Holder in the three preceding taxable years, or, if shorter, the Non-Electing Holder’s holding period for the NFTs), and (ii) any gain realized on the sale or other disposition of NFTs. Under these rules, (i) the excess distribution or gain would be allocated rateably over the Non-Electing Holder’s holding period for the NFTs; (ii) the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, would be taxed as ordinary income; and (iii) the amount allocated to each of the other prior taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. If a Non-Electing Holder dies while owning one or more NFTs, the Non-Electing Holder’s successor would be ineligible to receive a step-up in the tax basis of those NFTs.

Distributions received by a Non-Electing Holder that are not “excess distributions” would be includible in the gross income of the Non-Electing Holder as dividend income to the extent that such distributions are paid out of our current or accumulated earnings and profits as determined under U.S. federal income tax principles. Such dividends would not be eligible to be treated as “qualified dividend income” eligible for preferential tax rates. Distributions in excess of our current or accumulated earnings and profits would be treated first as a return of the U.S. Holder’s tax basis in the NFTs (thereby increasing the amount of any gain or decreasing the amount of any loss realized on the subsequent sale or disposition of such NFTs) and thereafter as capital gain.

Application of CFC Rules to Certain U.S. Holders

Special rules would apply if the Issuer were considered to be a “controlled foreign corporation” (a “CFC”) as defined in Code Section 957.  A foreign corporation is considered to be a CFC if, on any day during its taxable year, more than 50% of the total voting power or the total value of all classes of its equity, which for this purpose includes the NFTs, is owned, directly or indirectly, by “United States shareholders”.  A “United States shareholder” is a United States person who owns, directly or indirectly, 10% or more of the total voting power or value of the stock or NFTs of the foreign corporation.  If the Issuer were classified as a CFC, each U.S. Holder who owned, directly or indirectly, 10% or more of the NFTs would be required to include in his gross income, for his taxable year in which the taxable year of the Issuer ends, his pro rata share of the Issuer’s income for such year.  This income would be reported by the U.S. Holder as ordinary income even to the extent that it is attributable to long-term capital gains of the Issuer.  The PFIC rules will not apply to any portion of a U.S. Holder’s holding period during which the investor is a “United States investor” and the Issuer is a CFC.  The Issuer is not expected to be a CFC, but there can be no assurances on this point.  U.S. persons investing in NFTs should consult with their personal tax advisors regarding the impact of these CFC rules.  The CFC rules are complex, and a complete discussion of such rules is beyond the scope of this section.  U.S. Holders that own more than 10% of the NFTs should consult their own tax advisors regarding the consequences of investing in a CFC, including the potential application of Code Section 1248 to any disposition (including in redemption) of Trust interests.

U.S. Holder Reporting Obligations 

U.S. persons investing NFTs may be subject to certain IRS filing requirements.  For example, pursuant to Code section 6038B, a U.S. person which transfers property (including cash) to a foreign corporation in exchange for stock in the corporation, which for this purpose includes the NFTs, is in some cases required to file an information return with the IRS with respect to such transfer.  Accordingly, a U.S. Holder may be required to file an information return with respect to its investment in the NFTs.  Additional reporting requirements may be imposed on a U.S. Holder that acquires NFTs with a value equal to at least 10% of the aggregate value of the Issuer.  U.S. investors also may be required to file other information returns with the U.S. Treasury Department or the IRS with respect to their investment in the NFTs, including IRS Forms 961, 8621, 5471 and FBAR.  Investors should consult their own tax advisors with respect to any applicable filing requirements.

Non-U.S. Holder Considerations

Non-U.S. Holder Dividends on NFTs

Non-U.S. Holders generally will not be subject to U.S. federal income or withholding tax on dividends received from us with respect to our NFTs, unless that income is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to those dividends, that income is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States.

Non-U.S.- Holder Sale, Exchange or Other Disposition of NFTs

Non-U.S. Holders generally will not be subject to U.S. federal income or withholding tax on any gain realized upon the sale, exchange or other disposition of our NFTs, unless:

• the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to that gain, that gain is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States); or
• the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.

If the Non-U.S. Holder is engaged in a U.S. trade or business for U.S. federal income tax purposes, the income from the NFTs, including dividends and the gain from the sale, exchange or other disposition of the NFTs, that is effectively connected with the conduct of that trade or business will generally be subject to regular U.S. federal income tax in the same manner as discussed in the previous section relating to the taxation of U.S. Holders. In addition, if you are a corporate Non-U.S. Holder, your earnings and profits that are attributable to the effectively connected income, subject to certain adjustments, may be subject to an additional branch profits tax at a rate of 30%, or at a lower rate as may be specified by an applicable U.S. income tax treaty.

Backup Withholding and Information Reporting

In general, dividend payments, or other taxable distributions, made within the United States to you will be subject to information reporting requirements if you are a U.S. Holder. Such payments may also be subject to backup withholding tax if you are a U.S. Holder and you:

• fail to provide an accurate taxpayer identification number;
• are notified by the IRS that you have failed to report all interest or dividends required to be shown on your U.S. federal income tax returns; or
• in certain circumstances, fail to comply with applicable certification requirements.

Non-U.S. Holders may be required to establish their exemption from information reporting and backup withholding by certifying their status on an IRS Form W-8.

If you are a Non-U.S. Holder and you sell your NFTs to or through a U.S. office of a broker, the payment of the proceeds is subject to both U.S. backup withholding and information reporting unless you certify that you are a non-U.S. person, under penalties of perjury, or you otherwise establish an exemption. If you are a Non-U.S. Holder and you sell your NFTs through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then information reporting and backup withholding generally will not apply to that payment. However, information reporting requirements, but not backup withholding, will apply to a payment of sales proceeds, even if that payment is made to you outside the United States, if you sell your NFTs through a non-U.S. office of a broker that is a U.S. person or has some other contacts with the United States. Such information reporting requirements will not apply, however, if the broker has documentary evidence in his records that you are a non-U.S. person and certain other conditions are met, or you otherwise establish an exemption.

Backup withholding is not an additional tax. Rather, you generally may obtain a refund of any amounts withheld under backup withholding rules that exceed your U.S. federal income tax liability by filing a refund claim with the IRS.

The above-mentioned tax considerations do not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the NFTs. Holders who wish to clarify their own tax situation should consult and rely upon their own tax advisors.