10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2017

or

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

For the transition period from __________________ to __________________

Commission File Number:  001-37902

MOXIAN, INC.

(Exact name of registrant as specified in its charter)

Nevada	27-3729742
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

Block A, 9/F, Union Plaza, 5022 Binjiang Avenue,

Futian District, Shenzhen City, Guangdong Province, China

(Address of Principal Executive Offices)

Tel: +86 (0) 755-66803251

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 x    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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x     No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if smaller reporting company)		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

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

As of May 11, 2017, the registrant had 67,007,199 shares of common stock, par value $.001 per share, issued and outstanding.

TABLE OF CONTENTS

		Page No.
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2017 and September 30, 2016	1
	Unaudited Condensed Consolidated  Statements of Operations and Comprehensive Loss for the Three and Six Months Ended March 31, 2017 and December 31, 2016	2
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2017 and 2016	3
	Notes to Unaudited Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	24
Item 4.	Controls and Procedures.	24
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	26
Item 1A.	Risk Factors.	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	26
Item 3.	Defaults Upon Senior Securities.	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits.	27
Signatures		28
Certifications

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MOXIAN, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

	As of
	March 31, 2017			September 30, 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	859,890		$	76,580
Restricted cash		-			65,590
Inventories		5,553			9,857
Prepayments, deposits and other receivables, net		167,117			129,024
Value added tax recoverable		503,835			444,701
Deferred offering costs		-			290,234
Total current assets		1,536,395			1,015,986
Restricted cash, long-term		500,000			-
Deferred tax assets, net		-			98,581
Property and equipment, net		1,038,100			1,508,743
Intangible assets, net		-			3,311,293
TOTAL ASSETS	$	3,074,495		$	5,934,603
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accruals and other payables	$	1,104,651		$	1,392,200
Loans payable – related parties		125,619			2,552,565
Stock subscription payables		-			2,000,000
Total current liabilities		1,230,270			5,944,765
Total liabilities		1,230,270			5,944,765
Commitments and contingencies
STOCKHOLDERS’ EQUITY (DEFICIENCY)
Preferred stock, $0.001 par value, authorized: 100,000,000 shares. Nil shares issued and outstanding		-			-
Common stock, $0.001 par value, authorized: 250,000,000 shares. 67,007,199 and 64,005,949 shares issued and outstanding as of March 31, 2017 and September 30, 2016, respectively		67,007			64,006
Additional paid-in capital		35,450,722			24,691,259
Accumulated deficiency		(33,842,244	)		(24,988,796	)
Accumulated other comprehensive income		168,740			223,369
Total stockholders’ equity (deficiency)		1,844,225			(10,162	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)	$	3,074,495		$	5,934,603

See accompanying notes to unaudited condensed consolidated financial statements

1

MOXIAN, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2017			2016			2017			2016
Revenues	$	7,475		$	7,358		$	17,443		$	12,942
Cost of revenues		(389	)		(1,583	)		(1,391	)		(2,889	)
Gross Profit		7,086			5,775			16,052			10,053
Depreciation and amortization expenses		344,849			457,109			694,123			900,553
Research and development		654,418			625,756			1,351,858			1,514,296
Impairment Charge on Intangible Assets		2,985,181			-			2,985,181			-
Selling, general and administrative expenses		1,983,534			1,212,913			3,749,633			2,694,739
Loss from operations		(5,960,896	)		(2,290,003	)		(8,764,743	)		(5,099,535	)
Interest income (expenses)		(1,893	)		478			(1,123	)		1,362
Foreign exchange loss		-			(456,283	)		-			(456,283	)
Other income (expenses), net		7,764			(1,052	)		7,838			449
Loss before income tax		(5,955,025	)		(2,746,860	)		(8,758,028	)		(5,554,007	)
Income tax benefit (expense)		(95,420	)		21,398			(95,420	)		24,317
Net loss		(6,050,445	)		(2,725,462	)		(8,853,448	)		(5,529,690	)
Other comprehensive income (loss):
Foreign currency translation adjustments		276,959			55,719			(54,629	)		161,157
Comprehensive loss	$	(5,773,486	)	$	(2,669,743	)	$	(8,908,077	)	$	(5,368,533	)
Basic and diluted loss per common share	$	(0.09	)	$	(0.03	)	$	(0.13	)	$	(0.06	)
Basic and diluted weighted average common shares outstanding*		66,995,963			88,721,125			66,139,492			98,129,564

* Retroactively restated for effect of 1 for 2 reverse stock split on June 20, 2016

See accompanying notes to unaudited condensed consolidated financial statements

2

MOXIAN, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  

	Six Months Ended March 31,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(8,853,448	)	$	(5,529,690	)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization		694,123			900,553
Loss on disposition of property, plant and equipment		11,124			-
Impairment charge on intangible assets		2,985,181			-
Deferred tax (benefits) expense		95,420			(24,317	)
Changes in operating assets and liabilities:
Restricted cash		63,762			-
Inventories		4,107			3,999
Prepayments, deposits and other receivables		(116,173	)		342,440
Accruals and other payables		(273,082	)		4,887
Net cash used in operating activities		(5,388,986	)		(4,302,128	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(3,998	)		(280,226	)
Purchase of intangible assets		(11,137	)		(178,543	)
Net cash used in investing activities		(15,135	)		(458,769	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party loans		3,195,296			673,222
Repayment of related party loans		(5,582,602	)		(851,229	)
Initial Public Offering proceeds deposited in an indemnification escrow, restricted cash		(500,000	)		-
Gross proceeds from Initial Public Offering – stock issuance		10,005,000			-
Direct costs disbursed from Initial Public Offering proceeds		(927,303	)		-
Proceeds from private placement – stock issuance		-			2,684,105
Net cash provided by financing activities		6,190,391			2,506,098
Effect of exchange rates on cash and cash equivalents		(2,960	)		(20,385	)
Net increase (decrease) in cash and cash equivalents		783,310			(2,275,184	)
Cash and cash equivalents, beginning of period		76,580			2,398,713
Cash and cash equivalents, end of period	$	859,890		$	123,529
Supplemental cash flow disclosures:
Cash paid for interest expense	$	-		$	-
Cash paid for income taxes	$	-		$	-
Non-cash investing and financing activities
Issuance of shares for subscription payable	$	2,000,000		$	-
Reclassification of deferred Initial Public Offering costs to additional paid in capital	$	290,234			-
Warrants issued to placement agents in connection with the Company’s Initial Public Offering	$	280,042			-
Issuance of shares for subscription payment received in 2015	$	-		$	5,505,915
Reclassification of construction in progress to intangible assets	$	-		$	829,862
Cancellation of shares	$	-		$	94,845

See accompanying notes to unaudited condensed consolidated financial statements 

3

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and nature of operations

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

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 generate sufficient funds to meet its working capital requirements is dependent upon its ability to develop additional sources of capital, develop apps and websites, generate servicing income, and ultimately, achieve profitable operations.

On May 24, 2016 the Board of approved a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1-for-2 (the “Reverse Stock Split”). The Reverse Stock Split was effective on June 20, 2016 (the “Effective Date”). Simultaneously to the Reverse Stock Split, the number of shares of the Company’s authorized Common Stock was correspondingly reduced from 500,000,000 shares to 250,000,000 shares without changes in par value per share. The Company has retroactively restated all shares and per share data for all the periods presented.

On November 14, 2016, the Company announced the completion of a public offering of 2,501,250 shares of its common stock at a public offering price of $4.00 per share. The gross proceeds from the offering were approximately $10,005,000 before deducting placement agents' commissions and other offering expenses, resulting in net proceeds of approximately $9.0 million, of which $500,000 was placed in an indemnification escrow account. In connection with the offering, the Company's common stock began trading on the NASDAQ Capital Market beginning on November 15, 2016 under the symbol "MOXC".

2. Summary of principal accounting policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and reflect the activities of the following subsidiaries and VIE: Moxian CN Samoa, Moxian BVI, Moxian HK, Moxian Shenzhen, Moxian Malaysia, Moyi, Moxian Beijing and Moxian IP Samoa. All material intercompany transactions and balances have been eliminated in the consolidation.

The unaudited interim condensed consolidated financial information as of March 31, 2017 and for the three and six months ended March 31, 2017 and 2016 have been prepared, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K for the fiscal year ended September 30, 2016, previously filed with the SEC. 

4

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of principal accounting policies (Continued)

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of March 31, 2017 and its unaudited condensed consolidated results of operations for three and six months ended March 31, 2017 and 2016, and its unaudited condensed consolidated cash flows for the six months ended March 31, 2017 and 2016, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods. 

Reclassification

Certain prior period amounts have been reclassified to conform to the current period presentation.

Liquidity and Capital Resources

In assessing the Company’s liquidity, the Company monitors and analyzes its cash and cash equivalents and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. As of March 31, 2017, the Company’s current assets exceeded the current liabilities by $306,125, its accumulated deficit was approximately $33.8 million and the Company has incurred losses since inception.

On November 14, 2016, the Company completed its initial public offering (“IPO”) with net proceeds of $9.0 million after deducting placement agents’ commission and other offering costs, which helps the Company’s cash flow in fiscal 2017. As disclosed in Part II, Item 2(b) of this quarterly report, the Company has already spent approximately $8.6 million of the $9.0 million raised and is not generating sufficient revenue to maintain working capital sufficient to support its operations and finance its future growth. Although the Company hopes to increase revenues by selling advertisement space in the Xinhua New Media App and signing up more Merchant clients, its efforts through the date of this report have not resulted in significant revenue. Accordingly, the Company has recorded impairment charges on intangible assets associated with its software platform, and the Company expects to fund its cash flow shortfalls as follows:

● Financial support commitments from two of the Company’s major stockholders and two of the Company’s related parties; and

● Seeking additional public and/or private issuance of securities.

The Company does not currently have sufficient cash or commitments for financing to sustain its operations for the next twelve months. The Company plans to increase the cash flows through related party financing and other public or private placements. If the Company’s financing and private placements do not reach the level anticipated in its plan, and the Company is unable to obtain the necessary additional capital on a timely basis, on acceptable terms, and at all, the Company may be unable to implement its current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on its business, prospects, financial condition and results of operations. However, there can be no assurance that management will be successful in their plans. All of these factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

5

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

2. Summary of principal accounting policies (Continued)

Risks and Uncertainties

The Company’s operations are substantially carried out in the People’s Republic of China (“PRC”). Accordingly, the Company’s business, financial condition and results of operations maybe substantially influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Fair value of financial instruments

The Company follows the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs other than quoted prices that are observable for the asset or liability in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect management’s assumptions based on the best available information.

The carrying value of cash and cash equivalents, restricted cash, prepayments, deposits and other receivables, Value added tax recoverable, accruals and other payables, loans from related parties and stock subscription payable approximate their fair values because of the short-term nature of these instruments.

Use of estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP 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 accompanying unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates required to be made by management include but not limited to, useful lives of property and equipment, intangible assets valuation, inventory valuation, cash flows projection and deferred tax assets. Actual results could differ from those estimates.

Revenue recognition

The Company currently recognizes revenue from the sale of merchandise through its online platforms. Revenue is 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. Revenue was recorded on a gross basis, net of surcharges and value added tax ("VAT") of gross sales. The Company recorded revenue on a gross basis because the Company has the following indicators for gross reporting: it is the primary obligor of the sales arrangements, is subject to inventory risks of physical loss, has latitude in establishing prices, has discretion in suppliers' selection and assumes credit risks on receivables from customers.

6

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of principal accounting policies (Continued)

Restricted Cash

Restricted cash represents cash held by depository banks in order to comply with the provisions of certain of debt agreements, as well as the cash held in an indemnification escrow account related to requirements of financing agreement signed with the underwriter for a two-year period subsequent to the IPO.

Property and Equipment, net

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

Electronic equipment	3-5 years
Furniture and fixtures	3-5 years
Leasehold improvements	Shorter of estimated useful life or term of lease

Intangible assets, net

Intangible assets, comprising Intellectual property rights (“IP rights”) and software, which are separable from property and equipment, are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of 3- 10 years.

Impairment of long-lived assets

The Company classifies its long-lived assets into: (i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite – lived intangible assets.

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology, economy or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, relief from royalty income approach, quoted market values and third-party independent appraisals, as considered necessary.

The Company makes various assumptions and estimates regarding estimated future cash flows and other factors in determining the fair values of the respective assets. The assumptions and estimates used to determine future values and remaining useful lives of long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as the Company’s business strategy and its forecasts for specific market expansion.

Due to the continuing losses from operations with minimal revenues, the Company recognized an impairment loss of $2,985,181 for the IP rights and other intangible assets during the three and six months ended March 31, 2017.

7

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of principal accounting policies (Continued)

Income taxes

The Company utilizes ASC Topic 740 (“ASC 740”) “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 condensed 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” clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in the unaudited condensed 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 unaudited consolidated statements of operations and comprehensive loss.  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 measure the unrecognized benefits associated with the tax positions. As of March 31, 2017 and September 30, 2016, the Company did not have any unrecognized tax benefits. The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months.

Foreign currency transactions and translation

The reporting currency of the Company is United States Dollars (the “USD”) and the functional currency of Moxian Shenzhen, Moyi and Moxian Beijing is Renminbi (the “RMB”) as China is the primary economic environment in which they operate, the functional currency of Moxian HK is Hong Kong Dollar (the “HKD”), and the functional currency of Moxian Malaysia is Malaysia Ringgit (the “MYR”).

For financial reporting purposes, the financial statements of Moxian Shenzhen, Moyi, Moxian Beijing, Moxian HK and Moxian Malaysia, which are prepared using their respective functional currencies, are translated into the reporting currency, USD, so to be consolidated with the Company’s. Monetary assets and liabilities denominated in currencies other than the reporting currency are translated into the reporting currency at the rates of exchange ruling at the balance sheet date. Revenues and expenses are translated using average rates prevailing during the reporting period. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders’ equity (deficiency). Transaction gains and losses are recognized in the results of operations.

The exchange rates applied are as follows:

Balance sheet items, except for equity accounts	March 31, 2017		September 30, 2016
RMB:USD		6.8912		6.6702
HKD:USD		7.7707		7.7550
MYR:USD		4.4255		4.1356

8

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of principal accounting policies (Continued)

Foreign currency transactions and translation (continued)

Items in the unaudited condensed consolidated statements of operations and comprehensive loss, and unaudited condensed consolidated statements of cash flows

	Six Months Ended March 31,
	2017		2016
RMB:USD		6.8614		6.3907
HKD:USD		7.7590		7.7506
MYR:USD		4.3860		4.2821

Research and Development

Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other related expenses associated with product development. Research and development expenses also include third-party development, programming costs, and localization costs incurred to translate software for local markets. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached. Once technological feasibility is reached, such costs are capitalized and amortized to the cost of revenue over the estimated lives of the products.

9

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Summary of principal accounting policies (Continued)

Recent accounting pronouncements

In October 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-17, Consolidation (Topic 810): Interest Held through Related Parties That Are under Common Control, to provide guidance on the evaluation of whether a reporting entity is the primary beneficiary of a VIE by amending how a reporting entity, that is a single decision maker of a VIE, treats indirect interests in that entity held through related parties that are under common control. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of this ASU will not have any impact to the Company’s unaudited condensed consolidated financial statements as the Company did not have any interest held through related parties with common control.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows: Restricted Cash". The amendments address diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendment is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this ASU on the statement of cash flows will increase cash and cash equivalents by the amount of the restricted cash on the Company’s unaudited condensed consolidated financial statements.

In January 2017, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". The amendments in this Accounting Standards Update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Basically these amendments provide a screen to determine when a set is not a business. If the screen is not met, the amendments in this ASU first, require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and second, remove the evaluation of whether a market participant could replace missing elements. These amendments take effect for public businesses for fiscal years beginning after December 15, 2017 and interim periods within those periods, and all other entities should apply these amendments for fiscal years beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect that the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements.

10

MOXIAN, INC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. Prepayments, deposits and other receivables, net

	March 31, 2017			September 30, 2016
Prepayments to suppliers	$	38,530		$	19,496
Rental and other deposits		104,531			107,994
Employee advances and others		41,767			20,093
Sub total		184,828			147,583
Less:  allowance for doubtful accounts		(17,711	)		(18,559	)
Prepayments, deposits and other receivables, net	$	167,117		$	129,024

4. Property and equipment, net

	March 31, 2017			September 30, 2016
Electronic equipment	$	2,229,819		$	2,300,666
Furniture and fixtures		83,179			86,029
Leasehold improvements		349,150			397,443
Total property and equipment		2,662,148			2,784,138
Less: Accumulated depreciation and amortization		(1,624,048	)		(1,275,395	)
Total property and equipment, net	$	1,038,100		$	1,508,743

Depreciation and amortization expense for the three and six months ended March 31, 2017 were $206,633 and $417,421, respectively. Depreciation and amortization expense for the three and six months ended March 31, 2016 were $226,642 and $450,066, respectively.

5. Intangible assets

	March 31, 2017			September 30, 2016
IP rights	$	1,410,335		$	3,460,335
Other intangible assets		379,464			1,376,122
		1,789,799		$	4,836,457
Less: accumulated amortization		(1,789,799	)		(1,525,164	)
Net intangible assets	$	-		$	3,311,293

No significant residual value is estimated for these intangible assets. Aggregate amortization expense for the three and six months ended March 31, 2017 totaled $138,216 and $276,702, respectively. Amortization expense for the three and six months ended March 31, 2016 totaled $230,467 and $450,487, respectively.

Due to the continuing losses from operations with minimal revenues, the Company recognized an impairment loss of $2,985,181 for the IP rights and other intangible assets during the three and six months ended March 31, 2017. As of March 31, 2017, the net carrying value of intangible assets was nil. 

11

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Related party transactions and balances

The table below sets forth related parties having transactions during the three and six months ended March 31, 2017 and balances as of March 31, 2017 and September 30, 2016, respectively.

Name	Relationship with the Company
Jet Key Limited (“Jet Key”)	A below 1% shareholder of the Company
Shenzhen Bayi Consulting Co. Ltd. (“Bayi”)	A below 5% shareholder of the Company
Ace Keen Limited (“Ace Keen”)	A below 1% shareholder of the Company
Moxian China Limited	A 26.8% shareholder of the Company
Zhang Xin	A below 5% shareholder of the Company
Beijing Xinhua Huifeng Equity Investment Center (“Xinhua”)	A Shareholder of the Company (see note 7)
Zhongtou Huifeng Investment Management (Beijing) Co. Ltd	Affiliated company of Xinhua
Mr. Hao Qing Hu	A director of the Company
Vertical Venture Capital Group (“Vertical Venture”), formerly Morolling International HK Limited	A below 1% shareholder of the Company

Details of stock subscription payables are as follows:

Nature and Company	March 31, 2017		September 30, 2016
Bayi	$	-	$	1,434,189
Moxian China Limited		-		565,811
	$	-	$	2,000,000

On January 3, 2017, the Company issued 500,000 shares of its common stock to Bayi and Moxian China Limited at a price of $4.00 per share in full settlement of stock subscription payable in accordance to the note conversion agreements signed on September 7, 2016 (see note 7).

12

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Related party transactions and balances (Continued)

Details of loans payable – related parties are as follows:

Nature and Company	March 31, 2017		September 30, 2016
Loan payable – related parties
Bayi	$	2,781	$	543,655
Vertical Venture		122,838		914,014
Moxian China Limited		-		170,714
Jet Key		-		206,780
Ace Keen		-		98,473
Hao Qing Hu		-		10,562
Zhang Xin		-		98,969
Zhongtou		-		16,161
Xinhua		-		493,237
	$	125,619	$	2,552,565

For the three month period ended March 31, 2017, the Company borrowed the loans, net of the repayments, aggregating $2,052 from Vertical Venture and Bayi. For the six months period ended March 31, 2017, the Company repaid the loans, net of additional borrowings, aggregating $2,387,305 from Vertical Venture, Moxian China Limited, Ace Keen, Hao Qing Hu, Zhang Xin, Zhongtou, Jet Key, Xinhua and Bayi. For the three months period ended March 31, 2016, the Company repaid the loans, net of additional borrowings, aggregating $953,890 from Moxian China Limited, Zhang Xin, Ace Keen, Zhongtou and Xinhua, respectively. For the six months ended March 31, 2016, the Company repaid the loans, net of additional borrowings, aggregating $178,007 from Moxian China Limited, Zhang Xin, Ace Keen, Zhongtou and Xinhua, respectively.

The loans and advance made by shareholders to Moxian HK, Moxian Shenzhen, Moyi, Moxian Beijing and Moxian Malaysia are unsecured, interest free and due on various dates specified in the loan agreements.

Bayi

During six months ended March 31, 2017, Moxian Shenzhen and Bayi entered into various loan agreements whereby Bayi agreed to provide a loan to Moxian Shenzhen in aggregate of $2,640,076 (RMB 18,114,695) without interest and due on demand. Moyi and Bayi further entered into two loan agreements whereby Bayi agreed to provide a loan to Moyi in aggregate of $96,190 (RMB 660,000) without interest and due on demand. During the six months ended March 31, 2017, Moxian Shenzhen repaid $3,165,789 (RMB 21,721,834) to Bayi and Moyi repaid $96,190 (RMB 660,000) to Bayi. As of March 31, 2017 and September 30, 2016, the loan payable balance to Bayi was $2,781 and $543,655, respectively.

Vertical Venture

During six months ended March 31, 2017, Moxian HK and Vertical Venture entered into various loan agreements whereby Vertical Venture agreed to provide a loan to Moxian HK in aggregate of $553,781 (HKD 4,296,810) without interest and due on demand. During six months ended March 31, 2017, Moxian HK repaid $1,339,579 (HKD10,393,844) to Vertical Venture. As of March 31, 2017 and September 30, 2016, the loan payable balance to Vertical Venture was $127,546 and $914,014, respectively.

Moxian China Limited

During six months ended March 31, 2017, Moxian Malaysia received a repayment from Moxian China Limited in aggregate of $96,158 (MYR 421,750). In addition, Moxian HK repaid $272,552 (HKD 2,114,739) to Moxian China Limited.  As of March 31, 2017 and September 30, 2016, the loan payable balance to Moxian China Limited was $Nil and $170,714, respectively.

13

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Related party transactions and balances (Continued)

Jet Key

During six months ended March 31, 2017, Moyi repaid $74,329 (RMB 510,000) to Jet Key and Moxian Malaysia repaid $122,879 (MAL 538,950) to Jet Key. As of March 31, 2017 and September 30, 2016, the balance due to Jet Key was $Nil and $206,780, respectively. The balance bears no interest and is due on demand.

Ace Keen

During six months ended March 31, 2017, Moxian HK and Ace Keen entered into a loan agreement whereby Ace Keen agreed to provide a loan to Moxian HK in aggregate of $17,962 (HKD 139,730) without interest and due on demand. During six months ended March 31, 2017, Moxian HK repaid $93,907 (HKD 728,629) and Moyi repaid $21,861 (HKD 150,000) to Ace Keen. As of March 31, 2017 and September 30, 2016, the loan payable balance to Ace Keen was $Nil and $98,473, respectively.

Hao Qing Hu

During six months ended March 31, 2017, Moxian Beijing received advances from Hao Qing Hu in aggregate of $10,847 (RMB 74,423) without interest and due on demand. During six months ended March 31, 2017, Moxian Beijing repaid $21,114 (RMB 144,871) to Hao Qing Hu. As of March 31, 2017 and September 30, 2016, the loan payable balance to Hao Qing Hu was $Nil and $10,562, respectively.

Zhang Xin

During six months ended March 31, 2017, Moxian HK repaid $98,917 (HKD 767,500) to Zhang Xin. As of March 31, 2017 and September 30, 2016, the loan payable balance to Zhang Xin was $Nil and $98,969, respectively.

Zhongtou

During six months ended March 31, 2017, Moxian Beijing repaid $15,711 (RMB 107,800) to Zhongtou. As of March 31, 2017 and September 30, 2016, the loan payable balance to Zhongtou was $Nil and $16,161, respectively.

Xinhua

During six months ended March 31, 2017, Moxian Beijing repaid $107,849 (RMB 740,000) to Xinhua and Moxian Shenzhen repaid $371,643 (RMB 2,550,000) to Xinhua. As of March 31, 2017 and September 30, 2016, the loan payable balance to Xinhua was $Nil and $493,237, respectively.

14

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. Capital stock

Note Conversion

On September 7, 2016, the Company entered into two note conversion agreements with Bayi and Moxian China Limited. The note conversion agreements permitted for the conversion of promissory notes in the aggregate amount of $2 million payable by the Company into shares of the Company’s common stock at the IPO price. The Company announced a successful completion of its IPO on November 14, 2016 with an IPO price of $4.00 per share. As of December 31, 2016, the Company included the $2 million worth of shares to be issued as stock subscription payable in accordance with ASC 480-10-25-14. On January 3, 2017, the Company issued 500,000 shares of its common stock to Bayi and Moxian China Limited at a price of $4.00 per share in full settlement of stock subscription payables in accordance to the note conversion agreements signed on September 7, 2016 (see Note 6).

Cancellation of shares

On February 22, 2016, Good Eastern Investment Limited (“GEL”), Stellar Elite Limited (“SEL”) and Moxian China Limited (“MCL”), collectively, the Designated Shareholders, entered into a Share Cancellation Agreement (the “Agreement”) with the Company. Pursuant to the Agreement, on February 22, 2016, the Designated Shareholders cancelled 47,422,540 shares of the Company common stock which represented 42.93% of the Company’s issued and outstanding shares for no consideration. The cancelled shares resulted in GEL, SEL and MCL, respectively owning after the share cancellation 9,990,000, 19,830,000 and 17,602,540 shares of common stock or any other securities of the Company. 

Public Offering Warrants

In connection with and upon closing of the Public Offering on November 14, 2016, the Company issued warrants equal to four percent (4%) of the shares issued in the Public Offering, totaling 100,050 units to the placement agents for the offering. The warrants carry a term of five years, and shall not be exercisable for a period of six months from the closing of the Public Offering and shall be exercisable at a price equal to $4.60 per share. Management determined that these warrants meet the definition of a derivative under ASC 815-40, however, they fall under the scope exception which states that contracts issued that are both a) indexed to its own stock; and b) classified in stockholders' equity are not considered derivatives. The warrants were recorded at their fair value on the date of grant as a component of stockholders’ equity. 

The aggregated fair value of the Public Offering Warrants on November 14, 2016 was $280,042.  The fair value has been estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying stock of $4.09; risk free rate of 1.66%; expected term of 5 years; exercise price of the warrants of $4.60; volatility of 90.7%; and expected future dividends of Nil.

15

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Income taxes

The Company and its subsidiaries file separate income tax returns.

The United States of America

Moxian is incorporated in the State of Nevada in the U.S., and is subject to a gradual U.S. federal corporate income tax of 15% to 35%. The State of Nevada does not impose any state corporate income tax. As of March 31, 2017, future net operation losses of approximately $6.4 million are available to offset future operating income through 2036.

British Virgin Islands

Moxian BVI is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Moxian BVI is not subject to tax on income or capital gains. In addition, upon payments of dividends by Moxian BVI, no British Virgin Islands withholding tax is imposed.

Hong Kong

Moxian HK is incorporated in Hong Kong and Hong Kong’s profits tax rate is 16.5%. Moxian HK did not earn any income that was derived in Hong Kong for the three and six months ended March 31, 2017 and 2016, and therefore, Moxian HK was not subject to Hong Kong Profits Tax.

Malaysia

Management estimated that Moxian Malaysia will not generate any taxable income in the future.

PRC

Effective from January 1, 2008, the PRC’s statutory income tax rate is 25%. The Company’s PRC subsidiaries are subject to income tax rate of 25%, unless otherwise specified. Moxian Shenzhen was incorporated in the PRC. Moxian Shenzhen did not generate taxable income in the PRC for the period from April 8, 2013 (date of inception) to December 31, 2016. Management estimated that Moxian Shenzhen will not generate any taxable income in the future. Moyi was incorporated in the People’s Republic of China. Moyi did not generate taxable income in the PRC for the period from July 19, 2013 (date of inception) to March 31, 2017. Moxian Beijing was incorporated in the PRC. Moxian Beijing did not generate taxable income in the PRC for the period from December 10, 2015 (date of inception) to March 31, 2017. 

Because of the uncertainty regarding the Company’s ability to realize its deferred tax assets, a 100% valuation allowance has been established as of March 31, 2017. As of September 30, 2016, the Company had a deferred tax asset of $98,581, resulting from certain net operating losses in PRC.

As of March 31, 2017 and September 30, 2016, the valuation allowance was approximately $7.2 million and $5.8 million, respectively. $0.8 million and $1.4 million of an increase in the valuation allowance for the three and six months period ended March 31, 2017. For the three and six months period ended March 31, 2016, the increase in valuation allowance was approximately $0.01 million and $0.3 million respectively.

16

MOXIAN, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Income taxes (Continued)

	March 31, 2017			September 30, 2016
Deferred tax asset from net operating loss carry-forwards	$	7,176,965		$	5,876,564
Valuation allowance		(7,176,965	)		(5,777,983	)
Deferred tax asset, net	$	-		$	98,581

9. Commitments and contingencies

Operating Lease

The Company leases a number of properties under operating leases. Rental expenses under operating leases for the three and six months ended March 31, 2017 were $159,575 and $328,405 respectively. Rental expenses under operating leases for the three and six months ended March 31, 2016 were $237,186 and $418,595, respectively.

As of March 31, 2017, the Company was obligated under non-cancellable operating leases for minimum rentals as follows:

For the Twelve Months Ending March 31,
2017	$	555,643
2018		106,727
Total minimum lease payments	$	662,370

Arrangement with Xinhua New Media Co., Ltd

The Company entered into an exclusive advertising agency agreement and sponsor agreement with Xinhua New Media Co., Ltd (“Xinhua New Media”). Pursuant to the agreement, the Company, as an exclusive agent, is authorized to operate and sell advertisement on Xinhua New Media’s mobile application in the gaming channel and sponsor related advertising events. The exclusive advertising agency agreement and sponsor agreement expire on December 31, 2020 and December 31, 2017, respectively. The Company entered into amendments with Xinhua News Media for both the agency agreement and sponsor agreement during the six months ended March 31, 2017. The fees payable for the period ended March 31, 2017 under the amended exclusive advertising agency agreement and sponsor agreement have been reduced. The amended payment schedule as of March 31, 2017 for the exclusive agency agreement and sponsor agreement is listed below:

For the Twelve Months Ending
March 31, 2018	$	1,791,529
March 31, 2019		1,457,422
March 31, 2020		1,457,422
March 31, 2021		1,093,067
Total agency payments	$	5,799,440

For the six months ended March 31, 2017 and 2016, the Company incurred $120,994 and $Nil advertising agent fee expense, respectively. For the three months ended March 31, 2017 and 2016, the Company incurred $365,287 and $Nil advertising agent fee expense, respectively. For the six months ended March 31, 2017 and 2016, the Company incurred $45,831 and $110,900 sponsor expense, respectively. For the three months ended March 31, 2017 and 2016, the Company incurred $95,064 and $Nil sponsor expense, respectively. These expenses were included in the selling, general and administrative expense.

Legal Proceeding

There has been no legal proceeding in which the Company is a party as of as of March 31, 2017.

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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

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 the combined business of (i) Moxian, Inc., a Nevada corporation, (ii) Moxian CN Group Limited, a Samoa company, (iii) Moxian Group Limited, a British Virgin Islands company (“Moxian BVI”), (iv) Moxian (Hong Kong) Limited, a limited liability company incorporated under the laws of Hong Kong (“Moxian HK”), (v) Moxian Technologies (Shenzhen) Co., Limited. (“Moxian Shenzhen”), a company incorporated under the laws of People’s Republic of China (vi) Moxian Malaysia SDN BHD, a company incorporated under the laws of Malaysia (“Moxian Malaysia”), and (vii) Shenzhen Moyi Technologies Co. Limited., 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 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 recruit 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 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.

18

Moxian principally operates in mainland China with its headquarters in Shenzhen, China. We launched Moxian version 1.0 which only consists of the User component App in Malaysia in June 2013 and subsequently in China in July 2014. During 2014 to 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 only. In December 2015, we opened our Beijing office. We are currently operating in both Shenzhen and Beijing. 

As of the date of this report, the Company has a total of 160 employees, of which 21 employees are part of the product team, 60 employees are part of the research and development team, 26 employees are part of the sales and marketing department, 17 employees are part of the customer and technical support team and the remaining employees are in the administrative department.

As of March 31, 2017 and September 30, 2016, our accumulated deficiency was approximately $33.8 million and $25.0 million, respectively. Our stockholders’ equity was approximately $1.8 million as of March 31, 2017 and our stockholders’ deficit was $0.01 million as of September 30, 2016. We have generated $17,443 and $12,942 in revenue for the six months ended March 31, 2017 and 2016, respectively. Our operating losses have principally been attributed to selling, general administrative, depreciation and amortization, research and development expenses and impairment charges on intangible assets.

19

Results of Operations

For the three months ended March 31, 2017 compared with the three months ended March 31, 2016

Revenues

The Company had revenues of $7,475 in the three months ended March 31, 2017 compared to $7,358 being generated in the three months ended March 31, 2016. The Company started to develop the China market in 2015 and has not developed a significant presence. 

Operating Expenses

Selling and general administrative expenses for the three months ended March 31, 2017 and 2016 were $1,983,534 and $1,212,913, respectively. The expenses consisted of filing fees, professional fees, advertising and sponsor fees, payroll and benefits and other general expenses. The increase in selling, general and administrative expenses during the quarter ended March 31, 2017 was mainly due to the recruitment of sales staff and its related costs following expansion of business activities in Beijing and Shenzhen. There were also additional expenses incurred to build investor relationships following the uplisting of the stock in November, 2016.

The research and development expenses for the three months ended March 31, 2017 and 2016 were $654,418 and $625,756, respectively. The research and development expenses were fairly consistent for the three months ended March 31, 2017 comparing to the same period of last year.

Depreciation and amortization expense for the three months period ended March 31, 2017 was $344,849, decreased from the depreciation and amortization expense of $457,109 incurred in the same period of last year. The decrease in depreciation and amortization expense in the three months ended March 31, 2017 was due to less amortization expense because of the impairment charge of approximately $3.0 million on intangible assets recognized during the three months ended March 31, 2017. 

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

Other Expenses

The Company had a $456,283 foreign exchange transaction loss during the three months ended March 31, 2016 due to the conversion of private placement funds, while the Company did not incur similar expenses for the three months ended March 31, 2017.

Net Loss

Net losses for the three months ended March 31, 2017 and 2016 was $6,050,445 and $2,725,462, respectively. The increase in net loss for the three months ended March 31, 2017 comparing to three months ended March 31, 2016 was mainly due to an increase in general and administrative expenses, attributable to an approximately $3.0 million impairment charge on intangible assets and other expenses as explained above.

For the six months ended March 31, 2017 compared with the six months ended March 31, 2016

Revenues

The Company had revenues of $17,443 in the six months ended March 31, 2017 compared to $12,942 being generated in the six months ended March 31, 2016. The Company only started to develop the China market in 2015 and has not developed a significant presence. 

20

Operating Expenses

Selling and general administrative expenses for the six months ended March 31, 2017 and 2016 were $3,749,633 and $2,694,739, respectively. The expenses consisted of filing fees, professional fees, advertising and sponsor fees, payroll and benefits and other general expenses. The increase in selling, general and administrative expenses during the six months ended March 31, 2017 was mainly due to the recruitment of sales staff and its related costs following expansion of business activities in Beijing and Shenzhen. There were also additional expenses incurred to build investor relationships following the uplisting of the stock in November, 2016.

The research and development expenses for the six months ended March 31, 2017 and 2016 were $1,351,858 and $1,514,296, respectively. The decrease was because the Company hired more contracted software developers in the six months ended March 31, 2016 for customizing the Moxian + applications in mainland China, which resulted in the increase in the research and development expense in fiscal 2016. The need for contracted research and development work was reduced during the six months ended March 31, 2017.

Depreciation and amortization expense for the six months ended March 31, 2017 and 2016 were $694,123 and $900,553, respectively. The decrease in depreciation and amortization expense in the six months ended March 31, 2017 was due to less amortization expense because of the impairment charge of approximately $3.0 million on intangible assets recognized during the six months ended March 31, 2017. 

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

Other Expenses

The Company recorded a $456,283 foreign exchange transaction loss during the six months ended March 31, 2016 due to the conversion of the private placement funds, while the Company did not incur similar expenses for the six months ended March 31, 2017.

Net Loss

Net losses for the six months ended March 31, 2017 and 2016 was $8,853,448 and $5,529,690, respectively. The increase in net loss for the six months ended March 31, 2017 comparing to six months ended March 31, 2016 was mainly due to impairment on intangible assets and other expenses as explained above.

Liquidity and Capital Resources

As of March 31, 2017, we had working capital of $306,125 consisting of cash on hand of $859,890, as compared to working capital deficit of approximately $4.9 million and cash on hand of $76,580 as of September 30, 2016.

Net cash used in operating activities for the six months ended March 31, 2017 was $5,388,986 as compared to net cash used in operating activities of $4,302,128 for the six months ended March 31, 2016. The increase in cash used in operating activities for the six months ended March 31, 2017 was mainly due to increase in losses from operation, including a significant increase in selling, general and administrative expenses, increase of prepayments, deposits and other receivables, and the significant decrease of accruals and other payables, as IPO proceeds were used to pay our payables.

Net cash used in investing activities for the six months ended March 31, 2017 was $15,135 as compared to $458,769 for the six months ended March 31, 2016. The higher spending for the six months ended March 31, 2016 was because the Company expanded its operations in China and purchased $280,226 in computer and office equipment and $178,543 in intangible assets.

21

Net cash provided by financing activities for the six months ended March 31, 2017 was $6,190,391 as compared to $2,506,098 for the six months ended March 31, 2016. During the six months ended March 31, 2017, the Company completed a public offering with gross proceeds of approximately $10 million, deducting placement agents' commissions and other offering expenses of approximately $0.9 million, resulting in net proceeds of approximately $9.0 million, of which $500,000 was placed in an indemnification escrow account.

In addition, during the six months ended March 31, 2017, the Company also received proceeds of approximately $3.2 million from various related party loans and repaid a majority of all related party loans of approximately $5.6 million with IPO proceeds.

During the six months ended March 31, 2016, the Company completed a private placement of approximately $8.2 million, of which approximately $5.6 million was received as of September 30, 2015 and $2.7 million was received during the six months ended March 31, 2016. In additional, the Company received proceeds of $0.7 million from various related party loans during the six months ended March 31, 2016.

On November 14, 2016, the Company completed its initial public offering (“IPO”) with net proceeds of $9.0 million after deducting placement agents’ commission and other offering costs, which helps the Company’s cash flow in fiscal 2017. As disclosed in Part II, Item 2(b) of this quarterly report, the Company has already spent approximately $8.6 million of the $9.0 million raised and is not generating sufficient revenue to maintain working capital sufficient to support its operations and finance its future growth. Although the Company hopes to increase revenues by selling advertisement space in the Xinhua New Media App and signing up more Merchant clients, its efforts through the date of this report have not resulted in significant revenue. Accordingly, the Company has recorded impairment charges on intangible assets associated with its software platform, and the Company expects to fund its cash flow shortfalls as follows:

● Financial support commitments from two of the Company’s major stockholders and two of the Company’s related parties; and

● Seeking additional public and/or private issuance of securities.

The Company does not currently have sufficient cash or commitments for financing to sustain its operations for the next twelve months. The Company plans to increase the cash flows through related party financing and other public or private placements. If the Company’s financing and private placements do not reach the level anticipated in its plan, and the Company is unable to obtain the necessary additional capital on a timely basis, on acceptable terms, and at all, the Company may be unable to implement its current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on its business, prospects, financial condition and results of operations. However, there can be no assurance that management will be successful in their plans. All of these factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Critical Accounting Policies and Estimates

Use of estimates

The preparation of the unaudited condensed 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 accompanying unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates required to be made by management include but not limited to, useful lives of property and equipment, intangible assets valuation, inventory valuation and deferred tax assets. Actual results could differ from those estimates.

Accounting for Impairment of Intangible Assets

The Company recognized an impairment loss on the carrying value of its IP rights and other intangible assets when it estimates that the future undiscounted cash flows expected to be generated from this asset group are lower than their carrying value. As at March 31, 2017, this carrying value was $2,985,181 and the full amount was recognized as an impairment loss based on the estimated future discounted cash flows.

Recently Issued Accounting Pronouncements

Reference is made to the “Recent Accounting Pronouncements” in Note 2 to the Unaudited Condensed Consolidated Financial Statements included in this Report for information related to new accounting pronouncements, as well as the related impact of those recent accounting pronouncements.

Off-Balance Sheet Arrangements

As of March 31, 2017, we did not have any off-balance sheet arrangements.

23

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

ITEM 4. CONTROLS AND PROCEDURES

Disclosures Control and Procedures

As of March 31, 2017, the Company carried out an evaluation, under the supervision of and with the participation of management, including our Company’s chief executive officer of the effectiveness of the design and operation of our Company’s disclosure controls and procedures under the 2013 COSO framework. Based on the foregoing, the chief executive officer concluded that our Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were ineffective in timely alerting them to information required to be included in the Company’s periodic Securities and Exchange Commission filings, as of March 31, 2017.

Management is committed to improving the internal controls over financial reporting and will undertake the consistent improvements or enhancements on an ongoing basis.

To remediate the material weakness and significant deficiencies and to prevent similar deficiencies in the future, we are currently evaluating additional controls and procedures, which may include:

(1) We created and filled the Chief Financial Officer position on July 25, 2016 and this employed officer will assumes responsibilities, for among others, for reviewing and establishing written policies and procedures, with the necessary internal controls, to ensure that accounting records reflect all transactions in an accurate and timely manner and form a reliable basis for the preparation of all financial statements.

(2) Plan to engage an IT consultant to help formalize the Company’s policies and procedures on information technology, analyze the capability and reliability of existing systems, and establish an integrated information system development plan.

(3) Review and document all key processes of the Company, including ensuring that there are sufficient internal controls at key flow-points; this being an ongoing exercise undertaken by the newly-appointed Chief Financial Officer which will be progressively carried throughout fiscal 2017 with the key processes targeted for completion by September 2017.

(4) Design and monitor controls over financial reporting, including the introduction of a proper checklist of cut-off procedures to ensure compliance and a proper accounting of accruals and payables.

(5) Establish a communication channel between the CFO and the Audit Committee, which will also meet regularly, so that matters of importance are elevated to a higher level.

(6) Continue to provide more U.S. GAAP knowledge and SEC reporting requirement training for staff and establish formal policies and procedures as well as engaging an external accounting consultant to help with the accounting and consolidation requirements so that all compliance requirements are met.

(7) Implement an ongoing initiative and training in the Company to ensure the importance of internal controls and compliance with established policies and procedures are fully understood throughout the organization.

(8) Recruit more accounting staff to ensure that there is adequate segregation of key duties.

(9) Establish a process to review all related party transactions to ensure that adequate controls exist to protect the Company’s interest which would include a review by the Audit Committee and the Board of all related party agreements, for which there will be a complete record.

24

The remedial measures being undertaken may not be fully effectuated or may be insufficient to address the significant deficiencies and material weakness we identified, and there can be no assurance that significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified or occur in the future. If additional significant deficiencies (or if material weaknesses) in our internal controls are discovered or occur in the future, among other similar or related effects: (i) the Company may fail to meet future reporting obligations on a timely basis, (ii) the Company’s consolidated financial statements may contain material misstatements, and (iii) the Company’s business and operating results may be harmed.

Changes in internal controls over financial reporting

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.

25

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

Not applicable to a smaller reporting company.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a) On January 3, 2017, we issued in aggregate 500,000 shares upon conversion of certain notes outstanding. The aggregate value of the notes was $2 million, so the price per share associated with the exerccise of the notes was four dollars per share. No underwriter was involved in the issuance. Because the shares were issued in exercise of the notes, we did not receive any proceeds from the sale but instead saw a decrease in debt as a result. The above issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act and/or Regulation S promulgated under the Securities Act as a transaction by an issuer not involving a public offering.

(b) The section entitled “Use of Proceeds” from our registration statement filed on March 16, 2016, as amended (the “Registration Statement”) is incorporated herein by reference. The effective date of the Registration Statement is October 4, 2016, and the Commission file number assigned to the Registration Statement is 333-210250. The Registration Statement registered the offering of up to 5,000,000 common shares (the “Offering”).

On November 14, 2016, the Company completed the Offering of 2,501,250 shares of its common stock at a public offering price of $4.00 per share. The gross proceeds from the Offering were approximately $10,005,000 before deducting placement agents' commissions and other offering expenses, resulting in net proceeds of approximately $9.0 million, of which $500,000 was placed in an indemnification escrow account. In connection with the Offering, the Company's common stock began trading on the NASDAQ Capital Market beginning on November 15, 2016 under the symbol "MOXC".

As of March 31, 2017, the Company has spent proceeds from the Offering in accordance with the following table:

Description of Use	Proposed Expenditure Amount		Actual Expenditures through March 31, 2017
Expand our business in China and throughout Asia including setting up regional and sales offices in first and second tier cities in China, as well as infrastructure investment for the build-out and expansion of offices in these cities	$	6 million	$	5.6 million	(1)
General corporate purposes and funding potential acquisitions of complementary businesses, assets and technologies		3 million		0.6 million
Other purposes		0		2.4 million	(2)
Total	$	9 million	$	8.6 million

⁽¹⁾ Expansion of our business included expenditures of approximately $700,000 in research and development to expand our on-line platform and expenditures of approximately $3.7 million for working capital needs related to our infrastructure.

⁽²⁾ We have obtained approximately $3.2 million in new loans from related parties and repaid approximately $5.6 million in loans received from related parties, resulting in a net payment of approximately $2.4 million from the IPO proceeds. We received these loans to finance our operations and growth pending completion of the Offering. The related party loans were interest-free and due on demand.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

26

ITEM 6. EXHIBITS.

31.1*	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer
31.2*	Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer
32.1*	Section 1350 Certification of principal executive officer
32.2*	Section 1350 Certification of principal financial officer
101*	XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.

* Filed herewith

27

SIGNATURES

Pursuant to the requirements 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: May 12, 2017	By:	/s/ James Mengdong Tan
	Name:	James Mengdong Tan
	Title:	Chief Executive Officer
		(Principal Executive Officer)

	Moxian, Inc.
Date: May 12, 2017	By:	/s/ Tan Wan Hong
	Name:	Tan Wan Hong
	Title:	Chief Financial Officer
		(Principal Financial Officer)

28

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Securities and Exchange Commission Release 34-46427

I, James Mengdong Tan, certify that:

(1)       I have reviewed this Form 10-Q 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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 the 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 control 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: May 12, 2017	/s/ James Mengdong Tan
	James Mengdong Tan
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Securities and Exchange Commission Release 34-46427

I, Tan Wan Hong, certify that:

(1)       I have reviewed this Form 10-Q 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 (the registrant's fourth fiscal quarter in the case of an annual report) 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 the 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 control 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: May 12, 2017	/s/ Tan Wan Hong
	Tan Wan Hong
	Chief Financial Officer (Principal Financial Officer)

EX-32.1

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 this Form 10-Q report of Moxian, Inc. for the period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof and pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, James Mengdong Tan, certify that:

(1)       This report containing the financial statements 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 this period report fairly presents, in all material respects, the financial condition and results of operations of Moxian, Inc.

Date: May 12, 2017	/s/ James Mengdong Tan
	James Mengdong Tan
	Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

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 this Form 10-Q report of Moxian, Inc. for the period ended March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof and pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Tan Wan Hong, certify that:

(1)       This report containing the financial statements 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 this period report fairly presents, in all material respects, the financial condition and results of operations of Moxian, Inc.

Date: May 12, 2017	/s/ Tan Wan Hong
	Tan Wan Hong
	Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2017	May 11, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	Moxian, Inc.
Entity Central Index Key	0001516805
Trading Symbol	moxc
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		67,007,199
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2017	Sep. 30, 2016
CURRENT ASSETS
Cash and cash equivalents	$ 859,890	$ 76,580
Restricted cash		65,590
Inventories	5,553	9,857
Prepayments, deposits and other receivables, net	167,117	129,024
Value added tax recoverable	503,835	444,701
Deferred offering costs		290,234
Total current assets	1,536,395	1,015,986
Restricted cash, long-term	500,000
Deferred tax assets, net		98,581
Property and equipment, net	1,038,100	1,508,743
Intangible assets, net		3,311,293
TOTAL ASSETS	3,074,495	5,934,603
CURRENT LIABILITIES
Accruals and other payables	1,104,651	1,392,200
Loans payable - related parties	125,619	2,552,565
Stock subscription payables		2,000,000
Total current liabilities	1,230,270	5,944,765
Total liabilities	1,230,270	5,944,765
Commitments and contingencies
STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock, $0.001 par value, authorized: 100,000,000 shares. Nil shares issued and outstanding
Common stock, $0.001 par value, authorized: 250,000,000 shares. 67,007,199 and 64,005,949 shares issued and outstanding as of March 31, 2017 and September 30, 2016, respectively	67,007	64,006
Additional paid-in capital	35,450,722	24,691,259
Accumulated deficiency	(33,842,244)	(24,988,796)
Accumulated other comprehensive income	168,740	223,369
Total stockholders' equity (deficiency)	1,844,225	(10,162)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)	$ 3,074,495	$ 5,934,603

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2017	Sep. 30, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	67,007,199	64,005,949
Common stock, shares outstanding	67,007,199	64,005,949

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)		3 Months Ended		6 Months Ended
		Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Revenues		$ 7,475	$ 7,358	$ 17,443	$ 12,942
Cost of revenues		(389)	(1,583)	(1,391)	(2,889)
Gross Profit		7,086	5,775	16,052	10,053
Depreciation and amortization expenses		344,849	457,109	694,123	900,553
Research and development		654,418	625,756	1,351,858	1,514,296
Impairment Charge on Intangible Assets		2,985,181		2,985,181
Selling, general and administrative expenses		1,983,534	1,212,913	3,749,633	2,694,739
Loss from operations		(5,960,896)	(2,290,003)	(8,764,743)	(5,099,535)
Interest income (expenses)		(1,893)	478	(1,123)	1,362
Foreign exchange loss			(456,283)		(456,283)
Other income (expenses), net		7,764	(1,052)	7,838	449
Loss before income tax		(5,955,025)	(2,746,860)	(8,758,028)	(5,554,007)
Income tax benefit (expense)		(95,420)	21,398	(95,420)	24,317
Net loss		(6,050,445)	(2,725,462)	(8,853,448)	(5,529,690)
Other comprehensive income (loss):
Foreign currency translation adjustments		276,959	55,719	(54,629)	161,157
Comprehensive loss		$ (5,773,486)	$ (2,669,743)	$ (8,908,077)	$ (5,368,533)
Basic and diluted loss per common share (in dollars per share)		$ (0.09)	$ (0.03)	$ (0.13)	$ (0.06)
Basic and diluted weighted average common shares outstanding* (in shares)	[1]	66,995,963	88,721,125	66,139,492	98,129,564

[1] Retroactively restated for effect of 1 for 2 reverse stock split on June 20, 2016

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (Parentheticals)	1 Months Ended
	Jun. 20, 2016
Income Statement [Abstract]
Reverse stock split ratio, description	1 for 2

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (8,853,448)	$ (5,529,690)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation and amortization	694,123	900,553
Loss on disposition of property, plant and equipment	11,124
Impairment charge on intangible assets	2,985,181
Deferred tax (benefits) expense	95,420	(24,317)
Changes in operating assets and liabilities:
Restricted cash	63,762
Inventories	4,107	3,999
Prepayments, deposits and other receivables	(116,173)	342,440
Accruals and other payables	(273,082)	4,887
Net cash used in operating activities	(5,388,986)	(4,302,128)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(3,998)	(280,226)
Purchase of intangible assets	(11,137)	(178,543)
Net cash used in investing activities	(15,135)	(458,769)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party loans	3,195,296	673,222
Repayment of related party loans	(5,582,602)	(851,229)
Initial Public Offering proceeds deposited in an indemnification escrow, restricted cash	(500,000)
Gross proceeds from Initial Public Offering - stock issuance	10,005,000
Direct costs disbursed from Initial Public Offering proceeds	(927,303)
Proceeds from private placement - stock issuance		2,684,105
Net cash provided by financing activities	6,190,391	2,506,098
Effect of exchange rates on cash and cash equivalents	(2,960)	(20,385)
Net increase (decrease) in cash and cash equivalents	783,310	(2,275,184)
Cash and cash equivalents, beginning of period	76,580	2,398,713
Cash and cash equivalents, end of period	859,890	123,529
Supplemental cash flow disclosures:
Cash paid for interest expense
Cash paid for income taxes
Non-cash investing and financing activities
Issuance of shares for subscription payable	2,000,000
Reclassification of deferred Initial Public Offering costs to additional paid in capital	290,234
Warrants issued to placement agents in connection with the Company's Initial Public Offering	$ 280,042
Issuance of shares for subscription payment received in 2015		5,505,915
Reclassification of construction in progress to intangible assets		829,862
Cancellation of shares		$ 94,845

XML

Organization and nature of operations

6 Months Ended

Mar. 31, 2017

Organization and Nature of Operations [Abstract]

Organization and nature of operations

1. Organization and nature of operations

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

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 generate sufficient funds to meet its working capital requirements is dependent upon its ability to develop additional sources of capital, develop apps and websites, generate servicing income, and ultimately, achieve profitable operations.

On May 24, 2016 the Board of approved a reverse stock split of the Company’s issued and outstanding shares of common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1-for-2 (the “Reverse Stock Split”). The Reverse Stock Split was effective on June 20, 2016 (the “Effective Date”). Simultaneously to the Reverse Stock Split, the number of shares of the Company’s authorized Common Stock was correspondingly reduced from 500,000,000 shares to 250,000,000 shares without changes in par value per share. The Company has retroactively restated all shares and per share data for all the periods presented.

On November 14, 2016, the Company announced the completion of a public offering of 2,501,250 shares of its common stock at a public offering price of $4.00 per share. The gross proceeds from the offering were approximately $10,005,000 before deducting placement agents' commissions and other offering expenses, resulting in net proceeds of approximately $9.0 million, of which $500,000 was placed in an indemnification escrow account. In connection with the offering, the Company's common stock began trading on the NASDAQ Capital Market beginning on November 15, 2016 under the symbol "MOXC".

XML

Summary of principal accounting policies

6 Months Ended

Mar. 31, 2017

Summary of Principal Accounting Policies [Abstract]

Summary of principal accounting policies

2. Summary of principal accounting policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and reflect the activities of the following subsidiaries and VIE: Moxian CN Samoa, Moxian BVI, Moxian HK, Moxian Shenzhen, Moxian Malaysia, Moyi, Moxian Beijing and Moxian IP Samoa. All material intercompany transactions and balances have been eliminated in the consolidation.

The unaudited interim condensed consolidated financial information as of March 31, 2017 and for the three and six months ended March 31, 2017 and 2016 have been prepared, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K for the fiscal year ended September 30, 2016, previously filed with the SEC. 

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of March 31, 2017 and its unaudited condensed consolidated results of operations for three and six months ended March 31, 2017 and 2016, and its unaudited condensed consolidated cash flows for the six months ended March 31, 2017 and 2016, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods. 

Reclassification

Certain prior period amounts have been reclassified to conform to the current period presentation.

Liquidity and Capital Resources

In assessing the Company’s liquidity, the Company monitors and analyzes its cash and cash equivalents and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. As of March 31, 2017, the Company’s current assets exceeded the current liabilities by $306,125, its accumulated deficit was approximately $33.8 million and the Company has incurred losses since inception.

On November 14, 2016, the Company completed its initial public offering (“IPO”) with net proceeds of $9.0 million after deducting placement agents’ commission and other offering costs, which helps the Company’s cash flow in fiscal 2017. As disclosed in Part II, Item 2(b) of this quarterly report, the Company has already spent approximately $8.6 million of the $9.0 million raised and is not generating sufficient revenue to maintain working capital sufficient to support its operations and finance its future growth. Although the Company hopes to increase revenues by selling advertisement space in the Xinhua New Media App and signing up more Merchant clients, its efforts through the date of this report have not resulted in significant revenue. Accordingly, the Company has recorded impairment charges on intangible assets associated with its software platform, and the Company expects to fund its cash flow shortfalls as follows:

● Financial support commitments from two of the Company’s major stockholders and two of the Company’s related parties; and

● Seeking additional public and/or private issuance of securities.

The Company does not currently have sufficient cash or commitments for financing to sustain its operations for the next twelve months. The Company plans to increase the cash flows through related party financing and other public or private placements. If the Company’s financing and private placements do not reach the level anticipated in its plan, and the Company is unable to obtain the necessary additional capital on a timely basis, on acceptable terms, and at all, the Company may be unable to implement its current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on its business, prospects, financial condition and results of operations. However, there can be no assurance that management will be successful in their plans. All of these factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Risks and Uncertainties

The Company’s operations are substantially carried out in the People’s Republic of China (“PRC”). Accordingly, the Company’s business, financial condition and results of operations maybe substantially influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Fair value of financial instruments

The Company follows the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs other than quoted prices that are observable for the asset or liability in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect management’s assumptions based on the best available information.

The carrying value of cash and cash equivalents, restricted cash, prepayments, deposits and other receivables, Value added tax recoverable, accruals and other payables, loans from related parties and stock subscription payable approximate their fair values because of the short-term nature of these instruments.

Use of estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP 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 accompanying unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates required to be made by management include but not limited to, useful lives of property and equipment, intangible assets valuation, inventory valuation, cash flows projection and deferred tax assets. Actual results could differ from those estimates.

Revenue recognition

The Company currently recognizes revenue from the sale of merchandise through its online platforms. Revenue is 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. Revenue was recorded on a gross basis, net of surcharges and value added tax ("VAT") of gross sales. The Company recorded revenue on a gross basis because the Company has the following indicators for gross reporting: it is the primary obligor of the sales arrangements, is subject to inventory risks of physical loss, has latitude in establishing prices, has discretion in suppliers' selection and assumes credit risks on receivables from customers.

Restricted Cash

Restricted cash represents cash held by depository banks in order to comply with the provisions of certain of debt agreements, as well as the cash held in an indemnification escrow account related to requirements of financing agreement signed with the underwriter for a two-year period subsequent to the IPO.

Property and Equipment, net

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

Electronic equipment	3-5 years
Furniture and fixtures	3-5 years
Leasehold improvements	Shorter of estimated useful life or term of lease

Intangible assets, net

Intangible assets, comprising Intellectual property rights (“IP rights”) and software, which are separable from property and equipment, are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of 3- 10 years.

Impairment of long-lived assets

The Company classifies its long-lived assets into: (i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite – lived intangible assets.

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology, economy or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, relief from royalty income approach, quoted market values and third-party independent appraisals, as considered necessary.

The Company makes various assumptions and estimates regarding estimated future cash flows and other factors in determining the fair values of the respective assets. The assumptions and estimates used to determine future values and remaining useful lives of long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as the Company’s business strategy and its forecasts for specific market expansion.

Due to the continuing losses from operations with minimal revenues, the Company recognized an impairment loss of $2,985,181 for the IP rights and other intangible assets during the three and six months ended March 31, 2017.

Income taxes

The Company utilizes ASC Topic 740 (“ASC 740”) “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 condensed 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” clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in the unaudited condensed 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 unaudited consolidated statements of operations and comprehensive loss.  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 measure the unrecognized benefits associated with the tax positions. As of March 31, 2017 and September 30, 2016, the Company did not have any unrecognized tax benefits. The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months.

Foreign currency transactions and translation

The reporting currency of the Company is United States Dollars (the “USD”) and the functional currency of Moxian Shenzhen, Moyi and Moxian Beijing is Renminbi (the “RMB”) as China is the primary economic environment in which they operate, the functional currency of Moxian HK is Hong Kong Dollar (the “HKD”), and the functional currency of Moxian Malaysia is Malaysia Ringgit (the “MYR”).

For financial reporting purposes, the financial statements of Moxian Shenzhen, Moyi, Moxian Beijing, Moxian HK and Moxian Malaysia, which are prepared using their respective functional currencies, are translated into the reporting currency, USD, so to be consolidated with the Company’s. Monetary assets and liabilities denominated in currencies other than the reporting currency are translated into the reporting currency at the rates of exchange ruling at the balance sheet date. Revenues and expenses are translated using average rates prevailing during the reporting period. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders’ equity (deficiency). Transaction gains and losses are recognized in the results of operations.

The exchange rates applied are as follows:

Balance sheet items, except for equity accounts	March 31, 2017		September 30, 2016
RMB:USD		6.8912		6.6702
HKD:USD		7.7707		7.7550
MYR:USD		4.4255		4.1356

Items in the unaudited condensed consolidated statements of operations and comprehensive loss, and unaudited condensed consolidated statements of cash flows

	Six Months Ended  March 31,
	2017		2016
RMB:USD		6.8614		6.3907
HKD:USD		7.7590		7.7506
MYR:USD		4.3860		4.2821

Research and Development

Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other related expenses associated with product development. Research and development expenses also include third-party development, programming costs, and localization costs incurred to translate software for local markets. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached. Once technological feasibility is reached, such costs are capitalized and amortized to the cost of revenue over the estimated lives of the products.

Recent accounting pronouncements

In October 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-17, Consolidation (Topic 810): Interest Held through Related Parties That Are under Common Control, to provide guidance on the evaluation of whether a reporting entity is the primary beneficiary of a VIE by amending how a reporting entity, that is a single decision maker of a VIE, treats indirect interests in that entity held through related parties that are under common control. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of this ASU will not have any impact to the Company’s unaudited condensed consolidated financial statements as the Company did not have any interest held through related parties with common control.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows: Restricted Cash". The amendments address diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendment is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this ASU on the statement of cash flows will increase cash and cash equivalents by the amount of the restricted cash on the Company’s unaudited condensed consolidated financial statements.

In January 2017, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". The amendments in this Accounting Standards Update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Basically these amendments provide a screen to determine when a set is not a business. If the screen is not met, the amendments in this ASU first, require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and second, remove the evaluation of whether a market participant could replace missing elements. These amendments take effect for public businesses for fiscal years beginning after December 15, 2017 and interim periods within those periods, and all other entities should apply these amendments for fiscal years beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect that the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements.

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Prepayments, deposits and other receivables net

6 Months Ended

Mar. 31, 2017

Prepayments, Deposits and Other Receivables, Net [Abstract]

Prepayments, deposits and other receivables, net

3. Prepayments, deposits and other receivables, net

	March 31, 2017			September 30, 2016
Prepayments to suppliers	$	38,530		$	19,496
Rental and other deposits		104,531			107,994
Employee advances and others		41,767			20,093
Sub total		184,828			147,583
Less:  allowance for doubtful accounts		(17,711	)		(18,559	)
Prepayments, deposits and other receivables, net	$	167,117		$	129,024

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Property and equipment, net

6 Months Ended

Mar. 31, 2017

Property and Equipment, Net [Abstract]

Property and equipment, net

4. Property and equipment, net

	March 31, 2017			September 30, 2016
Electronic equipment	$	2,229,819		$	2,300,666
Furniture and fixtures		83,179			86,029
Leasehold improvements		349,150			397,443
Total property and equipment		2,662,148			2,784,138
Less: Accumulated depreciation and amortization		(1,624,048	)		(1,275,395	)
Total property and equipment, net	$	1,038,100		$	1,508,743

Depreciation and amortization expense for the three and six months ended March 31, 2017 were $206,633 and $417,421, respectively. Depreciation and amortization expense for the three and six months ended March 31, 2016 were $226,642 and $450,066, respectively.

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Intangible assets

6 Months Ended

Mar. 31, 2017

Intangible Assets, Net [Abstract]

Intangible assets

5. Intangible assets

	March 31, 2017			September 30, 2016
IP rights	$	1,410,335		$	3,460,335
Other intangible assets		379,464			1,376,122
		1,789,799		$	4,836,457
Less: accumulated amortization		(1,789,799	)		(1,525,164	)
Net intangible assets	$	-		$	3,311,293

No significant residual value is estimated for these intangible assets. Aggregate amortization expense for the three and six months ended March 31, 2017 totaled $138,216 and $276,702, respectively. Amortization expense for the three and six months ended March 31, 2016 totaled $230,467 and $450,487, respectively.

Due to the continuing losses from operations with minimal revenues, the Company recognized an impairment loss of $2,985,181 for the IP rights and other intangible assets during the three and six months ended March 31, 2017. As of March 31, 2017, the net carrying value of intangible assets was nil.

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Related party transactions and balances

6 Months Ended

Mar. 31, 2017

Related Party Transactions and Balances [Abstract]

Related party transactions and balances

6. Related party transactions and balances

The table below sets forth related parties having transactions during the three and six months ended March 31, 2017 and balances as of March 31, 2017 and September 30, 2016, respectively.

Name	Relationship with the Company
Jet Key Limited (“Jet Key”)	A below 1% shareholder of the Company
Shenzhen Bayi Consulting Co. Ltd. (“Bayi”)	A below 5% shareholder of the Company
Ace Keen Limited (“Ace Keen”)	A below 1% shareholder of the Company
Moxian China Limited	A 26.8% shareholder of the Company
Zhang Xin	A below 5% shareholder of the Company
Beijing Xinhua Huifeng Equity Investment Center (“Xinhua”)	A Shareholder of the Company (see note 7)
Zhongtou Huifeng Investment Management (Beijing) Co. Ltd	Affiliated company of Xinhua
Mr. Hao Qing Hu	A director of the Company
Vertical Venture Capital Group (“Vertical Venture”), formerly Morolling International HK Limited	A below 1% shareholder of the Company

Details of stock subscription payables are as follows:

Nature and Company	March 31, 2017		September 30, 2016
Bayi	$	-	$	1,434,189
Moxian China Limited		-		565,811
	$	-	$	2,000,000

On January 3, 2017, the Company issued 500,000 shares of its common stock to Bayi and Moxian China Limited at a price of $4.00 per share in full settlement of stock subscription payable in accordance to the note conversion agreements signed on September 7, 2016 (see note 7).

Details of loans payable – related parties are as follows:

Nature and Company	March 31, 2017		September 30, 2016
Loan payable – related parties
Bayi	$	2,781	$	543,655
Vertical Venture		122,838		914,014
Moxian China Limited		-		170,714
Jet Key		-		206,780
Ace Keen		-		98,473
Hao Qing Hu		-		10,562
Zhang Xin		-		98,969
Zhongtou		-		16,161
Xinhua		-		493,237
	$	125,619	$	2,552,565

For the three month period ended March 31, 2017, the Company borrowed the loans, net of the repayments, aggregating $2,052 from Vertical Venture and Bayi. For the six months period ended March 31, 2017, the Company repaid the loans, net of additional borrowings, aggregating $2,387,305 from Vertical Venture, Moxian China Limited, Ace Keen, Hao Qing Hu, Zhang Xin, Zhongtou, Jet Key, Xinhua and Bayi. For the three months period ended March 31, 2016, the Company repaid the loans, net of additional borrowings, aggregating $953,890 from Moxian China Limited, Zhang Xin, Ace Keen, Zhongtou and Xinhua, respectively. For the six months ended March 31, 2016, the Company repaid the loans, net of additional borrowings, aggregating $178,007 from Moxian China Limited, Zhang Xin, Ace Keen, Zhongtou and Xinhua, respectively.

The loans and advance made by shareholders to Moxian HK, Moxian Shenzhen, Moyi, Moxian Beijing and Moxian Malaysia are unsecured, interest free and due on various dates specified in the loan agreements.

Bayi

During six months ended March 31, 2017, Moxian Shenzhen and Bayi entered into various loan agreements whereby Bayi agreed to provide a loan to Moxian Shenzhen in aggregate of $2,640,076 (RMB 18,114,695) without interest and due on demand. Moyi and Bayi further entered into two loan agreements whereby Bayi agreed to provide a loan to Moyi in aggregate of $96,190 (RMB 660,000) without interest and due on demand. During the six months ended March 31, 2017, Moxian Shenzhen repaid $3,165,789 (RMB 21,721,834) to Bayi and Moyi repaid $96,190 (RMB 660,000) to Bayi. As of March 31, 2017 and September 30, 2016, the loan payable balance to Bayi was $2,781 and $543,655, respectively.

Vertical Venture

During six months ended March 31, 2017, Moxian HK and Vertical Venture entered into various loan agreements whereby Vertical Venture agreed to provide a loan to Moxian HK in aggregate of $553,781 (HKD 4,296,810) without interest and due on demand. During six months ended March 31, 2017, Moxian HK repaid $1,339,579 (HKD10,393,844) to Vertical Venture. As of March 31, 2017 and September 30, 2016, the loan payable balance to Vertical Venture was $127,546 and $914,014, respectively.

Moxian China Limited

During six months ended March 31, 2017, Moxian Malaysia received a repayment from Moxian China Limited in aggregate of $96,158 (MYR 421,750). In addition, Moxian HK repaid $272,552 (HKD 2,114,739) to Moxian China Limited.  As of March 31, 2017 and September 30, 2016, the loan payable balance to Moxian China Limited was $Nil and $170,714, respectively.

Jet Key

During six months ended March 31, 2017, Moyi repaid $74,329 (RMB 510,000) to Jet Key and Moxian Malaysia repaid $122,879 (MAL 538,950) to Jet Key. As of March 31, 2017 and September 30, 2016, the balance due to Jet Key was $Nil and $206,780, respectively. The balance bears no interest and is due on demand.

Ace Keen

During six months ended March 31, 2017, Moxian HK and Ace Keen entered into a loan agreement whereby Ace Keen agreed to provide a loan to Moxian HK in aggregate of $17,962 (HKD 139,730) without interest and due on demand. During six months ended March 31, 2017, Moxian HK repaid $93,907 (HKD 728,629) and Moyi repaid $21,861 (HKD 150,000) to Ace Keen. As of March 31, 2017 and September 30, 2016, the loan payable balance to Ace Keen was $Nil and $98,473, respectively.

Hao Qing Hu

During six months ended March 31, 2017, Moxian Beijing received advances from Hao Qing Hu in aggregate of $10,847 (RMB 74,423) without interest and due on demand. During six months ended March 31, 2017, Moxian Beijing repaid $21,114 (RMB 144,871) to Hao Qing Hu. As of March 31, 2017 and September 30, 2016, the loan payable balance to Hao Qing Hu was $Nil and $10,562, respectively.

Zhang Xin

During six months ended March 31, 2017, Moxian HK repaid $98,917 (HKD 767,500) to Zhang Xin. As of March 31, 2017 and September 30, 2016, the loan payable balance to Zhang Xin was $Nil and $98,969, respectively.

Zhongtou

During six months ended March 31, 2017, Moxian Beijing repaid $15,711 (RMB 107,800) to Zhongtou. As of March 31, 2017 and September 30, 2016, the loan payable balance to Zhongtou was $Nil and $16,161, respectively.

Xinhua

During six months ended March 31, 2017, Moxian Beijing repaid $107,849 (RMB 740,000) to Xinhua and Moxian Shenzhen repaid $371,643 (RMB 2,550,000) to Xinhua. As of March 31, 2017 and September 30, 2016, the loan payable balance to Xinhua was $Nil and $493,237, respectively.

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Capital stock

6 Months Ended

Mar. 31, 2017

Capital Stock [Abstract]

Capital stock

7. Capital stock

Note Conversion

On September 7, 2016, the Company entered into two note conversion agreements with Bayi and Moxian China Limited. The note conversion agreements permitted for the conversion of promissory notes in the aggregate amount of $2 million payable by the Company into shares of the Company’s common stock at the IPO price. The Company announced a successful completion of its IPO on November 14, 2016 with an IPO price of $4.00 per share. As of December 31, 2016, the Company included the $2 million worth of shares to be issued as stock subscription payable in accordance with ASC 480-10-25-14. On January 3, 2017, the Company issued 500,000 shares of its common stock to Bayi and Moxian China Limited at a price of $4.00 per share in full settlement of stock subscription payables in accordance to the note conversion agreements signed on September 7, 2016 (see Note 6).

Cancellation of shares

On February 22, 2016, Good Eastern Investment Limited (“GEL”), Stellar Elite Limited (“SEL”) and Moxian China Limited (“MCL”), collectively, the Designated Shareholders, entered into a Share Cancellation Agreement (the “Agreement”) with the Company. Pursuant to the Agreement, on February 22, 2016, the Designated Shareholders cancelled 47,422,540 shares of the Company common stock which represented 42.93% of the Company’s issued and outstanding shares for no consideration. The cancelled shares resulted in GEL, SEL and MCL, respectively owning after the share cancellation 9,990,000, 19,830,000 and 17,602,540 shares of common stock or any other securities of the Company. 

Public Offering Warrants

In connection with and upon closing of the Public Offering on November 14, 2016, the Company issued warrants equal to four percent (4%) of the shares issued in the Public Offering, totaling 100,050 units to the placement agents for the offering. The warrants carry a term of five years, and shall not be exercisable for a period of six months from the closing of the Public Offering and shall be exercisable at a price equal to $4.60 per share. Management determined that these warrants meet the definition of a derivative under ASC 815-40, however, they fall under the scope exception which states that contracts issued that are both a) indexed to its own stock; and b) classified in stockholders' equity are not considered derivatives. The warrants were recorded at their fair value on the date of grant as a component of stockholders’ equity. 

The aggregated fair value of the Public Offering Warrants on November 14, 2016 was $280,042.  The fair value has been estimated using the Black-Scholes pricing model with the following weighted-average assumptions: market value of underlying stock of $4.09; risk free rate of 1.66%; expected term of 5 years; exercise price of the warrants of $4.60; volatility of 90.7%; and expected future dividends of Nil.

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Income taxes

6 Months Ended

Mar. 31, 2017

Income Taxes [Abstract]

Income taxes

8. Income taxes

The Company and its subsidiaries file separate income tax returns.

The United States of America

Moxian is incorporated in the State of Nevada in the U.S., and is subject to a gradual U.S. federal corporate income tax of 15% to 35%. The State of Nevada does not impose any state corporate income tax. As of March 31, 2017, future net operation losses of approximately $6.4 million are available to offset future operating income through 2036.

British Virgin Islands

Moxian BVI is incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, Moxian BVI is not subject to tax on income or capital gains. In addition, upon payments of dividends by Moxian BVI, no British Virgin Islands withholding tax is imposed.

Hong Kong

Moxian HK is incorporated in Hong Kong and Hong Kong’s profits tax rate is 16.5%. Moxian HK did not earn any income that was derived in Hong Kong for the three and six months ended March 31, 2017 and 2016, and therefore, Moxian HK was not subject to Hong Kong Profits Tax.

Malaysia

Management estimated that Moxian Malaysia will not generate any taxable income in the future.

PRC

Effective from January 1, 2008, the PRC’s statutory income tax rate is 25%. The Company’s PRC subsidiaries are subject to income tax rate of 25%, unless otherwise specified. Moxian Shenzhen was incorporated in the PRC. Moxian Shenzhen did not generate taxable income in the PRC for the period from April 8, 2013 (date of inception) to December 31, 2016. Management estimated that Moxian Shenzhen will not generate any taxable income in the future. Moyi was incorporated in the People’s Republic of China. Moyi did not generate taxable income in the PRC for the period from July 19, 2013 (date of inception) to March 31, 2017. Moxian Beijing was incorporated in the PRC. Moxian Beijing did not generate taxable income in the PRC for the period from December 10, 2015 (date of inception) to March 31, 2017. 

Because of the uncertainty regarding the Company’s ability to realize its deferred tax assets, a 100% valuation allowance has been established as of March 31, 2017. As of September 30, 2016, the Company had a deferred tax asset of $98,581, resulting from certain net operating losses in PRC.

As of March 31, 2017 and September 30, 2016, the valuation allowance was approximately $7.2 million and $5.8 million, respectively. $0.8 million and $1.4 million of an increase in the valuation allowance for the three and six months period ended March 31, 2017. For the three and six months period ended March 31, 2016, the increase in valuation allowance was approximately $0.01 million and $0.3 million respectively.

	March 31, 2017			September 30, 2016
Deferred tax asset from net operating loss carry-forwards	$	7,176,965		$	5,876,564
Valuation allowance		(7,176,965	)		(5,777,983	)
Deferred tax asset, net	$	-		$	98,581

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Commitments and contingencies

6 Months Ended

Mar. 31, 2017

Commitments and Contingencies [Abstract]

Commitments and contingencies

9. Commitments and contingencies

Operating Lease

The Company leases a number of properties under operating leases. Rental expenses under operating leases for the three and six months ended March 31, 2017 were $159,575 and $328,405 respectively. Rental expenses under operating leases for the three and six months ended March 31, 2016 were $237,186 and $418,595, respectively.

As of March 31, 2017, the Company was obligated under non-cancellable operating leases for minimum rentals as follows:

For the Twelve Months Ending March 31,
2017	$	555,643
2018		106,727
Total minimum lease payments	$	662,370

Arrangement with Xinhua New Media Co., Ltd

The Company entered into an exclusive advertising agency agreement and sponsor agreement with Xinhua New Media Co., Ltd (“Xinhua New Media”). Pursuant to the agreement, the Company, as an exclusive agent, is authorized to operate and sell advertisement on Xinhua New Media’s mobile application in the gaming channel and sponsor related advertising events. The exclusive advertising agency agreement and sponsor agreement expire on December 31, 2020 and December 31, 2017, respectively. The Company entered into amendments with Xinhua News Media for both the agency agreement and sponsor agreement during the six months ended March 31, 2017. The fees payable for the period ended March 31, 2017 under the amended exclusive advertising agency agreement and sponsor agreement have been reduced. The amended payment schedule as of March 31, 2017 for the exclusive agency agreement and sponsor agreement is listed below:

For the Twelve Months Ending
March 31, 2018	$	1,791,529
March 31, 2019		1,457,422
March 31, 2020		1,457,422
March 31, 2021		1,093,067
Total agency payments	$	5,799,440

For the six months ended March 31, 2017 and 2016, the Company incurred $120,994 and $Nil advertising agent fee expense, respectively. For the three months ended March 31, 2017 and 2016, the Company incurred $365,287 and $Nil advertising agent fee expense, respectively. For the six months ended March 31, 2017 and 2016, the Company incurred $45,831 and $110,900 sponsor expense, respectively. For the three months ended March 31, 2017 and 2016, the Company incurred $95,064 and $Nil sponsor expense, respectively. These expenses were included in the selling, general and administrative expense.

Legal Proceeding

There has been no legal proceeding in which the Company is a party as of as of March 31, 2017.

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Summary of principal accounting policies (Policies)

6 Months Ended

Mar. 31, 2017

Summary of Principal Accounting Policies [Abstract]

Basis of presentation and consolidation

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and reflect the activities of the following subsidiaries and VIE: Moxian CN Samoa, Moxian BVI, Moxian HK, Moxian Shenzhen, Moxian Malaysia, Moyi, Moxian Beijing and Moxian IP Samoa. All material intercompany transactions and balances have been eliminated in the consolidation.

The unaudited interim condensed consolidated financial information as of March 31, 2017 and for the three and six months ended March 31, 2017 and 2016 have been prepared, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The unaudited interim condensed consolidated financial information should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Form 10-K for the fiscal year ended September 30, 2016, previously filed with the SEC.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company’s consolidated financial position as of March 31, 2017 and its unaudited condensed consolidated results of operations for three and six months ended March 31, 2017 and 2016, and its unaudited condensed consolidated cash flows for the six months ended March 31, 2017 and 2016, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Reclassification

Reclassification

Certain prior period amounts have been reclassified to conform to the current period presentation.

Liquidity and Capital Resources

Liquidity and Capital Resources

In assessing the Company’s liquidity, the Company monitors and analyzes its cash and cash equivalents and its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. As of March 31, 2017, the Company’s current assets exceeded the current liabilities by $306,125, its accumulated deficit was approximately $33.8 million and the Company has incurred losses since inception.

On November 14, 2016, the Company completed its initial public offering (“IPO”) with net proceeds of $9.0 million after deducting placement agents’ commission and other offering costs, which helps the Company’s cash flow in fiscal 2017. As disclosed in Part II, Item 2(b) of this quarterly report, the Company has already spent approximately $8.6 million of the $9.0 million raised and is not generating sufficient revenue to maintain working capital sufficient to support its operations and finance its future growth. Although the Company hopes to increase revenues by selling advertisement space in the Xinhua New Media App and signing up more Merchant clients, its efforts through the date of this report have not resulted in significant revenue. Accordingly, the Company has recorded impairment charges on intangible assets associated with its software platform, and the Company expects to fund its cash flow shortfalls as follows:

● Financial support commitments from two of the Company’s major stockholders and two of the Company’s related parties; and

● Seeking additional public and/or private issuance of securities.

The Company does not currently have sufficient cash or commitments for financing to sustain its operations for the next twelve months. The Company plans to increase the cash flows through related party financing and other public or private placements. If the Company’s financing and private placements do not reach the level anticipated in its plan, and the Company is unable to obtain the necessary additional capital on a timely basis, on acceptable terms, and at all, the Company may be unable to implement its current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on its business, prospects, financial condition and results of operations. However, there can be no assurance that management will be successful in their plans. All of these factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Risks and Uncertainties

Risks and Uncertainties

The Company’s operations are substantially carried out in the People’s Republic of China (“PRC”). Accordingly, the Company’s business, financial condition and results of operations maybe substantially influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy. The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Fair value of financial instruments

Fair value of financial instruments

The Company follows the provisions of Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs other than quoted prices that are observable for the asset or liability in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect management’s assumptions based on the best available information.

The carrying value of cash and cash equivalents, restricted cash, prepayments, deposits and other receivables, Value added tax recoverable, accruals and other payables, loans from related parties and stock subscription payable approximate their fair values because of the short-term nature of these instruments.

Use of estimates

Use of estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP 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 accompanying unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates required to be made by management include but not limited to, useful lives of property and equipment, intangible assets valuation, inventory valuation, cash flows projection and deferred tax assets. Actual results could differ from those estimates.

Revenue recognition

Revenue recognition

The Company currently recognizes revenue from the sale of merchandise through its online platforms. Revenue is 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. Revenue was recorded on a gross basis, net of surcharges and value added tax ("VAT") of gross sales. The Company recorded revenue on a gross basis because the Company has the following indicators for gross reporting: it is the primary obligor of the sales arrangements, is subject to inventory risks of physical loss, has latitude in establishing prices, has discretion in suppliers' selection and assumes credit risks on receivables from customers.

Restricted cash

Restricted Cash

Restricted cash represents cash held by depository banks in order to comply with the provisions of certain of debt agreements, as well as the cash held in an indemnification escrow account related to requirements of financing agreement signed with the underwriter for a two-year period subsequent to the IPO.

Property and Equipment, net

Property and Equipment, net

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

Electronic equipment	3-5 years
Furniture and fixtures	3-5 years
Leasehold improvements	Shorter of estimated useful life or term of lease

Intangible assets, net

Intangible assets, net

Intangible assets, comprising Intellectual property rights (“IP rights”) and software, which are separable from property and equipment, are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of 3- 10 years.

Impairment of long-lived assets

Impairment of long-lived assets

The Company classifies its long-lived assets into: (i) computer and office equipment; (ii) furniture and fixtures, (iii) leasehold improvements, and (iv) finite – lived intangible assets.

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. It is possible that these assets could become impaired as a result of technology, economy or other industry changes. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, relief from royalty income approach, quoted market values and third-party independent appraisals, as considered necessary.

The Company makes various assumptions and estimates regarding estimated future cash flows and other factors in determining the fair values of the respective assets. The assumptions and estimates used to determine future values and remaining useful lives of long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as the Company’s business strategy and its forecasts for specific market expansion.

Due to the continuing losses from operations with minimal revenues, the Company recognized an impairment loss of $2,985,181 for the IP rights and other intangible assets during the three and six months ended March 31, 2017.

Income taxes

Income taxes

The Company utilizes ASC Topic 740 (“ASC 740”) “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 condensed 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” clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in the unaudited condensed 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 unaudited consolidated statements of operations and comprehensive loss.  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 measure the unrecognized benefits associated with the tax positions. As of March 31, 2017 and September 30, 2016, the Company did not have any unrecognized tax benefits. The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months.

Foreign currency transactions and translation

Foreign currency transactions and translation

The reporting currency of the Company is United States Dollars (the “USD”) and the functional currency of Moxian Shenzhen, Moyi and Moxian Beijing is Renminbi (the “RMB”) as China is the primary economic environment in which they operate, the functional currency of Moxian HK is Hong Kong Dollar (the “HKD”), and the functional currency of Moxian Malaysia is Malaysia Ringgit (the “MYR”).

For financial reporting purposes, the financial statements of Moxian Shenzhen, Moyi, Moxian Beijing, Moxian HK and Moxian Malaysia, which are prepared using their respective functional currencies, are translated into the reporting currency, USD, so to be consolidated with the Company’s. Monetary assets and liabilities denominated in currencies other than the reporting currency are translated into the reporting currency at the rates of exchange ruling at the balance sheet date. Revenues and expenses are translated using average rates prevailing during the reporting period. Adjustments resulting from the translation are recorded as a separate component of accumulated other comprehensive income in stockholders’ equity (deficiency). Transaction gains and losses are recognized in the results of operations.

The exchange rates applied are as follows:

Balance sheet items, except for equity accounts	March 31, 2017		September 30, 2016
RMB:USD		6.8912		6.6702
HKD:USD		7.7707		7.7550
MYR:USD		4.4255		4.1356

Items in the unaudited condensed consolidated statements of operations and comprehensive loss, and unaudited condensed consolidated statements of cash flows

	Six Months Ended  March 31,
	2017		2016
RMB:USD		6.8614		6.3907
HKD:USD		7.7590		7.7506
MYR:USD		4.3860		4.2821

Research and Development

Research and Development

Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other related expenses associated with product development. Research and development expenses also include third-party development, programming costs, and localization costs incurred to translate software for local markets. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached. Once technological feasibility is reached, such costs are capitalized and amortized to the cost of revenue over the estimated lives of the products.

Recent accounting pronouncements

Recent accounting pronouncements

In October 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-17, Consolidation (Topic 810): Interest Held through Related Parties That Are under Common Control, to provide guidance on the evaluation of whether a reporting entity is the primary beneficiary of a VIE by amending how a reporting entity, that is a single decision maker of a VIE, treats indirect interests in that entity held through related parties that are under common control. The amendments are effective for public business entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of this ASU will not have any impact to the Company’s unaudited condensed consolidated financial statements as the Company did not have any interest held through related parties with common control.

In November 2016, the FASB issued ASU No. 2016-18, "Statement of Cash Flows: Restricted Cash". The amendments address diversity in practice that exists in the classification and presentation of changes in restricted cash on the statement of cash flows. The amendment is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this ASU on the statement of cash flows will increase cash and cash equivalents by the amount of the restricted cash on the Company’s unaudited condensed consolidated financial statements.

In January 2017, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business". The amendments in this Accounting Standards Update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Basically these amendments provide a screen to determine when a set is not a business. If the screen is not met, the amendments in this ASU first, require that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and second, remove the evaluation of whether a market participant could replace missing elements. These amendments take effect for public businesses for fiscal years beginning after December 15, 2017 and interim periods within those periods, and all other entities should apply these amendments for fiscal years beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. The Company does not expect that the adoption of this guidance will have a material impact on its unaudited condensed consolidated financial statements.

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Summary of principal accounting policies (Tables)

6 Months Ended

Mar. 31, 2017

Summary of Principal Accounting Policies [Abstract]

Schedule of straight-line method over the estimated useful lives

Electronic equipment	3-5 years
Furniture and fixtures	3-5 years
Leasehold improvements	Shorter of estimated useful life or term of lease

Summary of exchange rates of balance sheet items, except for equity accounts

Balance sheet items, except for equity accounts	March 31, 2017		September 30, 2016
RMB:USD		6.8912		6.6702
HKD:USD		7.7707		7.7550
MYR:USD		4.4255		4.1356

Schedule of exchange rates of statements of operations and comprehensive loss, and statements cash flows

	Six Months Ended  March 31,
	2017		2016
RMB:USD		6.8614		6.3907
HKD:USD		7.7590		7.7506
MYR:USD		4.3860		4.2821

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Prepayments, deposits and other receivables net (Tables)

6 Months Ended

Mar. 31, 2017

Prepayments, Deposits and Other Receivables, Net [Abstract]

Schedule on prepayments deposits and other receivable

	March 31, 2017			September 30, 2016
Prepayments to suppliers	$	38,530		$	19,496
Rental and other deposits		104,531			107,994
Employee advances and others		41,767			20,093
Sub total		184,828			147,583
Less:  allowance for doubtful accounts		(17,711	)		(18,559	)
Prepayments, deposits and other receivables, net	$	167,117		$	129,024

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Property and equipment, net (Tables)

6 Months Ended

Mar. 31, 2017

Property and Equipment, Net [Abstract]

Schedule of property and equipment, net

	March 31, 2017			September 30, 2016
Electronic equipment	$	2,229,819		$	2,300,666
Furniture and fixtures		83,179			86,029
Leasehold improvements		349,150			397,443
Total property and equipment		2,662,148			2,784,138
Less: Accumulated depreciation and amortization		(1,624,048	)		(1,275,395	)
Total property and equipment, net	$	1,038,100		$	1,508,743

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Intangible assets (Tables)

6 Months Ended

Mar. 31, 2017

Intangible Assets, Net [Abstract]

Schedule of intangible assets

	March 31, 2017			September 30, 2016
IP rights	$	1,410,335		$	3,460,335
Other intangible assets		379,464			1,376,122
		1,789,799		$	4,836,457
Less: accumulated amortization		(1,789,799	)		(1,525,164	)
Net intangible assets	$	-		$	3,311,293

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Related party transactions and balances (Tables)

6 Months Ended

Mar. 31, 2017

Related Party Transactions and Balances [Abstract]

Schedule of relationship of related party transactions

Name	Relationship with the Company
Jet Key Limited (“Jet Key”)	A below 1% shareholder of the Company
Shenzhen Bayi Consulting Co. Ltd. (“Bayi”)	A below 5% shareholder of the Company
Ace Keen Limited (“Ace Keen”)	A below 1% shareholder of the Company
Moxian China Limited	A 26.8% shareholder of the Company
Zhang Xin	A below 5% shareholder of the Company
Beijing Xinhua Huifeng Equity Investment Center (“Xinhua”)	A Shareholder of the Company (see note 7)
Zhongtou Huifeng Investment Management (Beijing) Co. Ltd	Affiliated company of Xinhua
Mr. Hao Qing Hu	A director of the Company
Vertical Venture Capital Group (“Vertical Venture”), formerly Morolling International HK Limited	A below 1% shareholder of the Company

Schedule of subscription payments payable

Nature and Company	March 31, 2017		September 30, 2016
Bayi	$	-	$	1,434,189
Moxian China Limited		-		565,811
	$	-	$	2,000,000

Schedule of loans payable-related party transactions

Nature and Company	March 31, 2017		September 30, 2016
Loan payable – related parties
Bayi	$	2,781	$	543,655
Vertical Venture		122,838		914,014
Moxian China Limited		-		170,714
Jet Key		-		206,780
Ace Keen		-		98,473
Hao Qing Hu		-		10,562
Zhang Xin		-		98,969
Zhongtou		-		16,161
Xinhua		-		493,237
	$	125,619	$	2,552,565

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Income taxes (Tables)

6 Months Ended

Mar. 31, 2017

Income Taxes [Abstract]

Schedule of deferred tax assets

	March 31, 2017			September 30, 2016
Deferred tax asset from net operating loss carry-forwards	$	7,176,965		$	5,876,564
Valuation allowance		(7,176,965	)		(5,777,983	)
Deferred tax asset, net	$	-		$	98,581

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Commitments and contingencies (Tables)

6 Months Ended

Mar. 31, 2017

Commitments and Contingencies [Abstract]

Schedule of operating leases minimum rentals

For the Twelve Months Ending March 31,
2017	$	555,643
2018		106,727
Total minimum lease payments	$	662,370

Schedule of payments

For the Twelve Months Ending
March 31, 2018	$	1,791,529
March 31, 2019		1,457,422
March 31, 2020		1,457,422
March 31, 2021		1,093,067
Total agency payments	$	5,799,440

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Organization and nature of operations (Details Textuals) - USD ($)		1 Months Ended	6 Months Ended
	Nov. 14, 2016	Jun. 20, 2016	Mar. 31, 2017	Sep. 30, 2016	May 24, 2016
Organization and Nature of Operations (Textual)
Common stock, par value (in dollars per share)			$ 0.001	$ 0.001
Common stock, shares authorized			250,000,000	250,000,000	500,000,000
Gross proceeds from offering			$ 10,005,000
IPO proceeds deposited in indemnification escrow account			$ 500,000
Reverse stock split ratio, description		1 for 2
Public offering
Organization and Nature of Operations (Textual)
Issue of common stock, shares	2,501,250
Price per share	$ 4.00
Gross proceeds from offering	$ 10,005,000
Net proceeds from offering	9,000,000
IPO proceeds deposited in indemnification escrow account	$ 500,000

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Summary of principal accounting policies (Details)	6 Months Ended
	Mar. 31, 2017
Electronic equipment | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Electronic equipment | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Furniture and fixtures | Minimum
Property, Plant and Equipment [Line Items]
Estimated useful lives	3 years
Furniture and fixtures | Maximum
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Estimated useful lives, description	Shorter of estimated useful life or term of lease

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Summary of principal accounting policies (Details 1)	6 Months Ended
	Mar. 31, 2017 ¥ / shares	Mar. 31, 2017 ¥ / shares HKD / shares	Mar. 31, 2017 ¥ / shares MYR / shares	Mar. 31, 2016 ¥ / shares	Mar. 31, 2016 HKD / shares	Mar. 31, 2016 MYR / shares	Mar. 31, 2017 HKD / shares	Mar. 31, 2017 MYR / shares	Sep. 30, 2016 ¥ / shares	Sep. 30, 2016 HKD / shares	Sep. 30, 2016 MYR / shares
Summary of Principal Accounting Policies [Abstract]
Balance sheet items, except for equity accounts | (per share)	¥ 6.8912	¥ 6.8912	¥ 6.8912				HKD 7.7707	MYR 4.4255	¥ 6.6702	HKD 7.7550	MYR 4.1356
Items in the statements of operations and comprehensive loss, and statements cash flows | (per share)	¥ 6.8614	¥ 7.7590	¥ 4.3860	¥ 6.3907	HKD 7.7506	MYR 4.2821

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Summary of principal accounting policies (Details Textuals) - USD ($)		3 Months Ended	6 Months Ended
	Nov. 14, 2016	Mar. 31, 2017	Mar. 31, 2017	Sep. 30, 2016
Summary of Principal Accounting Policies (Textual)
Current assets exceeded the current liabilities		$ 306,125	$ 306,125
Accumulated deficit		(33,842,244)	(33,842,244)	$ (24,988,796)
Net proceeds from initial public offering	$ 9,000,000
Amount of IPO proceeds spend on business expansion	$ 8,600,000
Asset Impairment Charges		$ 2,985,181	$ 2,985,181
Intellectual property rights
Summary of Principal Accounting Policies (Textual)
Intangible assets estimated useful lives			straight-line method
Intellectual property rights | Minimum
Summary of Principal Accounting Policies (Textual)
Intangible assets estimated useful life (in years)			3 years
Intellectual property rights | Maximum
Summary of Principal Accounting Policies (Textual)
Intangible assets estimated useful life (in years)			10 years

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Prepayments, deposits and other receivables net (Details) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Prepayments, Deposits and Other Receivables, Net [Abstract]
Prepayments to suppliers	$ 38,530	$ 19,496
Rental and other deposits	104,531	107,994
Employee advances and others	41,767	20,093
Sub total	184,828	147,583
Less: allowance for doubtful accounts	(17,711)	(18,559)
Prepayments, deposits and other receivables, net	$ 167,117	$ 129,024

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Property and equipment, net (Details) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Summary of Property and equipment
Total property and equipment	$ 2,662,148	$ 2,784,138
Less: Accumulated depreciation and amortization	(1,624,048)	(1,275,395)
Total property and equipment, net	1,038,100	1,508,743
Electronic equipment
Summary of Property and equipment
Total property and equipment	2,229,819	2,300,666
Furniture and fixtures
Summary of Property and equipment
Total property and equipment	83,179	86,029
Leasehold improvements
Summary of Property and equipment
Total property and equipment	$ 349,150	$ 397,443

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Property and equipment, net (Details Textuals) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Property and equipment, net (Textual)
Depreciation and amortization	$ 206,633	$ 226,642	$ 417,421	$ 450,066

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Intangible assets (Details) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Acquired Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 1,789,799	$ 4,836,457
Less: accumulated amortization	(1,789,799)	(1,525,164)
Net intangible assets		3,311,293
IP rights
Acquired Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	1,410,335	3,460,335
Other intangible assets
Acquired Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 379,464	$ 1,376,122

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Intangible assets (Details Textuals) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Intangible Assets, Net [Abstract]
Aggregate amortization expense	$ 138,216	$ 230,467	$ 276,702	$ 450,487
Asset Impairment Charges	$ 2,985,181		$ 2,985,181

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Related party transactions and balances (Details)	6 Months Ended
	Mar. 31, 2017
Jet Key Limited ("Jet Key")
Related Party Transaction [Line Items]
Relationship with the Company	A below 1% shareholder of the Company
Shenzhen Bayi Consulting Co. Ltd. ("Bayi")
Related Party Transaction [Line Items]
Relationship with the Company	A below 5% shareholder of the Company
Ace Keen Limited ("Ace Keen")
Related Party Transaction [Line Items]
Relationship with the Company	A below 1% shareholder of the Company
Moxian China Limited
Related Party Transaction [Line Items]
Relationship with the Company	A 26.8% shareholder of the Company
Zhang Xin
Related Party Transaction [Line Items]
Relationship with the Company	A below 5% shareholder of the Company
Beijing Xinhua Huifeng Equity Investment Center ("Xinhua")
Related Party Transaction [Line Items]
Relationship with the Company	A Shareholder of the Company (see note 7)
Zhongtou Huifeng Investment Management (Beijing) Co. Ltd
Related Party Transaction [Line Items]
Relationship with the Company	Affiliated company of Xinhua
Mr. Hao Qing Hu
Related Party Transaction [Line Items]
Relationship with the Company	A director of the Company
Vertical Venture Capital Group ("Vertical Venture"), formerly Morolling International HK Limited
Related Party Transaction [Line Items]
Relationship with the Company	A below 1% shareholder of the Company

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Related party transactions and balances (Details 1) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Related Party Transaction [Line Items]
Subscription payments payable		$ 2,000,000
Bayi
Related Party Transaction [Line Items]
Subscription payments payable		1,434,189
Moxian China Limited
Related Party Transaction [Line Items]
Subscription payments payable		$ 565,811

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Related party transactions and balances (Details 2) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Related Party Transaction [Line Items]
Amount due to related parties	$ 125,619	$ 2,552,565
Bayi
Related Party Transaction [Line Items]
Amount due to related parties	2,781	543,655
Vertical Venture
Related Party Transaction [Line Items]
Amount due to related parties	122,838	914,014
Moxian China Limited
Related Party Transaction [Line Items]
Amount due to related parties		170,714
Jet Key
Related Party Transaction [Line Items]
Amount due to related parties		206,780
Ace Keen
Related Party Transaction [Line Items]
Amount due to related parties		98,473
Hao Qing Hu
Related Party Transaction [Line Items]
Amount due to related parties		10,562
Zhang Xin
Related Party Transaction [Line Items]
Amount due to related parties		98,969
Zhongtou
Related Party Transaction [Line Items]
Amount due to related parties		16,161
Xinhua
Related Party Transaction [Line Items]
Amount due to related parties		$ 493,237

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Related party transactions and balances (Details Textuals)		3 Months Ended		6 Months Ended
	Jan. 03, 2017 $ / shares shares	Mar. 31, 2017 USD ($) Loan_Agreement	Mar. 31, 2016 USD ($)	Mar. 31, 2017 USD ($) Loan_Agreement	Mar. 31, 2017 HKD	Mar. 31, 2017 CNY (¥)	Mar. 31, 2017 MYR	Mar. 31, 2016 USD ($)	Mar. 31, 2017 HKD Loan_Agreement	Mar. 31, 2017 CNY (¥) Loan_Agreement	Mar. 31, 2017 MYR Loan_Agreement	Nov. 14, 2016 $ / shares	Sep. 30, 2016 USD ($)
Related Party Transactions and Balances (Textual)
Repayment of loan		$ 2,052	$ 953,890	$ 2,387,305				$ 178,007
Bayi
Related Party Transactions and Balances (Textual)
Related party payable, Balance		2,781		2,781									$ 543,655
Moyi and Jet Key
Related Party Transactions and Balances (Textual)
Repayment of loan				74,329		¥ 510,000
Related party payable, Balance													206,780
Moyi and Ace Keen
Related Party Transactions and Balances (Textual)
Repayment of loan				21,861	HKD 150,000
Moxian Hk And Zhang Xin
Related Party Transactions and Balances (Textual)
Repayment of loan				98,917	767,500
Related party payable, Balance													98,969
Moxian Hk And Ace Keen
Related Party Transactions and Balances (Textual)
Repayment of loan				93,907	728,629
Loan borrowed		17,962		17,962					HKD 139,730
Related party payable, Balance													98,473
Moxian Malaysia And Moxian China Limited
Related Party Transactions and Balances (Textual)
Repayment of loan				272,552	2,114,739
Loan borrowed		96,158		96,158							MYR 421,750
Related party payable, Balance													170,714
Moxian Shenzhen And Bayi
Related Party Transactions and Balances (Textual)
Repayment of loan				3,165,789		21,721,834
Loan borrowed		2,640,076		2,640,076						¥ 18,114,695
Moxian Shenzhen And Xinhua
Related Party Transactions and Balances (Textual)
Repayment of loan				371,643		2,550,000
Moxian Beijing And Zhongtou
Related Party Transactions and Balances (Textual)
Repayment of loan				15,711		107,800
Related party payable, Balance													16,161
Moxian Beijing And Xinhua
Related Party Transactions and Balances (Textual)
Repayment of loan				107,849		740,000
Related party payable, Balance													493,237
Bayi and Moxian China Limited
Related Party Transactions and Balances (Textual)
Shares issued as stock subscription payable | shares	500,000
Price per share | $ / shares	$ 4.00											$ 4.00
Moyi And Bayi
Related Party Transactions and Balances (Textual)
Repayment of loan				$ 96,190		660,000
Number of loan agreement | Loan_Agreement		2		2					2	2	2
Loan borrowed		$ 96,190		$ 96,190						¥ 660,000
Moxian Beijing And Hao Qing Hu
Related Party Transactions and Balances (Textual)
Repayment of loan				21,114		144,871
Related party payable, Balance													10,562
Advance from related party				10,847		¥ 74,423
Vertical Venture
Related Party Transactions and Balances (Textual)
Repayment of loan				1,339,579	HKD 10,393,844
Loan borrowed		553,781		553,781					HKD 4,296,810
Related party payable, Balance		$ 127,546		127,546									$ 914,014
Jet Key And Moxian Malaysia
Related Party Transactions and Balances (Textual)
Repayment of loan				$ 122,879			MYR 538,950

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Capital stock (Details Textuals)			1 Months Ended	3 Months Ended	6 Months Ended
	Jan. 03, 2017 $ / shares shares	Nov. 14, 2016 USD ($) $ / shares shares	Feb. 22, 2016 shares	Dec. 31, 2016 USD ($)	Mar. 31, 2017 $ / shares	Sep. 07, 2016 Note_Conversion
Capital Stock (Textual)
Common stock shares subject to cancellation			47,422,540
Percentage of common stock			42.93%
IPO
Capital Stock (Textual)
Price per share | $ / shares		$ 4.00
Warrant
Capital Stock (Textual)
Percentage of warrants issued equal to shares		4.00%
Warrants issued		100,050
Term of Warrant		5 years
Exercise price of warrants | $ / shares		$ 4.60
Fair value of warrants | $		$ 280,042
Valuation technique					Black-Scholes pricing model
Market value of underlying stock | $ / shares					$ 4.09
Risk free rate					1.66%
Expected term					5 years
Volatility					90.70%
Expected future dividends
Good Eastern Investment Limited
Capital Stock (Textual)
Common stock shares subject to cancellation			9,990,000
Stellar Elite Limited
Capital Stock (Textual)
Common stock shares subject to cancellation			19,830,000
Moxian China Limited
Capital Stock (Textual)
Common stock shares subject to cancellation			17,602,540
Bayi and Moxian China Limited
Capital Stock (Textual)
Number of note conversion agreement | Note_Conversion						2
Conversion of promissory notes, aggregate amount | $				$ 2,000,000
Shares to be issued as stock subscription payable	500,000
Price per share | $ / shares	$ 4.00	$ 4.00

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Income taxes (Details) - USD ($)	Mar. 31, 2017	Sep. 30, 2016
Income Taxes [Abstract]
Deferred tax asset from net operating loss carry-forwards	$ 7,176,965	$ 5,876,564
Valuation allowance	(7,176,965)	(5,777,983)
Deferred tax asset, net		$ 98,581

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Income taxes (Details Textuals) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Sep. 30, 2016
Income taxes (Textual)
Operating loss carryforwards	$ 6,400,000		$ 6,400,000
PRC's statutory income tax rate			Effective from January 1, 2008, the PRC's statutory income tax rate is 25%.
PRC subsidiaries subject to income tax rate			25.00%
Deferred tax asset					$ 98,581
Valuation allowance	7,176,965		7,176,965		$ 5,777,983
Increase in valuation allowance	$ 800,000	$ 10,000	$ 1,400,000	$ 300,000
Hong Kong
Income taxes (Textual)
Effective tax rate			16.50%
Minimum
Income taxes (Textual)
PRC statutory rate, percentage			15.00%
Maximum
Income taxes (Textual)
PRC statutory rate, percentage			35.00%

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Commitments and contingencies (Details)	Mar. 31, 2017 USD ($)
For the Twelve Months Ending December 31,
2017	$ 555,643
2018	106,727
Total minimum lease payments	$ 662,370

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Commitments and contingencies (Details 1)	Mar. 31, 2017 USD ($)
For the Twelve Months Ending
March 31, 2018	$ 1,791,529
March 31, 2019	1,457,422
March 31, 2020	1,457,422
March 31, 2021	1,093,067
Total agency payments	$ 5,799,440

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Commitments and contingencies (Detail Textuals) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2017	Mar. 31, 2016
Loss Contingencies [Line Items]
Rental expenses under operating leases	$ 159,575	$ 237,186	$ 328,405	$ 418,595
Advertising agency fee	365,287		120,994
Sponsor fees	$ 95,064		$ 45,831	$ 110,900
Xinhua New Media Co. Ltd
Loss Contingencies [Line Items]
Expiration date of agreement			Dec. 31, 2020