SHAREHOLDERS’ EQUITY

12 Months Ended

Sep. 30, 2021

NOTE 6 – SHAREHOLDERS’ EQUITY

Authorized shares

On September 3, 2019, the Company’s Board of Directors unanimously approved the amendment of its Articles of Incorporation to increase the total authorized capital stock from 185,000,000 common shares to 200,000,000 common shares. As of September 18, 2019, holders of a majority of the outstanding shares of voting capital stock executed written stockholder consents approving this action and the Company amended its Articles of Incorporation through a filing of a Certificate of Amendment on October 11, 2019. Holders of shares of common stock have full voting rights, one vote for each share held of record. Shareholders are entitled to receive dividends as may be declared by the Board out of funds legally available therefore and share pro rata in any distributions to shareholders upon liquidation. Shareholders have no conversion, pre-emptive or subscription rights. All outstanding shares of common stock are fully paid and non-assessable. As of September 30, 2021 and 2020, there were 123,877,077 and 118,252,077 shares of common stock issued and outstanding, respectively.

Common Shares Issued for Services to Consultants

During the year ended September 30, 2020, the Company issued 285,000 shares of its common stock valued at $22,800 for services provided by PSI consultants. The shares were valued at the trading price of the common stock at the date of issuance and were recorded as compensation expense during the year ended September 30, 2020.

Restricted Stock Grants to Officers and Directors

During the year ended September 30, 2020, the Company’s Board of Directors approved the issuance of a combined total of 20,170,000 restricted shares of the Company’s common stock to its Officers and Directors. A total of 7,120,000 shares vested in April 2020, while 1,800,000 vested monthly from April 2020 through March 2021, and 11,250,000 will vest monthly from April 2020 through March 2023. Of the 13,050,000 shares that vest over time, a total of 2,775,000 shares vested during the year ended September 30, 2020 and a total of 4,650,000 shares vested during the year ended September 30, 2021.

During the year ended September 30, 2021, the Company’s Board of Directors approved the issuance of a combined total of 3,750,000 restricted shares of the Company’s common stock to its Officers and Directors, all of which will vest monthly from April 2021 through March 2024. A total of 625,000 shares vested during the year ended September 30, 2021.

During the year ended September 30, 2021, the Company’s Board of Directors approved the issuance of a combined total of 41,353,731 restricted shares of the Company’s common stock to its Officers and Directors, all of which will only be issued upon the sale or merger of the Company. No stock compensation was recorded relating to that grant as management feels it is a remote possibility that a sale or merger of the Company will happen within the next twelve months. In relation to that grant, a total of 16,093,018 warrant shares held by the Officers and Directors were cancelled (see Stock Warrants below).

The following table summarizes restricted common stock activity:

SUMMARY OF RESTRICTED COMMON STOCK

	Number of Restricted Shares			Fair Value			Weighted Average Grant Date Fair Value

Non-vested, September 30, 2019		-		$	-		$	-
Granted		20,170,000			605,100			0.03
Vested		(9,895,000	)		(296,850	)		0.03
Forfeited		-			-			-
Non-vested, September 30, 2020		10,275,000			308,250			0.03
Granted		3,750,000			187,500			0.05
Vested		(5,275,000	)		(170,750	)		0.03
Forfeited		-			-			-
Non-vested, September 30, 2021		8,750,000		$	325,000		$	0.04

During the years ended September 30, 2021 and 2020, the Company recorded $170,750 and $296,850, respectively, of stock compensation for the value of restricted common stock vesting during the period, and as of September 30, 2021, unvested compensation of $325,000 remained that will be amortized over the remaining vesting period.

Stock Options

On December 22, 2010, effective retroactively as of June 30, 2010, the Company’s Board of Directors approved the adoption of the “2010 Non-Qualified Stock Option Plan” (“2010 Option Plan”) by unanimous consent. The 2010 Option Plan was initiated to encourage and enable officers, directors, consultants, advisors and key employees of the Company to acquire and retain a proprietary interest in the Company by ownership of its common stock. A total of 7,500,000 of the authorized shares of the Company’s common stock may be subject to, or issued pursuant to, the terms of the plan. Effective January 1, 2018, the Board of Directors approved to increase the number of authorized shares of the Company’s common stock that may be subject to, or issued pursuant to, the terms of the plan from 7,500,000 to 30,000,000.

The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis over the requisite service period for the entire award. Additionally, the Company’s policy is to issue new shares of common stock to satisfy stock option exercises. The Company applied fair value accounting for all share-based payments awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model.

The table below summarizes the Company’s stock option activities for the year ended September 30, 2021:

SCHEDULE OF STOCK OPTION ACTIVITY

	Number of Option Shares			Exercise Price Range Per Share		Weighted Average Exercise Price

Balance, September 30, 2019		15,237,738		$	0.03 - 2.00	$	0.28
Granted		5,000,000			0.04 – 0.09		0.05
Cancelled		(4,910,000	)		0.14 – 0.30		0.14
Exercised		-			-		-
Expired		(1,200,000	)		0.11 - 0.25		0.15
Balance, September 30, 2020		14,127,738			0.03 - 2.00		0.23
Granted		-			-		-
Cancelled		(7,262,500	)		0.04 – 0.40		0.06
Exercised		-			-		-
Expired		(1,587,500	)		0.11 - 2.00		1.29
Balance, September 30, 2021		5,277,738		$	0.03 - 0.26	$	0.15
Vested and exercisable, September 30, 2021		5,277,738		$	0.03 - 0.26	$	0.15

Unvested, September 30, 2021		-		$	-	$	-

The following table summarizes information concerning outstanding and exercisable options as of September 30, 2021:

		Options Outstanding						Options Exercisable
Range of Exercise Prices		Number Outstanding		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price

$	0.03 - 0.26		5,277,738		1.58	$	0.15		-		-	$	-

$	$0.03 - 0.26		5,277,738		1.58	$	0.15		-		-	$	-

Stock Option Activity during the Fiscal Year Ended September 30, 2020

During the year ended September 30, 2020, the Company’s Board of Directors approved the cancellation of stock options to purchase 3,360,000 shares of the Company’s common stock with an exercise prices of $0.14 and $0.30 per share that had vested as of March 31, 2020, and 1,550,000 shares with an exercise price of $0.14 per share that were set to vest monthly from April 2020 through March 2021. All of the cancelled options were held by the Company’s Officers and Directors.

The Board approved the grant of stock options to its Chief Executive Officer to purchase 4,250,000 shares with an exercise price of $0.04 per share that expire ten years from the date of grant. The fair value of the shares was determined to be $127,500 as of the date of grant based on a Black-Scholes option model. A total of 1,125,000 shares vested during the year ended September 30, 2020 and 3,125,000 shares will vest monthly over the period from October 2020 through March 2023. Subsequent to the grant of these shares, the Board approved the following modifications relating to the Chief Executive Officer’s options:

	a.	Repricing of stock options to purchase 1,200,000 shares with an exercise price of $0.14 per share to $0.04 per share that had vested as of March 31, 2020,
	b.	Repricing of stock options to purchase 600,000 shares with an exercise price of $0.14 per share to $0.04 per share that were set to vest monthly from April 2020 through March 2021.
	c.	Extend the expiration of the options to ten years from the date of grant, rather than the five-year expiration the shares initially had.

In accounting for the modification, the Company calculated for the fair value of the options before modification using current valuation inputs including the Company’s closing stock price of $0.03 on May 28, 2020, a volatility metric of 183%, and a risk-free interest rate of 0.34%. The Company also calculated the fair value of the options after modification using the extended term and modified exercise price. The incremental fair value of the options resulting from the modifications was $22,680 that was recognized as an expense during the year ended September 30, 2020.

In addition to the options granted to the Company’s Chief Executive Officer noted above, during the year ended September 30, 2020, the Company granted options to several employee to purchase a total of 750,000 shares of its common stock with an aggregate fair value of $59,376. The options have an exercise price of $0.04 and $0.09 per share and expire five years from the date of grant. The shares vested on the date of grant. The Company valued the options using a Black-Scholes option pricing model.

The assumptions used for all of the options granted during the year ended September 30, 2020 are as follows:

Exercise price	$	0.04 - $0.09
Expected dividends		-
Expected volatility		157.6% – 197.0	%
Risk free interest rate		0.17 % - 1.60	%
Expected life of options		2.5

Stock Option Activity during the Fiscal Year Ended September 30, 2021

During the year ended September 30, 2021, the Company’s Board of Directors approved the cancellation of 6,050,000 option shares held the Company’s Chief Executive Officer (CEO) and replaced them with a grant of 6,050,000 option shares that will only be granted upon the sale or merger of the Company. No stock compensation was recorded relating to that grant as management feels it is a remote possibility that a sale or merger of the Company will happen within the next twelve months.

During the years ended September 30, 2021 and 2020, the Company recorded $21,764 and $263,414, respectively, of stock compensation for the value of options vesting during the period, and as of September 30, 2021, no unvested compensation remained that will be amortized over the remaining vesting period.

The total aggregate intrinsic value for option shares outstanding at September 30, 2021 was $625. As of September 30, 2021, there were 24,722,262 shares of stock options remaining available for issuance under the 2010 Plan.

Stock Warrants

The table below summarizes the Company’s warrants activities for the year ended September 30, 2021:

SCHEDULE OF WARRANT ACTIVITY

	Number of Warrant Shares			Exercise Price Range Per Share		Weighted Average Exercise Price

Balance, September 30, 2019		66,484,049		$	0.12 - 0.40	$	0.17
Granted		1,150,000			0.07		0.07
Cancelled		-			-		-
Exercised		-			-		-
Expired		-			-		-
Balance, September 30, 2020		67,634,049			0.07 - 0.40		0.16
Granted		-			-		-
Cancelled		(16,093,018	)		0.12 - 0.18		0.15
Exercised		-			-		-
Expired		(19,508,956	)		0.15 - 0.25		0.18
Balance, September 30, 2021		32,032,075		$	0.07 - 0.40	$	0.16
Vested and exercisable, September 30, 2021		32,032,075		$	0.07 - 0.40	$	0.16

The following table summarizes information concerning outstanding and exercisable warrants as of September 30, 2021:

		Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices		Number Outstanding		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price

$	0.12 – 0.20		31,082,075		1.76	$	0.16		31,082,075		1.76	$	0.16
	0.21 – 0.40		950,000		1.67		0.33		950,000		1.67		0.33

	$ 0.12 – 0.40		32,032,075		1.76	$	0.16		32,032,075		1.76	$	0.16

During the year ended September 30, 2020, in connection with the conversion of a loan payable, the Company issued a warrant to purchase 1,150,000 shares with an exercise price of $0.07 per share with a fair value of $43,815. The warrant expires five years from the date of grant.

Effective January 1, 2020, the Company’s Board of Directors approved the extension of the Company’s unexpired stock warrants as of December 31, 2019, by an additional one-year period. This change affected approximately 66,000,000 warrant shares including approximately 20,000,000 warrant shares that were set to expire by the year ending September 30, 2020. The 66,000,000 warrant shares had exercise prices ranging from $0.12 per share to $0.40 per share. The incremental fair value of the warrants resulting from modification was $507,265 and was recognized as an expense during the year ended September 30, 2020.

During the year ended September 30, 2021, the Company’s Board of Directors approved the cancellation of 16,093,018 warrant shares held by the Company’s Officers and Directors. See Restricted Stock Grants above relating to this cancellation.

There was no aggregate intrinsic value for warrant shares outstanding at September 30, 2021.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI http://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (g)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI http://asc.fasb.org/topic&trid=2208762

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (h)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI http://asc.fasb.org/extlink&oid=123467817&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Wellness Center USA, Inc. 10-K