0001493152-19-004163.txt : 20190329 0001493152-19-004163.hdr.sgml : 20190329 20190329061635 ACCESSION NUMBER: 0001493152-19-004163 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 50 CONFORMED PERIOD OF REPORT: 20181231 FILED AS OF DATE: 20190329 DATE AS OF CHANGE: 20190329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Wellness Center USA, Inc. CENTRAL INDEX KEY: 0001516887 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 272980395 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-173216 FILM NUMBER: 19713795 BUSINESS ADDRESS: STREET 1: 2500 WEST HIGGINS ROAD, STE. 780 CITY: HOFFMAN ESTATES STATE: IL ZIP: 60169 BUSINESS PHONE: (847) 925-1885 MAIL ADDRESS: STREET 1: 2500 WEST HIGGINS ROAD, STE. 780 CITY: HOFFMAN ESTATES STATE: IL ZIP: 60169 10-Q 1 form10-q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2018

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

For the transition period from ___________ to ___________

WELLNESS CENTER USA, INC.

(Name of small business issuer in its charter)

NEVADA

333-173216

27-2980395

(State or other jurisdiction of incorporation or organization)

Commission

File Number

(IRS Employee

Identification No.)

2500 West Higgins Road, Ste. 780, Hoffman Estates, IL, 60169

(Address of Principal Executive Offices)

(847) 925-1885

(Issuer Telephone number)

Not Applicable

(Former name or former address, if changed since last report)

Securities registered under Section 12(b) of the Exchange Act:

Title of each class registered:		Name of each exchange on which registered:
None		None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $0.001

(Title of class)

Indicate by check mark whether the issuer (1) 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 or a smaller reporting company filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer [ ]

Accelerated Filer [ ]

Non-Accelerated Filer [ ]

Smaller Reporting Company [X]

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.

Yes [ ] No [X]

The number of shares issued and outstanding of each of the issuer’s classes of common equity as of December 31, 2018 was 103,697,867.

FORM 10-Q

WELLNESS CENTER USA, INC.

DECEMBER 31, 2018

TABLE OF CONTENTS

PART I-- FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Control and Procedures	23

PART II-- OTHER INFORMATION

Item 1	Legal Proceedings	25
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	26

SIGNATURE		27

Wellness Center USA, Inc.

Condensed Consolidated Balance Sheets

	December 31, 2018			September 30, 2018
		(Unaudited)
ASSETS
Current Assets
Cash	$	134,750		$	4,210
Prepaid expenses and other current assets		-			1,550
Total Current Assets		134,750			5,760

Property and equipment, net		2,355			2,619
Other assets		16,760			16,760
Total Other Assets		19,115			19,379

TOTAL ASSETS	$	153,865		$	25,139

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued expenses	$	626,584		$	572,753
Deferred revenue		9,750			8,624
Convertible notes payable		88,611			202,922
Loans payable from officers and shareholders		126,000			66,000
Total Current Liabilities		850,945			850,299

Shareholders’ Deficit
Common stock, par value $0.001, 185,000,000 shares authorized; 103,697,867 and 100,952,569 shares issued and outstanding, respectively		103,698			100,952
Additional paid-in capital		23,033,274			22,450,252
Accumulated deficit		(23,954,052	)		(22,974,740	)
Total Wellness Center USA shareholders’ deficit		(817,080	)		(423,536	)

Non-controlling interest		120,000			(401,624	)
Total Shareholder’s deficit		(697,080	)		(825,160	)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	153,865		$	25,139

The accompanying notes are an integral part of these condensed consolidated financial statements.

Wellness Center USA, Inc.

Condensed Consolidated Statements of Operations

	Three Months Ended
	December 31,
	2018			2017
	(Unaudited)
Sales:
Trade	$	7,675		$	15,500
Consulting services		5,200			11,000
Total Sales		12,875			26,500

Cost of goods sold		7,725			16,992

Gross profit		5,150			9,508

Operating expenses		475,864			334,163

Loss from operations		(470,714	)		(324,655	)

Other expenses
Amortization of debt discount		(50,689	)		(70,047	)
Financing costs		(51,434	)		-
Interest expense		(4,851	)		(3,300	)
Total other expenses		(106,974	)		(73,347	)

NET LOSS		(577,688	)		(398,002	)

Net loss attributable to non-controlling interest		3,759			45,969
Loss from deconsolidation of non-controlling interest		(405,383	)		-
NET LOSS ATTRIBUTABLE TO WELLNESS CENTER USA, INC.	$	(979,312	)	$	(352,033	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.01	)	$	(0.00	)

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED		100,952,569			90,336,112

The accompanying notes are an integral part of these condensed consolidated financial statements.

Wellness Center USA, Inc.

Condensed Consolidated Statement of Shareholders’ Deficit (Unaudited)

	Common Stock				Additional Paid-in		Accumulated			Total WCUI			Non-controlling
	Shares		Amount		Capital		Deficit			Deficit			Interest			Total

Balance, September 30, 2018		100,952,569	$	100,952	$	22,450,252	$	(22,974,740	)	$	(423,536	)	$	(401,624	)	$	(825,160	)

Common shares issued for cash		142,857		143		9,857		-			10,000			-			10,000

Shares issued upon conversions of note payable		2,482,441		2,483		171,300		-			173,783			-			173,783

Fair value of additional shares issued upon conversions of note payable		-		-		51,434		-			51,434			-			51,434

Fair value of vested stock options		-		-		85,951		-			85,951			-			85,951

Fair value of common stock issued for services		120,000		120		9,480		-			9,600			-			9,600

Termination of non-controlling interest agreement		-		-		-		(405,383	)		(405,383	)		405,383			-

Contribution of capital by joint venture partner		-		-		255,000		-			255,000			120,000			375,000

Net loss for the three months ended December 31, 2018		-		-		-		(573,929	)		(573,929	)		(3,759	)		(577,688	)

Balance, December 31, 2018 (unaudited)		103,697,867	$	103,698	$	23,033,274	$	(23,954,052	)	$	(817,080	)	$	120,000		$	(697,080	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Wellness Center USA, Inc.

Condensed Consolidated Statements of Cash Flows

	Three Months Ended
	December 31,
	2018			2017
	(Unaudited)
Cash Flows from Operating Activities
Net loss	$	(577,688	)	$	(398,002	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		264			1,014
Amortization of debt discount		50,689			70,046
Fair value of common shares issued for services		9,600			21,000
Fair value of stock options issued for services		85,951			-
Fair value of additional shares issued upon conversions of note payable		51,434			-
Changes in Assets and Liabilities
(Increase) Decrease in:
Accounts receivable		-			19,999
Inventories		-			223
Prepaid expenses and other current assets		1,550			(645	)
(Decrease) Increase in:
Accounts payable and accrued expenses		62,615			111,559
Accrued payroll - officers		-			30,367
Deferred revenue		1,125			(2,750	)
Net cash used in operating activities		(314,460	)		(147,189	)

Cash Flows from Financing Activities
Proceeds from loans payable from officers and shareholders		60,000			30,500
Common stock issued for cash		10,000			-
Exercise of stock warrants		-			110,914
Contribution of capital by joint venture partner		375,000			-
Net cash provided by financing activities		445,000			141,414

Net increase (decrease) in cash		130,540			(5,775	)

Cash beginning of period		4,210			29,369
Cash end of period	$	134,750		$	23,594

Supplemental cash flows disclosures:
Interest paid	$	-		$	-
Taxes paid	$	-		$	-

Supplemental non-cash financing disclosures:
Conversion of convertible note payable into common shares	$	173,783		$	-
Conversion of accrued interest into common shares	$	8,783		$	-
Non-controlling interest’s share in losses of a subsidiary	$	3,759		$	45,969

The accompanying notes are an integral part of these condensed consolidated financial statements.

WELLNESS CENTER USA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE THREE MONTHS ENDED DECEMBER 31, 2018 AND 2017

NOTE 1 – BASIS OF PRESENTATION

Organization and Operations

The Company currently operates in the following business segments: (i) distribution of targeted Ultra Violet (“UV”) phototherapy devices for dermatology; and (ii) authentication and encryption products and services. The segments are operated, respectively, through PSI and SCI.

Basis of Presentation of Unaudited Financial Information

The accompanying unaudited condensed consolidated financial statements of Wellness Center USA, Inc. and Subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended December 31, 2018 are not necessarily indicative of the results that may be expected for the year ending September 30, 2019.

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has not yet generated significant revenues and has incurred recurring net losses. During the three months ended December 31, 2018, the Company incurred a net loss of $577,688 and used cash in operations of $314,460, and had a shareholders’ deficit of $697,080 as of December 31, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its strategies. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

In addition, the Company’s independent registered public accounting firm, in its report on the Company’s September 30, 2018 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern.

At December 31, 2018, the Company had cash on hand in the amount of $134,750. The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and raising additional capital soon to meet its obligations and repay its liabilities arising from normal business operations when they come due. Since inception, we have funded our operations primarily through equity and debt financings and we expect to continue to rely on these sources of capital in the future. During the three months ended December 31, 2018, the Company received $445,000 through short-term loans, contributions of capital by a joint venture partner and the sale of common stock.

No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case of equity financing.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The Company’s consolidated subsidiaries and/or entities are as follows:

Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition/disposition, if applicable)	Attributable interest

Psoria-Shield Inc. (“PSI”)	The State of Florida	June 17, 2009 (August 24, 2012)		100	%

StealthCo, Inc. (“StealthCo”)	The State of Illinois	March 18, 2014		100	%

Psoria Development Company LLC. (“PDC”)	The State of Illinois	January 15, 2015/November 15, 2018		50	%

NEO Phototherapy LLC (“NEO”)	The State of Illinois	December 2018		50.5	%

Through October 2018, PSI was operated by PDC, a joint venture between PSI and the Medical Alliance, Inc (“TMA”). On November 15, 2018, the Company and TMA entered into a Withdraw and Mutual Release Agreement to terminate their joint venture agreement. In December 2018, the Company and its wholly-owned subsidiary, Psoria-Shield, Inc. (“PSI”), entered into a Joint Venture Agreement with PSI Gen 2 Funding, Inc. (“GEN2”), an Illinois corporation, to further development, marketing, licensing and/or sale of PSI technology and products. The joint venture will be conducted through NEO Phototherapy, LLC, a recently formed Illinois limited liability company (“NEO”), with principal offices and records to be maintained at WCUI’s offices. See Non-Controlling Interests in Note 2 for more details.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in the valuation of accounts receivable and allowance for uncollectible amounts, inventory and obsolescence reserves, accruals for potential liabilities, valuations of stock-based compensation, realization of deferred tax assets, among others. Actual results could differ from these estimates.

Income (Loss) Per Share

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. For the three months ended December 31, 2018 and 2017, the basic and diluted shares outstanding were the same, as potentially dilutive shares were considered anti-dilutive. At December 31, 2018 and 2017, the dilutive impact of outstanding stock options of 17,587,738 and 6,822,000 shares, respectively, and outstanding warrants for 68,192,442 and 62,716,019 shares, respectively, have been excluded because their impact on the loss per share is anti-dilutive.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The Company adopted this ASU on October 1, 2018 retrospectively, the cumulative effect of the initial application on our accumulated deficit on that date was immaterial.

For trade sales, the Company generates its revenue from sales contracts with customers with revenues being generated upon the shipment of merchandise, or for consulting services, revenue is recognized in the period services are rendered and earned under service arrangements with clients.

We sell our products through two main sales channels: 1) directly to customers who use our products (the “Direct Channel”) and 2) to distribution partners who resell our products (the “Indirect Channel”).

Under the Direct Channel, we sell our products to and we receive payment directly from customers who purchase our products. Under our Indirect Channel, we have entered into distribution agreements that allow the distributors to sell our products and fulfill performance obligations under the agreements.

We determine revenue recognition through the following steps:

	●	Identification of the contract, or contracts, with a customer

	●	Identification of the performance obligations in the contract

	●	Determination of the transaction price

	●	Allocation of the transaction price to the performance obligations in the contract

	●	Recognition of revenue when, or as, we satisfy a performance obligation.

Revenue is generally recognized upon shipment or when a service has been completed, unless we have significant performance obligations for services still to be completed. We recognize revenue when a material reversal is no longer probable. Payments received before the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue. Deferred revenue at December 31, 2018 and 2017 was $9,750 and $8,624, respectively.

Non-controlling Interests

Through November 2018, non-controlling interest represented the non-controlling interest holder’s proportionate share of the equity of the Company’s majority-owned subsidiary, PDC. Non-controlling interest is adjusted for the non-controlling interest holder’s proportionate share of the earnings or losses and other comprehensive income (loss), if any, and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance.

On November 15, 2018, PSI and TMA entered into a Withdraw and Mutual Release Agreement to terminate their joint venture agreement. On the date of termination, the non-controlling interest’s share of the accumulated losses of the joint venture totaled to $405,383. Upon termination, during the three months ended December 31, 2018, the Company forgave the non-controlling interest’s share of the accumulated losses and recorded a loss from deconsolidation of non-controlling interest of $405,383.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Non-controlling Interests (continued)

In December 2018, PSI entered into a Joint Venture Agreement with GEN2 to further development, marketing, licensing and/or sale of PSI technology and products. The joint venture will be conducted through NEO. PSI and GEN2 will be the members of NEO, owning 50.5% and 36.0%, respectively, of the Units issued in connection with the organization of NEO. An additional 13.5% of such Units will be reserved for issuance as incentives for key employees and consultants. Until such shares are distributed, the Company controls 68% of the joint venture and GEN2 the remaining 32%. PSI and GEN2 will manage NEO’s day-to-day operations. PSI will contribute PSI technology to NEO and GEN2 will contribute $700,000. Repayment of the $700,000 investment by GEN2 will begin through and upon the date which NEO has realized and retained cumulative net income/distributable cash in the amount of $300,000. Distributions thereafter will be made to PSI, GEN2 and other members in proportion to their respective Unit ownership, at the times and in the manner determined from time to time by the managers, in their sole discretion. GEN2 consists of accredited investors, and investment participation from several WCUI officers and directors, including Calvin R. O’Harrow and Roy M. Harsch.

As of December 31, 2018, GEN2 had received $375,000 of investments to contribute to NEO and the Company recorded its proportionate share of $255,000 to additional paid-in-capital and $120,000 to non-controlling interest. During the three months ended December 31, 2018, NEO did not record any income or expenses relating to its operations.

Stock-Based Compensation

The Company periodically grants stock options and warrants to employees and non-employees in non-capital raising transactions as compensation for services rendered. The Company accounts for stock option and stock warrant grants to employees based on the authoritative guidance provided by the Financial Accounting Standards Board where the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and stock warrant grants to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board where the value of the stock compensation is determined based upon the measurement date at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option or warrant grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

The fair value of the Company’s common stock option and warrant grants are estimated using a Black-Scholes Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, estimated forfeitures and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes Merton option pricing model could materially affect compensation expense recorded in future periods.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

NOTE 3 – LOANS PAYABLE FROM OFFICERS AND SHAREHOLDERS

As of September 30, 2018, loans payable from officers and shareholders of $66,000 were outstanding. During the three months ended December 31, 2018, the Company borrowed $60,000 from its Officers and Directors. All of the loans are unsecured, have an interest rate of eight percent and are due one year from the date of issuance. As of December 31, 2018, loans payable to officers and shareholders of $126,000 were outstanding.

NOTE 4 – CONVERTIBLE NOTE AGREEMENTS

	December 31, 2018			September 30, 2018

Convertible note payable (a)	$	-		$	165,000
Convertible note payable (b)		110,000			110,000
Debt discount – unamortized balance		(21,389	)		(72,078	)
Convertible note payable, net	$	88,611		$	202,922

(a) On March 5, 2018, the Company entered into a Convertible Note Payable Agreement with an individual under which the Company borrowed $165,000. Net proceeds received by the Company under the agreement after payment of a $15,000 fee to the lender was $150,000. In connection with the agreement, the Company issued the individual 300,000 restricted shares of its common stock with a fair value of $48,000 and warrants to purchase 660,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.20 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90^th day from the issue date into the Company’s common stock at the fixed conversion price of $0.10 per share. The note matures in October 2018, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days’ prior written notice. The note is currently past due.

The Company calculated the relative fair value of the warrants issued to the noteholder to be $55,032 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company’s calculation, it was determined that a beneficial conversion feature existed amounting to $94,968 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $165,000 relating to the $15,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount).

During the three months ended December 31, 2018, the individual converted $165,000 of the convertible note payable and $8,783 of accrued interest into 2,482,441 shares of the Company’s common stock. During the three months ended December 31, 2018, the Company amortized the remaining $3,837 of debt discount, leaving no unamortized balance at December 31, 2018.

During the three months ended December 31, 2018, the Company amended the terms of the agreement by extending the maturity date to January 2019 and reducing the conversion price to $0.07 per share, from $0.10 per share. The reduction of the conversion price caused the Company to issue an additional 744,732 shares, which on the conversion dates had a combined total fair value of $51,434, which was recorded a financing cost during the three months ended December 31, 2018.

NOTE 4 – CONVERTIBLE NOTE AGREEMENTS (CONTINUED)

(b) On July 11, 2018, the Company entered into another Convertible Note Payable Agreement with the same individual under which the Company borrowed an additional $110,000. Net proceeds received by the Company under the agreement after payment of a $10,000 fee to the lender was $100,000. In connection with the agreement, the Company issued the individual 200,000 restricted shares of its common stock with a fair value of $36,000 and warrants to purchase 440,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.18 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90^th day from the issue date into the Company’s common stock at the fixed conversion price of $0.15 per share. The note matures in February 2019, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days’ prior written notice. The note is currently past due.

The Company calculated the relative fair value of the warrants issued to the noteholder to be $66,440 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company’s calculation, it was determined that a beneficial conversion feature existed amounting to $33,560 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $110,000 relating to the $10,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount). As of September 30, 2018, the Company had amortized $41,759 of debt discount, leaving an unamortized balance of $68,241 at September 30, 2018.

During the three months ended December 31, 2018, the Company amortized $46,852 of debt discount, leaving an unamortized balance of $21,389 at December 31, 2018.

NOTE 5 – SHAREHOLDERS’ EQUITY

Common shares issued for cash

During the three months ended December 31, 2018, the Company received $10,000 from the sale of 142,857 shares of its common stock. In connection with the sale, the Company issued a warrant to the shareholder to purchase 284,714 shares of the Company’s common stock. The warrant expires five years from the date of grant and has an exercise price of $0.15 per share.

Common shares issued for Services

During the three months ended December 31, 2018, the Company issued 120,000 shares of its common stock valued at $9,600 for services provided by consultants. The shares were valued at the trading price of the common stock at the date of issuance.

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.

NOTE 5 – SHAREHOLDERS’ EQUITY (CONTINUED)

Stock Options (continued)

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.

During the three months ended December 31, 2018, the Company granted an option to an employee to purchase 62,500 shares of its common stock with a fair value of $3,206. The option has an exercise price of $0.06 per share and expires five years from the date of grant. The shares vested on December 31, 2018. The Company valued the option using a Black-Scholes option pricing model.

The assumptions used for the option granted during the three months ended December 31, 2018 are as follows:

Exercise price	$	0.06
Expected dividends		-
Expected volatility		126.8	%
Risk free interest rate		2.85	%
Expected life of options		2.5

During the three months ended December 31, 2018, the Company recorded $85,951 of stock compensation for the fair value of the vested options, and as of December 31, 2018, unvested compensation of $614,914 remained that will be amortized over the remaining vesting period.

The table below summarizes the Company’s stock option activities for the three months ended December 31, 2018:

	Number of Option Shares			Exercise Price Range Per Share		Weighted Average Exercise Price		Fair Value at Date of Grant

Balance, September 30, 2018		17,946,667		$	0.10 - 2.00	$	0.28	$	3,244,755
Granted		62,500			0.06		0.06		3,206
Cancelled		(421,429	)		0.19		0.19		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance, December 31, 2018		17,587,738		$	0.06 – 2.00	$	0.28	$	3,247,961
Vested and exercisable, December 31, 2018		12,418,095		$	0.06 – 2.00	$	0.34	$	2,153,024

Unvested, December 31, 2018		5,591,072		$	0.14 – 0.19	$	0.15	$	1,094,937

There was no aggregate intrinsic value for option shares outstanding at December 31, 2018. As of December 31, 2018, there were 11,990,833 shares of stock options remaining available for issuance under the 2010 Plan.

The following table summarizes information concerning outstanding and exercisable options as of December 31, 2018:

		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

$	0.06 - 0.39		14,075,238		3.79	$	0.15		8,905,595		3.53	$	0.15
	0.40 - 0.99		2,112,500		0.31		0.40		2,112,500		0.31		0.40
	1.00 - 1.99		750,000		2.00		1.00		750,000		2.00		1.00
	2.00		650,000		2.00		2.00		650,000		2.00		2.00
$	0.06 - 2.00		17,587,738		3.23	$	0.28		12,418,095		2.81	$	0.34

NOTE 5 – SHAREHOLDERS’ EQUITY (CONTINUED)

Stock Warrants

During the three months ended December 31, 2018, the Company issued a warrant to purchase 284,714 shares with an exercise price of $0.15 per share as part of the sale of equity units. The warrant expires five years from the date of grant.

The table below summarizes the Company’s warrants activities for the three months ended December 31, 2018:

	Number of Warrant Shares		Exercise Price Range Per Share		Weighted Average Exercise Price		Fair Value at Date of Issuance

Balance, September 30, 2018		67,907,728	$	0.12 - 0.67	$	0.17	$	3,434,560
Granted		284,714		0.15		0.15		17,803
Cancelled		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance, December 31, 2018		68,192,442	$	0.12 - 0.67	$	0.17	$	3,452,363
Vested and exercisable, December 31, 2018		68,192,442	$	0.12 - 0.67	$	0.17	$	3,452,363

Unvested, December 31, 2018		-	$	-	$	-	$	-

There was no aggregate intrinsic value for warrant shares outstanding at December 31, 2018.

The following table summarizes information concerning outstanding and exercisable warrants as of December 31, 2018:

		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		59,279,384	2.61	$	0.15		59,279,384	2.61	$	0.15
	0.21 – 0.49		8,574,570	1.36		0.28		8,574,570	1.36		0.28
	0.50 – 0.67		338,488	0.30		0.68		338,488	0.30		0.68

$	0.12 – 0.67		68,192,442	2.46	$	0.17		68,192,442	2.46	$	0.17

NOTE 6 – SEGMENT REPORTING

Reportable segments are components of an enterprise about which separate financial information is available and that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. During the year ended September 30, 2017, the Company discontinued operations of its NPC segment.

The Company operates in the following business segments:

(i) Medical Devices: which it stems from PSI, its wholly-owned subsidiary it acquired on August 24, 2012, a developer, manufacturer, marketer and distributer of targeted Ultra Violet (“UV”) phototherapy devices for the treatment of skin diseases.

(ii) Authentication and Encryption Products and Services: which it stems from StealthCo, its wholly-owned subsidiary formed on March 18, 2014. StealthCo engages in the business of selling, licensing or otherwise providing certain authentication and encryption products and services upon acquisition of certain assets from SMI.

NOTE 6 – SEGMENT REPORTING (CONTINUED)

The detailed segment information of the Company is as follows:

Wellness Center USA, Inc.
Assets By Segments

	December 31, 2018
	Corporate		Medical Devices		Authentication and Encryption		Total
ASSETS
Current Assets
Cash	$	36,996	$	97,307	$	447	$	134,750
Total current assets		36,996		97,307		447		134,750

Property and equipment, net		-		-		2,355		2,355
Other assets		15,000		1,760		-		16,760
Total other assets		15,000		1,760		2,355		19,115

TOTAL ASSETS	$	51,996	$	99,067	$	2,802	$	153,865

Wellness Center USA, Inc.

Operations by Segments

	For the Period Ended
	December 31, 2018
	Corporate			Medical Devices			Authentication and Encryption			Total
Sales:
Trade	$	-		$	-		$	7,675		$	7,675
Consulting services		-			-			5,200			5,200
Total Sales		-			-			12,875			12,875

Cost of goods sold		-			-			7,725			7,725

Gross profit		-			-			5,150			5,150

Operating expenses		254,429			119,720			101,715			475,864

Loss from operations	$	(254,429	)	$	(119,720	)	$	(96,565	)	$	(470,714	)

Wellness Center USA, Inc.

Operations by Segments

	For the Period Ended
	December 31, 2017
	Corporate			Medical Devices			Authentication and Encryption			Total
Sales:
Trade	$	-		$	-		$	15,500		$	15,500
Consulting services		-			-			11,000			11,000
Total Sales		-			-			26,500			26,500

Cost of goods sold		-			-			16,992			16,992

Gross profit		-			-			9,508			9,508

Operating expenses		161,405			92,672			80,086			334,163

Loss from operations	$	(161,405	)	$	(92,672	)	$	(70,578	)	$	(324,655	)

NOTE 7 – LEGAL MATTERS

The Company is periodically engaged in legal proceedings arising from and relating to its business operations. We currently are not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect on our financial condition or results of operations. However, we recently decided to attempt to preserve revenue and reduce operating expenses through actions including, but not limited to, facilities consolidation and staff reductions, which we hope to implement through negotiated transactions with lessors, employees and other third parties. Such actions may result in disputes with and claims by such parties which, if not resolved through negotiations, may impact negatively the Company’s ability to continue as a going concern.

In periodic reports on Forms 10K and 10Q for the periods ending September 30, 2017 and December 31, 2017, respectively, the Company disclosed that on May 25, 2017, the SEC’s Chicago Regional Office informed it that it had made a preliminary determination to recommend filing of an enforcement action against the Company and its CEO based on possible violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act, and Section 15(a) of the Exchange Act. Subsequent discussions resulted in the submission of an Offer of Settlement (“Settlement”) through an administrative cease and desist action on November 17, 2017, which was accepted by the SEC on April 12, 2018, as disclosed on Form 8K filed April 18, 2018. Pursuant to the Settlement, the Company neither admitted nor denied any of the allegations, but was enjoined from violating the above-referenced Sections and Rule. The Settlement imposed no financial penalties or sanctions against the Company.

The Form 8K also disclosed that on April 13, 2018, the SEC filed a separate complaint against the CEO in the U.S. District Court for the Northern District of Illinois, asserting the allegations noted above, as well as allegations that he manipulated the price of company shares through undisclosed trading, realizing more than $130,000 from such trading. On the date of filing, the CEO voluntarily resigned as an officer and director of the Company. Without admitting or denying the allegations, the CEO consented to the entry of the judgment, which was entered on September 26, 2018 by the U.S. District Court for the Northern District of Illinois. The judgment permanently enjoined him from violating the anti-fraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the broker registration provisions of Section 15(a) of the Exchange Act. It also bars him from serving as an officer or director of a public company and from participating in penny stock offerings, and ordered disgorgement and interest and penalties to be determined by the court.

On January 31, 2019, the employment agreement between the Company and its ex-CEO dated April 1, 2018 was terminated and his service thereunder as Director of Business Development ceased as of that date.

NOTE 8 – SUBSEQUENT EVENTS

Subsequent to December 31, 2018, the Company borrowed $200,000 from its officers and shareholders and an officer invested $25,000 in GEN2. All of the loans are unsecured, have an interest rate of eight percent and are due one year from the date of issuance.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

Except for historical information, the following discussion contains forward-looking statements based upon current expectations that involve certain risks and uncertainties. Such forward-looking statements include statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans, (e) our anticipated needs for working capital, (f) our lack of operational experience and (g) the benefits related to ownership of our common stock. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found under “Description of Business,” and “Analysis of Financial Condition and Results of Operations”, as well as in this Report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” in our Annual Report on Form 10-K and in other Reports we have filed with the Securities and Exchange Commission, as well as matters described in this Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Report will in fact occur as projected.

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Description of Business

Background

Wellness Center USA, Inc. (“WCUI” or the “Company”) was incorporated in June 2010 under the laws of the State of Nevada. The Company initially engaged in online sports and nutrition supplements marketing and distribution. The Company subsequently expanded into additional businesses within the healthcare and medical sectors through acquisitions, including Psoria-Shield Inc. (“PSI”), National Pain Centers, Inc. (“NPC”) and StealthCo Inc. (“SCI”), d/b/a Stealth Mark, Inc. On August 11, 2017, the Company entered into an agreement to sell 100% of the issued and outstanding shares of NPC, which has been accounted for as a discontinued operation on the condensed consolidated financial statements for the three months ended December 31, 2016. See Note 3 for details relating to the sale.

PSI

PSI was incorporated under the laws of the state of Florida on June 17, 2009. On August 24, 2012, we acquired all of the issued and outstanding shares of stock in PSI. PSI is a wholly-owned subsidiary of the Company and during a portion of the period covered by this Report was operated by Psoria Development Company LLC, an Illinois limited liability company (“PDC”), a joint venture between WCUI/PSI and The Medical Alliance, Inc., a Florida corporation (“TMA”).

PSI designs, develops and markets a targeted ultraviolet (“UV”) phototherapy device called the Psoria-Light. The Psoria-Light is designated for use in targeted PUVA photochemistry and UVB phototherapy and is designed to treat certain skin conditions including psoriasis, vitiligo, atopic dermatitis (eczema), seborrheic dermatitis, and leukoderma.

Psoriasis, eczema, and vitiligo, are common skin conditions that can be challenging to treat, and often cause the client significant psychosocial stress. Clients may undergo a variety of treatments to address these skin conditions, including routine consumption of systemic and biologic drug therapies which are highly toxic, reduce systemic immune system function, and come with a host of chemotherapy-like side effects. Ultraviolet (UV) phototherapy is a clinically validated alternate treatment modality for these disorders.

Traditionally, “non-targeted” UV phototherapy was administered by lamps that emitted either UVA or UVB light to both diseased and healthy skin. While sunblocks or other UV barriers may be used to protect healthy skin, the UV administered in this manner must be low dosage to avoid excessive exposure of healthy tissue. Today, “targeted” UV phototherapy devices administer much higher dosages of light only to affected tissue, resulting in “clearance” in the case of psoriasis and eczema, and “repigmentation” in the case of vitiligo, at much faster rates than non-targeted (low dosage) UV treatments.

Targeted UV treatments are typically administered to smaller total body surface areas, and are therefore used to treat the most intense parts of a client’s disease. Non-targeted UV treatment is typically used as a follow-up and for maintenance, capable of treating large surfaces of the body. Excimer laser devices (UVB at 308nm) are expensive and consume dangerous chemicals (Xenon and Chlorine). Mercury lamp devices (UVB and/or UVA) require expensive lamp replacements regularly and require special disposal (due to mercury content). Additionally, mercury lamp devices typically deliver wavelengths of light below 300nm. While within the UVB spectrum, it has been shown that wavelengths below 300nm produce significantly more “sunburn” type side effects than do wavelengths between 300 and 320nm without improvement in therapeutic benefit.

The Psoria-Light is a targeted UV phototherapy device that produces UVB light between 300 and 320 nm as well as UVA light between 350 and 395nm. It does not require consumption of dangerous chemicals or require special environmental disposal, and is cost effective for clinicians, which should result in increased patient access to this type of treatment. It has several unique and advanced features that we believe will distinguish it from the non-targeted and targeted UV phototherapy devices that are currently being used by dermatologists and other healthcare providers. These features include the following: the utilization of deep narrow-band UVB (“NB-UVB”) LEDs as light sources; the ability to produce both UVA or NB-UVB therapeutic wavelengths; an integrated high resolution digital camera and client record integration capabilities; the ability to export to an external USB memory device a PDF file of treatment information including a patent pending graph that includes digital images plotted against user tracked metrics which can be submitted to improve medical reimbursements; an accessory port and ability to update software; ease of placement and portability; advanced treatment site detection safety sensor; international language support; a warranty which includes the UV lamp(s); and a non-changeable treatment log (that does not include HIPPA information).

The Psoria-Light consists of three components: a base console, a color display with touchscreen control, and a hand-held delivery device with a conduit (or tether) between the handheld device and the base console. PSI requires clearance by the United States Food and Drug Administration (“FDA”) to market and sell the device in the United States as well as permission from TUV SUD America Inc., PSI’s Notified Body, to affix the CE mark to the Psoria-Light in order to market and sell the device in countries of the European Union.

To obtain FDA clearance and permission to affix the CE mark, PSI was required to conduct EMC and electrical safety testing, which it completed in the second quarter of 2011. PSI received FDA clearance on February 11, 2011 (no. K103540) and was granted permission to affix the CE mark on November 10, 2011. In its 510(k) application with the FDA (application number K103540), PSI asserted that the Psoria-Light was “substantially equivalent” in intended use and technology to two predicate devices, the X -Trac Excimer Laser, which has wide acceptance in the medical billing literature and has a large installed base in the U.S., and the Dualight, another competing targeted UV phototherapy device.

PSI has established an ISO 13485 compliant quality system for the Psoria-Light, which was first audited in the third quarter of 2011. This system is intended to ensure PSI devices will be manufactured in a controlled and reliable environment and that its resources follow similar practices and is required for sales in countries requiring a CE mark. PSI has also received Certified Space Technology designation from the Space Foundation, based on PSI’s incorporation of established NASA-funded LED technology.

PSI began Psoria-Light Beta deployment in January 2012. It is currently operating at a loss, and there is no assurance that its business development plans and strategies will ever be successful. PSI’s success depends upon the acceptance by healthcare providers and clients of Psoria-Light treatment as a preferred method of treatment for psoriasis and other UV-treatable skin conditions. Psoria-Light treatment appears to have been beneficial to clients, without demonstrable harmful side effects or safety issues, as evidenced by more than 10,000 treatments completed on more than 1,000 clients, domestically and Mexico, since 2012. In order for the Company to continue PSI operations, it will need additional capital and it will have to successfully coordinate integration of PSI operations without materially and adversely affecting continuation and development of other Company operations.

SCI

SCI was incorporated under the laws of the state of Illinois on March 18, 2014. SCI acquired certain Stealth Mark assets on April 4, 2014 and operates as a wholly-owned subsidiary of the Company. It is a Tennessee-based provider of: a) Stealth Mark encryption and authentication solutions offering advanced technologies within the security and supply chain management vertical sectors (Microparticles), and b) advanced data intelligence services offering proprietary, unprecedented, and actionable technology for industries, companies, and agencies on a global scale (ActiveDutyTM).

Intelligent Microparticles

SCI provides clients premiere authentication technology for the protection of a variety of products and brands from illicit counterfeiting and diversion activities. Its technology is applicable to a wide range of industries affected by counterfeiting, diversion and theft including, but not limited to, pharmaceuticals, defense/aerospace, automotive, electronics, technology, consumer and personal care goods, designer products, beverage/spirits, and many others.

SCI delivers the client a complete, simple to use, easy to implement, and cost effective turnkey system that is extremely difficult to compromise. SCI’s technology includes a combination of proprietary software and intelligent microparticle marks that are unduplicatable and undetectable to the human eye. These taggants are created with proprietary materials that create unique numerical codes that are assigned meaning by the client and are machine readable without the use of rare earth or chemical tracers. They have been used in covert and overt operations with easy to implement technology and do-it-yourself in-the-field forensic caliber verification.

In April 2018, the Company’s subsidiary, SCI, concluded licensing of a patent for technology that is the next generation of Stealth Mark. Working with researchers at the Oak Ridge National Labs, the patent signifies development of a new technology that will generate an invisible marking system with attributes currently unavailable in the anti-counterfeit marketplace today. The formula and techniques have been shown through extensive testing to be resilient to manufacturing processes and can be used on a wide range of materials from woven and non-woven fabrics, cardboard, metal, concrete, plastics, leather, wood, and paper. In addition, the complexity of the information that can be encoded with the system makes counterfeiting difficult.

ActiveDutyTM

SCI’s ActiveDutyTM data intelligence services offer unique, unprecedented, actionable technology for industries, companies, and agencies on a global scale. Comprised of a suite of powerful analytical tools, including artificial intelligence and social-psychology, the service provides timely and actionable intelligence to clients. ActiveDutyTM is adaptable to a broad spectrum of illicit activities within both private and public sectors such as, but not limited to, counterfeiting, sex and human trafficking, money laundering, and a variety of other markets.

The proprietary algorithmic architecture of ActiveDutyTM creates the first systemic reporting mechanism to deliver strategic and tactical results supported by an intense worldwide analysis of patterns of human behavior. The ActiveDutyTM global framework is heuristic in nature, capable of comprehending big data across the digital spectrum and speaks all the major languages. Up until now, there has not existed a unified system that could actively measure this lifecycle that is a collection of discreet and seemingly random behaviors of criminals anywhere within the digital domain. Criminals change their identities but not their basic behaviors.

During the period covered by this Report, SCI was managed by its CEO, Ricky Howard. Mr. Howard brought to SCI over thirty years of experience in operations management and executive positions in a variety of industries ranging from entrepreneurial startups to Fortune 500 companies. He joined Stealth Mark as V.P. of Operations at the early stage of development in 2006 and played an integral role in bringing the company’s capabilities to its present status including design and creation of its manufacturing capabilities, implementation of its ERP inventory controls system, software and hardware development, marketing and sales materials processes and day-to-day operational procedures and processes. In November 2018, Mr. Howard passed away suddenly and Mr. O’Harrow took over operations of SCI’s business on an interim basis.

Analysis of Financial Condition and Results of Operations

Results of Operations for the three months ended December 31, 2018 compared to the three months ended December 31, 2017.

Revenue and Cost of Goods Sold

Revenue for the three months ended December 31, 2018 and 2017 was 12,875 and $26,500, respectively. The decrease of $13,625 was due to the decrease in revenues at SCI. Cost of sales for the three months ended December 31, 2018 and 2017, was $7,725 and $16,992, respectively. Gross profit for the three months ended December 31, 2018 and 2017, was $5,150 and $9,508, respectively. The gross profit decrease of $4,358 was primarily due to the decrease in revenues at SCI during the three months ended December 31, 2018.

Operating Expenses

Operating expenses for the three months ended December 31, 2018 and 2017 were $475,864 and $334,163, respectively. The increase in operating expenses of $141,701 was due primarily to the increase in consulting and professional fees and stock compensation during the three months ended December 31, 2018.

Other Expenses

Other expenses during the three months ended December 31, 2018 consisted of $50,689 of amortization of debt discount, $51,434 of financing costs and $4,851 of interest expense. Other expenses during the three months ended December 31, 2017 consisted of $70,047 of amortization of debt discount and $3,300 of interest expense.

Net Loss

Our net loss for the three months ended December 31, 2018 was $577,688, compared to a net loss of $398,002 for the three months ended December 31, 2017. The increase in the net loss of $179,686 was primarily due to the increase in operating and other expenses.

Results of Operations by Segment

The Company currently maintains two business segments:

	(i)	Medical Devices: which it provided through PSI, its wholly-owned subsidiary acquired on August 24, 2012, a developer, manufacturer, marketer and distributer of targeted Ultra Violet (“UV”) phototherapy devices for the treatment of skin diseases; and

	(ii)	Authentication and Encryption Products and Services: which it provided through SCI, its wholly-owned subsidiary that on April 4, 2014 acquired certain assets of SMI Holdings, Inc. d/b/a Stealth Mark, Inc., including Stealth Mark tradenames and marks, and related encryption and authentication solutions offering advanced product security technologies within the security and supply chain management vertical sectors.

The detailed segment information of the Company is as follows:

Wellness Center USA, Inc.

Operations by Segments

	For the Period Ended
	December 31, 2018
	Corporate			Medical Devices			Authentication and Encryption			Total
Sales:
Trade	$	-		$	-		$	7,675		$	7,675
Consulting services		-			-			5,200			5,200
Total Sales		-			-			12,875			12,875

Cost of goods sold		-			-			7,725			7,725

Gross profit		-			-			5,150			5,150

Operating expenses		254,429			119,720			101,715			475,864

Loss from operations	$	(254,429	)	$	(119,720	)	$	(96,565	)	$	(470,714	)

Wellness Center USA, Inc.

Operations by Segments

	For the Period Ended
	December 31, 2017
	Corporate			Medical Devices			Authentication and Encryption			Total
Sales:
Trade	$	-		$	-		$	15,500		$	15,500
Consulting services		-			-			11,000			11,000
Total Sales		-			-			26,500			26,500

Cost of goods sold		-			-			16,992			16,992

Gross profit		-			-			9,508			9,508

Operating expenses		161,405			92,672			80,086			334,163

Loss from operations	$	(161,405	)	$	(92,672	)	$	(70,578	)	$	(324,655	)

There was no revenue or cost of goods sold for the Medical Devices segment for the three months ended December 31, 2018 and 2017. Operating expenses for the three months ended December 31, 2018 and 2017 was $119,720 and $92,672, respectively. The increase in operating expenses of $27,048 in 2018 was due primarily to the increase in consulting fees. The loss from operations for the three months ended December 31, 2018 and 2017 was $119,720 and $92,672, respectively.

Revenue for the Authentication and Encryption segment for the three months ended December 31, 2018 and 2017 was $12,875 and $26,500, respectively. The decrease of $13,625 was due to the decrease in trade sales and consulting services in 2018. Cost of goods sold for the three months ended December 31, 2018 and 2017 was $7,725 and $16,992, respectively, and the gross profit was $5,150 and $9,508, respectively. The gross profit decrease in in 2018 was primarily due to the decrease in sales in 2018. Operating expenses for the three months ended December 31, 2018 and 2017 was $101,715 and $80,086, respectively. The increase in operating expenses of $21,629 in 2018 was due primarily to the increase in stock compensation costs. The loss from operations for the three months ended December 31, 2018 and 2017 was $96,565 and $70,578, respectively.

The Corporate segment primarily provides executive management services for the Company. Operating expenses for the three months ended December 31, 2018 and 2017 was $254,429 and $161,405, respectively. The increase in operating expenses of $93,024 in fiscal 2018 was due primarily to the increase in stock compensation expenses. The loss from operations for the three months ended December 31, 2018 and 2017 was $254,429 and $161,405, respectively.

Liquidity and Capital Resources

At December 31, 2018, the Company had cash on hand in the amount of $134,750. The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and raising additional capital soon to meet its obligations and repay its liabilities arising from normal business operations when they come due. Since inception, we have funded our operations primarily through equity and debt financings and we expect to continue to rely on these sources of capital in the future. During the three months ended December 31, 2018, the Company received $445,000 through short-term loans, investments in a joint venture and the sale of common stock.

Comparison of three months years ended December 31, 2018 and 2017

As of December 31, 2018, we had $134,750 in cash, negative working capital of $716,195 and an accumulated deficit of $23,548,669.

As of December 31, 2017, we had $23,594 in cash, negative working capital of $577,409 and an accumulated deficit of $19,484,590.

Cash flows used in operating activities

During the three months ended December 31, 2018, the Company used cash flows in operating activities of $314,460, compared to $147,189 used in the three months ended December 31, 2017. During the three months ended December 31, 2018, the Company incurred a net loss of $577,688 and $197,938 of non-cash expenses compared to a net loss of $398,002 and $92,060 of non-cash expenses during the three month period ended December 31, 2017.

Cash flows used in investing activities

During the three months ended December 31, 2018 and 2017, we had no cash flows from investing activities.

Cash flows provided by financing activities

During the three months ended December 31, 2018, we had proceeds from loans payable from officers and shareholders of $60,000, proceeds from common stock issued for cash of $10,000 and proceeds of $375,000 from investments in a joint venture. During the three months ended December 31, 2017, we had proceeds from loans payable from officers and shareholders of $30,500 and $110,914 from the exercise of stock warrants.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Summary of Critical Accounting Policies.

The Company has identified critical accounting policies that, as a result of the judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved could result in material changes to its financial condition or results of operations under different conditions or using different assumptions. The Company’s most critical accounting policies include, but are not limited to, those related to fair value of financial instruments, revenue recognition, stock based compensation for obtaining employee services, and equity instruments issued to parties other than employees for acquiring goods or services. Details regarding the Company’s use of these policies and the related estimates are described in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018, filed with the Securities and Exchange Commission on January 15, 2019. There have been no material changes to the Company’s critical accounting policies that impact the Company’s financial condition, results of operations or cash flows for the three months ended December 31, 2018.

Recently Issued Accounting Pronouncements

See Management’s discussion of recent accounting policies included in footnote 2 to the condensed consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting Companies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Regulations under the Securities Exchange Act of 1934 (the “Exchange Act”) require public companies to maintain “disclosure controls and procedures,” which are defined as controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

The Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of September 30, 2018, the end of the period covered by this report. Based upon that evaluation, the Company’s CEO concluded that the Company’s disclosure controls and procedures are not effective at the reasonable assurance level due to the material weaknesses described below:

1. The Company does not have written documentation of its internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to the Company. Management evaluated the impact of its failure to have written documentation of its internal controls and procedures on its assessment of its disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

2. The Company does not have sufficient segregation of duties within its accounting functions, which is a basic internal control. Due to its size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of its failure to have segregation of duties on its assessment of its disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

3. The Company does not have sufficient segregation of duties so that one person can initiate, authorize and execute transactions.

In light of the material weaknesses, the management of the Company performed additional analysis and other post-closing procedures to ensure our consolidated financial statements were prepared in accordance with the accounting principles generally accepted in the United States of America. Accordingly, we believe that our consolidated financial statements included herein fairly present, in all material respects, our consolidated financial condition, consolidated results of operations and cash flows as of and for the reporting periods then ended.

Remediation of Material Weaknesses

The Company remediated certain of the material weaknesses in our disclosure controls and procedures identified above by adding independent directors and by hiring a CFO with SEC reporting experience. Effective November 17, 2017, the Board of Directors filled then existing vacancies in the Board by appointing each of the following persons as a member of the Board: William E. Kingsford; Thomas E. Scott, CPA; Paul D. Jones; and Roy M. Harsch, each to serve until the next annual meeting of the shareholders, or until his successor has been duly qualified and appointed. On December 1, 2017, the Board of Directors consisting of Andrew J. Kandalepas, Jay Joshi, M.D., Messrs. Kingsford, Scott, Jones, and Harsch, accepted the voluntary resignation of Mr. Kandalepas, as President, and appointed Mr. Jones as President. Mr. Kandalepas’ resignation and Mr. Jones’ appointment were effective immediately. On February 5, 2018, the Board of Directors appointed Calvin R. O’Harrow as Chief Operating Officer and a member of the Board. It accepted the resignation of Andrew J. Kandalepas as Chief Financial Officer (CFO) and Principal Accounting Officer (PAO) and appointed Douglas W. Samuelson, CPA, as CFO and PAO. It also removed Jay Joshi, M.D., as a Director. The Board of Directors also appointed a Compensation Committee consisting of Messrs. Jones, Scott and Kingsford. On April 17, 2018, Mr. Kandalepas voluntarily resigned as an Officer and Director and agreed to provide transition services to Calvin R. O’Harrow and Roy M. Harsch, who have been appointed to serve as CEO and Chairman, respectively, from the date of Mr. Kandalepas’ resignation.

The company has implemented the following corporate policies to remediate the noted material weaknesses:

	●	All Debt agreements must be approved by the Board

	●	All Equity grants must be approved by the Board

	●	All Officers must have an agreement approved by the Board

	●	All employees must have a written agreement

	●	Consultant agreements with payments totaling over $20,000 must be approved by the Board

	●	Creation of a Board compensation plan

	●	Creation of an Audit Committee with an Audit Committee Charter

	●	Creation of a policy for Board approval on cash disbursements over $20,000

	●	Creation of a policy to ensure no one at any entity can initiate a payment to them selves

	●	Creation of controls over all Press Releases

	●	Ensure the Company will only work with licensed dealer/brokers relating to the sale of equity instruments

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the issuer’s principal executive and principal financial officer and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

	●	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

	●	Only in accordance with authorizations of management and directors of the issuer; and provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the Company are being made;

	●	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

As of the end of our most recent fiscal year, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, as of September 30, 2018, such internal control over financial reporting was not effective. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal control over financial reporting that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and (2) inadequate segregation of duties consistent with control objectives of having segregation of the initiation of transactions, the recording of transactions and the custody of assets. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of September 30, 2018.

To address the material weaknesses set forth in items (2) and (3) discussed above, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.

This Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the SEC that permit the Company to provide only the management’s report in this Report.

Management’s Remediation Initiatives

In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, all of the series of measures noted above in Remediation of Material Weaknesses.

Changes in internal control over financial reporting.

There have been no changes in our internal control over financial reporting that occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Not required for smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None

Item 6. Exhibits

Exhibit No.		Description
31.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14*
31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14*
32.1		CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act*
32.2		CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act*
101.INS		XBRL Instance Document**
101.SCH		XBRL Taxonomy Extension Schema**
101.CAL		XBRL Taxonomy Extension Calculation Linkbase**
101.DEF		XBRL Taxonomy Extension Definition Linkbase**
101.LAB		XBRL Taxonomy Extension Label Linkbase**
101.PRE		XBRL Taxonomy Extension Presentation Linkbase**

* Filed herewith.

**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

	WELLNESS CENTER USA, INC.

Date: March 29, 2019	By:	/s/ Paul D. Jones
		Paul D. Jones
		President
		(Duly Authorized Principal Executive Officer)

	WELLNESS CENTER USA, INC.

Date: March 29, 2019	By:	/s/ Douglas W. Samuelson
		Douglas W. Samuelson
		Chief Financial Officer and Principal Accounting Officer
		(Duly Authorized Principal Accounting Officer)

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints severally Paul D. Jones, his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE

/s/ Calvin O’Harrow	Chief Executive Officer, Director	March 29, 2019
Calvin O’Harrow

/s/ Douglas W. Samuelson	Chief Financial Officer and Principal Accounting Officer	March 29, 2019
Douglas W. Samuelson

/s/ Paul D. Jones	Director, President	March 29, 2019
Paul D. Jones

/s/ Thomas E. Scott	Director, Secretary	March 29, 2019
Thomas E. Scott

/s/ William E. Kingsford	Director	March 29, 2019
William E. Kingsford

/s/ Roy M. Harsch	Director, Chairman	March 29, 2019
Roy M. Harsch

EX-31.1 2 ex31-1.htm

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Calvin O’Harrow, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Wellness Center USA, Inc. for the quarterly period ended December 31, 2018;

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. I am 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 internal control over financial reporting to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, if any, 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 my supervision, to provide reasonable assurance regarding the reliability of financial reporting and 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 cover 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. I have disclosed, based on my 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 controls 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: March 29, 2019

	/s/ Calvin O’Harrow
Name:	Calvin O’Harrow
Title:	Chief Executive Officer and Director

EX-31.2 3 ex31-2.htm

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Douglas W. Samuelson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Wellness Center USA, Inc. for the quarterly period ended December 31, 2018;

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: March 29, 2019

	/s/ Douglas W. Samuelson
Name:	Douglas W. Samuelson
Title:	Chief Accounting Officer and Chief Financial Officer

EX-32.1 4 ex32-1.htm

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 the Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2018 of Wellness Center USA, Inc., a Nevada corporation (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Calvin O’Harrow, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or15(d) of the Securities and Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: March 29, 2019

	/s/ Calvin O’Harrow
Name:	Calvin O’Harrow
Title:	Chief Executive Officer and Director

EX-32.2 5 ex32-2.htm

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 the Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2018 of Wellness Center USA, Inc., a Nevada corporation (the “Company”), as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas W. Samuelson, Chief Accounting Officer and Chief Financial Officer of the Company certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or15(d) of the Securities and Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: March 29, 2019

	/s/ Douglas W. Samuelson
Name:	Douglas W. Samuelson
Title:	Chief Accounting Officer and Chief Financial Officer

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NOTE 1 – BASIS OF PRESENTATION   Organization and Operations   Wellness Center USA, Inc. (“WCUI” or the “Company”) was incorporated in June 2010 under the laws of the State of Nevada. The Company initially engaged in online sports and nutrition supplements marketing and distribution. The Company subsequently expanded into additional businesses within the healthcare and medical sectors through acquisitions, including Psoria-Shield Inc. (“PSI”) and StealthCo Inc. (“SCI”), d/b/a Stealth Mark, Inc.   The Company currently operates in the following business segments: (i) distribution of targeted Ultra Violet (“UV”) phototherapy devices for dermatology; and (ii) authentication and encryption products and services. The segments are operated, respectively, through PSI and SCI.   Basis of Presentation of Unaudited Financial Information   The accompanying unaudited condensed consolidated financial statements of Wellness Center USA, Inc. and Subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended December 31, 2018 are not necessarily indicative of the results that may be expected for the year ending September 30, 2019.   Going Concern   The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has not yet generated significant revenues and has incurred recurring net losses. During the three months ended December 31, 2018, the Company incurred a net loss of $577,688 and used cash in operations of $314,460, and had a shareholders’ deficit of $697,080 as of December 31, 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its strategies. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.   In addition, the Company’s independent registered public accounting firm, in its report on the Company’s September 30, 2018 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern.   At December 31, 2018, the Company had cash on hand in the amount of $134,750. The ability to continue as a going concern is dependent on the Company attaining and maintaining profitable operations in the future and raising additional capital soon to meet its obligations and repay its liabilities arising from normal business operations when they come due. Since inception, we have funded our operations primarily through equity and debt financings and we expect to continue to rely on these sources of capital in the future. During the three months ended December 31, 2018, the Company received $445,000 through short-term loans, contributions of capital by a joint venture partner and the sale of common stock.   No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case of equity financing.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Basis of Consolidation   The Company’s consolidated subsidiaries and/or entities are as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid">Name of consolidated subsidiary or entity</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> State or other jurisdiction of incorporation or organization</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> Date of incorporation or formation (date of acquisition/disposition, if applicable)</td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid">Attributable interest</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 24%">Psoria-Shield Inc. (“PSI”)</td> <td style="width: 1%"> </td> <td style="width: 24%">The State of Florida</td> <td style="width: 1%"> </td> <td style="width: 36%; text-align: justify">June 17, 2009 (August 24, 2012)</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 11%; text-align: right">100</td> <td style="width: 1%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>StealthCo, Inc. (“StealthCo”)</td> <td> </td> <td>The State of Illinois</td> <td> </td> <td>March 18, 2014</td> <td> </td> <td> </td> <td style="text-align: right">100</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Psoria Development Company LLC. (“PDC”)</td> <td> </td> <td>The State of Illinois</td> <td> </td> <td>January 15, 2015/November 15, 2018</td> <td> </td> <td> </td> <td style="text-align: right">50</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>NEO Phototherapy LLC (“NEO”)</td> <td> </td> <td>The State of Illinois</td> <td> </td> <td>December 2018</td> <td> </td> <td> </td> <td style="text-align: right">50.5</td> <td>%</td></tr> </table>   Through October 2018, PSI was operated by PDC, a joint venture between PSI and the Medical Alliance, Inc (“TMA”). On November 15, 2018, the Company and TMA entered into a Withdraw and Mutual Release Agreement to terminate their joint venture agreement. In December 2018, the Company and its wholly-owned subsidiary, Psoria-Shield, Inc. (“PSI”), entered into a Joint Venture Agreement with PSI Gen 2 Funding, Inc. (“GEN2”), an Illinois corporation, to further development, marketing, licensing and/or sale of PSI technology and products. The joint venture will be conducted through NEO Phototherapy, LLC, a recently formed Illinois limited liability company (“NEO”), with principal offices and records to be maintained at WCUI’s offices. See Non-Controlling Interests in Note 2 for more details.   Use of Estimates   The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in the valuation of accounts receivable and allowance for uncollectible amounts, inventory and obsolescence reserves, accruals for potential liabilities, valuations of stock-based compensation, realization of deferred tax assets, among others. Actual results could differ from these estimates.   Income (Loss) Per Share   Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. For the three months ended December 31, 2018 and 2017, the basic and diluted shares outstanding were the same, as potentially dilutive shares were considered anti-dilutive. At December 31, 2018 and 2017, the dilutive impact of outstanding stock options of 17,587,738 and 6,822,000 shares, respectively, and outstanding warrants for 68,192,442 and 62,716,019 shares, respectively, have been excluded because their impact on the loss per share is anti-dilutive.     Revenue Recognition   In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The Company adopted this ASU on October 1, 2018 retrospectively, the cumulative effect of the initial application on our accumulated deficit on that date was immaterial.   For trade sales, the Company generates its revenue from sales contracts with customers with revenues being generated upon the shipment of merchandise, or for consulting services, revenue is recognized in the period services are rendered and earned under service arrangements with clients.   We sell our products through two main sales channels: 1) directly to customers who use our products (the “Direct Channel”) and 2) to distribution partners who resell our products (the “Indirect Channel”).   Under the Direct Channel, we sell our products to and we receive payment directly from customers who purchase our products. Under our Indirect Channel, we have entered into distribution agreements that allow the distributors to sell our products and fulfill performance obligations under the agreements.   We determine revenue recognition through the following steps:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 48px; text-align: justify"> </td> <td style="width: 48px; text-align: justify">●</td> <td style="text-align: justify">Identification of the contract, or contracts, with a customer</td></tr> <tr> <td style="text-align: justify"> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Identification of the performance obligations in the contract</td></tr> <tr> <td style="text-align: justify"> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Determination of the transaction price</td></tr> <tr> <td style="text-align: justify"> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Allocation of the transaction price to the performance obligations in the contract</td></tr> <tr> <td style="text-align: justify"> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Recognition of revenue when, or as, we satisfy a performance obligation. </td></tr> </table>   Revenue is generally recognized upon shipment or when a service has been completed, unless we have significant performance obligations for services still to be completed. We recognize revenue when a material reversal is no longer probable. Payments received before the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue. Deferred revenue at December 31, 2018 and 2017 was $9,750 and $8,624, respectively.   Non-controlling Interests   Through November 2018, non-controlling interest represented the non-controlling interest holder’s proportionate share of the equity of the Company’s majority-owned subsidiary, PDC. Non-controlling interest is adjusted for the non-controlling interest holder’s proportionate share of the earnings or losses and other comprehensive income (loss), if any, and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance.   On November 15, 2018, PSI and TMA entered into a Withdraw and Mutual Release Agreement to terminate their joint venture agreement. On the date of termination, the non-controlling interest’s share of the accumulated losses of the joint venture totaled to $405,383. Upon termination, during the three months ended December 31, 2018, the Company forgave the non-controlling interest’s share of the accumulated losses and recorded a reduction of additional paid-in-capital of $405,383.     In December 2018, PSI entered into a Joint Venture Agreement with GEN2 to further development, marketing, licensing and/or sale of PSI technology and products. The joint venture will be conducted through NEO. PSI and GEN2 will be the members of NEO, owning 50.5% and 36.0%, respectively, of the Units issued in connection with the organization of NEO. An additional 13.5% of such Units will be reserved for issuance as incentives for key employees and consultants. Until such shares are distributed, the Company controls 68% of the joint venture and GEN2 the remaining 32%. PSI and GEN2 will manage NEO’s day-to-day operations. PSI will contribute PSI technology to NEO and GEN2 will contribute $700,000. Repayment of the $700,000 investment by GEN2 will begin through and upon the date which NEO has realized and retained cumulative net income/distributable cash in the amount of $300,000. Distributions thereafter will be made to PSI, GEN2 and other members in proportion to their respective Unit ownership, at the times and in the manner determined from time to time by the managers, in their sole discretion. GEN2 consists of accredited investors, and investment participation from several WCUI officers and directors, including Calvin R. O’Harrow and Roy M. Harsch.   As of December 31, 2018, GEN2 had received $375,000 of investments to contribute to NEO and the Company recorded its proportionate share of $255,000 to additional paid-in-capital and $120,000 to non-controlling interest. During the three months ended December 31, 2018, NEO did not record any income or expenses relating to its operations.   Stock-Based Compensation   The Company periodically grants stock options and warrants to employees and non-employees in non-capital raising transactions as compensation for services rendered. The Company accounts for stock option and stock warrant grants to employees based on the authoritative guidance provided by the Financial Accounting Standards Board where the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and stock warrant grants to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board where the value of the stock compensation is determined based upon the measurement date at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option or warrant grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.   The fair value of the Company’s common stock option and warrant grants are estimated using a Black-Scholes Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, estimated forfeitures and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes Merton option pricing model could materially affect compensation expense recorded in future periods.   Recently Issued Accounting Pronouncements   In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.    Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

NOTE 3 – LOANS PAYABLE FROM OFFICERS AND SHAREHOLDERS   As of September 30, 2018, loans payable from officers and shareholders of $66,000 were outstanding. During the three months ended December 31, 2018, the Company borrowed $60,000 from its Officers and Directors. All of the loans are unsecured, have an interest rate of eight percent and are due one year from the date of issuance. As of December 31, 2018, loans payable to officers and shareholders of $126,000 were outstanding.

NOTE 4 – CONVERTIBLE NOTE AGREEMENTS   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2018</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Convertible note payable (a)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">165,000</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Convertible note payable (b)</td> <td> </td> <td> </td> <td style="text-align: right">110,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">110,000</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Debt discount – unamortized balance</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(21,389</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(72,078</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Convertible note payable, net</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">88,611</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">202,922</td> <td> </td></tr> </table>   (a) On March 5, 2018, the Company entered into a Convertible Note Payable Agreement with an individual under which the Company borrowed $165,000. Net proceeds received by the Company under the agreement after payment of a $15,000 fee to the lender was $150,000. In connection with the agreement, the Company issued the individual 300,000 restricted shares of its common stock with a fair value of $48,000 and warrants to purchase 660,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.20 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90th day from the issue date into the Company’s common stock at the fixed conversion price of $0.10 per share. The note matures in October 2018, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days’ prior written notice. The note is currently past due.   The Company calculated the related fair value of the warrants issued to the noteholder to be $55,032 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company’s calculation, it was determined that a beneficial conversion feature existed amounting to $94,968 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $165,000 relating to the $15,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount).   During the three months ended December 31, 2018, the individual converted $165,000 of the convertible note payable and $8,783 of accrued interest into 2,482,441 shares of the Company’s common stock. During the three months ended December 31, 2018, the Company amortized the remaining $3,837 of debt discount, leaving no unamortized balance at December 31, 2018.   During the three months ended December 31, 2018, the Company amended the terms of the agreement by extending the maturity date to January 2019 and reducing the conversion price to $0.07 per share, from $0.10 per share. The reduction of the conversion price caused the Company to issue an additional 744,732 shares, which on the conversion dates had a combined total fair value of $51,434, which was recorded a financing cost during the three months ended December 31, 2018.     (b) On July 11, 2018, the Company entered into another Convertible Note Payable Agreement with the same individual under which the Company borrowed an additional $110,000. Net proceeds received by the Company under the agreement after payment of a $10,000 fee to the lender was $100,000. In connection with the agreement, the Company issued the individual 200,000 restricted shares of its common stock with a fair value of $36,000 and warrants to purchase 440,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.18 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90th day from the issue date into the Company’s common stock at the fixed conversion price of $0.15 per share. The note matures in February 2019, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days’ prior written notice. The note is currently past due.   The Company calculated the related fair value of the warrants issued to the noteholder to be $66,440 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company’s calculation, it was determined that a beneficial conversion feature existed amounting to $33,560 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $110,000 relating to the $10,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount). As of September 30, 2018, the Company had amortized $41,759 of debt discount, leaving an unamortized balance of $68,241 at September 30, 2018.   During the three months ended December 31, 2018, the Company amortized $46,852 of debt discount, leaving an unamortized balance of $21,389 at December 31, 2018.

NOTE 5 – SHAREHOLDERS’ EQUITY   Common shares issued for cash   During the three months ended December 31, 2018, the Company received $10,000 from the sale of 142,857 shares of its common stock. In connection with the sale, the Company issued a warrant to the shareholder to purchase 284,714 shares of the Company’s common stock. The warrant expires five years from the date of grant and has an exercise price of $0.15 per share.   Common shares issued for Services   During the three months ended December 31, 2018, the Company issued 120,000 shares of its common stock valued at $9,600 for services provided by consultants. The shares were valued at the trading price of the common stock at the date of issuance.   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.   During the three months ended December 31, 2018, the Company granted an option to an employee to purchase 62,500 shares of its common stock with a fair value of $3,206. The option has an exercise price of $0.06 per share and expires five years from the date of grant. The shares vested on December 31, 2018. The Company valued the option using a Black-Scholes option pricing model.   The assumptions used for the option granted during the three months ended December 31, 2018 are as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 87%">Exercise price</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">0.06</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Expected dividends</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expected volatility</td> <td> </td> <td> </td> <td style="text-align: right">126.8</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Risk free interest rate</td> <td> </td> <td> </td> <td style="text-align: right">2.85</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expected life of options</td> <td> </td> <td> </td> <td style="text-align: right">2.5</td> <td> </td></tr> </table>   During the three months ended December 31, 2018, the Company recorded $85,951 of stock compensation for the fair value of the vested options, and as of December 31, 2018, unvested compensation of $614,914 remained that will be amortized over the remaining vesting period.   The table below summarizes the Company’s stock option activities for the three months ended December 31, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Number of Option Shares</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Exercise Price Range Per Share</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Fair Value at Date of Grant</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 36%">Balance, September 30, 2018</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">17,946,667</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">0.10 - 2.00</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 14%; text-align: right">0.28</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 14%; text-align: right">3,244,755</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Granted</td> <td> </td> <td> </td> <td style="text-align: right">62,500</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.06</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.06</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3,206</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Cancelled</td> <td> </td> <td> </td> <td style="text-align: right">(421,429</td> <td>)</td> <td> </td> <td> </td> <td style="text-align: right">0.19</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.19</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercised</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expired</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Balance, December 31, 2018</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">17,587,738</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.06 – 2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.28</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">3,247,961</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Vested and exercisable, December 31, 2018</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">12,418,095</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.06 – 2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.34</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2,153,024</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Unvested, December 31, 2018</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">5,591,072</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.14 – 0.19</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.15</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,094,937</td> <td> </td></tr> </table>   There was no aggregate intrinsic value for option shares outstanding at December 31, 2018. As of December 31, 2018, there were 11,990,833 shares of stock options remaining available for issuance under the 2010 Plan.    The following table summarizes information concerning outstanding and exercisable options as of December 31, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center">Options Outstanding</td> <td> </td> <td> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center">Options Exercisable</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="border-bottom: black 1.5pt solid">Range of Exercise Prices</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Number Outstanding</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Average Remaining Contractual Life (in years)</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Number Exercisable</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Average Remaining Contractual Life (in years)</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="text-align: center"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">0.06 - 0.39</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">14,075,238</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">3.79</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.15</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">8,905,595</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 20%; text-align: right">3.53</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.15</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right">0.40 - 0.99</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,112,500</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.31</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.40</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,112,500</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.31</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.40</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td style="text-align: right">1.00 - 1.99</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">750,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">750,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.00</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">650,000</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">650,000</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.06 - 2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double; text-align: right"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">17,587,738</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double; text-align: right"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">3.23</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.28</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double; text-align: right"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">12,418,095</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double; text-align: right"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2.81</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.34</td> <td> </td></tr> </table>    Stock Warrants   During the three months ended December 31, 2018, the Company issued a warrant to purchase 284,714 shares with an exercise price of $0.15 per share as part of the sale of equity units. The warrant expires five years from the date of grant.   The table below summarizes the Company’s warrants activities for the three months ended December 31, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Number of Warrant Shares</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Exercise Price Range Per Share</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted Average Exercise Price</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Fair Value at Date of Issuance</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 36%">Balance, September 30, 2018</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">67,907,728</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">0.12 - 0.67</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 14%; text-align: right">0.17</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 14%; text-align: right">3,434,560</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Granted</td> <td> </td> <td> </td> <td style="text-align: right">284,714</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.15</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.15</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">17,803</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Cancelled</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercised</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expired</td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Balance, December 31, 2018</td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">68,192,442</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.12 - 0.67</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.17</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">3,452,363</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Vested and exercisable, December 31, 2018</td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">68,192,442</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.12 - 0.67</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.17</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">3,452,363</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Unvested, December 31, 2018</td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="text-align: right"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td></tr> </table>   There was no aggregate intrinsic value for warrant shares outstanding at December 31, 2018.   The following table summarizes information concerning outstanding and exercisable warrants as of December 31, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td colspan="2"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center">Warrants Outstanding</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center">Warrants Exercisable</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td colspan="2" style="border-bottom: black 1.5pt solid">Range of Exercise Prices</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Number Outstanding</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Average Remaining Contractual Life (in years)</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Number Exercisable</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Average Remaining Contractual Life (in years)</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">0.12 – 0.20</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">59,279,384</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">2.61</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.15</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">59,279,384</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 20%; text-align: right">2.61</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.15</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right">0.21 – 0.49</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">8,574,570</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.36</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.28</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">8,574,570</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.36</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.28</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.50 – 0.67</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">338,488</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.30</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.68</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">338,488</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.30</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.68</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.12 – 0.67</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">68,192,442</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2.46</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.17</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">68,192,442</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2.46</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.17</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

NOTE 6 – SEGMENT REPORTING   Reportable segments are components of an enterprise about which separate financial information is available and that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. During the year ended September 30, 2017, the Company discontinued operations of its NPC segment.   The Company operates in the following business segments:   (i) Medical Devices: which it stems from PSI, its wholly-owned subsidiary it acquired on August 24, 2012, a developer, manufacturer, marketer and distributer of targeted Ultra Violet (“UV”) phototherapy devices for the treatment of skin diseases.    (ii) Authentication and Encryption Products and Services: which it stems from StealthCo, its wholly-owned subsidiary formed on March 18, 2014. StealthCo engages in the business of selling, licensing or otherwise providing certain authentication and encryption products and services upon acquisition of certain assets from SMI.    The detailed segment information of the Company is as follows:   Wellness Center USA, Inc. Assets By Segments    <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2018</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Corporate</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Medical Devices</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Authentication and Encryption</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Total</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center">ASSETS</td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Current Assets</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 44%">Cash</td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right">36,996</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right">97,307</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right">447</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right">134,750</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total current assets</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">36,996</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">97,307</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">447</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">134,750</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Property and equipment, net</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,355</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,355</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Other assets</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">15,000</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">1,760</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">16,760</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total other assets</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">15,000</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">1,760</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2,355</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">19,115</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>TOTAL ASSETS</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">51,996</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">99,067</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2,802</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">153,865</td> <td> </td></tr> </table>   Wellness Center USA, Inc. Operations by Segments   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="14" style="text-align: center">For the Period Ended</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2018</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Corporate</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Medical Devices</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Authentication and Encryption</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Total</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Sales:</td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 44%; padding-left: 10pt">Trade</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">7,675</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">7,675</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt; padding-left: 10pt">Consulting services</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">5,200</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">5,200</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total Sales</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">12,875</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">12,875</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Cost of goods sold</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">7,725</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">7,725</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Gross profit</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">5,150</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">5,150</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Operating expenses</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">254,429</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">119,720</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">101,715</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">475,864</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Loss from operations</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(254,429</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(119,720</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(96,565</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(470,714</td> <td style="padding-bottom: 2.5pt">)</td></tr> </table>   Wellness Center USA, Inc. Operations by Segments   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="14" style="text-align: center">For the Period Ended</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Corporate</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Medical Devices</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Authentication and Encryption</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Total</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Sales:</td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 44%; padding-left: 10pt">Trade</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">15,500</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">15,500</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt; padding-left: 10pt">Consulting services</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">11,000</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">11,000</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total Sales</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">26,500</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">26,500</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Cost of goods sold</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">16,992</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">16,992</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Gross profit</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">9,508</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">9,508</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Operating expenses</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">161,405</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">92,672</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">80,086</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">334,163</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Loss from operations</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(161,405</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(92,672</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(70,578</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(324,655</td> <td style="padding-bottom: 2.5pt">)</td></tr> </table>

NOTE 7 – LEGAL MATTERS   The Company is periodically engaged in legal proceedings arising from and relating to its business operations. We currently are not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect on our financial condition or results of operations. However, we recently decided to attempt to preserve revenue and reduce operating expenses through actions including, but not limited to, facilities consolidation and staff reductions, which we hope to implement through negotiated transactions with lessors, employees and other third parties. Such actions may result in disputes with and claims by such parties which, if not resolved through negotiations, may impact negatively the Company’s ability to continue as a going concern.   In periodic reports on Forms 10K and 10Q for the periods ending September 30, 2017 and December 31, 2017, respectively, the Company disclosed that on May 25, 2017, the SEC’s Chicago Regional Office informed it that it had made a preliminary determination to recommend filing of an enforcement action against the Company and its CEO based on possible violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act, and Section 15(a) of the Exchange Act. Subsequent discussions resulted in the submission of an Offer of Settlement (“Settlement”) through an administrative cease and desist action on November 17, 2017, which was accepted by the SEC on April 12, 2018, as disclosed on Form 8K filed April 18, 2018.  Pursuant to the Settlement, the Company neither admitted nor denied any of the allegations, but was enjoined from violating the above-referenced Sections and Rule. The Settlement imposed no financial penalties or sanctions against the Company.   The Form 8K also disclosed that on April 13, 2018, the SEC filed a separate complaint against the CEO in the U.S. District Court for the Northern District of Illinois, asserting the allegations noted above, as well as allegations that he manipulated the price of company shares through undisclosed trading, realizing more than $130,000 from such trading. On the date of filing, the CEO voluntarily resigned as an officer and director of the Company. Without admitting or denying the allegations, the CEO consented to the entry of the judgment, which was entered on September 26, 2018 by the U.S. District Court for the Northern District of Illinois. The judgment permanently enjoined him from violating the anti-fraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the broker registration provisions of Section 15(a) of the Exchange Act. It also bars him from serving as an officer or director of a public company and from participating in penny stock offerings, and ordered disgorgement and interest and penalties to be determined by the court.   On January 31, 2019, the employment agreement between the Company and its ex-CEO dated April 1, 2018 was terminated and his service thereunder as Director of Business Development ceased as of that date.

NOTE 8 – SUBSEQUENT EVENTS   [OPEN]

Basis of Consolidation   The Company’s consolidated subsidiaries and/or entities are as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid">Name of consolidated subsidiary or entity</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> State or other jurisdiction of incorporation or organization</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> Date of incorporation or formation (date of acquisition/disposition, if applicable)</td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid">Attributable interest</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 24%">Psoria-Shield Inc. (“PSI”)</td> <td style="width: 1%"> </td> <td style="width: 24%">The State of Florida</td> <td style="width: 1%"> </td> <td style="width: 36%; text-align: justify">June 17, 2009 (August 24, 2012)</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 11%; text-align: right">100</td> <td style="width: 1%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>StealthCo, Inc. (“StealthCo”)</td> <td> </td> <td>The State of Illinois</td> <td> </td> <td>March 18, 2014</td> <td> </td> <td> </td> <td style="text-align: right">100</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Psoria Development Company LLC. (“PDC”)</td> <td> </td> <td>The State of Illinois</td> <td> </td> <td>January 15, 2015/November 15, 2018</td> <td> </td> <td> </td> <td style="text-align: right">50</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>NEO Phototherapy LLC (“NEO”)</td> <td> </td> <td>The State of Illinois</td> <td> </td> <td>December 2018</td> <td> </td> <td> </td> <td style="text-align: right">50.5</td> <td>%</td></tr> </table>   Through October 2018, PSI was operated by PDC, a joint venture between PSI and the Medical Alliance, Inc (“TMA”). On November 15, 2018, the Company and TMA entered into a Withdraw and Mutual Release Agreement to terminate their joint venture agreement. In December 2018, the Company and its wholly-owned subsidiary, Psoria-Shield, Inc. (“PSI”), entered into a Joint Venture Agreement with PSI Gen 2 Funding, Inc. (“GEN2”), an Illinois corporation, to further development, marketing, licensing and/or sale of PSI technology and products. The joint venture will be conducted through NEO Phototherapy, LLC, a recently formed Illinois limited liability company (“NEO”), with principal offices and records to be maintained at WCUI’s offices. See Non-Controlling Interests in Note 2 for more details.

Use of Estimates   The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in the valuation of accounts receivable and allowance for uncollectible amounts, inventory and obsolescence reserves, accruals for potential liabilities, valuations of stock-based compensation, realization of deferred tax assets, among others. Actual results could differ from these estimates.

Income (Loss) Per Share   Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. For the three months ended December 31, 2018 and 2017, the basic and diluted shares outstanding were the same, as potentially dilutive shares were considered anti-dilutive. At December 31, 2018 and 2017, the dilutive impact of outstanding stock options of 17,587,738 and 6,822,000 shares, respectively, and outstanding warrants for 68,192,442 and 62,716,019 shares, respectively, have been excluded because their impact on the loss per share is anti-dilutive.

Revenue Recognition   In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. The Company adopted this ASU on October 1, 2018 retrospectively, the cumulative effect of the initial application on our accumulated deficit on that date was immaterial.   For trade sales, the Company generates its revenue from sales contracts with customers with revenues being generated upon the shipment of merchandise, or for consulting services, revenue is recognized in the period services are rendered and earned under service arrangements with clients.   We sell our products through two main sales channels: 1) directly to customers who use our products (the “Direct Channel”) and 2) to distribution partners who resell our products (the “Indirect Channel”).   Under the Direct Channel, we sell our products to and we receive payment directly from customers who purchase our products. Under our Indirect Channel, we have entered into distribution agreements that allow the distributors to sell our products and fulfill performance obligations under the agreements.   We determine revenue recognition through the following steps:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 48px; text-align: justify"> </td> <td style="width: 48px; text-align: justify">●</td> <td style="text-align: justify">Identification of the contract, or contracts, with a customer</td></tr> <tr> <td style="text-align: justify"> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Identification of the performance obligations in the contract</td></tr> <tr> <td style="text-align: justify"> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Determination of the transaction price</td></tr> <tr> <td style="text-align: justify"> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Allocation of the transaction price to the performance obligations in the contract</td></tr> <tr> <td style="text-align: justify"> </td> <td> </td> <td> </td></tr> <tr style="vertical-align: top"> <td style="text-align: justify"> </td> <td style="text-align: justify">●</td> <td style="text-align: justify">Recognition of revenue when, or as, we satisfy a performance obligation. </td></tr> </table>   Revenue is generally recognized upon shipment or when a service has been completed, unless we have significant performance obligations for services still to be completed. We recognize revenue when a material reversal is no longer probable. Payments received before the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue. Deferred revenue at December 31, 2018 and 2017 was $9,750 and $8,624, respectively.

Stock-Based Compensation   The Company periodically grants stock options and warrants to employees and non-employees in non-capital raising transactions as compensation for services rendered. The Company accounts for stock option and stock warrant grants to employees based on the authoritative guidance provided by the Financial Accounting Standards Board where the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and stock warrant grants to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board where the value of the stock compensation is determined based upon the measurement date at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option or warrant grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.   The fair value of the Company’s common stock option and warrant grants are estimated using a Black-Scholes Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, estimated forfeitures and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes Merton option pricing model could materially affect compensation expense recorded in future periods.

Recently Issued Accounting Pronouncements   In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures.    Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

The Company’s consolidated subsidiaries and/or entities are as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid">Name of consolidated subsidiary or entity</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> State or other jurisdiction of incorporation or organization</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> Date of incorporation or formation (date of acquisition/disposition, if applicable)</td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid">Attributable interest</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 24%">Psoria-Shield Inc. (“PSI”)</td> <td style="width: 1%"> </td> <td style="width: 24%">The State of Florida</td> <td style="width: 1%"> </td> <td style="width: 36%; text-align: justify">June 17, 2009 (August 24, 2012)</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 11%; text-align: right">100</td> <td style="width: 1%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>StealthCo, Inc. (“StealthCo”)</td> <td> </td> <td>The State of Illinois</td> <td> </td> <td>March 18, 2014</td> <td> </td> <td> </td> <td style="text-align: right">100</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Psoria Development Company LLC. (“PDC”)</td> <td> </td> <td>The State of Illinois</td> <td> </td> <td>January 15, 2015/November 15, 2018</td> <td> </td> <td> </td> <td style="text-align: right">50</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>NEO Phototherapy LLC (“NEO”)</td> <td> </td> <td>The State of Illinois</td> <td> </td> <td>December 2018</td> <td> </td> <td> </td> <td style="text-align: right">50.5</td> <td>%</td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2018</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">September 30, 2018</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 62%">Convertible note payable (a)</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 16%; text-align: right">165,000</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Convertible note payable (b)</td> <td> </td> <td> </td> <td style="text-align: right">110,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">110,000</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt">Debt discount – unamortized balance</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(21,389</td> <td style="padding-bottom: 1.5pt">)</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">(72,078</td> <td style="padding-bottom: 1.5pt">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Convertible note payable, net</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">88,611</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">202,922</td> <td> </td></tr> </table>   (a) On March 5, 2018, the Company entered into a Convertible Note Payable Agreement with an individual under which the Company borrowed $165,000. Net proceeds received by the Company under the agreement after payment of a $15,000 fee to the lender was $150,000. In connection with the agreement, the Company issued the individual 300,000 restricted shares of its common stock with a fair value of $48,000 and warrants to purchase 660,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.20 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90th day from the issue date into the Company’s common stock at the fixed conversion price of $0.10 per share. The note matures in October 2018, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days’ prior written notice. The note is currently past due.   The Company calculated the related fair value of the warrants issued to the noteholder to be $55,032 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company’s calculation, it was determined that a beneficial conversion feature existed amounting to $94,968 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $165,000 relating to the $15,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount).   During the three months ended December 31, 2018, the individual converted $165,000 of the convertible note payable and $8,783 of accrued interest into 2,482,441 shares of the Company’s common stock. During the three months ended December 31, 2018, the Company amortized the remaining $3,837 of debt discount, leaving no unamortized balance at December 31, 2018.   During the three months ended December 31, 2018, the Company amended the terms of the agreement by extending the maturity date to January 2019 and reducing the conversion price to $0.07 per share, from $0.10 per share. The reduction of the conversion price caused the Company to issue an additional 744,732 shares, which on the conversion dates had a combined total fair value of $51,434, which was recorded a financing cost during the three months ended December 31, 2018.     (b) On July 11, 2018, the Company entered into another Convertible Note Payable Agreement with the same individual under which the Company borrowed an additional $110,000. Net proceeds received by the Company under the agreement after payment of a $10,000 fee to the lender was $100,000. In connection with the agreement, the Company issued the individual 200,000 restricted shares of its common stock with a fair value of $36,000 and warrants to purchase 440,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.18 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90th day from the issue date into the Company’s common stock at the fixed conversion price of $0.15 per share. The note matures in February 2019, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days’ prior written notice. The note is currently past due.   The Company calculated the related fair value of the warrants issued to the noteholder to be $66,440 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company’s calculation, it was determined that a beneficial conversion feature existed amounting to $33,560 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $110,000 relating to the $10,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount). As of September 30, 2018, the Company had amortized $41,759 of debt discount, leaving an unamortized balance of $68,241 at September 30, 2018.   During the three months ended December 31, 2018, the Company amortized $46,852 of debt discount, leaving an unamortized balance of $21,389 at December 31, 2018.

The assumptions used for the option granted during the three months ended December 31, 2018 are as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 87%">Exercise price</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 10%; text-align: right">0.06</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Expected dividends</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expected volatility</td> <td> </td> <td> </td> <td style="text-align: right">126.8</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Risk free interest rate</td> <td> </td> <td> </td> <td style="text-align: right">2.85</td> <td>%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expected life of options</td> <td> </td> <td> </td> <td style="text-align: right">2.5</td> <td> </td></tr> </table>

The table below summarizes the Company’s stock option activities for the three months ended December 31, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Number of Option Shares</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Exercise Price Range Per Share</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Fair Value at Date of Grant</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 36%">Balance, September 30, 2018</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">17,946,667</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">0.10 - 2.00</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 14%; text-align: right">0.28</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 14%; text-align: right">3,244,755</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Granted</td> <td> </td> <td> </td> <td style="text-align: right">62,500</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.06</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.06</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">3,206</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Cancelled</td> <td> </td> <td> </td> <td style="text-align: right">(421,429</td> <td>)</td> <td> </td> <td> </td> <td style="text-align: right">0.19</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.19</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercised</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expired</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Balance, December 31, 2018</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">17,587,738</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.06 – 2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.28</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">3,247,961</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Vested and exercisable, December 31, 2018</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">12,418,095</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.06 – 2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.34</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2,153,024</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Unvested, December 31, 2018</td> <td> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">5,591,072</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.14 – 0.19</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.15</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">1,094,937</td> <td> </td></tr> </table>

The following table summarizes information concerning outstanding and exercisable options as of December 31, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center">Options Outstanding</td> <td> </td> <td> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center">Options Exercisable</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="border-bottom: black 1.5pt solid">Range of Exercise Prices</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Number Outstanding</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Average Remaining Contractual Life (in years)</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Number Exercisable</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Average Remaining Contractual Life (in years)</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="text-align: center"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">0.06 - 0.39</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">14,075,238</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">3.79</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.15</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">8,905,595</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 20%; text-align: right">3.53</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.15</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right">0.40 - 0.99</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,112,500</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.31</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.40</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,112,500</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.31</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.40</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td style="text-align: right">1.00 - 1.99</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">750,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">750,000</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2.00</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.00</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">650,000</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">650,000</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2.00</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.06 - 2.00</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double; text-align: right"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">17,587,738</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double; text-align: right"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">3.23</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.28</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double; text-align: right"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">12,418,095</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double; text-align: right"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2.81</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.34</td> <td> </td></tr> </table>

The following table summarizes information concerning outstanding and exercisable warrants as of December 31, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td colspan="2"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center">Warrants Outstanding</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="10" style="border-bottom: black 1.5pt solid; text-align: center">Warrants Exercisable</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td colspan="2" style="border-bottom: black 1.5pt solid">Range of Exercise Prices</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Number Outstanding</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Average Remaining Contractual Life (in years)</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Number Exercisable</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Average Remaining Contractual Life (in years)</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">0.12 – 0.20</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">59,279,384</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">2.61</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.15</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 10%; text-align: right">59,279,384</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 20%; text-align: right">2.61</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 8%; text-align: right">0.15</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right">0.21 – 0.49</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">8,574,570</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.36</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.28</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">8,574,570</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">1.36</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.28</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.50 – 0.67</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">338,488</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.30</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.68</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">338,488</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.30</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.68</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.12 – 0.67</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">68,192,442</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2.46</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.17</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">68,192,442</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">2.46</td> <td style="padding-bottom: 2.5pt"> </td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">0.17</td> <td style="padding-bottom: 2.5pt"> </td></tr> </table>

The detailed segment information of the Company is as follows:   Wellness Center USA, Inc. Assets By Segments    <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2018</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Corporate</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Medical Devices</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Authentication and Encryption</td> <td> </td> <td> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Total</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center">ASSETS</td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Current Assets</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 44%">Cash</td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right">36,996</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right">97,307</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right">447</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%; border-bottom: black 1.5pt solid">$</td> <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: right">134,750</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total current assets</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">36,996</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">97,307</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">447</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">134,750</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Property and equipment, net</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,355</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">2,355</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Other assets</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">15,000</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">1,760</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">16,760</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total other assets</td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">15,000</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">1,760</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">2,355</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">19,115</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>TOTAL ASSETS</td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">51,996</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">99,067</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">2,802</td> <td> </td> <td> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">153,865</td> <td> </td></tr> </table>

Wellness Center USA, Inc. Operations by Segments   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="14" style="text-align: center">For the Period Ended</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2018</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Corporate</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Medical Devices</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Authentication and Encryption</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Total</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Sales:</td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 44%; padding-left: 10pt">Trade</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">7,675</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">7,675</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt; padding-left: 10pt">Consulting services</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">5,200</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">5,200</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total Sales</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">12,875</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">12,875</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Cost of goods sold</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">7,725</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">7,725</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Gross profit</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">5,150</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">5,150</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Operating expenses</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">254,429</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">119,720</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">101,715</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">475,864</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Loss from operations</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(254,429</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(119,720</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(96,565</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(470,714</td> <td style="padding-bottom: 2.5pt">)</td></tr> </table>   Wellness Center USA, Inc. Operations by Segments   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="14" style="text-align: center">For the Period Ended</td> <td> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="14" style="border-bottom: black 1.5pt solid; text-align: center">December 31, 2017</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Corporate</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Medical Devices</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Authentication and Encryption</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Total</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Sales:</td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td> <td> </td> <td colspan="2" style="text-align: center"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 44%; padding-left: 10pt">Trade</td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">-</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">15,500</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 11%; text-align: right">15,500</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.5pt; padding-left: 10pt">Consulting services</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">11,000</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">11,000</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total Sales</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">26,500</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">26,500</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Cost of goods sold</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">16,992</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">16,992</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Gross profit</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">9,508</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">9,508</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.5pt">Operating expenses</td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">161,405</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">92,672</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">80,086</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">334,163</td> <td style="padding-bottom: 1.5pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">Loss from operations</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(161,405</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(92,672</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(70,578</td> <td style="padding-bottom: 2.5pt">)</td> <td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">(324,655</td> <td style="padding-bottom: 2.5pt">)</td></tr> </table>

0.135

421429

-825160

100952

22450252

-22974740

-423536

-401624

-697080

103698

23033274

-23954052

-817080

120000

130000

due one year from the date of issuance

48000

36000

0.12 0.67 0.17 0.17 0.12 0.67 0.15 0.15

-423536

-817080

17587738

6822000

68192442

62716019

8624

9750

8624

Psoria-Shield Inc. ("PSI") StealthCo, Inc. ("StealthCo") Psoria Development Company LLC. ("PDC") NEO Phototherapy LLC ("NEO") 2009-06-17 2014-03-18 2015-01-15 2018-12-31

2012-08-24

2018-11-15

1.00

0.50

0.505

1550

5760

134750

36996

97307

447

16760

15000

1760

19379

19115

15000

1760

2355

25139

153865

51996

99067

2802

165000 110000 110000

202922

88611

103697867 51434 51434 51434 51434

2482441

173783

2483

171300

173783

85951

-405383

405383

375000 255000 255000 120000

12875

26500

7675

15500

5200

11000

7675

5200

12875

15500

11000

26500

85951

130540

-5775

Non-controlling Interests   Through November 2018, non-controlling interest represented the non-controlling interest holder’s proportionate share of the equity of the Company’s majority-owned subsidiary, PDC. Non-controlling interest is adjusted for the non-controlling interest holder’s proportionate share of the earnings or losses and other comprehensive income (loss), if any, and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance.   On November 15, 2018, PSI and TMA entered into a Withdraw and Mutual Release Agreement to terminate their joint venture agreement. On the date of termination, the non-controlling interest’s share of the accumulated losses of the joint venture totaled to $405,383. Upon termination, during the three months ended December 31, 2018, the Company forgave the non-controlling interest’s share of the accumulated losses and recorded a reduction of additional paid-in-capital of $405,383.     In December 2018, PSI entered into a Joint Venture Agreement with GEN2 to further development, marketing, licensing and/or sale of PSI technology and products. The joint venture will be conducted through NEO. PSI and GEN2 will be the members of NEO, owning 50.5% and 36.0%, respectively, of the Units issued in connection with the organization of NEO. An additional 13.5% of such Units will be reserved for issuance as incentives for key employees and consultants. Until such shares are distributed, the Company controls 68% of the joint venture and GEN2 the remaining 32%. PSI and GEN2 will manage NEO’s day-to-day operations. PSI will contribute PSI technology to NEO and GEN2 will contribute $700,000. Repayment of the $700,000 investment by GEN2 will begin through and upon the date which NEO has realized and retained cumulative net income/distributable cash in the amount of $300,000. Distributions thereafter will be made to PSI, GEN2 and other members in proportion to their respective Unit ownership, at the times and in the manner determined from time to time by the managers, in their sole discretion. GEN2 consists of accredited investors, and investment participation from several WCUI officers and directors, including Calvin R. O’Harrow and Roy M. Harsch.   As of December 31, 2018, GEN2 had received $375,000 of investments to contribute to NEO and the Company recorded its proportionate share of $255,000 to additional paid-in-capital and $120,000 to non-controlling interest. During the three months ended December 31, 2018, NEO did not record any income or expenses relating to its operations.

The table below summarizes the Company’s warrants activities for the three months ended December 31, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center">Number of Warrant Shares</td> <td style="padding-bottom: 1.5pt"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Exercise Price Range Per Share</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Weighted Average Exercise Price</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td style="padding-bottom: 1.5pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Fair Value at Date of Issuance</td> <td style="padding-bottom: 1.5pt; text-align: center"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 36%">Balance, September 30, 2018</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 12%; text-align: right">67,907,728</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 12%; text-align: right">0.12 - 0.67</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 14%; text-align: right">0.17</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%">$</td> <td style="width: 14%; text-align: right">3,434,560</td> <td style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Granted</td> <td> </td> <td> </td> <td style="text-align: right">284,714</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.15</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">0.15</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">17,803</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Cancelled</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Exercised</td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td> <td> </td> <td> </td> <td style="text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Expired</td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Balance, December 31, 2018</td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">68,192,442</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.12 - 0.67</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.17</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">3,452,363</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Vested and exercisable, December 31, 2018</td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">68,192,442</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.12 - 0.67</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">0.17</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">3,452,363</td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Unvested, December 31, 2018</td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td> <td> </td> <td style="border-bottom: black 1.5pt solid">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td style="text-align: right"> </td> <td> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">$</td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td> </td></tr> </table>

445000 405383

405383

700000

300000

The joint venture will be conducted through NEO. PSI and GEN2 will be the members of NEO, owning 50.5% and 36.0%, respectively, of the Units issued in connection with the organization of NEO. An additional 13.5% of such Units will be reserved for issuance as incentives for key employees and consultants. Until such shares are distributed, the Company controls 68% of the joint venture and GEN2 the remaining 32%. PSI and GEN2 will manage NEO's day-to-day operations. PSI will contribute PSI technology to NEO and GEN2 will contribute $700,000. Repayment of the $700,000 investment by GEN2 will begin through and upon the date which NEO has realized and retained cumulative net income/distributable cash in the amount of $300,000.

P5Y

0.07 744732

12418095

5591072

2153024

1094937

1125

-2750

0.06

375000 On March 5, 2018, the Company entered into a Convertible Note Payable Agreement with an individual under which the Company borrowed $165,000. Net proceeds received by the Company under the agreement after payment of a $15,000 fee to the lender was $150,000. In connection with the agreement, the Company issued the individual 300,000 restricted shares of its common stock with a fair value of $48,000 and warrants to purchase 660,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.20 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90th day from the issue date into the Company's common stock at the fixed conversion price of $0.10 per share. The note matures in October 2018, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days' prior written notice. The note is currently past due. The Company calculated the related fair value of the warrants issued to the noteholder to be $55,032 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company's calculation, it was determined that a beneficial conversion feature existed amounting to $94,968 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $165,000 relating to the $15,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount). During the three months ended December 31, 2018, the individual converted $165,000 of the convertible note payable and $8,783 of accrued interest into 2,482,441 shares of the Company's common stock. During the three months ended December 31, 2018, the Company amortized the remaining $3,837 of debt discount, leaving no unamortized balance at December 31, 2018. During the three months ended December 31, 2018, the Company amended the terms of the agreement by extending the maturity date to January 2019 and reducing the conversion price to $0.07 per share, from $0.10 per share. The reduction of the conversion price caused the Company to issue an additional 744,732 shares, which on the conversion dates had a combined total fair value of $51,434, which was recorded a financing cost during the three months ended December 31, 2018. On July 11, 2018, the Company entered into another Convertible Note Payable Agreement with the same individual under which the Company borrowed an additional $110,000. Net proceeds received by the Company under the agreement after payment of a $10,000 fee to the lender was $100,000. In connection with the agreement, the Company issued the individual 200,000 restricted shares of its common stock with a fair value of $36,000 and warrants to purchase 440,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.18 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90th day from the issue date into the Company's common stock at the fixed conversion price of $0.15 per share. The note matures in February 2019, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days' prior written notice. The note is currently past due. The Company calculated the related fair value of the warrants issued to the noteholder to be $66,440 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company's calculation, it was determined that a beneficial conversion feature existed amounting to $33,560 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $110,000 relating to the $10,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount). As of September 30, 2018, the Company had amortized $41,759 of debt discount, leaving an unamortized balance of $68,241 at September 30, 2018. During the three months ended December 31, 2018, the Company amortized $46,852 of debt discount, leaving an unamortized balance of $21,389 at December 31, 2018.

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[Member] Psoria Development Company LLC. [Member] Segments [Axis] Corporate [Member] Medical Devices [Member] Authentication and Encryption [Member] Exercise Price Range One [Member] Exercise Price Range Four [Member] Gen 2 Funding, Inc [Member] Employees and Consultants [Member] NEO Phototherapy LLC [Member] Illinois Limited Liability Company [Member] Officers and Directors [Member] CEO [Member] Employee [Member] Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Entity Filer Category Entity Small Business Flag Entity Emerging Growth Company Entity Ex Transition Period Entity Common Stock, Shares Outstanding Trading Symbol Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS Current Assets Cash Prepaid expenses and other current assets Total Current Assets Property and equipment, net Other assets Total Other Assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' DEFICIT Current Liabilities Accounts payable and accrued expenses Deferred revenue Convertible notes payable Loans payable from officers and shareholders Total Current Liabilities Shareholders' Deficit Common stock, par value $0.001, 185,000,000 shares authorized; 103,697,867 and 100,952,569 shares issued and outstanding, respectively Additional paid-in capital Accumulated deficit Total Wellness Center USA shareholders' deficit Non-controlling interest Total Shareholder's deficit TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT Common stock, par value Common stock, shares authorized Common stock, shares, issued Common stock, shares, outstanding Statement [Table] Statement [Line Items] Sales: Total Sales Cost of goods sold Gross profit Operating expenses Loss from operations Other expenses Amortization of debt discount Financing costs Interest expense Total other expenses NET LOSS Net loss attributable to non-controlling interest NET LOSS ATTRIBUTABLE TO WELLNESS CENTER USA, INC. BASIC AND DILUTED LOSS PER SHARE WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED Balance Balance, shares Common shares issued for cash Common shares issued for cash, shares Shares issued upon conversions of note payable Shares issued upon conversions of note payable, shares Fair value of additional shares issued upon conversions of note payable Fair value of vested stock options Fair value of common stock issued for services Fair value of common stock issued for services, shares Termination of non-controlling interest agreement Contribution of capital by joint venture partner Net loss Balance Balance, shares Statement of Cash Flows [Abstract] Cash Flows from Operating Activities Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense Amortization of debt discount Fair value of common shares issued for services Fair value of stock options issued for services Changes in Assets and Liabilities (Increase) Decrease in: Accounts receivable Inventories Prepaid expenses and other current assets (Decrease) Increase in: Accounts payable and accrued expenses Accrued payroll - officers Deferred revenue Net cash used in operating activities Cash Flows from Financing Activities Proceeds from loans payable from officers and shareholders Common stock issued for cash Exercise of stock warrants Net cash provided by financing activities Net increase (decrease) in cash Cash beginning of period Cash end of period Supplemental cash flows disclosures: Interest paid Taxes paid Supplemental non-cash financing disclosures: Conversion of convertible note payable into common shares Conversion of accrued interest into common shares Non-controlling interest's share in losses of a subsidiary Organization, Consolidation and Presentation of Financial Statements [Abstract] Basis of Presentation Accounting Policies [Abstract] Summary of Significant Accounting Policies Debt Disclosure [Abstract] Loans Payable from Officers and Shareholders Convertible Note Agreements Equity [Abstract] Shareholders' Equity Segment Reporting [Abstract] Segment Reporting Commitments and Contingencies Disclosure [Abstract] Legal Matters Subsequent Events [Abstract] Subsequent Events Basis of Consolidation Use of Estimates Income (Loss) Per Share Revenue Recognition Non-Controlling Interests Stock-Based Compensation Recently Issued Accounting Pronouncements Schedule of Company's Consolidated Subsidiaries Schedule of Convertible Notes Payable Schedule of Assumptions Used for Options Granted Schedule of Stock Option Activity Schedule of Outstanding and Exercisable Options by Exercise Price Range Schedule of Warrant Activity Schedule of Outstanding and Exercisable Warrants by Exercise Price Range Schedule of Assets of Reportable Segments Schedule of Operations of Reportable Segments Entity incorporation, state country name Cash used in operations Shareholders' deficit Cash on hand Proceeds from short-term loans, contributions of capital by a joint venture partner and the sale of common stock Antidilutive securities excluded from computation of earnings per share Non-controlling interest's share of accumulated losses of joint venture EX-101.PRE 11 wcui-20181231_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information	3 Months Ended
Document and Entity Information	Dec. 31, 2018 shares
Document And Entity Information
Entity Registrant Name	Wellness Center USA, Inc.
Entity Central Index Key	0001516887
Document Type	10-Q
Document Period End Date	Dec. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding	103,697,867
Trading Symbol	WCUI
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

XML 13 R2.htm IDEA: XBRL DOCUMENT

Condensed Consolidated Balance Sheets - USD ($)	Dec. 31, 2018	Sep. 30, 2018
Current Assets
Cash	$ 134,750	$ 4,210
Prepaid expenses and other current assets		1,550
Total Current Assets	134,750	5,760
Property and equipment, net	2,355	2,619
Other assets	16,760	16,760
Total Other Assets	19,115	19,379
TOTAL ASSETS	153,865	25,139
Current Liabilities
Accounts payable and accrued expenses	626,584	572,753
Deferred revenue	9,750	8,624
Convertible notes payable	88,611	202,922
Loans payable from officers and shareholders	126,000	66,000
Total Current Liabilities	850,945	850,299
Shareholders' Deficit
Common stock, par value $0.001, 185,000,000 shares authorized; 103,697,867 and 100,952,569 shares issued and outstanding, respectively	103,698	100,952
Additional paid-in capital	22,627,891	22,450,252
Accumulated deficit	(23,548,669)	(22,974,740)
Total Wellness Center USA shareholders' deficit	(817,080)	(423,536)
Non-controlling interest	120,000	(401,624)
Total Shareholder's deficit	(697,080)	(825,160)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$ 153,865	$ 25,139

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2018	Sep. 30, 2018
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	185,000,000	185,000,000
Common stock, shares, issued	103,697,867	100,952,569
Common stock, shares, outstanding	103,697,867	100,952,569

XML 15 R4.htm IDEA: XBRL DOCUMENT

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Sales:
Total Sales	$ 12,875	$ 26,500
Cost of goods sold	7,725	16,992
Gross profit	5,150	9,508
Operating expenses	475,864	334,163
Loss from operations	(470,714)	(324,655)
Other expenses
Amortization of debt discount	(50,689)	(70,047)
Financing costs	(51,434)
Interest expense	(4,851)	(3,300)
Total other expenses	(106,974)	(73,347)
NET LOSS	(577,688)	(398,002)
Net loss attributable to non-controlling interest	3,759	45,969
NET LOSS ATTRIBUTABLE TO WELLNESS CENTER USA, INC.	$ (573,929)	$ (352,033)
BASIC AND DILUTED LOSS PER SHARE	$ (0.01)	$ (0.00)
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED	100,952,569	90,336,112
Trade [Member]
Sales:
Total Sales	$ 7,675	$ 15,500
Consulting Services [Member]
Sales:
Total Sales	$ 5,200	$ 11,000

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Condensed Consolidated Statement of Shareholders' Deficit (Unaudited) - 3 months ended Dec. 31, 2018 - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total WCUI Deficit [Member]	Non-controlling Interest [Member]	Total
Balance at Sep. 30, 2018	$ 100,952	$ 22,450,252	$ (22,974,740)	$ (423,536)	$ (401,624)	$ (825,160)
Balance, shares at Sep. 30, 2018	100,952,569
Common shares issued for cash	$ 143	9,857		10,000		$ 10,000
Common shares issued for cash, shares	142,857					142,857
Shares issued upon conversions of note payable	$ 2,483	171,300		173,783		$ 173,783
Shares issued upon conversions of note payable, shares	2,482,441
Fair value of additional shares issued upon conversions of note payable		51,434		51,434		51,434
Fair value of vested stock options		85,951		85,951		85,951
Fair value of common stock issued for services	$ 120	9,480		9,600		$ 9,600
Fair value of common stock issued for services, shares	120,000					120,000
Termination of non-controlling interest agreement		(405,383)		(405,383)	405,383
Contribution of capital by joint venture partner		255,000		255,000	120,000	375,000
Net loss			(573,929)	(573,929)	(3,759)	(577,688)
Balance at Dec. 31, 2018	$ 103,698	$ 23,033,274	$ (23,954,052)	$ (817,080)	$ 120,000	$ (697,080)
Balance, shares at Dec. 31, 2018	103,697,867

XML 17 R6.htm IDEA: XBRL DOCUMENT

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Cash Flows from Operating Activities
Net loss	$ (577,688)	$ (398,002)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	264	1,014
Amortization of debt discount	50,689	70,046
Fair value of common shares issued for services	9,600	21,000
Fair value of stock options issued for services	85,951
Fair value of additional shares issued upon conversions of note payable	51,434
(Increase) Decrease in:
Accounts receivable		19,999
Inventories		223
Prepaid expenses and other current assets	1,550	(645)
(Decrease) Increase in:
Accounts payable and accrued expenses	62,615	111,559
Accrued payroll - officers		30,367
Deferred revenue	1,125	(2,750)
Net cash used in operating activities	(314,460)	(147,189)
Cash Flows from Financing Activities
Proceeds from loans payable from officers and shareholders	60,000	30,500
Common stock issued for cash	10,000
Exercise of stock warrants		110,914
Contribution of capital by joint venture partner	375,000
Net cash provided by financing activities	445,000	141,414
Net increase (decrease) in cash	130,540	(5,775)
Cash beginning of period	4,210	29,369
Cash end of period	134,750	23,594
Supplemental cash flows disclosures:
Interest paid
Taxes paid
Supplemental non-cash financing disclosures:
Conversion of convertible note payable into common shares	173,783
Conversion of accrued interest into common shares	8,783
Non-controlling interest's share in losses of a subsidiary	$ 3,759	$ 45,969

XML 18 R7.htm IDEA: XBRL DOCUMENT

Basis of Presentation

3 Months Ended

Dec. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

NOTE 1 – BASIS OF PRESENTATION

Organization and Operations

Basis of Presentation of Unaudited Financial Information

Going Concern

XML 19 R8.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies

3 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

The Company’s consolidated subsidiaries and/or entities are as follows:

Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition/disposition, if applicable)	Attributable interest

Psoria-Shield Inc. (“PSI”)	The State of Florida	June 17, 2009 (August 24, 2012)		100	%

StealthCo, Inc. (“StealthCo”)	The State of Illinois	March 18, 2014		100	%

Psoria Development Company LLC. (“PDC”)	The State of Illinois	January 15, 2015/November 15, 2018		50	%

NEO Phototherapy LLC (“NEO”)	The State of Illinois	December 2018		50.5	%

Use of Estimates

Income (Loss) Per Share

Revenue Recognition

We determine revenue recognition through the following steps:

	●	Identification of the contract, or contracts, with a customer

	●	Identification of the performance obligations in the contract

	●	Determination of the transaction price

	●	Allocation of the transaction price to the performance obligations in the contract

	●	Recognition of revenue when, or as, we satisfy a performance obligation.

Non-controlling Interests

On November 15, 2018, PSI and TMA entered into a Withdraw and Mutual Release Agreement to terminate their joint venture agreement. On the date of termination, the non-controlling interest’s share of the accumulated losses of the joint venture totaled to $405,383. Upon termination, during the three months ended December 31, 2018, the Company forgave the non-controlling interest’s share of the accumulated losses and recorded a reduction of additional paid-in-capital of $405,383.

Stock-Based Compensation

Recently Issued Accounting Pronouncements

XML 20 R9.htm IDEA: XBRL DOCUMENT

Loans Payable from Officers and Shareholders

3 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Loans Payable from Officers and Shareholders

NOTE 3 – LOANS PAYABLE FROM OFFICERS AND SHAREHOLDERS

XML 21 R10.htm IDEA: XBRL DOCUMENT

Convertible Note Agreements

3 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Convertible Note Agreements

NOTE 4 – CONVERTIBLE NOTE AGREEMENTS

	December 31, 2018			September 30, 2018

Convertible note payable (a)	$	-		$	165,000
Convertible note payable (b)		110,000			110,000
Debt discount – unamortized balance		(21,389	)		(72,078	)
Convertible note payable, net	$	88,611		$	202,922

The Company calculated the related fair value of the warrants issued to the noteholder to be $55,032 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company’s calculation, it was determined that a beneficial conversion feature existed amounting to $94,968 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $165,000 relating to the $15,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount).

The Company calculated the related fair value of the warrants issued to the noteholder to be $66,440 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company’s calculation, it was determined that a beneficial conversion feature existed amounting to $33,560 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $110,000 relating to the $10,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount). As of September 30, 2018, the Company had amortized $41,759 of debt discount, leaving an unamortized balance of $68,241 at September 30, 2018.

During the three months ended December 31, 2018, the Company amortized $46,852 of debt discount, leaving an unamortized balance of $21,389 at December 31, 2018.

XML 22 R11.htm IDEA: XBRL DOCUMENT

Shareholders' Equity

3 Months Ended

Dec. 31, 2018

Equity [Abstract]

Shareholders' Equity

NOTE 5 – SHAREHOLDERS’ EQUITY

Common shares issued for cash

Common shares issued for Services

Stock Options

The assumptions used for the option granted during the three months ended December 31, 2018 are as follows:

Exercise price	$	0.06
Expected dividends		-
Expected volatility		126.8	%
Risk free interest rate		2.85	%
Expected life of options		2.5

The table below summarizes the Company’s stock option activities for the three months ended December 31, 2018:

	Number of Option Shares			Exercise Price Range Per Share		Weighted Average Exercise Price		Fair Value at Date of Grant

Balance, September 30, 2018		17,946,667		$	0.10 - 2.00	$	0.28	$	3,244,755
Granted		62,500			0.06		0.06		3,206
Cancelled		(421,429	)		0.19		0.19		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance, December 31, 2018		17,587,738		$	0.06 – 2.00	$	0.28	$	3,247,961
Vested and exercisable, December 31, 2018		12,418,095		$	0.06 – 2.00	$	0.34	$	2,153,024

Unvested, December 31, 2018		5,591,072		$	0.14 – 0.19	$	0.15	$	1,094,937

The following table summarizes information concerning outstanding and exercisable options as of December 31, 2018:

		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

$	0.06 - 0.39		14,075,238		3.79	$	0.15		8,905,595		3.53	$	0.15
	0.40 - 0.99		2,112,500		0.31		0.40		2,112,500		0.31		0.40
	1.00 - 1.99		750,000		2.00		1.00		750,000		2.00		1.00
	2.00		650,000		2.00		2.00		650,000		2.00		2.00
$	0.06 - 2.00		17,587,738		3.23	$	0.28		12,418,095		2.81	$	0.34

Stock Warrants

The table below summarizes the Company’s warrants activities for the three months ended December 31, 2018:

	Number of Warrant Shares		Exercise Price Range Per Share		Weighted Average Exercise Price		Fair Value at Date of Issuance

Balance, September 30, 2018		67,907,728	$	0.12 - 0.67	$	0.17	$	3,434,560
Granted		284,714		0.15		0.15		17,803
Cancelled		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance, December 31, 2018		68,192,442	$	0.12 - 0.67	$	0.17	$	3,452,363
Vested and exercisable, December 31, 2018		68,192,442	$	0.12 - 0.67	$	0.17	$	3,452,363

Unvested, December 31, 2018		-	$	-	$	-	$	-

There was no aggregate intrinsic value for warrant shares outstanding at December 31, 2018.

The following table summarizes information concerning outstanding and exercisable warrants as of December 31, 2018:

		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		59,279,384	2.61	$	0.15		59,279,384	2.61	$	0.15
	0.21 – 0.49		8,574,570	1.36		0.28		8,574,570	1.36		0.28
	0.50 – 0.67		338,488	0.30		0.68		338,488	0.30		0.68

$	0.12 – 0.67		68,192,442	2.46	$	0.17		68,192,442	2.46	$	0.17

XML 23 R12.htm IDEA: XBRL DOCUMENT

Segment Reporting

3 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Segment Reporting

NOTE 6 – SEGMENT REPORTING

The Company operates in the following business segments:

The detailed segment information of the Company is as follows:

Wellness Center USA, Inc.
Assets By Segments

	December 31, 2018
	Corporate		Medical Devices		Authentication and Encryption		Total
ASSETS
Current Assets
Cash	$	36,996	$	97,307	$	447	$	134,750
Total current assets		36,996		97,307		447		134,750

Property and equipment, net		-		-		2,355		2,355
Other assets		15,000		1,760		-		16,760
Total other assets		15,000		1,760		2,355		19,115

TOTAL ASSETS	$	51,996	$	99,067	$	2,802	$	153,865

Wellness Center USA, Inc.

Operations by Segments

	For the Period Ended
	December 31, 2018
	Corporate			Medical Devices			Authentication and Encryption			Total
Sales:
Trade	$	-		$	-		$	7,675		$	7,675
Consulting services		-			-			5,200			5,200
Total Sales		-			-			12,875			12,875

Cost of goods sold		-			-			7,725			7,725

Gross profit		-			-			5,150			5,150

Operating expenses		254,429			119,720			101,715			475,864

Loss from operations	$	(254,429	)	$	(119,720	)	$	(96,565	)	$	(470,714	)

Wellness Center USA, Inc.

Operations by Segments

	For the Period Ended
	December 31, 2017
	Corporate			Medical Devices			Authentication and Encryption			Total
Sales:
Trade	$	-		$	-		$	15,500		$	15,500
Consulting services		-			-			11,000			11,000
Total Sales		-			-			26,500			26,500

Cost of goods sold		-			-			16,992			16,992

Gross profit		-			-			9,508			9,508

Operating expenses		161,405			92,672			80,086			334,163

Loss from operations	$	(161,405	)	$	(92,672	)	$	(70,578	)	$	(324,655	)

XML 24 R13.htm IDEA: XBRL DOCUMENT

Legal Matters

3 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Legal Matters

NOTE 7 – LEGAL MATTERS

XML 25 R14.htm IDEA: XBRL DOCUMENT

Subsequent Events

3 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

NOTE 8 – SUBSEQUENT EVENTS

[OPEN]

XML 26 R15.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of Consolidation

Basis of Consolidation

The Company’s consolidated subsidiaries and/or entities are as follows:

Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition/disposition, if applicable)	Attributable interest

Psoria-Shield Inc. (“PSI”)	The State of Florida	June 17, 2009 (August 24, 2012)		100	%

StealthCo, Inc. (“StealthCo”)	The State of Illinois	March 18, 2014		100	%

Psoria Development Company LLC. (“PDC”)	The State of Illinois	January 15, 2015/November 15, 2018		50	%

NEO Phototherapy LLC (“NEO”)	The State of Illinois	December 2018		50.5	%

Use of Estimates

Use of Estimates

Income (Loss) Per Share

Income (Loss) Per Share

Revenue Recognition

Revenue Recognition

We determine revenue recognition through the following steps:

	●	Identification of the contract, or contracts, with a customer

	●	Identification of the performance obligations in the contract

	●	Determination of the transaction price

	●	Allocation of the transaction price to the performance obligations in the contract

	●	Recognition of revenue when, or as, we satisfy a performance obligation.

Non-Controlling Interests

Non-controlling Interests

On November 15, 2018, PSI and TMA entered into a Withdraw and Mutual Release Agreement to terminate their joint venture agreement. On the date of termination, the non-controlling interest’s share of the accumulated losses of the joint venture totaled to $405,383. Upon termination, during the three months ended December 31, 2018, the Company forgave the non-controlling interest’s share of the accumulated losses and recorded a reduction of additional paid-in-capital of $405,383.

Stock-Based Compensation

Stock-Based Compensation

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

XML 27 R16.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Schedule of Company's Consolidated Subsidiaries

The Company’s consolidated subsidiaries and/or entities are as follows:

Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition/disposition, if applicable)	Attributable interest

Psoria-Shield Inc. (“PSI”)	The State of Florida	June 17, 2009 (August 24, 2012)		100	%

StealthCo, Inc. (“StealthCo”)	The State of Illinois	March 18, 2014		100	%

Psoria Development Company LLC. (“PDC”)	The State of Illinois	January 15, 2015/November 15, 2018		50	%

NEO Phototherapy LLC (“NEO”)	The State of Illinois	December 2018		50.5	%

XML 28 R17.htm IDEA: XBRL DOCUMENT

Convertible Note Agreements (Tables)

3 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Schedule of Convertible Notes Payable

	December 31, 2018			September 30, 2018

Convertible note payable (a)	$	-		$	165,000
Convertible note payable (b)		110,000			110,000
Debt discount – unamortized balance		(21,389	)		(72,078	)
Convertible note payable, net	$	88,611		$	202,922

During the three months ended December 31, 2018, the Company amortized $46,852 of debt discount, leaving an unamortized balance of $21,389 at December 31, 2018.

XML 29 R18.htm IDEA: XBRL DOCUMENT

Shareholders' Equity (Tables)

3 Months Ended

Dec. 31, 2018

Equity [Abstract]

Schedule of Assumptions Used for Options Granted

The assumptions used for the option granted during the three months ended December 31, 2018 are as follows:

Exercise price	$	0.06
Expected dividends		-
Expected volatility		126.8	%
Risk free interest rate		2.85	%
Expected life of options		2.5

Schedule of Stock Option Activity

The table below summarizes the Company’s stock option activities for the three months ended December 31, 2018:

	Number of Option Shares			Exercise Price Range Per Share		Weighted Average Exercise Price		Fair Value at Date of Grant

Balance, September 30, 2018		17,946,667		$	0.10 - 2.00	$	0.28	$	3,244,755
Granted		62,500			0.06		0.06		3,206
Cancelled		(421,429	)		0.19		0.19		-
Exercised		-			-		-		-
Expired		-			-		-		-
Balance, December 31, 2018		17,587,738		$	0.06 – 2.00	$	0.28	$	3,247,961
Vested and exercisable, December 31, 2018		12,418,095		$	0.06 – 2.00	$	0.34	$	2,153,024

Unvested, December 31, 2018		5,591,072		$	0.14 – 0.19	$	0.15	$	1,094,937

Schedule of Outstanding and Exercisable Options by Exercise Price Range

The following table summarizes information concerning outstanding and exercisable options as of December 31, 2018:

		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

$	0.06 - 0.39		14,075,238		3.79	$	0.15		8,905,595		3.53	$	0.15
	0.40 - 0.99		2,112,500		0.31		0.40		2,112,500		0.31		0.40
	1.00 - 1.99		750,000		2.00		1.00		750,000		2.00		1.00
	2.00		650,000		2.00		2.00		650,000		2.00		2.00
$	0.06 - 2.00		17,587,738		3.23	$	0.28		12,418,095		2.81	$	0.34

Schedule of Warrant Activity

The table below summarizes the Company’s warrants activities for the three months ended December 31, 2018:

	Number of Warrant Shares		Exercise Price Range Per Share		Weighted Average Exercise Price		Fair Value at Date of Issuance

Balance, September 30, 2018		67,907,728	$	0.12 - 0.67	$	0.17	$	3,434,560
Granted		284,714		0.15		0.15		17,803
Cancelled		-		-		-		-
Exercised		-		-		-		-
Expired		-		-		-		-
Balance, December 31, 2018		68,192,442	$	0.12 - 0.67	$	0.17	$	3,452,363
Vested and exercisable, December 31, 2018		68,192,442	$	0.12 - 0.67	$	0.17	$	3,452,363

Unvested, December 31, 2018		-	$	-	$	-	$	-

Schedule of Outstanding and Exercisable Warrants by Exercise Price Range

The following table summarizes information concerning outstanding and exercisable warrants as of December 31, 2018:

		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		59,279,384	2.61	$	0.15		59,279,384	2.61	$	0.15
	0.21 – 0.49		8,574,570	1.36		0.28		8,574,570	1.36		0.28
	0.50 – 0.67		338,488	0.30		0.68		338,488	0.30		0.68

$	0.12 – 0.67		68,192,442	2.46	$	0.17		68,192,442	2.46	$	0.17

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References + Details

XML 30 R19.htm IDEA: XBRL DOCUMENT

Segment Reporting (Tables)

3 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Schedule of Assets of Reportable Segments

The detailed segment information of the Company is as follows:

Wellness Center USA, Inc.
Assets By Segments

	December 31, 2018
	Corporate		Medical Devices		Authentication and Encryption		Total
ASSETS
Current Assets
Cash	$	36,996	$	97,307	$	447	$	134,750
Total current assets		36,996		97,307		447		134,750

Property and equipment, net		-		-		2,355		2,355
Other assets		15,000		1,760		-		16,760
Total other assets		15,000		1,760		2,355		19,115

TOTAL ASSETS	$	51,996	$	99,067	$	2,802	$	153,865

Schedule of Operations of Reportable Segments

Wellness Center USA, Inc.

Operations by Segments

	For the Period Ended
	December 31, 2018
	Corporate			Medical Devices			Authentication and Encryption			Total
Sales:
Trade	$	-		$	-		$	7,675		$	7,675
Consulting services		-			-			5,200			5,200
Total Sales		-			-			12,875			12,875

Cost of goods sold		-			-			7,725			7,725

Gross profit		-			-			5,150			5,150

Operating expenses		254,429			119,720			101,715			475,864

Loss from operations	$	(254,429	)	$	(119,720	)	$	(96,565	)	$	(470,714	)

Wellness Center USA, Inc.

Operations by Segments

	For the Period Ended
	December 31, 2017
	Corporate			Medical Devices			Authentication and Encryption			Total
Sales:
Trade	$	-		$	-		$	15,500		$	15,500
Consulting services		-			-			11,000			11,000
Total Sales		-			-			26,500			26,500

Cost of goods sold		-			-			16,992			16,992

Gross profit		-			-			9,508			9,508

Operating expenses		161,405			92,672			80,086			334,163

Loss from operations	$	(161,405	)	$	(92,672	)	$	(70,578	)	$	(324,655	)

XML 31 R20.htm IDEA: XBRL DOCUMENT

Basis of Presentation (Details Narrative) - USD ($)	3 Months Ended
Basis of Presentation (Details Narrative) - USD ($)	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018	Sep. 30, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Entity incorporation, state country name	Nevada
Net loss	$ (577,688)	$ (398,002)
Cash used in operations	(314,460)	(147,189)
Shareholders' deficit	(697,080)		$ (825,160)
Cash on hand	134,750	$ 23,594	$ 4,210	$ 29,369
Proceeds from short-term loans, contributions of capital by a joint venture partner and the sale of common stock	$ 445,000

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1A
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=114867106&loc=SL7669619-108580

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1A
-Subparagraph (a)(1)
-URI http://asc.fasb.org/extlink&oid=109239629&loc=SL4573702-111684

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 1B
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=114867106&loc=SL7669625-108580

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 50
-Paragraph 1A
-Subparagraph (c)(1)
-URI http://asc.fasb.org/extlink&oid=109239629&loc=SL4573702-111684

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=115929826&loc=d3e8736-108599

Reference 6: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 55
-Paragraph 4J
-URI http://asc.fasb.org/extlink&oid=84234705&loc=SL4591551-111686

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=109223946&loc=d3e3000-108585

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 45
-Paragraph 19
-URI http://asc.fasb.org/extlink&oid=108774443&loc=SL4569616-111683

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=115929826&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 55
-Paragraph 4K
-URI http://asc.fasb.org/extlink&oid=84234705&loc=SL4591552-111686

+ Details

XML 32 R21.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended
	Nov. 15, 2018	Dec. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018
Deferred revenue		$ 9,750	$ 9,750	$ 8,624	$ 8,624
Non-controlling interest's share of accumulated losses of joint venture	$ 405,383
Reduction of additional paid-in-capital			405,383
Contributed capital		700,000
Repayment of investments		700,000
Distributable cash		$ 300,000	300,000
Noncontrolling interest, description		The joint venture will be conducted through NEO. PSI and GEN2 will be the members of NEO, owning 50.5% and 36.0%, respectively, of the Units issued in connection with the organization of NEO. An additional 13.5% of such Units will be reserved for issuance as incentives for key employees and consultants. Until such shares are distributed, the Company controls 68% of the joint venture and GEN2 the remaining 32%. PSI and GEN2 will manage NEO's day-to-day operations. PSI will contribute PSI technology to NEO and GEN2 will contribute $700,000. Repayment of the $700,000 investment by GEN2 will begin through and upon the date which NEO has realized and retained cumulative net income/distributable cash in the amount of $300,000.
Additional paid-in capital		$ 22,627,891	22,627,891		22,450,252
Non-controlling interest		$ 120,000	$ 120,000		$ (401,624)
Employees and Consultants [Member]
Additional units reserved for issuance		13.50%
Psoria-Shield, Inc [Member]
Ownership percentage		50.50%	50.50%
Gen 2 Funding, Inc [Member]
Ownership percentage		36.00%	36.00%
Proceeds from investments		$ 375,000
Illinois Limited Liability Company [Member]
Additional paid-in capital		255,000	$ 255,000
Non-controlling interest		$ 120,000	$ 120,000
Stock Option [Member]
Antidilutive securities excluded from computation of earnings per share			17,587,738	6,822,000
Warrants [Member]
Antidilutive securities excluded from computation of earnings per share			68,192,442	62,716,019

XML 33 R22.htm IDEA: XBRL DOCUMENT

Summary of Significant Accounting Policies - Schedule of Company's Consolidated Subsidiaries (Details)	3 Months Ended
	Dec. 31, 2018
State or other jurisdiction of incorporation or organization	Nevada
Psoria-Shield, Inc [Member]
Name of consolidated subsidiary or entity	Psoria-Shield Inc. ("PSI")
State or other jurisdiction of incorporation or organization	The State of Florida
Date of incorporation or formation	Jun. 17, 2009
Date of acquisition/disposition	Aug. 24, 2012
Attributable interest	100.00%
StealthCo, Inc. [Member]
Name of consolidated subsidiary or entity	StealthCo, Inc. ("StealthCo")
State or other jurisdiction of incorporation or organization	The State of Illinois
Date of incorporation or formation	Mar. 18, 2014
Attributable interest	100.00%
Psoria Development Company LLC. [Member]
Name of consolidated subsidiary or entity	Psoria Development Company LLC. ("PDC")
State or other jurisdiction of incorporation or organization	The State of Illinois
Date of incorporation or formation	Jan. 15, 2015
Date of acquisition/disposition	Nov. 15, 2018
Attributable interest	50.00%
NEO Phototherapy LLC [Member]
Name of consolidated subsidiary or entity	NEO Phototherapy LLC ("NEO")
State or other jurisdiction of incorporation or organization	The State of Illinois
Date of incorporation or formation	Dec. 31, 2018
Attributable interest	50.50%

XML 34 R23.htm IDEA: XBRL DOCUMENT

Loans Payable from Officers and Shareholders (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2018
Loans payable from officers and shareholders	$ 126,000		$ 66,000
Proceeds from short term debt	60,000	$ 30,500
Unsecured Loans [Member]
Loans payable from officers and shareholders	$ 126,000		$ 66,000
Debt instrument, interest rate, stated percentage	8.00%
Debt instrument, payment terms	due one year from the date of issuance
Unsecured Loans [Member] \| Officers and Directors [Member]
Proceeds from short term debt	$ 60,000

XML 35 R24.htm IDEA: XBRL DOCUMENT

Convertible Note Agreements - Schedule of Convertible Notes Payable (Details) - USD ($)

Dec. 31, 2018

Sep. 30, 2018

Debt discount - unamortized balance

$ (21,389)

$ (72,078)

Convertible note payable, net

88,611

202,922

Convertible Note Payable One [Member]

Convertible note payable

^[1]

165,000

Convertible Note Payable Two [Member]

Convertible note payable

^[2]

$ 110,000

[1]

On March 5, 2018, the Company entered into a Convertible Note Payable Agreement with an individual under which the Company borrowed $165,000. Net proceeds received by the Company under the agreement after payment of a $15,000 fee to the lender was $150,000. In connection with the agreement, the Company issued the individual 300,000 restricted shares of its common stock with a fair value of $48,000 and warrants to purchase 660,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.20 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90th day from the issue date into the Company's common stock at the fixed conversion price of $0.10 per share. The note matures in October 2018, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days' prior written notice. The note is currently past due. The Company calculated the related fair value of the warrants issued to the noteholder to be $55,032 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company's calculation, it was determined that a beneficial conversion feature existed amounting to $94,968 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $165,000 relating to the $15,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount). During the three months ended December 31, 2018, the individual converted $165,000 of the convertible note payable and $8,783 of accrued interest into 2,482,441 shares of the Company's common stock. During the three months ended December 31, 2018, the Company amortized the remaining $3,837 of debt discount, leaving no unamortized balance at December 31, 2018. During the three months ended December 31, 2018, the Company amended the terms of the agreement by extending the maturity date to January 2019 and reducing the conversion price to $0.07 per share, from $0.10 per share. The reduction of the conversion price caused the Company to issue an additional 744,732 shares, which on the conversion dates had a combined total fair value of $51,434, which was recorded a financing cost during the three months ended December 31, 2018.

[2]

On July 11, 2018, the Company entered into another Convertible Note Payable Agreement with the same individual under which the Company borrowed an additional $110,000. Net proceeds received by the Company under the agreement after payment of a $10,000 fee to the lender was $100,000. In connection with the agreement, the Company issued the individual 200,000 restricted shares of its common stock with a fair value of $36,000 and warrants to purchase 440,000 shares of its common stock, which vested upon grant. The warrants expire five years from the date of grant and have an exercise price of $0.18 per share. The note payable accrues interest at eight percent per annum, is unsecured and is convertible at any time after the 90th day from the issue date into the Company's common stock at the fixed conversion price of $0.15 per share. The note matures in February 2019, but may be extended at the option of the individual. The Company may prepay the note at any time immediately following the issue date upon seven days' prior written notice. The note is currently past due. The Company calculated the related fair value of the warrants issued to the noteholder to be $66,440 using a Black Scholes Merton option pricing model and performing a relative value calculation. The Company then made a calculation to determine if a beneficial conversion feature (BCF) existed. The beneficial conversion was based upon the effective conversion price based on the proceeds received that were allocated to the convertible instrument. Based upon the Company's calculation, it was determined that a beneficial conversion feature existed amounting to $33,560 and was recorded as a debt discount. As such the Company recognized a debt discount at the date of issuance in the aggregate amount of $110,000 relating to the $10,000 fees paid to the lender, the relative value of the warrants and the BCF. The note discount is being amortized over the term of the note and the unamortized portion is recognized as a reduction to the carrying amount of the Convertible note (a valuation debt discount). As of September 30, 2018, the Company had amortized $41,759 of debt discount, leaving an unamortized balance of $68,241 at September 30, 2018. During the three months ended December 31, 2018, the Company amortized $46,852 of debt discount, leaving an unamortized balance of $21,389 at December 31, 2018.

XML 36 R25.htm IDEA: XBRL DOCUMENT

Convertible Note Agreements - Schedule of Convertible Notes Payable (Details) (Parenthetical) - USD ($)				3 Months Ended
	Sep. 30, 2018	Jul. 11, 2018	Mar. 05, 2018	Dec. 31, 2018	Dec. 31, 2017
Number of warrants issued to purchase shares				284,714
Warrant term				5 years
Warrant exercise price				$ 0.15
Debt instrument, unamortized discount	$ 72,078			$ 21,389
Amortization of debt discount				46,852
Fair value of additional shares issued upon conversions of note payable				$ 51,434
Convertible Note Payable Agreement One [Member]
Debt instrument maturity date description				January 2019
Conversion of debt into common stock				$ 165,000
Accrued interest				$ 8,783
Conversion of debt into common stock, shares				2,482,441
Amortization of debt discount				$ 3,837
Reducing conversion price per shares				$ 0.07
Additional number of shares issued for conversion debt				744,732
Fair value of additional shares issued upon conversions of note payable				$ 51,434
Convertible Note Payable Agreement One [Member] \| Individual [Member]
Debt instrument, face amount			$ 165,000
Lender fee			15,000
Proceeds from convertible notes payable			$ 150,000
Number of restricted shares issued			300,000
Restricted shares of common stock at fair value			$ 48,000
Number of warrants issued to purchase shares			660,000
Warrant term			5 years
Warrant exercise price			$ 0.20
Debt instrument, collateral			unsecured
Debt instrument, convertible, terms of conversion feature			Convertible at any time after the 90th day from the issue date into the Company's common stock at the fixed conversion price of $0.10 per share.
Debt instrument conversion price			$ 0.10
Debt instrument maturity date description			October 2018
Fair value of warrants			$ 55,032
Debt instrument, unamortized discount			$ 94,968
Convertible Note Payable Agreement Two [Member] \| Individual [Member]
Debt instrument, face amount		$ 110,000
Lender fee		10,000
Proceeds from convertible notes payable		$ 100,000
Number of restricted shares issued		200,000
Restricted shares of common stock at fair value		$ 36,000
Number of warrants issued to purchase shares		440,000
Warrant term		5 years
Warrant exercise price		$ 0.18
Debt instrument, collateral		unsecured
Debt instrument, convertible, terms of conversion feature		Convertible at any time after the 90th day from the issue date into the Company's common stock at the fixed conversion price of $0.15 per share.
Debt instrument conversion price		$ 0.15
Debt instrument maturity date description		February 2019
Fair value of warrants		$ 66,440
Debt instrument, unamortized discount	68,241	$ 33,560
Amortization of debt discount	$ 41,759

XML 37 R26.htm IDEA: XBRL DOCUMENT

Shareholders' Equity (Details Narrative) - USD ($)	3 Months Ended
Shareholders' Equity (Details Narrative) - USD ($)	Dec. 31, 2018	Sep. 30, 2018	Jan. 02, 2018	Jun. 30, 2010
Common stock issued for cash	$ 10,000
Common stock issued for cash, shares	142,857
Number of warrants issued to purchase common shares	284,714
Warrant exercise price	$ 0.15
Warrant term	5 years
Number of stock issued for service	120,000
Number of stock issued for service, amount	$ 9,600
Common stock, shares authorized	185,000,000	185,000,000	30,000,000	7,500,000
Number options to purchase of common stock	62,500
Options exercisable term	2 years 9 months 22 days
Stock based compensation	$ 85,951
Unvested compensation	$ 614,914
Stock Option [Member] \| 2010 Plan [Member]
Shares of stock options remaining available for issuance	11,990,833
Warrant [Member]
Number of warrants issued to purchase common shares	284,714
Warrant exercise price	$ 0.15
Warrant term	5 years
Aggregate intrinsic value for warrant shares outstanding
Employee [Member]
Number options to purchase of common stock	62,500
Fair value of stock options	$ 3,206
Stock option exercise price per share	$ 0.06
Options exercisable term	5 years

XML 38 R27.htm IDEA: XBRL DOCUMENT

Shareholders' Equity - Schedule of Assumptions Used for Options Granted (Details)	3 Months Ended
	Dec. 31, 2018 $ / shares
Equity [Abstract]
Exercise price	$ 0.06
Expected dividends	0.00%
Expected volatility	126.80%
Risk free interest rate	2.85%
Expected life of options	2 years 6 months

XML 39 R28.htm IDEA: XBRL DOCUMENT

Shareholders' Equity - Schedule of Stock Option Activity (Details)	3 Months Ended
	Dec. 31, 2018 USD ($) $ / shares shares
Number of Option Shares Outstanding, Number, Beginning Balance \| shares	17,946,667
Number of Option Shares Outstanding, Granted \| shares	62,500
Number of Option Shares Outstanding, Cancelled \| shares	(421,429)
Number of Option Shares Outstanding, Exercised \| shares
Number of Option Shares Outstanding, Expired \| shares
Number of Option Shares Outstanding, Number, Ending Balance \| shares	17,587,738
Number of Option Shares Outstanding, Vested and exercisable, Ending Balance \| shares	12,418,095
Number of Option Shares Outstanding, Unvested, Ending Balance \| shares	5,591,072
Weighted Average Exercise Price, Number, Beginning Balance	$ 0.28
Weighted Average Exercise Price, Granted	0.06
Weighted Average Exercise Price, Cancelled	0.19
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Expired
Weighted Average Exercise Price, Number, Ending Balance	0.28
Weighted Average Exercise Price, Vested and exercisable, Ending Balance	0.34
Weighted Average Exercise Price, Unvested, Ending Balance	$ 0.15
Fair Value at Date of Grant, Number, Beginning Balance \| $	$ 3,244,755
Fair Value at Date of Grant, Granted \| $	3,206
Fair Value at Date of Grant, Cancelled \| $
Fair Value at Date of Grant, Exercised \| $
Fair Value at Date of Grant, Expired \| $
Fair Value at Date of Grant, Number, Ending Balance \| $	3,247,961
Fair Value at Date of Grant, Vested and exercisable, Ending Balance \| $	2,153,024
Fair Value at Date of Grant, Unvested, Ending Balance \| $	$ 1,094,937
Minimum [Member]
Weighted Average Exercise Price, Number, Beginning Balance	$ 0.10
Weighted Average Exercise Price, Granted
Weighted Average Exercise Price, Cancelled
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Expired
Weighted Average Exercise Price, Number, Ending Balance	0.06
Weighted Average Exercise Price, Vested and exercisable, Ending Balance	0.06
Weighted Average Exercise Price, Unvested, Ending Balance	0.14
Maximum [Member]
Weighted Average Exercise Price, Number, Beginning Balance	2.00
Weighted Average Exercise Price, Granted	0.06
Weighted Average Exercise Price, Cancelled	0.19
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Expired
Weighted Average Exercise Price, Number, Ending Balance	2.00
Weighted Average Exercise Price, Vested and exercisable, Ending Balance	2.00
Weighted Average Exercise Price, Unvested, Ending Balance	$ 0.19

XML 40 R29.htm IDEA: XBRL DOCUMENT

Shareholders' Equity - Schedule of Outstanding and Exercisable Options by Exercise Price Range (Details) - $ / shares	3 Months Ended
	Dec. 31, 2018	Sep. 30, 2018
Range of Exercise Prices, Lower Limit	$ 0.06
Range of Exercise Prices, Upper Limit	$ 2.00
Number of Options, Outstanding, Number	17,587,738	17,946,667
Number of Options, Outstanding, Weighted Average Remaining Contractual Term	3 years 2 months 23 days
Number of Options, Outstanding, Weighted Average Exercise Price	$ 0.28	$ 0.28
Number of Options, Exercisable, Number	12,418,095
Number of Options, Exercisable, Weighted Average Remaining Contractual Term	2 years 9 months 22 days
Number of Options, Exercisable, Weighted Average Exercise Price	$ 0.34
Exercise Price Range One [Member]
Range of Exercise Prices, Lower Limit	0.06
Range of Exercise Prices, Upper Limit	$ 0.39
Number of Options, Outstanding, Number	14,075,238
Number of Options, Outstanding, Weighted Average Remaining Contractual Term	3 years 9 months 14 days
Number of Options, Outstanding, Weighted Average Exercise Price	$ 0.15
Number of Options, Exercisable, Number	8,905,595
Number of Options, Exercisable, Weighted Average Remaining Contractual Term	3 years 6 months 10 days
Number of Options, Exercisable, Weighted Average Exercise Price	$ 0.15
Exercise Price Range Two [Member]
Range of Exercise Prices, Lower Limit	0.40
Range of Exercise Prices, Upper Limit	$ 0.99
Number of Options, Outstanding, Number	2,112,500
Number of Options, Outstanding, Weighted Average Remaining Contractual Term	3 months 22 days
Number of Options, Outstanding, Weighted Average Exercise Price	$ 0.40
Number of Options, Exercisable, Number	2,112,500
Number of Options, Exercisable, Weighted Average Remaining Contractual Term	3 months 22 days
Number of Options, Exercisable, Weighted Average Exercise Price	$ 0.40
Exercise Price Range Three [Member]
Range of Exercise Prices, Lower Limit	1.00
Range of Exercise Prices, Upper Limit	$ 1.99
Number of Options, Outstanding, Number	750,000
Number of Options, Outstanding, Weighted Average Remaining Contractual Term	2 years
Number of Options, Outstanding, Weighted Average Exercise Price	$ 1.00
Number of Options, Exercisable, Number	750,000
Number of Options, Exercisable, Weighted Average Remaining Contractual Term	2 years
Number of Options, Exercisable, Weighted Average Exercise Price	$ 1.00
Exercise Price Range Four [Member]
Range of Exercise Prices, Upper Limit	$ 2.00
Number of Options, Outstanding, Number	650,000
Number of Options, Outstanding, Weighted Average Remaining Contractual Term	2 years
Number of Options, Outstanding, Weighted Average Exercise Price	$ 2.00
Number of Options, Exercisable, Number	650,000
Number of Options, Exercisable, Weighted Average Remaining Contractual Term	2 years
Number of Options, Exercisable, Weighted Average Exercise Price	$ 2.00

XML 41 R30.htm IDEA: XBRL DOCUMENT

Shareholders' Equity - Schedule of Warrant Activity (Details) - Warrant [Member]	3 Months Ended
	Dec. 31, 2018 USD ($) $ / shares shares
Number of Warrant Shares Outstanding, Number, Beginning Balance \| shares	67,907,728
Number of Warrant Shares Outstanding, Granted \| shares	284,714
Number of Warrant Shares Outstanding, Cancelled \| shares
Number of Warrant Shares Outstanding, Exercised \| shares
Number of Warrant Shares Outstanding, Expired \| shares
Number of Warrant Shares Outstanding, Number, Ending Balance \| shares	68,192,442
Number of Warrant Shares Outstanding, Vested and exercisable, Ending Balance \| shares	68,192,442
Number of Warrant Shares Outstanding, Unvested, Ending Balance \| shares
Weighted Average Exercise Price, Number, Beginning Balance	$ 0.17
Weighted Average Exercise Price, Granted	0.15
Weighted Average Exercise Price, Cancelled
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Expired
Weighted Average Exercise Price, Number, Ending Balance	0.17
Weighted Average Exercise Price, Vested and exercisable, Ending Balance	0.17
Weighted Average Exercise Price, Unvested, Ending Balance
Fair Value at Date of Issuance, Number, Beginning Balance \| $	$ 3,434,560
Fair Value at Date of Issuance, Granted \| $	17,803
Fair Value at Date of Issuance, Cancelled \| $
Fair Value at Date of Issuance, Exercised \| $
Fair Value at Date of Issuance, Expired \| $
Fair Value at Date of Issuance, Number, Ending Balance \| $	3,452,363
Fair Value at Date of Issuance, Vested and exercisable, Ending Balance \| $	3,452,363
Fair Value at Date of Issuance, Unvested, Ending Balance \| $
Minimum [Member]
Weighted Average Exercise Price, Number, Beginning Balance	$ 0.12
Weighted Average Exercise Price, Number, Ending Balance	0.12
Weighted Average Exercise Price, Vested and exercisable, Ending Balance	0.12
Weighted Average Exercise Price, Unvested, Ending Balance
Maximum [Member]
Weighted Average Exercise Price, Number, Beginning Balance	0.67
Weighted Average Exercise Price, Granted	0.15
Weighted Average Exercise Price, Cancelled
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Expired
Weighted Average Exercise Price, Number, Ending Balance	0.67
Weighted Average Exercise Price, Vested and exercisable, Ending Balance	0.67
Weighted Average Exercise Price, Unvested, Ending Balance

XML 42 R31.htm IDEA: XBRL DOCUMENT

Shareholders' Equity - Schedule of Outstanding and Exercisable Warrants by Exercise Price Range (Details) - $ / shares	3 Months Ended
	Dec. 31, 2018	Sep. 30, 2018
Range of Exercise Prices, Lower Limit	$ 0.06
Range of Exercise Prices, Upper Limit	2.00
Exercise Price Range One [Member]
Range of Exercise Prices, Lower Limit	0.06
Range of Exercise Prices, Upper Limit	0.39
Exercise Price Range Two [Member]
Range of Exercise Prices, Lower Limit	0.40
Range of Exercise Prices, Upper Limit	0.99
Exercise Price Range Three [Member]
Range of Exercise Prices, Lower Limit	1.00
Range of Exercise Prices, Upper Limit	1.99
Warrant [Member]
Range of Exercise Prices, Lower Limit	0.12
Range of Exercise Prices, Upper Limit	$ 0.67
Number of Warrants, Outstanding, Number	68,192,442	67,907,728
Number of Warrants, Outstanding, Weighted Average Remaining Contractual Term	2 years 5 months 16 days
Number of Warrants, Outstanding, Weighted Average Exercise Price	$ 0.17
Number of Warrants, Exercisable, Number	68,192,442
Number of Warrants, Exercisable, Weighted Average Remaining Contractual Term	2 years 5 months 16 days
Number of Warrants, Exercisable, Weighted Average Exercise Price	$ 0.17
Warrant [Member] \| Exercise Price Range One [Member]
Range of Exercise Prices, Lower Limit	0.12
Range of Exercise Prices, Upper Limit	$ 0.20
Number of Warrants, Outstanding, Number	59,279,384
Number of Warrants, Outstanding, Weighted Average Remaining Contractual Term	2 years 7 months 10 days
Number of Warrants, Outstanding, Weighted Average Exercise Price	$ 0.15
Number of Warrants, Exercisable, Number	59,279,384
Number of Warrants, Exercisable, Weighted Average Remaining Contractual Term	2 years 7 months 10 days
Number of Warrants, Exercisable, Weighted Average Exercise Price	$ 0.15
Warrant [Member] \| Exercise Price Range Two [Member]
Range of Exercise Prices, Lower Limit	0.21
Range of Exercise Prices, Upper Limit	$ 0.49
Number of Warrants, Outstanding, Number	8,574,570
Number of Warrants, Outstanding, Weighted Average Remaining Contractual Term	1 year 4 months 9 days
Number of Warrants, Outstanding, Weighted Average Exercise Price	$ 0.28
Number of Warrants, Exercisable, Number	8,574,570
Number of Warrants, Exercisable, Weighted Average Remaining Contractual Term	1 year 4 months 9 days
Number of Warrants, Exercisable, Weighted Average Exercise Price	$ 0.28
Warrant [Member] \| Exercise Price Range Three [Member]
Range of Exercise Prices, Lower Limit	0.50
Range of Exercise Prices, Upper Limit	$ 0.67
Number of Warrants, Outstanding, Number	338,488
Number of Warrants, Outstanding, Weighted Average Remaining Contractual Term	3 months 19 days
Number of Warrants, Outstanding, Weighted Average Exercise Price	$ 0.68
Number of Warrants, Exercisable, Number	338,488
Number of Warrants, Exercisable, Weighted Average Remaining Contractual Term	3 months 19 days
Number of Warrants, Exercisable, Weighted Average Exercise Price	$ 0.68

XML 43 R32.htm IDEA: XBRL DOCUMENT

Segment Reporting - Schedule of Assets of Reportable Segments (Details) - USD ($)	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017
Cash	$ 134,750	$ 4,210	$ 23,594	$ 29,369
Total current assets	134,750	5,760
Property and equipment, net	2,355	2,619
Other assets	16,760	16,760
Total other assets	19,115	19,379
TOTAL ASSETS	153,865	$ 25,139
Corporate [Member]
Cash	36,996
Total current assets	36,996
Property and equipment, net
Other assets	15,000
Total other assets	15,000
TOTAL ASSETS	51,996
Medical Devices [Member]
Cash	97,307
Total current assets	97,307
Property and equipment, net
Other assets	1,760
Total other assets	1,760
TOTAL ASSETS	99,067
Authentication and Encryption [Member]
Cash	447
Total current assets	447
Property and equipment, net	2,355
Other assets
Total other assets	2,355
TOTAL ASSETS	$ 2,802

- Definition

Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold or consumed after one year or beyond the normal operating cycle, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(11))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(12))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(15))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(17))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(13))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(16))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(14))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02(10))
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

+ Details

XML 44 R33.htm IDEA: XBRL DOCUMENT

Segment Reporting - Schedule of Operations of Reportable Segments (Details) - USD ($)	3 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 30, 2017
Total Sales	$ 12,875	$ 26,500
Cost of goods sold	7,725	16,992
Gross profit	5,150	9,508
Operating expenses	475,864	334,163
Loss from operations	(470,714)	(324,655)
Trade [Member]
Total Sales	7,675	15,500
Consulting Services [Member]
Total Sales	5,200	11,000	$ 11,000
Corporate [Member]
Total Sales
Cost of goods sold
Gross profit
Operating expenses	254,429	161,405
Loss from operations	(254,429)	(161,405)
Corporate [Member] \| Trade [Member]
Total Sales
Corporate [Member] \| Consulting Services [Member]
Total Sales
Medical Devices [Member]
Total Sales
Cost of goods sold
Gross profit
Operating expenses	119,720	92,672
Loss from operations	(119,720)	(92,672)
Medical Devices [Member] \| Trade [Member]
Total Sales
Medical Devices [Member] \| Consulting Services [Member]
Total Sales
Authentication and Encryption [Member]
Total Sales	12,875	26,500
Cost of goods sold	7,725	16,992
Gross profit	5,150	9,508
Operating expenses	101,715	80,086
Loss from operations	(96,565)	(70,578)
Authentication and Encryption [Member] \| Trade [Member]
Total Sales	7,675	15,500
Authentication and Encryption [Member] \| Consulting Services [Member]
Total Sales	$ 5,200	$ 11,000

XML 45 R34.htm IDEA: XBRL DOCUMENT

Legal Matters (Details Narrative)	Dec. 31, 2018 USD ($)
CEO [Member] \| Minimum [Member]
Trading expense	$ 130,000