Wellness Center USA, Inc. - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 SECTION 906 CERTIFICATION - Wellness Center USA, Inc.	f10q063014_ex32z1.htm
EX-31.1 - EXHIBIT 31.1 SECTION 302 CERTIFICATION - Wellness Center USA, Inc.	f10q063014_ex31z1.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 June 30, 2014

.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.)

1014 E Algonquin Rd, Ste. 111, Schaumburg, IL, 60173

(Address of Principal Executive Offices)


	(847) 925-1885
(Issuer Telephone number)


	Not Applicable
(Former name or former address, if changed since last report)

Copies of communication to:

Ronald P. Duplack, Esq.

Rieck and Crotty, P.C.

55 West Monroe Street, Suite 3625, Chicago, IL 60603

Telephone (312) 726-4646 Fax (312) 726-0647

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	. (Do not check if a smaller reporting company)	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 .

State the number of shares issued and outstanding of each of the issuer’s classes of common equity, as of June 30, 2014: 50,758,985 shares of issued common stock.

WELLNESS CENTER USA, INC.

FORM 10-Q

June 30, 2014

INDEX


PART I¾FINANCIAL INFORMATION

Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	78
Item 3	Quantitative and Qualitative Disclosures About Market Risk	86
Item 4.	Control and Procedures	86

PART II¾OTHER INFORMATION

Item 1	Legal Proceedings	87
Item 1A	Risk Factors	87
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures.	87
Item 5.	Other Information	87
Item 6.	Exhibits	87

SIGNATURE		88

PART I-- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Wellness Center USA, Inc.

June 30, 2014 and 2013

Index to the Consolidated Financial Statements


Contents	Page(s)

Consolidated Balance Sheets at June 30, 2014 (Unaudited) and September 30, 2013	5

Consolidated Statements of Operations for the Nine Months and Three Months Ended June 30, 2014 and 2013 (Unaudited)	7

Consolidated Statement of Stockholders’ Equity for the Interim Period Ended June 30, 2014 (Unaudited) and for the Fiscal Year Ended September 30, 2013	8

Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2014 and 2013 (Unaudited)	11

Notes to the Consolidated Financial Statements (Unaudited)	13

Wellness Center USA, Inc.

Consolidated Balance Sheets


			June 30, 2014		September 30, 2013
			(Unaudited)

ASSETS
Current Assets
	Cash		$	56,793	$	499,246
	Accounts receivable			15,968		4,472
	Inventories			270,135		135,485
	Current maturity of note receivable - Chairman and CEO			135,233		83,333
	Prepayments and other current assets			23,794		7,475

		Total current assets		501,923		730,011

Property and Equipment
	Property and equipment			120,825		117,805
	Accumulated depreciation			(64,772)		(43,300)
		Property and equipment, net		56,053		74,505

Exclusive Licenses
	Exclusive licenses and patents			206,497		5,000
	Accumulated amortization			(8,722)		(688)
		Exclusive licenses, net		197,775		4,312

Acquired Technologies
	Acquired technologies			2,420,000		2,420,000
	Accumulated amortization			(219,118)		(132,433)
	Accumulated impairment			(297,920)		-
		Acquired technologies, net		1,902,962		2,287,567

Non-Compete Agreements
	Non-compete agreements			240,000		240,000
	Accumulated amortization			(121,660)		(79,162)
	Accumulated impairment			(53,340)		-
		Non-compete agreements, net		65,000		160,838

Trademarks
	Trademarks			740,000		740,000
	Accumulated amortization			(185,380)		(111,766)
	Accumulated impairment			(89,620)		-
		Trademarks, net		465,000		628,234

Website Development Costs
	Website development costs			22,809		22,809
	Accumulated amortization			(13,277)		(8,826)
		Website development costs, net		9,532		13,983

Goodwill
	Goodwill			5,784,648		4,584,648
	Accumulated impairment			(2,868,045)		-
		Goodwill, net		2,916,603		4,584,648



Other assets
	Note receivable - Chairman and CEO, net of current maturity				87,767		166,667
	Security deposits				38,699		38,699
		#	Total other assets		126,466		205,366

			Total assets	$	6,241,314	$	8,689,464

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
	Accounts payable			$	162,612	$	39,749
	Accounts payable - related party				67,153		67,153
	Accrued interest - related parties				11,107		9,445
	Accrued payroll - officers				75,000		-
	Accrued warranty				12,000		12,000
	Credit cards payable				44,187		60,866
	Current portion of deferred rent				11,363		11,363
	Advances from related parties				233,568		224,736
	Customer deposits				3,128		-
	Loan payable - others				7,000		-
	Notes payable - JMJ				201,388		-
	Note payable - related party				37,139		37,139
	Accrued expenses and other current liabilities				116,823		57,062

		Total current liabilities			982,468		519,513

Long-term Liabilities
#	Deferred rent, net of current portion				9,477		18,000
#	Long-term notes payable - officers				136,448		140,737

		Total long-term liabilities			145,925		158,737

			Total liabilities		1,128,393		678,250

Commitments and Contingencies

Stockholders' Equity
	Common stock par value $0.001: 75,000,000 shares authorized;
		50,758,984 and 45,110,670 shares issued and outstanding, respectively			50,759		45,111
	Additional paid-in capital				13,395,041		11,340,244
	Accumulated deficit				(8,332,879)		(3,374,141)

		Total stockholders' equity			5,112,921		8,011,214

		Total liabilities and stockholders' equity		$	6,241,314	$	8,689,464

See accompanying notes to the consolidated financial statements.

Wellness Center USA, Inc.

Consolidated Statements of Operations


			For the Nine Months		For the Three Months		For the Nine Months		For the Three Months
			Ended		Ended		Ended		Ended
			June 30, 2014		June 30, 2014		June 30, 2013		June 30, 2013
			(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Revenue
	Client services		$	102,156	$	-	$	173,489	$	75,611
	Management fee			70,000		70,000		-		-
	Sales			3,606		576		1,546		1,546

#		Total revenue		175,762		70,576		175,035		77,157

Cost of goods sold				2,777		539		1,770		1,770

Gross margin				172,985		70,037		173,265		75,387

Operating expenses
	Consulting fees			193,759		106,564		569,075		(38,220)
	Professional fees			175,709		90,391		213,045		52,693
	Rent expense - related party			19,021		6,358		18,910		6,512
	Rent expense			144,182		50,863		130,113		40,605
	Research and development			7,741		7,300		6,394		3,475
	Salaries - officers			544,940		100,000		487,600		153,946
	Salaries - others			201,163		51,160		129,951		44,611
	Selling expenses			38,922		20,144		65,836		29,037
	Depreciation and amortization			211,354		59,963		248,029		98,386
	Impairment of intangible assets and goodwill			3,308,925		-		-		-
	General and administrative expenses			288,915		74,294		298,966		145,493

		Total operating expenses		5,134,631		567,037		2,167,919		536,538

Loss from operations				(4,961,646)		(497,000)		(1,994,654)		(461,151)

Other (income) epxense
	Interest expense			-		-		6,286		2,000
	Interest expense - related party			1,662		-		3,968		1,296
	Other (income) expense			(4,570)		-		6,120		2,016

		Other (income) expense, net		(2,908)		-		108,004		96,942

Loss before income tax provision				(4,958,738)		(497,000)		(2,102,658)		(558,093)

Income tax provision				-		-		-		-

Net loss			$	(4,958,738)	$	(497,000)	$	(2,102,658)	$	(558,093)

#	Net loss per common share - basic and diluted		$	(0.10)	$	(0.01)	$	(0.06)	$	(0.01)

	Weighted Average Common Shares Outstanding - basic and diluted			47,761,292		50,786,682		35,786,670		39,867,487

See accompanying notes to the consolidated financial statements.

Wellness Center USA, Inc.

Statement of Stockholders' Equity

For the Interim Period Ended June 30, 2014 (Unaudited) and for the Fiscal Year Ended September 30, 2013


		Common Stock Par Value $0.001
		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity

Balance, September 30, 2012		30,978,237	$	30,978		7,604,440	$	(557,111)	$	7,078,307

Common shares issued to an IR firm for
	services on October 1, 2012 valued at $0.50 per share	35,000		35		17,465		-		17,500

Common shares issued to an IR firm for
	services on November 1, 2012 valued at $0.36 per share	35,000		35		12,565		-		12,600

Issuance of common shares for cash at $0.10
	per share on November 29, 2012	1,447,550		1,448		143,307		-		144,755

Conversion of accured interest to the common
	shares at $0.10 per share on November 29, 2012	12,500		13		1,237		-		1,250

Issuance of common shares and warrants for
	cash at $0.30 per unit during December, 2012	520,999		521		155,779		-		156,300

Exercise of warrants with exercise price of
	$0.01 per share during the quarter ended December 31, 2012	1,777,000		1,777		15,993		-		17,770

Common shares issued to consultant for future
	services on March 13, 2012 earned during the quarter ended December 31, 2012 valued at $0.30 per share	12,500		13		3,737		-		3,750

Warrants issued to consultant for future
	services on March 13, 2012 earned during the quarter ended December 31, 2012 valued at $1.10 per share	-		-		3,565		-		3,565

Issuance of common shares for IR services
	on February 26, 2013 valued at $0.30 per share	550,000		550		164,450		-		165,000

Issuance of warrants for IR services
	on February 26, 2013 valued at $0.30 per share	-		-		47,490		-		47,490

Issuance of common shares for financing
	services on March 17, 2013 valued at $0.30 per share	600,000		600		179,400		-		180,000

Issuance of warrants for financing services
	on March 17, 2013 valued at $0.30 per share	-		-		63,080		-		63,080

Issuance of common shares and warrants for
	cash at $0.30 per unit during the quarter ended March 31, 2013	3,096,603		3,097		925,884		-		928,981



Exercise of warrants with an exercise price of
	$0.01 per share during the quarter ended March 31, 2013	80,000	80	720	-	800

Common shares issued to consultant for future
	services on March 13, 2012 earned during the quarter ended March 31, 2013 valued at $0.30 per share	12,500	13	3,737	-	3,750

Warrants issued to consultant for future
	services on March 13, 2012 earned during the quarter ended March 31, 2013 valued at $1.10 per share	-	-	3,570	-	3,570

Common shares issued for consulting services
	on April 9, 2013 valued at $0.30 per share	50,000	50	14,950	-	15,000

Common shares issued for chartible
	contribution on April 9, 2013 valued at $0.30 per share	30,000	30	8,970	-	9,000

Issuance of warrants for financing services
	on April 19, 2013 valued at $0.30 per share	-	-	9,289	-	9,289

Cashless exercise of warrants with exercise
	price of $0.30 per share exercised on April 19, 2013	59,201	59	17,701	-	17,760

Cashless exercise of warrants
	exercised on April 19, 2013	(14,558)	(15)	(17,745)	-	(17,760)

Exercise of warrants with an exercise price of
	$0.01 per share exercised on May 7, 2013	100,000	100	900	-	1,000

Issuance of common shares and warrants for
	cash at $0.50 per unit on May 9, 2013	40,000	40	19,960	-	20,000

Exercise of warrants with an exercise price of
	$0.45 per share exercised on May 29, 2013	100,001	100	44,900	-	45,000

Issuance of common shares and warrants for
	cash at $0.30 per unit during the quarter ending June 30, 2013	601,668	601	179,899	-	180,500

Issuance of common shares and warrants for
	cash at $0.40 per share during the quarter ending September 30, 2013	4,121,250	4,121	1,644,379	-	1,648,500

Finder's fees paid in connection with the
	private placements during the quarter ending September 30, 2013	-	-	(148,550)	-	(148,550)

Exercise of warrants with an exercise price of
	$0.01 per share on July 13 and September 13, 2013	87,000	87	783	-	870

Common shares issued for employee services
	on July 3, 2013 valued at $0.10 per share	244,260	244	24,182	-	24,426

Issuance of options for advisory services
	on September 6, 2013	-	-	1,491	-	1,491

Common shares issued per consulting
	agreement valued at $0.40 per share during the quarter ending September 30, 2013	80,625	81	32,169	-	32,250



Issuance of common shares and warrants for
	conversion of convertible notes at $0.30 per share on September 27, 2013	453,334		453		135,547		-		136,000

Forgiveness of debt by stockholder						25,000		-		25,000

Net loss								(2,817,030)		(2,817,030)

Balance, September 30, 2013		45,110,670		45,111		11,340,244		(3,374,141)		8,011,214

Common shares issued per consulting
	agreement valued at $0.40 per share during the quarter ending December 31, 2013	20,000		20		7,980		-		8,000

Finder fees paid in connection with the private
	placements during the quarter ending September 30, 2013	-		-		(9,850)		-		(9,850)

Issuance of common shares and warrants for
	cash at $0.30 per share in January, 2014	396,667		397		118,603		-		119,000

Issuance of common shares and warrants for
	cash at $0.35 per share in January, 2014	228,572		228		79,772		-		80,000

Issuance of common shares for acquisition of
	NPC valued at $0.24 per share on February 28, 2014	5,000,000		5,000		1,195,000		-		1,200,000

Issuance of options for director services
	on February 28, 2014					194,940		-		194,940

Issuance of common shares and warrants for
	cash at $0.45 per share on March 28, 2014	150,000		150		67,350		-		67,500

Issuance of common shares for SCI assets
	acquisition and debt settlement valued at $0.665 per share on April 4, 2014	427,103		427		283,596		-		284,023

Issuance of warrants for SCI assets acquisition
	and debt settlement on April 4, 2014	-		-		43,082		-		43,082

Shares returned to treasury per the separation
	agreement with the former board of director on April 11, 2014	(751,250)		(751)		751		-		-

Common shares issued per consulting
	agreement valued at $0.40 per share for the period from November 2013 to April 2014	120,000		120		47,880		-		48,000

Issuance of common shares and warrants for
	cash at $0.45 per share in April and May, 2014	57,222		57		25,693		-		25,750

Net loss								(4,958,738)		(4,958,738)

Balance, June 30, 2014		50,758,984	$	50,759	$	13,395,041	$	(8,332,879)	$	5,112,921

See accompanying notes to the consolidated financial statements.

Wellness Center USA, Inc.

Consolidated Statements of Cash Flows


			For the Nine Months		For the Nine Months
			Ended		Ended
			June 30, 2014		June 30, 2013
			(Unaudited)		(Unaudited)

Cash flows from operating activities:
Net loss			$	(4,958,738)	$	(2,102,658)
Adjustments to reconcile net loss to net cash used in operating activities
	Common shares issued for compensation and services			56,000		462,190
	Warrants and options issued for compensation and services			194,940		126,994
	Amortization of original interest discount			1,388		-
	Depreciation expense			21,472		23,481
	Amortization expense			215,282		224,548
	Impairment of intangible assets and goodwill			3,308,925		-
	Changes in operating assets and liabilities:
		Accounts receivable		(11,496)		607
		Inventories		(47,528)		(439,282)
		Prepayments and other current assets		16,178		(176,976)
		Accounts payable		118,536		274,358
		Accrued interest - related party		1,662		3,968
		Accrued payroll - officers		75,000		94,194
		Credit cards payable		(16,679)		(13,885)
		Deferred rent		(8,523)		(8,522)
		Sales tax payable		-		(2,940)
		Customer deposits		7,455		-
		Accrued expenses and other current liabilities		59,761		75,174

Net cash used in operating activities				(966,365)		(1,458,749)

Cash flows from investing activities:
	Cash acquired from business acquisitions			2,969		-
	Purchases of property and equipment			-		(16,598)
	Investment in website development costs			-		(5,000)

Net cash provided by (used in) investing activities				2,969		(21,598)

Cash flows from financing activities:
	Collection of note receivable - Chairman and CEO			27,000		-
	Advances from (repayments to) related parties			8,832		(54,173)
	Loan payable - others			7,000		-
	Proceeds from notes payable			200,000		(20,000)
	Proceeds from convertible notes payable			-		78,000
	Repayments of long-term notes payable - officers			(4,289)		(33,513)
	Proceeds from sale of common stock and warrants for cash, net			282,400		1,376,196
	Proceeds from exercise of warrants			-		64,570

Net cash provided by financing activities				520,943		1,411,080


Net change in cash			(442,453)		(69,267)

Cash at beginning of the reporting period			499,246		116,204

Cash at end of the reporting period		$	56,793	$	46,937

Supplemental disclosure of cash flows information:
	Interest paid	$	-	$	-
	Income tax paid	$	-	$	-

Non cash financing and investing activities:
	Issuance of common stock for acquisition of National Pain Center	$	1,200,000	$	-
	Issuance of common stock and warrants for acquisition of Stealth Mark	$	327,105	$	-

See accompanying notes to the consolidated financial statements.

Wellness Center USA, Inc.

June 30, 2014 and 2013

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1 - Organization and Operations

Wellness Center USA, Inc.

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. Upon consummation of the share exchange agreements with CNS-Wellness Florida, LLC and Psoria-Shield Inc., the Company currently operates in the following business segments: (i) nutritional supplement sales; (ii) treatment of brain-based behavioral health disorders; (iii) distribution of targeted Ultra Violet ("UV") phototherapy devices for dermatology; (iv) management of top-tier medical practices in the interventional and multi-modal pain management sector; and (v) authentication and encryption products and services.

Acquisition of CNS-Wellness Florida, LLC

On May 30, 2012, the Company entered into an Exchange Agreement (“Exchange Agreement”) to acquire all of the limited liability company interests in CNS-Wellness Florida, LLC (“CNS”), a Tampa, Florida-based cognitive neuroscience company, specializing in the treatment of brain-based behavioral health disorders including developmental, emotional and stress-related problems.

On August 2, 2012, the Company consummated the Exchange Agreement and acquired all of the issued and outstanding limited liability company interests in CNS for and in consideration of the issuance of 7.3 million shares of the Company’s common stock pursuant to the Exchange Agreement. The 7.3 million common shares issued in connection with the share exchange represented 32.2% of the 22,704,773 shares of issued and outstanding common stock of the Company as of the closing date of the share exchange under the Exchange Agreement. CNS is now operated as a wholly-owned subsidiary of the Company.

CNS Wellness Florida, LLC, the Successor of Cognitive Neuro Sciences, Inc.

Cognitive Neuro Sciences, Inc. (the ''CNS Predecessor") was incorporated on March 14, 2006 under the laws of the State of Florida. The CNS Predecessor specialized in the treatment of brain-based behavioral health disorders including developmental, emotional and stress-related problems. On May 26, 2009, the stockholders of CNS Predecessor decided to dissolve CNS Predecessor and form a Limited Liability Company (“LLC”) to carry on the business of CNS Predecessor.

CNS was formed on May 26, 2009 under the laws of the State of Florida. The sole purpose of CNS was to carry on the business of CNS Predecessor in the form of an LLC. The assets and liabilities of CNS Predecessor were carried forward to CNS and recorded at the historical cost on the date of conversion.

Suspension of the Operation of CNS Wellness Florida, LLC

As of January 24, 2014 the operation of CNS Wellness Florida, LLC has been suspended. The Company impaired remaining balances of all intangible assets associated with acquisition of CNS as of January 24, 2014 accordingly.

Acquisition of Psoria-Shield Inc.

On June 21, 2012, the Company entered into an Exchange Agreement (“Exchange Agreement”) to acquire all of the issued and outstanding shares of capital stock in Psoria-Shield Inc. (“PSI”), a Tampa, Florida-based developer and manufacturer of targeted Ultra Violet ("UV") phototherapy devices for the treatment of skin diseases, for and in consideration of the issuance of 7,686,797 shares of common stock in the Company.

On August 24, 2012, the Company consummated the share exchange and acquired all of the issued and outstanding shares of stock in PSI for and in consideration of the issuance of 7,686,797 shares of its common stock pursuant to the Exchange Agreement. The 7,686,797 common shares issued in connection with the share exchange represented 25.3% of the 30,391,570 shares of issued and outstanding common stock of the Company as of the closing date of the share exchange under the Exchange Agreement. PSI is now operated as a wholly-owned subsidiary of the Company.

Psoria-Shield Inc.

Psoria-Shield Inc. (“PSI”) was incorporated on June 17, 2009 under the laws of the State of Florida. PSI engages in the business of research and development, manufacturing, and marketing and distribution of Ultra Violet ("UV") phototherapy devices for the treatment of skin diseases.

Acquisition of National Pain Centers, Inc.

On January 28, 2014, the Company entered into an Exchange Agreement (“Exchange Agreement”) to acquire all of the issued and outstanding shares of common stock of National Pain Centers, Inc. ("NPC"), a Nevada holding corporation based in Deer Park, Illinois.

On February 28, 2014, the Company consummated the Exchange Agreement and acquired all of the issued and outstanding shares of common stock of NPC for and in consideration of the issuance of 5,000,000 shares of common stock of the Company pursuant to the Exchange Agreement valued at $0.24 per share or $1,200,000, the relative fair value of the PPM consummated on January 13, 2014 with a relative value of $0.11 per share for the warrants on the $0.35 offering immediately prior to the consummation of the Exchange Agreement, which was recorded as goodwill as NPC is a newly formed entity. NPC is now operated as a wholly-owned subsidiary of the Company.

National Pain Centers, Inc. ("NPC")

National Pain Centers, Inc. ("NPC") was incorporated on January 24, 2014 under the laws of the State of Nevada. NPC engages in management of top-tier medical practices in the interventional and multi-modal pain management sector.

Formation of StealthCo, Inc. and Acquisition of Certain Assets of SMI Holdings, Inc.

On March 18, 2014, the Company formed a wholly-owned subsidiary, StealthCo, Inc. (“StealthCo” or “SCI”) under the laws of the State of Illinois. Prior to the acquisition of certain assets from SMI Holdings, Inc., a Minnesota corporation d/b/a StealthMark, Inc. (“SMI”), StealthCo was inactive.

As of April 4, 2014, StealthCo engages in the business of selling, licensing or otherwise providing certain authentication and encryption products and services from facilities located in Centerville, Minnesota upon entry into an Asset Purchase Agreement (“Purchase Agreement”) and consummation of the acquisition of certain assets of SMI and settlement of certain debt.

Note 2 - Significant and Critical Accounting Policies and Practices

The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

Basis of Presentation - Unaudited Interim Financial Information

The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the fiscal year ended September 30, 2013 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on January 14, 2014.

Fiscal Year End

The Company elected September 30^th as its fiscal year end date upon its formation.

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date(s) of the financial statements and the reported amounts of revenues and expenses during the reporting period(s).

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

(i)

Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

(ii)

Allowance for doubtful accounts: Management’s estimate of the allowance for doubtful accounts is based on historical sales, historical loss levels, and an analysis of the collectability of individual accounts; and general economic conditions that may affect a client’s ability to pay. The Company evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the financial statements taken as a whole.

(iii)

Inventory Obsolescence and Markdowns: The Company’s estimate of potentially excess and slow-moving inventories is based on evaluation of inventory levels and aging, review of inventory turns and historical sales experiences. The Company’s estimate of reserve for inventory shrinkage is based on the historical results of physical inventory cycle counts.

(iv)

Fair value of long-lived assets: Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

(v)

Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.

(vi)

Estimates and assumptions used in valuation of equity instruments: Management estimates expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk free rate(s) to value share options and similar instruments.

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

Actual results could differ from those estimates.

Principles of Consolidation

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification ("ASC") to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8 the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

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, if applicable)	Attributable interest

CNS Wellness Florida, LLC	The State of Florida	May 26, 2009 (August 2, 2012)	100%

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

National Pain Centers, Inc	The State of Nevada	January 24, 2014 (February 28, 2014)	100%

StealthCo, Inc	The State of Illinois	March 18, 2014	100%

The consolidated financial statements include all accounts of the Company, CNS, PSI, NPC and StealthCo as of reporting periods end date and for the reporting periods then ended from their respective dates of acquisition.

All inter-company balances and transactions have been eliminated.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.

Business Combinations

The Company applies Topic 805 “Business Combinations” of the FASB Accounting Standards Codification (formerly Statement of Financial Accounting Standards No. 141 (R) “Business Combinations” (“SFAS No. 141(R)”)) for transactions that represent business combinations to be accounted for under the acquisition method. Pursuant to ASC Paragraph 805-10-25-1 in order for a transaction or other event to be considered as a business combination it is required that the assets acquired and liabilities assumed constitute a business. Upon determination of transactions representing business combinations the Company then (i) identifies the accounting acquirer; (ii) identifies and estimates the fair value of the identifiable tangible and intangible assets acquired, separately from goodwill; (iii) estimates the business enterprise value of the acquired entities; (iv) allocates the purchase price of acquired entities to the tangible and intangible assets acquired and liabilities assumed, based on their estimated fair values at the date of acquisition. The excess of the liabilities assumed and the purchase price over the assets acquired was recorded as goodwill and the excess of the assets acquired over the liabilities assumed and the purchase price was recorded as a gain from bargain purchase.

Identification of the Accounting Acquirer

The Company used the existence of a controlling financial interest to identify the acquirer—the entity that obtains control of the acquiree in accordance with ASC paragraph 805-20-25-5 and identifies the acquisition date, which is the date on which it obtains control of the acquiree in accordance with ASC paragraph 805-20-25-6. The date on which the acquirer obtains control of the acquiree generally is the date on which the acquirer legally transfers the consideration, acquires the assets, and assumes the liabilities of the acquiree—the closing date.

Intangible Assets Identification, Estimated Fair Value and Useful Lives

In accordance with ASC Section 805-20-25 as of the acquisition date, the acquirer shall recognize, separately from goodwill, the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree. Recognition of identifiable assets acquired and liabilities assumed is subject to the conditions specified in ASC paragraphs 805-20-25-2 through 25-3.

The recognized intangible assets of the acquiree were valued through the use of the market, income and/or cost approach, as appropriate. The Company utilizes the income approach on a debt-free basis to estimate the fair value of the identifiable assets acquired in the acquiree at the date of acquisition with the assistance of the third party valuation firm. This method eliminates the effect of how the business is presently financed and provides an indication of the value of the total invested capital of the Company or its business enterprise value.

Business Enterprise Valuation

The Company utilizes the income approach – discounted cash flows method to estimate the business enterprise value with the assistance of the third party valuation firm. The income approach considers a given company's future sales, net cash flow and growth potential. In valuing the business enterprise value of business acquired, the Company forecasted sales and net cash flow for the acquiree for five (5) years into the future and used a discounted net cash flow method to determine a value indication of the total invested capital of the acquiree. The basic method of forecasting involves using past experience to forecast the future. The next step was to discount these projected net cash flows to their present values. One of the key elements of the income approach is the discount rate used to discount the projected cash flows to their present values. Determining an appropriate discount rate is one of the more difficult parts of the valuation process. The applicable rate of return or discount rate, the rate investors in closely-held companies require as a condition of acquisition, varies from time to time, depending on economic and other conditions. The discount rate is determined after considering the overall risk of the investment, which includes: (1) operating and financial risk in the business enterprise or asset; (2) current and projected profitability and growth; (3) risk of the respective industry; and (4) the equity risk premium relative to Treasury bonds. The discount rate is also affected by an analyst's judgment regarding the credibility of the income projections. The discount rate rises as the projections become increasingly optimistic, or falls as the degree of certainty increases.

Inherent Risk in the Estimates

Management makes estimates of fair values based upon assumptions believed to be reasonable. These estimates are based on historical experience and information obtained from the management of the acquired companies. Critical estimates in valuing certain of the intangible assets include but are not limited to: future expected cash flows from revenues, customer relationships, key management and market positions, assumptions about the period of time the acquired trade names will continue to be used in the Company’s combined portfolio of products and/or services, and discount rates used to establish fair value. These estimates are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

Fair Value of Financial Instruments

The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:


Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, prepayment and other current assets, accounts payable, accrued payroll – officers, accrued warranty, credit cards payable, deferred rent, and accrued expenses and other current liabilities approximate their fair values because of the short maturity of these instruments.

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

Fair Value of Non-Financial Assets or Liabilities Measured on a Recurring Basis

The Company’s non-financial assets include inventories. The Company identifies potentially excess and slow-moving inventories by evaluating turn rates, inventory levels and other factors. Excess quantities are identified through evaluation of inventory aging, review of inventory turns and historical sales experiences. The Company provides lower of cost or market reserves for such identified excess and slow-moving inventories. The Company establishes a reserve for inventory shrinkage, if any, based on the historical results of physical inventory cycle counts.

Carrying Value, Recoverability and Impairment of Long-Lived Assets

The Company has adopted Section 360-10-35 of the FASB Accounting Standards Codification for its long-lived assets. Pursuant to ASC Paragraph 360-10-35-17 an impairment loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC Paragraph 360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis. For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited.

Pursuant to ASC Paragraph 360-10-35-21 the Company’s long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The Company considers the following to be some examples of such events or changes in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset group); (b) A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in its physical condition; (c) A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) An accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset (asset group); and (f) A current expectation that, more likely than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

Pursuant to ASC Paragraphs 360-10-45-4 and 360-10-45-5 an impairment loss recognized for a long-lived asset (asset group) to be held and used shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amount of that loss. A gain or loss recognized on the sale of a long-lived asset (disposal group) that is not a component of an entity shall be included in income from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the amounts of those gains or losses.

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company follows paragraph 310-10-50-9 of the FASB Accounting Standards Codification to estimate the allowance for doubtful accounts. The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client’s ability to pay.

Pursuant to paragraph 310-10-50-2 of the FASB Accounting Standards Codification account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company has adopted paragraph 310-10-50-6 of the FASB Accounting Standards Codification and determine when receivables are past due or delinquent based on how recently payments have been received.

Outstanding account balances are reviewed individually for collectability. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Bad debt expense is included in general and administrative expenses, if any.

There was no allowance for doubtful accounts at June 30, 2014 or September 30, 2013, or bad debt expense for the reporting periods then ended.

The Company does not have any off-balance-sheet credit exposure to its customers at June 30, 2014 or September 30, 2013.

Inventories

Inventory Valuation

The Company values inventory, consisting of finished goods, at the lower of cost or market. Cost is determined on the first-in and first-out (“FIFO”) method. The Company reduces inventory for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its estimated market value. Factors utilized in the determination of estimated market value include (i) estimates of future demand, and (ii) competitive pricing pressures.

Inventory Obsolescence and Markdowns

The Company evaluates its current level of inventory considering historical sales and other factors and, based on this evaluation, classify inventory markdowns in the income statement as a component of cost of goods sold pursuant to Paragraph 420-10-S99 of the FASB Accounting Standards Codification to adjust inventory to net realizable value. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations.

There was no inventory obsolescence for the reporting period ended June 30, 2014 or 2013.

There was no lower of cost or market adjustments for the reporting period ended June 30, 2014 or 2013.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:


	Estimated Useful Life (Years)

Auto		3

Computer equipment		5

Furniture and fixture		7

Leasehold improvement		*

Medical and office equipment		5

Software		3

(*) Amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.

Upon sale or retirement, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the statements of operations.

Leases

Lease agreements are evaluated to determine whether they are capital leases or operating leases in accordance with paragraph 840-10-25-1 of the FASB Accounting Standards Codification (“Paragraph 840-10-25-1”). Pursuant to Paragraph 840-10-25-1 A lessee and a lessor shall consider whether a lease meets any of the following four criteria as part of classifying the lease at its inception under the guidance in the Lessees Subsection of this Section (for the lessee) and the Lessors Subsection of this Section (for the lessor): a. Transfer of ownership. The lease transfers ownership of the property to the lessee by the end of the lease term. This criterion is met in situations in which the lease agreement provides for the transfer of title at or shortly after the end of the lease term in exchange for the payment of a nominal fee, for example, the minimum required by statutory regulation to transfer title. b. Bargain purchase option. The lease contains a bargain purchase option. c. Lease term. The lease term is equal to 75 percent or more of the estimated economic life of the leased property. d. Minimum lease payments. The present value at the beginning of the lease term of the minimum lease payments, excluding that portion of the payments representing executory costs such as insurance, maintenance, and taxes to be paid by the lessor, including any profit thereon, equals or exceeds 90 percent of the excess of the fair value of the leased property to the lessor at lease inception over any related investment tax credit retained by the lessor and expected to be realized by the lessor. In accordance with paragraphs 840-10-25-29 and 840-10-25-30, if at its inception a lease meets any of the four lease classification criteria in Paragraph 840-10-25-1, the lease shall be classified by the lessee as a capital lease; and if none of the four criteria in Paragraph 840-10-25-1 are met, the lease shall be classified by the lessee as an operating lease. Pursuant to Paragraph 840-10-25-31 a lessee shall compute the present value of the minimum lease payments using the lessee's incremental borrowing rate unless both of the following conditions are met, in which circumstance the lessee shall use the implicit rate: a. It is practicable for the lessee to learn the implicit rate computed by the lessor. b. The implicit rate computed by the lessor is less than the lessee's incremental borrowing rate. Capital lease assets are depreciated on a straight line method, over the capital lease assets estimated useful lives consistent with the Company’s normal depreciation policy for tangible fixed assets. Interest charges are expensed over the period of the lease in relation to the carrying value of the capital lease obligation.

Operating leases primarily relate to the Company’s leases of office spaces. When the terms of an operating lease include tenant improvement allowances, periods of free rent, rent concessions, and/or rent escalation amounts, the Company establishes a deferred rent liability for the difference between the scheduled rent payment and the straight-line rent expense recognized, which is amortized over the underlying lease term on a straight-line basis as a reduction of rent expense.

Intangible Assets Other Than Goodwill

The Company has adopted Subtopic 350-30 of the FASB Accounting Standards Codification for intangible assets other than goodwill. Under the requirements, the Company amortizes the acquisition costs of intangible assets other than goodwill on a straight-line basis over the estimated useful lives of the respective assets as follows:


	Estimated Useful Life (Years)

Exclusive license agreements (*)		18

Acquired technologies		20

Non-compete agreements (**)		3-4

Patents		15

Trademarks (***)		7

(*) Amortized on a straight-line basis over the terms of the exclusive licenses and/or agreements, or the terms of legal lives of the patents, whichever is shorter

(**) Amortized on a straight-line basis over the terms of the agreements

Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.

Goodwill

The Company follows Subtopic 350-20 of the FASB Accounting Standards Codification for goodwill. Goodwill represents the excess of the cost of an acquired entity over the fair value of the net assets at the date of acquisition. Under paragraph 350-20-35-1 of the FASB Accounting Standards Codification, goodwill acquired in a business combination with indefinite useful lives are not amortized; rather, goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired.

Website Development Costs

The Company has adopted Subtopic 350-50 of the FASB Accounting Standards Codification for website development costs. Under the requirements of Sections 350-50-15 and 350-50-25, the Company capitalizes costs incurred to develop a website as website development costs, which are amortized on a straight-line basis over the estimated useful lives of three (3) years. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.

Customer Deposits

Customer deposits primarily represent amounts received from customers for future delivery of products, which are fully or partially refundable depending upon the terms and conditions of the sales agreements.

Related Parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

Pursuant to Section 850-10-20 the Related parties include a. affiliates of the Company; b. Entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company; f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g. Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d. amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Product Warranty

The Company estimates future costs of warranty obligations in accordance with ASC 460-10, which requires an entity to disclose and recognize a liability for the fair value of the obligation it assumes upon issuance of a warranty. The Company warrants most of its products for a specific period of time, usually 12 months, against material defects. The Company provides for the estimated future costs of warranty obligations in cost of revenues when the related revenues are recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that the Company will incur to repair or replace product parts that fail while still under warranty. The amount of the accrued estimated warranty costs obligation for established products is primarily based on historical experience as to product failures adjusted for current information on repair costs. For new products, estimates include the historical experience of similar products, as well as reasonable allowance for warranty expenses associated with new products. On a quarterly basis, the Company reviews the accrued warranty costs and updates the historical warranty cost trends, if required.

Commitment and Contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

Revenue Recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. In addition to the aforementioned general policy, the following are the specific revenue recognition policies for each major category of revenue:

(i)

Sale of products: The Company derives its revenues from sales contracts with customers with revenues being generated upon the shipment of merchandise. Persuasive evidence of an arrangement is demonstrated via sales invoice or contract; product delivery is evidenced by warehouse shipping log as well as a signed bill of lading from the vessel or rail company and title transfers upon shipment, based on free on board (“FOB”) warehouse terms; the sales price to the customer is fixed upon acceptance of the signed purchase order or contract and there is no separate sales rebate, discount, or volume incentive. When the Company recognizes revenue, no provisions are made for returns because, historically, there have been very few sales returns and adjustments that have impacted the ultimate collection of revenues.

(ii)

Client Services: The Company derives its revenues from the client services it provides. Deferred revenues are recorded at the time clients pay prior to services being rendered. The Company recognizes revenues as services are provided, which typically is over a period of three (3) to five (5) months. The Company’s clients sign a contract prior to any service. Clients who wish to pay for the full package in advance receive a discount ranging from 10% to 15% depending on the package of the services chosen. In the majority of cases, payments are collected before all services are rendered. The client signs an agreement stating that they are required to complete treatment within one (1) year or remaining unused treatments are forfeited. In addition, the contract stipulates that if the client does not appear for treatment for a period of six (6) consecutive months, their package is placed into abandonment. In such a case the Company retains all payments and is able to pursue any balances.

Shipping and Handling Costs

The Company accounts for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification. While amounts charged to customers for shipping products are included in revenues, the related costs are classified in cost of goods sold as incurred.

Stock-Based Compensation for Obtaining Employee Services

The Company accounts for share-based payment transactions issued to employees under the guidance of the Topic 718 Compensation—Stock Compensation of the FASB Accounting Standards Codification (“ASC Topic 718”).

Pursuant to ASC Section 718-10-20 an employee is an individual over whom the grantor of a share-based compensation award exercises or has the right to exercise sufficient control to establish an employer-employee relationship based on common law as illustrated in case law and currently under U.S. Internal Revenue Service (“IRS”) Revenue Ruling 87-41. A nonemployee director does not satisfy this definition of employee. Nevertheless, nonemployee directors acting in their role as members of a board of directors are treated as employees if those directors were elected by the employer’s shareholders or appointed to a board position that will be filled by shareholder election when the existing term expires. However, that requirement applies only to awards granted to nonemployee directors for their services as directors. Awards granted to nonemployee directors for other services shall be accounted for as awards to non-employees.

Pursuant to ASC Paragraphs 718-10-30-2 and 718-10-30-3 a share-based payment transaction with employees shall be measured based on the fair value of the equity instruments issued and an entity shall account for the compensation cost from share-based payment transactions with employees in accordance with the fair value-based method, i.e., the cost of services received from employees in exchange for awards of share-based compensation generally shall be measured based on the grant-date fair value of the equity instruments issued or the fair value of the liabilities incurred/settled.

Pursuant to ASC Paragraphs 718-10-30-6 and 718-10-30-9 the measurement objective for equity instruments awarded to employees is to estimate the fair value at the grant date of the equity instruments that the entity is obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments (for example, to exercise share options). That estimate is based on the share price and other pertinent factors, such as expected volatility, at the grant date. As such, the fair value of an equity share option or similar instrument shall be estimated using a valuation technique such as an option pricing model. For this purpose, a similar instrument is one whose fair value differs from its intrinsic value, that is, an instrument that has time value.

If the Company’s common shares are traded in one of the national exchanges the grant-date share price of the Company’s common stock will be used to measure the fair value of the common shares issued, however, if the Company’s common shares are thinly traded the use of share prices established in its most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.

Pursuant to ASC Paragraph 718-10-55-21 if an observable market price is not available for a share option or similar instrument with the same or similar terms and conditions, an entity shall estimate the fair value of that instrument using a valuation technique or model that meets the requirements in paragraph 718-10-55-11 and takes into account, at a minimum, all of the following factors:


a.	The exercise price of the option.

The expected term of the option, taking into account both the contractual term of the option and the effects of employees’ expected exercise and post-vesting employment termination behavior: The expected life of options and similar instruments represents the period of time the option and/or warrant are expected to be outstanding. Pursuant to paragraph 718-10-S99-1, it may be appropriate to use the simplified method, i.e., expected term = ((vesting term + original contractual term) / 2), if (i) A company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded; (ii) A company significantly changes the terms of its share option grants or the types of employees that receive share option grants such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term; or (iii) A company has or expects to have significant structural changes in its business such that its historical exercise data may no longer provide a reasonable basis upon which to estimate expected term. The Company uses the simplified method to calculate expected term of share options and similar instruments as the company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.


c.	The current price of the underlying share.

The expected volatility of the price of the underlying share for the expected term of the option. Pursuant to ASC Paragraph 718-10-55-25 a newly publicly traded entity might base expectations about future volatility on the average volatilities of similar entities for an appropriate period following their going public. A nonpublic entity might base its expected volatility on the average volatilities of otherwise similar public entities. For purposes of identifying otherwise similar entities, an entity would likely consider characteristics such as industry, stage of life cycle, size, and financial leverage. Because of the effects of diversification that are present in an industry sector index, the volatility of an index should not be substituted for the average of volatilities of otherwise similar entities in a fair value measurement. Pursuant to paragraph 718-10-S99-1 if shares of a company are thinly traded the use of weekly or monthly price observations would generally be more appropriate than the use of daily price observations as the volatility calculation using daily observations for such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market. The Company uses the average historical volatility of the comparable companies over the expected term of the share options or similar instruments as its expected volatility.


e.	The expected dividends on the underlying share for the expected term of the option. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

The risk-free interest rate(s) for the expected term of the option. Pursuant to ASC 718-10-55-28 a U.S. entity issuing an option on its own shares must use as the risk-free interest rates the implied yields currently available from the U.S. Treasury zero-coupon yield curve over the contractual term of the option if the entity is using a lattice model incorporating the option’s contractual term. If the entity is using a closed-form model, the risk-free interest rate is the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model.

Pursuant to ASC Paragraphs 718-10-30-11 and 718-10-30-17 a restriction that stems from the forfeitability of instruments to which employees have not yet earned the right, such as the inability either to exercise a non-vested equity share option or to sell non-vested shares, is not reflected in estimating the fair value of the related instruments at the grant date. Instead, those restrictions are taken into account by recognizing compensation cost only for awards for which employees render the requisite service and a non-vested equity share or non-vested equity share unit awarded to an employee shall be measured at its fair value as if it were vested and issued on the grant date.

Pursuant to ASC Paragraphs 718-10-35-2 and 718-10-35-3 the compensation cost for an award of share-based employee compensation classified as equity shall be recognized over the requisite service period, with a corresponding credit to equity (generally, paid-in capital). The requisite service period is the period during which an employee is required to provide service in exchange for an award, which often is the vesting period. The total amount of compensation cost recognized at the end of the requisite service period for an award of share-based compensation shall be based on the number of instruments for which the requisite service has been rendered (that is, for which the requisite service period has been completed). An entity shall base initial accruals of compensation cost on the estimated number of instruments for which the requisite service is expected to be rendered. That estimate shall be revised if subsequent information indicates that the actual number of instruments is likely to differ from previous estimates. The cumulative effect on current and prior periods of a change in the estimated number of instruments for which the requisite service is expected to be or has been rendered shall be recognized in compensation cost in the period of the change. Previously recognized compensation cost shall not be reversed if an employee share option (or share unit) for which the requisite service has been rendered expires unexercised (or unconverted).

Under the requirement of ASC Paragraph 718-10-35-8 the Company made a policy decision to recognize compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award.

Equity Instruments Issued to Parties Other Than Employees for Acquiring Goods or Services

The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under the guidance of Sub-topic 505-50 of the FASB Accounting Standards Codification (“Sub-topic 505-50”).

Pursuant to ASC paragraph 505-50-25-7, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then, because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof) of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in which equity instruments are transferred to other than employees in exchange for goods or services.

Pursuant to Paragraphs 505-50-25-8 and 505-50-25-9, an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with, or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that the counterparty has the right to exercise expires unexercised.

Pursuant to ASC Paragraphs 505-50-30-2 and 505-50-30-11 share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The issuer shall measure the fair value of the equity instruments in these transactions using the stock price and other measurement assumptions as of the earlier of the following dates, referred to as the measurement date: (a) The date at which a commitment for performance by the counterparty to earn the equity instruments is reached (a performance commitment); or (b) The date at which the counterparty's performance is complete. If the Company’s common shares are traded in one of the national exchanges the grant-date share price of the Company’s common stock will be used to measure the fair value of the common shares issued, however, if the Company’s common shares are thinly traded the use of share prices established in the Company’s most recent private placement memorandum (“PPM”), or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.


a.	The exercise price of the option.

The expected term of the option, taking into account both the contractual term of the option and the effects of employees’ expected exercise and post-vesting employment termination behavior: Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the FASB Accounting Standards Codification the expected term of share options and similar instruments represents the period of time the options and similar instruments are expected to be outstanding taking into consideration of the contractual term of the instruments and holder’s expected exercise behavior into the fair value (or calculated value) of the instruments. The Company uses historical data to estimate holder’s expected exercise behavior. If the Company is a newly formed corporation or shares of the Company are thinly traded the contractual term of the share options and similar instruments is used as the expected term of share options and similar instruments as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term.


c.	The current price of the underlying share.


e.	The expected dividends on the underlying share for the expected term of the option. The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the expected term of the share options and similar instruments.

Pursuant to ASC paragraph 505-50-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement date and no entry should be recorded.

Income Tax Provision

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income and Comprehensive Income in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Uncertain Tax Positions

The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the reporting period ended June 30, 2014 or 2013.

Earnings per Share

Earnings Per Share is the amount of earnings attributable to each share of common stock. For convenience, the term is used to refer to either earnings or loss per share. Earnings per share ("EPS") is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Pursuant to ASC Paragraphs 260-10-45-10 through 260-10-45-16 Basic EPS shall be computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Income available to common stockholders shall be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not earned) from income from continuing operations (if that amount appears in the income statement) and also from net income. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued during the period to reflect the potential dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.

Pursuant to ASC Paragraphs 260-10-45-45-21 through 260-10-45-45-23 Diluted EPS shall be based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. The dilutive effect of outstanding call options and warrants (and their equivalents) issued by the reporting entity shall be reflected in diluted EPS by application of the treasury stock method unless the provisions of paragraphs 260-10-45-35 through 45-36 and 260-10-55-8 through 55-11 require that another method be applied. Equivalents of options and warrants include non-vested stock granted to employees, stock purchase contracts, and partially paid stock subscriptions (see paragraph 260–10–55–23). Anti-dilutive contracts, such as purchased put options and purchased call options, shall be excluded from diluted EPS. Under the treasury stock method: a. Exercise of options and warrants shall be assumed at the beginning of the period (or at time of issuance, if later) and common shares shall be assumed to be issued. b. The proceeds from exercise shall be assumed to be used to purchase common stock at the average market price during the period. (See paragraphs 260-10-45-29 and 260-10-55-4 through 55-5.) c. The incremental shares (the difference between the number of shares assumed issued and the number of shares assumed purchased) shall be included in the denominator of the diluted EPS computation.

The Company’s contingent shares issuance arrangement, stock options or warrants are as follows:


	Contingent shares issuance arrangement, stock options or warrants

	For the Reporting Period Ended June 30, 2014		For the Reporting Period Ended June 30, 2013

Convertible Notes Payable Shares and Related Warrant Shares

Convertible note payable of $58,000 issued on August 17, 2012 convertible into common shares at $0.30 per share. The note was converted on September 27, 2013.		-		193,334

Warrants issuable, contingent upon conversion of convertible note payable of $58,000, issued on August 17, 2012 with an exercise price of $0.45 per share. The Warrants were issued in connection with the convertible note conversion on September 27, 2013		193,334		193,334

Convertible note payable of $50,000 issued on October 11, 2012 convertible into common shares at $0.30 per share. The note was converted on September 27, 2013.		-		166,666

Warrants issuable, contingent upon conversion of convertible note payable of $50,000, issued on October 11, 2012 with an exercise price of $0.45 per share. The Warrants were issued in connection with the convertible note conversion on September 27, 2013		166,666		166,666

Warrants issuable, contingent upon conversion of convertible note payable of $8,000, issued on February 8, 2013 with an exercise price of $0.45 per share. The Warrants were issued in connection with the convertible note conversion on September 27, 2013		26,667		26,667

Warrants issuable, contingent upon conversion of convertible note payable of $20,000, issued on June 28, 2013 with an exercise price of $0.45 per share. The Warrants were issued in connection with the convertible note conversion on September 27, 2013		66,667		66,667

Sub-total: convertible notes payable shares and related warrant shares		453,334		906,668

Stock Option Shares

Stock options issued in June, 2010 to the founder of the Company, upon formation, with an exercise price of $0.01 per share expiring five (5) years from the date of issuance		1,600,000		1,600,000

Stock options issued on November 30, 2010 to the members of the board of directors of the Company with an exercise price of $0.01 per share expiring five (5) years from the date of issuance		200,000		200,000



Stock options issued on March 13, 2012 to a consultant with an exercise price of $0.44 per share expiring five (5) years from the date of issuance	50,000	50,000

Stock options issued on August 24, 2012 for conversion of PSI stock options originally issued on December 20, 2010 with an exercise price of $1.00 per share expiring ten (10) years from the date of original issuance upon acquisition of PSI	750,000	750,000

Stock options issued on August 24, 2012 for conversion of PSI stock options originally issued on February 22, 2012 with an exercise price of $2.00 per share expiring ten (10) years from the date of original issuance upon acquisition of PSI	650,000	650,000

Stock options issued on September 6, 2013 to the advisory board member of the Company with an exercise price of $0.75 per share expiring five (5) years from the date of issuance	10,000	-

Stock options issued on February 28, 2014 to the two officers of the Company with an exercise price of $0.40 per share expiring five (5) years from the date of issuance	1,800,000	-

Sub-total: Stock option shares	5,060,000	3,250,000

Warrant Shares

Warrants issued on November 10, 2010 to investors in connection with the Company’s November 10, 2010 equity financing with an exercise price of $0.01 per share expiring five (5) years from the date of issuance	1,600,000	1,600,000

Remaining unexercised warrants originally issued on November 30, 2010 to investors with an exercise price of $0.01 per share expiring five (5) years from the date of issuance	2,434,334	2,521,334

Warrants issued on November 30, 2010 for services with an exercise price of $0.01 per share expiring five (5) years from the date of issuance	375,000	375,000

Warrants issued on March 8, 2012 to an investor with an exercise price of $0.50 per share expiring five (5) years from the date of issuance	190,000	190,000

Warrants issued on March 15, 2012 to an investor with an exercise price of $0.75 per share expiring five (5) years from the date of issuance	75,000	75,000

Warrants issued on April 19, 2012 to an investor with an exercise price of $1.65 per share expiring five (5) years from the date of issuance	14,545	14,545

Warrants issued on May 9, 2012 to an investor with an exercise price of $2.16 per share expiring five (5) years from the date of issuance	9,091	9,091

Warrants issued on May 14, 2012 to investors with an exercise price of $2.25 per share expiring five (5) years from the date of issuance	18,182	18,182



Warrants issued between May 21 and 25, 2012 to investors with an exercise price of $2.31 per share expiring five (5) years from the date of issuance	112,955	112,955

Remaining unexercised warrants originally issued on September 25, 2012 to investors with an exercise price of $0.45 per share expiring five (5) years from the date of issuance	236,666	236,667

Warrants issued on December 19, 2012 to investors with an exercise price of $0.45 per share expiring five (5) years from the date of issuance	520,999	520,999

Warrants issued on February 27, 2013 and March 17, 2013 for services with an exercise price of $0.30 per share expiring five (5) years from the date of issuance	700,000	700,000

Warrants issued on March 18, 2013 to investors with an exercise price of $0.45 per share expiring five (5) years from the date of issuance	3,096,603	3,096,603

Warrants issued on April 18, 2013 to investors with an exercise price of $0.45 per share expiring five (5) years from the date of issuance	601,668	601,668

Warrants issued on May 9, 2013 to investors with an exercise price of $1.00 per share expiring five (5) years from the date of issuance	40,000	40,000

Warrants issued on August 15, 2013 to investors with an exercise price of $0.75 per share expiring five (5) years from the date of issuance	4,121,250	-

Warrants issued on September 29, 2013 to an investor with an exercise price of $0.45 per share expiring five (5) years from the date of issuance	250,000	-

Warrants issued on January 13, 2014 to investors with an exercise price of $0.40 per share expiring five (5) years from the date of issuance	793,333	-

Warrants issued on January 13, 2014 to investors with an exercise price of $0.45 per share expiring five (5) years from the date of issuance	228,572	-

Warrants issued on March 28, 2014 to investors with an exercise price of $0.65 per share expiring five (5) years from the date of issuance	150,000	-

Warrants issued on April 4, 2014 to the stockholders of Stealth Mark, Inc. with an exercise price of $0.665 per share expiring five (5) years from the date of issuance in connection with Asset Purchase Agreement.	131,266	-

Warrants issued on April 30, 2014 to investors with an exercise price of $0.65 per share expiring five (5) years from the date of issuance.	57,222	-

Sub-total: Warrant shares	15,756,686	10,112,043

Total contingent shares issuance arrangement, stock options or warrants	21,270,020	14,268,711

For the reporting period ended June 30, 2014 and 2013 there were approximate 9,150,384 and 9,274,661 potentially outstanding dilutive common shares, respectively, which were excluded from the diluted earnings per share calculation as they were anti-dilutive.

Cash Flows Reporting

The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect method”) as defined by paragraph 230-10-45-25 of the FASB Accounting Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards Codification.

Segment Information

The Company follows Topic 280 of the FASB Accounting Standards Codification for segment reporting. Pursuant to Paragraph 280-10-50-1 an operating segment is a component of a public entity that has all of the following characteristics: a. It engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same public entity). b. Its operating results are regularly reviewed by the public entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. c. Its discrete financial information is available. In accordance with Paragraph 280-10-50-5 the term chief operating decision maker identifies a function, not necessarily a manager with a specific title. That function is to allocate resources to and assess the performance of the segments of a public entity. Often the chief operating decision maker of a public entity is its chief executive officer or chief operating officer, but it may be a group consisting of, for example, the public entity's president, executive vice presidents, and others. Pursuant to Paragraph 280-10-50-10 a public entity shall report separately information about each operating segment that meets both of the following criteria: a. Has been identified in accordance with paragraphs 280-10-50-1 and 280-10-50-3 through 50-9 or results from aggregating two or more of those segments in accordance with the following paragraph; and b. Exceeds the quantitative thresholds in paragraph 280-10-50-12. In accordance with Paragraph 280-10-50-12 a public entity shall report separately information about an operating segment that meets any of the following quantitative thresholds: a. Its reported revenue, including both sales to external customers and intersegment sales or transfers, is 10 percent or more of the combined revenue, internal and external, of all operating segments. b. The absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount, of either: 1. The combined reported profit of all operating segments that did not report a loss, or 2. The combined reported loss of all operating segments that did report a loss. c. Its assets are 10 percent or more of the combined assets of all operating segments. Pursuant to Paragraphs 280-10-50-22 and 280-10-50-29, a public entity shall report a measure of profit or loss and total assets for each reportable segment and provide an explanation of the measurements of segment profit or loss and segment assets for each reportable segment. At a minimum, a public entity shall disclose all of the following: a. The basis of accounting for any transactions between reportable segments. b. The nature of any differences between the measurements of the reportable segments' profits or losses and the public entity's consolidated income (loss) before income tax provision, extraordinary items, and discontinued operations (if not apparent from the reconciliations described in paragraphs 280-10-50-30 through 50-31). c. The nature of any differences between the measurements of the reportable segments’ assets and the public entity's consolidated assets (if not apparent from the reconciliations described in paragraphs 280-10-50-30 through 50-31). d. The nature of any changes from prior periods in the measurement methods used to determine reported segment profit or loss and the effect, if any, of those changes on the measure of segment profit or loss. e. The nature and effect of any asymmetrical allocations to reportable segments.

Subsequent Events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued the FASB Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”)

This guidance amends the existing FASB Accounting Standards Codification, creating a new Topic 606, Revenue from Contracts with Customer. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

To achieve that core principle, an entity should apply the following steps:

Identify the contract(s) with the customer

Identify the performance obligations in the contract

Determine the transaction price

Allocate the transaction price to the performance obligations in the contract

Recognize revenue when (or as) the entity satisfies a performance obligations

The ASU also provides guidance on disclosures that should be provided to enable financial statement users to understand the nature, amount, timing, and uncertainty of revenue recognition and cash flows arising from contracts with customers. Qualitative and quantitative information is required about the following:

Contracts with customers – including revenue and impairments recognized, disaggregation of revenue, and information about contract balances and performance obligations (including the transaction price allocated to the remaining performance obligations)

Significant judgments and changes in judgments – determining the timing of satisfaction of performance obligations (over time or at a point in time), and determining the transaction price and amounts allocated to performance obligations

Assets recognized from the costs to obtain or fulfill a contract.

ASU 2014-09 is effective for periods beginning after December 15, 2016, including interim reporting periods within that reporting period for all public entities. Early application is not permitted.

In June 2014, the FASB issued the FASB Accounting Standards Update No. 2014-12 “Compensation—Stock Compensation (Topic 718) : Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014-12”).

The amendments clarify the proper method of accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The Update requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.

The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

Note 3 – Going Concern

The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

As reflected in the consolidated financial statements, the Company had an accumulated deficit at June 30, 2014, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The Company is attempting to further implement its business plan and generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenue and in its ability to raise additional funds by way of a public or private offering, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 - Business Acquisitions

(i)

Acquisition of CNS Wellness Florida, LLC

Identification of the Accounting Acquirer

The Company used the existence of a controlling financial interest to identify the acquirer—the entity that obtains control of the acquiree in accordance with ASC paragraph 805-20-25-5 and identifies the acquisition date, which is the date on which it obtains control of the acquiree in accordance with ASC paragraph 805-20-25-6. The management of the Company specifically addressed (i) the ownership interest of each party after the acquisition; (ii) the members of the board of directors from both companies; and (iii) senior management from both companies and determined that Wellness Center USA, Inc. was the accounting acquirer for the merger between Wellness Center USA, Inc. and CNS Wellness Florida, LLC.

The specific control factors considered to determine which entity was the accounting acquirer are as follows:


(i) The ownership interest of each party after the acquisition

WCUI's common shares issued and outstanding prior to CNS acquisition	15,367,273	67.8%

WCUI's common shares issued to the members of CNS for the acquisition of all of the issued and outstanding limited liability company interests in CNS upon acquisition of CNS	7,300,000	32.2%

	22,667,273	100.0%

(ii) The members of the board of directors from both companies

The members of the board of directors from WCUI prior to CNS acquisition	3	60.0%

The members of the board of directors from CNS upon acquisition of CNS	2	40.0%

	5	100.0%

(iii) Senior management from both companies

Senior management from WCUI prior to CNS acquisition	1	100.0%

Senior management from CNS upon acquisition of CNS	-	-%

	1	100.0%

Intangible Assets Identification, Estimated Fair Value and Useful Lives

With the assistance of the third party valuation firm, the Company identified certain separate recognizable intangible assets that possessed economic value, estimated their fair values and related useful lives of CNS at the date of acquisition as follows:


	Estimated Useful Life (Years)	August 2, 2012

Trademark/Trade Name	9	$	110,000

Acquired Technology	20		325,000

Non-Competition Agreement	3		120,000

Total Recognized Intangible Assets		$	555,000

Business Enterprise Valuation

With the assistance of the third party valuation firm, the Company estimated the indicated value of the total invested operating capital of CNS at the date of acquisition utilizing the income approach – discounted cash flows method, was $3,100,000, as follows:


	August 2, 2012

Present Value of Debt-Free Net Cash Flow - Forecast Period	$	807,921

Present Value of Debt-Free Net Cash Flow - Residual Period		2,287,246

Present Value of Debt-Free Net Cash Flow – Total		3,095,167

Value Indication Income Approach - Discounted Net Cash Flow Method (Rounded)	$	3,100,000

Allocation of Purchase Price

The purchase price of CNS has been allocated to the tangible and intangible assets acquired and liabilities assumed, and any non-controlling interest, if any, based on their estimated fair values at the date of acquisition as follows:


	Book Value			Fair Value Adjustment		Fair Market Value

Cash	$	11,713		$	-	$	11,713

Property and equipment		18,459			-		18,459

Trademark		-			110,000		110,000

Acquired technology		-			325,000		325,000

Non-compete agreements		-			120,000		120,000

Goodwill		323,045			2,545,000		2,868,045

Security deposits		36,939			-		36,939

Accounts payable		(41,957	)		-		(41,957	)

Accrued interest - related party		(3,516	)		-		(3,516	)

Credit cards payable		(66,008	)		-		(66,008	)

Payroll liability		(2,709	)		-		(2,709	)

Current portion of deferred rent		(11,363	)		-		(11,363	)

Advances from related parties		(196,208	)		-		(196,208	)

Note payable - related party		(37,139	)		-		(37,139	)

Deferred rent, net of current portion		(31,256	)		-		(31,256	)

Total		-			3,100,000		3,100,000

Non-controlling interest		(-	)		-		(-	)

Purchase price	$	-		$	3,100,000	$	3,100,000

(ii)

Acquisition of Psoria-Shield Inc.

On August 24, 2012, the Company consummated the share exchange and acquired all of the issued and outstanding shares of stock in PSI for and in consideration of the issuance of 7,686,797 shares of its common stock pursuant to the Exchange Agreement. The 7,686,797 common shares issued in connection with the share exchange represented 25.3% of the 30,354,570 shares of issued and outstanding common stock of the Company as of the closing date of the share exchange under the Exchange Agreement. PSI is now operated as a wholly-owned subsidiary of the Company.

Identification of the Accounting Acquirer

The Company used the existence of a controlling financial interest to identify the acquirer—the entity that obtains control of the acquiree in accordance with ASC paragraph 805-20-25-5 and identifies the acquisition date, which is the date on which it obtains control of the acquiree in accordance with ASC paragraph 805-20-25-6. The management of the Company specifically addressed (i) the ownership interest of each party after the acquisition; (ii) the members of the board of directors from both companies; and (iii) senior management from both companies and determined that Wellness Center USA, Inc. was the accounting acquirer for the merger between Wellness Center USA, Inc. and Psoria-Shield Inc.

The specific control factors considered to determine which entity was the accounting acquirer are as follows:


(i) The ownership interest of each party after the acquisition

WCUI's common shares issued and outstanding prior to PSI acquisition	22,667,273	74.7%

WCUI's common shares issued to the stockholders of PSI for the acquisition of all of the issued and outstanding common stock of PSI upon acquisition of PSI	7,686,797	25.3%

	30,354,070	100.0%

(ii) The members of the board of directors from both companies

The members of the board of directors from WCUI prior to PSI acquisition	5	83.3%

The members of the board of directors from PSI upon acquisition of PSI	1	16.7%

	6	100.0%

(iii) Senior management from both companies

Senior management from WCUI prior to PSI acquisition	1	100.0%

Senior management from PSI upon acquisition of PSI	-	-%

	1	100.0%

Intangible Assets Identification, Estimated Fair Value and Useful Lives


	Estimated Useful Life (Years)	August 24, 2012

Trademark - Psoria-Shield	7	$	210,000

Trademark - Psoria-Light	7		420,000

Acquired Technology	20		2,095,000

Non-Competition Agreement	4		120,000

Total Recognized Intangible Assets		$	2,845,000

Business Enterprise Valuation

With the assistance of the third party valuation firm, the Company estimated the indicated value of the total invested operating capital of PSI at the date of acquisition utilizing the income approach – discounted cash flows method, was $4,105,000, as follows:


	August 24, 2012

Present Value of Debt-Free Net Cash Flow - Forecast Period	$	2,205,360

Present Value of Debt-Free Net Cash Flow - Residual Period		1,899,261

Present Value of Debt-Free Net Cash Flow – Total		4,104,622

Value Indication Income Approach - Discounted Net Cash Flow Method (Rounded)	$	4,105,000

Allocation of Purchase Price

The purchase price of PSI has been allocated to the tangible and intangible assets acquired and liabilities assumed, and any non-controlling interest, if any, based on their estimated fair values at the date of acquisition as follows:


	Book Value			Fair Value Adjustment		Fair Market Value

Cash	$	11,413		$	-	$	11,413

Inventories		12,694			-		12,694

Property and equipment		80,956			-		80,956

Exclusive licenses		4,562			-		4,562

Trademark - Psoria-Shield		-			210,000		210,000

Trademark - Psoria-light		-			420,000		420,000

Acquired technology		-			2,095,000		2,095,000

Non-compete agreement		-			120,000		120,000

Goodwill		456,603			1,260,000		1,716,603

Security deposits		1,760			-		1,760

Accounts payable		(161,821	)		-		(161,821	)

Credit cards payable		(42,198	)		-		(42,198	)



Customer deposits		(25,000	)		-		(25,000	)

Accrued warranty		(9,600	)		-		(9,600	)

Current portion of long-term payable		(72,653	)		-		(72,653	)

Loan payable		(20,000	)		-		(20,000	)

Advances from stockholders		(233,994	)		-		(233,994	)

Total		-			4,105,000		4,105,000

Non-controlling interest		(-	)		-		(-	)

Purchase price	$	-		$	4,105,000	$	4,105,000

(iii) Acquisition of National Pain Centers, Inc

On February 28, 2014, the Company consummated the Exchange Agreement entered into on January 28, 2014 and acquired all of the issued and outstanding shares of common stock of NPC for and in consideration of the issuance of 5,000,000 shares of common stock of the Company pursuant to the Exchange Agreement valued at $0.24 per share or $1,200,000, the relative fair value of the PPM consummated on January 13, 2014 immediately prior to the consummation of the Exchange Agreement, which was recorded as goodwill as NPC is a newly formed entity. NPC is now operated as a wholly-owned subsidiary of the Company.

(iv) Acquisition of Certain Assets and Settlement of Certain Debit of SMI Holdings, Inc.

On April 4, 2014, StealthCo consummated an Asset Purchase Agreement (“Purchase Agreement”) and acquired certain assets of SMI. In consideration for the purchased assets, the Company issued 375,820 shares of $0.001 par value common stock (“WCUI Shares”) and warrants (“Warrants”) to acquire 90,505 WCUI Shares with an exercise price of $0.665 per share expiring five years from the date of issuance. In addition, the Company settled certain debt of SMI through the issuance of 51,283 shares of $0.001 par value common stock (“WCUI Shares”) and warrants (“Warrants”) to acquire 40,761 WCUI Shares with an exercise price of $0.665 per share expiring five years from the date of issuance.

Pursuant to the terms and conditions of the Purchase Agreement the Company would be obligated to pay royalties for a period commencing with the Closing Date and continuing through the third anniversary of the Closing Date or the date upon which the aggregate, cumulative royalties paid equal $250,000, whichever first occurs. The Company would pay royalties annually in an amount equal to 5% of Net Revenues collected by the Company and arising from or relating to the sale of SMI authentication and encryption products and services, subject to an aggregate cap of $250,000.

Identification of the Accounting Acquirer

The Company used the existence of a controlling financial interest to identify the acquirer—the entity that obtains control of the acquiree in accordance with ASC paragraph 805-20-25-5 and identifies the acquisition date, which is the date on which it obtains control of the acquiree in accordance with ASC paragraph 805-20-25-6. The management of the Company specifically addressed (i) the ownership interest of each party after the acquisition; (ii) the members of the board of directors from both companies; and (iii) senior management from both companies and determined that Wellness Center USA, Inc. was the accounting acquirer for the merger between Wellness Center USA, Inc. and SMI.

The specific control factors considered to determine which entity was the accounting acquirer are as follows:


(i) The ownership interest of each party after the acquisition

WCUI's common shares issued and outstanding prior to SMI assets acquisition	50,909,909	99.2%

WCUI's common shares issued to the stockholders of SCI for the acquisition of certain assets and settlement of certain debt of SCI upon acquisition of certain SMI assets and settlement of certain debt	427,103	0.8%

	51,337,012	100.0%

(ii) The members of the board of directors from both companies

The members of the board of directors from WCUI prior to SMI assets acquisition	3	100.0%

The members of the board of directors from SMI upon acquisition of certain SMI assets and settlement of certain debt	0	0.0%

	3	100.0%

(iii) Senior management from both companies

Senior management from WCUI prior to SMI assets acquisition	2	100.0%

Senior management from SMI upon acquisition of certain SMI assets and settlement of certain debt	-	-%

	2	100.0%

Intangible Assets Identification, Estimated Fair Value and Useful Lives

The Company considered this acquisition a bargain purchase and did not identify any separate recognizable intangible assets that possessed economic value at the date of acquisition.

Valuation of Consideration and Allocation of Purchase Price

In consideration for the purchased assets and settlement of certain debt, the Company issued to the stockholders and debt holders of SMI (i) 375,820 and 51,283 shares, or 427,103 shares in aggregate of $0.001 par value common stock (“WCUI Shares”) and (ii) warrants (“Warrants”) to acquire 90,505 and 40,761 WCUI Shares, or 131,266 WCUI shares in aggregate with an exercise price of $0.665 per share expiring five years from the date of issuance, respectively. Pursuant to ASC Paragraphs 505-50-30-2 and 505-50-30-11 share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The Company determined that the fair value of the equity instruments issued is more reliably measurable and valued (i) 427,103 common shares issued at $0.665 per share, the weekly average stock price proceeding the acquisition date (the measurement date), or $284,023; and (ii) 131,266 WCUI shares in aggregate with an exercise price of $0.665 per share expiring five years from the date of issuance at $0.3282 per warrant share or $43,082 on the date of grant (the measurement date) using the Black-Scholes option-pricing model.

The purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed, and any non-controlling interest, if any, based on their estimated fair values at the date of acquisition as follows:


	Book Value			Fair Value Adjustment			Fair Market Value

Cash	$	2,969		$	-		$	2,969

Inventories		87,122			-			87,122

Prepayments and other current assets		32,497			-			32,497

Property and equipment		3,020			-			3,020

Patents		463,120			(261,623	)		201,497

Total		588,728			(261,623	)		327,105

Non-controlling interest		(-	)		-			(-	)

Purchase price	$	588,728		$	(261,623	)	$	327,105

Note 5 – Inventories

Inventories consisted of the following:


	June 30, 2014			September 30, 2013

Purchased parts for assembly - PSI	$	57,131		$	135,485

Finished goods - PSI		125,987	*		-

Finished goods - StealthCo		87,017			-

	$	270,135		$	135,485

PSI's purchased parts from vendors and assembled them to finished goods. Due to the short duration time for the assembly, PSI did not capitalize the assembly time to finished good and there was no material work-in-process inventory at June 30, 2014 or September 30, 2013.

Slow-Moving or Obsolescence Markdowns

The Company recorded no inventory obsolescence adjustments for the reporting period ended June 30, 2014 or 2013.

Note 6 – Property and Equipment

Property and equipment, stated at cost, less accumulated depreciation consisted of the following:


	Estimated Useful Life (Years)	June 30, 2014			September 30, 2013

Auto	3	$	15,000		$	15,000

Computer equipment	5		12,112			12,112

Furniture and fixture	7		26,808			26,808

Leasehold improvement	5		15,170			15,170

Medical and office equipment	5		19,259			16,239

Software	3		32,276			32,276

			120,825			117,805

Less accumulated depreciation			(64,772	)		(43,300	)

		$	56,053		$	74,505

(i)

Depreciation Expense

Depreciation expense was $21,472 and $23,481 for the reporting period ended June 30, 2014 and 2013, respectively.

(ii)

Impairment

The Company completed the annual impairment test of property and equipment and determined that there was no impairment as the fair value of property and equipment, exceeded their carrying values at September 30, 2013.

Note 7 – Intangible Assets Other Than Goodwill

Exclusive License Agreements

(i)

Exclusive License Agreement for Provisional Patent No. 1 Signed on August 25, 2009

Grant of License

An exclusive license agreement ("Exclusive License Agreement") was made and entered into on August 25, 2009, by and among Scot L. Johnson ("Johnson"), Edwin T. Longo ("Longo", and together with Johnson collectively referred to herein as "Licensors"), and Psoria-Shield Inc. (“PSI” or "Licensee").

Upon the execution of the Exclusive License Agreement, Licensee acquired, and Licensors granted to Licensee, for the duration of the License Term (as defined below), the sole and exclusive (including to the exclusion of Licensors), worldwide, paid-up, royalty-free right and license under the Licensed Patents, Know-how, Technical Data, and any Improvements as defined in the Exclusive License Agreement to develop, make, have made, use, sell, offer to sell, distribute, export, import, and otherwise commercialize the Licensed Product(s) in the Field. This license shall include the right of Licensee to grant sublicenses and distribution rights in the Field.

Consideration for License

As the sole and exclusive consideration for the rights and license granted in the Exclusive License Agreement, each of the Licensors received, on the date of signing, 3,000,000 shares of the common stock of PSI, or 6,000,000 shares of PSI in aggregate, which were valued at the stockholders’ cost basis of nil.

License Term

The term of the rights and license granted herein shall commence upon the date of signing of the Exclusive License Agreement and shall continue in effect in perpetuity unless and to the extent terminated as set forth in Sections 5.2 through 5.4 of the License Term of the Exclusive License Agreement.

The License may be terminated at any time by the mutual written agreement of each of the Licensors and Licensee.

(ii)

Exclusive License Agreement for Provisional Patent No. 2 Signed on December 11, 2010

Grant of License

An exclusive license agreement ("Exclusive License Agreement") was made and entered into on December 11, 2010, by and between Scot L. Johnson ("Johnson" or referred to herein as "Licensor"), and Psoria-Shield Inc. (“PSI” or "Licensee").

Upon the execution of the Exclusive License Agreement, Licensee acquired, and Licensor granted to Licensee, for the duration of the License Term (as defined below), the sole and exclusive (including to the exclusion of Licensor), worldwide, paid-up, royalty-free right and license under the Licensed Patents, Know-how, Technical Data, and any Improvements as defined in the Exclusive License Agreement to develop, make, have made, use, sell, offer to sell, distribute, export, import, and otherwise commercialize the Licensed Product(s) in the Field. This license shall include the right of Licensee to grant sublicenses and distribution rights in the Field.

Consideration for License

As the sole and exclusive consideration for the rights and license granted in the Exclusive License Agreement, the Licensor received, on the date of signing, 5,000 shares of the common stock of PSI, which was valued at the stockholder’s cost basis of $5,000.

License Term

The term of the rights and licenses granted herein shall commence upon the date of signing of the Exclusive License Agreement and shall continue in effect in perpetuity unless and to the extent terminated as set forth in Sections 5.2 through 5.4 of the License Term of the Exclusive License Agreement.

The License may be terminated at any time by the mutual written agreement of each of the Licensors and Licensee.

Amortization Expense

Amortization expense was $187 each for the reporting period ended June 30, 2014 and 2013.

Patents - StealthCo

The Company follows the guidelines as set out in paragraph 350-30-25-3 and paragraph 350-30-35-6 of the FASB Accounting Standards Codification for patent. For acquired patents the Company records the costs to acquire patents as patent and amortizes the patent acquisition cost over its remaining legal life, or estimated useful life, or the term of the contract, whichever is shorter. For internal developed patents, all costs incurred to the point when a patent application is to be filed are expended as incurred as research and development expense; patent application costs, generally legal costs, thereafter incurred are capitalized, which are to be amortized once the patents are granted or expended if the patent application is rejected. The Company amortizes the internal developed patents over the shorter of the expected useful lives or the legal lives of the patents, which are generally 17 to 20 years for domestic patents and 5 to 20 years for foreign patents from the date when the patents are granted. The costs of defending and maintaining patents are expended as incurred. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts.

The Company acquired certain patents from the acquisition of certain assets from SMI and amortizes the acquisition cost over patent acquisition cost over its remaining legal life.

(i)

Amortization Expense

Amortization expense was $7,847 for the reporting period ended June 30, 2014.

Summary of Patents and Exclusive Licenses

The patents and exclusive licenses were as follows:


	Estimated Useful Life (Years)	June 30, 2014			September 30, 2013

PSI

Exclusive license	20	$	5,000		$	5,000

Accumulated amortization			(875	)		(688	)

Accumulated impairment			-			-

			4,125			4,312

Patents	15	$	201,497		$	-

Accumulated amortization			(7,847	)		-

Accumulated impairment			-			-

			193,650			-


Total

Exclusive license and patens			206,497			5,000

Accumulated amortization			(8,722	)		(688	)

Accumulated impairment			-			-

		$	197,775		$	4312

Acquired Technologies

Acquired technologies, stated at cost, less accumulated amortization consisted of the following:


	Estimated Useful Life (Years)	June 30, 2014			September 30, 2013

CNS

Acquired technologies	20	$	325,000		$	325,000

Accumulated amortization			(27,080	)		(18,956	)

Accumulated impairment			(297,920	)		-

			-			306,044

PSI

Acquired technologies	20		2,095,000			2,095,000

Accumulated amortization			(192,038	)		(113,477	)

Accumulated impairment			(-	)		(-	)

			1,902,962			1,981,527

Total

Acquired technologies			2,420,000			2,420,000

Accumulated amortization			(219,118	)		(132,433	)

Accumulated impairment			(297,920	)		(-	)

		$	1,902,962		$	2,287,567

Amortization Expense

Amortization expense was $86,685 and $90,747 for the reporting period ended June 30, 2014 and 2013, respectively

Non-compete Agreements

Non-compete agreements, stated at cost, less accumulated amortization consisted of the following:


	Estimated Useful Life (Years)	June 30, 2014			September 30, 2013

CNS

Non-Compete agreement	3	$	120,000		$	120,000

Accumulated amortization			(66,660	)		(46,662	)

Accumulated impairment			(53,340	)		(-	)

			-			73,338

PSI

Non-Compete agreement	4		120,000			120,000

Accumulated amortization			(55,000	)		(32,500	)

Accumulated impairment			(-	)		(-	)

			72,500			87,500

Total

Non-Compete agreements			240,000			240,000

Accumulated amortization			(121,660	)		(79,162	)

Accumulated impairment			(53,340	)		(-	)

		$	65,000		$	160,838

Amortization Expense

Amortization expense was $42,498 and $52,497 for the reporting period ended June 30, 2014 and 2013, respectively.

Trademarks

Trademarks, stated at cost, less accumulated amortization consisted of the following:


	Estimated Useful Life (Years)	June 30, 2014			September 30, 2013

CNS

Trademark	7	$	110,000		$	110,000

Accumulated amortization			(20,380	)		(14,266	)

Accumulated impairment			(89,620	)		(-	)

			-			95,734

PSI

Trademark - Psoria-Light	7		420,000			420,000

Accumulated amortization			(102,500	)		(57,500	)

Accumulated impairment			(-	)		(-	)

			317,500			362,500

Trademark - Psoria-Shield	7		210,000			210,000

Accumulated amortization			(62,500	)		(40,000	)

Accumulated impairment			(-	)		(-	)

			147,500			170,000

Total

Trademarks			740,000			740,000

Accumulated amortization			(185,380	)		(111,766	)

Accumulated impairment			(89,620	)		(-	)

		$	465,000		$	628,234

Amortization Expense

Amortization expense was $73,614 and $76,671 for the reporting period ended June 30, 2014 and 2013, respectively.

Impairment

The Company completed the annual impairment test of intangible assets other than goodwill inclusive of acquired technologies, exclusive licenses, non-compete agreements and trademarks and determined that there was total $440,880 impairment to the fair value of intangible assets other than goodwill inclusive of acquired technologies, exclusive licenses, non-compete agreements, and trademarks.

Note 8 – Goodwill

Goodwill, stated at cost, less accumulated impairment, if any, consisted of the following:


	June 30, 2014			September 30, 2013

Acquisition of CNS

Goodwill	$	2,868,045		$	2,868,045

Accumulated impairment		(2,868,045	)		(-	)

		-			2,868,045

Acquisition of NPC

Goodwill	$	1,200,000		$	-

Accumulated impairment		(-	)		(-	)

		1,200,000			-

Acquisition of PSI

Goodwill		1,716,603			1,716,603

Accumulated impairment		(-	)		(-	)

		1,716,603			1,716,603

Total

Acquired technologies		5,784,648			4,584,648

Accumulated impairment		(2,868,045	)		(-	)

	$	2,916,603		$	4,584,648

Impairment

The Company completed the interim impairment test of goodwill and determined that there was an impairment of $2,868,045 to the goodwill at June 30, 2014.

Note 9 – Website Development Costs

Website development costs, stated at cost, less accumulated amortization consisted of the following:


	Estimated Useful Life (Years)	June 30, 2014			September 30, 2013

Website development costs	3	$	22,809		$	22,809

Less accumulated amortization			(13,277	)		(8,826	)

		$	9,532		$	13,983

(i)

Amortization Expense

Amortization expense was $4,451 and $4,446 for the reporting period ended June 30, 2014 and 2013, respectively.

(ii)

Impairment

The Company completed the annual impairment test of website development costs and determined that there was no impairment as the fair value of website development costs, exceeded their carrying values at September 30, 2013.

Note 10 – Notes Payable

(i) April 16, 2014 Note Payable

General Terms

On April 16, 2014, the Company (the “Borrower”) entered into a Promissory Note Agreement (the “Note”) with an investor (the “Lender”) for up to $350,000 principal that is to be transferred in tranches. The consideration is $315,000 payable with a 10% original interest discount and will mature after two years from the date of each payment. The Lender shall pay $150,000 of Consideration upon closing of this Note. The Lender may pay additional Consideration to the Borrower in such amounts and at such dates as Lender may choose in its sole discretion.

Zero Percent Interest for the First Three Months

The Company may repay each payment of consideration on or before 90 days from the payment date with zero percent interest and a one-time interest charge of 12% shall be applied to principal sum after 90 days from the effective date.

Conversion

The Lender has the right, at any time after 180 days from the effective date, to convert the outstanding and unpaid notes principal and interest due into the Company’s common shares. The conversion price is the lesser of $0.70 or 65% of the average of the two lowest closing prices in the 25 trading days previous to the conversion.

Piggyback Registration Rights

The Company shall include on the next registration statement the Company files with SEC (or on the subsequent registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note. Failure to do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than $25,000, being immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.

The notes payable are as follows:


	June 30, 2014			September 30, 2013

On April 16, 2014 the Company issued a note in the principal amount of $166,667 with a 10% Original Issuance Discount ("OID") and 12% one-time interest if not being fully repaid on or before 90 days from the payment date. The note is due two year from the date of issuance, convertible after 180 days from the payment date as of October 16, 2014 at the lesser of $0.70 or 65% of the two lowest trade prices for the 25 trade day period before the conversion date. On July 15, 2014 the Company accrued the one-time interest charge of $20,000 on the note.	$	166,667		$	-

On June 23, 2014 the Company issued a note in the principal amount of $55,556 with a 10% Original Issuance Discount ("OID") and 12% one-time interest if not being fully repaid on or before 90 days from the payment date. The note is due two years from the date of issuance, convertible after 180 days from the payment date as January 22, 2015 at the lesser of $0.70 or 65% of the two lowest trade price for the 25 trade day period before the conversion date.		55,556			-

Sub-total: notes payable		222,223			-

Discount representing the original issue discount		(22,223	)		(-	)

Accumulated amortization of discount of notes payable		1,388			-

Remaining discount		(20,835	)		-

	$	201,388		$	-

Note 11 – Related Party Transactions

Related Parties

Related parties with whom the Company had transactions are:


Related Parties		Relationship

Andrew J. Kandalepas		Chairman, CEO, significant stockholder and director

CADserv Corporation		An entity owned and controlled by significant stockholder

Jay Joshi, MD		Chief Medical Officer of the Company, President and CEO of NPC, stockholder and director

Rich Howard		President and CEO of SCI and stockholder

Advances from Stockholders

From time to time, stockholders of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.

Note Receivable – Chairman, President and CEO


	June 30, 2014			September 30, 2013

On September 30, 2013, Mr. Andrew Kandalepas, Chairman, President and CEO of the Company (“Maker”), issued a note to pay to the order of Wellness Center USA, Inc. ("Lender"), the principal sum of Two Hundred Fifty Thousand Dollars ($250,000), together with interest at 7.0% per annum, in six quarterly payments of principal and accrued interest, beginning on April 1, 2014 and continuing on the first day of each calendar quarter thereafter, with all principal and interest to be paid in full on or before July 1, 2015 (the "Maturity Date"). After the Maturity Date, and in addition to the interest described above which is due on or prior to the Maturity Date, Maker shall pay interest on the balance of principal remaining unpaid during any such period at an annual rate equal to ten percent (10%) (the "Default Rate"). The interest accruing under this paragraph shall be immediately due and payable by Maker to, and shall be additional indebtedness evidenced by, this Note.	$	250,000		$	250,000

Repayments from inception to date		(27,000	)		(-	)

Remaining balance		223,000			250,000

Current maturity of note receivable - Chairman, President and CEO		(135,233	)		(83,333	)

Note receivable - Chairman, President and CEO, net of current maturity	$	87,767		$	166,667

Note Payable – Related Party


	June 30, 2014		September 30, 2013

On August 29, 2010 CNS issued a promissory note to a family member of a stockholder, then one of CNS' members to memorialize (i) the receipt of the funds in the amount of $37,139 and (ii) the terms of note. Pursuant to the terms, the note accrues simple interest of 5% per annum until the note is fully repaid. Interest has been computed as of the date of the receipt of the funds. The note is due on demand.	$	37,139	$	37,139

	$	37,139	$	37,139

Long-Term Notes Payable – Officers


	June 30, 2014			September 30, 2013

On August 2, 2012, upon the acquisition of CNS by WCUI, CNS memorialized the advances from the former member as a promissory note to the officer. Pursuant to the terms and conditions of the note, CNS promises to pay the officer the principal sum of $120,886.30 and the note accrues simple interest at 2% per annum, payable annually on each anniversary date of the Note. The entire principal balance together with any accrued but unpaid interest thereon is due August 2, 2015.

Original amount	$	120,886		$	120,886

Repayments from inception to date		(32,862	)		(26,956	)

Remaining balance		88,024			93,930

On August 2, 2012, upon the acquisition of CNS by WCUI, CNS memorialized the advances from the former member as a promissory note to the officer. Pursuant to the terms and conditions of the note, CNS promises to pay the officer the principal sum of $75,322.14 and the note accrues simple interest of 2%, per annum ,payable annually on each anniversary date of the Note. The entire principal balance together with any accrued but unpaid interest thereon is due August 2, 2015.

Original amount		75,322			75,322

Repayments from inception to date		(26,898	)		(28,515	)

Remaining balance		48,424			46,807

	$	136,448		$	140,737

Note 12 – Commitments and Contingencies

Employment Agreements - CNS

Employment Agreement - William A. Lambos

On August 2, 2012, the Company entered into an employment agreement (the “Employment Agreement”) with William A. Lambos (the “Executive”). Under the Employment Agreement, the Company acquired from the Executive all of the Executive’s limited liability company membership interests in CNS-Wellness Florida, LLC, a Florida limited liability company, in exchange for 3,650,000 shares of $0.001 par value common stock of the Company, The Company hereby employs the Executive, and the Executive hereby accepts such employment, upon the terms and conditions stated herein (1) The Executive is engaged to serve as the Chief Executive Officer of the Company’s subsidiary CNS Wellness Florida, (2) The Executive’s employment under this Agreement shall commence on the date hereof and shall continue in effect until July 31, 2015. the Executive understands that he is an at-will Executive, and that the Company may terminate his employment at any time (3) The Company shall pay to the Executive a base annual salary of $150,000, subject to increase, but not decrease, from time to time by the Board of Directors of the Company, provided other benefits and retirement plans (4) If at any time on or before July 31, 2015 the employment of the Executive is terminated by the Executive other than for good reason, or by the Company for cause, then the Company shall pay to the Executive any compensation earned but not paid to the Executive prior to the effective date of such termination (5) The Executive covenants and agrees that during the term of the Executive's employment, whether pursuant to this Agreement, any renewal hereof, or otherwise, and for a period of two years (the “Restricted Period”) after the later of the expiration of this Agreement or the termination of his employment with the Company, in the State(s) in which the Company conducts business as of the Executive's termination of employment, he will not, directly or indirectly (through one or more intermediaries), whether individually, or as an officer, director, agent, shareholder of 5% or more of the applicable company’s outstanding equity shares, member, partner, joint venturer, investor (other than as a passive trader in publicly traded securities), consultant or otherwise, compete in whole or in part with the business then engaged in by the Company. This Section shall not apply in the event of a termination by the Executive for good reason or a termination by the Company without cause.

Effective January 24, 2014, the employment agreement of William A. Lambos, PhD. and his employment thereunder was terminated by the action of the Company’s Board of Directors. Dr. Lambos subsequently resigned from the Board of Directors.

Employment Agreement - Peter A. Hannouche

On August 2, 2012, the Company entered into an employment agreement (the “Employment Agreement”) with Peter A. Hannouche (the “Executive”) with the same terms and conditions of the Employment Agreement with William A. Lambos.

Effective January 24, 2014, the employment agreement of Peter A. Hannouche and his employment thereunder was terminated by the action of the Company’s Board of Directors. Mr. Hannouche subsequently resigned from the Board of Directors.

Employment Agreements - NPC

Employment Agreement – Jay Joshi, MD

On February 28, 2014, the Company entered into an employment agreement (the “Employment Agreement”) with Jay Joshi, MD, a physician (the “Executive”). Under the Employment Agreement, the Company acquired from the Executive all of the Executive’s shares of common stock in National Pain Centers, Inc, a Nevada corporation, in exchange for 5,000,000 shares of $0.001 par value common stock of the Company, for the consideration given and received herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Executive and the Company hereby agree as follows:

Term

The Executive’s employment under this Agreement shall commence on the date hereof, and this Agreement shall commence as of that date and shall continue in effect until February 27, 2019. The parties expressly understand that nothing in this Agreement is a guarantee or assurance of employment for any specific period of time. Rather, subject to the notice provisions set forth in Section 6(c), the Executive understands that he is an at-will Executive, and that the Company may terminate his employment at any time, and the Executive is similarly free to resign at any time.

Duties

The Executive is engaged to serve as the Chief Medical Officer of the Company and the President and CEO of the Company’s wholly-owned subsidiary, NPC. Executive shall have such duties as are customarily associated with such positions including but not limited to overall responsibility and authority for general operations, management, and employment matters and relationships, as well as such other senior executive duties as may from time to time be reasonably assigned to him by the Company’s CEO and/or Board of Directors. In addition, at every election for the Company's Board of Directors while the Executive is employed by the Company hereunder, the Company will nominate the Executive to be elected to serve on the Board of Directors.

Compensations

(a) Base Salary. The Company shall pay to the Executive as compensation for services rendered by the Executive hereunder a base annual salary of $200,000, subject to increase, but not decrease, from time to time by the CEO and/or the Board of Directors of the Company. The base salary paid to the Executive is subject to such payroll and other deductions as may be agreed upon by the parties or required by law. This salary shall be paid in accordance with Company's customary biweekly payroll procedure.

(b) Benefits. Upon the signing of the agreement, Executive shall be issued a signing stock option to purchase 400,000 Shares at an exercise price of $0.40. Further, provided Executive remains employed by the Company, he will be granted additional stock options to buy up to an aggregate total of 1,000,000 shares of the Company’s common stock, at a vesting schedule of 200,000 per quarter, starting with the quarter ending September 30, 2014. Each Stock option tranche shall carry an exercise price equal to the then market closing price, at the end of each quarter. All other terms and conditions not specified herein will be treated in accordance with the Company’s 2010 Non-Qualified Stock Compensation Plan. In the event of an acquisition or merger of the Company, all options granted or scheduled to be granted shall convert immediately into the incumbent company’s shares or be paid in cash on a cashless provision.

Termination

The Executive or the Company may voluntarily elect to terminate this Agreement (a termination "Without Cause") by delivering to the other party, at least ninety (90) days prior to the date upon which termination is desired, by written notice of such intention to terminate.

Covenant not to Compete

The Executive covenants and agrees that during the term of the Executive's employment, whether pursuant to this Agreement, any renewal hereof, or otherwise, and for a period of one year (the “Restricted Period”) after the later of the expiration of this Agreement or the termination of his employment with the Company, in the State(s) in which the Company conducts business as of the Executive's termination of employment, he will not, directly or indirectly (through one or more intermediaries), whether individually, or as an officer, director, agent, shareholder of 5% or more of the applicable company’s outstanding equity shares, member, partner, joint venturer, investor (other than as a passive trader in publicly traded securities), consultant or otherwise, compete in whole or in part with the business then engaged in by the Company.

Employment Agreements - WCUI

Employment Agreement – Donald Swanson

On February 28, 2014, the Company entered into an employment agreement (the “Employment Agreement”) with Donald Swanson (the “Executive”) for the consideration given and received herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Executive and the Company hereby agree as follows:

Term

The Executive’s employment under this Agreement shall commence on the date hereof, and this Agreement shall commence as of that date and shall continue in effect until February 27, 2017. The parties expressly understand that nothing in this Agreement is a guarantee or assurance of employment for any specific period of time. Rather, subject to the notice provisions set forth in Section 6(c), the Executive understands that he is an at-will Executive, and that the Company may terminate his employment at any time, and the Executive is similarly free to resign at any time.

Duties

The Executive is engaged to serve as the Chief Operating Officer of the Company, reporting to the Company's CEO. Executive shall have such duties as are customarily associated with such positions including but not limited to overall responsibility and authority for general operations, management, employment matters and relationships, as well as such other senior executive duties as may from time to time be reasonably assigned to him by the Company's CEO and/or Board of Directors. The Executive shall perform such services subject to the direction, supervision, and rules and regulations of the Company and the Company's Board of Directors.

Compensations

(b) Benefits. Upon the signing of the agreement, Executive shall be issued a signing stock option to purchase 1,400,000 Shares at an exercise price of $0.40. Further, provided Executive remains employed by the Company, he will be granted additional stock options to buy up to an aggregate total of 1,000,000 shares of the Company’s common stock, at a vesting schedule of 200,000 per quarter, starting with the quarter ending September 30, 2014. Each Stock option tranche shall carry an exercise price equal to the then market closing price, at the end of each quarter. All other terms and conditions not specified herein will be treated in accordance with the Company’s 2010 Non-Qualified Stock Compensation Plan. In the event of an acquisition or merger of the Company, all options granted or scheduled to be granted shall convert immediately into the incumbent company’s shares or be paid in cash on a cashless provision.

Termination

Covenant not to Compete

Separation Agreement

On June 10, 2014, Donald Swanson entered into a separation agreement (“Separation Agreement”) with the Company where he resigned from all positions and employment with the Company and the Employment agreement with the Company was terminated. The Company shall pay the Executive in the amount of $1,180 representing all the payable compensation as well as $3,820 representing all the reimbursement expense through the separation date. The Company acknowledges that the Executive currently holds options to purchase 1,400,000 shares of the Company’s common stock at an exercise price of $0.40 per share.

Operating Lease with a Related Party - WCUI

On December 20, 2010 the Company entered into a non-cancellable sub-lease for office space in Illinois with CADserv Corporation for $1,909.50 per month for a period of 12 months from January 1, 2011 through December 31, 2011.

On January 10, 2012 the Company renewed the non-cancellable sub-lease for office space in Illinois with CADserv Corporation with the same terms and condition for a period of 12 months from January 1, 2012 through December 31, 2012.

On December 19, 2012 the Company renewed the non-cancellable sub-lease for office space in Illinois with CADserv Corporation with the same terms and condition for a period of 12 months from January 1, 2013 through December 31, 2013.

On November 25, 2013 the Company renewed the non-cancellable sub-lease for office space in Illinois with CADserv Corporation with the same terms and condition for a period of 12 months from January 1, 2014 through December 31, 2014.

Future minimum lease payments required under the non-cancelable operating lease are as follows:


Fiscal year ending September 30:

2014 (remainder of the year)	$	5,729

2015		5,728

	$	11,457

Operating Lease - CNS

On August 10, 2010 CNS entered into a non-cancellable sub-lease for office space of approximate 4,552 square feet of rentable area in Tampa, Florida with Teachers Insurance and Annuity Association of America for the benefit of its Separate Real Estate Account, a New York corporation ("Landlord"), effective December 1, 2010, for a period of 65 months from December 1, 2010 through April 30, 2016. On August 10, 2010, in conjunction with the signing of the lease, CNS deposited (i) $11,364.82 representing one (1) month of base rent for the sixth (6^th) month of the Initial Term) and (ii) $36,939 representing the security deposit into a certificate of deposit as a security deposit upon execution. The certificate of deposit is forfeitable to the landlord of the facility upon any event of default by CNS.

Future minimum lease payments inclusive of related tax required under the non-cancelable operating lease are as follows:


Fiscal year ending September 30:

2014 (remainder of the year)	$	37,261

2015		152,402

	$	189,663

CNS paid the rent through January 31, 2014 and accrued its rent obligation on its books after February 2014; however, CNS stopped paying the rent as of February 1, 2014. The Company is not aware of pending legal action involving the lease.

Deferred Rent

To induce CNS to enter into the operating lease for a period of 65 months the Landlord granted free rent for the first five (5) months of the occupancy. The first five (5) month cumulative rent expense is recognized on a straight-line basis over the duration of the initial lease term of 65 months.

Operating Lease - PSI

On January 4, 2011 the Company entered into a non-cancellable lease for office space of approximately 3,050 square feet of rentable area in aggregate in Tampa, Florida with a third party for a period of 12 months from the date of signing at $3,000 per month plus tax and common charges.

On January 4, 2012 the Company renewed the non-cancellable lease for an additional 12 months expiring January 3, 2013 with the same terms and conditions.

On January 4, 2013 the Company renewed the non-cancellable lease for an office space of approximately 2,000 square feet of rentable area for an additional 12 months expiring January 3, 2014 at $2,000 per month plus tax and common charges.

The Company and the landlord have tentatively agreed to renew the non-cancellable lease for an office space of approximately 2,000 square feet of rentable area for an additional 12 months expiring January 3, 2015 at $2,000 per month plus tax and common charges.

Future minimum lease payments inclusive of related tax required under the non-cancelable operating lease are as follows:


Fiscal year ending September 30:

2014 (remainder of the year)	$	6,420

2015		6,420

	$	12,840

Note 13 – Stockholders’ Equity (Deficit)

Shares Authorized

Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is Seventy Five Million (75,000,000) shares of which Seventy Five Million (75,000,000) shares shall be Common Stock, par value $.001 per share.

Common Stock

Sale of Common Stock or Equity Units

On November 29, 2012 the Company issued a total of 1,447,550 shares of its common stock at $0.10 per share for an aggregate of $144,755 in cash.

Between December 4, 2012 and December 29, 2012 the Company sold a total of 520,999 equity units consisting of one (1) common share and a warrant to purchase one (1) common share with an exercise price of $0.45 per share expiring five (5) years from the date of issuance at $0.30 per unit or $156,300 in cash, $108,786 ($0.21 per common share) and $47,514 ($0.09 per warrant share) of which were allocated as the relative fair value of the common stock and warrants, respectively.

During the quarter ended December 31, 2012, warrants to purchase 1,777,000 shares with an exercise price of $0.01 per share were exercised by shareholders for an aggregate of $17,770 in cash.

During the quarter ended March 31, 2013 the Company sold 3,096,603 equity units consisting of one (1) common share and a warrant to purchase one (1) common share with an exercise price of $0.45 per share, expiring five (5) years from the date of issuance, at $0.30 per unit or $928,980; $651,216 ($0.21 per common share) and $277,764 ($0.09 per warrant share) were allocated as the relative fair value of the common stock and warrants, respectively.

During the quarter ended March 31, 2013, warrants to purchase 80,000 shares with an exercise price of $0.01 per share were exercised by shareholders for an aggregate of $800 in cash.

During the quarter ended June 30, 2013 the Company sold 601,668 equity units consisting of one (1) common share and a warrant to purchase one (1) common share with an exercise price of $0.45 per share, expiring five (5) years from the date of issuance, at $0.30 per unit or $180,500; $126,109 ($0.21 per common share) and $53,789 ($0.09 per warrant share) were allocated as the relative fair value of the common stock and warrants, respectively.

On May 9, 2013 the Company sold 40,000 equity units consisting of one (1) common share and a warrant to purchase one (1) common share with an exercise price of $1.00 per share, expiring five (5) years from the date of issuance, at $0.50 per unit or $20,000; $14,740 ($0.37 per common share) and $5,220 ($0.13 per warrant share) were allocated as the relative fair value of the common stock and warrants, respectively.

On April 19, 2013, the placement agent exercised its warrant to purchase 59,201 shares of the Company’s common stock with an exercise price of $0.30 per share, on a cashless basis, per the placement agent agreement, and the Company issued 44,643 shares of its common stock to the placement agent.

On May 7, 2013, warrants to purchase 100,000 shares with an exercise price of $0.01 per share were exercised by a shareholder for $1,000 in cash.

On May 29, 2013, warrants to purchase 100,001 shares with an exercise price of $0.45 per share were exercised by a shareholder for $45,000 in cash.

During the quarter ended September 30, 2013, the Company raised $1,648,500 from the issuance of (i) 4,121,250 common shares of the Company; (ii) warrants to purchase 4,121,250 common shares with an exercise price of $0.75 per share, expiring five (5) years from the date of issuance, and (iii) warrants to purchase 250,000 common shares with an exercise price of $0.45 per share expiring five (5) years from the date of issuance; of which $1,281,297 ($0.31 per common share) and $367,203 ($0.29 per warrant share) were allocated as the relative fair value of the common stock and warrants, respectively. In connection with this tranche of equity finance the Company paid certain placement agents finder's fee at 10%, or $148,550 in the aggregate.

On July 13 and September 13, 2013, warrants to purchase 87,000 shares with an exercise price of $0.01 per share were exercised by shareholders for $870 in cash.

During the period ended March 31, 2014, the Company raised $266,450 from the issuance of (i) 775,239 common shares of the Company; (ii) warrants to purchase 793,333 common shares with an exercise price of $0.30 per share, expiring five (5) years from the date of issuance, and (iii) warrants to purchase 228,572 common shares with an exercise price of $0.35 per share expiring five (5) years from the date of issuance; and (iv) warrants to purchase 150,000 common shares with an exercise price of $0.45 per share expiring five (5) years from the date of issuance.

During the period ended June 30, 2014, the Company sold 57,222 equity units consisting of one (1) common share and a warrant to purchase one (1) common share with an exercise price of $0.65 per share, expiring five (5) years from the date of issuance, at $0.45 per unit or $25,750; $18,482 ($0.32 per common share) and $7,210 ($0.13 per warrant share) were allocated as the relative fair value of the common stock and warrants, respectively.

Issuance of Common Stock or Equity Units for Employee Services

On July 3, 2013, the Company issued 244,260 common shares to two employees for their past services, valued at $24,260 based on more reliably measurable employee services received.

Issuance of Common Stock or Equity Units to Parties Other Than Employees for Acquiring Goods or Services

On March 13, 2012, the Company entered into a consulting agreement (the "Consulting Agreement") with a Consultant (the "Consultant”) for a period of one (1) year from the date of signing whereby the Company agreed to retain the Consultant and the Consultant agreed to identify possible sources of working capital for the Company. As consideration for the services, the Company granted (i) 50,000 shares of its common stock and (ii) options to purchase 50,000 shares of common stock with an exercise price of $0.44 per share expiring five (5) years from the date of issuance to the Consultant. The common shares and warrants are earned ratably over the term of the Consulting Agreement, every three (3) months, and the unearned shares are forfeitable in the event of non-performance by the Consultant. Pursuant to Paragraph 505-50-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the date of issuance and no entry should be recorded. 12,500 common shares and an option to purchase 12,500 common shares with an exercise price of $0.44 per share each are to be earned on a quarterly basis. For the quarter ended June 30, 2012, 12,500 common shares were earned and valued at $1.10 per share, then PPM price, or $13,750 and the option to purchase 12,500 common shares was earned and valued at $3,565. For the quarter ended September 30, 2012, 12,500 common shares were earned and valued at $0.30 per share, then PPM price, or $3,750 and option to purchase 12,500 common shares was earned and valued at $3,565. For the quarter ended December 31, 2012, 12,500 common shares were earned and valued at $0.30 per share, then PPM price, or $3,750 and option to purchase 12,500 common shares was earned and valued at $3,565. For the quarter ended March 31, 2013, 12,500 common shares were earned and valued at $0.30 per share, then PPM price, or $3,750 and option to purchase 12,500 common shares was earned and valued at $3,570.

On September 11, 2012, the Company entered into a consulting agreement (the "Consulting Agreement") with a consulting firm (the "Consultant”). Under the terms and conditions of the Consulting Agreement, the Company agreed to retain the Consultant and the Consultant agreed to identify possible sources of working capital for the Company for a period of one (1) year from the date of signing. As consideration for the services, the Company would pay the consultant monthly for four (4) terms: (i) cash of $8,000 each month for the first term of three (3) months; grant 35,000 common shares monthly for the first term of three (3) months to the Consultant. (ii) cash of $10,000 each month for the second term of three (3) months; grant 30,000 common shares monthly for the second term of three (3) months. (iii) cash of $17,000 each month for the third term of three (3) months; grant 25,000 common shares monthly for the third term of three (3) months. (iv) cash of $20,000 each month for the fourth term of three (3) months; grant 20,000 common shares monthly for the fourth term of three (3) months. For the quarter ended September 30, 2012, the Company paid $8,000 in cash and issued 35,000 common shares valued at $0.38 per share, or $13,300. On October 15, 2012 the Consultant and the Company agreed to terminate the Consulting Agreement. For the period from October 1, 2012 through October 15, 2012, the Company did not pay any cash to the Consultant and issued 70,000 common shares in aggregate which were valued at $0.43 per share, or $30,100.

On October 26, 2012, the Company entered into a Placement Agreement ("Placement Agreement") with Security Research Associates, Inc. ("SRA" or the "Placement Agent")) that SRA was engaged during the engagement period commencing on the date of this Placement Agreement and ending on the earlier to occur of May 31, 2013 or the termination of this Agreement (“Engagement Period”), as exclusive placement agent on a "best-efforts" basis in connection with a proposed private placement of securities to be issued by the Company in accordance with the proposed terms. The Company agrees to pay to SRA a transaction fee (the "Transaction Fee") consisting of (i) 8% (eight percent) of the gross proceeds from the Financing received by the Company from all investors (the "Investors"), and (ii) 5 year Warrants (the "Warrant") to acquire a number of shares of the Company's Common Shares equal to 8% (eight percent) of the aggregate gross proceeds from the Financing received by the Company divided by the effective price per share of the Company's common shares paid by all of the Investors in the Financing received by the Company at closing (the "SRA Warrants"). The Transaction Fee shall be payable with respect to any Financing consummated during the Engagement Period and also with respect to any similar financing consummated within 12 months of the end of the Engagement Period. The SRA Warrants issued by the Company pursuant to this Placement Agreement will have an exercise price which will be the same as the price of such warrants issued to the Investors in the Financing. SRA Warrants issued pursuant to the Placement Agreement shall have piggyback registration rights, will include customary adjustments in the event of stock dividends and/or stock splits, reclassifications, reorganizations and/or business combinations involving the Company, will have a "cashless exercise" provision and, in the event Investors receive warrants, will contain such additional rights as are contained in the warrants issued to the Investors. On April 19, 2013, the Company issued a warrant to purchase 59,201 shares of the Company’s common stock with an exercise price of $0.30 per share to the Placement Agent. The Company estimated the relative fair value of the warrant at $9,289 at the date of issuance using the Black-Scholes Option Pricing Model. The Placement Agent exercised its warrant to purchase 59,201 shares of the Company’s common stock, on a cashless basis, on April 19, 2013, and the Company issued 44,643 shares of its common stock to the Placement Agent pursuant to the Placement Agreement.

On February 26, 2013, the Company entered into a Consulting agreement (the "Consulting Agreement"), with a Consultant (the "Consultant”). Under the terms and conditions of the Consulting Agreement, the Company agreed to retain the Consultant and the Consultant agreed to identify possible sources of working capital for the Company for a period of one (1) year from the date of signing. As consideration for services, the Company would (i) pay $20,000 in cash; and (ii) grant (a) 550,000 shares of its common stock and (b) an option to purchase 300,000 shares of common stock with an exercise price of $0.30 per share, expiring five (5) years from the date of issuance, to the Consultant. The Company ratably recognizes the $20,000 payment in cash over the term of the Consulting Agreement. 550,000 common shares were valued at $0.30 per share, the PPM price, or $165,000, and the option to purchase 300,000 shares of common stock were valued at $47,490, or $212,490 in aggregate, all of which were expensed as consulting fees upon signing of the agreement as these common shares and warrants were issued upon signing the agreement and are fully vested and non-forfeitable.

On March 17, 2013, the Company entered into a Financing Service agreement (the "Financing Service Agreement"), with a Consultant (the "Consultant”). Under the terms and conditions of the Financing Service Agreement, the Company agreed to retain the Consultant and the Consultant agreed to identify possible sources of working capital for the Company for a period of one (1) year from the date of signing. As consideration for services, the Company would grant (i) 600,000 shares of its common stock and (ii) an option to purchase 400,000 shares of its common stock with an exercise price of $0.30 per share expiring five (5) years from the date of issuance to the Consultant. 600,000 common shares were valued at $0.30 per share, the PPM price, or $180,000 and the option to purchase 400,000 shares of common stock were valued at $63,080, or $243,080 in aggregate, all of which were expensed as consulting fees upon signing of the agreement as these common shares and warrants are issued upon signing the agreement and are fully vested and non-forfeitable.

On April 9, 2013, the Company issued 50,000 shares of its common stock to a consultant for consulting services. These fully vested and non-forfeitable shares were valued at $0.30 per share, the PPM price, or $15,000, all of which were expensed as consulting fees.

On April 9, 2013, the Company issued 30,000 shares of its common stock to a foundation. These fully vested and non-forfeitable shares were valued at $0.30 per share, the most recent PPM price, or $9,000, which were recorded as charitable contribution.

On July 18, 2013, the Company entered into a Consulting agreement (the "Consulting Agreement") with a consulting firm (the "Consultant”). Under the terms and conditions of the Consulting Agreement, the Consultant agreed to provide marketing and promotion services for the Company for a period of one (1) year from the date of signing. As consideration for services, the Company would (i) pay $20,000 per month in cash; and (ii) grant (a) 50,000 shares of its common stock for the first month of engagement and (b) 20,000 shares of common stock per subsequent month. During the period ending September 30, 2013, the Company issued 70,000 common shares in aggregate to the consultant valued at $0.40 per share, the most recent PPM price, or $28,000, all of which were expensed as consulting fees. On October 8, 2013, the Company issued 20,000 common shares to the consultant valued at $0.40 per share, the most recent PPM price, or $8,000, all of which were expensed as consulting fees during the period ending December 31, 2013. On April 21, 2014, the Company issued 120,000 common shares to the consultant for the service period from November 2013 to April 2014, valued at $0.40 per share, the most recent PPM price, or $48,000, all of which were expensed as consulting fees upon issuance.

On September 3, 2013, the Company entered into a service agreement (the "Service Agreement") with a marketing firm (the "Consultant”). Under the terms and conditions of the Service Agreement, the Consultant agreed to provide marketing and public relation services for the Company through the end of 2013. As consideration for the services, the Company would pay (i) $2,000 per month in cash; and (ii) $2,000 worth of the Company’s common stock. The Company also entered another public event service agreement with the consultant for compensation of $4,600 in cash and $2,250 worth of common stock. The Company issued 10,625 common shares in aggregate to the consultant valued at $0.40 per share, the most recent PPM price, or $4,250, all of which were expensed as consulting fees.

Stock Options

2010 Non-Qualified Stock Option Plan (“2010 Option Plan”)

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.

Pursuant to Section 7 - Adjustments or Changes in Capitalization of the Stock Option Plan, the number of shares to be received upon the exercise of the option and the exercise price to be paid for a share hereinafter sometimes referred to as “Exercise Price” which may be adjusted from time to time as hereinafter as follows:

7.1

In the event that the outstanding Common Shares of the Company are hereafter changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend:

Prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to Stock Options which may be granted under the Plan, such that the Optionee shall have the right to purchase such Common Shares as may be issued in exchange for the Common Shares purchasable on exercise of the NQSO had such merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend not taken place;

Rights under unexercised Stock Options or portions thereof granted prior to any such change, both as to the number or kind of shares and the exercise price per share, shall be adjusted appropriately, provided that such adjustments shall be made without change in the total exercise price applicable to the unexercised portion of such NQSO’s but by an adjustment in the price for each share covered by such NQSO’s; or

Upon any dissolution or liquidation of the Company or any merger or combination in which the Company is not a surviving corporation, each outstanding Stock Option granted hereunder shall terminate, but the Optionee shall have the right, immediately prior to such dissolution, liquidation, merger or combination, to exercise his NQSO in whole or in part, to the extent that it shall not have been exercised, without regard to any installment exercise provisions in such NQSO.

7.2

The foregoing adjustments and the manner of application of the foregoing provisions shall be determined solely by the Committee, whose determination as to what adjustments shall be made and the extent thereof, shall be final, binding and conclusive. No fractional Shares shall be issued under the Plan on account of any such adjustments.

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.

September 6, 2013 Issuance

On September 6, 2013, the Company issued an option to purchase 10,000 shares of its common stock to the consultant with an exercise price of $0.75 per share for advisory board services. The option was vested and exercisable upon grant.

The Company estimated the fair value of the stock options on the date of grant using the Black-Scholes Option Pricing Model with the following weighted-average assumptions:


	September 6, 2013

Expected life (year)		5

Expected volatility (*)		61.77%

Expected annual rate of quarterly dividends		0.00%

Risk-free rate(s)		1.77%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company plans to engage in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life and averaged them as its expected volatility.

The estimated fair value of the stock options was $1,491 on the date of grant, which are recorded as consulting fees.

February 28, 2014 Issuance

On February 28, 2014, the Company issued an option to purchase 1,800,000 shares of its common stock to two officers of the Company with an exercise price of $0.40 per share expiring five (5) years from the date of issuance.


	February 28, 2014

Expected life (year)		5

Expected volatility (*)		57.09%

Expected annual rate of quarterly dividends		0.00%

Risk-free rate(s)		0.51%

The estimated fair value of the stock options was $194,939 on the date of grant, which are recorded as salaries - officers.

Summary of the Company’s Stock Option Activities

The table below summarizes the Company’s stock option activities:


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

Balance, September 30, 2012	3,250,000	$	0.01 - 2.00	$	0.64	$	1,177,227	$	-

Granted	10,000		0.75		0.75		1,491		-

Canceled	-		-		-		-		-

Exercised	-		-		-		-		-

Expired	-		-		-		-		-

Balance, September 30, 2013	3,260,000	$	0.01 - 2.00	$	0.64	$	1,178,718	$	-

Granted	1,800,000		0.40		0.40		194,940		-

Canceled	-		-		-		-		-

Exercised	-		-		-		-		-

Expired	-		-		-		-		-

Balance, June 30, 2014	5,060,000	$	0.01 - 2.00	$	0.64	$	1,373,658	$	-

Vested and exercisable, June 30, 2014	5,060,000	$	0.01 - 2.00	$	0.64	$	1,373,658	$	-

Unvested, June 30, 2014	-	$	-	$	-	$	-	$	-

The following table summarizes information concerning outstanding and exercisable options as of June 30, 2014:


	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

$0.01		1,600,000			1.00	$	0.01		1,600,000		1.00	$	0.01

$0.01		200,000	.		1.37		0.01		200,000		1.37		0.01

$0.44		50,000			2.70		0.44		50,000		2.70		0.44

$1.00		750,000			6.44		1.00		750,000		6.44		1.00

$2.00		650,000			7.65		2.00		650,000		7.65		2.00

$0.75		10,000			4.19		0.75		10,000		4.19		0.75

$0.40		1,800,000			4.67		0.40		1,800,000		4.67		0.40

$0.01 - 2.00		5,060,000			4.00	$	0.56		5,060,000		4.00	$	0.56

As of June 30, 2014, there were 2,450,000 shares of stock options remaining available for issuance under the 2010 Plan.

Warrants

Significant terms of the warrants

Significant terms of the warrants issued in connection with the Company's equity unit offering include Section (F) Anti-dilution provisions and (G) Registration rights.

Pursuant to Section (F) Anti-dilution provisions of the warrant, the number of shares to be received upon the exercise of the warrant and the exercise price to be paid for a share hereinafter sometimes referred to as “Exercise Price” which may be adjusted from time to time as hereinafter provided:

(1)

In case the Company shall issue Shares as a dividend upon Shares or in payment of a dividend thereon, or shall subdivide the number of outstanding Shares into a greater number of shares or shall contract the number of outstanding Shares into a lesser number of shares, the Exercise Price then in effect shall be adjusted, effective at the close of business on the record date for the determination of shareholders entitled to receive the same, to the price (computed to the nearest cent) determined by dividing: (a) the product obtained by multiplying the Exercise Price in effect immediately prior to the close of business on such record date by the number of Shares outstanding prior to such dividend, subdivision or contraction; by (b) the sum of the number of Shares outstanding immediately after such dividend, subdivision, or contraction.

(2)

If any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, lawful and adequate provision shall be made whereby the Holder of each Warrant shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions specified in the Warrant and in lieu of the Shares of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by such Warrant, such Shares, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding Shares immediately theretofore purchasable and receivable upon the exercise of the rights represented by such Warrant had such reorganization, reclassification, consolidation, merger or sale not taken place, and in any such case appropriate provision shall be made with respect to the rights and interest of the Holder to the end that the provisions of the Warrant (including, without limitation, provisions for adjustment of the Exercise Price and of the number of Shares issuable upon the exercise of Warrants) shall thereafter be applicable as nearly as may be practicable in relation to any shares of stock, securities, or assets thereafter deliverable upon exercise of Warrants. The Company shall not affect any such consolidation, merger or sale unless prior to or simultaneously with the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume, by written instrument, the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Holder may be entitled to purchase.

(3)

Upon each adjustment of the Exercise Price pursuant to this Section (F), the number of shares of Common Stock specified in each Warrant shall thereupon evidence the right to purchase that number of shares of Common Stock (calculated to the nearest hundredth of a share of Common Stock) obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock purchasable immediately by the Exercise Price in effect after such adjustment.

(4)

Irrespective of any adjustment of the number or kind of securities issuable upon exercise of Warrants or the Exercise Price, Warrants theretofore or thereafter issued may continue to express the same number of Shares and Exercise Price as are stated in similar Warrants previously issued.

(5)

The Company may, at its sole option, retain the independent public accounting firm regularly retained by the Company, or another firm of independent public accountants of recognized standing selected by the Company's Board of Directors, to make any computation required under this Section (F) and a certificate signed by such firm shall be conclusive evidence of any computation made under this Section (F).

(6)

Whenever there is an adjustment in the Exercise Price or in the number or kind of securities issuable upon exercise of the Warrants, or both, as provided in this Section (F), the Company shall: (i) promptly file in the custody of its Secretary or Assistant Secretary a certificate signed by the Chairman of the Board or the President or a Vice President of the Company and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company, showing in detail the facts requiring such adjustment and the number and kind of securities issuable upon exercise of each Warrant after such adjustment; and (ii) cause a notice stating that such adjustment has been effected and stating the Exercise Price then in effect and the number and kind of securities issuable upon exercise of each Warrant to be sent to each registered holder of Warrant.

(7)

In addition to the adjustments otherwise set forth in this Section (F), the Company, in its sole discretion, may reduce the Exercise Price or extend the expiration date of the Warrant.

(8)

The Exercise Price and the number of Shares issuable upon exercise of a Warrant shall be adjusted in the manner and only upon the occurrence of the events heretofore specifically referred to in this Section (F).

Pursuant to Section (G) Registration rights of the warrant, the warrant holder shall have piggyback registration rights as set forth in paragraph 12 of that certain Stockholder Subscription Agreement by and between the Company and the warrant holder.

December 2012 Issuances

In December 2012, the Company issued (i) warrants to purchase 520,999 shares, in aggregate, of the Company’s common stock to the investors with an exercise price of $0.45 per share expiring five (5) years from the date of issuance as part of the sale of equity units.

The Company estimated the relative fair value of the warrants on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	December 19, 2012

Expected life (year)		5

Expected volatility (*)		63.91	%

Expected annual rate of quarterly dividends		0.00	%

Risk-free rate(s)		0.77	%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company engages in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life of the options or warrants and averaged them as its expected volatility.

The estimated relative fair value of the warrants was $47,514 at the date of issuance using the Black-Scholes Option Pricing Model.

February and March 2013 Issuance

On February 26, 2013 and March 17, 2013, the Company issued warrants to purchase 300,000 shares and 400,000 shares, or 700,000 shares in aggregate, of the Company’s common stock to consultants for future services with an exercise price of $0.30 per share expiring five (5) years from the date of issuance.

The estimated fair value of the warrants was valued using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	February 26, 2013			March 17, 2013

Expected life (year)		5			5

Expected volatility (*)		62.93	%		62.56	%

Expected annual rate of quarterly dividends		0.00	%		0.00	%

Risk-free rate(s)		0.78	%		0.81	%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company engages in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life and averaged them as its expected volatility.

The estimated fair value of the warrants was $47,490 and $63,080, or $110,570 in aggregate, on the date of grant using the Black-Scholes Option Pricing Model.

March 2013 Issuances

In March 2013, the Company issued warrants to purchase 3,096,603 shares, in aggregate, of the Company’s common stock to investors with an exercise price of $0.45 per share expiring five (5) years from the date of issuance as part of the sale of equity units.

The Company estimated the relative fair value of the warrants on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	March 17, 2013

Expected life (year)		5

Expected volatility (*)		62.56	%

Expected annual rate of quarterly dividends		0.00	%

Risk-free rate(s)		0.81	%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company engages in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life of the options or warrants and averaged them as its expected volatility.

The estimated relative fair value of the warrants was $277,764 at the date of issuance using the Black-Scholes Option Pricing Model.

April 2013 Issuance

On April 19, 2013, the Company issued warrants to purchase 601,668 shares of the Company’s common stock to investors with an exercise price of $0.45 per share expiring five (5) years from the date of issuance as part of the sale of equity units.

The estimated relative fair value of the warrants was valued using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	April 19, 2013

Expected life (year)		5

Expected volatility (*)		62.35	%

Expected annual rate of quarterly dividends		0.00	%

Risk-free rate(s)		0.72	%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company engages in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life and averaged them as its expected volatility.

The estimated relative fair value of the warrants was $53,789 on the date of grant using the Black-Scholes Option Pricing Model.

May 2013 Issuances

In May 9, 2013, the Company issued warrants to purchase 40,000 shares, in aggregate, of the Company’s common stock to investors with an exercise price of $1.00 per share expiring five (5) years from the date of issuance as part of the sale of equity units.

The Company estimated the relative fair value of the warrants on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	May 9, 2013

Expected life (year)		5

Expected volatility (*)		62.08	%

Expected annual rate of quarterly dividends		0.00	%

Risk-free rate(s)		0.75	%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company engages in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life of the options or warrants and averaged them as its expected volatility.

The estimated relative fair value of the warrants was $5,220 at the date of issuance using the Black-Scholes Option Pricing Model.

August 2013 Issuances

On August, 2013, the Company issued warrants to purchase 4,371,250 shares, in aggregate, consisting of 4,121,250 warrants with an exercise price of $0.75 per share and 250,000 warrants with an exercise price of $0.40 per share expiring five (5) years from the date of issuance.

The Company estimated the relative fair value of the warrants on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	August 15, 2013

Expected life (year)		5

Expected volatility (*)		61.39	%

Expected annual rate of quarterly dividends		0.00	%

Risk-free rate(s)		1.54	%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company engages in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life of the options or warrants and averaged them as its expected volatility.

The estimated relative fair value of the warrants was $662,992 at the date of issuance using the Black-Scholes Option Pricing Model.

January 2014 and March 2014 Issuances

On January 13, 2014 and March 28, 2014, the Company issued warrants to purchase 1,171,905 shares, in aggregate, consisting of warrants to purchase (i) 793,333 shares with an exercise price of $0.40 per share; (ii) 228,572 shares with an exercise price of $0.45 per share; and (iii) 150,000 shares with an exercise price of $0.65 per share expiring five (5) years from the date of issuance to the investors as part of the sale of equity units.

The Company estimated the relative fair value of the warrants on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	January 13, 2014			March 28, 2014

Expected life (year)		5			5

Expected volatility (*)		58.28	%		56.29	%

Expected annual rate of quarterly dividends		0.00	%		0.00	%

Risk-free rate(s)		1.60	%		1.73	%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company engages in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life of the options or warrants and averaged them as its expected volatility.

The estimated relative fair value of the warrants was $55,097, $24,480, and $19,170, respectively, or $98,747, in aggregate, at the date of issuance using the Black-Scholes Option Pricing Model.

April 2014 Issuances

On April 4, 2014, the Company issued warrants to purchase 131,266 shares with an exercise price of $0.665 per share expiring five (5) years from the date of issuance in connection with the asset purchase agreement consummated on April 4, 2014.

The Company estimated the fair value of the warrants on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	April 5, 2014

Expected life (year)		5

Expected volatility (*)		56.26	%

Expected annual rate of quarterly dividends		0.00	%

Risk-free rate(s)		1.74	%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company engages in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life of the options or warrants and averaged them as its expected volatility.

The estimated fair value of the warrants was $0.3282 per warrant share or $43,082, respectively, at the date of issuance using the Black-Scholes Option Pricing Model.

On April 30, 2014, the Company issued warrants to purchase 57,222 shares with an exercise price of $0.65 per share expiring five (5) years from the date of issuance to the investors as part of the sale of equity units.

The Company estimated the relative fair value of the warrants on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	April 30, 2014

Expected life (year)		5

Expected volatility (*)		55.52	%

Expected annual rate of quarterly dividends		0.00	%

Risk-free rate(s)		1.69	%

As a newly formed entity it is not practicable for the Company to estimate the expected volatility of its share price. The Company selected five (5) comparable public companies listed on NYSE MKT and NASDAQ Capital Market within nutritional supplements industry which the Company engages in to calculate the expected volatility. The Company calculated those five (5) comparable companies’ historical volatility over the expected life of the options or warrants and averaged them as its expected volatility.

The estimated relative fair value of the warrants was $7,210 at the date of issuance using the Black-Scholes Option Pricing Model.

Summary of the Company’s Warrants Activities

The table below summarizes the Company’s warrants activities:


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

Balance, September 30, 2012		7,209,774			$	0.45 - 2.31		$	0.10	$	122,013		$	-

Granted		9,389,721				0.30 - 1.00			0.42		1,167,139			-

Canceled		-				-			-		-			-

Exercised		(2,203,202	)			-			-		-			-

Expired		-				-			-		-			-

Balance, September 30, 2013		14,396,293			$	0.01 - 2.31		$	0.42	$	1,289,152		$	-

Granted		1,360,373				0.40 – 0.665			0.44		143,448			-

Canceled		-				-			-		-			-

Exercised		-				-			-		-			-

Expired		-				-			-		-			-

Balance, June 30, 2014		15,756,686			$	0.01 - 2.31		$	0.42	$	1,432,600		$	-

Earned and exercisable, June 30, 2014		15,756,686			$	0.01 - 2.31		$	0.42	$	1,432,600		$	-

Unvested, March 31, 2014		-			$	-		$	-	$	-		$	-

The following table summarizes information concerning outstanding and exercisable warrants as of June 30, 2014:


	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

$0.01 – 2.31		15,756,686		3.22	$	0.42		15,756,686		3.22	$	0.42

Note 14 - Concentration of Credit Risk

Credit Risk Arising from Financial Instruments

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents.

As of June 30, 2014, substantially all of the Company’s cash and cash equivalents were held by major financial institutions and the balance at certain accounts may exceed the maximum amount insured by the Federal Deposits Insurance Corporation (“FDIC”). However, the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts.

Note 15 – 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.

The Company operates in following business segments:

(i)

Nutritional Supplement Distribution: nutritional supplement business segment engages in the development of an internet online store business to market nutritional supplement solutions through the Company's website www.aminofactory.com;

(ii)

Client Services: which it stems from CNS, its wholly-owned subsidiary it acquired on August 2, 2012, a client service provider specializing in the treatment of brain-based behavioral health disorders including developmental, emotional and stress-related problems; and

(iii)

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.

(iv)

Management of Client Services: which it stems from NPC, its wholly-owned subsidiary it acquired on February 28, 2014. NPC engages in management of top-tier medical practices in the interventional and multi-modal pain management sector.

(v)

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 Company measures the segment profit or loss and segment assets for each reportable segment as follows:

The basis of accounting for any transactions between reportable segments: The Company allows reportable segments to freely negotiate the terms and conditions of and carries out, on an arm's-length basis, any transactions between reportable segments;

The nature of any differences between the measurements of the reportable segments' profits or losses and the public entity's consolidated income before income taxes, extraordinary items, and discontinued operations: There were no difference between the measurements of the reportable segments' profits or losses and the public entity's consolidated income (loss) as the Company does not allocate centrally incurred costs at the corporate headquarter;

The nature of any differences between the measurements of the reportable segments’ assets and the public entity's consolidated assets: There were no difference between the measurements of the reportable segments’ assets and the public entity's consolidated assets as the Company does not have any jointly used assets;

The nature of any changes from prior periods in the measurement methods used to determine reported segment profit or loss and the effect, if any, of those changes on the measure of segment profit or loss: There were no change from prior periods in the measurement methods used to determine reported segment profit or loss;

The nature and effect of any asymmetrical allocations to reportable segments: There were no asymmetrical allocations to reportable segments as the Company does not allocate depreciation expense to a reportable segment without allocating the related depreciable assets to that reportable segment.

The detailed segment information of the Company is as follows:


			WCUI	CNS	PSI	NPC	SCI	WCUI	Elimination (2)	Consolidated
			Corporate Headquarter	Client Services	Medical Devices	Practice Management	Authentication & Encryption	Nutritional Supplement Distribution		Total
ASSETS
Current Assets
	Cash		19,210	(5,539)	1,879	37,276	3,967	-	-	56,793
	Accounts receivable		-	3,105	12,863	-	-	-	-	15,968
	Inventories		-	-	183,118	-	87,017	-	-	270,135
	Current maturity of note receivable - Chairman and CEO		135,233	-	-	-	-	-	-	135,233
	Prepayments and other current assets		17,473	-	416	-	5,905	-	-	23,794

		Total current assets	171,916	(2,434)	198,276	37,276	96,889	-	-	501,923

Property and Equipment
	Property and equipment		18,390	18,459	80,956	-	3,020	-	-	120,825
	Accumulated depreciation		(5,309)	(11,691)	(47,508)	-	(264)	-	-	(64,772)

		Property and equipment, net	13,081	6,768	33,448	-	2,756	-	-	56,053

Exclusive Licenses
	Exclusive licenses and patents		-	-	5,000	-	201,497	-	-	206,497
	Accumulated amortization		-	-	(875)	-	(7,847)	-	-	(8,722)

		Exclusive licenses, net	-	-	4,125	-	193,650	-	-	197,775



Acquired Technologies
	Acquired technologies
	Acquired technologies - CNS		-	325,000	-	-	-	-	-	325,000
	Acquired technologies - PSI		-		2,095,000	-	-	-	-	2,095,000
	Accumulated amortization
	Accumulated amortization - CNS		-	(27,080)	-	-	-	-	-	(27,080)
	Accumulated amortization - PSI		-		(192,038)	-	-	-	-	(192,038)
	Accumulated impairment
	Accumulated impairment - CNS		-	(297,920)	-	-	-	-	-	(297,920)
	Accumulated impairment - PSI		-	-	-	-	-	-	-	-

		Acquired technologies, net	-	-	1,902,962	-	-	-	-	1,902,962

Non-Compete Agreements
	Non-compete agreements
	Non-compete Agreement - CNS		-	120,000	-	-	-	-	-	120,000
	Non-compete Agreement - PSI		-	-	120,000	-	-	-	-	120,000
	Accumulated amortization
	Accumulated amortization - CNS		-	(66,660)	-	-	-	-	-	(66,660)
	Accumulated amortization - PSI		-	-	(55,000)	-	-	-	-	(55,000)
	Accumulated impairment
	Accumulated impairment - CNS		-	(53,340)	-	-	-	-	-	(53,340)
	Accumulated impairment - PSI		-	-	-	-	-	-	-	-

		Non-compete agreements, net	-	-	65,000	-	-	-	-	65,000

Trademarks
	Trademarks
	Trade Mark:TM - CNS		-	110,000	-	-	-	-	-	110,000
	Trade Mark:TM - PL		-	-	420,000	-	-	-	-	420,000
	Trade Mark:TM - PS		-	-	210,000	-	-	-	-	210,000
	Accumulated amortization
	Accumulated amortization - CNS		-	(20,380)	-	-	-	-	-	(20,380)
	Accumulated amortization - PL		-	-	(102,500)	-	-	-	-	(102,500)
	Accumulated amortization - PS		-	-	(62,500)	-	-	-	-	(62,500)


	Accumulated impairment
	Accumulated impairment - CNS			-	(89,620)	-	-	-	-	-	(89,620)
	Accumulated impairment - PL			-	-	-	-	-	-	-	-
	Accumulated impairment - PS			-	-	-	-	-	-	-	-

		Trademarks, net		-	-	465,000	-	-	-	-	465,000

Website Development Costs
	Website development costs			22,809	-	-	-	-	-	-	22,809
	Accumulated amortization			(13,277)	-	-	-	-	-	-	(13,277)

		Website development costs, net		9,532	-	-	-	-	-	-	9,532

Goodwill
	Goodwill
	Goodwill - CNS			-	2,868,045	-	-	-	-	-	2,868,045
	Goodwill - NPC			-	-	-	1,200,000	-	-	-	1,200,000
	Goodwill - PSI			-	-	1,716,603	-	-	-	-	1,716,603
	Accumulated impairment			-	-	-	-	-	-	-	-
	Accumulated impairment - CNS			-	(2,868,045)	-	-	-	-	-	(2,868,045)
	Accumulated impairment - NPC			-	-	-	-	-	-	-	-
	Accumulated impairment - PSI			-	-	-	-	-	-	-	-

		Goodwill, net		-	-	1,716,603	1,200,000	-	-	-	2,916,603

Other assets
	Note receivable - Chairman and CEO, net of current maturity			87,767	-	-	-	-	-	-	87,767
	Security deposits			-	36,939	1,760	-	-	-	-	38,699

		Total other assets		87,767	36,939	1,760	-	-	-	-	126,466

			Total assets	282,296	41,273	4,387,174	1,237,276	293,295	-	-	6,241,314

Note 16 – Subsequent Events

The Company has evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if they must be reported. The Management of the Company determined that there were certain reportable subsequent event(s) to be disclosed as followed:

Employment Agreements – Stealthco Inc.

Employment Agreement – Ricky Howard

On July 1, 2014, the Company entered into an employment agreement (the “Employment Agreement”) with Ricky Howard, (the “Executive”). The Executive and the Company hereby agree as follows:

Term

The Executive’s employment under this Agreement shall commence on the date hereof, and this Agreement shall commence as of that date and shall continue in effect until June 30, 2017. The parties expressly understand that nothing in this Agreement is a guarantee or assurance of employment for any specific period of time. Rather, subject to the notice provisions set forth in Section 6(c), the Executive understands that he is an at-will Executive, and that the Company may terminate his employment at any time, and the Executive is similarly free to resign at any time.

Duties

The Executive is engaged to serve as the Chief Executive Officer of the Company’s wholly-owned Subsidiary “StealthCo”, reporting to the Company’s CEO. Executive shall have such duties as are customarily associated with such positions including but not limited to overall responsibility and authority for general operations, management, and employment matters and relationships, as well as such other senior executive duties as may from time to time be reasonably assigned to him by the Company’s CEO and/or Board of Directors.

Compensations

(a) Base Salary. The Company shall pay to the Executive as compensation for services rendered by the Executive hereunder a base annual salary of $100,000, subject to increase, but not decrease, from time to time by the CEO and/or the Board of Directors of the Company. The base salary paid to the Executive is subject to such payroll and other deductions as may be agreed upon by the parties or required by law. This salary shall be paid in accordance with Company's customary biweekly payroll procedure.

(b) Benefits. Upon the signing of the agreement, Executive shall be (i) entitled to receive a cash signing bonus of $8,500, payable over a period of three months, (ii) issued a signing stock option to purchase 250,000 shares at an exercise price of $0.40 per share. Further, provided Executive remains employed by the Company, he will be granted additional stock options to buy up to 750,000 shares of the Company’s common stock, at a vesting schedule of 62,500 per quarter, starting with the quarter ending September 30, 2014. Each Stock option tranche shall carry an exercise price equal to the then market closing price, at the end of each quarter. All other terms and conditions not specified herein will be treated in accordance with the Company’s 2010 Non-Qualified Stock Compensation Plan. In the event of an acquisition or merger of the Company, all options granted or scheduled to be granted shall convert immediately into the incumbent company’s shares or be paid in cash on a cashless provision.

Termination

The Executive or the Company may voluntarily elect to terminate this Agreement (a termination "Without Cause") by delivering to the other party, at least ninety (45) days prior to the date upon which termination is desired, by written notice of such intention to terminate.

Covenant not to Compete

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

Forward Looking Statements.

Except for historical information, this Report and Management’s Discussion and Analysis of Financial Condition and Results of Operations contain 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. Because forward-looking statements may involve known and unknown risks, uncertainties, and other factors that could impact our actual results, performance, or achievements, actual results could differ materially from those expressed or implied by such forward-looking statements as set forth in this Report, the Company’s Annual Report on Form 10-K and other reports that the Company files with the Securities and Exchange Commission. 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.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. 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.

Background

Wellness Center USA, Inc. (the “Company”) was incorporated in the State of Nevada on June 30, 2010. The Company is engaged in the healthcare and medical device solutions business that addresses important healthcare and wellness needs. The Company began operations as an online nutraceutical store but has expanded into additional businesses within the healthcare and medical sectors, through acquisition of CNS Wellness Florida, LLC (CNS), Psoria-Shield Inc. (PSI), and National Pain Centers Inc. (NPC), and the acquisition of certain assets of SMI Holdings, Inc. d/b/a StealthMark, Inc. by the Company’s wholly-owned subsidiary, Stealthco, Inc. (“StealthCo” or “SCI”). CNS is a cognitive neuroscience company specializing in the treatment of brain-based behavioral health disorders including developmental, emotional and stress-related problems. PSI is a developer and manufacturer of Ultra Violet (UV) phototherapy devices for the treatment of skin diseases such as psoriasis, eczema, vitiligo, and others. NPC manages physician services in three clinics and two surgical centers, providing diagnostic, surgical, treatment, research, advocacy, education, and setting standards/protocols within the interventional and multi-modal pain management. SCI is a provider of certain authentication and encryption products and services. Our online web-based store “aminofactory.com”, is designed to market customized vitamins and other nutritional supplements to the sports industry.

CNS

CNS was organized in the State of Florida on May 26, 2009. CNS provides alternative, scientific approaches to mental health and wellness. It assesses dis-regulations in brain function via EEG-based brain mapping along with other recognized behavioral health assessment tools, such as neuropsychological examinations. Its trained therapists then assist the client to restore brain function to within normative limits using leading–edge modalities, such as LENS, Neurofield EMS therapy, traditional neurofeedback, hemoencephalography, transcranial direct current stimulation, cranial alternating current stimulation, photonic stimulation and heart variability training. The client is periodically assessed throughout and following completion of the treatment program. This enables the clinical team to form treatment protocols as well as demonstrate the effectiveness of the treatment through a comparison of pre-vs. post-treatment assessments.

CNS treatment modalities, when combined in specific manners that are proprietary to CNS, contribute to restoring the brain’s ability to regulate itself within normative limits. CNS methods are noninvasive and safe, and achieve their goals without the use of prescription pharmaceuticals. This technology helps the client to overcome difficulties with mental health and/or developmental barriers to successful daily functioning, and thereby to experience a higher quality of life.

CNS services appear to have been beneficial to clients, without demonstrable harmful side effects or safety issues. CNS has serviced approximately 617 clients since commencement of operations in 2009. There can be no assurance that the experience to date is indicative of results that might be expected from an expanded sample or base.

PSI

PSI was incorporated under the laws of the State of Florida on June 17, 2009. It is a medical device design and manufacturing company. It 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. PSI intends to enter into agreements with third parties, in the United States and internationally, for the manufacture of component parts that make up the Psoria-Light and to license its proprietary technology to third parties domestically and in selected foreign markets.

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. PSI submitted a 510(k) application with the FDA for marketing clearance of the device in the United States (application number K103540). 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 also developed an ISO 13485 compliant quality system for the Psoria-Light which was audited in the fourth 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.

Psoria-Light treatment appears to have been beneficial to clients, without demonstrable harmful side effects or safety issues, and PSI has serviced approximately 200 clients since PSI started to sell the device in January 2012. There can be no assurance that the experience to date is indicative of results that might be expected from an expanded sample or base.

Aminofactory.com

Since we started implementation of our acquisition strategy, we have focused primarily upon the development of our subsidiaries’s products, services and operations. We have continued limited development of our aminofactory.com web-based online store and expansion of a wider range of nutritional supplements, including customized formulas uniquely tailored to suit an individual’s needs. Customers that log into our site may select an amino acid supplement and/or nutritious formula combination suitable to his/her needs. Once a suitable supplement solution has been chosen by the client, his/her order is placed for processing through our suppliers and generally shipped directly by the supplier to the client within seven business days.

Supplements offered through our website are produced by unaffiliated third party manufacturers and/or product fulfillment suppliers, specializing in nutritional supplement production. Supplements produced for us can be also provided to our competitors by our suppliers and/or manufacturers. However, we are able to specifically select our product portfolio and market it through our website with our custom packaging and pricing, under a supplier or manufacturer’s, or under our own label.

The processing, formulation, manufacturing, packaging, labeling, advertising, distribution and sale of our nutritional supplement products are subject to regulation by several U.S. federal agencies, including the FDA, the Federal Trade Commission, or FTC, the Postal Service, the Consumer Product Safety Commission, the Department of Agriculture and the Environmental Protection Agency, as well as various state, local and international laws and agencies of the localities in which our products are sold. Government regulations may prevent or delay the introduction or require the reformulation of our products.

The FDA regulates, among other things, the manufacture, composition, safety, labeling, marketing and distribution of dietary supplements (including vitamins, minerals, herbs, and other dietary ingredients for human use). The FDA may not accept the evidence of safety we present for new dietary supplements we wish to market, or they may determine that a particular dietary supplement or ingredient that we currently market presents an unacceptable health risk. If that occurs, we could be required to cease distribution of and/or recall supplements or products containing that ingredient.

The FDA may also determine that certain advertising and promotional claims, statements or activities are not in compliance with applicable laws and regulations and may determine that a particular statement is an unacceptable drug claim or an unauthorized version of a food or dietary supplement “health claim.” Failure to comply with FDA or other regulatory requirements could prevent us from marketing particular dietary supplement products or subject us to administrative, civil or criminal penalties.

NPC

On February 28, 2014, the Company acquired all of the issued and outstanding shares of stock in National Pain Centers, Inc. (“NPC”), a Deer Park, Illinois-based management services provider. NPC was incorporated under the laws of the State of Nevada on January 24, 2014 and is operated as a wholly-owned subsidiary of the Company. NPC manages non-medical services in three clinics and two surgical centers in the Chicagoland area providing diagnostic, surgical, treatment, research, advocacy, education, and setting standards and protocols within the interventional and multi-modal pain management.

NPC is managed by its founder and CEO Dr. Jay Joshi, MD, DABA, DABAPM, FABAPM. Dr. Joshi also serves as the Company’s Chief Medical Officer (“CMO”) and as a member of its Board of Directors. Dr. Joshi is a nationally recognized double board certified Anesthesiologist and fellowship trained Interventional Spine and Pain Management physician whose capabilities combine clinical medicine, research, creativity, marketing, inventions, and business development. He is considered a National Key Opinion Leader in pain management, has presented to a variety of audiences over 500 times, and has worked internationally at the World Health Organization (WHO). He has been featured on major TV networks, Radio, Print, and the Internet. He was accepted into medical school at the age of 16 via an accelerated honors BS/MD program with multiple scholarships.

StealthCo

On April 4, 2014, SCI acquired certain assets of SMI Holdings, Inc., a Minnesota corporation d/b/a StealthMark, Inc., including StealthMark tradenames and marks, and related authentication solutions offering advanced product security technologies within the security and supply chain management vertical sectors. SCI provides customers brand protection from counterfeiting and diversion while maintaining the integrity of product authentication. SCI enables the Company to offer a complete, simple to use, easy to implement, and cost effective turnkey system that is extremely difficult to compromise.

We believe the need for anti-counterfeit and diversion solutions has never been clearer, as an estimated 5-7% of all goods traded on the global market are counterfeit, resulting in over approximately $900 billion in lost revenues annually. More importantly, in the pharmaceutical and medical device markets, counterfeiting and diversion has led to an estimated loss of $200 billion in revenues. SCI solutions demonstrate an emerging market awareness through encryption and state of the art software products that aim to put an end to counterfeiting and diversion.

SCI operations are managed by its CEO, Ricky Howard. Mr. Howard has 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.

Management

Presently, our general business functions and strategies are managed by our founder, Andrew J. Kandalepas, Dr. Joshi and Mr. Howard. Mr. Kandalepas serves as Chief Executive Officer (“CEO”), Chairman of the Board of Directors, Prinicpal Accounting Officer, and Chief Financial Officer (“CFO”) of the Company. He is responsible for developing and planning our business units, including product development, organizational structure, financing and administrational functions, working closely with Dr. Joshi and Mr. Howard. His service in multiple capacities shall continue until we are financially capable of engaging additional management personnel.

As noted above, Dr. Joshi serves as the Company’s Chief Medical Officer (“CMO”) and as a member of its Board of Directors, as well as CEO of NPC.

Mr. Howard serves as CEO of the Company’s wholly-owned subsidiary, SCI.

We relied upon CNS’s management team including William A. Lambos and Peter A. Hannouche to manage the CNS business through January 24, 2014, at which time their employment terminated. We are currently considering CNS management alternatives and have suspended operations.

We relied upon PSI’s executive management, Mr. Scot L. Johnson, to operate PSI’s business through March 31, 2014. Subsequently, by mutual agreement with the Company, he resigned as an officer of PSI and director of the Company. In connection with his resignation, Mr. Johnson agreed to provide technical and support consulting services through April 1, 2015, pursuant to a Separation Agreement and Consulting Agreement. He also agreed to restrictions on his shareholdings pursuant to a Lock-up Agreement. We are currently considering PSI management alternatives.

Results of Operations

For the Three Months Ended June 30, 2014 compared to the Three Months Ended June 30, 2013

For the three months ended June 30, 2014, we earned $70,576 in revenues, incurred $539 in cost of revenues, resulting $70,037 in gross margin. We expended $106,564; $90,391; $57,221; $7,300; $151,160; and $94,438; in consulting fees, professional fees, rent, research and development, personnel, selling and general and administrative expenses, respectively. We had loss from operations of $497,000 for the three months ended June 30, 2014.

For the three months ended June 30, 2013, we earned $77,157 in revenues, incurred $1,770 in cost of revenues, resulting $75,387 in gross margin. We expended $38,220; $52,693; $47,117; $3,475; $198,557; $29,037; and $243,879; in consulting fees, professional fees, rent, research and development, personnel, selling and general and administrative expenses, respectively. We had loss from operations of $461,151 for the three months ended June 30, 2013.

For the Nine Months Ended June 30, 2014 compared to the Nine Months Ended June 30, 2013

For the nine months ended June 30, 2014, we earned $175,762 in revenues, incurred $2,777 in cost of revenues, resulting $172,985 in gross margin. We expended $193,759; $175,709; $163,203; $7,741; $746,103; and $327,837; in consulting fees, professional fees, rent, research and development, personnel, selling and general and administrative expenses, respectively. We reported impairment of goodwill of $3,308,925. We had a loss from operations of $4,961,646 (including impairment) for the nine months ended June 30, 2014.

For the nine months ended June 30, 2013, we earned $175,035 in revenues, incurred $1,770 in cost of revenues, resulting $175,265 in gross margin. We expended $569,075; $213,045; $149,023; $6,394; $617,551; $65,836; and $546,995; in consulting fees, professional fees, rent, research and development, personnel, selling and general and administrative expenses, respectively. We had loss from operations of $1,994,654 for the nine months ended June 30, 2013.

The Company maintained five (5) business segments through the end of the period covered by this Report:

(i)

(ii)

Client Services: which it provides through CNS, its wholly-owned subsidiary acquired on August 2, 2012, a client service provider specializing in the treatment of brain-based behavioral health disorders including developmental, emotional and stress-related problems;

(iii)

Medical Devices: which it provides 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;

(iv)

Practice Management Services: which it provides through NPC, its wholly-owned subsidiary acquired on February 28, 2014, which manages non-medical services in three clinics and two surgical centers in the Chicagoland area; and

(v)

Authentication and Encryption Products and Services: which it provides through StealthCo, its wholly-owned subsidiary that on April 4, 2014 acquired certain assets of SMI Holdings, Inc. d/b/a StealthMark, Inc., including StealthMark tradenames and marks, and related 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:

For the Six Months

Ended

March 31, 2014


			WCUI	CNS	PSI	NPC	SCI	WCUI	Consl Adj (2)	Consolidated
			Corporate Headquarter	Client Services	Medical Devices	Practice Management	Authentication & Encryption	Nutritional Supplement Distribution		Total
Revenue
	Client services		-	102,156	-	-	-	-	-	102,156
	Management fee		-	-	-	70,000	-	-	-	70,000
	Sales		-	-	-	-	-	3,606	-	3,606

		Total revenue	-	102,156	-	70,000	-	3,606	-	175,762
									-
Cost of goods sold			-	-	-	-	-	2,777	-	2,777

Gross margin			-	102,156	-	70,000	-	829	-	172,985

Operating expenses
	Consulting fees		193,759	-	-	-	-	-	-	193,759
	Professional fees		169,309	-	6,400	-	-	-	-	175,709
	Rent expense - related party		19,021	-	-	-	-	-	-	19,021
	Rent expense		-	118,622	19,260	-	6,300	-	-	144,182
	Research and development		-	-	441	7,300	-	-	-	7,741
	Salaries - officers		344,940	75,000	75,000	50,000	-	-	-	544,940
	Salaries - others		68,851	89,426	27,500	15,386	-	-	-	201,163
	Selling expenses		-	4,013	34,909	-	-	-	-	38,922
	Depreciation and amortization		211,354	-	-	-	-	-	-	211,354
	Impairment of intangible assets and goodwill		2,985,880	-	-	-	-	-	323,045	3,308,925
	General and administrative expenses		118,336	54,568	70,478	8,870	36,663	-	-	288,915

		Total operating expenses	4,111,450	341,629	233,988	81,556	42,963	-	323,045	5,134,631

Loss from operations			(4,111,450)	(239,473)	(233,988)	(11,556)	(42,963)	829	(323,045)	(4,961,646)

Other (income) epxense
	Interest expense - related party		-	1,662	-	-	-	-	-	1,662
	Other (income) expense		-	1,167	(5,737)	-	-	-	-	(4,570)

		Other (income) expense, net	-	2,829	(5,737)	-	-	-	-	(2,908)

Loss before income tax provision			(4,111,450)	(242,302)	(228,251)	(11,556)	(42,963)	829	(323,045)	(4,958,738)

Income tax provision			-	-	-	-	-	-	-	-

Net loss			(4,111,450)	(242,302)	(228,251)	(11,556)	(42,963)	829	(323,045)	(4,958,738)

Liquidity and Capital Resources

Liquidity is the ability of a company to generate adequate amounts of cash to meet its cash needs.

As of June 30, 2014, our cash balance was $56,793. Management estimated that our current monthly burn rate is approximately $151,000. Our current cash on hand is not sufficient to maintain our daily operations for the next 12 months. Management intends to raise additional capital through debt or equity financing to fund our daily operations through next 12 months. For the nine months ended June 30, 2014 we raised $1,411,080 from equity financing, respectively, to fund our daily operations, however no assurance can be given that we will be successful in raising sufficient capital through debt or equity financing, or that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed during next 12 months. Any failure to secure sufficient debt or equity financing may force the Company to modify its business plan. In addition, we have incurred recurring losses from inception and such losses are expected to continue for the foreseeable future and until such time, if ever, as the Company is able to attain sales levels sufficient to support its operations. No assurance can be given that the Company will achieve or maintain profitability in the foreseeable future. In the event that we are unable to raise sufficient capital through debt or equity financing or to attain sales levels sufficient to support its operations we may have to curtail our operating activities to keep in operations.

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.

Patents, Trademarks, Franchises, Concessions, Royalty Agreements, or Labor Contracts

PSI

PSI received FDA clearance for the Psoria-Light on February 11, 2011 (no. K103540) and was granted permission to affix the CE mark for the Psoria-Light in the fourth quarter of 2011.

Mr. Johnson filed a provisional patent application covering certain aspects of the technology that we intend to utilize in the development and commercialization of the Psoria-Light, including handheld ergonomics, emitter platform and LED arrangements, methods for treatment site detection, cooling methods, useful information displays, collection of digital images and graphical correlation to quantitative metrics, and base console designs. Two non-provisional patent applications were submitted by Mr. Johnson claiming the prior filing date of the initial provisional application. The first non-provisional application describes a unique distance sensor located at the tip of the Psoria-Light hand-piece, which detects the treatment site based on a projected field. The sensor can detect electrolytic/conductive surfaces, such as human skin, without requiring any physical or direct electrical contact. Further, the unique sensor can sense the treatment site at any point about the tip of the hand-piece and without causing any attenuation of the therapeutic UV light output. The second non-provisional application describes the integration and use of a digital camera in the Psoria-Light, including the location of the digital camera and how and when it is used to conveniently correspond to real-life treatment routines, how images are displayed and captured to memory, and how the images are arranged in patient records are illustrated. Additionally, the second non-provisional application describes the inclusion of clinician defined variables, such as health-related quality of life scores, and their placement into a graphical arrangement relative to treatment site images. Both the initial provisional patent application and the two non-provisional patent applications are owned by Mr. Johnson, who has granted PSI the sole and exclusive, worldwide, paid-up, royalty-free, perpetual license under the initial provisional patent application, any non-provisional patent applications filed by Mr. Johnson covering the technology described in the initial provisional patent application, and associated know-how, technical data, and improvements to develop and commercialize the Psoria-Light.

Mr. Johnson filed a second provisional patent application containing concepts for the improvement of microelectronics packages and thermal management solutions, the improvement of handheld phototherapy devices in general (either used on humans, animals, or plants, or used on inanimate objects), and replacement of laser therapy devices with LED devices. This second provisional patent application is owned by Mr. Johnson who has granted PSI the sole and exclusive, worldwide, paid-up, royalty-free, perpetual license under this second provisional patent application, any non-provisional patent applications filed by Mr. Johnson covering the technology described in the second provisional patent application, and associated know-how, technical data, and improvements to develop and commercialize the Psoria-Light.

PSI was issued one patent on its Psoria-Light technology on July 9, 2013, US 8,481,982, covering a unique patient safety feature. No other patents have been issued for CNS or PSI products or methods, or any of the other technology associated with such products, and we cannot guarantee that any other patents will be issued for such products or any of the technology associated with such products.

StealthCo

StealthMark devoted substantial effort and resources to develop and advance microparticle security technologies in support of its business activities. Protection of the acquired StealthMark intellectual property is maintained through a combination of Patents, Trademarks, and Trade Secrets consisting of the following:


U.S. Patent	Issued	“Title” – Summary

No. 6,647,649	November 18, 2003	“Microparticle Taggant Systems” - Generation of microparticle codes from marks containing encrypted microparticles.

No. 7,720,254	May 18, 2010	“Automatic Microparticle Mark Reader” - Automatic readers for interrogating microparticle marks.

No. 7,831.042	November 9, 2010	“Three-Dimensional Authentication Of Microparticle Mark - Validation of 3D nature of microparticle mark to protect against counterfeiting of mark.

No. 7,885,428	February 8, 2011	“Automatic Microparticle Mark Reader” - Automatic readers for interrogating microparticle marks (broadened protection).

No. 8,033,450	October 11, 2011	“Expression Codes For Microparticle Marks Based On Signature Strings” - Generation of expression codes (“fingerprints”) unique to each microparticle mark to protect against counterfeiting of marks.

Appl. No. 12/899,110	Pending (Notice of Allowance received)	“Three-Dimensional Authentication Of Microparticle Mark - Validation of 3D nature of microparticle mark to protect against counterfeiting of marks (broadened protection).

Europe


WO/EP Patent	Issued	“Title” - Summary

Appl. No. 07753042.6	Pending	“Automatic Microparticle Mark Reader” - Automatic readers for interrogating microparticle marks.

Appl. No. 07753043.4	Pending	“Expression Codes For Microparticle Marks Based On Signature Strings” - Generation of expression codes (“fingerprints”) unique to each microparticle mark to protect against counterfeiting of marks.

Appl. No. 07753034.3	Pending	“Three-Dimensional Authentication Of Microparticle Mark - Validation of 3D nature of microparticle mark to protect against counterfeiting of mark.


Trademarks	Type	Countries
Stealth Mark^®	Registered	United States European Community Australia

StealthFire™	Not Registered	United States European Community

Trade Secrets

Stealth Mark proprietary technologies and capabilities being maintained as Trade Secrets include, but are not limited to:

Microparticle Manufacturing

Microparticle Color Systems

Technology advancements providing improvements in Automatic Reader performance

Software solutions supporting microparticle security solutions

We will assess the need for any additional patent, trademark or copyright applications, franchises, concessions royalty agreements or labor contracts on an ongoing basis.

Employees

We employed no employees within CNS, and two (2) full-time employees and two (2) part-time employees within PSI, at the beginning of the period covered by this Report. Mr. Johnson no longer serves as an officer or employee of the Company or PSI, but he continues to provide technical and support consulting services pursuant to a Separation Agreement and Consulting Agreement. We are currently considering PSI management and staffing alternatives. We employed four (4) full-time and two (2) part-time employees within NPC, and two (2) full-time and four (4) part-time employees within SCI, as of the end of the period covered by this Report.

Summary of Significant Accounting Policies.

The Company has identified significant 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 business combinations, 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, 2013, filed with the Securities and Exchange Commission on January 14, 2014. 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 nine months ended June 30, 2014.

Going Concern

Our independent registered public accounting firm issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next 12 months.

As reflected in the consolidated financial statements, the Company had an accumulated deficit at December 31, 2013, a net loss and net cash used in operating activities for the interim period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

While the Company is attempting to further implement its business plan and generate sufficient revenues, the Company’s cash position may not be sufficient enough to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting Companies.

Item 4. Controls and Procedures

Disclosure controls and procedures.

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are not effective as of December 31, 2013 because we do not have sufficient staff to segregate responsibilities and no written documentation of internal control policies. We plan to seek to correct these deficiencies during the current fiscal year or the next.

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

We are currently 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 companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

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*
32.1		CEO and 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 the Securities Exchange Act of 1934, as amended, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	WELLNESS CENTER USA, INC.

Date: August 20, 2014	By:	/s/ Andrew J. Kandalepas
		Andrew J. Kandalepas
		Chairman, Chief Executive Officer, Principal Accounting Officer, and Chief Financial Officer

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and appoints severally Andrew J. Kandalepas, 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/ Andrew J. Kandalepas Andrew J. Kandalepas	Chief Executive Officer, Chairman, Principal Accounting Officer, Chief Financial Officer, and Director	August 20, 2014

/s/ Periklis Papadopoulos	Director	August 20, 2014
Periklis Papadopoulos

/s/ Jay Joshi, M.D.	Secretary and Director	August 20, 2014
Jay Joshi, M.D.

Wellness Center USA, Inc. - FORM 10-Q - August 20, 2014

Attached files

Wellness Center USA, Inc. Reports