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DEFICIENCY IN STOCKHOLDERS' EQUITY
 12 Months Ended
Sep. 30, 2021
DEFICIENCY IN STOCKHOLDERS' EQUITY  
DEFICIENCY IN STOCKHOLDERS' EQUITY

NOTE 7 – DEFICIENCY IN STOCKHOLDERS’ EQUITY

The accompanying financial statements include a retrospective recapitalization to reflect the composition of stockholder’s equity, as if they had existed for the periods presented.

Preferred Stock

On November 5, 2021, we filed an Amended and Restated Articles of Incorporation which included the rights and privileges of Preferred Stock Series A and Series B.  Under the terms of our Articles of Incorporation, the Board of Directors may determine the rights, preferences and terms of our authorized but unissued shares of preferred stock.

Dividends

The holders of Preferred Stock are entitled to non-cumulative dividends if declared by the Board of Directors. The holders of the Preferred Stock Series A and Series B shall participate on a pro rata basis (on an “as converted” basis to common stock) in any cash dividend paid on common stock. No dividends have been declared or paid during the years ended September 30, 2021 and 2020.

Liquidation

Holders of Preferred Stock are entitled to receive a liquidation preference prior to any distribution to holders of Common Stock. Upon occurrence of a liquidation transaction, the Preferred Stock would be redeemed by the issuer for the applicable original issue price. However, if the holders of Preferred Stock would receive a greater amount of consideration had the Preferred Stock been converted immediately prior to such transaction, the Preferred Stock shall be deemed to have been converted for the purposes of the redemption amount.

Conversion

Preferred Stock Series A is convertible at any time at the option of the holder into Common Stock at a conversion rate of one for one hundred basis with common shares of at any time after the date of issuance of such shares into such number of fully paid and non-accessible shares of Common Stock. Preferred Stock Series B is convertible at any time at the option of the holder into Common Stock at a conversion rate of one for one basis with common shares at any time after the date of issuance of such shares into such number of fully paid and non-accessible shares of Common Stock.

Additionally, all outstanding shares of the Preferred Stock shall automatically convert into shares of the underlying Common Stock upon the Company’s sale of its Common Stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act, the public offering price of which results in aggregate cash proceeds to the Company of not less than $50 million, net of underwriting discounts and commissions (a “Qualified IPO”).

Voting Rights

Holders of Preferred Stock are entitled to the same voting rights as the holders of common stock and to notice of shareholders’ meetings. The holders of Common Stock and Preferred Stock shall vote together as a single class (on an as-converted basis) on all matters. Each holder of Preferred Stock is entitled to the number of votes equal to the number of shares of Common Stock into which such shares of Preferred Stock could be converted.

Common Stock

We have 500,000,000 shares of common stock authorized with $0.001 par value per share. There were 7,048,386 and 5,086,225 shares of common stock issued and outstanding at September 30, 2021 and 2020, respectively.

The holders of Common Stock are entitled to one vote for each share of Common Stock held at all meetings of shareholders. In the event of a liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the common shareholders are entitled to receive the remaining assets following distribution of liquidation preferences, if any, to the holders of our preferred stock. The holders of common stock are not entitled to receive dividends unless declared by our Board of Directors. To date, no dividends were declared or paid to the holders of common stock.

Warrants

The following table summarizes warrant activity for the years ended September 30, 2021 and 2020:

​

​

​

​

​

​

​

    

​

    

Weighted Average 

​

​

MAI shares

​

Exercise Price

Warrants outstanding at September 30, 2019

 

97,308

​

$

8.84

Warrants exercised

 

—

​

$

—

Warrants granted

 

420,242

​

$

8.84

Warrants expired

 

—

​

$

—

Warrants outstanding at September 30, 2020

 

540,905

​

$

8.84

​

​

​

​

​

​

​

​

​

​

​

Weighted Average

​

​

MAI shares

    

Exercise Price

Warrants outstanding at September 30, 2020

​

540,905

​

$

8.84

Warrants exercised

​

—

​

$

—

Warrants granted

​

4,480,855

​

$

8.84

Warrants expired

​

(97,308)

​

$

8.84

Warrants outstanding at September 30, 2021

​

4,924,447

​

$

8.84

​

2020-2021 Warrants

The warrants are exercisable for a five-year period commencing upon issuance . The estimated fair value of the MAI warrants issued and outstanding is $8,166,441 using the Black-Scholes option valuation model. The assumptions used that represent management’s best estimates of the fair value of the Company’s warrants issued and outstanding were as follows:

​

​

​

​

​

​

​

    

September 30, 2021

 

Expected term (in years)

 

​

5.0

​

Volatility

 

​

63.9

%

Dividend yield

 

​

0.00

%

Risk-free interest rate

 

​

0.34%-0.82

%

Common stock price

 

$

5.43

​

​

The allocation of the fair value of these warrants was included as a debt discount on the consolidated balance sheet and amortized to interest expense over the scheduled maturity dates of the various promissory notes.