Capital Stock | 11. Capital Stock Common shares During the year ended September 30, 2022, the Company issued 736,247 common shares to its directors, executives and employees for their services rendered to the Company. These common shares are based on certain vesting schedules (see “ Share-based awards During the year ended September 30, 2022, the Company issued 201,614 common shares for the acquisition of Ameri-Can (Note 3). The value of $1,250,000 of the common shares was determined based on the share price agreed upon at the closing date, which was November 24, 2021. The shares were redeemable at the option of the Seller of Ameri-Can until one year anniversary of the acquisition date, being November 24, 2022. Upon the Seller’s redemption, the Company is required to buy back the 201,614 common shares at the same price of $1,250,000. The Company presented the 201,614 redeemable common shares as financial liability in temporary equity account. During the year ended September 30, 2023, the Company issued 699,083 common shares to its directors, executives and employees for their services rendered to the Company. These common shares are based on certain vesting schedules (see “ Share-based awards During the year ended September 30, 2023, the Company issued 150,000 common shares for certain consulting services. The value of $244,500 of the common shares was recognized in the year ended September 30, 2023. During the year ended September 30, 2023, the Seller of Ameri-Can exercised its redemption option and therefore the Company repurchased the 201,614 common shares that it previously issued for the acquisition of Ameri-Can (see above). The Company paid cash consideration of $1,250,000 for the repurchase and the amount is debited from the share capital for the year ended September 30, 2023. During the year ended September 30, 2024, the Company completed a unit offering private placement and issued 400,000 units with unit price of $2.00, raising total gross proceeds of $800,000. Each unit contains one share and one warrant. Each warrant is exercisable into one share at an exercise price of $2.00/share within 5 years from the issuance date. During the year ended September 30, 2024, the Company issued 715,000 common shares to its directors, executives and employees for their services rendered to the Company. These common shares are based on certain vesting schedules (see “ Share-based awards Stock options At September 30, 2024, the Company had one stock option plan, the 2019 Equity Incentive Plan (the “2019 Plan”). During the year ended September 30, 2024, the Company granted 1,030,000 stock options, vesting in one-year or a three-year period, to certain officers and directors of the Company. During the years ended September 30, 2023 and 2022, the Company granted 90,000 and 365,000 stock options respectively, vesting in a one-year period, to certain officers of the Company. The fair values of these stock options were estimated at the dates of grant, which is October 19, 2023 for stock options granted in fiscal 2024 and December 30, 2022 for stock options granted in fiscal 2023, using the Black-Scholes Option Valuation Model, with the following weighted average assumptions: September 30, September 30, Stock price $ 1.16 $ 2.21 Exercise price $ 1.16 $ 2.21 Expected risk free interest rate 4.75 % 3.99 % Expected volatility 166.40 % 174.20 % Expected life in years 5 5 Expected dividend yield nil nil Grant date fair value per option $ 1.10 $ 2.11 A continuity schedule of outstanding stock options at September 30, and the changes during the periods, is as follows: Number of Weighted US$ Balance, September 30, 2022 365,000 4.10 Granted 90,000 2.21 Exercised - - Forfeited - - Balance, September 30, 2023 455,000 3.73 Granted 1,030,000 1.16 Exercised - - Forfeited - - Balance, September 30, 2024 1,485,000 1.95 A continuity schedule of outstanding unvested stock options at September 30, and the changes during the periods, is as follows: Number of Weighted US$ Balance, September 30, 2022 91,250 4.06 Granted 90,000 2.11 Vested (158,750 ) 3.30 Forfeited - - Balance, September 30, 2023 22,500 2.11 Granted 1,030,000 1.10 Vested (775,000 ) 1.19 Forfeited - - Balance, September 30, 2024 277,500 1.10 At September 30, 2024, the aggregate intrinsic value of all outstanding stock options granted was estimated at $ nil A summary of stock options outstanding and exercisable at September 30, 2024: Exercisable Weighted Weighted US$ Grant date November 1, 2021 365,000 4.10 7.08 December 30, 2022 90,000 2.21 8.25 October 19, 2023 752,500 1.16 9.08 Share-based awards (a) During the year ended September 30, 2022, the Company granted an aggregate of 875,000 share-based awards with a fair value of $4.10 per share, determined using the share price at the date of grant of November 1, 2021 to certain directors, officers and employees of the Company (the “November 1, 2021 Grant”). These share-based awards have a vesting period of ranging from 1 year to 2 years from the grant date in ranging from 3 equal instalments to 5 equal instalments in the vesting periods. During the year ended September 30, 2022, an aggregate of 640,000 shares were issued to these directors, officers and employees under the November 1, 2021 Grant. (b) During the year ended September 30, 2022, the Company approved the following share-based compensations to its directors (the “November 1, 2021 Director Grant”): (i) annually a number of restricted stock equal to $30,000 divided by the closing price of the Company’s common stock, under the Company’s 2019 Equity Incentive Plan on the date of the Company’s annual meeting of stockholders; (ii) Mr. Craig Wilson received a grant of shares equal to $27,000 (based on the Company’s common share price as of November 1, 2021) of which one-third of such shares were issued and the remaining two-thirds will be issued in equal instalments on April 1, 2022 and October 1, 2022; and iii) Ms. Cowan and Mr. Pratt each received a grant of shares equal to $22,500 (based on the Company’s common share price as of November 1, 2021) of which one-third of such shares were issued and the remaining two thirds will be issued in equal instalments on April 1, 2022 and October 1, 2022. As of September 30, 2022, an aggregate of 16,247 shares were issued to these directors. (c) On November 1, 2021, the Company granted an aggregate of 80,000 annual bonus share (the “Bonus Shares”) to certain of its officers. The Bonus Shares are subject to a one-year vesting provision whereby the total Bonus Shares become exercisable at the end of September 30, 2022. The share-based compensation expense in relation to the Bonus Shares have been recognized based on the fair value on the share price of $4.10 on the grant date. As of September 30, 2022, the 80,000 annual bonus shares have been issued to these officers. (d) In addition, on November 1, 2021, the Company granted an aggregate of 90,000 performance-based share (the “Performance Shares”) to Chief Executive Officer and Chief Financial Officer. The Performance Shares are subject to a one-year vesting provision whereby the total Performance Shares become exercisable at the end of September 30, 2022 if the Company’s sales increase achieved a targeted percentage determined by the Company. Since the Company has not met the sales increase target for the year ended September 30, 2022, the share-based compensation expense in relation to the Performance Shares have not been recognized during the year ended September 30, 2022. (e) During the year ended September 30, 2023, the Company issued 185,000 shares of the November 1, 2021 Grant (see (a) above) pursuant to its vesting schedule. (f) During the year ended September 30, 2023, the Company issued the remaining 71,519 shares of the November 1, 2021 Director Grant (see (b) above) pursuant to its vesting schedule. (g) During the year ended September 30, 2024, the Company issued the remaining 50,000 shares of the November 1, 2021 Grant (see (a) above) pursuant to its vesting schedule. (h) During the year ended September 30, 2023, the Company granted an aggregate of 360,000 share-based awards with a fair value of $2.21 per share, determined using the share price at the date of grant of December 31, 2022 to the Company’s Chief Executive Officer and Chief Financial Officer. These share-based awards vest in 4 equal instalments over each of the quarter end of the fiscal year. During the year ended September 30, 2023, an aggregate of 360,000 shares have already been issued to the Chief Executive Officer and Chief Financial Officer. (i) During the year ended September 30, 2023, the Company granted an aggregate of 80,000 share-based awards with a fair value of $1.63 per share, determined using the share price at the date of grant of February 7, 2023, to certain officers of the Company. These share-based awards vest in 4 equal instalments over each of the quarter end of the fiscal year. During the year ended September 30, 2023, all of the 80,000 shares have already been issued to these officers. (j) During the year ended September 30, 2023, the Company granted 300,000 share-based awards with a fair value of $1.63 per share, determined using the share price at the date of grant of February 7, 2023, to a consultant of the Company. These share-based awards vest according to the percentage of the consulting services rendered to the Company. As of September 30, 2023, only 50% of the services have been rendered to the Company. Therefore, only 150,000 shares have been issued to the consultant during the year ended September 30, 2023. (k) In addition, on February 7, 2023, the Company granted share-based awards with value equal to US$3,846 (RMB27,000) divided by the closing price of February 7, 2023 to an employee. Accordingly, 2,564 shares were issued to the employee during the year ended September 30, 2023. The total amount of stock-based compensation expenses in relation to awards (e) to (k) above is $1,796,179 for the year ended September 30, 2023. (l) During the year ended September 30, 2024, the Company granted an aggregate of 440,000 share-based awards with a fair value of $1.16 per share, determined using the share price at the date of grant of October 19, 2023, to certain officers of the Company. These share-based awards vest in 4 equal instalments over each of the quarter end of the fiscal year. During the year ended September 30, 2024, all of the 440,000 shares have already been issued to these officers. (m) During the year ended September 30, 2024, the remaining 150,000 shares from note (j) above were granted to the consultant. (n) During the year ended September 30, 2024, the Company granted 150,000 share-based awards with a fair value of $0.84 per share, determined using the share price at the date of grant of July 10,2024, to a consultant of the Company. These share-based awards vest according to the percentage of the consulting services rendered to the Company. As of September 30, 2024, 75,000 shares have already been issued to the consultant. A summary of stock-based compensation expense for the years ended September 30 2024, 2023 and 2022 is as follows: September 30, September 30, September 30, 2024 2023 2022 US$ US$ US$ Common share awards 834,399 1,796,179 3,455,680 Stock option awards 1,142,787 265,631 1,357,369 Total 1,977,186 2,061,810 4,813,049 Investment in subsidiary On November 17, 2023, the Company incorporated a 100% owned subsidiary, Gilmore. Gilmore owns 40% of SouthGilmore, which was incorporated on November 20, 2023. The shareholders of SouthGilmore agreed to contribute a total investment of US$7,500,000 into the newly formed entity. The Company agreed to subscribe to 600 units of the total 1,500 units issued by SouthGilmore by contributing US$3,750,000 (actual contribution: US$3,762,395). The remaining 900 units will be subscribed by the other shareholders, who will contribute the remaining US$3,750,000 (actual contribution: US$3,737,727) into SouthGilmore. SouthGilmore is a variable interest entity (“VIE”) to the Company since its holds 40% interest in the entity. The Company concluded that it has controlling financial interest in SouthGilmore since it has: i) the power to direct the activities of SouthGilmore and ii) the Company’s equity pickup of the financial results (losses or benefits) of SouthGilmore could potentially be significant to the Company. Therefore, the Company should consolidate SouthGilmore based on the VIE model. Since the Company only owns 40% of the interest in SouthGilmore although it is required to contribute the same amount of investment as the other non-controlling shareholders (“NCI”), the Company ownership in the total US$7,500,000 is still based on the 40% ownership. Therefore, its US$3,750,000 investment was diluted by the NCI’s additional 10% more ownership. The dilution amount, calculated based on actual contributions from the Company and the NCI, is US$762,346. Since the dilution has not changed the Company’s control over SouthGilmore, the dilution amount is accounted for as an equity transaction between the Company, controlling shareholder, and the NCI. |