Document and Entity Information
Document and Entity Information - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Mar. 31, 2017 | |
Document and Entity Information: | ||
Entity Registrant Name | NuZee, Inc. | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2017 | |
Trading Symbol | nuze | |
Amendment Flag | false | |
Entity Central Index Key | 1,527,613 | |
Current Fiscal Year End Date | --09-30 | |
Entity Common Stock, Shares Outstanding | 34,172,431 | |
Entity Public Float | $ 0 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited for December 31, 2017) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 | |
Current assets: | |||
Cash | $ 292,454 | $ 347,327 | |
Accounts receivable, net | 85,098 | 143,893 | |
Accounts receivable - Related party | 6,183 | 12,380 | |
Subscription receivable | 153,000 | 0 | |
Inventories, net | 299,861 | 266,620 | |
Other current assets | 190,289 | 102,926 | |
Other current assets - Related party | 26,347 | 29,378 | |
Total current assets | 1,053,232 | 902,524 | |
Property and equipment, net | 260,917 | 277,987 | |
Other assets: | |||
Goodwill | 17,112 | 17,112 | |
Customer List, net | 43,031 | 45,899 | |
Investment in unconsolidated affiliate | 10,167 | 10,733 | |
Total other assets | 70,310 | 73,744 | |
Total assets | 1,384,459 | 1,254,255 | |
Current liabilities: | |||
Accounts payable | 205,842 | 104,973 | |
Loan payable - short term - Related party | 200 | 200 | |
Current portion of long-term loan payable | 33,475 | 44,681 | |
Other current liabilities | 80,286 | 126,687 | |
Other current liabilities - Related party | 2,963 | 1,089 | |
Deferred revenue | 6,221 | 72,750 | |
Total current liabilities | 328,987 | 350,380 | |
Non-current liabilities: | |||
Loan payable - long term, net of current portion | 133,502 | 133,644 | |
Other noncurrent liabilities | 9,599 | 9,610 | |
Total non-current liabilities | 143,101 | 143,254 | |
Total liabilities | 472,088 | 493,634 | |
Stockholders' equity: | |||
Common stock | 360 | 347 | |
Additional paid in capital | 10,514,231 | 9,718,648 | |
Accumulated deficit | (9,668,051) | (9,030,551) | |
Accumulated other comprehensive loss | (20,883) | (20,680) | |
Total shareholders' equity | [1] | 825,657 | 667,764 |
Noncontrolling interest | 86,714 | 92,857 | |
Total stockholders' equity | 912,371 | 760,621 | |
Total liabilities and stockholders' equity | $ 1,384,459 | $ 1,254,255 | |
[1] | NuZee, Inc. |
Statement of Financial Position
Statement of Financial Position - Parenthetical - $ / shares | Dec. 31, 2017 | Sep. 30, 2017 |
Statement of Financial Position | ||
Preferred Stock, Par Value | $ 0.00001 | $ 0.00001 |
Preferred Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, Par Value | $ 0.00001 | $ 0.00001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares Issued | 36,018,792 | 34,720,538 |
Common Stock, Shares Outstanding | 36,018,792 | 34,720,538 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Statement of Income | |||
Revenues | $ 356,879 | $ 577,507 | |
Cost of sales | 239,010 | 416,868 | |
Gross Profit | 117,869 | 160,639 | |
Operating expenses | 760,653 | 508,334 | |
Loss from operations | (642,784) | (347,695) | |
Other income | 507 | 17,847 | |
Equity in loss of unconsolidated affiliate | (566) | (15,171) | |
Other expense | 0 | 1,076 | |
Interest expense | (713) | (2,431) | |
Net loss | (643,556) | (346,374) | |
Net loss attributable to noncontrolling interest | (6,056) | (6,422) | |
Net loss attributable to shareholders | [1] | $ (637,500) | $ (339,952) |
Basic and diluted loss per common share | $ (0.02) | $ (0.01) | |
Basic and diluted weighted average number of common stock outstanding | 34,908,982 | 32,553,835 | |
[1] | NuZee, Inc. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Operating activities: | |||
Net loss | $ (643,556) | $ (346,374) | |
Adjustments to reconcile net loss to net cash used by operating activities: | |||
Depreciation and Amortization | 23,536 | 18,646 | |
Option expense | 133,486 | 1,900 | |
Interest Expense | 0 | 1,848 | |
Inventory impairment | 0 | 4,112 | |
Equity in loss of unconsolidated affiliate | 566 | 15,171 | |
Change in operating assets and liabilities: | |||
Accounts receivable (increase/decrease) | 58,662 | (82,692) | |
Accounts receivable - Related party (increase/decrease) | 6,184 | 0 | |
Inventories (increase/decrease) | (33,360) | 24,866 | |
Other current assets (increase/decrease) | (87,407) | 67,910 | |
Other current assets - Related party (increase/decrease) | 4,000 | 0 | |
Accounts payable (increase/decrease) | 100,892 | (77,156) | |
Other current liabilities (increase/decrease) | (10,935) | 19,643 | |
Other current liabilities - Related party (increase/decrease) | 1,874 | 0 | |
Deferred revenue (increase/decrease) | (66,529) | 0 | |
Net cash used by operating activities | (512,587) | (352,126) | |
Investing activities: | |||
Purchase of equipment | (38,145) | (135,731) | |
Acquisition of investment in unconsolidated affiliate | 0 | (50,000) | |
Net cash acquired from business acquisition | 0 | 201,676 | |
Net cash provided (used) by investing activities | (38,145) | 15,945 | |
Financing activities: | |||
Proceeds from issuance of Loan - short term - Related party | 156,000 | 18,384 | |
Repayment of loans - short term - Related party | (157,000) | (34,670) | |
Repayment of loans - short term | (11,137) | (6,438) | |
Payments on capital lease | (864) | 0 | |
Proceeds from issuance of common stock | 509,110 | 535,000 | |
Net cash provided by financing activities | 496,109 | 512,276 | |
Effect of foreign exchange on cash and cash equivalents | (250) | (53,966) | |
Net change in cash | (54,873) | 122,129 | |
Cash, beginning of period | 347,327 | 40,613 | |
Cash, end of period | 292,454 | 162,742 | |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 543 | 584 | |
Cash paid for taxes | 800 | 0 | |
Noncash investing and financing activities: | |||
Acquisition through issuance of common shares | [1] | 0 | 258,465 |
Software purchased with installment agreement | 0 | 14,807 | |
Subscription receivable from issuance of common stock | $ 153,000 | $ 0 | |
[1] | Of NuZee JAPAN Co., Ltd. |
1. Basis of Presentation and Su
1. Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2017 | |
Notes | |
1. Basis of Presentation and Summary of Significant Accounting Policies | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited interim financial statements of NuZee, Inc. (the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report on Form 10-K for the year ended September 30, 2017 as filed with the SEC. In the opinion of management, all adjustments, consisting of recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the annual report on Form 10-K have been omitted. Earnings per Share Basic earnings per common share equal net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. The Company incurred a net loss for the three months ended December 31, 2017 and 2016, respectively and therefore, basic and diluted earnings per share for those periods are the same because all potential common equivalent shares would be antidilutive. Going Concern The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has recurring losses, negative operating cash flows, an accumulated deficit and is dependent on its shareholders to provide additional funding for operating expenses. These items raise substantial doubt as to the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company's continued existence is dependent upon management's ability to develop profitable operations, continued contributions from the Company's executive officers to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of the Company's products and business. Major Customers In the three months ended December 31, 2017 and 2016, revenue was primarily from major customers disclosed below. Besides those revenues, there were $54,318 and $0 account receivable owed by customer PO and customer B as of December 31, 2017, and $122,090 and $37,858 account receivable owed by customer PO and K as of December 31, 2016. Three months ended December 31, 2017 Sales Amount % of Total Revenue Customer Name Customer PO $ 167,682 47 % Customer B $ 72,750 20 % Three months ended December 31, 2016 Sales Amount % of Total Revenue Customer Name Customer PO $ 265,605 46 % Customer K $ 146,005 25 % Lease The Company evaluates each lease for classification as either a capital lease or an operating lease. If substantially all of the benefits and risks of ownership have been transferred to the Company as lessee, the Company records the lease as a capital lease at its inception. The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. If the lease agreement calls for a scheduled rent increase during the lease term, the Company recognizes the lease expense on a straight-line basis over the lease term. NuZee JAPAN Co., Ltd is the lessee of certain equipment under a capital lease extending through 2020. The asset and liability under the capital lease are recorded at the lower of the present value of the minimum lease payments, or the fair value of the asset. Leased equipment is depreciated over a 6-year life. The leased equipment is reported in the accompanying consolidated balance sheets in property and equipment of $10,573 as of December 31, 2017. The capital lease liability is included in other current liabilities on the consolidated balance sheets. Future minimum lease payments under capital lease as of December 31, 2017 for each of the remaining years are as follows: 2018 $ 3,250 2019 $ 4,333 2020 $ 4,333 2021 $ 1,083 Total Minimum Lease Payments $ 12,999 The Company leases office space under leases expiring on May 31, 2020. Rent expense included in general and administrative expense for three months ended December 31, 2017 and 2016 was $32,971 and $13,367 respectively. Future minimum rents as of December 31, 2017 for each of the remaining years are as follows: 2018 $ 42,729 2019 $ 58,488 2020 $ 39,760 Total Minimum Lease Payments $ 140,977 Loan On June 30, 2016, NuZee JAPAN Co., Ltd entered into a loan agreement with Tono Shinyo Kinko Bank. The Company borrowed the sum of approximately $145,758 to be repaid on or before June 5, 2021 at an annual interest rate of 1.2%. The loan is unsecured and guaranteed by a director. The Company had $93,209 loan payable at December 31, 2017. On January 27, 2017, NuZee JAPAN Co., Ltd entered into a loan agreement with Nihon Seisaku Kouko. The Company borrowed the sum of approximately $87,268 to be repaid on or before January 20, 2022 at an interest rate of 0.16%. The loan is unsecured and not guaranteed by a director. The Company had $73,768 loan payable at December 31, 2017. During the three months ended December 31, 2017, the Company paid back the principal amount of The loan payments required for the next five years are as follows: Tono Shinyo Kinko Bank Nihon Seisaku Kouko 2018 $ 19,974 $ 13,501 2019 $ 26,631 $ 18,003 2020 $ 26,631 $ 18,003 2021 $ 19,973 $ 18,003 2022 $ - $ 6,258 Total Loan Payment $ 93,209 $ 73,768 Principles of Consolidation The Company prepares its financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and majority owned subsidiary which has a fiscal year end of January 31. All significant intercompany accounts, balances and transactions have been eliminated in the consolidation. The Company consolidates its subsidiary in accordance with ASC 810, and specifically ASC 810-10-15-8 which states, 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, or over 50% of the outstanding voting shares of another entity is a condition pointing toward consolidation. Foreign Currency Translation The financial position and results of operations of the Company's foreign subsidiary is measured using the foreign subsidiary's local currency as the functional currency. Revenues and expenses of such subsidiary has been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders' equity unless there is a sale or complete liquidation of the underlying foreign investment. Foreign currency translation adjustment recorded to other comprehensive loss amounted to $20,883 and $20,680 as of December 31, 2017 and September 30, 2017, respectively. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction gains included in the consolidated statements of operations totaled $0 and $1,076 for three months ended December 31, 2017 and 2016, respectively. Inventories Inventory, consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower of cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. At December 31, 2017 and September 30 2017, the carrying value of inventory of $299,861 and $266,620 respectively, reflected on the consolidated balance sheets is net of this adjustment. December 31, 2017 September 30, 2017 Raw materials $ 167,518 $ 111,043 Work in process 5,535 5,535 Finished goods 135,894 159,128 Less - Inventory reserve (9,086 ) (9,086 ) Total (Inventories, net) $ 299,861 $ 266,620 Reclassifications have been made to conform with the current year presentation. |
2. Geographic Concentrations
2. Geographic Concentrations | 3 Months Ended |
Dec. 31, 2017 | |
Notes | |
2. Geographic Concentrations | 2. GEOGRAPHIC CONCENTRATIONS The Company is organized based on fundamentally one business segment although it does sell its products on a world-wide basis. Information about the Company's geographic operations are as follows: Net Revenue: Three Months Ended December 31, 2017 Three Months Ended December 31, 2016 North America $ 173,640 $ 260,279 Japan 183,239 317,228 $ 356,879 $ 577,507 Property and equipment, net: December 31, 2017 September 30, 2017 North America $ 250,343 $ 266,522 Japan 10,574 11,465 $ 260,917 $ 277,987 |
3. Related Party Transactions
3. Related Party Transactions | 3 Months Ended |
Dec. 31, 2017 | |
Notes | |
3. Related Party Transactions | 3. RELATED PARTY TRANSACTIONS Loans During June 2017, the Company borrowed the sum of $1,200 unsecured short-term loan from Masateru Higashida to be repaid on or before June 14, 2018 at an interest rate of one percent (1%). During the three months ended December 31, 2017, the Company borrowed the sum of $2,000 unsecured short-term loan from Masateru Higashida to be repaid on or before December 31, 2018 at an interest rate of one percent (1%). The Company made principal payments of $2,000 during the three months ended December 31, 2017. The Company accrued interest of $1 and $211 for the three months ended December 31, 2017 and 2016, respectively. As of December 31, 2017, the loan had principal and accrued interest balances of $200 and $559, respectively. During December 2016, the Company borrowed the sum of $18,384 unsecured short-term loan from NuZee Co., Ltd to be repaid on or before December 14, 2017 at an interest rate of one percent (1%). During the three months ended December 31, 2016, the Company paid back the total principal amount of $34,670 to Masateru Higashida for loans previously borrowed. During the three months ended December 31, 2017, the Company borrowed the sum of $154,000 unsecured short-term loan from NuZee Co., Ltd to be repaid on or before October 31, 2018 at an interest rate of one percent (1%) and made principal payments of $155,000 . The Company accrued interest of $169 and $11 for three months ended December 31, 2017 and 2016, respectively. As of December 31, 2017, the loans had overpaid principal and accrued interest balances of $1,000 and $441, respectively. The $1,000 of principal overpayment was reclassified to other current assets - related party as of December 31, 2017. The Company took new loans from NuZee Co., Ltd after the balance sheet date in excess of the overpayment. All short-term loans are related party transactions since Masateru Higashida is the Company's major shareholder and he holds 100% ownership of NuZee Co., Ltd. Sales, Purchases and Operating Expenses For three months ended December 31, 2017, NuZee JP sold their products to Eguchi Holdings Co.,Ltd ("EHCL") and the sales to them totaled approximately $924 . The corresponding accounts receivable balance from them was $0 as of December 31, 2017. NuZee JP sold their products to NuZee Co., Ltd. during the 2017 fiscal year. The related accounts receivable outstanding was $6,183 as of December 31, 2017. EHCL is the Company's related party as they are controlled by Katsuyoshi Eguchi who is a director and the minority owner of NuZee JP. NuZee JP leased an employee to NuZee Co., Ltd. for Contlus during October 2016 to January 2017 for $10,936 and sold greeting cards to NuZee Co., Ltd. for $7,418 during the year ended September 30, 2017. The related receivables outstanding was $797 as of December 31, 2017. NuZee JP leased an employee to Contlus. For three months ended December 31, 2017, NuZee JP billed $9,206 for this arrangement and $24,550 remains outstanding as of December 31, 2017. Contlus is the Company's related party as the Company holds 50% of their issued shares. Rent During October 2016, NuZee JP entered into a rental agreement of an office space with NuZee Co., Ltd. The Company agrees to pay $1,169 per month for the office on the last day of each month. There is no set expiration date on the agreement. During September 2016, the Company entered into a rental agreement of an office space and warehouse with EHCL. The Company agrees to pay $1,213 per month for the office and the warehouse on the last day of each month. The term of this agreement is 3 years and will be automatically renewed. The corresponding rent payable balance to them was $2,963 as of December 31, 2017. During February 2015, the Company entered into a rental agreement of a warehouse with Eguchi Steel Co.,Ltd ("ESCL"). The Company agrees to pay $449 per month for the warehouse on the last day of each month. There is no set expiration date on the agreement. ESCL is the Company's related party as they are controlled by Katsuyoshi Eguchi who is a director and the minority owner of NuZee JP. |
4. Investment in Unconsolidated
4. Investment in Unconsolidated Affiliate | 3 Months Ended |
Dec. 31, 2017 | |
Notes | |
4. Investment in Unconsolidated Affiliate | 4. INVESTMENT IN UNCONSOLIDATED AFFILIATE The Company has an investment in an equity method affiliate which has main businesses related to the production, sale, import and export of coffee & beans, tea & tea leaf, healthy foods and drinks. The investment of $50,000 was made during the three months ended December 31, 2016. The following table is a reconciliation of the Company's investment in equity affiliate as presented on the consolidated balance sheet as of December 31, 2017 INVESTMENT IN AFFILIATE December 31, 2017 Beginning of period $ 10,733 Additional investments in unconsolidated affiliate $ - Distributions received $ - Sale of investment in unconsolidated affiliate $ - Equity in net income (loss) of unconsolidated affiliate $ (566 ) End of period $ 10,167 |
5. Common Stock
5. Common Stock | 3 Months Ended |
Dec. 31, 2017 | |
Notes | |
5. Common Stock | 5. COMMON STOCK During three months ended December 31, 2017, the Company sold 998,254 shares of common stock at $0.51 per share, for an aggregate purchase price of $509,110. The Company also received subscriptions for 300,000 shares for a total consideration of $153,000 which were fully collected in January 2018. |
6. Stock Options
6. Stock Options | 3 Months Ended |
Dec. 31, 2017 | |
Notes | |
6. Stock Options | 6. STOCK OPTIONS The following table summarizes stock option activity for three months ended of December 31, 2017: Weighted Weighted Average Average Remaining Aggregate Number of Shares Exercise Price Contractual Life (years) Intrinsic Value Outstanding at September 30, 2017 3,064,500 $ 0.58 9.6 17,425 Granted - - Exercised - - Expired - - Forfeited - - Outstanding at December 31, 2017 3,064,500 $ 0.58 9.1 988,154 Exercisable at December 31, 2017 180,500 $ 0.48 8.2 75,882 The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expenses of $133,486 for three months ended December 31, 2017. Unamortized option expense as of December 31, 2017, for all options outstanding amounted to approximately $859,872 These costs are expected to be recognized over a weighted-average period of 2.9 years. The Company recognized stock option expenses of $1,900 for three months ended December 31, 2016. A summary of the status of the Company's nonvested shares as of December 31, 2017, is presented below: Nonvested options Number of Nonvested Shares Nonvested shares at September 30, 2017 2,884,000 Granted - Exercised - Forfeited - Vested - Nonvested shares at December 31, 2017 2,884,000 |
7. Subsequent Events
7. Subsequent Events | 3 Months Ended |
Dec. 31, 2017 | |
Notes | |
7. Subsequent Events | 7. SUBSEQUENT EVENTS -Common Stock During January to March 2018, the Company sold 1,103,529 shares of common stock of which 43,529 shares were sold at $0.51 per share and 1,060,000 shares were sold at $1.00 per share, for an aggregate purchase price of $1,082,200. -Related Party Transaction During January to March 2018, the Company borrowed the sum of $185,000 unsecured short-term loan from NuZee Co., Ltd. Repayment of $184,000 and the application of the $1,000 overpayment from the prior quarter was made to NuZee Co., Ltd. before March 31, 2018. |
1. Basis of Presentation and 13
1. Basis of Presentation and Summary of Significant Accounting Policies: Earnings Per Share (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Policies | |
Earnings Per Share | Earnings per Share Basic earnings per common share equal net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. The Company incurred a net loss for the three months ended December 31, 2017 and 2016, respectively and therefore, basic and diluted earnings per share for those periods are the same because all potential common equivalent shares would be antidilutive. |
1. Basis of Presentation and 14
1. Basis of Presentation and Summary of Significant Accounting Policies: Going Concern (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Policies | |
Going Concern | Going Concern The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has recurring losses, negative operating cash flows, an accumulated deficit and is dependent on its shareholders to provide additional funding for operating expenses. These items raise substantial doubt as to the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company's continued existence is dependent upon management's ability to develop profitable operations, continued contributions from the Company's executive officers to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of the Company's products and business. |
1. Basis of Presentation and 15
1. Basis of Presentation and Summary of Significant Accounting Policies: Major Customers (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Policies | |
Major Customers | Major Customers In the three months ended December 31, 2017 and 2016, revenue was primarily from major customers disclosed below. Besides those revenues, there were $54,318 and $0 account receivable owed by customer PO and customer B as of December 31, 2017, and $122,090 and $37,858 account receivable owed by customer PO and K as of December 31, 2016. Three months ended December 31, 2017 Sales Amount % of Total Revenue Customer Name Customer PO $ 167,682 47 % Customer B $ 72,750 20 % Three months ended December 31, 2016 Sales Amount % of Total Revenue Customer Name Customer PO $ 265,605 46 % Customer K $ 146,005 25 % |
1. Basis of Presentation and 16
1. Basis of Presentation and Summary of Significant Accounting Policies: Lease (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Policies | |
Lease | Lease The Company evaluates each lease for classification as either a capital lease or an operating lease. If substantially all of the benefits and risks of ownership have been transferred to the Company as lessee, the Company records the lease as a capital lease at its inception. The Company performs this evaluation at the inception of the lease and when a modification is made to a lease. If the lease agreement calls for a scheduled rent increase during the lease term, the Company recognizes the lease expense on a straight-line basis over the lease term. NuZee JAPAN Co., Ltd is the lessee of certain equipment under a capital lease extending through 2020. The asset and liability under the capital lease are recorded at the lower of the present value of the minimum lease payments, or the fair value of the asset. Leased equipment is depreciated over a 6-year life. The leased equipment is reported in the accompanying consolidated balance sheets in property and equipment of $10,573 as of December 31, 2017. The capital lease liability is included in other current liabilities on the consolidated balance sheets. Future minimum lease payments under capital lease as of December 31, 2017 for each of the remaining years are as follows: 2018 $ 3,250 2019 $ 4,333 2020 $ 4,333 2021 $ 1,083 Total Minimum Lease Payments $ 12,999 The Company leases office space under leases expiring on May 31, 2020. Rent expense included in general and administrative expense for three months ended December 31, 2017 and 2016 was $32,971 and $13,367 respectively. Future minimum rents as of December 31, 2017 for each of the remaining years are as follows: 2018 $ 42,729 2019 $ 58,488 2020 $ 39,760 Total Minimum Lease Payments $ 140,977 |
1. Basis of Presentation and 17
1. Basis of Presentation and Summary of Significant Accounting Policies: Loan (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Policies | |
Loan | Loan On June 30, 2016, NuZee JAPAN Co., Ltd entered into a loan agreement with Tono Shinyo Kinko Bank. The Company borrowed the sum of approximately $145,758 to be repaid on or before June 5, 2021 at an annual interest rate of 1.2%. The loan is unsecured and guaranteed by a director. The Company had $93,209 loan payable at December 31, 2017. On January 27, 2017, NuZee JAPAN Co., Ltd entered into a loan agreement with Nihon Seisaku Kouko. The Company borrowed the sum of approximately $87,268 to be repaid on or before January 20, 2022 at an interest rate of 0.16%. The loan is unsecured and not guaranteed by a director. The Company had $73,768 loan payable at December 31, 2017. During the three months ended December 31, 2017, the Company paid back the principal amount of The loan payments required for the next five years are as follows: Tono Shinyo Kinko Bank Nihon Seisaku Kouko 2018 $ 19,974 $ 13,501 2019 $ 26,631 $ 18,003 2020 $ 26,631 $ 18,003 2021 $ 19,973 $ 18,003 2022 $ - $ 6,258 Total Loan Payment $ 93,209 $ 73,768 |
1. Basis of Presentation and 18
1. Basis of Presentation and Summary of Significant Accounting Policies: Principles of Consolidation (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Policies | |
Principles of Consolidation | Principles of Consolidation The Company prepares its financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and majority owned subsidiary which has a fiscal year end of January 31. All significant intercompany accounts, balances and transactions have been eliminated in the consolidation. The Company consolidates its subsidiary in accordance with ASC 810, and specifically ASC 810-10-15-8 which states, 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, or over 50% of the outstanding voting shares of another entity is a condition pointing toward consolidation. |
1. Basis of Presentation and 19
1. Basis of Presentation and Summary of Significant Accounting Policies: Foreign Currency Translation (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Policies | |
Foreign Currency Translation | Foreign Currency Translation The financial position and results of operations of the Company's foreign subsidiary is measured using the foreign subsidiary's local currency as the functional currency. Revenues and expenses of such subsidiary has been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders' equity unless there is a sale or complete liquidation of the underlying foreign investment. Foreign currency translation adjustment recorded to other comprehensive loss amounted to $20,883 and $20,680 as of December 31, 2017 and September 30, 2017, respectively. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction gains included in the consolidated statements of operations totaled $0 and $1,076 for three months ended December 31, 2017 and 2016, respectively. |
1. Basis of Presentation and 20
1. Basis of Presentation and Summary of Significant Accounting Policies: Inventories (Policies) | 3 Months Ended |
Dec. 31, 2017 | |
Policies | |
Inventories | Inventories Inventory, consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower of cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. At December 31, 2017 and September 30 2017, the carrying value of inventory of $299,861 and $266,620 respectively, reflected on the consolidated balance sheets is net of this adjustment. December 31, 2017 September 30, 2017 Raw materials $ 167,518 $ 111,043 Work in process 5,535 5,535 Finished goods 135,894 159,128 Less - Inventory reserve (9,086 ) (9,086 ) Total (Inventories, net) $ 299,861 $ 266,620 Reclassifications have been made to conform with the current year presentation. |
1. Basis of Presentation and 21
1. Basis of Presentation and Summary of Significant Accounting Policies: Major Customers: Schedule of Revenue by Major Customers by Reporting Segments (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Revenue by Major Customers by Reporting Segments | Three months ended December 31, 2017 Sales Amount % of Total Revenue Customer Name Customer PO $ 167,682 47 % Customer B $ 72,750 20 % Three months ended December 31, 2016 Sales Amount % of Total Revenue Customer Name Customer PO $ 265,605 46 % Customer K $ 146,005 25 % |
1. Basis of Presentation and 22
1. Basis of Presentation and Summary of Significant Accounting Policies: Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Future Minimum Lease Payments for Capital Leases | 2018 $ 3,250 2019 $ 4,333 2020 $ 4,333 2021 $ 1,083 Total Minimum Lease Payments $ 12,999 |
1. Basis of Presentation and 23
1. Basis of Presentation and Summary of Significant Accounting Policies: Lease: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments for Operating Leases | 2018 $ 42,729 2019 $ 58,488 2020 $ 39,760 Total Minimum Lease Payments $ 140,977 |
1. Basis of Presentation and 24
1. Basis of Presentation and Summary of Significant Accounting Policies: Loan: Schedule of Maturities of Long-term Debt (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Maturities of Long-term Debt | Tono Shinyo Kinko Bank Nihon Seisaku Kouko 2018 $ 19,974 $ 13,501 2019 $ 26,631 $ 18,003 2020 $ 26,631 $ 18,003 2021 $ 19,973 $ 18,003 2022 $ - $ 6,258 Total Loan Payment $ 93,209 $ 73,768 |
1. Basis of Presentation and 25
1. Basis of Presentation and Summary of Significant Accounting Policies: Inventories: Schedule of Inventory, Current (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Inventory, Current | December 31, 2017 September 30, 2017 Raw materials $ 167,518 $ 111,043 Work in process 5,535 5,535 Finished goods 135,894 159,128 Less - Inventory reserve (9,086 ) (9,086 ) Total (Inventories, net) $ 299,861 $ 266,620 |
2. Geographic Concentrations_ S
2. Geographic Concentrations: Schedules of Concentration of Risk, by Risk Factor (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedules of Concentration of Risk, by Risk Factor | Net Revenue: Three Months Ended December 31, 2017 Three Months Ended December 31, 2016 North America $ 173,640 $ 260,279 Japan 183,239 317,228 $ 356,879 $ 577,507 Property and equipment, net: December 31, 2017 September 30, 2017 North America $ 250,343 $ 266,522 Japan 10,574 11,465 $ 260,917 $ 277,987 |
4. Investment in Unconsolidat27
4. Investment in Unconsolidated Affiliate: Equity Method Investments (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Equity Method Investments | INVESTMENT IN AFFILIATE December 31, 2017 Beginning of period $ 10,733 Additional investments in unconsolidated affiliate $ - Distributions received $ - Sale of investment in unconsolidated affiliate $ - Equity in net income (loss) of unconsolidated affiliate $ (566 ) End of period $ 10,167 |
6. Stock Options_ Share-Based C
6. Stock Options: Share-Based Compensation, Stock Options, Activity (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Share-Based Compensation, Stock Options, Activity | Weighted Weighted Average Average Remaining Aggregate Number of Shares Exercise Price Contractual Life (years) Intrinsic Value Outstanding at September 30, 2017 3,064,500 $ 0.58 9.6 17,425 Granted - - Exercised - - Expired - - Forfeited - - Outstanding at December 31, 2017 3,064,500 $ 0.58 9.1 988,154 Exercisable at December 31, 2017 180,500 $ 0.48 8.2 75,882 |
6. Stock Options_ Schedule of N
6. Stock Options: Schedule of Nonvested Share Activity (Tables) | 3 Months Ended |
Dec. 31, 2017 | |
Tables/Schedules | |
Schedule of Nonvested Share Activity | Nonvested options Number of Nonvested Shares Nonvested shares at September 30, 2017 2,884,000 Granted - Exercised - Forfeited - Vested - Nonvested shares at December 31, 2017 2,884,000 |
1. Basis of Presentation and 30
1. Basis of Presentation and Summary of Significant Accounting Policies: Lease (Details) | Dec. 31, 2017USD ($) |
Details | |
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Other Property, Plant, and Equipment, Net | $ 10,573 |
1. Basis of Presentation and 31
1. Basis of Presentation and Summary of Significant Accounting Policies: Loan (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Notes and Loans Payable, Current | $ 93,209 | |
Other Loans Payable, Current | 73,768 | |
Repayment of loans - short term | $ 11,137 | $ 6,438 |
1. Basis of Presentation and 32
1. Basis of Presentation and Summary of Significant Accounting Policies: Foreign Currency Translation (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Details | |||
Accumulated other comprehensive loss | $ 20,883 | $ 20,680 | |
Other expense | $ 0 | $ 1,076 |
1. Basis of Presentation and 33
1. Basis of Presentation and Summary of Significant Accounting Policies: Inventories (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Details | ||
Inventories, net | $ 299,861 | $ 266,620 |
1. Basis of Presentation and 34
1. Basis of Presentation and Summary of Significant Accounting Policies: Inventories: Schedule of Inventory, Current (Details) - USD ($) | Dec. 31, 2017 | Sep. 30, 2017 |
Details | ||
Inventory, Raw Materials, Gross | $ 167,518 | $ 111,043 |
Inventory, Work in Process, Gross | 5,535 | 5,535 |
Inventory, Finished Goods, Gross | 135,894 | 159,128 |
Inventory, Raw Materials, Net of Reserves | (9,086) | (9,086) |
Inventories, net | $ 299,861 | $ 266,620 |
3. Related Party Transactions (
3. Related Party Transactions (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Details | |||
Loan payable - short term - Related party | $ 200 | $ 200 | |
Repayments of Unsecured Debt | 155,000 | $ 34,670 | |
Proceeds from Issuance of Unsecured Debt | 154,000 | ||
Revenue from Related Parties | 924 | ||
Due from Related Parties, Current | 6,183 | ||
Due from Affiliates | 797 | ||
Due from Other Related Parties, Current | 24,550 | ||
Operating Lease, Liability, Current | $ 2,963 |
5. Common Stock (Details)
5. Common Stock (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Subscription receivable from issuance of common stock | $ 153,000 | $ 0 |
6. Stock Options (Details)
6. Stock Options (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Details | ||
Option expense | $ 133,486 | $ 1,900 |