CIMG (IMG) 10-Q 11 May 16 2017 Q2 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	6 Months Ended
	Mar. 31, 2016	May. 09, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	NuZee, Inc.
Trading Symbol	NUZE
Document Type	10-Q
Current Fiscal Year End Date	--09-30
Entity Common Stock, Shares Outstanding		30,964,951
Amendment Flag	false
Entity Central Index Key	1,527,613
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2

NuZee, Inc. - Balance Sheets

NuZee, Inc. - Balance Sheets - USD ($)	Mar. 31, 2016	Sep. 30, 2015
Current assets:
Cash	$ 57,056	$ 107,678
Accounts receivable	11,766	18,205
Inventories	236,923	201,764
Prepaid expenses and deposits	21,374	21,532
Total current assets	327,119	349,179
Equipment, net	173,964	192,103
Total assets	501,083	541,282
Current liabilities:
Accounts payable	49,676	65,522
Advanced received	96,604
Loan payable - short term - Related party	70,000
Notes payable - Related party	600,000	600,000
Other current liabilities	380	607
Total current liabilities	816,660	666,129
Stockholders' equity (deficit):
Preferred stock; 100,000,000 shares authorized, $0.00001 par value; 0 shares issued and outstanding	0	0
Common stock; 100,000,000 shares authorized, $0.00001 par value; 30,687,451 and 30,124,951 shares issued	307	301
Additional paid in capital	6,397,139	5,940,337
Accumulated deficit	(6,635,657)	(5,988,119)
Less: treasury stock, at cost (2,016,000 held in treasury, $0.03838 per share)	(77,366)	(77,366)
Total stockholders' equity (deficit)	(315,577)	(124,847)
Total liabilities and stockholders' equity (deficit)	$ 501,083	$ 541,282

NuZee, Inc. - Balance Sheets (P

NuZee, Inc. - Balance Sheets (Parentheticals) - $ / shares	Mar. 31, 2016	Sep. 30, 2015
Preferred stock; shares authorized	100,000,000	100,000,000
Preferred stock; par value (in Dollars per share)	$ 0.00001	$ 0.00001
Preferred stock; shares issued	0	0
Preferred stock; shares outstanding	0	0
Common stock; shares authorized,	100,000,000	100,000,000
Common stock; par value (in Dollars per share)	$ 0.00001	$ 0.00001
Common stock; shares issued	30,687,451	30,124,951
Less: treasury stock, held	2,016,000	2,016,000

NuZee Inc. - Statements of Oper

NuZee Inc. - Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015	Mar. 31, 2016	Mar. 31, 2015
Revenues	$ 50,954	$ 15,586	$ 95,414	$ 56,602
Cost of sales	30,276	5,438	59,340	40,955
Gross Profit	20,678	10,148	36,074	15,647
Operating expenses	359,465	416,349	681,038	723,329
Loss from operations	(338,787)	(406,201)	(644,964)	(707,682)
Other income	48		276
Other expense	800	(425)	(2,850)	(1,225)
Net loss	$ (337,939)	$ (406,626)	$ (647,538)	$ (708,907)
Basic and diluted loss per common share (in Dollars per share)	$ (0.01)	$ (0.02)	$ (0.02)	$ (0.03)
Basic and diluted weighted average number of common stock outstanding (in Shares)	30,394,231	27,757,719	30,399,213	27,930,422

NuZee, Inc. - Statements of Cas

NuZee, Inc. - Statements of Cash Flows - USD ($)	6 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Operating activities:
Net loss	$ (647,538)	$ (708,907)
used by operating activities:
Depreciation	20,992	3,420
Option expense	25,807	24,326
Warrant expense		15,768
Change in operating assets and liabilities:
Accounts receivable	6,439	4,109
Inventories	(35,159)	(56,422)
Prepaid expenses and deposits	158	(45,551)
Accounts payable	(15,846)	(22,926)
Other current liabilities	96,377	(1,048)
Net cash used by operating activities	(548,770)	(787,231)
Investing activities:
Purchase of equipment	(2,854)	(11,637)
net cash used by investing activities	(2,854)	(11,637)
Financing activities:
Proceeds from sale of common stock	431,000	27,200
Proceeds from issuance of short term loan payable - related party	100,000
Proceeds from issuance of convertible note payable - related party		600,000
Proceeds from issuance of treasury stock		216,000
Repayment of principal on short term loan payable - related party	(30,000)
Net cash provided by financing activities	501,000	843,200
Net change in cash	(50,624)	44,332
Cash, beginning of period	107,678	238,160
Cash, end of period	57,055	282,492
Cash paid for taxes	800
Cash paid for interest	$ 0	0
Non-cash investing and financing activities:
Cancellation of common stocks		$ (12)

1. BASIS OF PRESENTATION AND SU

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Significant Accounting Policies [Text Block]	1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited interim financial statements of Nuzee, Inc. 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 March 31, 2016 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. The accompanying 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 had recurring losses, large accumulated deficits, is dependent on the shareholder to provide additional funding for operating expenses and has no recurring revenues. These items raise substantial doubts about the Company’s ability to continue as a going concern.

2. INVENTORY

2. INVENTORY	6 Months Ended
	Mar. 31, 2016
Inventory Disclosure [Abstract]
Inventory Disclosure [Text Block]	2. INVENTORY Inventory, consisting principally of products held for sale is stated at the lower of cost or market or net realizable value, using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. At March 31, 2016 and 2015 the Company concluded the carrying value of the inventory of $236,923 and $107,304 respectively, the amount reflected on the balance sheet is net of this adjustment. March 31, 2016 March 31, 2015 Raw Material $ 96,005 $ 31,110 Work in Process 12,414 - Finished goods 128,504 76,194 Total $ 236, 923 $ 107,304

3. RELATED PARTY TRANSACTIONS

3. RELATED PARTY TRANSACTIONS	6 Months Ended
	Mar. 31, 2016
Related Party Transactions [Abstract]
Related Party Transactions Disclosure [Text Block]	3. RELATED PARTY TRANSACTIONS During February 2015, the Company issued a secured convertible promissory note in the sum of $600,000 to Masateru Higashida, the Company’s major shareholder. Interest calculated at the annual rate of zero percent (0%) for the period until April 2016. During March 2016, the Company and Masateru Higashida decides to extend the repayment date to March 31, 2017 in the best interest of the Corporation and its shareholders, with the annual rate of repayment at an interest rate of one percent (1%) for the period until March 31, 2017. If the outstanding principle and all accrued and unpaid interest on the debt hereof (the “Debt”) is not repaid by the Company in full by the Repayment Date, the Debt or any portion thereof may be converted at the option of the Holder, upon written notice to the Company at any time after the Repayment Date, into that number of shares of the Company’s Common Stock equal to the Debt or that portion thereof that the Holder elects to convert, divided by price per share of $0.51. This note shall by cancelled on the date of conversion of the entirety of the Debt During March 2016, the Company borrowed the sum of $100,000 short-term loan (the “From East Loan”) from From East Holdings (“From East” [aka NuZee Co., Ltd]) to be repaid on or before September 30, 2016 at an interest rate of one percent (1%). Company paid back $30,000 of the short-term loan on March 29 th The $600,000 convertible promissory note payable and $100,000 short-term loan are related party transactions since Masateru Higashida is the Company’s major shareholder and he holds 100% ownership of From East Holdings [aka NuZee Co., Ltd]. Both Mr. Higashida and From East Holdings [aka NuZee Co., Ltd] are related parties with the Company.

4. ADVANCE RECEIVED

4. ADVANCE RECEIVED	6 Months Ended
	Mar. 31, 2016
Advances Received Advances Received [Abstract]
Advances Received Advances Received	4. ADVANCE RECEIVED During March 2016, Company received below Advance Received Received from Customer $ 73,501 Other – Related Party 23,103 Total $ 96,604

5. COMMON STOCK

5. COMMON STOCK	6 Months Ended
	Mar. 31, 2016
Stockholders' Equity Note [Abstract]
Stockholders' Equity Note Disclosure [Text Block]	5. COMMON STOCK During October 2015, the Company sold 140,000 shares of common stock at $0.70 per share, for an aggregate purchase price of $98,000. During November 2015, the Company sold 50,000 shares of common stock at $0.70 per share, for an aggregate purchase price of $35,000. During December 2015, the Company sold 90,000 shares of common stock at $0.80 per share, for an aggregate purchase price of $72,000 During January 2016, the Company sold 60,000 shares of common stock at $0.80 per share, for an aggregate purchase price of $48,000. During February 2016, the Company sold 20,000 shares of common stock at $0.80 per share, for an aggregate purchase price of $16,000. During March 2016, the Company sold 202,500 shares of common stock at $0.80 per share, for an aggregate purchase price of $162,000

6. STOCK OPTIONS

6. STOCK OPTIONS	6 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	6. STOCK OPTIONS Our stock-based compensation arrangements include grants of stock options awards under the 2013 Stock Incentive Plan (the “Plan”). During the six months ended March 31, 2016, the Company issued, per board approval, stock options under the Plan to purchase an aggregate of 298,000 shares of the Company’s common stock to officers, directors, employees and consultants. The grant date fair value of these options, net of estimated forfeiture rate of 0%, was $39,496 using Black-Scholes option valuation models with the following assumptions: exercise price of $0.30 to $0.80, volatility of 83.6% to 104.7%, expected life of 4.5 years to 10 years, and risk-free rate of 1.11% to 1.74%. The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized expense of $25,807 associated with stock option awards during the six months ended March 31, 2016. The Company did not have any such expense for the six months ended March 31, 2015. As of March 31, 2016, there was $13,689 of total unrecognized compensation cost related to an aggregate of 145,000 of non-vested stock option awards. These costs are expected to be recognized over a weighted-average period of .55 years for the stock options awards. The following table summarizes stock option activity as of September 30, 2015 and for the six months ended March 31, 2016: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at September 30, 2015 28,333,333 $0.48 G r 298,000 $0.48 Forfeited (28,333,333) $0.48 Outstanding at March 31, 2016 298,000 $0.48 9.9 14,500 Exercisable at March 31, 2016 153,000 $0.32 9.9 14

7. SUBSEQUENT EVENTS

7. SUBSEQUENT EVENTS	6 Months Ended
	Mar. 31, 2016
Subsequent Events [Abstract]
Subsequent Events [Text Block]	7. SUBSEQUENT EVENTS During April 2016, the Company sold 272,500 shares of common stock at $0.80 per share for an aggregate purchase price of $218, 000 During April 216, the Company issued 5,000 shares of common stock at $0.3 per share for a purchase price of $1,500 to previous employee, Michael Billing.

2. INVENTORY (Tables)

2. INVENTORY (Tables)	6 Months Ended
	Mar. 31, 2016
Inventory Disclosure [Abstract]
Schedule of Inventory, Current [Table Text Block]	March 31, 2016 March 31, 2015 Raw Material $ 96,005 $ 31,110 Work in Process 12,414 - Finished goods 128,504 76,194 Total $ 236, 923 $ 107,304

4. ADVANCE RECEIVED (Tables)

4. ADVANCE RECEIVED (Tables)	6 Months Ended
	Mar. 31, 2016
Advances Received Advances Received [Abstract]
Schedule of Investments in and Advances to Affiliates, Schedule of Investments [Table Text Block]	Received from Customer $ 73,501 Other – Related Party 23,103 Total $ 96,604

6. STOCK OPTIONS (Tables)

6. STOCK OPTIONS (Tables)	6 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Share-based Compensation, Stock Options and Stock Appreciation Rights Award Activity [Table Text Block]	Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at September 30, 2015 28,333,333 $0.48 G r 298,000 $0.48 Forfeited (28,333,333) $0.48 Outstanding at March 31, 2016 298,000 $0.48 9.9 14,500 Exercisable at March 31, 2016 153,000 $0.32 9.9 14

2. INVENTORY (Details)

2. INVENTORY (Details) - USD ($)	Mar. 31, 2016	Mar. 31, 2015
Inventory Disclosure [Abstract]
Inventory, Parts and Components, Net of Reserves	$ 236,923	$ 107,304

2. INVENTORY (Details) - Invent

2. INVENTORY (Details) - Inventory, consisting principally of products held for sale is stated at the lower of cost or market - USD ($)	Mar. 31, 2016	Sep. 30, 2015	Mar. 31, 2015
Inventory, consisting principally of products held for sale is stated at the lower of cost or market [Abstract]
Raw Material	$ 96,005		$ 31,110
Work in Process	12,414
Finished goods	128,504		76,194
Total	$ 236,923	$ 201,764	$ 107,304

3. RELATED PARTY TRANSACTIONS (

3. RELATED PARTY TRANSACTIONS (Details) - USD ($)	Mar. 02, 2016	Feb. 02, 2015	Mar. 31, 2017	Mar. 03, 2016
Related Party Transactions [Abstract]
Related Party Transaction, Amounts of Transaction	$ 100,000	$ 600,000
Interest Expense, Related Party		$ 0
Debt Conversion, Converted Instrument, Rate	1.00%		1.00%
Debt Instrument, Convertible, Conversion Price (in Dollars per share)		$ 0.51
Related Party Transaction, Due from (to) Related Party, Current	$ 30,000			$ 100,000
Convertible Notes Payable, Noncurrent				$ 600,000

4. ADVANCE RECEIVED (Details) -

4. ADVANCE RECEIVED (Details) - During March 2016, Company received below Advance Received	6 Months Ended
	Mar. 31, 2016USD ($)
During March 2016, Company received below Advance Received [Abstract]
Received from Customer	$ 73,501
Other – Related Party	23,103
Total	$ 96,604

5. COMMON STOCK (Details)

5. COMMON STOCK (Details) - USD ($)	Apr. 05, 2016	Apr. 02, 2016	Mar. 31, 2016	Feb. 29, 2016	Jan. 31, 2016	Dec. 31, 2015	Nov. 30, 2015	Oct. 31, 2015
Stockholders' Equity Note [Abstract]
Stock Issued During Period, Shares, New Issues	5,000	272,500	202,500	20,000	60,000	90,000	50,000	140,000
Shares Issued, Price Per Share	$ 0.3	$ 0.80	$ 0.80	$ 0.80	$ 0.80	$ 0.80	$ 0.70	$ 0.70
Stock Issued During Period, Value, New Issues	$ 1,500	$ 218,000	$ 162,000	$ 16,000	$ 48,000	$ 72,000	$ 35,000	$ 98,000

6. STOCK OPTIONS (Details)

6. STOCK OPTIONS (Details) - USD ($)	6 Months Ended	60 Months Ended	126 Months Ended	666 Months Ended
	Mar. 31, 2016	Sep. 30, 2020	Mar. 31, 2026	Mar. 31, 2071
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options (in Shares)	298,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value (in Dollars per share)	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value (in Dollars)	$ 39,496
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit (in Dollars per share)	$ 0.30
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit (in Dollars per share)	$ 0.80
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Minimum	83.60%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum	104.70%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term		4 years 6 months	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum	1.11%
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum	1.74%
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options (in Dollars)	$ 13,689
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares (in Shares)	145,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term				55 years

6. STOCK OPTIONS (Details) - Th

6. STOCK OPTIONS (Details) - The following table summarizes common stock options issued and outstanding: - USD ($)	6 Months Ended
	Mar. 31, 2016	Sep. 30, 2015
The following table summarizes common stock options issued and outstanding: [Abstract]
Outstanding, Number of Shares	298,000	28,333,333
Outstanding, Weighted Average Exercise Price	$ 0.48	$ 0.48
Outstanding, Weighted Average Remainin Contractial Life	9 years 328 days
Outstanding, Aggregate Intrinsic Value	$ 14,500
Exercisable at March 31, 2016	153,000
Exercisable at March 31, 2016	$ 0.32
Exercisable at March 31, 2016	9 years 328 days
Exercisable at March 31, 2016	$ 14,500
Granted	298,000
Granted	$ 0.48
Forfeited	(28,333,333)
Forfeited	$ 0.48

7. SUBSEQUENT EVENTS (Details)

7. SUBSEQUENT EVENTS (Details) - USD ($)	Apr. 05, 2016	Apr. 02, 2016	Mar. 31, 2016	Feb. 29, 2016	Jan. 31, 2016	Dec. 31, 2015	Nov. 30, 2015	Oct. 31, 2015
Subsequent Events [Abstract]
Stock Issued During Period, Shares, New Issues	5,000	272,500	202,500	20,000	60,000	90,000	50,000	140,000
Shares Issued, Price Per Share	$ 0.3	$ 0.80	$ 0.80	$ 0.80	$ 0.80	$ 0.80	$ 0.70	$ 0.70
Stock Issued During Period, Value, New Issues	$ 1,500	$ 218,000	$ 162,000	$ 16,000	$ 48,000	$ 72,000	$ 35,000	$ 98,000