Document and Entity Information
Document and Entity Information - USD ($) | 3 Months Ended | ||
Dec. 31, 2018 | Mar. 25, 2019 | Mar. 31, 2018 | |
Details | |||
Registrant Name | NUZEE, INC. | ||
Registrant CIK | 0001527613 | ||
SEC Form | 10-Q | ||
Period End date | Dec. 31, 2018 | ||
Fiscal Year End | --09-30 | ||
Trading Symbol | nuze | ||
Tax Identification Number (TIN) | 383849791 | ||
Number of common stock shares outstanding | 39,850,299 | ||
Public Float | $ 0 | ||
Filer Category | Non-accelerated Filer | ||
Current with reporting | Yes | ||
Small Business | true | ||
Emerging Growth Company | false | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | Q1 | ||
Entity File Number | 333-176684 | ||
Entity Incorporation, State Country Name | Nevada | ||
Entity Address, Address Line One | 2865 Scott Street | ||
Entity Address, Address Line Two | Suite 107 | ||
Entity Address, City or Town | Vista | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92081 | ||
Entity Address, Address Description | Address of principal executive offices | ||
City Area Code | 760 | ||
Local Phone Number | 295-2408 | ||
Phone Fax Number Description | Registrant’s telephone number, including area code |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Current assets: | ||
Cash | $ 2,441,717 | $ 1,806,666 |
Accounts receivable, net | 107,016 | 144,632 |
Accounts receivable - Related party | 1,390 | 222 |
Inventories, net | 284,761 | 134,877 |
Other current assets | 207,343 | 134,632 |
Other current assets - Related party | 451 | 33,887 |
Total current assets | 3,042,678 | 2,254,916 |
Property and equipment, net | 734,273 | 674,393 |
Other assets: | ||
Goodwill | 17,112 | 17,112 |
Customer List, net | 31,556 | 34,424 |
Other asset | 2,208 | 1,667 |
Assets, Noncurrent | 50,876 | 53,203 |
Total assets | 3,827,827 | 2,982,512 |
Current liabilities: | ||
Accounts payable | 318,776 | 268,283 |
Current portion of long-term loan payable | 34,280 | 44,229 |
Other current liabilities | 142,487 | 160,773 |
Other current liabilities - Related party | 2,875 | 2,782 |
Total current liabilities | 498,418 | 476,067 |
Non-current liabilities: | ||
Loan payable - long term, net of current portion | 91,005 | 88,063 |
Other noncurrent liabilities | 6,528 | 6,317 |
Liabilities, Noncurrent | 97,533 | 94,380 |
Total liabilities | 595,951 | 570,447 |
Stockholders' equity: | ||
Common Stock, Value | 399 | 396 |
Additional paid in capital | 18,349,258 | 14,957,227 |
Accumulated deficit | (15,184,414) | (12,607,722) |
Accumulated other comprehensive loss | (19,639) | (30,967) |
Total NuZee, Inc. shareholders' equity | 3,145,604 | 2,318,934 |
Noncontrolling interest | 86,272 | 93,131 |
Total stockholders' equity | 3,231,876 | 2,412,065 |
Total liabilities and stockholders' equity | $ 3,827,827 | $ 2,982,512 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) - Parenthetical - $ / shares | Dec. 31, 2018 | Sep. 30, 2018 |
Details | ||
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Common Stock, Shares, Issued | 39,949,800 | 39,583,773 |
Common Stock, Shares, Outstanding | 39,949,800 | 39,583,773 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Revenues | $ 353,408 | $ 356,879 |
Cost of sales | 209,670 | 239,010 |
Gross Profit | 143,738 | 117,869 |
Operating expenses | 2,732,628 | 760,653 |
Loss from operations | (2,588,890) | (642,784) |
Other income | 4,185 | 507 |
Equity in loss of unconsolidated affiliate | 0 | (566) |
Other expense | (3,244) | 0 |
Interest expense | (457) | (713) |
Net loss | (2,588,406) | (643,556) |
Net loss attributable to noncontrolling interest | (11,714) | (6,056) |
Net loss attributable to NuZee, Inc. | $ (2,576,692) | $ (637,500) |
Basic and diluted loss per common share | $ (0.06) | $ (0.02) |
Basic and diluted weighted average number of common stock outstanding | 39,696,767 | 34,908,982 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net loss | $ (2,588,406) | $ (643,556) |
Foreign currency translation | 16,183 | (290) |
Total other comprehensive loss, net of tax | 16,183 | (290) |
Comprehensive loss | (2,572,223) | (643,846) |
Parent | ||
Net loss | (2,576,692) | (637,500) |
Foreign currency translation | 11,328 | (203) |
Total other comprehensive loss, net of tax | 11,328 | (203) |
Comprehensive loss | (2,565,364) | (637,703) |
Noncontrolling Interest | ||
Net loss | (11,714) | (6,056) |
Foreign currency translation | 4,855 | (87) |
Total other comprehensive loss, net of tax | 4,855 | (87) |
Comprehensive loss | $ (6,859) | $ (6,143) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities: | ||
Net loss | $ (2,588,406) | $ (643,556) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and Amortization | 65,711 | 23,536 |
Option expense | 1,789,751 | 133,486 |
Loss on sale of assets | 3,217 | 0 |
Loss on settlement of payable | 89,053 | 0 |
Inventory impairment | 4,560 | 0 |
Allowance for sales return | 7,740 | 0 |
Equity in loss of unconsolidated affiliate | 0 | 566 |
Change in operating assets and liabilities: | ||
Accounts receivable | 29,876 | 58,662 |
Accounts receivable - Related party | (1,168) | 6,184 |
Inventories | (154,444) | (33,360) |
Prepaid expense and other current assets | (72,711) | (87,407) |
Increase (Decrease) in Contract with Customer, Asset | 33,436 | 4,000 |
Other asset | (541) | 0 |
Accounts payable | 68,918 | 100,892 |
Accounts payable - related party | 0 | (10,935) |
Deferred revenue | 0 | 1,874 |
Other liabilities | 211 | 0 |
Other current liabilities - related party | 93 | 0 |
Accrued expense and other current liabilities | (18,286) | (66,529) |
Net cash used by operating activities | (742,990) | (512,586) |
Investing activities: | ||
Purchase of equipment | (149,540) | (38,145) |
Proceeds from sales of equipment | 23,600 | 0 |
Net cash used in investing activities | (125,940) | (38,145) |
Financing activities: | ||
Proceeds from issuance of loan - short term - Related party | 0 | 156,000 |
Repayment of loans - short term - Related party | 0 | (157,000) |
Repayment of loans - short term | (9,949) | (11,137) |
Payments on capital lease | 0 | (864) |
Proceeds from issuance of common stock | 1,494,805 | 509,110 |
Net cash provided by financing activities | 1,484,856 | 496,109 |
Effect of foreign exchange on cash and cash equivalents | 19,125 | (250) |
Net change in cash | 635,051 | (54,873) |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 1,806,666 | 347,327 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 2,441,717 | 292,454 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 0 | 543 |
Cash paid for taxes | 0 | 800 |
Noncash investing and financing activities: | ||
Subscription receivable from issuance of common stock | 0 | 153,000 |
Stock issued to settle payables | $ 18,425 | $ 0 |
1. BASIS OF PRESENTATION AND SU
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Dec. 31, 2018 | |
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 consolidated 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 consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended September 30, 2018 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. 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 its majority owned subsidiary, which has a fiscal year end of September 30. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation. NuZee JAPAN Co., Ltd (“NuZee JP”), NuZee Korea Ltd (“NuZee KR”) and NuZee Investment Co., Ltd. (“NuZee INV”) are wholly owned subsidiaries of the Company. Earnings per Share Basic earnings per common share is equal to 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, 2018 and 2017, 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 and Capital Resources Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital. The Company has generated limited revenues from its principal operations, and there is no assurance of future revenues. As of December 31, 2018, the Company had cash of $2,275,681. The Company has not attained profitable operations since inception. 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 had limited revenues, recurring losses, an accumulated deficit and is dependent on its majority shareholder 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. Mandatorily Redeemable Non-controlling Interests with a Scope Exception. The ASU was issued to address the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible debt, warrants and other financing instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The amendments are effective for fiscal years beginning after December 15, 2018, and should be applied retrospectively. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this amendment on its consolidated financial statements. |
2. GEOGRAPHIC CONCENTRATION
2. GEOGRAPHIC CONCENTRATION | 3 Months Ended |
Dec. 31, 2018 | |
Notes | |
2. GEOGRAPHIC CONCENTRATION | 2. GEOGRAPHIC CONCENTRATION 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: Geographic Concentrations Net Revenue: Three Months Ended December 31, 2018 Three Months Ended December 31, 2017 North America $ 156,768 $ 173,640 Japan 187,968 183,239 South Korea 8,672 - $ 353,408 $ 356,879 Property and equipment, net: December 31, 2018 September 30, 2018 North America $ 441,083 $ 508,711 Japan 7,293 7,864 South Korea 285,897 157,818 $ 734,273 $ 674,393 |
3. RELATED PARTY TRANSACTIONS
3. RELATED PARTY TRANSACTIONS | 3 Months Ended |
Dec. 31, 2018 | |
Notes | |
3. RELATED PARTY TRANSACTIONS | 3. RELATED PARTY TRANSACTIONS Sales, Purchases and Operating Expenses For the three months ended December 31, 2018 and 2017, NuZee JP sold their products to EHCL, and the sales to them totaled approximately $741 and $924, respectively. The corresponding accounts receivable balance from EHCL was $1,390 and $222 as of December 31, 2018 and September 30, 2018, respectively. EHCL leased an employee to NuZee JP with no fee during the three months ended December 31, 2018. 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 $6,019 as of September 30, 2017. NuZee JP leased an employee to Contlus. Contlus is the Company’s related party as the Company holds 50% of their issued shares. Contlus has payable balance of $34,568 as of December 31, 2018. 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. At December 31, 2018, the payable balance under this lease was $2,875. 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. COMMON STOCK
4. COMMON STOCK | 3 Months Ended |
Dec. 31, 2018 | |
Notes | |
4. COMMON STOCK | 4. COMMON STOCK Revenue Recognition |
5. STOCK OPTIONS
5. STOCK OPTIONS | 3 Months Ended |
Dec. 31, 2018 | |
Notes | |
5. STOCK OPTIONS | 5. STOCK OPTIONS The following table summarizes stock option activity for three months ended December 31, 2018: Weighted Weighted Average Average Number of Exercise Remaining Aggregate Shares Price Contractual Life (years) Intrinsic Value Outstanding at September 30, 2018 3,942,000 $ 0.78 8.9 $ 4,407,160 Granted - - Exercised - - Expired - - Forfeited - - Outstanding at December 31, 2018 3,942,000 $ 0.78 8.7 26,679,460 Exercisable at December 31, 2018 632,000 $ 0.51 8.2 $ 4,431,760 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 $1,789,751 for three months ended December 31, 2018. Unamortized option expense as of December 31, 2018, for all options outstanding amounted to approximately $6,216,482. These costs are expected to be recognized over a weighted-average period of 2.3 years. The Company recognized stock option expenses of $133,486 for three months ended December 31, 2017. A summary of the status of the Company’s nonvested shares as of December 31, 2018, is presented below: Nonvested options Number of Nonvested Shares Nonvested shares at September 30, 2018 3,310,000 Granted - Exercised - Forfeited - Vested - Nonvested shares at December 31, 2018 3,310,000 |
6. SUBSEQUENT EVENT
6. SUBSEQUENT EVENT | 3 Months Ended |
Dec. 31, 2018 | |
Notes | |
6. SUBSEQUENT EVENT | 6. SUBSEQUENT EVENT On January 23, 2019, we terminated the Commercial Contract of Sale (the "Agreement") for the purchase of a building located in Irving, Texas that we entered on December 5, 2018. Details of the Agreement were reported in our Current Report on Form 8-K filed on December 11, 2018. All but $100.00 of our deposit was returned. |
1. BASIS OF PRESENTATION AND _2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Accounting, Policy (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Policies | |
Basis of Accounting, Policy | The accompanying unaudited interim consolidated 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 consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended September 30, 2018 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. |
1. BASIS OF PRESENTATION AND _3
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
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 its majority owned subsidiary, which has a fiscal year end of September 30. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation. NuZee JAPAN Co., Ltd (“NuZee JP”), NuZee Korea Ltd (“NuZee KR”) and NuZee Investment Co., Ltd. (“NuZee INV”) are wholly owned subsidiaries of the Company. |
1. BASIS OF PRESENTATION AND _4
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings per Share (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Policies | |
Earnings per Share | Earnings per Share Basic earnings per common share is equal to 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, 2018 and 2017, 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 _5
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Going Concern and Capital Resources (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Policies | |
Going Concern and Capital Resources | Going Concern and Capital Resources Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital. The Company has generated limited revenues from its principal operations, and there is no assurance of future revenues. As of December 31, 2018, the Company had cash of $2,275,681. The Company has not attained profitable operations since inception. 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 had limited revenues, recurring losses, an accumulated deficit and is dependent on its majority shareholder 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 _6
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Major Customers (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Policies | |
Major Customers | Major Customers In the three months ended December 31, 2018 and 2017, revenue was primarily from major customers disclosed below. Three months ended December 31, 2018: Customer Name Sales Amount % of Total Revenue Customer A $ 157,653 45 % Customer B $ 56,285 16 % Three months ended December 31, 2017: Customer Name Sales Amount % of Total Revenue Customer A $ 167,682 47 % Customer B $ 72,750 20 % |
1. BASIS OF PRESENTATION AND _7
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
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 $7,293 as of December 31, 2018. The capital lease liability is included in other current liabilities on the consolidated balance sheets. Future minimum lease payments under capital lease obligations as of December 31, 2018 for each of the remaining fiscal years are as follows: 2019 $ 3,662 2020 $ 4,883 2021 $ 1,221 Total Minimum Lease Payments $ 9,765 The Company leases office space with terms ranging from month to month to 32 months. Rent expense included in general and administrative expense for the three months ended December 31, 2018 and 2017 was $33,175 and $32,971, respectively. 2019 $ 63,982 2020 $ 59,732 Total Minimum Lease Payments $ 123,714 |
1. BASIS OF PRESENTATION AND _8
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Policies | |
Revenue Recognition | In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605). The new standard’s core principle is that an entity will recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring good or services to a customer. The principles in the standard are applied in five steps: 1) Identify the contract(s) with a customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to the performance obligations in the contract; and 5) Recognize revenue when (or as) the entity satisfies a performance obligation. We adopted Topic 606 as of October 1, 2018 on a modified retrospective basis. The adoption of Topic 606 does not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations. |
1. BASIS OF PRESENTATION AND _9
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Foreign Currency Translation (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
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 adjustments comprising accumulated other comprehensive loss amounted to $(19,369) and ($30,967) as of December 31, 2018 and September 30, 2018, 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. |
1. BASIS OF PRESENTATION AND_10
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
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, 2018 and September 30, 2018, the carrying value of inventory of $284,761 and $134,877 respectively, reflected on the consolidated balance sheets is net of this adjustment. December 31, 2018 September 30, 2018 Raw materials $ 147,991 $ 30,200 Work in process 2,250 - Finished goods 134,520 104,677 Less - Inventory reserve - - Total $ 284,761 $ 134,877 |
1. BASIS OF PRESENTATION AND_11
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Policies | |
Recent Accounting Pronouncements | In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception. The ASU was issued to address the complexity associated with applying generally accepted accounting principles (GAAP) for certain financial instruments with characteristics of liabilities and equity. The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible debt, warrants and other financing instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The amendments are effective for fiscal years beginning after December 15, 2018, and should be applied retrospectively. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this amendment on its consolidated financial statements. |
1. BASIS OF PRESENTATION AND_12
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Major Customers: Schedule of Revenue from External Customers (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Revenue from External Customers | Three months ended December 31, 2018: Customer Name Sales Amount % of Total Revenue Customer A $ 157,653 45 % Customer B $ 56,285 16 % Three months ended December 31, 2017: Customer Name Sales Amount % of Total Revenue Customer A $ 167,682 47 % Customer B $ 72,750 20 % |
1. BASIS OF PRESENTATION AND_13
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, 2018 | |
Tables/Schedules | |
Schedule of Future Minimum Lease Payments for Capital Leases | 2019 $ 3,662 2020 $ 4,883 2021 $ 1,221 Total Minimum Lease Payments $ 9,765 |
1. BASIS OF PRESENTATION AND_14
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, 2018 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments for Operating Leases | 2019 $ 63,982 2020 $ 59,732 Total Minimum Lease Payments $ 123,714 |
1. BASIS OF PRESENTATION AND_15
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Schedule of Loan Payments (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Loan Payments | In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605). The new standard’s core principle is that an entity will recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring good or services to a customer. The principles in the standard are applied in five steps: 1) Identify the contract(s) with a customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to the performance obligations in the contract; and 5) Recognize revenue when (or as) the entity satisfies a performance obligation. We adopted Topic 606 as of October 1, 2018 on a modified retrospective basis. The adoption of Topic 606 does not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations. |
1. BASIS OF PRESENTATION AND_16
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories: Schedule of Inventory, Current (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Inventory, Current | December 31, 2018 September 30, 2018 Raw materials $ 147,991 $ 30,200 Work in process 2,250 - Finished goods 134,520 104,677 Less - Inventory reserve - - Total $ 284,761 $ 134,877 |
2. GEOGRAPHIC CONCENTRATION_ Sc
2. GEOGRAPHIC CONCENTRATION: Schedule of Geographic Operations (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Geographic Operations | Geographic Concentrations Net Revenue: Three Months Ended December 31, 2018 Three Months Ended December 31, 2017 North America $ 156,768 $ 173,640 Japan 187,968 183,239 South Korea 8,672 - $ 353,408 $ 356,879 Property and equipment, net: December 31, 2018 September 30, 2018 North America $ 441,083 $ 508,711 Japan 7,293 7,864 South Korea 285,897 157,818 $ 734,273 $ 674,393 |
5. STOCK OPTIONS_ Schedule of S
5. STOCK OPTIONS: Schedule of Stock Option Activity (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Stock Option Activity | Weighted Weighted Average Average Number of Exercise Remaining Aggregate Shares Price Contractual Life (years) Intrinsic Value Outstanding at September 30, 2018 3,942,000 $ 0.78 8.9 $ 4,407,160 Granted - - Exercised - - Expired - - Forfeited - - Outstanding at December 31, 2018 3,942,000 $ 0.78 8.7 26,679,460 Exercisable at December 31, 2018 632,000 $ 0.51 8.2 $ 4,431,760 |
5. STOCK OPTIONS_ Schedule of C
5. STOCK OPTIONS: Schedule of Company's unvested shares (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Company's unvested shares | Nonvested options Number of Nonvested Shares Nonvested shares at September 30, 2018 3,310,000 Granted - Exercised - Forfeited - Vested - Nonvested shares at December 31, 2018 3,310,000 |
1. BASIS OF PRESENTATION AND_17
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Going Concern and Capital Resources (Details) | Dec. 31, 2018USD ($) |
Details | |
Cash | $ 2,275,681 |
1. BASIS OF PRESENTATION AND_18
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Major Customers: Schedule of Revenue from External Customers (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Customer A | ||
Sales Amount | $ 157,653 | $ 167,682 |
Percent of Total Revenue | 45.00% | 47.00% |
Customer B | ||
Sales Amount | $ 56,285 | $ 72,750 |
Percent of Total Revenue | 16.00% | 20.00% |
1. BASIS OF PRESENTATION AND_19
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Details) | Dec. 31, 2018USD ($) |
Details | |
Capital Leases, Future Minimum Payments Due, Next Twelve Months | $ 3,662 |
Capital Leases, Future Minimum Payments Due in Two Years | 4,883 |
Capital Leases, Future Minimum Payments Due in Three Years | 1,221 |
Capital Leases, Future Minimum Payments Due | $ 9,765 |
1. BASIS OF PRESENTATION AND_20
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Dec. 31, 2018USD ($) |
Details | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 63,982 |
Operating Leases, Future Minimum Payments, Due in Two Years | 59,732 |
Operating Leases, Future Minimum Payments Due | $ 123,714 |
1. BASIS OF PRESENTATION AND_21
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Schedule of Loan Payments (Details) | Dec. 31, 2018USD ($) |
Tono Shinyo Kinko Bank | |
2019 | $ 20,454 |
2020 | 27,272 |
2021 | 20,454 |
2022 | 0 |
Total Loan Payment | 68,180 |
Nihon Seisaku Kouko | |
2019 | 13,826 |
2020 | 18,436 |
2021 | 18,436 |
2022 | 6,407 |
Total Loan Payment | $ 57,105 |
1. BASIS OF PRESENTATION AND_22
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Foreign Currency Translation (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Details | ||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | $ (19,369) | $ (30,967) |
1. BASIS OF PRESENTATION AND_23
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories: Schedule of Inventory, Current (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Details | ||
Raw materials | $ 147,991 | $ 30,200 |
Work in process | 2,250 | 0 |
Finished goods | 134,520 | 104,677 |
Less - Inventory reserve | 0 | 0 |
Inventories, net | $ 284,761 | $ 134,877 |
2. GEOGRAPHIC CONCENTRATION_ _2
2. GEOGRAPHIC CONCENTRATION: Schedule of Geographic Operations (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | |
North America | |||
Net Revenue | $ 156,768 | $ 173,640 | |
Property and equipment, net | 441,083 | $ 508,711 | |
JAPAN | |||
Net Revenue | 187,968 | 183,239 | |
Property and equipment, net | 7,293 | 7,864 | |
South Korea | |||
Net Revenue | 8,672 | 0 | |
Property and equipment, net | 285,897 | 157,818 | |
Total | |||
Net Revenue | 353,408 | $ 356,879 | |
Property and equipment, net | $ 734,273 | $ 674,393 |
3. RELATED PARTY TRANSACTIONS_
3. RELATED PARTY TRANSACTIONS: Sales, Purchases and Operating Expenses (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Sales or Purchase Transaction 1 | ||||
Sales-type Lease, Revenue | $ 741 | $ 924 | ||
Accounts Receivable, after Allowance for Credit Loss | 1,390 | $ 222 | ||
Sales or Purchase Transaction 2 | ||||
Proceeds from leasing employee | 0 | |||
Sales or Purchase Transaction 3 | ||||
Sales-type Lease, Revenue | 7,418 | |||
Accounts Receivable, after Allowance for Credit Loss | $ 6,019 | |||
Proceeds from leasing employee | $ 10,936 | |||
Sales or Purchase Transaction 4 | ||||
Accounts Receivable, after Allowance for Credit Loss | $ 34,568 |
4. COMMON STOCK (Details)
4. COMMON STOCK (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Transaction 1 | ||
Sale of Stock, Description of Transaction | Company sold 350,673 shares of common stock | |
Shares, Issued | 350,673 | |
Stock Issued | $ 1,494.805 | |
Stock Transaction 1 | Minimum | ||
Sale of Stock, Price Per Share | $ 1.70 | |
Stock Transaction 1 | Maximum | ||
Sale of Stock, Price Per Share | $ 5.46 | |
Stock Transaction 2 | ||
Sale of Stock, Description of Transaction | Company issued 15,354 shares | |
Shares, Issued | 15,354 | |
Stock Issued | $ 107,478 | |
Gain (loss) on settlement of payables | $ (89,053) |
5. STOCK OPTIONS_ Schedule of_2
5. STOCK OPTIONS: Schedule of Stock Option Activity (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2018 |
Details | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 3,942,000 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 0.78 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 8 years 8 months 12 days | 8 years 10 months 24 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 4,407,160 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 0 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period | 0 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price | $ 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period | 0 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price | $ 0 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 3,942,000 | 3,942,000 | 3,942,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 0.78 | $ 0.78 | $ 0.78 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value | $ 26,679,460 | $ 4,407,160 | $ 26,679,460 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 632,000 | 632,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 0.51 | $ 0.51 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 8 years 2 months 12 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 4,431,760 | $ 4,431,760 |
5. STOCK OPTIONS (Details)
5. STOCK OPTIONS (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Option expense | $ 1,789,751 | $ 133,486 |
5. STOCK OPTIONS_ Schedule of_3
5. STOCK OPTIONS: Schedule of Company's unvested shares (Details) | 3 Months Ended |
Dec. 31, 2018shares | |
Details | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares, Beginning Balance | 3,310,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Number of Shares, Period Increase (Decrease) | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares, Ending Balance | 3,310,000 |
6. SUBSEQUENT EVENT (Details)
6. SUBSEQUENT EVENT (Details) - Event 1 | 3 Months Ended |
Dec. 31, 2018 | |
Subsequent Event, Date | Jan. 23, 2019 |
Subsequent Event, Description | we terminated the Commercial Contract of Sale (the "Agreement") for the purchase of a building located in Irving |