Document and Entity Information
Document and Entity Information - USD ($) | 6 Months Ended | ||
Mar. 31, 2019 | Apr. 30, 2019 | Mar. 31, 2018 | |
Details | |||
Registrant Name | NUZEE, INC. | ||
Registrant CIK | 0001527613 | ||
SEC Form | 10-Q | ||
Period End date | Mar. 31, 2019 | ||
Fiscal Year End | --09-30 | ||
Trading Symbol | nuze | ||
Tax Identification Number (TIN) | 383849791 | ||
Number of common stock shares outstanding | 40,163,940 | ||
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 | Q2 | ||
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 ($) | Mar. 31, 2019 | Sep. 30, 2018 |
Current assets: | ||
Cash | $ 1,150,490 | $ 1,806,666 |
Accounts receivable, net | 90,980 | 144,632 |
Accounts receivable - Related party | 271 | 222 |
Inventories, net | 276,877 | 134,877 |
Other current assets | 182,270 | 134,632 |
Other current assets - Related party | 34,568 | 33,887 |
Total current assets | 1,735,456 | 2,254,916 |
Property and equipment, net | 1,726,287 | 674,393 |
Other assets: | ||
Goodwill | 17,112 | 17,112 |
Customer List, net | 28,687 | 34,424 |
Other asset | 2,185 | 1,667 |
Assets, Noncurrent | 47,984 | 53,203 |
Total assets | 3,509,727 | 2,982,512 |
Current liabilities: | ||
Accounts payable | 701,663 | 268,283 |
Current portion of long-term loan payable | 22,682 | 44,229 |
Other current liabilities | 114,955 | 160,773 |
Other current liabilities - Related party | 1,408 | 2,782 |
Total current liabilities | 840,708 | 476,067 |
Non-current liabilities: | ||
Loan payable - long term, net of current portion | 90,324 | 88,063 |
Other noncurrent liabilities | 0 | 6,317 |
Liabilities, Noncurrent | 90,324 | 94,380 |
Total liabilities | 931,032 | 570,447 |
Stockholders' equity: | ||
Common Stock, Value | 401 | 396 |
Additional paid in capital | 19,085,519 | 14,957,227 |
Accumulated deficit | (16,637,416) | (12,607,722) |
Accumulated other comprehensive loss | (22,586) | (30,967) |
Total NuZee, Inc. shareholders' equity | 2,425,918 | 2,318,934 |
Noncontrolling interest | 152,777 | 93,131 |
Total stockholders' equity | 2,578,695 | 2,412,065 |
Total liabilities and stockholders' equity | $ 3,509,727 | $ 2,982,512 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) - Parenthetical - $ / shares | Mar. 31, 2019 | 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 | 40,143,940 | 39,583,773 |
Common Stock, Shares, Outstanding | 40,143,940 | 39,583,773 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Details | ||||
Revenues | $ 365,956 | $ 390,653 | $ 719,364 | $ 747,532 |
Cost of sales | 245,188 | 287,399 | 454,858 | 526,409 |
Gross Profit | 120,768 | 103,254 | 264,506 | 221,123 |
Operating expenses | 1,513,352 | 838,125 | 4,245,980 | 1,598,778 |
Loss from operations | (1,392,584) | (734,871) | (3,981,474) | (1,377,655) |
Other income | 81 | 8,544 | 4,266 | 9,051 |
Equity in loss of unconsolidated affiliate | 0 | (10,167) | 0 | (10,733) |
Other expense | (41,109) | (3) | (44,353) | (3) |
Interest expense | (751) | (766) | (1,208) | (1,479) |
Net loss | (1,434,363) | (737,263) | (4,022,769) | (1,380,819) |
Net loss attributable to noncontrolling interest | 18,639 | 17,210 | 6,925 | 11,154 |
Net loss attributable to NuZee, Inc. | $ (1,453,002) | $ (754,473) | $ (4,029,694) | $ (1,391,973) |
Basic and diluted loss per common share | $ (0.04) | $ (0.02) | $ (0.10) | $ (0.04) |
Basic and diluted weighted average number of common stock outstanding | 39,720,202 | 36,267,298 | 39,795,817 | 35,580,677 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | |
Net loss | $ (1,434,363) | $ (737,263) | $ (4,022,769) | $ (1,380,819) |
Foreign currency translation | 44,919 | 14,155 | 61,102 | 13,865 |
Total other comprehensive loss, net of tax | 44,919 | 14,155 | 61,102 | 13,865 |
Comprehensive income (loss) | (1,389,444) | (723,108) | (3,961,667) | (1,366,954) |
Parent | ||||
Net loss | (1,453,002) | (754,473) | (4,029,694) | (1,391,973) |
Foreign currency translation | (2,947) | 9,908 | 8,381 | 9,705 |
Total other comprehensive loss, net of tax | (2,947) | 9,908 | 8,381 | 9,705 |
Comprehensive income (loss) | (1,455,949) | (744,565) | (4,021,313) | (1,382,268) |
Noncontrolling Interest | ||||
Net loss | 18,639 | 17,210 | 6,925 | 11,154 |
Foreign currency translation | 47,866 | 4,247 | 52,721 | 4,160 |
Total other comprehensive loss, net of tax | 47,866 | 4,247 | 52,721 | 4,160 |
Comprehensive income (loss) | $ 66,505 | $ 21,457 | $ 59,646 | $ 15,314 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Retained Earnings | Noncontrolling Interest | AOCI Attributable to Parent | Total |
Equity Balance, Starting at Sep. 30, 2017 | $ 347 | $ 9,718,648 | $ (9,030,551) | $ 92,857 | $ (20,680) | $ 760,621 |
Shares Outstanding, Starting at Sep. 30, 2017 | 34,720,538 | |||||
Stock Issued During Period, Value, New Issues | $ 10 | 509,100 | 0 | 0 | 0 | 509,110 |
Stock Issued During Period, Shares, New Issues | 998,254 | |||||
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture | $ 0 | 133,486 | 0 | 0 | 0 | 133,486 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 0 | |||||
Subscription receivable from issuance of common stock, value | $ 3 | 152,997 | 0 | 0 | 0 | 153,000 |
Subscription receivable from issuance of common stock, shares | 300,000 | |||||
Other Comprehensive Income, Other, Net of Tax | $ 0 | 0 | 0 | (87) | (203) | (290) |
Net Income (Loss) | $ 0 | 0 | (637,500) | (6,056) | 0 | (643,556) |
Shares Outstanding, Ending at Dec. 31, 2017 | 36,018,792 | |||||
Equity Balance, Ending at Dec. 31, 2017 | $ 360 | 10,514,231 | (9,668,051) | 86,714 | (20,883) | 912,371 |
Equity Balance, Starting at Sep. 30, 2017 | $ 347 | 9,718,648 | (9,030,551) | 92,857 | (20,680) | 760,621 |
Shares Outstanding, Starting at Sep. 30, 2017 | 34,720,538 | |||||
Stock issuance costs | 0 | |||||
Stock Issued During Period, Value, Issued for Services | 0 | |||||
Shares Outstanding, Ending at Mar. 31, 2018 | 37,122,321 | |||||
Equity Balance, Ending at Mar. 31, 2018 | $ 371 | 11,712,443 | (10,422,524) | 108,171 | (10,975) | 1,387,486 |
Equity Balance, Starting at Dec. 31, 2017 | $ 360 | 10,514,231 | (9,668,051) | 86,714 | (20,883) | 912,371 |
Shares Outstanding, Starting at Dec. 31, 2017 | 36,018,792 | |||||
Stock Issued During Period, Value, New Issues | $ 11 | 1,082,189 | 0 | 0 | 0 | 1,082,200 |
Stock Issued During Period, Shares, New Issues | 1,103,529 | |||||
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture | $ 0 | 116,023 | 0 | 0 | 0 | 116,023 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 0 | |||||
Other Comprehensive Income, Other, Net of Tax | $ 0 | 0 | 0 | 4,247 | 9,908 | 14,155 |
Net Income (Loss) | $ 0 | 0 | (754,473) | 17,210 | 0 | (737,263) |
Shares Outstanding, Ending at Mar. 31, 2018 | 37,122,321 | |||||
Equity Balance, Ending at Mar. 31, 2018 | $ 371 | 11,712,443 | (10,422,524) | 108,171 | (10,975) | 1,387,486 |
Equity Balance, Starting at Sep. 30, 2018 | $ 396 | 14,957,227 | (12,607,722) | 93,131 | (30,967) | 2,412,065 |
Shares Outstanding, Starting at Sep. 30, 2018 | 39,583,773 | |||||
Stock Issued During Period, Value, New Issues | $ 3 | 1,494,802 | 0 | 0 | 0 | 1,494,805 |
Stock Issued During Period, Shares, New Issues | 350,673 | |||||
Stock Issued During Period, Value, Other | $ 0 | 107,478 | 0 | 0 | 0 | 107,478 |
Stock Issued During Period, Shares, Other | 15,354 | |||||
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture | $ 0 | 1,789,751 | 0 | 0 | 0 | 1,789,751 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 0 | |||||
NuZee foreign currency gain (loss) | $ 0 | 0 | 0 | 4,855 | 11,328 | 16,183 |
Net Income (Loss) | (2,576,692) | (11,714) | (2,588,406) | |||
Shares Outstanding, Ending at Dec. 31, 2018 | 39,949,800 | |||||
Equity Balance, Ending at Dec. 31, 2018 | $ 399 | 18,349,258 | (15,184,414) | 86,272 | (19,639) | 3,231,876 |
Equity Balance, Starting at Sep. 30, 2018 | $ 396 | 14,957,227 | (12,607,722) | 93,131 | (30,967) | 2,412,065 |
Shares Outstanding, Starting at Sep. 30, 2018 | 39,583,773 | |||||
Stock issuance costs | 27,628 | |||||
Stock Issued During Period, Value, Issued for Services | 37,500 | |||||
Shares Outstanding, Ending at Mar. 31, 2019 | 40,143,940 | |||||
Equity Balance, Ending at Mar. 31, 2019 | $ 401 | 19,085,519 | (16,637,416) | 152,777 | (22,586) | 2,578,695 |
Equity Balance, Starting at Dec. 31, 2018 | $ 399 | 18,349,258 | (15,184,414) | 86,272 | (19,639) | 3,231,876 |
Shares Outstanding, Starting at Dec. 31, 2018 | 39,949,800 | |||||
Stock Issued During Period, Value, New Issues | $ 0 | 228,204 | 0 | 0 | 0 | 228,204 |
Stock Issued During Period, Shares, New Issues | 41,610 | |||||
Stock Issued During Period, Value, Other | $ 0 | 16,445 | 0 | 0 | 0 | 16,445 |
Stock Issued During Period, Shares, Other | 2,530 | |||||
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture | $ 0 | 481,742 | 0 | 0 | 0 | 481,742 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 0 | |||||
NuZee foreign currency gain (loss) | 0 | 47,866 | (2,947) | 44,919 | ||
Stock issuance costs | (27,628) | 0 | 0 | 0 | (27,628) | |
Stock Issued During Period, Value, Issued for Services | $ 2 | 37,498 | 0 | 0 | 0 | 37,500 |
Stock Issued During Period, Shares, Issued for Services | 150,000 | |||||
Net Income (Loss) | (1,453,002) | 18,639 | 0 | (1,434,363) | ||
Shares Outstanding, Ending at Mar. 31, 2019 | 40,143,940 | |||||
Equity Balance, Ending at Mar. 31, 2019 | $ 401 | $ 19,085,519 | $ (16,637,416) | $ 152,777 | $ (22,586) | $ 2,578,695 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating activities: | ||
Net loss | $ (4,022,769) | $ (1,380,819) |
used by operating activities: | ||
Depreciation and Amortization | 32,444 | 59,486 |
Option expense | 2,271,493 | 249,509 |
Inventory impairment | 23,656 | 0 |
Loss on sale of assets | 3,217 | 0 |
loss on settlement of payable | 91,684 | 0 |
Allowance for sales return | 15,854 | 0 |
Equity in loss of unconsolidated affiliate | 0 | 10,733 |
Change in operating assets and liabilities: | ||
Accounts receivable | 37,798 | (25,847) |
Accounts receivable - Related party | (49) | 12,613 |
Inventories | (165,656) | (28,691) |
Prepaid expense and other current assets | (47,638) | (67,397) |
Increase (Decrease) in Contract with Customer, Asset | (681) | (4,677) |
Other asset | (518) | 0 |
Accounts payable | 503,119 | 28,538 |
Deferred revenue | 0 | (72,750) |
Other liabilities | (6,317) | 0 |
Other current liabilities - related party | (1,374) | (15,028) |
Accrued expense and other current liabilities | (45,818) | 5,297 |
Net cash used by operating activities | (1,311,555) | (1,229,033) |
Investing activities: | ||
Purchase of equipment | (1,105,418) | (331,916) |
Proceeds from sales of equipment | 23,600 | 0 |
Net cash used in investing activities | (1,081,818) | (331,916) |
Financing activities: | ||
Proceeds from issuance of loan - short term - Related party | 0 | 341,000 |
Stock issuance costs | (27,628) | 0 |
Repayment of loans - short term - Related party | 0 | (341,200) |
Repayment of loans | (22,228) | (23,196) |
Payments on capital lease | 0 | (1,800) |
Proceeds from issuance of common stock | 1,723,009 | 1,744,310 |
Net cash provided by financing activities | 1,673,153 | 1,719,114 |
Effect of foreign exchange on cash and cash equivalents | 64,044 | 9,798 |
Net change in cash | (656,176) | 167,963 |
Cash and Cash Equivalents, at Carrying Value, Beginning Balance | 1,806,666 | 347,327 |
Cash and Cash Equivalents, at Carrying Value, Ending Balance | 1,150,490 | 515,290 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 0 | 1,082 |
Cash paid for taxes | 0 | 800 |
Noncash investing and financing activities: | ||
Stock issued to settle payables | 32,239 | 0 |
Stock issued for services | $ 37,500 | $ 0 |
1. BASIS OF PRESENTATION AND SU
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Mar. 31, 2019 | |
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 and six months ended March 31, 2019 and 2018, 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 March 31, 2019, the Company had cash of $1,150,490. 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. Major Customers In the six months ended March 31, 2019 and 2018, revenue was primarily from major customers disclosed below. Six months ended March 31, 2019: Customer Name Sales Amount % of Total Revenue Customer PO $ 329,572 46 % Customer B $ 60,384 8 % Customer C $ 56,285 8 % Six months ended March 31, 2018: Customer Name SalesAmount %ofTotalRevenue Customer PO $ 432,176 58 % Customer K $ 77,750 10 % 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 $8,812 as of March 31, 2019. 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 March 31, 2019 for each of the remaining fiscal years are as follows: 2019 $2,518 2020 $5,035 2021 $1,259 Total Minimum Lease Payments $8,812 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 six months ended March 31, 2019 and 2018 was $66,350 and $61,692, respectively. 2019 $49,570 2020 $59,732 Total Minimum Lease Payments $109,302 Loan On June 30, 2016, NuZee JP 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 outstanding balance on the loan at March 31, 2019 amounted to $60,901. On January 27, 2017, NuZee JP entered into a loan agreement with Nihon Seiaku 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 outstanding balance on the loan at March 31, 2019 amounted to $52,105. During the six months ended March 31, 2019, the Company made principal repayments on outstanding loan balances totaling $22,228. and liabilities that arise from all leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases. However, the principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases should be recognized in the consolidated balance sheet. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The Company is currently evaluating the impact of these amendments on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification accounting, to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic 718. The amendments are effective for fiscal years beginning after December 15, 2017, and should be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted, including adoption in an interim period. The Company adopted ASU No. 2017-09 on October 1, 2018, and this adoption did not have an impact on the Company's financial statements. 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. |
2. GEOGRAPHIC CONCENTRATION
2. GEOGRAPHIC CONCENTRATION | 6 Months Ended |
Mar. 31, 2019 | |
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 Six Months Ended March 31, 2019 Six Months Ended March 31, 2018 Net Revenue: North America $ 295,619 $ 266,836 Japan 388,658 480,696 South Korea 35,087 - $ 719,364 $ 747,532 Property and equipment, net: March 31, 2019 September 30, 2018 North America $ 1,177,813 $ 508,711 Japan 8,640 7,864 South Korea 539,834 157,818 $ 1,726,287 $ 674,393 |
3. RELATED PARTY TRANSACTIONS
3. RELATED PARTY TRANSACTIONS | 6 Months Ended |
Mar. 31, 2019 | |
Notes | |
3. RELATED PARTY TRANSACTIONS | 3. RELATED PARTY TRANSACTIONS Sales, Purchases and Operating Expenses For the six months ended March 31, 2019 and 2018, NuZee JP sold their products to EHCL, and the sales to them totaled approximately $2,628 and $2,805, respectively. The corresponding accounts receivable balance from EHCL was $271 and $222 as of March 31, 2019 and September 30, 2018, respectively. EHCL leased an employee to NuZee JP with no fee during the six months ended March 31, 2019. NuZee Investment 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 March 31, 2019. 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 March 31, 2019, the payable balance under this lease was $1,408. 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 | 6 Months Ended |
Mar. 31, 2019 | |
Notes | |
4. COMMON STOCK | 4. COMMON STOCK During the six months ended March 31, 2019, the Company sold 392,283 shares of common stock at a weighted average price of $4.39 per share, for an aggregate purchase price of $1,723,009 as well as incurred $27,628 in stock issuance costs. The proceeds will be used for general corporate purposes. During the six months ended March 31, 2019, the Company issued 17,884 shares to settle payables amounting to $32,239. The Company recognized a loss on settlement of payables of $91,684 for the six months ended March 31, 2019. During the six months ended March 31, 2019, the Company issued 150,000 shares to satisfy a previously committed service obligation of $37,500. |
5. STOCK OPTIONS
5. STOCK OPTIONS | 6 Months Ended |
Mar. 31, 2019 | |
Notes | |
5. STOCK OPTIONS | 5. STOCK OPTIONS The following table summarizes stock option activity for six months ended March 31, 2019: 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 March 31, 2019 3,942,000 $ 0.78 8.5 22,540,360 Exercisable at March 31, 2019 632,000 $ 0.54 8.0 $ 3,768,160 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 $2,271,493 for six months ended March 31, 2019. Unamortized option expense as of March 31, 2019, for all options outstanding amounted to approximately $4,743,539. These costs are expected to be recognized over a weighted-average period of 2.1 years. The Company recognized stock option expenses of $249,509 for six months ended March 31, 2018. A summary of the status of the Company’s nonvested shares as of March 31, 2019, 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 March 31, 2019 3,310,000 |
6. SUBSEQUENT EVENTS
6. SUBSEQUENT EVENTS | 6 Months Ended |
Mar. 31, 2019 | |
Notes | |
6. SUBSEQUENT EVENTS | 6. SUBSEQUENT EVENTS On April 23, 2019, we entered into the “Third Amendment to Lease” with our current landlord in Vista California. Under the terms of this lease we added 2,134 square feet to our facility. After this expansion, we will have 5,643 square feet spaced leased by the landlord with an additional 1,108 square feet subleased from another tenant (total 6,751 square feet). All of this space will co-terminate on May 31, 2020. The additional space will increase our monthly rent by approximately $2,347. On April 15, 2019, we sold 20,000 shares for $5.46 per share for a total of $109,200. On May 7, 2019, we entered into a lease of 16,603 square-foot facility in Plano, Texas. The lease begins on June 1, 2019 and expires on June 30, 2024, and the base rent begins at $9,615.90 per month and increases periodically reaching $10,822.78 per month in the final year of the lease. The base rent does not include the Company's share of operating expenses which are currently $3,348.27 per month and could increase up to 10% per year. This facility will become our future single serve pour over co-packing hub. |
1. BASIS OF PRESENTATION AND _2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Accounting, Policy (Policies) | 6 Months Ended |
Mar. 31, 2019 | |
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) | 6 Months Ended |
Mar. 31, 2019 | |
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) | 6 Months Ended |
Mar. 31, 2019 | |
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 and six months ended March 31, 2019 and 2018, 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) | 6 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019, the Company had cash of $1,150,490. 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) | 6 Months Ended |
Mar. 31, 2019 | |
Policies | |
Major Customers | Major Customers In the six months ended March 31, 2019 and 2018, revenue was primarily from major customers disclosed below. Six months ended March 31, 2019: Customer Name Sales Amount % of Total Revenue Customer PO $ 329,572 46 % Customer B $ 60,384 8 % Customer C $ 56,285 8 % Six months ended March 31, 2018: Customer Name SalesAmount %ofTotalRevenue Customer PO $ 432,176 58 % Customer K $ 77,750 10 % |
1. BASIS OF PRESENTATION AND _7
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease (Policies) | 6 Months Ended |
Mar. 31, 2019 | |
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 $8,812 as of March 31, 2019. 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 March 31, 2019 for each of the remaining fiscal years are as follows: 2019 $2,518 2020 $5,035 2021 $1,259 Total Minimum Lease Payments $8,812 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 six months ended March 31, 2019 and 2018 was $66,350 and $61,692, respectively. 2019 $49,570 2020 $59,732 Total Minimum Lease Payments $109,302 |
1. BASIS OF PRESENTATION AND _8
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition (Policies) | 6 Months Ended |
Mar. 31, 2019 | |
Policies | |
Revenue Recognition | 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) | 6 Months Ended |
Mar. 31, 2019 | |
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 $(22,586) and ($30,967) as of March 31, 2019 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) | 6 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and September 30, 2018, the carrying value of inventory of $276,877 and $134,877 respectively, reflected on the consolidated balance sheets is net of this adjustment. March 31, 2019 September 30, 2018 Raw materials $ 52,936 $ 30,200 Finished goods 223,941 104,677 Less - Inventory reserve - - Total $ 276,877 $ 134,877 |
1. BASIS OF PRESENTATION AND_11
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Mar. 31, 2019 | |
Policies | |
Recent Accounting Pronouncements | In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities on the consolidated balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different types of leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from all leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases. However, the principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases should be recognized in the consolidated balance sheet. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The Company is currently evaluating the impact of these amendments on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification accounting, to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award. The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic 718. The amendments are effective for fiscal years beginning after December 15, 2017, and should be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted, including adoption in an interim period. The Company adopted ASU No. 2017-09 on October 1, 2018, and this adoption did not have an impact on the Company's financial statements. 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) | 6 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Revenue from External Customers | Six months ended March 31, 2019: Customer Name Sales Amount % of Total Revenue Customer PO $ 329,572 46 % Customer B $ 60,384 8 % Customer C $ 56,285 8 % Six months ended March 31, 2018: Customer Name SalesAmount %ofTotalRevenue Customer PO $ 432,176 58 % Customer K $ 77,750 10 % |
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) | 6 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Future Minimum Lease Payments for Capital Leases | 2019 $2,518 2020 $5,035 2021 $1,259 Total Minimum Lease Payments $8,812 |
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) | 6 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments for Operating Leases | 2019 $49,570 2020 $59,732 Total Minimum Lease Payments $109,302 |
1. BASIS OF PRESENTATION AND_15
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Loan (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Loan | Loan On June 30, 2016, NuZee JP 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 outstanding balance on the loan at March 31, 2019 amounted to $60,901. On January 27, 2017, NuZee JP entered into a loan agreement with Nihon Seiaku 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 outstanding balance on the loan at March 31, 2019 amounted to $52,105. During the six months ended March 31, 2019, the Company made principal repayments on outstanding loan balances totaling $22,228. Tono Shinyo Kinko Bank Nihon Seisaku Kouko 2019 $ 13,534 $ 9,148 2020 27,067 18,297 2021 20,300 18,298 2022 - 6,362 Total Loan Payment $ 60,901 $ 52,105 |
1. BASIS OF PRESENTATION AND_16
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Schedule of Loan Payments (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Loan Payments | Tono Shinyo Kinko Bank Nihon Seisaku Kouko 2019 $ 13,534 $ 9,148 2020 27,067 18,297 2021 20,300 18,298 2022 - 6,362 Total Loan Payment $ 60,901 $ 52,105 |
1. BASIS OF PRESENTATION AND_17
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories: Schedule of Inventory, Current (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Inventory, Current | March 31, 2019 September 30, 2018 Raw materials $ 52,936 $ 30,200 Finished goods 223,941 104,677 Less - Inventory reserve - - Total $ 276,877 $ 134,877 |
2. GEOGRAPHIC CONCENTRATION_ Sc
2. GEOGRAPHIC CONCENTRATION: Schedule of Geographic Operations (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
Tables/Schedules | |
Schedule of Geographic Operations | Geographic Concentrations Six Months Ended March 31, 2019 Six Months Ended March 31, 2018 Net Revenue: North America $ 295,619 $ 266,836 Japan 388,658 480,696 South Korea 35,087 - $ 719,364 $ 747,532 Property and equipment, net: March 31, 2019 September 30, 2018 North America $ 1,177,813 $ 508,711 Japan 8,640 7,864 South Korea 539,834 157,818 $ 1,726,287 $ 674,393 |
5. STOCK OPTIONS_ Schedule of S
5. STOCK OPTIONS: Schedule of Stock Option Activity (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 3,942,000 $ 0.78 8.5 22,540,360 Exercisable at March 31, 2019 632,000 $ 0.54 8.0 $ 3,768,160 |
5. STOCK OPTIONS_ Schedule of C
5. STOCK OPTIONS: Schedule of Company's unvested shares (Tables) | 6 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 3,310,000 |
1. BASIS OF PRESENTATION AND_18
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Going Concern and Capital Resources (Details) - USD ($) | Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 |
Details | ||||
Cash | $ 1,150,490 | $ 1,806,666 | $ 515,290 | $ 347,327 |
1. BASIS OF PRESENTATION AND_19
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Major Customers: Schedule of Revenue from External Customers (Details) - USD ($) | 6 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Customer PO | ||
Sales Amount | $ 329,572 | $ 432,176 |
Percent of Total Revenue | 46.00% | 58.00% |
Customer B | ||
Sales Amount | $ 60,384 | |
Percent of Total Revenue | 8.00% | |
Customer C | ||
Sales Amount | $ 56,285 | |
Percent of Total Revenue | 8.00% | |
Customer K | ||
Sales Amount | $ 77,750 | |
Percent of Total Revenue | 10.00% |
1. BASIS OF PRESENTATION AND_20
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease (Details) - USD ($) | 6 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Details | ||
Capital Leases, Future Minimum Payments Due | $ 8,812 | |
Payments for Rent | $ 66,350 | $ 61,692 |
1. BASIS OF PRESENTATION AND_21
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Details) | Mar. 31, 2019USD ($) |
Details | |
Capital Leases, Future Minimum Payments Due, Next Twelve Months | $ 2,518 |
Capital Leases, Future Minimum Payments Due in Two Years | 5,035 |
Capital Leases, Future Minimum Payments Due in Three Years | 1,259 |
Capital Leases, Future Minimum Payments Due | $ 8,812 |
1. BASIS OF PRESENTATION AND_22
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Mar. 31, 2019USD ($) |
Details | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 49,570 |
Operating Leases, Future Minimum Payments, Due in Two Years | 59,732 |
Operating Leases, Future Minimum Payments Due | $ 109,302 |
1. BASIS OF PRESENTATION AND_23
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Loan (Details) - USD ($) | 6 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Repayments of Other Debt | $ 22,228 | $ 23,196 |
Loan 1 | ||
Debt Instrument, Issuance Date | Jun. 30, 2016 | |
Debt Instrument, Issuer | NuZee JP | |
Debt Instrument, Description | loan agreement with Tono Shinyo Kinko Bank | |
Debt Instrument, Face Amount | $ 145,758 | |
Debt Instrument, Maturity Date | Jun. 5, 2021 | |
Debt Instrument, Interest Rate, Stated Percentage | 1.20% | |
Debt Instrument, Collateral | unsecured and guaranteed by a director | |
Long-term Debt | $ 60,901 | |
Loan 2 | ||
Debt Instrument, Issuance Date | Jan. 27, 2017 | |
Debt Instrument, Issuer | NuZee JP | |
Debt Instrument, Description | loan agreement with Nihon Seiaku Kouko | |
Debt Instrument, Face Amount | $ 87,268 | |
Debt Instrument, Maturity Date | Jan. 20, 2022 | |
Debt Instrument, Interest Rate, Stated Percentage | 0.16% | |
Debt Instrument, Collateral | unsecured and not guaranteed by a director | |
Long-term Debt | $ 52,105 |
1. BASIS OF PRESENTATION AND_24
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Schedule of Loan Payments (Details) | Mar. 31, 2019USD ($) |
Tono Shinyo Kinko Bank | |
2019 | $ 13,534 |
2020 | 27,067 |
2021 | 20,300 |
2022 | 0 |
Total Loan Payment | 60,901 |
Nihon Seisaku Kouko | |
2019 | 9,148 |
2020 | 18,297 |
2021 | 18,298 |
2022 | 6,362 |
Total Loan Payment | $ 52,105 |
1. BASIS OF PRESENTATION AND_25
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Foreign Currency Translation (Details) - USD ($) | Mar. 31, 2019 | Sep. 30, 2018 |
Details | ||
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax | $ 22,586 | $ 30,967 |
1. BASIS OF PRESENTATION AND_26
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories: Schedule of Inventory, Current (Details) - USD ($) | Mar. 31, 2019 | Sep. 30, 2018 |
Details | ||
Raw materials | $ 52,936 | $ 30,200 |
Finished goods | 223,941 | 104,677 |
Less - Inventory reserve | 0 | 0 |
Inventories, net | $ 276,877 | $ 134,877 |
2. GEOGRAPHIC CONCENTRATION_ _2
2. GEOGRAPHIC CONCENTRATION: Schedule of Geographic Operations (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2018 | |
Net Revenue | $ 365,956 | $ 390,653 | $ 719,364 | $ 747,532 | |
Property and equipment, net | 1,726,287 | 1,726,287 | $ 674,393 | ||
JAPAN | |||||
Property and equipment, net | 8,640 | 8,640 | 7,864 | ||
South Korea | |||||
Property and equipment, net | 539,834 | 539,834 | 157,818 | ||
Total | |||||
Property and equipment, net | $ 1,726,287 | $ 1,726,287 | $ 674,393 |
3. RELATED PARTY TRANSACTIONS (
3. RELATED PARTY TRANSACTIONS (Details) - USD ($) | 6 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2018 | |
Lessee, Operating Lease, Liability, Payments, Due | $ 1,408 | ||
Sales or Purchase Transaction 1 | |||
Sales-type Lease, Revenue | 2,628 | $ 2,805 | |
Accounts Receivable, after Allowance for Credit Loss | 271 | $ 222 | |
Sales or Purchase Transaction 2 | |||
Proceeds from leasing employee | 0 | ||
Sales or Purchase Transaction 3 | |||
Accounts Receivable, after Allowance for Credit Loss | $ 34,568 |
4. COMMON STOCK (Details)
4. COMMON STOCK (Details) | 6 Months Ended |
Mar. 31, 2019USD ($)$ / sharesshares | |
Stock Transaction 1 | |
Sale of Stock, Description of Transaction | Company sold 392,283 shares of common stock |
Shares, Issued | shares | 392,283 |
Sale of Stock, Price Per Share | $ / shares | $ 4.39 |
Stock Issued | $ | $ 1,723,009 |
Stock Transaction 2 | |
Sale of Stock, Description of Transaction | Company issued 17,884 shares |
Shares, Issued | shares | 17,884 |
Gain (loss) on settlement of payables | $ | $ (91,684) |
Stock Transaction 3 | |
Shares, Issued | shares | 150,000 |
Stock Issued | $ | $ 37,500 |
5. STOCK OPTIONS_ Schedule of_2
5. STOCK OPTIONS: Schedule of Stock Option Activity (Details) - USD ($) | Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2019 |
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 6 months | 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 | $ 22,540,360 | $ 4,407,160 | $ 22,540,360 |
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 | $ 0.54 | $ 0.54 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 8 years | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | $ 3,768,160 | $ 3,768,160 |
5. STOCK OPTIONS (Details)
5. STOCK OPTIONS (Details) - USD ($) | 6 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Details | ||
Option expense | $ 2,271,493 | $ 249,509 |
5. STOCK OPTIONS_ Schedule of_3
5. STOCK OPTIONS: Schedule of Company's unvested shares (Details) | 6 Months Ended |
Mar. 31, 2019shares | |
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 EVENTS (Details)
6. SUBSEQUENT EVENTS (Details) | 6 Months Ended |
Mar. 31, 2019USD ($)$ / sharesshares | |
Event 1 | |
Subsequent Event, Date | Apr. 23, 2019 |
Subsequent Event, Description | we entered into the “Third Amendment to Lease” with our current landlord in Vista California |
Event 2 | |
Subsequent Event, Date | Apr. 15, 2019 |
Subsequent Event, Description | we sold 20,000 shares for $5.46 per share for a total of $109,200 |
Sale of Stock, Transaction Date | Apr. 15, 2019 |
Sale of Stock, Description of Transaction | we sold 20,000 shares |
Shares, Issued | shares | 20,000 |
Sale of Stock, Price Per Share | $ / shares | $ 5.46 |
Stock Issued | $ | $ 109,200 |
Event 3 | |
Subsequent Event, Date | May 7, 2019 |
Subsequent Event, Description | we entered into a lease of 16,603 square-foot facility in Plano, Texas |