Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2020 | Feb. 08, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | NuZee, Inc. | |
Entity Central Index Key | 0001527613 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,936,803 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Current assets: | ||
Cash | $ 5,321,558 | $ 4,398,545 |
Accounts receivable, net | 220,604 | 195,610 |
Inventories, net | 256,298 | 245,370 |
Prepaid expenses and other current assets | 617,984 | 645,375 |
Total current assets | 6,416,444 | 5,484,900 |
Property and equipment, net | 1,605,514 | 1,668,348 |
Other assets: | ||
Right-of-use asset - operating lease | 587,489 | 652,197 |
Right-of-use asset - finance lease | 99,600 | 105,825 |
Investment | 181,258 | 183,314 |
Other asset | 81,465 | 80,559 |
Total other assets | 949,812 | 1,021,895 |
Total assets | 8,971,770 | 8,175,143 |
Current liabilities: | ||
Accounts payable | 22,766 | 49,778 |
Current portion of long-term loan payable | 74,696 | 56,072 |
Current portion of lease liability - operating lease | 265,283 | 263,678 |
Current portion of lease liability - finance lease | 25,307 | 21,598 |
Accrued expenses | 225,312 | 703,069 |
Deferred income | 10,875 | 34,000 |
Other current liabilities | 198,641 | 104,525 |
Total current liabilities | 822,880 | 1,232,720 |
Non-current liabilities: | ||
Lease liability - operating lease, net of current portion | 330,601 | 395,713 |
Lease liability - finance lease, net of current portion | 69,545 | 78,400 |
Loan payable - long term, net of current portion | 29,627 | 56,845 |
Other noncurrent liabilities | 23,317 | 21,707 |
Total noncurrent liabilities | 453,090 | 552,665 |
Total liabilities | 1,275,970 | 1,785,385 |
Stockholders' equity: | ||
Common stock; 100,000,000 shares authorized, $0.00001 par value; 14,901,064 and 14,570,105 shares issued | 149 | 146 |
Additional paid in capital | 47,672,684 | 40,472,229 |
Accumulated deficit | (40,168,850) | (34,272,778) |
Accumulated other comprehensive income | 191,817 | 190,161 |
Total stockholders' equity | 7,695,800 | 6,389,758 |
Total liabilities and stockholders' equity | $ 8,971,770 | $ 8,175,143 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2020 | Sep. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares issued | 14,901,064 | 14,570,105 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues | $ 517,987 | $ 546,208 |
Cost of sales | 516,284 | 423,173 |
Gross Profit | 1,703 | 123,035 |
Operating expenses | 5,903,826 | 3,549,833 |
Loss from operations | (5,902,123) | (3,426,798) |
Loss from investmeent in unconsolidated affiliate | (2,056) | |
Other income | 12,621 | 1,671 |
Interest income | 94 | 176 |
Other expense | (569) | (2,584) |
Interest expense | (4,039) | (4,718) |
Net loss | (5,896,072) | (3,432,253) |
Net loss attributable to noncontrolling interest | (11,021) | |
Net loss attributable to NuZee, Inc. | $ (5,896,072) | $ (3,421,232) |
Basic and diluted loss per common share | $ (0.40) | $ (0.25) |
Basic and diluted weighted average number of common stock outstanding | 14,741,974 | 13,598,001 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Net loss | $ (5,896,072) | $ (3,432,253) |
Foreign currency translation | 1,656 | 32,872 |
Total other comprehensive income, net of tax | 1,656 | 32,872 |
Comprehensive loss | (5,894,416) | (3,399,381) |
Parent [Member] | ||
Net loss | (5,896,072) | (3,421,232) |
Foreign currency translation | 1,656 | 27,230 |
Total other comprehensive income, net of tax | 1,656 | 27,230 |
Comprehensive loss | (5,894,416) | (3,394,002) |
Noncontrolling Interest [Member] | ||
Net loss | (11,021) | |
Foreign currency translation | 5,642 | |
Total other comprehensive income, net of tax | 5,642 | |
Comprehensive loss | $ (5,379) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
Beginning balance at Sep. 30, 2019 | $ 137 | $ 28,898,344 | $ (24,795,687) | $ 102,903 | $ (90,635) | $ 4,115,062 |
Beginning balance, shares at Sep. 30, 2019 | 13,617,366 | |||||
Common shares issued for cash | $ 1 | 1,994,522 | 1,994,523 | |||
Common shares issued for cash, shares | 111,738 | |||||
Stock option expense | 2,220,861 | 2,220,861 | ||||
Other comprehensive gain / (loss) | 5,642 | 27,230 | 32,872 | |||
Net income (loss) | (3,421,232) | (11,021) | (3,432,253) | |||
Ending balance at Dec. 31, 2019 | $ 138 | 33,113,727 | (28,216,919) | 97,524 | (63,405) | 4,931,065 |
Ending balance, shares at Dec. 31, 2019 | 13,729,104 | |||||
Beginning balance at Sep. 30, 2020 | $ 146 | 40,472,229 | (34,272,778) | 190,161 | 6,389,758 | |
Beginning balance, shares at Sep. 30, 2020 | 14,570,105 | |||||
Common shares issued for cash | $ 3 | 2,683,977 | 2,683,980 | |||
Common shares issued for cash, shares | 324,959 | |||||
Stock option expense | 4,507,298 | 4,507,298 | ||||
Exercise of stock options | 9,180 | $ 9,180 | ||||
Exercise of stock options, shares | 6,000 | 6,000 | ||||
Other comprehensive gain / (loss) | 1,656 | $ 1,656 | ||||
Net income (loss) | (5,896,072) | (5,896,072) | ||||
Ending balance at Dec. 31, 2020 | $ 149 | $ 47,672,684 | $ (40,168,850) | $ 191,817 | $ 7,695,800 | |
Ending balance, shares at Dec. 31, 2020 | 14,901,064 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating activities: | ||
Net loss | $ (5,896,072) | $ (3,432,253) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and Amortization | 121,824 | 97,812 |
Noncash lease expense | 70,933 | 24,733 |
Option expense | 4,507,298 | 2,220,861 |
Sales allowance | 2,018 | 40,230 |
Loss from investment in unconsolidated affiliate | 2,056 | |
Change in operating assets and liabilities: | ||
Accounts receivable | (27,012) | (18,181) |
Accounts receivable - Related party | (114) | |
Inventories | (10,928) | (179,209) |
Prepaid expenses and other current assets | (186,466) | (268,582) |
Other current assets - Related party | 460 | |
Other assets | (906) | (25,751) |
Accounts payable | (27,012) | (80,972) |
Deferred income | (23,125) | |
Lease liability - operating lease | (63,507) | (22,855) |
Other non-current liabilities | 1,610 | 4,861 |
Other current liabilities - related party | (1,744) | |
Accrued expense and other current liabilities | (169,784) | 161,340 |
Net cash used in operating activities | (1,699,073) | (1,479,364) |
Investing activities: | ||
Cash paid for purchase of fixed assets | (58,990) | (11,791) |
Net cash used in investing activities | (58,990) | (11,791) |
Financing activities: | ||
Repayment of loans | (8,594) | (31,328) |
Proceeds from issuance of common stock, exercise of options | 9,180 | |
Repayment of finance lease | (5,146) | |
Proceeds from issuance of common stock, net of issuance costs | 2,683,980 | 1,994,523 |
Net cash provided by financing activities | 2,679,420 | 1,963,195 |
Effect of foreign exchange on cash and cash equivalents | 1,656 | 32,872 |
Net change in cash | 923,013 | 504,912 |
Cash, beginning of period | 4,398,545 | 1,326,040 |
Cash, end of period | 5,321,558 | 1,830,952 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 4,039 | 1,774 |
Cash paid for taxes | 250 | 800 |
Noncash investing and financing activities: | ||
Recognition of right-of-use asset and lease liability upon adoption of ASU 2016-02 | 487,000 | |
Finance lease of equipment to pay off accounts payable | 124,540 | |
Stock issuance costs accrued | $ 213,857 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
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. (together with its subsidiaries, referred to herein as the “Company”, “we” or “NuZee”) 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 (the “SEC”), 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, 2020 as filed with the SEC on December 28, 2020. 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, its wholly owned subsidiaries and its former majority owned subsidiary (which was sold as of September 28, 2020, as described below), which has a fiscal year end of September 30. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation. On September 28, 2020, the Company entered into a Stock Transfer Agreement with Eguchi Holdings Co., Ltd. (“EHCL”), pursuant to which the Company sold all of its equity interests in its former majority-owned subsidiary, NuZee JAPAN Co., Ltd. (“NuZee JP”), representing 70% of the outstanding equity interests of NuZee JP, to EHCL for an aggregate sale price of approximately $34,000. The Company has two wholly owned international subsidiaries in NuZee KOREA Ltd. (“NuZee KR”) and NuZee Investment Co., Ltd. (“NuZee INV”). Stock Split On October 28, 2019, we completed a l-for-3 reverse stock split, which became effective on November 12, 2019. All share and per share information included in these financial statements and notes thereto give effect to the reverse stock split. 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. As of December 31, 2020 and December 31, 2019, the total number of common stock equivalents was 2,314,053 and 1,795,667, respectively, comprised of stock options and warrants. The Company incurred a net loss for the three months ended December 31, 2020 and 2019, respectively, and therefore basic and diluted earnings per share for those periods are the same because all potential common equivalent shares would be antidilutive. Capital Resources Since its inception on July 15, 2011, 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, 2020, the Company had cash of $5,321,558. The Company has not attained profitable operations since inception. Major Customers In the three months ended December 31, 2020 and 2019, revenue was primarily derived from major customers disclosed below. Three months ended December 31, 2020: C ustomer Name Sales Amount % of Total Accounts % of Total Customer WP $ 156,299 30 % $ 94,066 43 % Customer RSM $ 66,811 13 % $ - 0 % Customer GR $ 65,536 13 % $ 65,352 30 % Three months ended December 31, 2019: Customer Name Sales Amount % of Total Accounts % of Total Customer WP $ 233,283 43 % $ 178,114 34 % Customer K $ 106,664 20 % $ 264,842 51 % Customer J $ 90,085 16 % $ 35,091 7 % Lease 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 Company implemented ASU No. 2016-02 on October 1, 2019. The Company does a quarterly analysis of leases to determine if there are any operating leases that require recognition under ASC 842. The Company has one significant long-term operating lease for office and manufacturing space in Plano, Texas. The leased property in Plano, Texas, has a remaining lease term through June of 2024. The lease has an option to extend beyond the stated termination date, but exercise of this option is not probable. The Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less. The impact of ASU No. 2016-02 (“Leases (Topic 842)” on our consolidated balance sheet beginning October 1, 2020, through the recognition of ROU assets and lease liabilities for operating leases are as follows: October 1, 2020 ROU Asset $ 652,197 Lease Liability $ 659,391 During the prior year analysis of leases, we determined to renew the office and manufacturing space in Vista, CA through January 31, 2022, which was previously scheduled to be vacated at June 30, 2020. Additionally, the Korean office and manufacturing space lease was extended through June 2022 and an apartment lease was signed through June 2022. Accordingly, we have added ROU assets and lease liabilities related to those leases at June 30, 2020. The direct-leased property in Vista, California has a remaining lease term through January of 2022. The leased properties in both Korea and Vista, California have options to extend beyond the stated termination date, but exercise of these options are not probable. The sub-leased property in Vista, California, is leased month-to-month and has been calculated as a ROU Asset co-terminous with the direct-leased property. In September 2020, we entered into an 18-month sublease effective October 1, 2020 reducing our space and term in Plano, Texas. Accordingly, this lease has been added to our right-of-use asset balance at September 30, 2020. This lease is for the Company’s principal executive office located at 1401 Capital Avenue, Suite B, Plano, Texas 75074. Effective September 1, 2020, we converted our month-to-month sublease in Vista, California to a 17-month sublease ending January 31, 2022 which is co-terminus with our direct lease in Vista. The month-to-month sublease was recognized as a right-of-use asset in our June 30, 2020 analysis. The terms of the 17-month lease are similar to the terms used to value the right-of-use asset at June 30, 2020. As of December 31, 2020, our operating leases had a weighted average remaining lease term of 2.4 years and a weighted-average discount rate of 5%. Other information related to our operating leases is as follows: ROU Asset – October 1, 2020 $ 652,197 Amortization during the period (64,708 ) ROU Asset –December 31, 2020 $ 587,489 Lease Liability – October 1, 2020 $ 659,391 Amortization during the period (63,507 ) Lease Liability – December 31, 2020 $ 595,884 Lease Liability – Short-Term $ 265,283 Lease Liability – Long-Term 330,601 Lease Liability – Total $ 595,884 The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2020: Amounts due within 12 months of December 31, 2021 $ 289,088 2022 157,823 2023 127,982 2024 64,937 2025 - Total Minimum Lease Payments 639,830 Less Effect of Discounting (43,946 ) Present Value of Future Minimum Lease Payments 595,884 Less Current Portion of Operating Lease Obligations (265,283 ) Long-Term Operating Lease Obligations $ 330,601 On October 9, 2019, the Company entered into a lease agreement with Alliance Funding Group which provided for a sale lease back on certain packing equipment. The terms of this agreement require us to pay $2,987 per month for the next 60 months. As part of this agreement, Alliance Funding Group provided our equipment supplier with $124,540 for the purchase of this equipment. This transaction was accounted for as a financing lease. As of December 31, 2020, our financing lease had a remaining lease term of 3.5 years and a discount rate of 12.75%. The interest expense on finance lease liabilities for the three months ended December 31, 2020 was $3,133. The following summarizes ROU assets under finance leases at December 31, 2020: ROU asset-finance lease at October 1, 2020 $ 105,825 Amortization (6,225 ) ROU asset-finance lease at December 31, 2020 $ 99,600 The table below summarizes future minimum finance lease payments at December 31, 2020 for the 12 months ended December 31: 2021 $ 33,113 2022 33,113 2023 33,113 2024 19,316 2025 — Total Minimum Lease Payments 118,655 Amount representing interest (23,803 ) Present Value of Minimum Lease Payments 94,852 Current Portion of Finance Lease Obligations (25,307 ) Finance Lease Obligations, Less Current Portion $ 69,545 The Company leases office space with terms ranging from month to month to 61 months. Rent expense included in general and administrative expense for the three months ended December 31, 2020 and 2019 was $93,750 and $84,820, respectively. Cash and non cash activities associated with the leases for the three months ended December 31, 2020 are as follows: Operating cash outflows from operating leases: 71,617 Operating cash outflows from finance lease: 3,133 Financing cash outflows from finance lease: 5,146 In September 2020, we subleased the space at 1700 Capital Avenue in Plano, Texas, effective October 1, 2020 under favorable terms that are co-terminus with the original lease ending June 30, 2024. Future minimum lease payments to be received under that sublease as of December 31, 2020, for the 12 months ended December 31: 2021 $ 120,621 2022 124,190 2023 127,926 2024 64,918 2025 — Total $ 437,655 Loans On April 1, 2019, NuZee purchased a delivery van from Ford Motor Credit for $41,627. The Company paid $3,500 as a down payment and financed $38,127 for 60 months at a rate of 2.9%. The loan is secured by the van. The outstanding balance on the loan at December 31, 2020 and September 30, 2020, amounted to $26,061 and $27,916, respectively. On February 15, 2019 NuZee KR entered into equipment financing for production equipment with ShinHan Bank for $60,563. In June 28, 2019 NuZee KR purchased additional equipment and increased the loan with ShinHan Bank by $86,518. The loan is secured by our production equipment at NuZee KR. The financing bears a term of 36 months at a rate of 4.33% per annum. Principal payments began in July of 2019. The outstanding balance on this loan at December 31, 2020 and September 30, 2020, amounted to $78,262 and $85,001, respectively. The loan payments required for the next five remaining fiscal years are as follows: Ford Motor Credit ShinHan Bank Total 2021 $ 7,555 $ 52,175 2022 1,923 13,043 Total Current Portion $ 9,478 $ 65,218 $ 74,696 2022 $ 5,854 $ 13,044 2023 8,005 2024 2,724 2025 Total LT Portion $ 16,583 $ 13,044 $ 29,627 Grand Total $ 26,061 $ 78,262 $ 104,323 Revenue Recognition We determine revenue recognition through the following steps in accordance with FASB Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers”, which we adopted as of October 1, 2018 on a modified retrospective basis: ● identification of the contract, or contracts, with a customer; ● identification of the performance obligations in the contract; ● determination of the transaction price; ● allocation of the transaction price to the performance obligations in the contract; and ● recognition of revenue when, or as, we satisfy a performance obligation. Revenue is recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Foreign Currency Translation The financial position and results of operations of each of the Company’s foreign subsidiaries are measured using the foreign subsidiary’s local currency as the functional currency. Revenues and expenses of each such subsidiary have 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 income amounted to $1,656 and $27,230 for the three months ended December 31, 2020 and 2019, 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. 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, 2020 and September 30, 2020, the carrying value of inventory of $256,298 and $245,370 respectively, reflected on the consolidated balance sheets is net of this adjustment. December 31, 2020 September 30, 2020 Raw materials $ 191,865 $ 176,231 Finished goods 64,433 69,139 Less – Inventory reserve - - Total $ 256,298 $ 245,370 Joint Venture On January 9, 2020, a joint venture agreement was signed between Industrial Marino, S.A. de C.V. (50%) and NuZee, Inc. (50%) forming NuZee LATIN AMERICA (NLA), S.A. de C.V. NLA was formed pursuant to the laws of Mexico, with corporate domicile in Mazatlan, Mexico. As part of the capitalization of NLA, NuZee contributed two co-packing machines to the joint venture. These machines had an aggregate carrying cost of $313,012. NuZee received $110,000 in cash for this contribution and recorded an investment in NLA of $160,000 and a loss of $43,012 on the contribution of the machines to NLA. The Company accounts for NLA using the equity method of accounting since the management of day to day operations at NLA ultimately lies with its partner as the operations of NLA are based in its partners facilities as well as our partner appoints the Chairman of the joint Board. As of December 31, 2020, the only activity in NLA was the contribution of two machines as described above and other start up related activities. $2,056 of a loss was recognized under the equity method of accounting during the three months ended December 31, 2020. |
Geographic Concentration
Geographic Concentration | 3 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Geographic Concentration | 2. GEOGRAPHIC CONCENTRATION The Company is organized based on fundamentally one geographic segment although it does sell its products on a world-wide basis. Information about the Company’s geographic operations are as follows: Geographic Concentrations Three Months Ended Three Months Ended December 31, 2020 December 31, 2019 Net Revenue: North America $ 406,488 $ 380,586 Japan — 126,969 South Korea 111,499 38,653 $ 517,987 $ 546,208 Property and equipment, net: As of December 31, 2020 As of September 30, 2020 North America $ 1,364,858 $ 1,422,575 Japan 2,239 2,813 South Korea 238,417 242,960 $ 1,605,514 $ 1,668,348 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 3. RELATED PARTY TRANSACTIONS For the three months ended December 31, 2020, we sold $15,998 of materials to NuZee Latin America. |
Common Stock
Common Stock | 3 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Common Stock | 4. COMMON STOCK During the three months ended December 31, 2020, the Company sold (i) 72,955 shares of common stock to Triton Funds LP in a registered public offering for aggregate net proceeds of $534,494 and (ii) 252,004 shares of common stock at $9.14 per share for aggregate net proceeds of $2,149,486 pursuant to Securities Act registration exemptions under Regulation S and/or Section 4(a)(2) of the Securities Act. During the three months ended December 31, 2020, 6,000 shares were issued upon the exercise of stock options. As part of this exercise, the Company received $9,180 in proceeds. |
Stock Options and Warrants
Stock Options and Warrants | 3 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options and Warrants | 5. STOCK OPTIONS AND WARRANTS During the three months ended December 31, 2020, the Company issued 15,000 options to independent contractors and 684,969 options to independent Board members. The right to excise these options shall vest and become exercisable over a period of 3 years for independent contractors and for independent board members, 1/3 of options vested immediately with the balance over a period of 2 years. The exercise price ranged from $10.15 - $16.79 per share. The options will expire ten years from the grant date, unless terminated earlier as provided by the option agreements. The fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model using the assumptions noted as follows: expected volatility was based on the Company’s historical stock performance. The expected term of options granted was determined using the contractual term. The risk-free rate is calculated using the U.S. Treasury yield curve and is based on the expected term of the option. The Black-Scholes option pricing model was used with the following weighted average assumptions for options granted during the three months ended December 31, 2020: For non-employees and independent Board members December 31, 2020 Risk-free interest rate 0.81 – 0.88 % Expected option life 10 years Expected volatility 310 - 311 % Expected dividend yield 0.00 % Exercise price $10.15 - $16.79 For the three months ended December 31, 2020, 40,833 options were forfeited because of the termination of employment. For the three months ended December 31, 2020, 6,000 shares were issued upon the exercise of stock options. The following table summarizes stock option activity for three months ended December 31, 2020: Number of Shares Weighted Price Weighted Contractual Aggregate Intrinsic Outstanding at September 30, 2020 1,620,667 $ 5.74 7.3 $ 19,112,118 Granted 699,969 10.29 Exercised (6,000 ) 1.53 Expired - - Forfeited (40,833 ) 19.50 Outstanding at December 31, 2020 2,273,803 $ 6.05 7.9 11,043,375 Exercisable at December 31, 2020 1,160,902 $ 6.81 4.9 $ 5,793,130 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 $4,507,298 for the three months ended December 31, 2020. Unamortized option expense as of December 31, 2020, for all options outstanding amounted to $6,339,444. These costs are expected to be recognized over a weighted- average period of 1.5 years. The Company recognized stock option expenses of $2,220,861 for the three months ended December 31, 2019. A summary of the status of the Company’s nonvested options as of December 31, 2020, is presented below: Nonvested options Number of Weighted average Nonvested shares at September 30, 2020 762,917 $ 10.60 Granted 699,969 10.29 Forfeited (7,500 ) 19.50 Vested (342,485 ) 10.15 Nonvested shares at December 31, 2020 1,112,901 $ 10.48 On June 23, 2020, as part of our agreement with Benchmark Company, LLC the underwriter of the Company’s June 2020 registered public offering of common stock, we issued 40,250 warrants to purchase our common stock at an exercise price of $9.00 a share. These warrants are exercisable on December 23, 2020 and expire on June 18, 2025. The following table summarizes warrant activity for the three months ended December 31, 2020: Number of Weighted Weighted Aggregate Outstanding at September 30, 2020 40,250 $ 9.00 4.7 $ 321,598 Granted - - Exercised - - Expired - - Forfeited - - Outstanding December 31, 2020 40,250 $ 9.00 4.5 64,400 Exercisable at December 31, 2020 40,250 $ 9.00 4.5 $ 64,400 |
Subsequent Event
Subsequent Event | 3 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Event | 6. SUBSEQUENT EVENT On January 11, 2021, the Compensation Committee (the “Committee”) of the Company’s Board of Directors granted to Shanoop Kothari, the Company’s Chief Financial Officer and Chief Operating Officer, in connection with the Committee’s determination of Mr. Kothari’s annual compensation, an award of 152,215 restricted shares (the “Restricted Shares”) of the Company’s common stock under the NuZee, Inc. 2019 Stock Incentive Plan. The Restricted Shares vest as follows: (i) 50,739 Restricted Shares vested immediately (35,739 net shares were issued to Mr. Kothari following the forfeiture of 15,000 vested shares to cover taxes); (ii) 50,739 Restricted Shares will vest on March 31, 2021; and (iii) 50,737 Restricted Shares vest on March 31, 2022. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
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, its wholly owned subsidiaries and its former majority owned subsidiary (which was sold as of September 28, 2020, as described below), which has a fiscal year end of September 30. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation. On September 28, 2020, the Company entered into a Stock Transfer Agreement with Eguchi Holdings Co., Ltd. (“EHCL”), pursuant to which the Company sold all of its equity interests in its former majority-owned subsidiary, NuZee JAPAN Co., Ltd. (“NuZee JP”), representing 70% of the outstanding equity interests of NuZee JP, to EHCL for an aggregate sale price of approximately $34,000. The Company has two wholly owned international subsidiaries in NuZee KOREA Ltd. (“NuZee KR”) and NuZee Investment Co., Ltd. (“NuZee INV”). |
Stock Split | Stock Split On October 28, 2019, we completed a l-for-3 reverse stock split, which became effective on November 12, 2019. All share and per share information included in these financial statements and notes thereto give effect to the reverse stock split. |
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. As of December 31, 2020 and December 31, 2019, the total number of common stock equivalents was 2,314,053 and 1,795,667, respectively, comprised of stock options and warrants. The Company incurred a net loss for the three months ended December 31, 2020 and 2019, respectively, and therefore basic and diluted earnings per share for those periods are the same because all potential common equivalent shares would be antidilutive. |
Capital Resources | Capital Resources Since its inception on July 15, 2011, 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, 2020, the Company had cash of $5,321,558. The Company has not attained profitable operations since inception. |
Major Customers | Major Customers In the three months ended December 31, 2020 and 2019, revenue was primarily derived from major customers disclosed below. Three months ended December 31, 2020: C ustomer Name Sales Amount % of Total Accounts % of Total Customer WP $ 156,299 30 % $ 94,066 43 % Customer RSM $ 66,811 13 % $ - 0 % Customer GR $ 65,536 13 % $ 65,352 30 % Three months ended December 31, 2019: Customer Name Sales Amount % of Total Accounts % of Total Customer WP $ 233,283 43 % $ 178,114 34 % Customer K $ 106,664 20 % $ 264,842 51 % Customer J $ 90,085 16 % $ 35,091 7 % |
Lease | Lease 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 Company implemented ASU No. 2016-02 on October 1, 2019. The Company does a quarterly analysis of leases to determine if there are any operating leases that require recognition under ASC 842. The Company has one significant long-term operating lease for office and manufacturing space in Plano, Texas. The leased property in Plano, Texas, has a remaining lease term through June of 2024. The lease has an option to extend beyond the stated termination date, but exercise of this option is not probable. The Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less. The impact of ASU No. 2016-02 (“Leases (Topic 842)” on our consolidated balance sheet beginning October 1, 2020, through the recognition of ROU assets and lease liabilities for operating leases are as follows: October 1, 2020 ROU Asset $ 652,197 Lease Liability $ 659,391 During the prior year analysis of leases, we determined to renew the office and manufacturing space in Vista, CA through January 31, 2022, which was previously scheduled to be vacated at June 30, 2020. Additionally, the Korean office and manufacturing space lease was extended through June 2022 and an apartment lease was signed through June 2022. Accordingly, we have added ROU assets and lease liabilities related to those leases at June 30, 2020. The direct-leased property in Vista, California has a remaining lease term through January of 2022. The leased properties in both Korea and Vista, California have options to extend beyond the stated termination date, but exercise of these options are not probable. The sub-leased property in Vista, California, is leased month-to-month and has been calculated as a ROU Asset co-terminous with the direct-leased property. In September 2020, we entered into an 18-month sublease effective October 1, 2020 reducing our space and term in Plano, Texas. Accordingly, this lease has been added to our right-of-use asset balance at September 30, 2020. This lease is for the Company’s principal executive office located at 1401 Capital Avenue, Suite B, Plano, Texas 75074. Effective September 1, 2020, we converted our month-to-month sublease in Vista, California to a 17-month sublease ending January 31, 2022 which is co-terminus with our direct lease in Vista. The month-to-month sublease was recognized as a right-of-use asset in our June 30, 2020 analysis. The terms of the 17-month lease are similar to the terms used to value the right-of-use asset at June 30, 2020. As of December 31, 2020, our operating leases had a weighted average remaining lease term of 2.4 years and a weighted-average discount rate of 5%. Other information related to our operating leases is as follows: ROU Asset – October 1, 2020 $ 652,197 Amortization during the period (64,708 ) ROU Asset –December 31, 2020 $ 587,489 Lease Liability – October 1, 2020 $ 659,391 Amortization during the period (63,507 ) Lease Liability – December 31, 2020 $ 595,884 Lease Liability – Short-Term $ 265,283 Lease Liability – Long-Term 330,601 Lease Liability – Total $ 595,884 The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2020: Amounts due within 12 months of December 31, 2021 $ 289,088 2022 157,823 2023 127,982 2024 64,937 2025 - Total Minimum Lease Payments 639,830 Less Effect of Discounting (43,946 ) Present Value of Future Minimum Lease Payments 595,884 Less Current Portion of Operating Lease Obligations (265,283 ) Long-Term Operating Lease Obligations $ 330,601 On October 9, 2019, the Company entered into a lease agreement with Alliance Funding Group which provided for a sale lease back on certain packing equipment. The terms of this agreement require us to pay $2,987 per month for the next 60 months. As part of this agreement, Alliance Funding Group provided our equipment supplier with $124,540 for the purchase of this equipment. This transaction was accounted for as a financing lease. As of December 31, 2020, our financing lease had a remaining lease term of 3.5 years and a discount rate of 12.75%. The interest expense on finance lease liabilities for the three months ended December 31, 2020 was $3,133. The following summarizes ROU assets under finance leases at December 31, 2020: ROU asset-finance lease at October 1, 2020 $ 105,825 Amortization (6,225 ) ROU asset-finance lease at December 31, 2020 $ 99,600 The table below summarizes future minimum finance lease payments at December 31, 2020 for the 12 months ended December 31: 2021 $ 33,113 2022 33,113 2023 33,113 2024 19,316 2025 — Total Minimum Lease Payments 118,655 Amount representing interest (23,803 ) Present Value of Minimum Lease Payments 94,852 Current Portion of Finance Lease Obligations (25,307 ) Finance Lease Obligations, Less Current Portion $ 69,545 The Company leases office space with terms ranging from month to month to 61 months. Rent expense included in general and administrative expense for the three months ended December 31, 2020 and 2019 was $93,750 and $84,820, respectively. Cash and non cash activities associated with the leases for the three months ended December 31, 2020 are as follows: Operating cash outflows from operating leases: 71,617 Operating cash outflows from finance lease: 3,133 Financing cash outflows from finance lease: 5,146 In September 2020, we subleased the space at 1700 Capital Avenue in Plano, Texas, effective October 1, 2020 under favorable terms that are co-terminus with the original lease ending June 30, 2024. Future minimum lease payments to be received under that sublease as of December 31, 2020, for the 12 months ended December 31: 2021 $ 120,621 2022 124,190 2023 127,926 2024 64,918 2025 — Total $ 437,655 |
Loans | Loans On April 1, 2019, NuZee purchased a delivery van from Ford Motor Credit for $41,627. The Company paid $3,500 as a down payment and financed $38,127 for 60 months at a rate of 2.9%. The loan is secured by the van. The outstanding balance on the loan at December 31, 2020 and September 30, 2020, amounted to $26,061 and $27,916, respectively. On February 15, 2019 NuZee KR entered into equipment financing for production equipment with ShinHan Bank for $60,563. In June 28, 2019 NuZee KR purchased additional equipment and increased the loan with ShinHan Bank by $86,518. The loan is secured by our production equipment at NuZee KR. The financing bears a term of 36 months at a rate of 4.33% per annum. Principal payments began in July of 2019. The outstanding balance on this loan at December 31, 2020 and September 30, 2020, amounted to $78,262 and $85,001, respectively. The loan payments required for the next five remaining fiscal years are as follows: Ford Motor Credit ShinHan Bank Total 2021 $ 7,555 $ 52,175 2022 1,923 13,043 Total Current Portion $ 9,478 $ 65,218 $ 74,696 2022 $ 5,854 $ 13,044 2023 8,005 2024 2,724 2025 Total LT Portion $ 16,583 $ 13,044 $ 29,627 Grand Total $ 26,061 $ 78,262 $ 104,323 |
Revenue Recognition | Revenue Recognition We determine revenue recognition through the following steps in accordance with FASB Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers”, which we adopted as of October 1, 2018 on a modified retrospective basis: ● identification of the contract, or contracts, with a customer; ● identification of the performance obligations in the contract; ● determination of the transaction price; ● allocation of the transaction price to the performance obligations in the contract; and ● recognition of revenue when, or as, we satisfy a performance obligation. Revenue is recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. |
Foreign Currency Translation | Foreign Currency Translation The financial position and results of operations of each of the Company’s foreign subsidiaries are measured using the foreign subsidiary’s local currency as the functional currency. Revenues and expenses of each such subsidiary have 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 income amounted to $1,656 and $27,230 for the three months ended December 31, 2020 and 2019, 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. |
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, 2020 and September 30, 2020, the carrying value of inventory of $256,298 and $245,370 respectively, reflected on the consolidated balance sheets is net of this adjustment. December 31, 2020 September 30, 2020 Raw materials $ 191,865 $ 176,231 Finished goods 64,433 69,139 Less – Inventory reserve - - Total $ 256,298 $ 245,370 |
Joint Venture | Joint Venture On January 9, 2020, a joint venture agreement was signed between Industrial Marino, S.A. de C.V. (50%) and NuZee, Inc. (50%) forming NuZee LATIN AMERICA (NLA), S.A. de C.V. NLA was formed pursuant to the laws of Mexico, with corporate domicile in Mazatlan, Mexico. As part of the capitalization of NLA, NuZee contributed two co-packing machines to the joint venture. These machines had an aggregate carrying cost of $313,012. NuZee received $110,000 in cash for this contribution and recorded an investment in NLA of $160,000 and a loss of $43,012 on the contribution of the machines to NLA. The Company accounts for NLA using the equity method of accounting since the management of day to day operations at NLA ultimately lies with its partner as the operations of NLA are based in its partners facilities as well as our partner appoints the Chairman of the joint Board. As of December 31, 2020, the only activity in NLA was the contribution of two machines as described above and other start up related activities. $2,056 of a loss was recognized under the equity method of accounting during the three months ended December 31, 2020. |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Revenue by Major Customers | In the three months ended December 31, 2020 and 2019, revenue was primarily derived from major customers disclosed below. Three months ended December 31, 2020: C ustomer Name Sales Amount % of Total Accounts % of Total Customer WP $ 156,299 30 % $ 94,066 43 % Customer RSM $ 66,811 13 % $ - 0 % Customer GR $ 65,536 13 % $ 65,352 30 % Three months ended December 31, 2019: Customer Name Sales Amount % of Total Accounts % of Total Customer WP $ 233,283 43 % $ 178,114 34 % Customer K $ 106,664 20 % $ 264,842 51 % Customer J $ 90,085 16 % $ 35,091 7 % |
Schedule of ROU Assets and Lease Liability | The impact of ASU No. 2016-02 (“Leases (Topic 842)” on our consolidated balance sheet beginning October 1, 2020, through the recognition of ROU assets and lease liabilities for operating leases are as follows: October 1, 2020 ROU Asset $ 652,197 Lease Liability $ 659,391 |
Schedule of Other Information Related to Operating Lease | Other information related to our operating leases is as follows: ROU Asset – October 1, 2020 $ 652,197 Amortization during the period (64,708 ) ROU Asset –December 31, 2020 $ 587,489 Lease Liability – October 1, 2020 $ 659,391 Amortization during the period (63,507 ) Lease Liability – December 31, 2020 $ 595,884 Lease Liability – Short-Term $ 265,283 Lease Liability – Long-Term 330,601 Lease Liability – Total $ 595,884 |
Schedule of Future Minimum Rental Payments for Operating Leases | Amounts due within 12 months of December 31, 2021 $ 289,088 2022 157,823 2023 127,982 2024 64,937 2025 - Total Minimum Lease Payments 639,830 Less Effect of Discounting (43,946 ) Present Value of Future Minimum Lease Payments 595,884 Less Current Portion of Operating Lease Obligations (265,283 ) Long-Term Operating Lease Obligations $ 330,601 |
Summary of ROU Assets Under Finance Leases | The following summarizes ROU assets under finance leases at December 31, 2020: ROU asset-finance lease at October 1, 2020 $ 105,825 Amortization (6,225 ) ROU asset-finance lease at December 31, 2020 $ 99,600 |
Schedule of Future Minimum Lease Payments for Finance Leases | The table below summarizes future minimum finance lease payments at December 31, 2020 for the 12 months ended December 31: 2021 $ 33,113 2022 33,113 2023 33,113 2024 19,316 2025 — Total Minimum Lease Payments 118,655 Amount representing interest (23,803 ) Present Value of Minimum Lease Payments 94,852 Current Portion of Finance Lease Obligations (25,307 ) Finance Lease Obligations, Less Current Portion $ 69,545 |
Schedule of Cash and Non-cash Activities of Leases | Cash and non cash activities associated with the leases for the three months ended December 31, 2020 are as follows: Operating cash outflows from operating leases: 71,617 Operating cash outflows from finance lease: 3,133 Financing cash outflows from finance lease: 5,146 |
Schedule of Future Minimum Lease Payments of Sublease | Future minimum lease payments to be received under that sublease as of December 31, 2020, for the 12 months ended December 31: 2021 $ 120,621 2022 124,190 2023 127,926 2024 64,918 2025 — Total $ 437,655 |
Schedule of Loan Payments | The loan payments required for the next five remaining fiscal years are as follows: Ford Motor Credit ShinHan Bank Total 2021 $ 7,555 $ 52,175 2022 1,923 13,043 Total Current Portion $ 9,478 $ 65,218 $ 74,696 2022 $ 5,854 $ 13,044 2023 8,005 2024 2,724 2025 Total LT Portion $ 16,583 $ 13,044 $ 29,627 Grand Total $ 26,061 $ 78,262 $ 104,323 |
Schedule of Inventory | December 31, 2020 September 30, 2020 Raw materials $ 191,865 $ 176,231 Finished goods 64,433 69,139 Less – Inventory reserve - - Total $ 256,298 $ 245,370 |
Geographic Concentration (Table
Geographic Concentration (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
Schedule of Geographic Operations | Information about the Company’s geographic operations are as follows: Geographic Concentrations Three Months Ended Three Months Ended December 31, 2020 December 31, 2019 Net Revenue: North America $ 406,488 $ 380,586 Japan — 126,969 South Korea 111,499 38,653 $ 517,987 $ 546,208 Property and equipment, net: As of December 31, 2020 As of September 30, 2020 North America $ 1,364,858 $ 1,422,575 Japan 2,239 2,813 South Korea 238,417 242,960 $ 1,605,514 $ 1,668,348 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 3 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Weighted Average Assumptions for Fair Value Measurement of Options Granted | The Black-Scholes option pricing model was used with the following weighted average assumptions for options granted during the three months ended December 31, 2020: For non-employees and independent Board members December 31, 2020 Risk-free interest rate 0.81 – 0.88 % Expected option life 10 years Expected volatility 310 - 311 % Expected dividend yield 0.00 % Exercise price $10.15 - $16.79 |
Summary of Stock Option Activity | The following table summarizes stock option activity for three months ended December 31, 2020: Number of Shares Weighted Price Weighted Contractual Aggregate Intrinsic Outstanding at September 30, 2020 1,620,667 $ 5.74 7.3 $ 19,112,118 Granted 699,969 10.29 Exercised (6,000 ) 1.53 Expired - - Forfeited (40,833 ) 19.50 Outstanding at December 31, 2020 2,273,803 $ 6.05 7.9 11,043,375 Exercisable at December 31, 2020 1,160,902 $ 6.81 4.9 $ 5,793,130 |
Summary of Unvested Shares | A summary of the status of the Company’s nonvested options as of December 31, 2020, is presented below: Nonvested options Number of Weighted average Nonvested shares at September 30, 2020 762,917 $ 10.60 Granted 699,969 10.29 Forfeited (7,500 ) 19.50 Vested (342,485 ) 10.15 Nonvested shares at December 31, 2020 1,112,901 $ 10.48 |
Schedule of Warrant Activity | The following table summarizes warrant activity for the three months ended December 31, 2020: Number of Weighted Weighted Aggregate Outstanding at September 30, 2020 40,250 $ 9.00 4.7 $ 321,598 Granted - - Exercised - - Expired - - Forfeited - - Outstanding December 31, 2020 40,250 $ 9.00 4.5 64,400 Exercisable at December 31, 2020 40,250 $ 9.00 4.5 $ 64,400 |
Basis of Presentation and Sum_4
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Sep. 28, 2020 | Oct. 28, 2019 | Oct. 09, 2019 | Jun. 28, 2019 | Apr. 02, 2019 | Feb. 15, 2019 | Dec. 31, 2020 | Dec. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Jun. 30, 2020 | Jan. 09, 2020 |
Common stock issued value | $ 2,683,980 | $ 1,994,523 | ||||||||||
Reverse stock split | l-for-3 reverse stock split | |||||||||||
common stock equivalents | 2,314,053 | 1,795,667 | ||||||||||
Cash | $ 5,321,558 | $ 4,398,545 | ||||||||||
Weighted average remaining lease term | 2 years 7 months 6 days | |||||||||||
Weighted-average discount rate | 5.00% | |||||||||||
Financing lease remaining lease term | 3 years 6 months | |||||||||||
Financing lease discount rate | 12.75% | |||||||||||
Interest expense on finance lease liabilities | $ 3,133 | |||||||||||
Foreign currency translation adjustment | 1,656 | $ 27,230 | ||||||||||
Inventory | 256,298 | 245,370 | ||||||||||
Cash contribution | 110,000 | |||||||||||
Ford Motor Credit [Member] | ||||||||||||
Debt outstanding | 26,061 | 27,916 | ||||||||||
ShinHan Bank [Member] | ||||||||||||
Debt outstanding | 78,262 | $ 85,001 | ||||||||||
Van [Member] | Ford Motor Credit [Member] | ||||||||||||
Purchase price | $ 41,627 | |||||||||||
Payment to purchase | 3,500 | |||||||||||
Financed amount | $ 38,127 | |||||||||||
Debt term | 60 months | |||||||||||
Interest rate | 2.90% | |||||||||||
General and Administrative Expense [Member] | ||||||||||||
Weighted average remaining lease term | 61 months | |||||||||||
Rent expense | $ 93,750 | $ 84,820 | ||||||||||
Maximum [Member] | ||||||||||||
Operating Lease, Remaining Lease Term | 12 months | |||||||||||
Joint Venture Agreement [Member] | ||||||||||||
Machine carrying cost | $ 313,012 | |||||||||||
NuZee JAPAN Co., Ltd [Member] | Stock Transfer Agreement [Member] | ||||||||||||
Equity percentage | 70.00% | |||||||||||
Common stock issued value | $ 34,000 | |||||||||||
Alliance Funding Group [Member] | ||||||||||||
Payment of equipment on lease | $ 124,540 | |||||||||||
Alliance Funding Group [Member] | Lease Agreement [Member] | ||||||||||||
Weighted average remaining lease term | 60 months | |||||||||||
Payment of equipment on lease | $ 2,987 | |||||||||||
NuZee Korea Ltd [Member] | Equipment [Member] | ShinHan Bank [Member] | ||||||||||||
Financed amount | $ 60,563 | |||||||||||
Debt term | 36 months | |||||||||||
Interest rate | 4.33% | |||||||||||
Increase in debt | $ 86,518 | |||||||||||
Industrial Marino, S.A. de C.V. and NuZee Latin America, S.A. de C.V. [Member] | Joint Venture Agreement [Member] | ||||||||||||
Equity percentage | 50.00% | |||||||||||
NLA [Member] | ||||||||||||
Cash contribution | $ 2,056 | |||||||||||
Gain on investments | 160,000 | |||||||||||
Loss on investments | $ 43,012 |
Basis of Presentation and Sum_5
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Revenue by Major Customers (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Sales Amount | $ 517,987 | $ 546,208 |
Sales [Member] | Customer WP [Member] | ||
Sales Amount | $ 156,299 | $ 233,283 |
Concentration risk percentage | 30.00% | 43.00% |
Sales [Member] | Customer RSM [Member] | ||
Sales Amount | $ 66,811 | |
Concentration risk percentage | 13.00% | |
Sales [Member] | Customer GR [Member] | ||
Sales Amount | $ 65,536 | |
Concentration risk percentage | 13.00% | |
Sales [Member] | Customer K [Member] | ||
Sales Amount | $ 106,664 | |
Concentration risk percentage | 20.00% | |
Sales [Member] | Customer J [Member] | ||
Sales Amount | $ 90,085 | |
Concentration risk percentage | 16.00% | |
Accounts Receivable [Member] | Customer WP [Member] | ||
Concentration risk percentage | 43.00% | 34.00% |
Accounts Receivable Amount | $ 94,066 | $ 178,114 |
Accounts Receivable [Member] | Customer RSM [Member] | ||
Concentration risk percentage | 0.00% | |
Accounts Receivable Amount | ||
Accounts Receivable [Member] | Customer GR [Member] | ||
Concentration risk percentage | 30.00% | |
Accounts Receivable Amount | $ 65,352 | |
Accounts Receivable [Member] | Customer K [Member] | ||
Concentration risk percentage | 51.00% | |
Accounts Receivable Amount | $ 264,842 | |
Accounts Receivable [Member] | Customer J [Member] | ||
Concentration risk percentage | 7.00% | |
Accounts Receivable Amount | $ 35,091 |
Basis of Presentation and Sum_6
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of ROU Assets and Lease Liability (Details) - USD ($) | Dec. 31, 2020 | Oct. 02, 2020 | Sep. 30, 2020 |
ROU Asset | $ 587,489 | $ 652,197 | |
Lease Liability | $ 595,884 | $ 659,391 | |
Topic 842 [Member] | |||
ROU Asset | $ 652,197 | ||
Lease Liability | $ 659,391 |
Basis of Presentation and Sum_7
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Other Information Related to Operating Lease (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2020 | Sep. 30, 2020 | |
Accounting Policies [Abstract] | |||
ROU Asset | $ 652,197 | ||
Amortization during the period | (64,708) | ||
ROU Asset | 587,489 | ||
Lease Liability | 659,391 | ||
Amortization during the period | (63,507) | ||
Lease Liability | 595,884 | ||
Lease Liability - Short-Term | $ 265,283 | $ 263,678 | |
Lease Liability - Long-Term | 330,601 | 395,713 | |
Lease Liability - Total | $ 595,884 | $ 595,884 | $ 659,391 |
Basis of Presentation and Sum_8
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Future Minimum Rental Payments for Operating Leases (Details) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Accounting Policies [Abstract] | ||
2021 | $ 289,088 | |
2022 | 157,823 | |
2023 | 127,982 | |
2024 | 64,937 | |
2025 | ||
Total Minimum Lease Payments | 639,830 | |
Less Effect of Discounting | (43,946) | |
Present Value of Future Minimum Lease Payments | 595,884 | $ 659,391 |
Less Current Portion of Operating Lease Obligations | (265,283) | (263,678) |
Long-Term Operating Lease Obligations | $ 330,601 | $ 395,713 |
Basis of Presentation and Sum_9
Basis of Presentation and Summary of Significant Accounting Policies - Summary of ROU Assets Under Finance Leases (Details) | 3 Months Ended |
Dec. 31, 2020USD ($) | |
ROU asset-finance lease, beginning balance | $ 105,825 |
ROU asset-finance lease, ending balance | 99,600 |
Finance Lease [Member] | |
ROU asset-finance lease, beginning balance | 105,825 |
Amortization | (6,225) |
ROU asset-finance lease, ending balance | $ 99,600 |
Basis of Presentation and Su_10
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Future Minimum Lease Payments for Finance Leases (Details) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Accounting Policies [Abstract] | ||
2021 | $ 33,113 | |
2022 | 33,113 | |
2023 | 33,113 | |
2024 | 19,316 | |
2025 | ||
Total Minimum Lease Payments | 118,655 | |
Amount representing interest | (23,803) | |
Present Value of Minimum Lease Payments | 94,852 | |
Current Portion of Finance Lease Obligations | (25,307) | $ (21,598) |
Finance Lease Obligations, Less Current Portion | $ 69,545 | $ 78,400 |
Basis of Presentation and Su_11
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Cash and Non-cash Activities of Leases (Details) | 3 Months Ended |
Dec. 31, 2020USD ($) | |
Accounting Policies [Abstract] | |
Operating cash outflows from operating leases: | $ 71,617 |
Operating cash outflows from finance lease: | 3,133 |
Financing cash outflows from finance lease: | $ 5,146 |
Basis of Presentation and Su_12
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Future Minimum Lease Payments of Sublease (Details) | Dec. 31, 2020USD ($) |
Accounting Policies [Abstract] | |
2021 | $ 120,621 |
2022 | 124,190 |
2023 | 127,926 |
2024 | 64,918 |
2025 | |
Total | $ 437,655 |
Basis of Presentation and Su_13
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Loan Payments (Details) | Dec. 31, 2020USD ($) |
Total Current Portion | $ 74,696 |
Total LT Portion | 29,627 |
Grand Total | 104,323 |
Ford Motor Credit [Member] | |
2021 | 7,555 |
2022 | 1,923 |
Total Current Portion | 9,478 |
2022 | 5,854 |
2023 | 8,005 |
2024 | 2,724 |
2025 | |
Total LT Portion | 16,583 |
Grand Total | 26,061 |
ShinHan Bank [Member] | |
2021 | 52,175 |
2022 | 13,043 |
Total Current Portion | 65,218 |
2022 | 13,044 |
Total LT Portion | 13,044 |
Grand Total | $ 78,262 |
Basis of Presentation and Su_14
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Inventory (Details) - USD ($) | Dec. 31, 2020 | Sep. 30, 2020 |
Accounting Policies [Abstract] | ||
Raw materials | $ 191,865 | $ 176,231 |
Finished goods | 64,433 | 69,139 |
Less - Inventory reserve | ||
Total | $ 256,298 | $ 245,370 |
Geographic Concentration - Sche
Geographic Concentration - Schedule of Geographic Operations (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Net Revenue | $ 517,987 | $ 546,208 |
Property and equipment, net | 1,605,514 | 1,668,348 |
North America [Member] | ||
Net Revenue | 406,488 | 380,586 |
Property and equipment, net | 1,364,858 | 1,422,575 |
Japan [Member] | ||
Net Revenue | 126,969 | |
Property and equipment, net | 2,239 | 2,813 |
South Korea [Member] | ||
Net Revenue | 111,499 | 38,653 |
Property and equipment, net | $ 238,417 | $ 242,960 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) | 3 Months Ended |
Dec. 31, 2020USD ($) | |
NuZee Latin America [Member] | |
Revenues from related parties | $ 15,998 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Net proceeds from common stock | $ 2,683,980 | $ 1,994,523 |
Shares were issued upon the exercise of stock options | 6,000 | |
Common Stock [Member] | ||
Shares sold during period | 324,959 | 111,738 |
Shares were issued upon the exercise of stock options | 6,000 | |
Common Stock [Member] | Triton Funds LP [Member] | ||
Shares sold during period | 72,955 | |
Net proceeds from public offering | $ 534,494 | |
Common Stock [Member] | ||
Shares sold during period | 252,004 | |
Weighted average price per share | $ 9.14 | |
Net proceeds from common stock | $ 2,149,486 | |
Shares were issued upon the exercise of stock options | 6,000 | |
Proceeds from issuance stock option exercise | $ 9,180 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) - USD ($) | Jun. 23, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Stock option vest and exercisable period | 4 years 10 months 25 days | ||
Stock option exercise price | $ 1.53 | ||
Stock option forfeiture during period | 40,833 | ||
Shares were issued upon the exercise of stock options | 6,000 | ||
Warrant to purchase common stock | 40,250 | ||
Warrant exercise price | $ 9 | ||
Warrants exercisable date | Dec. 23, 2020 | ||
Warrant expiration date | Jun. 18, 2025 | ||
Stock Options [Member] | |||
Stock option vest and exercisable period | 1 year 6 months | ||
Stock option expenses | $ 4,507,298 | $ 2,220,861 | |
Unamortized option expense | $ 6,339,444 | ||
Common Stock [Member] | |||
Shares were issued upon the exercise of stock options | 6,000 | ||
Termination of Employment [Member] | |||
Stock option forfeiture during period | 40,833 | ||
Minimum [Member] | |||
Stock option exercise price | $ 10.15 | ||
Maximum [Member] | |||
Stock option exercise price | $ 16.79 | ||
Independent Contractors [Member] | |||
Stock options issued to independent contractors | 15,000 | ||
Stock option vest and exercisable period | 3 years | ||
Independent Board Members [Member] | |||
Share issued share based compensation | 684,969 | ||
Vesting percentage description | 1/3 of options vested immediately with the balance over a period of 2 years. |
Stock Options and Warrants - Sc
Stock Options and Warrants - Schedule of Weighted Average Assumptions for Fair Value Measurement of Options Granted (Details) - For Non-Employees and Independent Board [Member] - $ / shares | 3 Months Ended | |
Dec. 31, 2020 | Sep. 30, 2020 | |
Expected option life | 10 years | |
Expected dividend yield | 0.00% | |
Minimum [Member] | ||
Risk-free interest rate | 0.81% | |
Expected volatility | 310.00% | |
Exercise price | $ 10.15 | |
Maximum [Member] | ||
Risk-free interest rate | 0.88% | |
Expected volatility | 311.00% | |
Exercise price | $ 16.79 |
Stock Options and Warrants - Su
Stock Options and Warrants - Summary of Stock Option Activity (Details) | 3 Months Ended |
Dec. 31, 2020USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Options Outstanding, Beginning | shares | 1,620,667 |
Number of Options, Granted | shares | 699,969 |
Number of Options, Exercised | shares | (6,000) |
Number of Options, Expired | shares | |
Number of Options, Forfeited | shares | (40,833) |
Number of Options Outstanding, Ending | shares | 2,273,803 |
Number of Options Exercisable | shares | 1,160,902 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 5.74 |
Weighted Average Exercise Price, Granted | $ / shares | 10.29 |
Weighted Average Exercise Price, Exercised | $ / shares | 1.53 |
Weighted Average Exercise Price, Expired | $ / shares | |
Weighted Average Exercise Price, Forfeited | $ / shares | 19.50 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | 6.05 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 6.81 |
Weighted Average Remaining Contractual Life (years) Stock Options Outstanding, Beginning | 7 years 3 months 19 days |
Weighted Average Remaining Contractual Life (years) Stock Options Outstanding, Ending Balance | 7 years 10 months 25 days |
Weighted Average Remaining Contractual Life (years) Stock Options, Exercisable | 4 years 10 months 25 days |
Aggregate Intrinsic Value Options Outstanding, Beginning | $ | $ 19,112,118 |
Aggregate Intrinsic Value Options Outstanding, Ending Balance | $ | 11,043,375 |
Aggregate Intrinsic Value Options, Exercisable | $ | $ 5,793,130 |
Stock Options and Warrants - _2
Stock Options and Warrants - Summary of Unvested Shares (Details) | 3 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Nonvested Shares, Beginning | shares | 762,917 |
Number of Nonvested Shares, Granted | shares | 699,969 |
Number of Nonvested Shares, Forfeited | shares | (7,500) |
Number of Nonvested Shares, Vested | shares | (342,485) |
Number of Nonvested Shares, Ending | shares | 1,112,901 |
Weighted Average Grant Date Fair Value Nonvested Shares Beginning | $ / shares | $ 10.60 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | 10.29 |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | 19.50 |
Weighted Average Grant Date Fair Value, Vested | $ / shares | 10.15 |
Weighted Average Grant Date Fair Value Nonvested Shares Ending | $ / shares | $ 10.48 |
Stock Options and Warrants - _3
Stock Options and Warrants - Schedule of Warrant Activity (Details) | 3 Months Ended |
Dec. 31, 2020USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Warrants Outstanding, Beginning | shares | 40,250 |
Number of Warrants, Granted | shares | |
Number of Warrants, Exercised | shares | |
Number of Warrants, Expired | shares | |
Number of Warrants, Forfeited | shares | |
Number of Warrants Outstanding, Ending | shares | 40,250 |
Number of Warrants Exercisable | shares | 40,250 |
Weighted Average Exercise Price, Beginning | $ / shares | $ 9 |
Weighted Average Exercise Price, Granted | $ / shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Expired | $ / shares | |
Weighted Average Exercise Price, Forfeited | $ / shares | |
Weighted Average Exercise Price, Ending | $ / shares | 9 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 9 |
Weighted Average Remaining Contractual Life (years) Stock Warrants, Beginning Balance | 4 years 8 months 12 days |
Weighted Average Remaining Contractual Life (years) Stock Warrants, Ending Balance | 4 years 6 months |
Weighted Average Remaining Contractual Life (years) Stock Warrants, Exercisable | 4 years 6 months |
Aggregate Intrinsic Value Warrants Outstanding, Beginning | $ | $ 321,598 |
Aggregate Intrinsic Value Warrants Outstanding, Ending | $ | 64,400 |
Aggregate Intrinsic Value Warrants, Exercisable | $ | $ 64,400 |
Subsequent Event (Details Narra
Subsequent Event (Details Narrative) - Subsequent Event [Member] - Restricted Shares [Member] | Jan. 11, 2021shares |
Vest on March 31, 2021 [Member] | |
Restricted shares immediately vested | 50,739 |
Vest on March 31, 2022 [Member] | |
Restricted shares immediately vested | 50,737 |
Shanoop Kothari [Member] | |
Restricted shares immediately vested | 50,739 |
Number of restricted shares issued | 35,739 |
Number of restricted shares forfeited | 15,000 |
Restricted shares vested description | The Restricted Shares vest as follows: (i) 50,739 Restricted Shares vested immediately (35,739 net shares were issued to Mr. Kothari following the forfeiture of 15,000 vested shares to cover taxes); (ii) 50,739 Restricted Shares will vest on March 31, 2021; and (iii) 50,737 Restricted Shares vest on March 31, 2022. |
Shanoop Kothari [Member] | 2019 Stock Incentive Plan [Member] | |
Number of restricted shares | 152,215 |