Cover
Cover - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Dec. 15, 2022 | Mar. 31, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Sep. 30, 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Current Fiscal Year End Date | --09-30 | ||
Entity File Number | 001-39338 | ||
Entity Registrant Name | NUZEE, INC. | ||
Entity Central Index Key | 0001527613 | ||
Entity Tax Identification Number | 38-3849791 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Address, Address Line One | 1350 East Arapaho Road | ||
Entity Address, Address Line Two | Suite #230 | ||
Entity Address, City or Town | Richardson | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 75081 | ||
City Area Code | (760) | ||
Local Phone Number | 295-2408 | ||
Title of 12(b) Security | Common Stock, $0.00001 par value | ||
Trading Symbol | NUZE | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 Public Float | $ 28,852,352 | ||
Entity Common Stock, Shares Outstanding | 23,668,017 | ||
Documents Incorporated by Reference [Text Block] | Specified portions of the registrant’s definitive Proxy Statement to be filed in connection with its 2023 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K. The information in Part III hereof for the fiscal year ended September 30, 2022, will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates | ||
ICFR Auditor Attestation Flag | false | ||
Auditor Firm ID | 206 | ||
Auditor Name | MaloneBailey, LLP | ||
Auditor Location | Houston, Texas |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Current assets: | ||
Cash | $ 8,315,053 | $ 10,815,954 |
Accounts receivable, net | 345,258 | 555,238 |
Inventories, net | 947,995 | 573,464 |
Prepaid expenses and other current assets | 547,773 | 482,288 |
Total current assets | 10,156,079 | 12,426,944 |
Property and equipment, net | 525,075 | 674,024 |
Other assets: | ||
Right-of-use asset - operating lease | 642,624 | 386,587 |
Investment in unconsolidated affiliate | 169,634 | 175,425 |
Intangible assets, net | 140,000 | |
Other assets | 77,962 | 79,822 |
Total other assets | 1,030,220 | 641,834 |
Total assets | 11,711,374 | 13,742,802 |
Current liabilities: | ||
Accounts payable | 113,708 | 342,790 |
Current portion of long-term loan payable | 7,947 | 43,618 |
Current portion of lease liability - operating lease | 388,325 | 150,931 |
Current portion of lease liability - finance lease | 24,518 | 27,833 |
Accrued expenses | 706,492 | 274,009 |
Deferred income | 319,707 | 175,822 |
Other current liabilities | 39,241 | 138,631 |
Total current liabilities | 1,599,938 | 1,153,634 |
Non-current liabilities: | ||
Lease liability - operating lease, net of current portion | 267,786 | 247,656 |
Lease liability - finance lease, net of current portion | 29,622 | 50,567 |
Loan payable - long term, net of current portion | 4,745 | 12,696 |
Other noncurrent liabilities | 66,484 | 65,802 |
Total non-current liabilities | 368,637 | 376,721 |
Total liabilities | 1,968,575 | 1,530,355 |
Stockholders’ equity: | ||
Common stock; 200,000,000 shares authorized, $0.00001 par value; 23,668,017 and 17,820,390 shares issued and outstanding as of September 30, 2022 and 2021, respectively | 236 | 178 |
Additional paid in capital | 74,281,189 | 64,839,254 |
Accumulated deficit | (64,622,520) | (52,824,808) |
Accumulated other comprehensive income | 83,894 | 197,823 |
Total stockholders’ equity | 9,742,799 | 12,212,447 |
Total liabilities and stockholders’ equity | $ 11,711,374 | $ 13,742,802 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Sep. 30, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares issued | 23,668,017 | 17,820,390 |
Common stock, shares outstanding | 23,668,017 | 17,820,390 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||
Revenues, net | $ 3,109,162 | $ 1,926,660 |
Cost of sales | 3,219,575 | 2,006,753 |
Gross loss | (110,413) | (80,093) |
Selling, general and administrative expense | 10,616,971 | 17,080,792 |
Impairment expense | 675,134 | 840,391 |
Operating expenses | 11,292,105 | 17,921,183 |
Loss from operations | (11,402,518) | (18,001,276) |
Other income | 191,631 | 144,452 |
Loss from equity method investment | (5,791) | (7,889) |
Other expense | (574,710) | (672,929) |
Interest expense, net | (6,324) | (14,388) |
Net loss | $ (11,797,712) | $ (18,552,030) |
Basic and diluted loss per common share | $ (0.61) | $ (1.13) |
Basic and diluted weighted average number of common stock outstanding | 19,366,276 | 16,413,162 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||
Net loss | $ (11,797,712) | $ (18,552,030) |
Foreign currency translation | (113,929) | 7,662 |
Total other comprehensive income (loss), net of tax | (113,929) | 7,662 |
Comprehensive loss | $ (11,911,641) | $ (18,544,368) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Total |
Beginning balance, value 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 | ||||
Equity securities issued for cash | $ 31 | 13,701,253 | 13,701,284 | ||
Equity securities issued for cash, shares | 3,107,070 | ||||
Stock option expense | 9,405,191 | 9,405,191 | |||
Exercise of stock options | 9,180 | $ 9,180 | |||
Exercise of stock options, shares | 6,000 | 6,000 | |||
Other comprehensive gain (loss) | 7,662 | $ 7,662 | |||
Net loss | (18,552,030) | (18,552,030) | |||
Common stock issued for compensation | $ 1 | 1,251,401 | 1,251,402 | ||
Common stock issued for compensation, shares | 137,215 | ||||
Ending balance, value at Sep. 30, 2021 | $ 178 | 64,839,254 | (52,824,808) | 197,823 | 12,212,447 |
Ending balance, shares at Sep. 30, 2021 | 17,820,390 | ||||
Exercise of warrants, net of issuance costs | $ 4 | 1,702,592 | 1,702,596 | ||
Exercise of warrants, net of issuance costs, shares | 384,447 | ||||
Common stock issued for cash, ATM offering, net of issuance costs | 95,256 | 95,256 | |||
Common stock issued for cash, ATM offering, net of issuance costs, shares | 49,326 | ||||
Equity securities issued for cash | $ 9 | 1,649,727 | 1,649,736 | ||
Equity securities issued for cash, shares | 884,778 | ||||
Common stock issued for cash, registered offering, net of issuance costs | $ 42 | 2,520,826 | 2,520,868 | ||
Common stock issued for cash, registered offering, net of issuance costs, shares | 4,200,000 | ||||
Common stock issued for Dripkit acquisition | $ 2 | 426,842 | 426,844 | ||
Common stock issued for Dripkit acquisition, shares | 197,156 | ||||
Stock option expense | 2,899,338 | 2,899,338 | |||
Exercise of stock options | 12,600 | $ 12,600 | |||
Exercise of stock options, shares | 14,000 | 14,000 | |||
Restricted stock award issuance | $ 1 | 134,754 | $ 134,755 | ||
Restricted stock award issuance, shares | 117,920 | ||||
Other comprehensive gain (loss) | (113,929) | (113,929) | |||
Net loss | (11,797,712) | (11,797,712) | |||
Ending balance, value at Sep. 30, 2022 | $ 236 | $ 74,281,189 | $ (64,622,520) | $ 83,894 | $ 9,742,799 |
Ending balance, shares at Sep. 30, 2022 | 23,668,017 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Operating activities: | ||
Net loss | $ (11,797,712) | $ (18,552,030) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 379,474 | 344,669 |
Noncash lease expense | 302,334 | 278,060 |
Loss on disposition of assets | 12,618 | |
Stock option expense | 2,899,338 | 9,405,191 |
Restricted stock award compensation | 134,755 | |
Common stock issued for compensation | 1,251,402 | |
Bad debt expense | 34,351 | |
Loss from equity method investment | 5,791 | 7,889 |
Goodwill and intangible asset impairment | 675,134 | |
Property and equipment impairment | 840,391 | |
Write-off of deferred financing costs | 368,783 | 477,605 |
Change in operating assets and liabilities: | ||
Accounts receivable | 175,629 | (359,628) |
Inventories | (364,867) | (328,094) |
Prepaid expenses and other current assets | (65,485) | (283,655) |
Other assets | 1,860 | 737 |
Accounts payable | (229,845) | 293,012 |
Deferred income | 143,885 | 141,822 |
Lease liability - operating lease | (300,847) | (260,804) |
Accrued expenses and other current liabilities | 162,001 | (407,817) |
Other non-current liabilities | 682 | 44,095 |
Net cash used in operating activities | (7,462,121) | (7,107,155) |
Investing activities: | ||
Purchase of equipment | (191,765) | (115,361) |
Acquisition of Dripkit | (413,069) | |
Net cash used in investing activities | (604,834) | (115,361) |
Financing activities: | ||
Proceeds from issuance of equity securities, net of issuance costs | 13,701,284 | |
Repayment of loans | (43,622) | (56,603) |
Proceeds from issuance of common stock, ATM offering, net of issuance costs | 95,256 | |
Proceeds from issuance of common stock, exercise of warrants, net of issuance costs | 1,702,596 | |
Proceeds from issuance of equity securities, exempt offering, net of issuance costs | 1,649,736 | |
Proceeds from issuance of common stock, registered offering, net of issuance costs | 2,656,460 | |
Repayment of finance lease | (24,260) | (21,598) |
Cash paid for offering costs | (368,783) | |
Proceeds from issuance of common stock, exercise of stock options | 12,600 | 9,180 |
Net cash provided by financing activities | 5,679,983 | 13,632,263 |
Effect of foreign exchange on cash | (113,929) | 7,662 |
Net change in cash | (2,500,901) | 6,417,409 |
Cash, beginning of period | 10,815,954 | 4,398,545 |
Cash, end of period | 8,315,053 | 10,815,954 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 9,811 | 2,871 |
Cash paid for taxes | 800 | 800 |
Noncash investing and financing activities: | ||
Common stock issued in acquisition of Dripkit | 426,844 | |
Stock issuance costs accrued | 135,592 | |
ROU assets and liabilities added during the period | $ 558,371 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | 1. ORGANIZATION NuZee, Inc. (the “Company”, “we”, “our”, “us’) was incorporated on November 9, 2011, in Nevada. The Company is a specialty coffee company and is a leading co-packer of single serve pour over coffee in the United States, as well as a preeminent co-packer of coffee brew bags, which is also referred to as tea-bag style coffee. The Company is a commercial-scale producer that has the dual capability to pack both single serve pour over coffee and coffee brew bags within the North American market including a third type of single serve coffee format, DRIPKIT pour over products, as a result of our acquisition of substantially all of the assets of Dripkit, Inc. (“Dripkit”). While the United States is the Company’s core market, it also has single serve pour over coffee manufacturing and sales operations in Korea and a joint venture in Latin America. The Company has also developed and sells NuZee branded single serve coffee products, including its flagship Coffee Blenders line of both single serve pour over coffee and coffee brew bags. The Company has two wholly owned international subsidiaries in NuZee KOREA Ltd. (“NuZee KR”) and NuZee Investment Co., Ltd. (“NuZee INV”). |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) in all material respects and have been consistently applied in preparing the accompanying financial statements. Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. The Company reclassified a write off of deferred financing costs related to the termination of an ATM sales agreement, and lease expenses associated with subleased property from Operating expenses to Other expenses totaling, $ 477,605 160,489 18,000 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 wholly owned subsidiaries. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation. The Company consolidates NuZee KR and NuZee INV in accordance with ASC 810, and specifically ASC 810-10-15-8 which states, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of over 50 On February 25, 2022 (the “Closing Date”), the Company acquired substantially all the assets and certain specified liabilities (the “Acquisition”) of Dripkit, Inc., a Delaware corporation (“Dripkit”), pursuant to the Asset Purchase Agreement, dated as of February 21, 2022 (the “Asset Purchase Agreement”), by and among the Company, Dripkit, and Dripkit’s existing investors (the “Stock Recipients”) who executed joinders to the Asset Purchase Agreement as of the Closing Date. Pursuant to the terms of the Asset Purchase Agreement, the aggregate purchase price paid by the Company for the Acquisition was $ 860,000 197,156 18,475 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, warrants 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 September 30, 2022 and September 30, 2021, the total number of common stock equivalents was 9,307,921 9,343,606 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, raising capital and the commercialization and manufacture of its single serve coffee products 8,315,053 8,556,141 Use of Estimates In preparing these consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Fair Value of Financial Instruments Fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction cost. Fair value measurement under generally accepted accounting principles provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis. The carrying amounts of cash, accounts receivable, accounts payable, accrued liabilities and short-term debt approximate fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar remaining maturities. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instruments when available. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. The Company had no Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash with high quality banking institutions. From time to time, the Company may or may not maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit. Accounts Receivable Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. Bad debts expense or write offs of receivables are determined on the basis of loss experience, known and inherent risks in the receivable portfolio and current economic conditions. The Company had $ 6,862 no Major Customers For the years ended September 30, 2022 and 2021, the Company’s largest single source of revenue was from one major customer disclosed below. SCHEDULE OF REVENUE BY MAJOR CUSTOMERS For the year ended September 30, 2022: Customer Name Sales Amount % of Total Accounts % of Total Customer WP $ 882,392 28 % $ 95,351 28 % For the year ended September 30, 2021: Customer Name Sales Amount % of Total Accounts % of Total Customer WP $ 611,412 32 % $ 172,390 31 % Leases 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 performs a quarterly analysis of leases to determine if there are any operating leases that require recognition under ASC 842. The Company has a 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 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. During the Company’s analysis of leases in the year ended September 30, 2022, the Company determined to renew through March 31, 2025 the office and manufacturing space in Vista, California which was previously scheduled to expire on January 31, 2023 8,451 leased an additional 1,796 2,514 January 31, 2023 2,111 Additionally, the Company leased a new larger office and manufacturing space in Seoul, Korea beginning November 15, 2021, through November 15, 2023. The lease has a monthly expense of 7,040 As of September 30, 2022, the Company’s operating leases had a weighted average remaining lease term of 1.7 5.0 SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE ROU Asset – October 1, 2021 $ 386,587 ROU Asset added during the period 558,371 Amortization during the period (302,334 ) ROU Asset – September 30, 2022 $ 642,624 Lease Liability – October 1, 2021 $ 398,587 Lease Liability added during the period 558,371 Amortization during the period (300,847 ) Lease Liability – September 30, 2022 $ 656,111 Lease Liability – Short-Term $ 388,325 Lease Liability – Long-Term 267,786 Lease Liability – Total $ 656,111 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 September 30, 2022. Amounts due within 12 months of September 30, SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES 2023 349,890 2024 250,523 2025 67,310 Total Minimum Lease Payments 667,723 Less Effect of Discounting (11,612 ) Present Value of Future Minimum Lease Payments 656,111 Less Current Portion of Operating Lease Obligations 388,325 Long-Term Operating Lease Obligations $ 267,786 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 $ 2,987 124,500 1.8 12.75 8,853 The table below summarizes future minimum finance lease payments at September 30, 2022 for the 12 months ended September 30: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES 2023 $ 33,113 2024 27,594 Total Minimum Lease Payments 60,707 Amount representing interest (6,567 ) Present Value of Minimum Lease Payments 54,140 Current Portion of Finance Lease Obligations 24,518 Finance Lease Obligations, Less Current Portion $ 29,622 Lease expense included in Operating expense for the year ended September 30, 2022 and 2021 was $ 320,813 162,096 189,223 160,489 During the year ended September 30, 2022, we had the following cash and non-cash activities associated with our leases: SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES Operating cash outflows from operating leases: $ 373,968 Operating cash outflows from finance leases: $ 7,594 Financing cash outflows from finance lease: $ 24,260 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. During the year ended September 30, 2022, we recognized sublease income of $ 185,139 SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE 2023 $ 126,971 2024 $ 97,377 Total Minimum Lease Payments to be Received $ 224,348 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 adjustment attributable to NuZee, Inc. recorded to other comprehensive (loss) gain amounted to ($113,929) 7,662 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. Equity Method Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level, which is generally a 20 50 When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. On January 9, 2020, a joint venture agreement was signed between Industrial Marino, S.A. de C.V. ( 50 50 313,012 110,000 160,000 43,012 The Company accounts for NLA using the equity method of accounting since the management of day-to-day operations at NLA ultimately lies with the Company’s joint venture 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 September 30, 2022, the activity in NLA consisted of the contribution of two machines as described above and other start up and initial sales and marketing related activities. $ 5,791 7,889 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 goods 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 did not have a material impact on our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations. Return and Exchange Policy The Company provides a 30-day money-back guarantee if a buyer is not satisfied with a product. All products are thoroughly inspected and securely packaged before they are shipped to ensure buyers receive the best possible product. If for any reason buyers are unsatisfied with the products, they can return them and the Company will exchange or refund the purchase minus any shipping charges. For wholesale customers, return policies vary based on their specific agreements with customers. Under chargebacks agreements with the customers, the Company agrees to reimburse the seller for a portion of the costs incurred by the seller to advertise and promote certain of the Company’s products. The Company estimates, accrues and recognizes such chargebacks. These amounts are included in the determination of net sales. As of September 30, 2022 and September 30, 2021, the Company had no Cost Recognition Cost of products sold is primarily comprised of direct materials consumed in the manufacturing of co-packing arrangements or the production of our own products for resale. Cost of products sold also includes directly related labor salaries and other overhead cost including depreciation, temporary labor and shipping costs for shipment of raw materials to our facilities. Selling, General and Administrative Expense Selling, general and administrative expense (SG&A) is primarily comprised of personnel costs, sales and marketing expenses, depreciation and amortization, insurance expenses, professional services fees, travel and office expenses, and facilities costs. In some situations, the Company covers shipping fees for delivering customer orders, and the shipping and handling expenses are recorded under operating expenses in the consolidated statements of operations. Advertising Expenses The Company expenses advertising costs when incurred. Advertising expense for the years ended September 30, 2022 and 2021 is as follows: SCHEDULE OF ADVERTISING EXPENSE September 30, 2022 September 30, 2021 Advertising $ 192,316 $ 227,845 Research and Development Research and development expenses are expensed in the consolidated statements of operations as incurred in accordance with FASB ASC 730, Research and Development. For the years ended September 30, 2022 and 2021, respectively, research and development expenses amounted to $ 633 1,840 Other Expense Other expense of $ 574,710 672,929 Prepaid expenses and other current assets Prepaid expenses and other current assets for the years ended September 30, 2022 and 2021 is as follows: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, 2022 September 30, 2021 Prepaid expenses and other current assets $ 547,773 $ 482,288 The Prepaid expenses and other current assets balance of $ 547,773 482,288 Inventory 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 September 30, 2022 and 2021, the carrying value of inventory of $ 947,995 573,464 SCHEDULE OF INVENTORY September 30, 2022 September 30, 2021 Raw materials $ 887,632 $ 552,621 Finished goods 60,363 20,843 Less - Inventory reserve - - Total $ 947,995 $ 573,464 Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. The Company generally depreciates property and equipment on a straight-line basis over the estimated useful lives of the assets after the assets are placed in service except for NuZee KR which uses the declining balance method. Office equipment is depreciated over a 3 7 5 333,196 344,699 Expenditures associated with upgrades and enhancements that improve, add functionality, or otherwise extend the life of property and equipment that exceed $1,000 are capitalized SCHEDULE OF PROPERTY AND EQUIPMENT September 30, 2022 September 30, 2021 Machinery & Equipment 1,930,898 1,794,968 Vehicles 73,008 76,267 Leasehold Improvements 62,122 122,698 Less - Accumulated Depreciation (1,540,953 ) (1,319,909 ) Net Property and Equipment $ 525,075 $ 674,024 The Company is required to make deposits or prepayments and progress payments on equipment purchases before the Company receives possession and title. As a result, the Company accounts for such payments as Other Assets until it has possession at which time the equipment is recorded as Property and Equipment. There were no Samples The Company distributes samples of its products as a component of its marketing program. Costs for samples are expensed at the time the samples are produced and recorded under operating expenses in the consolidated statements of operations. Long-Lived Assets The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicated that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. In March 2021, the Company wrote off $ 840,391 Goodwill and intangible assets We evaluate goodwill for impairment on an annual basis as of the last day of our fiscal fourth quarter, and whenever events or circumstances make it more likely than not that an impairment may have occurred. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, client engagement, or sale or disposition. We monitor the existence of potential impairment indicators throughout the fiscal year. We test for goodwill impairment at the reporting unit level. We consider the Company as a reporting unit for goodwill impairment testing. We determined the Company has one operating segment and two components, NuZee, Inc. and NuZee KR, which are combined into one reporting unit as they are considered to be economically similar. The impairment test involves comparing the fair value of the reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the fair value exceeds the carrying value, we conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value of the goodwill. Since the Company is one reporting unit, the fair value of the Company equals market capitalization, thus net book value is compared to market capitalization to determine if there is any impairment. During the year ended September 30, 2022, we recorded a goodwill impairment loss of $ 531,412 Goodwill and Intangible Assets 0 no Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. We have identifiable useful life intangible assets related to acquired Dripkit tradename and customer relationships. We test these intangible assets annually for impairment, and when indications of potential impairment exist. We utilize the relief from royalty method to determine the fair value of the tradename. Management uses considerable judgment to determine key assumptions, including projected revenue, royalty rates and appropriate discount rates. We estimate the fair value of acquired customer relationships using a weighted average of the income. The income approach applies a fair value methodology based on discounted cash flows. This analysis requires significant estimates and judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, customer attrition, and determination of our weighted average cost of capital. If the carrying value of an intangible asset exceeds the fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value. During the year ended September 30, 2022, we recorded an impairment loss of $ 63,167 80,555 Goodwill and Intangible Assets 140,000 0 no Income Taxes In accordance with ASC 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. The Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood No Related parties A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. Other Current Liabilities Other current liabilities are primarily comprised of deposits and advances received from equity investors for certain legal opinions that will be provided by the Company’s counsel which totaled $ 8,553 99,760 Stock-based Compensation We account for share-based awards issued to employees in accordance with Accounting Standards Codification (ASC) 718, “Compensation-Stock Compensation”. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period, which is normally the vesting period. Share-based compensation to directors is treated in the same manner as share-based compensation to employees, regardless of whether the directors are also employees. In June 2018, the FASB issued ASU 2018-07 which simplifies several aspects of the accounting for non-employee transactions by stipulating that the existing accounting guidance for share-based payments to employees (accounted for under ASC Topic 718, “Compensation-Stock Compensation”) will also apply to non-employee share-based transactions (accounted for under ASC Topic 505, “Equity”). The Company implemented ASU 2018-07 on October 1, 2019 and the impact of the implementation was not material to the financial statements. We determine the fair value of share-based payments using the Black Scholes option-pricing model for common stock options and warrants and the closing price of our common stock for common share issuances. We recognize forfeitures as they occurred. Comprehensive income/loss Comprehensive income/loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income/loss are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income/loss pertain to foreign currency translation adjustments. Segment Information ASC Topic 280, “Disclosures about Segments of an Enterprise and Related Information,” established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires those enterprises to report selected information about operating segments in interim financial reports issued to stockholders. Management has determined that the Company operates in one business segment, which is the commercialization and development of functional beverages. Recent Accounting Pronouncements Changes to accounting principles are established by the Financial Accounting Standards Board’s (“FASB”) in the form of Accounting Standards Update (“ASU”) to the FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations, cash flows, or presentation thereof. The Company reviewed all recently issued pronouncements in 2022, but not yet effective, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial condition or the results of its operations. |
LOANS
LOANS | 12 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
LOANS | 3. LOANS On April 1, 2019, the Company purchased a delivery van from Ford Motor Credit for $ 41,627 3,500 38,127 60 2.9 12,692 20,416 60,563 86,518 36 4.33 0 35,898 The loan payments required for the next five years are as follows: SCHEDULE OF LOAN PAYMENTS Ford Motor Credit 2022 (October-December) $ 1,965 2023 (January-September) 5,982 Total Current Portion 7,947 2023 (October-September) 2,019 2024 2,726 Total Long-Term Portion 4,745 Grand Total $ 12,692 |
GEOGRAPHIC CONCENTRATIONS
GEOGRAPHIC CONCENTRATIONS | 12 Months Ended |
Sep. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
GEOGRAPHIC CONCENTRATIONS | 4. GEOGRAPHIC CONCENTRATIONS The Company is organized based on fundamentally one business segment although it does sell its products on a world-wide basis. The Company is organized in three geographical segments. The Company co-packs product for customers and produces and sells its products directly in North America and Korea. In fiscal year 2022, the Company had a minimally staffed office in Japan that provided support for import and export of product and materials between the U.S. and Japan, as well as investor relations support to our stockholders based in Japan; these functions are now supported by our personnel residing in the United States. Information about the Company’s geographic operations for the years ended September 30, 2022 and 2021 are as follows: SCHEDULE OF GEOGRAPHIC OPERATIONS Year Ended September 30, 2022 Year Ended September 30, 2021 Net Revenue: North America $ 2,443,863 $ 1,441,274 South Korea 665,299 485,386 Net Revenue $ 3,109,162 $ 1,926,660 September 30, 2022 September 30, 2021 Property and equipment, net: North America $ 378,546 $ 517,966 Japan 1,664 1,496 South Korea 144,865 154,562 Property and equipment, net $ 525,075 $ 674,024 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 5. RELATED PARTY TRANSACTIONS During the years ended September 30, 2022 and 2021, the Company sold $ 0 28,298 8,117 0 |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS COMBINATIONS | 6. BUSINESS COMBINATIONS As described in Note 2, on February 25, 2022, the Company acquired substantially all the assets and certain specified liabilities of Dripkit pursuant to the Asset Purchase Agreement, dated as of February 21, 2022, by and among the Company, Dripkit, and Dripkit’s existing investors who executed joinders to the Asset Purchase Agreement as of the Closing Date. Pursuant to the terms of the Asset Purchase Agreement, the aggregate purchase price paid by the Company for the Acquisition was $ 860,000 cash paid by the Company to Dripkit and the Company’s issuance to the Stock Recipients of shares of the Company’s common stock, 13,000 3,176 876,176 Pursuant to the terms of the Asset Purchase Agreement, on the Closing Date, the cash portion of the purchase price was reduced by the following amounts: (a) $ 22,000 35,500 40,000 40,000 On the Closing Date, after adjustments and holdbacks under the Asset Purchase Agreement, the Company paid the aggregate purchase price as follows: (i) cash paid by the Company to Dripkit was $ 257,000 178,681 78,656 115,500 80,000 35,500 During the year ended September 30, 2022, pursuant to the terms of the Asset Purchase Agreement, the Bulk Sales Holdback Amount was used to satisfy sales and use taxes owed by Dripkit to the State of New York as of the Closing Date. Pursuant to the terms of the Asset Purchase Agreement, the amounts remaining after offsetting the cost of these sales and use taxes were distributed as follows in the quarter ended June 30, 2022: (i) $ 39,237 18,475 The following table presents the allocation of the aggregate purchase price paid by the Company for the Acquisition of $ 860,000 13,000 3,176 876,176 SCHEDULE OF ALLOCATION OF AGGREGATE PURCHASE PRICE Total purchase price $ 876,176 Assets acquired: Inventory $ 9,664 Property and equipment 5,100 Identifiable intangible assets 330,000 Total assets acquired $ 344,764 Estimated fair value of net assets acquired $ 344,764 Goodwill $ 531,412 Identified Intangibles and Goodwill The Company identified tradename and customer relationships intangible assets. The tradename and customer relationships intangible assets will be amortized on a straight-line basis over their respective estimated useful lives. The goodwill recognized results from such factors as an assembled workforce and management’s industry know-how. See Note 7-Goodwill and Intangible Assets for additional information on identified intangible assets and goodwill. The financial statements for the year ended September 30, 2022 include the operating results of Dripkit for the period from February 25, 2022, the date of the Acquisition, to September 30, 2022. The consolidated statement of operations for the year ended September 30, 2022 includes revenues of approximately $ 69,767 272,610 46,278 During the year ended September 30, 2022, the Company incurred $ 270,478 Unaudited Pro forma Financial Information The following unaudited proforma financial information presents the combined results of operations of the Company and gives effect to the Acquisition for the year ended September 30, 2022, as if the Acquisition had occurred as of October 1, 2020 instead of on February 25, 2022. The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the Acquisition had been completed on October 1, 2020, nor does it purport to project the results of operations of the combined company in future periods. The pro forma financial information does not give effect to any integration costs related to the acquired company. The pro forma financial information for the Company and Dripkit is as follows for the years ended: SCHEDULE OF UNAUDITED PRO FORMA FINANCIAL INFORMATION September 30, 2022 September 30, 2021 Revenues $ 3,168,528 $ 2,322,859 Net loss $ 11,651,790 $ 18,815,500 For purposes of the pro forma disclosures above, the primary adjustments for the year ended September 30, 2022 include the elimination of transaction costs of approximately $ 270,478 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | 7. GOODWILL AND INTANGIBLE ASSETS Impairments Goodwill During the year ended September 30, 2022, we recorded a non-cash impairment charge of $ 531,412 Changes in goodwill for the year ended September 30, 2022, consists of the following: SCHEDULE OF CHANGES IN GOODWILL September 30, 2022 Balance at September 30, 2021 $ - Dripkit acquisition 531,412 Impairment charge (531,412 ) Balance at September 30, 2022 $ - Identifiable life intangible assets During the year ended September 30, 2022, we recorded non-cash impairment charges for the Dripkit tradename and acquired customer relationships of $ 80,555 63,167 140,000 As of September 30, 2022, the Company’s intangible assets consisted of the following: SCHEDULE OF INTANGIBLE ASSETS Amortization September 30, 2022 Period Gross Accumulated Impairment Charge Net Tradenames 5 $ 230,000 $ 26,833 $ 63,167 $ 140,000 Customer relationships 3 100,000 19,445 80,555 - Balance at September 30, 2022 $ 330,000 $ 46,278 $ 143,722 $ 140,000 Amortization expense was $ 46,278 Amortization expense for the next five fiscal years is as follows: SCHEDULE OF AMORTIZATION EXPENSE Tradename 2023 31,111 2024 31,111 2025 31,111 2026 31,111 2027 15,556 Grand Total $ 140,000 |
ISSUANCE OF EQUITY SECURITIES
ISSUANCE OF EQUITY SECURITIES | 12 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
ISSUANCE OF EQUITY SECURITIES | 8. ISSUANCE OF EQUITY SECURITIES During the year ended September 30, 2021, the Company sold (i) 72,955 534,494 256,338 9.14 2,149,486 2,777,777 11,017,304 4.50 5.85 416,666 416,666 On March 11, 2021, we terminated our At Market Issuance Sales Agreement, dated September 1, 2020 (the “ATM Agreement”), with B. Riley Securities, Inc. (f/k/a/ B. Riley FBR, Inc.) and The Benchmark Company, LLC (collectively, the “Agents”), pursuant to which we could from time to time offer and sell up to an aggregate of $ 50.0 477,605 On December 28, 2021, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Maxim Group LLC, as agent (the “Agent”), pursuant to which the Company could offer and sell, from time to time, shares of common stock through the Agent in “at-the-market-offerings”, as defined in Rule 415 under the Securities Act, having an aggregate offering price of up to $ 20,000,000 3.0 In the year ended September 30, 2022 49,326 95,256 3,003 the Company 368,783 On April 13, 2022, pursuant to Securities Act registration exemptions under Regulation S and/or Section 4(a)(2) of the Securities Act, the Company sold 884,778 2.00 1,649,736 2.00 On August 10, 2022, the Company completed an underwritten public offering of 4,200,000 2.5 2,656,460 135,592 Exercise of Warrants In the year ended September 30, 2022, the Company issued 384,447 380,447 380,447 4,000 8,000 1,702,596 Restricted Shares On January 11, 2021, the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors granted to Shanoop Kothari, who was serving at the time as both the Company’s Chief Financial Officer and Chief Operating Officer, in connection with the Compensation Committee’s determination of Mr. Kothari’s annual compensation, an award of 152,215 50,739 (35,739 net shares were issued to Mr. Kothari following the forfeiture of 15,000 vested shares to cover taxes) 50,739 50,737 1,251,402 Grant of Restricted Stock Awards to the Company’s Independent Board Members On March 17, 2022, pursuant to the Company’s non-employee director compensation policy, the Compensation Committee granted 23,584 117,920 134,755 Exercise of options During the year ended September 30, 2021, 6,000 9,180 14,000 12,600 |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK OPTIONS AND WARRANTS | 9. STOCK OPTIONS AND WARRANTS Options During the fiscal year ended September 30, 2022, the Company granted 185,000 1.31 128,000 The exercise price for the options issued in the year ended September 30, 2022 ranged from $ 0.313 2.16 ten years During the fiscal year ended September 30, 2021, the Company issued 3,366,681 4.88 15,000 1,369,944 1,981,737 3 years 33% of the options vesting on each anniversary of the grant date. these options shall vest and become exercisable (i) in the case of time-based options, generally as to 1/3 on each anniversary of the grant date, although different vesting patterns exist, or (ii) in the case of performance-based options (the “Performance-Based Options”), based on the Company’s or individual’s achievement of certain performance milestones established by the Compensation Committee for each fiscal year in the fiscal years ending September 30, 2021, 2022, 2023 and 2024 1,610,743 The exercise price for the options issued in the year ended September 30, 2021 ranged from $ 2.91 16.79 ten years 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 volatility of a peer group of companies for the year ended September 30, 2022, and historical volatility of Company stock for the year ended September 30, 2021. The Black-Scholes option pricing model was used with the following weighted average assumptions for options granted during the year ended September 30, 2022 and 2021, respectively: SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR FAIR VALUE MEASUREMENT OF OPTIONS GRANTED For employees September 30, 2022 September 30, 2021 Risk-free interest rate 2.38 3.71 % 1.27 2.2 % Expected option life 6 years 10 years Expected volatility 68.2 70.5 % 297 301 % Expected dividend yield 0.00 % 0.00 % Exercise price $ 0.31 2.16 $ 2.91 3.27 For non-employees September 30, 2022 September 30, 2021 Risk-free interest rate Not applicable 0.78 1.71 % Expected option life Not applicable 10 years Expected volatility Not applicable 302 310 % Expected dividend yield Not applicable 0.00 % Exercise price Not applicable $ 3.03 16.79 The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expense $ 2,899,338 9,405,191 1,104,758 1.23 During the year ended September 30, 2022, the Company issued 14,000 563,016 563,016 227,667 335,349 144,000 The following table summarizes stock option activity for the year ended September 30, 2022. SUMMARY OF STOCK OPTION ACTIVITY Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding at September 30, 2021 4,511,691 $ 4.73 8.4 $ 452,206 Granted 185,000 1.31 Exercised (14,000 ) 0.90 Expired (144,000 ) 19.42 Forfeited (563,016 ) 3.12 Outstanding at September 30, 2022 3,975,675 4.28 7.4 $ 1,207 Exercisable at September 30, 2022 2,226,557 $ 4.59 6.5 $ - During the year ended September 30, 2021, the Company issued 6,000 469,657 469,657 361,657 108,000 The following table summarizes stock option activity for the year ended September 30, 2021. Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding at September 30, 2020 1,620,667 $ 5.74 7.3 $ 19,112,118 Granted 3,366,681 4.88 Exercised (6,000 ) 1.53 Expired — — Forfeited (469,657 ) 9.29 Outstanding at September 30, 2021 4,511,691 4.73 8.4 $ 452,206 Exercisable at September 30, 2021 1,640,892 $ 5.64 7.3 $ 368,673 A summary of the status of the Company’s unvested options as of September 30, 2022 and 2021, are presented below: SUMMARY OF UNVESTED SHARES Number of Nonvested Weighted Average Grant Options Date Fair Value Nonvested options at September 30, 2020 762,917 $ 10.60 Granted 3,366,681 $ 4.88 Exercised — $ — Forfeited (316,328 ) $ 7.66 Vested (942,471 ) $ 8.16 Nonvested options at September 30, 2021 2,870,799 $ 5.02 Granted 185,000 $ 0.84 Exercised - $ - Forfeited (563,016 ) $ 3.09 Vested (743,665 ) $ 6.11 Nonvested options at September 30, 2022 1,749,118 $ 4.41 Warrants 2020 Warrants 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 9.00 December 23, 2020 June 18, 2025 2021 Warrants On March 19, 2021, the Company sold (i) 2,777,777 4.50 416,666 416,666 4.50 5.85 5 2022 Warrants On April 13, 2022, the Company sold 884,778 2022 2.00 The following table summarizes warrant activity for the year ended September 30, 2022: SCHEDULE OF WARRANT ACTIVITY Number of Shares Issuable Upon Exercise of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding at September 30, 2021 4,831,915 $ 4.98 4.5 $ - Issued 884,778 2.00 Exercised (384,447 ) 4.51 Expired - - Outstanding at September 30, 2022 5,332,246 $ 4.52 3.7 - Exercisable at September 30, 2022 5,332,246 $ 4.52 3.7 $ - In the year ended September 30, 2022, we issued 384,447 380,447 380,447 4,000 8,000 1,702,596 The following table summarizes warrant activity for the year ended September 30, 2021: Number of Shares Issuable Weighted Weighted Average Remaining Upon Average Contractual Aggregate Exercise of Exercise Life Intrinsic Warrants Price (years) Value Outstanding at September 30, 2020 40,250 $ 9.00 4.7 $ 321,598 Issued 4,791,665 4.95 Exercised - - Expired - - Outstanding at September 30, 2021 4,831,915 $ 4.98 4.5 - Exercisable at September 30, 2021 4,831,915 $ 4.98 4.5 $ - |
INCOME TAX
INCOME TAX | 12 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAX | 10. INCOME TAX The company recorded $ 0 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company will have tax losses available to be applied against future years’ income as result of the losses incurred. However, due to the losses incurred in the period and expected future operating results, management determined that it is more likely than not that the deferred tax asset resulting from the tax losses available for carry forward will not be realized through the reduction of future income tax payments. Accordingly, a 100 37,663,761 27,750,819 The earliest tax year which remains open to examination is 2019. The Company used statutory blended tax rates of 28 11 33.58 Deferred tax assets consisted of the following as of September 30, 2022 and 2021: SCHEDULE OF DEFERRED TAX ASSETS 2022 2021 Net Operating Losses $ 10,263,914 $ 7,770,229 Stock based compensation 5,775,567 4,926,021 Fixed assets and intangible assets 168,498 - Total deferred tax assets $ 16,207,979 $ 12,696,250 Valuation Allowance $ (16,207,979 ) $ (12,696,250 ) Deferred tax assets net of valuation allowance $ - $ - |
CONTINGENCIES
CONTINGENCIES | 12 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | 11. CONTINGENCIES From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. The results of any future litigation cannot be predicted with certainty, and, regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Matters that are probable of unfavorable outcomes to us and which can be reasonably estimated are accrued. Such accruals are based on information known about the matters, our estimates of the outcomes of such matters and our experience in contesting, litigating and settling similar matters. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 12. SUBSEQUENT EVENTS Resignation of Patrick Shearer as Chief Financial Officer On November 2, 2022, Patrick Shearer notified the Company of his resignation as the Company’s Chief Financial Officer. Mr. Shearer’s resignation will be effective as of January 4, 2023 (the “Effective Date”). Appointment of Shana Bowman as Interim Chief Financial Officer On November 4, 2022, in connection with Mr. Shearer’s resignation as described above, Shana Bowman was appointed as the Company’s Interim Chief Financial Officer, with such appointment to be effective on the Effective Date. Ms. Bowman will serve as the Company’s principal financial officer and principal accounting officer on an interim basis. On November 4, 2022, the Company and Ms. Bowman entered into that certain Second Amended and Restated Employment Agreement (the “Employment Agreement”), providing for Ms. Bowman’s continued employment as the Controller until the Effective Date, and thereafter as Interim Chief Financial Officer. Pursuant to the Employment Agreement, commencing on the Effective Date, Ms. Bowman is entitled to an annual base salary of $ 185,000 20 30 15,000 Appointment of Marie Franklin as Senior Vice President of Sales and Marketing On December 9, 2022, the Company appointed Marie Franklin to serve as the Company’s Senior Vice President of Sales and Marketing, effective December 1, 2022 (the “Employment Date”). Pursuant to her employment agreement (the “Franklin Employment Agreement”), commencing on the Employment Date, Ms. Franklin is entitled to an annual base salary of $ 180,000 12,000 100,000 5,000 100,000 Stockholder Approval of Reverse Stock Split On December 9, 2022, at a Special Meeting of Stockholders, the Company’s stockholders approved a proposal granting the Board discretionary authority to file an amendment (the “Certificate of Amendment”) to the Company’s Articles of Incorporation, as amended (the “Articles”), which amends the Articles to add a Section 1A to effect a reverse stock split of the Company’s common stock, at any ratio from 1-for-10 to 1-for-50 at the Board’s discretion. The Board intends to effect the 2022 Reverse Stock Split as soon as practicable. New Operating Lease Effective December 1, 2022, we entered into a new operating lease for our principal executive office, which is located at 1350 East Arapaho Road, Suite #230, Richardson, Texas 75081. We lease the Richardson office on an annual basis, at a cost of $1,510 per month, through November 30, 2023. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Sep. 30, 2022 | |
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 and its wholly owned subsidiaries. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation. The Company consolidates NuZee KR and NuZee INV in accordance with ASC 810, and specifically ASC 810-10-15-8 which states, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of over 50 On February 25, 2022 (the “Closing Date”), the Company acquired substantially all the assets and certain specified liabilities (the “Acquisition”) of Dripkit, Inc., a Delaware corporation (“Dripkit”), pursuant to the Asset Purchase Agreement, dated as of February 21, 2022 (the “Asset Purchase Agreement”), by and among the Company, Dripkit, and Dripkit’s existing investors (the “Stock Recipients”) who executed joinders to the Asset Purchase Agreement as of the Closing Date. Pursuant to the terms of the Asset Purchase Agreement, the aggregate purchase price paid by the Company for the Acquisition was $ 860,000 197,156 18,475 |
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, warrants 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 September 30, 2022 and September 30, 2021, the total number of common stock equivalents was 9,307,921 9,343,606 |
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, raising capital and the commercialization and manufacture of its single serve coffee products 8,315,053 8,556,141 |
Use of Estimates | Use of Estimates In preparing these consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not adjusted for transaction cost. Fair value measurement under generally accepted accounting principles provides for use of a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company. Level 3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis. The carrying amounts of cash, accounts receivable, accounts payable, accrued liabilities and short-term debt approximate fair value because of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based on current rates at which the Company could borrow funds with similar remaining maturities. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instruments when available. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. The Company had no |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash with high quality banking institutions. From time to time, the Company may or may not maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. Bad debts expense or write offs of receivables are determined on the basis of loss experience, known and inherent risks in the receivable portfolio and current economic conditions. The Company had $ 6,862 no |
Major Customers | Major Customers For the years ended September 30, 2022 and 2021, the Company’s largest single source of revenue was from one major customer disclosed below. SCHEDULE OF REVENUE BY MAJOR CUSTOMERS For the year ended September 30, 2022: Customer Name Sales Amount % of Total Accounts % of Total Customer WP $ 882,392 28 % $ 95,351 28 % For the year ended September 30, 2021: Customer Name Sales Amount % of Total Accounts % of Total Customer WP $ 611,412 32 % $ 172,390 31 % |
Leases | Leases 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 performs a quarterly analysis of leases to determine if there are any operating leases that require recognition under ASC 842. The Company has a 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 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. During the Company’s analysis of leases in the year ended September 30, 2022, the Company determined to renew through March 31, 2025 the office and manufacturing space in Vista, California which was previously scheduled to expire on January 31, 2023 8,451 leased an additional 1,796 2,514 January 31, 2023 2,111 Additionally, the Company leased a new larger office and manufacturing space in Seoul, Korea beginning November 15, 2021, through November 15, 2023. The lease has a monthly expense of 7,040 As of September 30, 2022, the Company’s operating leases had a weighted average remaining lease term of 1.7 5.0 SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE ROU Asset – October 1, 2021 $ 386,587 ROU Asset added during the period 558,371 Amortization during the period (302,334 ) ROU Asset – September 30, 2022 $ 642,624 Lease Liability – October 1, 2021 $ 398,587 Lease Liability added during the period 558,371 Amortization during the period (300,847 ) Lease Liability – September 30, 2022 $ 656,111 Lease Liability – Short-Term $ 388,325 Lease Liability – Long-Term 267,786 Lease Liability – Total $ 656,111 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 September 30, 2022. Amounts due within 12 months of September 30, SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES 2023 349,890 2024 250,523 2025 67,310 Total Minimum Lease Payments 667,723 Less Effect of Discounting (11,612 ) Present Value of Future Minimum Lease Payments 656,111 Less Current Portion of Operating Lease Obligations 388,325 Long-Term Operating Lease Obligations $ 267,786 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 $ 2,987 124,500 1.8 12.75 8,853 The table below summarizes future minimum finance lease payments at September 30, 2022 for the 12 months ended September 30: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES 2023 $ 33,113 2024 27,594 Total Minimum Lease Payments 60,707 Amount representing interest (6,567 ) Present Value of Minimum Lease Payments 54,140 Current Portion of Finance Lease Obligations 24,518 Finance Lease Obligations, Less Current Portion $ 29,622 Lease expense included in Operating expense for the year ended September 30, 2022 and 2021 was $ 320,813 162,096 189,223 160,489 During the year ended September 30, 2022, we had the following cash and non-cash activities associated with our leases: SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES Operating cash outflows from operating leases: $ 373,968 Operating cash outflows from finance leases: $ 7,594 Financing cash outflows from finance lease: $ 24,260 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. During the year ended September 30, 2022, we recognized sublease income of $ 185,139 SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE 2023 $ 126,971 2024 $ 97,377 Total Minimum Lease Payments to be Received $ 224,348 |
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 adjustment attributable to NuZee, Inc. recorded to other comprehensive (loss) gain amounted to ($113,929) 7,662 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. |
Equity Method | Equity Method Investee companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level, which is generally a 20 50 When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. On January 9, 2020, a joint venture agreement was signed between Industrial Marino, S.A. de C.V. ( 50 50 313,012 110,000 160,000 43,012 The Company accounts for NLA using the equity method of accounting since the management of day-to-day operations at NLA ultimately lies with the Company’s joint venture 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 September 30, 2022, the activity in NLA consisted of the contribution of two machines as described above and other start up and initial sales and marketing related activities. $ 5,791 7,889 |
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 goods 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 did not have a material impact on our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations. |
Return and Exchange Policy | Return and Exchange Policy The Company provides a 30-day money-back guarantee if a buyer is not satisfied with a product. All products are thoroughly inspected and securely packaged before they are shipped to ensure buyers receive the best possible product. If for any reason buyers are unsatisfied with the products, they can return them and the Company will exchange or refund the purchase minus any shipping charges. For wholesale customers, return policies vary based on their specific agreements with customers. Under chargebacks agreements with the customers, the Company agrees to reimburse the seller for a portion of the costs incurred by the seller to advertise and promote certain of the Company’s products. The Company estimates, accrues and recognizes such chargebacks. These amounts are included in the determination of net sales. As of September 30, 2022 and September 30, 2021, the Company had no |
Cost Recognition | Cost Recognition Cost of products sold is primarily comprised of direct materials consumed in the manufacturing of co-packing arrangements or the production of our own products for resale. Cost of products sold also includes directly related labor salaries and other overhead cost including depreciation, temporary labor and shipping costs for shipment of raw materials to our facilities. Selling, General and Administrative Expense Selling, general and administrative expense (SG&A) is primarily comprised of personnel costs, sales and marketing expenses, depreciation and amortization, insurance expenses, professional services fees, travel and office expenses, and facilities costs. In some situations, the Company covers shipping fees for delivering customer orders, and the shipping and handling expenses are recorded under operating expenses in the consolidated statements of operations. |
Advertising Expenses | Advertising Expenses The Company expenses advertising costs when incurred. Advertising expense for the years ended September 30, 2022 and 2021 is as follows: SCHEDULE OF ADVERTISING EXPENSE September 30, 2022 September 30, 2021 Advertising $ 192,316 $ 227,845 |
Research and Development | Research and Development Research and development expenses are expensed in the consolidated statements of operations as incurred in accordance with FASB ASC 730, Research and Development. For the years ended September 30, 2022 and 2021, respectively, research and development expenses amounted to $ 633 1,840 |
Other Expense | Other Expense Other expense of $ 574,710 672,929 |
Prepaid expenses and other current assets | Prepaid expenses and other current assets Prepaid expenses and other current assets for the years ended September 30, 2022 and 2021 is as follows: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, 2022 September 30, 2021 Prepaid expenses and other current assets $ 547,773 $ 482,288 The Prepaid expenses and other current assets balance of $ 547,773 482,288 |
Inventory | Inventory 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 September 30, 2022 and 2021, the carrying value of inventory of $ 947,995 573,464 SCHEDULE OF INVENTORY September 30, 2022 September 30, 2021 Raw materials $ 887,632 $ 552,621 Finished goods 60,363 20,843 Less - Inventory reserve - - Total $ 947,995 $ 573,464 |
Property and Equipment | Property and Equipment Property and equipment is stated at cost, net of accumulated depreciation. The Company generally depreciates property and equipment on a straight-line basis over the estimated useful lives of the assets after the assets are placed in service except for NuZee KR which uses the declining balance method. Office equipment is depreciated over a 3 7 5 333,196 344,699 Expenditures associated with upgrades and enhancements that improve, add functionality, or otherwise extend the life of property and equipment that exceed $1,000 are capitalized SCHEDULE OF PROPERTY AND EQUIPMENT September 30, 2022 September 30, 2021 Machinery & Equipment 1,930,898 1,794,968 Vehicles 73,008 76,267 Leasehold Improvements 62,122 122,698 Less - Accumulated Depreciation (1,540,953 ) (1,319,909 ) Net Property and Equipment $ 525,075 $ 674,024 The Company is required to make deposits or prepayments and progress payments on equipment purchases before the Company receives possession and title. As a result, the Company accounts for such payments as Other Assets until it has possession at which time the equipment is recorded as Property and Equipment. There were no |
Samples | Samples The Company distributes samples of its products as a component of its marketing program. Costs for samples are expensed at the time the samples are produced and recorded under operating expenses in the consolidated statements of operations. |
Long-Lived Assets | Long-Lived Assets The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicated that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. In March 2021, the Company wrote off $ 840,391 |
Goodwill and intangible assets | Goodwill and intangible assets We evaluate goodwill for impairment on an annual basis as of the last day of our fiscal fourth quarter, and whenever events or circumstances make it more likely than not that an impairment may have occurred. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, client engagement, or sale or disposition. We monitor the existence of potential impairment indicators throughout the fiscal year. We test for goodwill impairment at the reporting unit level. We consider the Company as a reporting unit for goodwill impairment testing. We determined the Company has one operating segment and two components, NuZee, Inc. and NuZee KR, which are combined into one reporting unit as they are considered to be economically similar. The impairment test involves comparing the fair value of the reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the fair value exceeds the carrying value, we conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value of the goodwill. Since the Company is one reporting unit, the fair value of the Company equals market capitalization, thus net book value is compared to market capitalization to determine if there is any impairment. During the year ended September 30, 2022, we recorded a goodwill impairment loss of $ 531,412 Goodwill and Intangible Assets 0 no Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. We have identifiable useful life intangible assets related to acquired Dripkit tradename and customer relationships. We test these intangible assets annually for impairment, and when indications of potential impairment exist. We utilize the relief from royalty method to determine the fair value of the tradename. Management uses considerable judgment to determine key assumptions, including projected revenue, royalty rates and appropriate discount rates. We estimate the fair value of acquired customer relationships using a weighted average of the income. The income approach applies a fair value methodology based on discounted cash flows. This analysis requires significant estimates and judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, customer attrition, and determination of our weighted average cost of capital. If the carrying value of an intangible asset exceeds the fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value. During the year ended September 30, 2022, we recorded an impairment loss of $ 63,167 80,555 Goodwill and Intangible Assets 140,000 0 no |
Income Taxes | Income Taxes In accordance with ASC 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. The Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood No |
Related parties | Related parties A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. |
Other Current Liabilities | Other Current Liabilities Other current liabilities are primarily comprised of deposits and advances received from equity investors for certain legal opinions that will be provided by the Company’s counsel which totaled $ 8,553 99,760 |
Stock-based Compensation | Stock-based Compensation We account for share-based awards issued to employees in accordance with Accounting Standards Codification (ASC) 718, “Compensation-Stock Compensation”. Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period, which is normally the vesting period. Share-based compensation to directors is treated in the same manner as share-based compensation to employees, regardless of whether the directors are also employees. In June 2018, the FASB issued ASU 2018-07 which simplifies several aspects of the accounting for non-employee transactions by stipulating that the existing accounting guidance for share-based payments to employees (accounted for under ASC Topic 718, “Compensation-Stock Compensation”) will also apply to non-employee share-based transactions (accounted for under ASC Topic 505, “Equity”). The Company implemented ASU 2018-07 on October 1, 2019 and the impact of the implementation was not material to the financial statements. We determine the fair value of share-based payments using the Black Scholes option-pricing model for common stock options and warrants and the closing price of our common stock for common share issuances. We recognize forfeitures as they occurred. |
Comprehensive income/loss | Comprehensive income/loss Comprehensive income/loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income/loss are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income/loss pertain to foreign currency translation adjustments. |
Segment Information | Segment Information ASC Topic 280, “Disclosures about Segments of an Enterprise and Related Information,” established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires those enterprises to report selected information about operating segments in interim financial reports issued to stockholders. Management has determined that the Company operates in one business segment, which is the commercialization and development of functional beverages. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Changes to accounting principles are established by the Financial Accounting Standards Board’s (“FASB”) in the form of Accounting Standards Update (“ASU”) to the FASB’s Codification. We consider the applicability and impact of all ASUs on our financial position, results of operations, cash flows, or presentation thereof. The Company reviewed all recently issued pronouncements in 2022, but not yet effective, and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on the Company’s financial condition or the results of its operations. |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
SCHEDULE OF REVENUE BY MAJOR CUSTOMERS | For the years ended September 30, 2022 and 2021, the Company’s largest single source of revenue was from one major customer disclosed below. SCHEDULE OF REVENUE BY MAJOR CUSTOMERS For the year ended September 30, 2022: Customer Name Sales Amount % of Total Accounts % of Total Customer WP $ 882,392 28 % $ 95,351 28 % For the year ended September 30, 2021: Customer Name Sales Amount % of Total Accounts % of Total Customer WP $ 611,412 32 % $ 172,390 31 % |
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE | SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE ROU Asset – October 1, 2021 $ 386,587 ROU Asset added during the period 558,371 Amortization during the period (302,334 ) ROU Asset – September 30, 2022 $ 642,624 Lease Liability – October 1, 2021 $ 398,587 Lease Liability added during the period 558,371 Amortization during the period (300,847 ) Lease Liability – September 30, 2022 $ 656,111 Lease Liability – Short-Term $ 388,325 Lease Liability – Long-Term 267,786 Lease Liability – Total $ 656,111 |
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES | Amounts due within 12 months of September 30, SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES 2023 349,890 2024 250,523 2025 67,310 Total Minimum Lease Payments 667,723 Less Effect of Discounting (11,612 ) Present Value of Future Minimum Lease Payments 656,111 Less Current Portion of Operating Lease Obligations 388,325 Long-Term Operating Lease Obligations $ 267,786 |
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES | The table below summarizes future minimum finance lease payments at September 30, 2022 for the 12 months ended September 30: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES 2023 $ 33,113 2024 27,594 Total Minimum Lease Payments 60,707 Amount representing interest (6,567 ) Present Value of Minimum Lease Payments 54,140 Current Portion of Finance Lease Obligations 24,518 Finance Lease Obligations, Less Current Portion $ 29,622 |
SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES | During the year ended September 30, 2022, we had the following cash and non-cash activities associated with our leases: SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES Operating cash outflows from operating leases: $ 373,968 Operating cash outflows from finance leases: $ 7,594 Financing cash outflows from finance lease: $ 24,260 |
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE | SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE 2023 $ 126,971 2024 $ 97,377 Total Minimum Lease Payments to be Received $ 224,348 |
SCHEDULE OF ADVERTISING EXPENSE | The Company expenses advertising costs when incurred. Advertising expense for the years ended September 30, 2022 and 2021 is as follows: SCHEDULE OF ADVERTISING EXPENSE September 30, 2022 September 30, 2021 Advertising $ 192,316 $ 227,845 |
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | Prepaid expenses and other current assets for the years ended September 30, 2022 and 2021 is as follows: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, 2022 September 30, 2021 Prepaid expenses and other current assets $ 547,773 $ 482,288 |
SCHEDULE OF INVENTORY | SCHEDULE OF INVENTORY September 30, 2022 September 30, 2021 Raw materials $ 887,632 $ 552,621 Finished goods 60,363 20,843 Less - Inventory reserve - - Total $ 947,995 $ 573,464 |
SCHEDULE OF PROPERTY AND EQUIPMENT | SCHEDULE OF PROPERTY AND EQUIPMENT September 30, 2022 September 30, 2021 Machinery & Equipment 1,930,898 1,794,968 Vehicles 73,008 76,267 Leasehold Improvements 62,122 122,698 Less - Accumulated Depreciation (1,540,953 ) (1,319,909 ) Net Property and Equipment $ 525,075 $ 674,024 |
LOANS (Tables)
LOANS (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF LOAN PAYMENTS | The loan payments required for the next five years are as follows: SCHEDULE OF LOAN PAYMENTS Ford Motor Credit 2022 (October-December) $ 1,965 2023 (January-September) 5,982 Total Current Portion 7,947 2023 (October-September) 2,019 2024 2,726 Total Long-Term Portion 4,745 Grand Total $ 12,692 |
GEOGRAPHIC CONCENTRATIONS (Tabl
GEOGRAPHIC CONCENTRATIONS (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Risks and Uncertainties [Abstract] | |
SCHEDULE OF GEOGRAPHIC OPERATIONS | SCHEDULE OF GEOGRAPHIC OPERATIONS Year Ended September 30, 2022 Year Ended September 30, 2021 Net Revenue: North America $ 2,443,863 $ 1,441,274 South Korea 665,299 485,386 Net Revenue $ 3,109,162 $ 1,926,660 September 30, 2022 September 30, 2021 Property and equipment, net: North America $ 378,546 $ 517,966 Japan 1,664 1,496 South Korea 144,865 154,562 Property and equipment, net $ 525,075 $ 674,024 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
SCHEDULE OF ALLOCATION OF AGGREGATE PURCHASE PRICE | SCHEDULE OF ALLOCATION OF AGGREGATE PURCHASE PRICE Total purchase price $ 876,176 Assets acquired: Inventory $ 9,664 Property and equipment 5,100 Identifiable intangible assets 330,000 Total assets acquired $ 344,764 Estimated fair value of net assets acquired $ 344,764 Goodwill $ 531,412 |
SCHEDULE OF UNAUDITED PRO FORMA FINANCIAL INFORMATION | The pro forma financial information for the Company and Dripkit is as follows for the years ended: SCHEDULE OF UNAUDITED PRO FORMA FINANCIAL INFORMATION September 30, 2022 September 30, 2021 Revenues $ 3,168,528 $ 2,322,859 Net loss $ 11,651,790 $ 18,815,500 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF CHANGES IN GOODWILL | Changes in goodwill for the year ended September 30, 2022, consists of the following: SCHEDULE OF CHANGES IN GOODWILL September 30, 2022 Balance at September 30, 2021 $ - Dripkit acquisition 531,412 Impairment charge (531,412 ) Balance at September 30, 2022 $ - |
SCHEDULE OF INTANGIBLE ASSETS | As of September 30, 2022, the Company’s intangible assets consisted of the following: SCHEDULE OF INTANGIBLE ASSETS Amortization September 30, 2022 Period Gross Accumulated Impairment Charge Net Tradenames 5 $ 230,000 $ 26,833 $ 63,167 $ 140,000 Customer relationships 3 100,000 19,445 80,555 - Balance at September 30, 2022 $ 330,000 $ 46,278 $ 143,722 $ 140,000 |
SCHEDULE OF AMORTIZATION EXPENSE | Amortization expense for the next five fiscal years is as follows: SCHEDULE OF AMORTIZATION EXPENSE Tradename 2023 31,111 2024 31,111 2025 31,111 2026 31,111 2027 15,556 Grand Total $ 140,000 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
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 year ended September 30, 2022 and 2021, respectively: SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR FAIR VALUE MEASUREMENT OF OPTIONS GRANTED For employees September 30, 2022 September 30, 2021 Risk-free interest rate 2.38 3.71 % 1.27 2.2 % Expected option life 6 years 10 years Expected volatility 68.2 70.5 % 297 301 % Expected dividend yield 0.00 % 0.00 % Exercise price $ 0.31 2.16 $ 2.91 3.27 For non-employees September 30, 2022 September 30, 2021 Risk-free interest rate Not applicable 0.78 1.71 % Expected option life Not applicable 10 years Expected volatility Not applicable 302 310 % Expected dividend yield Not applicable 0.00 % Exercise price Not applicable $ 3.03 16.79 |
SUMMARY OF STOCK OPTION ACTIVITY | The following table summarizes stock option activity for the year ended September 30, 2022. SUMMARY OF STOCK OPTION ACTIVITY Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding at September 30, 2021 4,511,691 $ 4.73 8.4 $ 452,206 Granted 185,000 1.31 Exercised (14,000 ) 0.90 Expired (144,000 ) 19.42 Forfeited (563,016 ) 3.12 Outstanding at September 30, 2022 3,975,675 4.28 7.4 $ 1,207 Exercisable at September 30, 2022 2,226,557 $ 4.59 6.5 $ - The following table summarizes stock option activity for the year ended September 30, 2021. Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding at September 30, 2020 1,620,667 $ 5.74 7.3 $ 19,112,118 Granted 3,366,681 4.88 Exercised (6,000 ) 1.53 Expired — — Forfeited (469,657 ) 9.29 Outstanding at September 30, 2021 4,511,691 4.73 8.4 $ 452,206 Exercisable at September 30, 2021 1,640,892 $ 5.64 7.3 $ 368,673 |
SUMMARY OF UNVESTED SHARES | A summary of the status of the Company’s unvested options as of September 30, 2022 and 2021, are presented below: SUMMARY OF UNVESTED SHARES Number of Nonvested Weighted Average Grant Options Date Fair Value Nonvested options at September 30, 2020 762,917 $ 10.60 Granted 3,366,681 $ 4.88 Exercised — $ — Forfeited (316,328 ) $ 7.66 Vested (942,471 ) $ 8.16 Nonvested options at September 30, 2021 2,870,799 $ 5.02 Granted 185,000 $ 0.84 Exercised - $ - Forfeited (563,016 ) $ 3.09 Vested (743,665 ) $ 6.11 Nonvested options at September 30, 2022 1,749,118 $ 4.41 |
SCHEDULE OF WARRANT ACTIVITY | The following table summarizes warrant activity for the year ended September 30, 2022: SCHEDULE OF WARRANT ACTIVITY Number of Shares Issuable Upon Exercise of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding at September 30, 2021 4,831,915 $ 4.98 4.5 $ - Issued 884,778 2.00 Exercised (384,447 ) 4.51 Expired - - Outstanding at September 30, 2022 5,332,246 $ 4.52 3.7 - Exercisable at September 30, 2022 5,332,246 $ 4.52 3.7 $ - The following table summarizes warrant activity for the year ended September 30, 2021: Number of Shares Issuable Weighted Weighted Average Remaining Upon Average Contractual Aggregate Exercise of Exercise Life Intrinsic Warrants Price (years) Value Outstanding at September 30, 2020 40,250 $ 9.00 4.7 $ 321,598 Issued 4,791,665 4.95 Exercised - - Expired - - Outstanding at September 30, 2021 4,831,915 $ 4.98 4.5 - Exercisable at September 30, 2021 4,831,915 $ 4.98 4.5 $ - |
INCOME TAX (Tables)
INCOME TAX (Tables) | 12 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF DEFERRED TAX ASSETS | Deferred tax assets consisted of the following as of September 30, 2022 and 2021: SCHEDULE OF DEFERRED TAX ASSETS 2022 2021 Net Operating Losses $ 10,263,914 $ 7,770,229 Stock based compensation 5,775,567 4,926,021 Fixed assets and intangible assets 168,498 - Total deferred tax assets $ 16,207,979 $ 12,696,250 Valuation Allowance $ (16,207,979 ) $ (12,696,250 ) Deferred tax assets net of valuation allowance $ - $ - |
SCHEDULE OF REVENUE BY MAJOR CU
SCHEDULE OF REVENUE BY MAJOR CUSTOMERS (Details) - Customer WP [Member] - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue Benchmark [Member] | ||
Product Information [Line Items] | ||
Sales Amount | $ 882,392 | $ 611,412 |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 28% | 32% |
Accounts Receivable [Member] | ||
Product Information [Line Items] | ||
Accounts Receivable Amount | $ 95,351 | $ 172,390 |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 28% | 31% |
SCHEDULE OF OTHER INFORMATION R
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Accounting Policies [Abstract] | ||
ROU Asset – October 1, 2021 | $ 386,587 | |
ROU Asset added during the period | 558,371 | |
Amortization during the period | (302,334) | |
ROU Asset – September 30, 2022 | 642,624 | |
Lease Liability – October 1, 2021 | 398,587 | |
Lease Liability added during the period | 558,371 | |
Amortization during the period | (300,847) | |
Lease Liability – September 30, 2022 | 656,111 | |
Lease Liability - Short-Term | 388,325 | $ 150,931 |
Lease Liability - Long-Term | 267,786 | 247,656 |
Lease Liability - Total | $ 656,111 | $ 398,587 |
SCHEDULE OF FUTURE MINIMUM RENT
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Accounting Policies [Abstract] | ||
2023 | $ 349,890 | |
2024 | 250,523 | |
2025 | 67,310 | |
Total Minimum Lease Payments | 667,723 | |
Less Effect of Discounting | (11,612) | |
Present Value of Future Minimum Lease Payments | 656,111 | $ 398,587 |
Less Current Portion of Operating Lease Obligations | 388,325 | 150,931 |
Long-Term Operating Lease Obligations | $ 267,786 | $ 247,656 |
SCHEDULE OF FUTURE MINIMUM LEAS
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Accounting Policies [Abstract] | ||
2023 | $ 33,113 | |
2024 | 27,594 | |
Total Minimum Lease Payments | 60,707 | |
Amount representing interest | (6,567) | |
Present Value of Minimum Lease Payments | 54,140 | |
Current Portion of Finance Lease Obligations | 24,518 | $ 27,833 |
Finance Lease Obligations, Less Current Portion | $ 29,622 | $ 50,567 |
SCHEDULE OF CASH AND NON-CASH A
SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES (Details) | 12 Months Ended |
Sep. 30, 2022 USD ($) | |
Accounting Policies [Abstract] | |
Operating cash outflows from operating leases | $ 373,968 |
Operating cash outflows from finance lease | 7,594 |
Financing cash outflows from finance lease | $ 24,260 |
SCHEDULE OF FUTURE MINIMUM LE_2
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE (Details) | Sep. 30, 2022 USD ($) |
Accounting Policies [Abstract] | |
2023 | $ 126,971 |
2024 | 97,377 |
Total Minimum Lease Payments to be Received | $ 224,348 |
SCHEDULE OF ADVERTISING EXPENSE
SCHEDULE OF ADVERTISING EXPENSE (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Accounting Policies [Abstract] | ||
Advertising | $ 192,316 | $ 227,845 |
SCHEDULE OF PREPAID EXPENSES AN
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Accounting Policies [Abstract] | ||
Prepaid expenses and other current assets | $ 547,773 | $ 482,288 |
SCHEDULE OF INVENTORY (Details)
SCHEDULE OF INVENTORY (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Accounting Policies [Abstract] | ||
Raw materials | $ 887,632 | $ 552,621 |
Finished goods | 60,363 | 20,843 |
Less - Inventory reserve | ||
Total | $ 947,995 | $ 573,464 |
SCHEDULE OF PROPERTY AND EQUIPM
SCHEDULE OF PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Accounting Policies [Abstract] | ||
Machinery & Equipment | $ 1,930,898 | $ 1,794,968 |
Vehicles | 73,008 | 76,267 |
Leasehold Improvements | 62,122 | 122,698 |
Less - Accumulated Depreciation | (1,540,953) | (1,319,909) |
Net Property and Equipment | $ 525,075 | $ 674,024 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 1 Months Ended | 12 Months Ended | ||||||
Apr. 25, 2022 shares | Feb. 25, 2022 USD ($) shares | Jan. 09, 2020 USD ($) | Jan. 09, 2020 USD ($) | Oct. 09, 2019 USD ($) | Mar. 31, 2021 USD ($) | Sep. 30, 2022 USD ($) ft² shares | Sep. 30, 2021 USD ($) shares | |
Property, Plant and Equipment [Line Items] | ||||||||
Recalssification from operating expenses to other expenses | $ 477,605 | $ 160,489 | ||||||
Recalssification from capitalized software costs to other assets | $ 18,000 | |||||||
Common stock equivalents | shares | 9,307,921 | 9,343,606 | ||||||
Cash | $ 8,315,053 | $ 10,815,954 | ||||||
Working capital | 8,556,141 | |||||||
Cash equivalents | 0 | 0 | ||||||
Allowance for doubtful debts | 6,862 | 0 | ||||||
Operating lease expense | $ 320,813 | 162,096 | ||||||
Operating leases weighted average remaining lease term | 1 year 8 months 12 days | |||||||
Operating lease weighted average discount rate percent | 5% | |||||||
Finance Lease, Weighted Average Remaining Lease Term | 1 year 9 months 18 days | |||||||
Finance lease discount rate | 12.75% | |||||||
Interest expense on finance lease liabilities | $ 8,853 | |||||||
Other expense | 574,710 | 672,929 | ||||||
Sub lease, income | 185,139 | |||||||
Foreign currency translation adjustment | (113,929) | 7,662 | ||||||
Investments | 169,634 | 175,425 | ||||||
Loss on investments | (5,791) | (7,889) | ||||||
Research and development expenses | 633 | 1,840 | ||||||
Deferred financing costs | 547,773 | 482,288 | ||||||
Inventory | 947,995 | 573,464 | ||||||
Depreciation | $ 333,196 | 344,699 | ||||||
Property and equipment, description | Expenditures associated with upgrades and enhancements that improve, add functionality, or otherwise extend the life of property and equipment that exceed $1,000 are capitalized | |||||||
Purchase of deposit equipment | $ 0 | 0 | ||||||
Write off assets | $ 840,391 | 675,134 | 840,391 | |||||
Goodwill impairment loss | 531,412 | |||||||
Goodwill | ||||||||
Intangible assets | 0 | |||||||
Income tax examination, likelihood of unfavorable settlement | greater than 50% likelihood | |||||||
Unrecognized tax benefits | $ 0 | 0 | ||||||
Other current liabilities | 8,553 | 99,760 | ||||||
Trade Names [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Impairment of intangible assets | 63,167 | |||||||
Intangible assets | 140,000 | |||||||
Customer Relationships [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Impairment of intangible assets | 80,555 | |||||||
Intangible assets | 0 | |||||||
Sales Returns and Allowances [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Sales allowances | 0 | 0 | ||||||
Sublease Expense [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Other expense | 189,223 | 160,489 | ||||||
NLA [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Gain on investments | $ 110,000 | |||||||
Investments | 160,000 | $ 160,000 | ||||||
Loss on investments | 43,012 | |||||||
Loss from equity method | $ 5,791 | $ 7,889 | ||||||
Lease Agreement [Member] | Alliance Funding Group [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Sale leaseback value | $ 2,987 | |||||||
Purchase price of equipment | $ 124,500 | |||||||
Office Equipment [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Property, Plant and Equipment, Useful Life | 3 years | |||||||
Furniture [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Property, Plant and Equipment, Useful Life | 7 years | |||||||
Other Equipment [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Property, Plant and Equipment, Useful Life | 5 years | |||||||
CALIFORNIA | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Lease Expiration Date | Jan. 31, 2023 | |||||||
Base rent | $ 8,451 | |||||||
Sub-leased, option to extend description | leased an additional 1,796 square feet that has a monthly base rent of $2,514 through | |||||||
CALIFORNIA | Additional Lease Area [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Base rent | $ 2,514 | |||||||
Area of Land | ft² | 1,796 | |||||||
CALIFORNIA | Sub-Leased Property [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Lease Expiration Date | Jan. 31, 2023 | |||||||
Base rent | $ 2,111 | |||||||
KOREA, REPUBLIC OF | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Sub-leased, option to extend description | Additionally, the Company leased a new larger office and manufacturing space in Seoul, Korea beginning November 15, 2021, through November 15, 2023. The lease has a monthly expense of | |||||||
Operating lease expense | $ 7,040 | |||||||
Joint Venture Agreement [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Machine carrying cost | $ 313,012 | $ 313,012 | ||||||
Dripkit Inc. [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Payments to acquire assets | $ 257,000 | |||||||
Common stock shares issued | shares | 178,681 | |||||||
Goodwill | 531,412 | |||||||
Dripkit Inc. [Member] | Trade Names [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Impairment of intangible assets | 80,555 | |||||||
Dripkit Inc. [Member] | Customer Relationships [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Impairment of intangible assets | $ 63,167 | |||||||
Dripkit Inc. [Member] | Asset Purchase Agreement [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Payments to acquire assets | $ 860,000 | |||||||
Common stock shares issued | shares | 18,475 | 197,156 | ||||||
NuZee KR and NuZee INV [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Equity percentage | 50% | |||||||
Other Investment [Member] | Minimum [Member] | Equity Method Investee [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Equity percentage | 20% | |||||||
Other Investment [Member] | Maximum [Member] | Equity Method Investee [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Equity percentage | 50% | |||||||
Other Investment [Member] | Joint Venture Agreement [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Equity percentage | 50% | 50% | ||||||
Other Investment [Member] | Joint Venture Agreement [Member] | Industrial Marino, S.A. de C.V. and NuZee Latin America, S.A. de C.V. [Member] | ||||||||
Property, Plant and Equipment [Line Items] | ||||||||
Equity percentage | 50% | 50% |
SCHEDULE OF LOAN PAYMENTS (Deta
SCHEDULE OF LOAN PAYMENTS (Details) - Ford Motor Credit [Member] | Sep. 30, 2022 USD ($) |
Line of Credit Facility [Line Items] | |
2022 | $ 1,965 |
2023 | 5,982 |
Total Current Portion | 7,947 |
2023 | 2,019 |
2024 | 2,726 |
Total Long-Term Portion | 4,745 |
Grand Total | $ 12,692 |
LOANS (Details Narrative)
LOANS (Details Narrative) - USD ($) | 1 Months Ended | ||||
Apr. 02, 2019 | Feb. 15, 2019 | Jun. 30, 2019 | Sep. 30, 2022 | Sep. 30, 2021 | |
Ford Motor Credit [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Loans Payable | $ 12,692 | $ 20,416 | |||
ShinHan Bank [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Loans Payable | $ 0 | $ 35,898 | |||
Vehicles [Member] | Ford Motor Credit [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Supplemental Deferred Purchase Price | $ 41,627 | ||||
Payments to Acquire Machinery and Equipment | 3,500 | ||||
Debt Instrument, Face Amount | $ 38,127 | ||||
Debt Instrument, Term | 60 months | ||||
Debt Instrument, Interest Rate, Stated Percentage | 2.90% | ||||
Equipment [Member] | ShinHan Bank [Member] | NuZee Korea Ltd [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Debt Instrument, Face Amount | $ 60,563 | ||||
Debt Instrument, Term | 36 months | ||||
Debt Instrument, Interest Rate, Stated Percentage | 4.33% | ||||
Debt Instrument, Increase (Decrease), Net | $ 86,518 |
SCHEDULE OF GEOGRAPHIC OPERATIO
SCHEDULE OF GEOGRAPHIC OPERATIONS (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Net Revenue | $ 3,109,162 | $ 1,926,660 |
Property and equipment, net | 525,075 | 674,024 |
North America [Member] | ||
Net Revenue | 2,443,863 | 1,441,274 |
Property and equipment, net | 378,546 | 517,966 |
KOREA, REPUBLIC OF | ||
Net Revenue | 665,299 | 485,386 |
Property and equipment, net | 144,865 | 154,562 |
JAPAN | ||
Property and equipment, net | $ 1,664 | $ 1,496 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
NuZee Latin America [Member] | ||
Related Party Transaction [Line Items] | ||
Revenue from related parties | $ 0 | $ 28,298 |
Mystery Golf Ltd [Member] | ||
Related Party Transaction [Line Items] | ||
Revenue from related parties | $ 8,117 | $ 0 |
SCHEDULE OF ALLOCATION OF AGGRE
SCHEDULE OF ALLOCATION OF AGGREGATE PURCHASE PRICE (Details) - USD ($) | 12 Months Ended | ||
Feb. 25, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Assets acquired: | |||
Goodwill | |||
Dripkit Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Total purchase price | $ 876,176 | 876,176 | |
Assets acquired: | |||
Inventory | 9,664 | ||
Property and equipment | 5,100 | ||
Identifiable intangible assets | 330,000 | ||
Total assets acquired | 344,764 | ||
Estimated fair value of net assets acquired | 344,764 | ||
Goodwill | $ 531,412 |
SCHEDULE OF UNAUDITED PRO FORMA
SCHEDULE OF UNAUDITED PRO FORMA FINANCIAL INFORMATION (Details) - Dripkit Inc. [Member] - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Business Acquisition [Line Items] | ||
Revenues | $ 3,168,528 | $ 2,322,859 |
Net loss | $ 11,651,790 | $ 18,815,500 |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details Narrative) - USD ($) | 12 Months Ended | ||
Feb. 25, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Business Acquisition [Line Items] | |||
Accounts payable, current | $ 113,708 | $ 342,790 | |
Revenue | 3,109,162 | 1,926,660 | |
Net loss | (11,797,712) | $ (18,552,030) | |
Depreciation and amortization | 46,278 | ||
Dripkit Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Purchase price paid for acquisition | $ 860,000 | ||
Bridge loan | 13,000 | ||
Accounts payable, current | 3,176 | ||
Business combination, consideration transferred | $ 876,176 | 876,176 | |
Purchase price description | the cash portion of the purchase price was reduced by the following amounts: (a) $22,000, in satisfaction of the bridge loan made from the Company to Dripkit in February 2022 to provide Dripkit with operational financing prior to the Closing Date, (b) $35,500, as an indemnity holdback for the purpose of satisfying any indemnification claims made by the Company pursuant to the Asset Purchase Agreement, and (c) $40,000, as a cash bulk sales holdback (the “Cash Bulk Sales Holdback Amount”) | ||
Purchase price reduction on payment of Bridge loan | $ 22,000 | ||
Indemnity holdback | 35,500 | ||
Cash bulk sales holdback amount | 40,000 | ||
Stock bulk sales holdback amount | 40,000 | ||
Cash paid for acquisition | $ 257,000 | ||
Shares issued in acquisition | 178,681 | ||
Economic injury disaster loan paid | $ 78,656 | ||
Liability related to potential future amounts | 115,500 | ||
Bulk sales holdback | $ 80,000 | ||
Amount distributed | $ 39,237 | ||
Shares of common stock issued to stock recipients | 18,475 | ||
Revenue | $ 69,767 | ||
Net loss | 272,610 | ||
Depreciation and amortization | 46,278 | ||
Business acquisition, transaction costs | 270,478 | ||
Transaction costs eliminated | $ 270,478 |
SCHEDULE OF CHANGES IN GOODWILL
SCHEDULE OF CHANGES IN GOODWILL (Details) | 12 Months Ended |
Sep. 30, 2022 USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Balance at September 30, 2021 | |
Dripkit acquisition | 531,412 |
Impairment charge | (531,412) |
Balance at September 30, 2022 |
SCHEDULE OF INTANGIBLE ASSETS (
SCHEDULE OF INTANGIBLE ASSETS (Details) | 12 Months Ended |
Sep. 30, 2022 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, Gross | $ 330,000 |
Intangible assets, Accumulated Amortization | 46,278 |
Intangible assets, Impairment Charge | 143,722 |
Intangible assets, Net | $ 140,000 |
Trade Names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization period (Years) | 5 years |
Intangible assets, Gross | $ 230,000 |
Intangible assets, Accumulated Amortization | 26,833 |
Intangible assets, Impairment Charge | 63,167 |
Intangible assets, Net | $ 140,000 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization period (Years) | 3 years |
Intangible assets, Gross | $ 100,000 |
Intangible assets, Accumulated Amortization | 19,445 |
Intangible assets, Impairment Charge | 80,555 |
Intangible assets, Net |
SCHEDULE OF AMORTIZATION EXPENS
SCHEDULE OF AMORTIZATION EXPENSE (Details) | Sep. 30, 2022 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2023 | $ 31,111 |
2024 | 31,111 |
2025 | 31,111 |
2026 | 31,111 |
2027 | 15,556 |
Grand Total | $ 140,000 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS (Details Narrative) | 12 Months Ended |
Sep. 30, 2022 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Goodwill impairment charges | $ 531,412 |
Indefinite lived trade names | 140,000 |
Amortization of intangible assets | 46,278 |
Trade Names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Infinite lived intangible assets impairment charges | 63,167 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Infinite lived intangible assets impairment charges | 80,555 |
Dripkit Inc. [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization of intangible assets | 46,278 |
Dripkit Inc. [Member] | Trade Names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Infinite lived intangible assets impairment charges | 80,555 |
Dripkit Inc. [Member] | Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Infinite lived intangible assets impairment charges | $ 63,167 |
ISSUANCE OF EQUITY SECURITIES (
ISSUANCE OF EQUITY SECURITIES (Details Narrative) - USD ($) | 12 Months Ended | |||||||||
Aug. 10, 2022 | Apr. 13, 2022 | Mar. 17, 2022 | Dec. 28, 2021 | Mar. 19, 2021 | Mar. 11, 2021 | Jan. 11, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Jun. 23, 2020 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares sold during period | 884,778 | |||||||||
price per share | $ 2 | |||||||||
Proceeds from issuance of common stock | $ 1,649,736 | $ 95,256 | ||||||||
Warrant exercise price | $ 9 | |||||||||
Aggregate offering price | 1,649,736 | $ 13,701,284 | ||||||||
Sale of Stock, Price Per Share | $ 2 | |||||||||
Proceeds from exercise of warrants, net of issuance costs | $ 1,702,596 | |||||||||
Stock option exercised during period | 14,000 | 6,000 | ||||||||
Proceeds from stock option exercise | $ 12,600 | $ 9,180 | ||||||||
Stock Options [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Stock option exercised during period | 14,000 | 6,000 | ||||||||
Proceeds from stock option exercise | $ 12,600 | $ 9,180 | ||||||||
Shanoop Kothari [Member] | 2019 Stock Incentive Plan [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Compensation paid to agent | 1,251,402 | |||||||||
Number of restricted stock, shares | 152,215 | |||||||||
Vesting of shares, description | (35,739 net shares were issued to Mr. Kothari following the forfeiture of 15,000 vested shares to cover taxes) | |||||||||
Shanoop Kothari [Member] | 2019 Stock Incentive Plan [Member] | Vesting Immediately [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Number of shares vested during period | 50,739 | |||||||||
Shanoop Kothari [Member] | 2019 Stock Incentive Plan [Member] | Vest on March 31, 2021 [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Number of shares vested during period | 50,739 | |||||||||
Shanoop Kothari [Member] | 2019 Stock Incentive Plan [Member] | Vest on March 31, 2022 [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Number of shares vested during period | 50,737 | |||||||||
Independent Director Five [Member] | 2013 Stock Incentive Plan [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Number of restricted stock, shares | 23,584 | |||||||||
Five Independent Directors [Member] | 2013 Stock Incentive Plan [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Compensation paid to agent | $ 134,755 | |||||||||
Number of restricted stock, shares | 117,920 | |||||||||
2021 Warrants [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares issued for exercise of warrants | 384,447 | |||||||||
Series A Warrant [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares issued for exercise of warrants | 380,447 | |||||||||
Number of warrants exercised | 380,447 | |||||||||
Series B Warrant [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares issued for exercise of warrants | 4,000 | |||||||||
Number of warrants exercised | 8,000 | |||||||||
Underwritten, Over Allotment Option [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares sold during period | 2,777,777 | |||||||||
Proceeds from offering | $ 11,017,304 | |||||||||
ATM Agreement [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares sold during period | 50,000,000 | |||||||||
Stock issuance expense | $ 477,605 | |||||||||
ATM Agreement [Member] | Other Expense [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Stock issuance expense | $ 368,783 | |||||||||
Equity Distribution Agreement [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Percentage of commission to agent | 3% | |||||||||
Equity Distribution Agreement [Member] | At-The-Market Offering [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares sold during period | 49,326 | |||||||||
Aggregate offering price | $ 20,000,000 | |||||||||
Proceeds from issuance and sale of common stock | $ 95,256 | |||||||||
Compensation paid to agent | 3,003 | |||||||||
Underwriting Agreement [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Proceeds from offering | $ 2,500,000 | |||||||||
Proceeds from issuance of common stock | $ 2,656,460 | |||||||||
Number of shares of common stock | 4,200,000 | |||||||||
Proceeds from offering after deducting underwriting discounts | $ 135,592 | |||||||||
Common Stock [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares issued during period, shares | 256,338 | |||||||||
price per share | $ 9.14 | |||||||||
Proceeds from issuance of common stock | $ 2,149,486 | |||||||||
Aggregate offering price | $ 9 | $ 31 | ||||||||
Number of shares of common stock | 884,778 | 3,107,070 | ||||||||
Shares issued for exercise of warrants | 384,447 | |||||||||
Stock option exercised during period | 14,000 | 6,000 | ||||||||
Common Stock [Member] | Triton Funds LP [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares sold during period | 72,955 | |||||||||
Proceeds from offering | $ 534,494 | |||||||||
Series A Warrant [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Warrant exercise price | $ 4.50 | |||||||||
Series A Warrant [Member] | Underwritten, Over Allotment Option [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares sold during period | 416,666 | |||||||||
Series B Warrant [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Warrant exercise price | $ 5.85 | |||||||||
Series B Warrant [Member] | Underwritten, Over Allotment Option [Member] | ||||||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||||||
Shares sold during period | 416,666 |
SCHEDULE OF WEIGHTED AVERAGE AS
SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR FAIR VALUE MEASUREMENT OF OPTIONS GRANTED (Details) - $ / shares | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Employees [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected option life | 6 years | 10 years |
Expected dividend yield | 0% | 0% |
Employees [Member] | Minimum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Risk-free interest rate | 2.38% | 1.27% |
Expected volatility | 68.20% | 297% |
Exercise price | $ 2.91 | |
Employees [Member] | Maximum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Risk-free interest rate | 3.71% | 2.20% |
Expected volatility | 70.50% | 301% |
Exercise price | $ 2.16 | $ 3.27 |
For Employees [Member] | Minimum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Exercise price | $ 0.31 | |
NonEmployees [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected option life | 10 years | |
Expected dividend yield | 0% | |
NonEmployees [Member] | Minimum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Risk-free interest rate | 0.78% | |
Expected volatility | 302% | |
Exercise price | $ 3.03 | |
NonEmployees [Member] | Maximum [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Risk-free interest rate | 1.71% | |
Expected volatility | 310% | |
Exercise price | $ 16.79 |
SUMMARY OF STOCK OPTION ACTIVIT
SUMMARY OF STOCK OPTION ACTIVITY (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-Based Payment Arrangement [Abstract] | |||
Number of Options Outstanding, Beginning | 4,511,691 | 1,620,667 | |
Weighted Average Exercise Price Outstanding, Beginning | $ 4.73 | $ 5.74 | |
Weighted Average Remaining Contractual Life (years) Stock Options Outstanding, Ending Balance | 7 years 4 months 24 days | 8 years 4 months 24 days | 7 years 3 months 18 days |
Aggregate Intrinsic Value Options Outstanding, Beginning | $ 452,206 | $ 19,112,118 | |
Number of Options, Granted | 185,000 | 3,366,681 | |
Weighted Average Exercise Price, Granted | $ 1.31 | $ 4.88 | |
Number of Options, Exercised | (14,000) | (6,000) | |
Weighted Average Exercise Price, Exercised | $ 0.90 | $ 1.53 | |
Number of Options, Expired | (144,000) | ||
Weighted Average Exercise Price, Expired | $ 19.42 | ||
Number of Options, Forfeited | (563,016) | (469,657) | |
Weighted Average Exercise Price, Forfeited | $ 3.12 | $ 9.29 | |
Number of Options Outstanding, Ending | 3,975,675 | 4,511,691 | 1,620,667 |
Weighted Average Exercise Price Outstanding, Ending | $ 4.28 | $ 4.73 | $ 5.74 |
Aggregate Intrinsic Value Options Outstanding, Ending Balance | $ 1,207 | $ 452,206 | $ 19,112,118 |
Number of Options Exercisable | 2,226,557 | 1,640,892 | |
Weighted Average Exercise Price, Exercisable | $ 4.59 | $ 5.64 | |
Weighted Average Remaining Contractual Life (years) Stock Options, Exercisable | 6 years 6 months | 7 years 3 months 18 days | |
Aggregate Intrinsic Value Options, Exercisable | $ 368,673 |
SUMMARY OF UNVESTED SHARES (Det
SUMMARY OF UNVESTED SHARES (Details) - $ / shares | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
Number of Nonvested Shares, Beginning | 2,870,799 | 762,917 |
Weighted Average Grant Date Fair Value Nonvested Shares Ending | $ 10.60 | $ 5.02 |
Number of Nonvested Shares, Granted | 185,000 | 3,366,681 |
Weighted Average Grant Date Fair Value, Granted | $ 0.84 | $ 4.88 |
Number of Nonvested Shares, Exercised | ||
Weighted Average Grant Date Fair Value, Granted | ||
Number of Nonvested Shares, Forfeited | (563,016) | (316,328) |
Weighted Average Grant Date Fair Value, Forfeited | $ 3.09 | $ 7.66 |
Number of Nonvested Shares, Vested | (743,665) | (942,471) |
Weighted Average Grant Date Fair Value, Vested | $ 6.11 | $ 8.16 |
Number of Nonvested Shares, Ending | 1,749,118 | 2,870,799 |
Weighted Average Grant Date Fair Value Nonvested Shares Ending | $ 4.41 | $ 10.60 |
SCHEDULE OF WARRANT ACTIVITY (D
SCHEDULE OF WARRANT ACTIVITY (Details) - USD ($) | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-Based Payment Arrangement [Abstract] | |||
Number of Warrants Outstanding, Beginning | 4,831,915 | 40,250 | |
Weighted Average Exercise Price, Beginning | $ 4.98 | $ 9 | |
Weighted Average Remaining Contractual Life (years) Stock Warrants, Ending Balance | 3 years 8 months 12 days | 4 years 6 months | 4 years 8 months 12 days |
Aggregate Intrinsic Value Warrants Outstanding, Beginning | $ 321,598 | ||
Number of Warrants, Issued | 884,778 | 4,791,665 | |
Weighted Average Exercise Price, Issued | $ 2 | $ 4.95 | |
Number of Warrants, Exercised | (384,447) | ||
Weighted Average Exercise Price, Exercised | $ 4.51 | ||
Number of Warrants, Expired | |||
Weighted Average Exercise Price, Expired | |||
Number of Warrants Outstanding, Ending | 5,332,246 | 4,831,915 | 40,250 |
Weighted Average Exercise Price, Ending | $ 4.52 | $ 4.98 | $ 9 |
Aggregate Intrinsic Value Warrants Outstanding, Ending | $ 321,598 | ||
Number of Warrants Exercisable | 5,332,246 | 4,831,915 | |
Weighted Average Exercise Price, Exercisable | $ 4.52 | $ 4.98 | |
Weighted Average Remaining Contractual Life (years) Stock Warrants, Exercisable | 3 years 8 months 12 days | 4 years 6 months | |
Aggregate Intrinsic Value Warrants, Exercisable |
STOCK OPTIONS AND WARRANTS (Det
STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 12 Months Ended | ||||
Apr. 13, 2022 | Mar. 19, 2021 | Jun. 23, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock option forfeiture during period | 563,016 | 469,657 | |||
Exercise price per share | $ 0.90 | $ 1.53 | |||
Number of options issued | 185,000 | 3,366,681 | |||
Stock option expiration term | 10 years | 10 years | |||
Stock option vest and exercisable period | 6 years 6 months | 7 years 3 months 18 days | |||
Stock option expense | $ 2,899,338 | $ 9,405,191 | |||
Stock option exercised during period | 14,000 | 6,000 | |||
Stock option expiration during period | 144,000 | ||||
Warrant to purchase common stock | 40,250 | ||||
Warrant exercise price | $ 9 | ||||
Warrants exercisable date | Dec. 23, 2020 | ||||
Warrant expiration date | Jun. 18, 2025 | ||||
Shares sold during period | 884,778 | ||||
Proceeds from exercise of warrants, net of issuance costs | $ 1,702,596 | ||||
2021 Warrants [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Shares issued for exercise of warrants | 384,447 | ||||
Series A Warrant [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Shares issued for exercise of warrants | 380,447 | ||||
Number of warrants exercised | 380,447 | ||||
Series B Warrant [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Shares issued for exercise of warrants | 4,000 | ||||
Number of warrants exercised | 8,000 | ||||
Warrant [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Warrant exercise price | $ 2 | ||||
Shares sold during period | 884,778 | ||||
Series A Warrant [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Warrant exercise price | $ 4.50 | ||||
Series B Warrant [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Warrant exercise price | $ 5.85 | ||||
Warrants term | 5 years | ||||
Termination of Employment [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock option forfeiture during period | 227,667 | 361,657 | |||
Stock option expiration during period | 144,000 | ||||
Performance Conditions [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock option forfeiture during period | 335,349 | 108,000 | |||
Underwritten, Over Allotment Option [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Shares sold during period | 2,777,777 | ||||
Underwritten, Over Allotment Option [Member] | Warrant [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Shares sold during period | 2,777,777 | ||||
Underwritten, Over Allotment Option [Member] | Series A Warrant [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Shares sold during period | 416,666 | ||||
Issuance of warrants, description | 416,666 | ||||
Underwritten, Over Allotment Option [Member] | Series B Warrant [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Shares sold during period | 416,666 | ||||
Issuance of warrants, description | 416,666 | ||||
Independent Contractors [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Options | 15,000 | ||||
Stock option vest and exercisable period | 3 years | ||||
Share-based compensation award vesting rights | 33% of the options vesting on each anniversary of the grant date. | ||||
Independent Board Members [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Options | 1,369,944 | ||||
Employees [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Options | 1,981,737 | ||||
Share-based compensation award vesting rights | these options shall vest and become exercisable (i) in the case of time-based options, generally as to 1/3 on each anniversary of the grant date, although different vesting patterns exist, or (ii) in the case of performance-based options (the “Performance-Based Options”), based on the Company’s or individual’s achievement of certain performance milestones established by the Compensation Committee for each fiscal year in the fiscal years ending September 30, 2021, 2022, 2023 and 2024 | ||||
Consultant [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Exercise price per share | $ 4.88 | ||||
Number of options issued | 3,366,681 | ||||
Minimum [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Exercise price per share | $ 0.313 | $ 2.91 | |||
Maximum [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Exercise price per share | $ 2.16 | $ 16.79 | |||
Performance Shares [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Number of options issued | 128,000 | 1,610,743 | |||
Stock Options [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock option forfeiture during period | 563,016 | 469,657 | |||
Stock option vest and exercisable period | 1 year 2 months 23 days | ||||
Stock option expense | $ 2,899,338 | $ 9,405,191 | |||
Unamortized option expense | $ 1,104,758 | ||||
Stock option exercised during period | 14,000 | 6,000 | |||
Employee Stock [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock option forfeiture during period | 185,000 | ||||
Exercise price per share | $ 1.31 |
SCHEDULE OF DEFERRED TAX ASSETS
SCHEDULE OF DEFERRED TAX ASSETS (Details) - USD ($) | Sep. 30, 2022 | Sep. 30, 2021 |
Income Tax Disclosure [Abstract] | ||
Net Operating Losses | $ 10,263,914 | $ 7,770,229 |
Stock based compensation | 5,775,567 | 4,926,021 |
Fixed assets and intangible assets | 168,498 | |
Total deferred tax assets | 16,207,979 | 12,696,250 |
Valuation Allowance | (16,207,979) | (12,696,250) |
Deferred tax assets net of valuation allowance |
INCOME TAX (Details Narrative)
INCOME TAX (Details Narrative) - USD ($) | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Income tax expense | $ 0 | $ 0 |
Deferred income tax assets valuation allowance percentage | 100% | |
Net operating loss carry forward | $ 37,663,761 | $ 27,750,819 |
Income tax examination description | The earliest tax year which remains open to examination is 2019. | |
UNITED STATES | ||
Statutorty blended tax rates | 28% | |
KOREA, REPUBLIC OF | ||
Statutorty blended tax rates | 11% | |
JAPAN | ||
Statutorty blended tax rates | 33.58% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - Employment Agreement [Member] - USD ($) | Dec. 09, 2022 | Nov. 04, 2022 |
Subsequent Event [Line Items] | ||
Base salary | $ 15,000 | |
Ms.Bowman's [Member] | ||
Subsequent Event [Line Items] | ||
Base salary | $ 185,000 | |
Ms.Bowman's [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Base salary annual target bonus rate | 20% | |
Ms.Bowman's [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Base salary annual target bonus rate | 30% | |
Marie Franklin [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Annual bonus | $ 12,000 | |
Stock option component ranging from options to purchase | 5,000 | |
Marie Franklin [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Base salary | $ 180,000 | |
Annual bonus | $ 100,000 | |
Stock option component ranging from options to purchase | 100,000 |