Cover
Cover - shares | 3 Months Ended | |
Dec. 31, 2022 | Feb. 07, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Dec. 31, 2022 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2023 | |
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, $0.00001 par value | |
Trading Symbol | NUZE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 691,088 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Dec. 31, 2022 | Sep. 30, 2022 |
Current assets: | ||
Cash | $ 6,491,819 | $ 8,315,053 |
Accounts receivable, net | 653,903 | 345,258 |
Inventories, net | 1,089,901 | 947,995 |
Prepaid expenses and other current assets | 376,264 | 547,773 |
Total current assets | 8,611,887 | 10,156,079 |
Property and equipment, net | 475,284 | 525,075 |
Other assets: | ||
Right-of-use asset - operating lease | 569,521 | 642,624 |
Investment in unconsolidated affiliate | 167,811 | 169,634 |
Intangible assets, net | 132,500 | 140,000 |
Other assets | 91,979 | 77,962 |
Total other assets | 961,811 | 1,030,220 |
Total assets | 10,048,982 | 11,711,374 |
Current liabilities: | ||
Accounts payable | 462,655 | 113,708 |
Current portion of long-term loan payable | 8,005 | 7,947 |
Current portion of lease liability - operating lease | 392,714 | 388,325 |
Current portion of lease liability - finance lease | 28,729 | 24,518 |
Accrued expenses | 624,282 | 706,492 |
Deferred income | 298,023 | 319,707 |
Other current liabilities | 15,520 | 39,241 |
Total current liabilities | 1,829,928 | 1,599,938 |
Non-current liabilities: | ||
Lease liability - operating lease, net of current portion | 185,351 | 267,786 |
Lease liability - finance lease, net of current portion | 18,522 | 29,622 |
Loan payable - long term, net of current portion | 2,719 | 4,745 |
Other noncurrent liabilities | 77,339 | 66,484 |
Total non-current liabilities | 283,931 | 368,637 |
Total liabilities | 2,113,859 | 1,968,575 |
Stockholders’ equity: | ||
Common stock; 200,000,000 shares authorized, $0.00001 par value; 685,088 and 676,229 shares issued and outstanding as of December 31, 2022, and September 30, 2022, respectively | 7 | 7 |
Additional paid in capital | 74,541,365 | 74,281,418 |
Accumulated deficit | (66,805,726) | (64,622,520) |
Accumulated other comprehensive income | 199,477 | 83,894 |
Total stockholders’ equity | 7,935,123 | 9,742,799 |
Total liabilities and stockholders’ equity | $ 10,048,982 | $ 11,711,374 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2022 | Sep. 30, 2022 |
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 | 685,088 | 676,229 |
Common stock, shares outstanding | 685,088 | 676,229 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Revenues, net | $ 1,136,348 | $ 1,019,253 |
Cost of sales | 1,060,816 | 1,003,882 |
Gross profit | 75,532 | 15,371 |
Operating expenses | 2,277,200 | 2,811,189 |
Loss from operations | (2,201,668) | (2,795,818) |
Loss from equity method investment | (1,823) | (1,157) |
Other income | 50,737 | 42,757 |
Other expense | (35,790) | (47,422) |
Interest income (expense), net | 5,338 | (2,563) |
Net loss | $ (2,183,206) | $ (2,804,203) |
Basic and diluted loss per common share | $ (3.23) | $ (5.45) |
Basic and diluted weighted average number of common stock outstanding | 676,422 | 514,794 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Net loss | $ (2,183,206) | $ (2,804,203) |
Foreign currency translation | 115,583 | 32,688 |
Total other comprehensive income, net of tax | 115,583 | 32,688 |
Comprehensive loss | $ (2,067,623) | $ (2,771,515) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Total |
Beginning balance, value at Sep. 30, 2021 | $ 5 | $ 64,839,427 | $ (52,824,808) | $ 197,823 | $ 12,212,447 |
Beginning balance, shares at Sep. 30, 2021 | 509,154 | ||||
Stock option expense | 1,124,187 | 1,124,187 | |||
Other comprehensive income | 32,688 | 32,688 | |||
Net loss | (2,804,203) | (2,804,203) | |||
Exercise of warrants, net of issuance costs | 1,721,018 | 1,721,018 | |||
Exercise of warrants, net of issuance costs, shares | 10,984 | ||||
Ending balance, value at Dec. 31, 2021 | $ 5 | 67,684,632 | (55,629,011) | 230,511 | 12,286,137 |
Ending balance, shares at Dec. 31, 2021 | 520,138 | ||||
Beginning balance, value at Sep. 30, 2022 | $ 7 | 74,281,418 | (64,622,520) | 83,894 | 9,742,799 |
Beginning balance, shares at Sep. 30, 2022 | 676,229 | ||||
Stock option expense | 197,108 | 197,108 | |||
Restricted stock compensation | 62,839 | 62,839 | |||
Round-up shares issued in reverse split, shares | 8,859 | ||||
Other comprehensive income | 115,583 | 115,583 | |||
Net loss | (2,183,206) | (2,183,206) | |||
Ending balance, value at Dec. 31, 2022 | $ 7 | $ 74,541,365 | $ (66,805,726) | $ 199,477 | $ 7,935,123 |
Ending balance, shares at Dec. 31, 2022 | 685,088 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating activities: | ||
Net loss | $ (2,183,206) | $ (2,804,203) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 73,805 | 36,711 |
Noncash lease expense | 73,103 | 36,822 |
Stock option expense | 197,108 | 1,124,187 |
Restricted stock compensation | 62,839 | |
Bad debt expense | 65,608 | |
Loss from equity method investment | 1,823 | 1,157 |
Change in operating assets and liabilities: | ||
Accounts receivable | (374,253) | (240,063) |
Inventories | (141,906) | 189,266 |
Prepaid expenses and other current assets | 171,509 | 66,527 |
Other assets | (14,017) | 231 |
Accounts payable | 348,947 | 81,507 |
Deferred income | (21,684) | 151,397 |
Lease liability – operating lease | (78,046) | (36,949) |
Accrued expenses and other current liabilities | (105,931) | (188,084) |
Other non-current liabilities | 10,855 | 1,763 |
Net cash used in operating activities | (1,913,446) | (1,579,731) |
Investing activities: | ||
Purchase of equipment | (16,514) | (3,009) |
Net cash used in investing activities | (16,514) | (3,009) |
Financing activities: | ||
Repayment of loans | (1,968) | (13,975) |
Repayment of finance lease | (6,889) | (5,841) |
Proceeds from exercise of warrants, net of issuance costs | 1,721,018 | |
Net cash provided by (used in) financing activities | (8,857) | 1,701,202 |
Effect of foreign exchange on cash | 115,583 | 32,688 |
Net change in cash | (1,823,234) | 151,150 |
Cash, beginning of period | 8,315,053 | 10,815,954 |
Cash, end of period | 6,491,819 | 10,967,104 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 1,474 | 2,808 |
Non-cash transactions: | ||
ROU assets and liabilities added during the period | 192,397 | |
Deferred offering costs accrued | $ 257,234 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited interim consolidated financial statements of NuZee, Inc. (together with its subsidiaries, referred to herein as the “Company”, “we” or “NuZee”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and rules of the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2022 as filed with the SEC on December 23, 2022. In the opinion of management, all adjustments, consisting of recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the Annual Report on Form 10-K for the year ended September 30, 2022, have been omitted. Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. We reclassified lease expenses associated with subleased property from operating expenses to other expenses totaling $ 41,604 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 has two wholly owned international subsidiaries in NuZee KOREA Ltd. (“NuZee KR”) and NuZee Investment Co., Ltd. (“NuZee INV”). 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 2022 Reverse Stock Split On December 28, 2022 l-for-35 reverse stock split an amendment to the Company’s Articles of Incorporation, as amended, All share and per share information included in these financial statements and notes thereto have been retroactively adjusted to give effect to the Reverse Stock Split. Earnings per Share Basic earnings per common share is equal to net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options, 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 December 31, 2022, and December 31, 2021, the total number of common stock equivalents was 262,030 250,471 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 As of December 31, 2022, the Company had cash of $ 6,491,819 6,781,959 The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP, which contemplates continuation of the Company as a going concern. The Company has had limited revenues, recurring losses and an accumulated deficit. These items raise substantial doubt as to the Company’s ability to continue as a going concern. The accompanying unaudited interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent upon management’s ability to develop profitable operations and to raise additional capital for the further development and marketing of the Company’s products and business. Major Customers In the three months ended December 31, 2022 and 2021, revenue was primarily derived from major customers disclosed below. SCHEDULE OF REVENUE BY MAJOR CUSTOMERS Three months ended December 31, 2022: Customer Name Sales Amount % of Total Revenue Accounts Receivable Amount % of Total Accounts Receivable Customer CL $ 331,211 29 % $ 340,534 52 % Three months ended December 31, 2021: Customer Name Sales Amount % of Total Revenue Accounts Receivable Amount % of Total Accounts Receivable Customer WP $ 310,551 30 % $ 279,273 35 % Customer CU 199,936 20 % 137,566 17 % Lease In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities on the consolidated balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different types of leases. The Company implemented ASU No. 2016-02 on October 1, 2019. The Company 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. In May 2022, the Company renewed the office and manufacturing space in Vista, California which was scheduled to expire on January 31, 2023, through March 31, 2025 8,451 we leased an additional 1,796 2,514 January 31, 2023 2,111 7,040 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 As of December 31, 2022, our operating leases had a weighted average remaining lease term of 1.5 5.0 SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE ROU Asset – October 1, 2022 $ 642,624 ROU Asset added during the period - Amortization during the period (73,103 ) ROU Asset – December 31, 2022 $ 569,521 Lease Liability – October 1, 2022 $ 656,111 Lease Liability added during the period - Amortization during the period (78,046 ) Lease Liability – December 31, 2022 $ 578,065 Lease Liability – Short-Term $ 392,714 Lease Liability – Long-Term 185,351 Lease Liability – Total $ 578,065 The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2022: Amounts due within twelve months of December 31, SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES 2023 $ 379,603 2024 217,301 2025 33,908 Total Minimum Lease Payments 630,812 Less Effect of Discounting (52,747 ) Present Value of Future Minimum Lease Payments 578,065 Less Current Portion of Operating Lease Liabilities 392,714 Long-Term Operating Lease Liabilities $ 185,351 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 1.5 12.75 1,474 The table below summarizes future minimum finance lease payments at December 31, 2022 for the twelve months ended December 31: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES 2023 $ 33,113 2024 19,315 Total Minimum Lease Payments 52,428 Amount representing interest (5,177 ) Present Value of Minimum Lease Payments 47,251 Current Portion of Finance Lease Obligations 28,729 Finance Lease Obligations, Less Current Portion $ 18,522 Lease expense included in Operating expense for the three months ended December 31, 2022 and 2021 was $ 91,119 48,921 35,790 41,604 Cash and non-cash activities associated with the leases for the three months ended December 31, 2022 are as follows: SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES Operating cash outflows from operating leases: $ 114,131 Operating cash outflows from finance lease: $ 1,474 Financing cash outflows from finance lease: $ 6,889 In September 2020, we subleased the space at 1700 Capital Avenue in Plano, Texas, effective October 1, 2020, under terms that are co-terminus with the original lease ending June 30, 2024. During the three months ended December 31, 2022, we recognized sublease income of $ 50,738 pursuant to the sublease included in Other income on our financial statements. Future minimum lease payments to be received under that sublease as of December 31, 2022, for each of the twelve months ended December 31 are as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE 2023 $ 127,926 2024 64,918 Total $ 192,844 Loans On April 1, 2019, we purchased a delivery van from Ford Motor Credit for $ 41,627 3,500 38,127 60 2.9 10,724 12,692 The remaining loan payments for each of the twelve months ended December 31: SCHEDULE OF LOAN PAYMENTS Ford Motor Credit 2023 $ 8,005 2024 2,719 Grand Total $ 10,724 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. Foreign Currency Translation The financial position and results of operations of each of the Company’s foreign subsidiaries are measured using the foreign subsidiary’s local currency as the functional currency. Revenues and expenses of each such subsidiary have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders’ equity unless there is a sale or complete liquidation of the underlying foreign investment. Foreign currency translation adjustments recorded to other comprehensive income amounted to $ 115,583 32,688 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. Prepaid expenses and other current assets Prepaid expenses and other current assets at December 31, 2022 and September 30, 2022, were as follows: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS December 31, 2022 September 30, 2022 Prepaid expenses and other current assets $ 376,264 $ 547,773 The prepaid expenses and other current assets balance of $ 376,264 547,773 Inventories Inventory, consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower of cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. At December 31, 2022 and September 30, 2022, the carrying value of inventory was $ 1,089,901 and $ 947,995 , respectively. SCHEDULE OF INVENTORY December 31, 2022 September 30, 2022 Raw materials $ 1,086,761 $ 887,632 Finished goods 3,140 60,363 Less – Inventory reserve - - Total $ 1,089,901 $ 947,995 Equity Method Investment 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 and our partner appoints the Chairman of the joint board of directors of NLA. As of December 31, 2022, the only activities in NLA were the contribution of two machines, as described above, and start up and initial marketing and sales activities. $ 1,823 1,157 |
GEOGRAPHIC CONCENTRATION
GEOGRAPHIC CONCENTRATION | 3 Months Ended |
Dec. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
GEOGRAPHIC CONCENTRATION | 2. GEOGRAPHIC CONCENTRATION The Company is organized based on fundamentally one business segment although it does sell its products on a world-wide basis. 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. The Company previously 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 its stockholders based in Japan; these functions are now supported by the Company’s personnel residing in the United States. Information about the Company’s geographic operations for the three months ended December 31, 2022 and 2021 are as follows: Geographic Concentration SCHEDULE OF GEOGRAPHICAL OPERATIONS Three Months Three Months December 31, 2022 December 31, 2021 Net Revenue: North America $ 665,741 $ 817,341 South Korea 470,607 201,912 Net Revenue $ 1,136,348 $ 1,019,253 Property and equipment, net: As of As of North America $ 303,835 $ 378,546 South Korea 170,033 144,865 Japan 1,416 1,664 Property and equipment, net $ 475,284 $ 525,075 |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 3 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS COMBINATIONS | 3. BUSINESS COMBINATIONS As described in Note 1, 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 78,656 115,500 80,000 35,500 In 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: (i) $ 39,237 Dripkit was acquired for purposes of supplementing our current product offerings. Dripkit operates as a new Dripkit Coffee business division that is wholly-owned by NuZee, Inc. The following table presents the allocation of the aggregate purchase price paid by the Company for the Acquisition of $ 860,000 , plus the assumption of certain assumed liabilities, including a $ 13,000 bridge loan and approximately $ 3,176 of payables, resulting in an acquisition accounting purchase price of $ 876,176 , to the assets acquired for the acquisition of Dripkit: 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 The Company identified tradename and customer relationships as intangible assets in connection with the Acquisition. Any tradename and customer relationship intangible assets will be amortized on a straight-line basis over their respective estimated useful lives. The goodwill recognized resulted from such factors as an assembled workforce and management’s industry know-how. During the year ended September 30, 2022, we recorded a non-cash impairment charge of $ 531,412 0 80,555 63,167 The consolidated statement of operations for the three months ended December 31, 2022 includes revenues of $ 42,159 101,806 7,500 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 Dripkit Acquisition for the three months ended December 31, 2021, as if the Acquisition had occurred on October 1, 2021 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, 2021, 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 anticipated integration costs related to the acquired company. The following is the proforma financial information for the Company and Dripkit: SCHEDULE OF UNAUDITED PRO FORMA FINANCIAL INFORMATION Description 2021 For the three December 31, Description 2021 Revenues $ 1,039,258 Net loss $ 2,840,383 For purposes of the pro forma disclosures above, the primary adjustments for the three months ended December 31, 2021 include the elimination of transaction costs of $ 16,939 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | 4. INTANGIBLE ASSETS As of December 31, 2022, the Company’s intangible assets consisted of the following: SCHEDULE OF INTANGIBLE ASSETS Amortization December 31, 2022 Period Gross Accumulated Net Tradenames 5 $ 140,000 $ 7,500 $ 132,500 Amortization expense of intangible assets was $ 7,500 |
ISSUANCE OF EQUITY SECURITIES
ISSUANCE OF EQUITY SECURITIES | 3 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
ISSUANCE OF EQUITY SECURITIES | 5. ISSUANCE OF EQUITY SECURITIES Restricted Stock Awards On March 17, 2022, pursuant to the Company’s non-employee director compensation policy, the Compensation Committee (the “Committee”) of the Company’s Board of Directors (the “Board”) granted 674 restricted shares (the “Restricted Shares”) of the Company’s common stock to each of the Company’s five independent directors pursuant to the NuZee, Inc. 2013 Stock Incentive Plan, totaling 3,370 Restricted Shares. The Restricted Shares are scheduled to vest in full on the one-year anniversary of the grant date, subject to each independent director’s continued service as a director of the Company. The Company recognized common stock compensation expense of $ 62,839 for the three months ended December 31, 2022, related to these Restricted Shares. The Restricted Shares are valued using the closing stock price on the grant date and the Company is expensing these stock option awards on a straight-line basis over the requisite service period. Exercise of Warrants In the three months ended December 31, 2021, the Company issued 10,984 10,870 10,870 114 228 (the “Series B Warrants” and, collectively with the Series A Warrants, the “2021 Warrants”) that were issued by us in March 2021 in an underwritten registered public offering . In connection with such exercises, in the three months ended December 31, 2021, we received aggregate net proceeds of $ 1,721,018 |
STOCK OPTIONS AND WARRANTS
STOCK OPTIONS AND WARRANTS | 3 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK OPTIONS AND WARRANTS | 6. STOCK OPTIONS AND WARRANTS Options During the three months ended December 31, 2022, the Company granted no 3,732 286 The following table summarizes stock option activity for the three months ended December 31, 2022: SUMMARY OF STOCK OPTION ACTIVITY Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding at October 1, 2022 113,650 $ 149.88 7.4 $ 1,207 Expired (286 ) 109.55 Forfeited (3,732 ) 114.37 - Outstanding at December 31, 2022 109,632 $ 151.19 7.2 $ - Exercisable at December 31, 2022 66,761 $ 171.55 6.4 $ - The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expense of $ 197,108 1,124,187 655,073 1.09 A summary of the status of the Company’s nonvested options as of December 31, 2022, is presented below: SUMMARY OF UNVESTED SHARES Nonvested options Number of Nonvested Options Weighted Average Grant Date Fair Value Nonvested options at October 1, 2022 50,009 $ 154.24 Granted - - Forfeited (3,732 ) 114.90 Vested (3,406 ) 368.19 Nonvested options at December 31, 2022 42,871 $ 140.67 Warrants During the three months ended December 31, 2022, the Company granted no new warrants to purchase shares of common stock and did not issue any shares upon the exercise of outstanding warrants to purchase shares of common stock. The following table summarizes warrant activity for the three months ended December 31, 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, 2022 152,398 $ 158.24 3.7 $ - Issued - - Exercised - - Expired - - Outstanding at December 31, 2022 152,398 $ 158.24 3.4 - Exercisable at December 31, 2022 152,398 $ 158.24 3.4 $ - |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 7. SUBSEQUENT EVENTS Issuance of Common Stock to a Professional Services Provider On January 6, 2023, the Company issued 6,000 |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Reclassification | Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. We reclassified lease expenses associated with subleased property from operating expenses to other expenses totaling $ 41,604 |
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 has two wholly owned international subsidiaries in NuZee KOREA Ltd. (“NuZee KR”) and NuZee Investment Co., Ltd. (“NuZee INV”). 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 |
2022 Reverse Stock Split | 2022 Reverse Stock Split On December 28, 2022 l-for-35 reverse stock split an amendment to the Company’s Articles of Incorporation, as amended, All share and per share information included in these financial statements and notes thereto have been retroactively adjusted to give effect to the Reverse Stock Split. |
Earnings per Share | Earnings per Share Basic earnings per common share is equal to net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options, 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 December 31, 2022, and December 31, 2021, the total number of common stock equivalents was 262,030 250,471 |
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 As of December 31, 2022, the Company had cash of $ 6,491,819 6,781,959 The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP, which contemplates continuation of the Company as a going concern. The Company has had limited revenues, recurring losses and an accumulated deficit. These items raise substantial doubt as to the Company’s ability to continue as a going concern. The accompanying unaudited interim consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent upon management’s ability to develop profitable operations and to raise additional capital for the further development and marketing of the Company’s products and business. |
Major Customers | Major Customers In the three months ended December 31, 2022 and 2021, revenue was primarily derived from major customers disclosed below. SCHEDULE OF REVENUE BY MAJOR CUSTOMERS Three months ended December 31, 2022: Customer Name Sales Amount % of Total Revenue Accounts Receivable Amount % of Total Accounts Receivable Customer CL $ 331,211 29 % $ 340,534 52 % Three months ended December 31, 2021: Customer Name Sales Amount % of Total Revenue Accounts Receivable Amount % of Total Accounts Receivable Customer WP $ 310,551 30 % $ 279,273 35 % Customer CU 199,936 20 % 137,566 17 % |
Lease | Lease In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities on the consolidated balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different types of leases. The Company implemented ASU No. 2016-02 on October 1, 2019. The Company 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. In May 2022, the Company renewed the office and manufacturing space in Vista, California which was scheduled to expire on January 31, 2023, through March 31, 2025 8,451 we leased an additional 1,796 2,514 January 31, 2023 2,111 7,040 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 As of December 31, 2022, our operating leases had a weighted average remaining lease term of 1.5 5.0 SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE ROU Asset – October 1, 2022 $ 642,624 ROU Asset added during the period - Amortization during the period (73,103 ) ROU Asset – December 31, 2022 $ 569,521 Lease Liability – October 1, 2022 $ 656,111 Lease Liability added during the period - Amortization during the period (78,046 ) Lease Liability – December 31, 2022 $ 578,065 Lease Liability – Short-Term $ 392,714 Lease Liability – Long-Term 185,351 Lease Liability – Total $ 578,065 The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2022: Amounts due within twelve months of December 31, SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES 2023 $ 379,603 2024 217,301 2025 33,908 Total Minimum Lease Payments 630,812 Less Effect of Discounting (52,747 ) Present Value of Future Minimum Lease Payments 578,065 Less Current Portion of Operating Lease Liabilities 392,714 Long-Term Operating Lease Liabilities $ 185,351 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 1.5 12.75 1,474 The table below summarizes future minimum finance lease payments at December 31, 2022 for the twelve months ended December 31: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES 2023 $ 33,113 2024 19,315 Total Minimum Lease Payments 52,428 Amount representing interest (5,177 ) Present Value of Minimum Lease Payments 47,251 Current Portion of Finance Lease Obligations 28,729 Finance Lease Obligations, Less Current Portion $ 18,522 Lease expense included in Operating expense for the three months ended December 31, 2022 and 2021 was $ 91,119 48,921 35,790 41,604 Cash and non-cash activities associated with the leases for the three months ended December 31, 2022 are as follows: SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES Operating cash outflows from operating leases: $ 114,131 Operating cash outflows from finance lease: $ 1,474 Financing cash outflows from finance lease: $ 6,889 In September 2020, we subleased the space at 1700 Capital Avenue in Plano, Texas, effective October 1, 2020, under terms that are co-terminus with the original lease ending June 30, 2024. During the three months ended December 31, 2022, we recognized sublease income of $ 50,738 pursuant to the sublease included in Other income on our financial statements. Future minimum lease payments to be received under that sublease as of December 31, 2022, for each of the twelve months ended December 31 are as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE 2023 $ 127,926 2024 64,918 Total $ 192,844 |
Loans | Loans On April 1, 2019, we purchased a delivery van from Ford Motor Credit for $ 41,627 3,500 38,127 60 2.9 10,724 12,692 The remaining loan payments for each of the twelve months ended December 31: SCHEDULE OF LOAN PAYMENTS Ford Motor Credit 2023 $ 8,005 2024 2,719 Grand Total $ 10,724 |
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. |
Foreign Currency Translation | Foreign Currency Translation The financial position and results of operations of each of the Company’s foreign subsidiaries are measured using the foreign subsidiary’s local currency as the functional currency. Revenues and expenses of each such subsidiary have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders’ equity unless there is a sale or complete liquidation of the underlying foreign investment. Foreign currency translation adjustments recorded to other comprehensive income amounted to $ 115,583 32,688 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. |
Prepaid expenses and other current assets | Prepaid expenses and other current assets Prepaid expenses and other current assets at December 31, 2022 and September 30, 2022, were as follows: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS December 31, 2022 September 30, 2022 Prepaid expenses and other current assets $ 376,264 $ 547,773 The prepaid expenses and other current assets balance of $ 376,264 547,773 |
Inventories | Inventories Inventory, consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower of cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. At December 31, 2022 and September 30, 2022, the carrying value of inventory was $ 1,089,901 and $ 947,995 , respectively. SCHEDULE OF INVENTORY December 31, 2022 September 30, 2022 Raw materials $ 1,086,761 $ 887,632 Finished goods 3,140 60,363 Less – Inventory reserve - - Total $ 1,089,901 $ 947,995 |
Equity Method Investment | Equity Method Investment 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 and our partner appoints the Chairman of the joint board of directors of NLA. As of December 31, 2022, the only activities in NLA were the contribution of two machines, as described above, and start up and initial marketing and sales activities. $ 1,823 1,157 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
SCHEDULE OF REVENUE BY MAJOR CUSTOMERS | In the three months ended December 31, 2022 and 2021, revenue was primarily derived from major customers disclosed below. SCHEDULE OF REVENUE BY MAJOR CUSTOMERS Three months ended December 31, 2022: Customer Name Sales Amount % of Total Revenue Accounts Receivable Amount % of Total Accounts Receivable Customer CL $ 331,211 29 % $ 340,534 52 % Three months ended December 31, 2021: Customer Name Sales Amount % of Total Revenue Accounts Receivable Amount % of Total Accounts Receivable Customer WP $ 310,551 30 % $ 279,273 35 % Customer CU 199,936 20 % 137,566 17 % |
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE | SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE ROU Asset – October 1, 2022 $ 642,624 ROU Asset added during the period - Amortization during the period (73,103 ) ROU Asset – December 31, 2022 $ 569,521 Lease Liability – October 1, 2022 $ 656,111 Lease Liability added during the period - Amortization during the period (78,046 ) Lease Liability – December 31, 2022 $ 578,065 Lease Liability – Short-Term $ 392,714 Lease Liability – Long-Term 185,351 Lease Liability – Total $ 578,065 |
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES | Amounts due within twelve months of December 31, SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES 2023 $ 379,603 2024 217,301 2025 33,908 Total Minimum Lease Payments 630,812 Less Effect of Discounting (52,747 ) Present Value of Future Minimum Lease Payments 578,065 Less Current Portion of Operating Lease Liabilities 392,714 Long-Term Operating Lease Liabilities $ 185,351 |
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES | SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES 2023 $ 33,113 2024 19,315 Total Minimum Lease Payments 52,428 Amount representing interest (5,177 ) Present Value of Minimum Lease Payments 47,251 Current Portion of Finance Lease Obligations 28,729 Finance Lease Obligations, Less Current Portion $ 18,522 |
SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES | Cash and non-cash activities associated with the leases for the three months ended December 31, 2022 are as follows: SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES Operating cash outflows from operating leases: $ 114,131 Operating cash outflows from finance lease: $ 1,474 Financing cash outflows from finance lease: $ 6,889 |
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE | SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE 2023 $ 127,926 2024 64,918 Total $ 192,844 |
SCHEDULE OF LOAN PAYMENTS | The remaining loan payments for each of the twelve months ended December 31: SCHEDULE OF LOAN PAYMENTS Ford Motor Credit 2023 $ 8,005 2024 2,719 Grand Total $ 10,724 |
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | Prepaid expenses and other current assets at December 31, 2022 and September 30, 2022, were as follows: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS December 31, 2022 September 30, 2022 Prepaid expenses and other current assets $ 376,264 $ 547,773 |
SCHEDULE OF INVENTORY | SCHEDULE OF INVENTORY December 31, 2022 September 30, 2022 Raw materials $ 1,086,761 $ 887,632 Finished goods 3,140 60,363 Less – Inventory reserve - - Total $ 1,089,901 $ 947,995 |
GEOGRAPHIC CONCENTRATION (Table
GEOGRAPHIC CONCENTRATION (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
SCHEDULE OF GEOGRAPHICAL OPERATIONS | SCHEDULE OF GEOGRAPHICAL OPERATIONS Three Months Three Months December 31, 2022 December 31, 2021 Net Revenue: North America $ 665,741 $ 817,341 South Korea 470,607 201,912 Net Revenue $ 1,136,348 $ 1,019,253 Property and equipment, net: As of As of North America $ 303,835 $ 378,546 South Korea 170,033 144,865 Japan 1,416 1,664 Property and equipment, net $ 475,284 $ 525,075 |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 3 Months Ended |
Dec. 31, 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 | SCHEDULE OF UNAUDITED PRO FORMA FINANCIAL INFORMATION Description 2021 For the three December 31, Description 2021 Revenues $ 1,039,258 Net loss $ 2,840,383 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF INTANGIBLE ASSETS | SCHEDULE OF INTANGIBLE ASSETS Amortization December 31, 2022 Period Gross Accumulated Net Tradenames 5 $ 140,000 $ 7,500 $ 132,500 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
SUMMARY OF STOCK OPTION ACTIVITY | SUMMARY OF STOCK OPTION ACTIVITY Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value Outstanding at October 1, 2022 113,650 $ 149.88 7.4 $ 1,207 Expired (286 ) 109.55 Forfeited (3,732 ) 114.37 - Outstanding at December 31, 2022 109,632 $ 151.19 7.2 $ - Exercisable at December 31, 2022 66,761 $ 171.55 6.4 $ - |
SUMMARY OF UNVESTED SHARES | SUMMARY OF UNVESTED SHARES Nonvested options Number of Nonvested Options Weighted Average Grant Date Fair Value Nonvested options at October 1, 2022 50,009 $ 154.24 Granted - - Forfeited (3,732 ) 114.90 Vested (3,406 ) 368.19 Nonvested options at December 31, 2022 42,871 $ 140.67 |
SCHEDULE OF WARRANT ACTIVITY | The following table summarizes warrant activity for the three months ended December 31, 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, 2022 152,398 $ 158.24 3.7 $ - Issued - - Exercised - - Expired - - Outstanding at December 31, 2022 152,398 $ 158.24 3.4 - Exercisable at December 31, 2022 152,398 $ 158.24 3.4 $ - |
SCHEDULE OF REVENUE BY MAJOR CU
SCHEDULE OF REVENUE BY MAJOR CUSTOMERS (Details) - Customer Concentration Risk [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue Benchmark [Member] | Customer CL [Member] | ||
Product Information [Line Items] | ||
Sales Amount | $ 331,211 | |
Concentration risk percentage | 29% | |
Revenue Benchmark [Member] | Customer WP [Member] | ||
Product Information [Line Items] | ||
Sales Amount | $ 310,551 | |
Concentration risk percentage | 30% | |
Revenue Benchmark [Member] | Customer CU [Member] | ||
Product Information [Line Items] | ||
Sales Amount | $ 199,936 | |
Concentration risk percentage | 20% | |
Accounts Receivable [Member] | Customer CL [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 52% | |
Accounts receivable amount | $ 340,534 | |
Accounts Receivable [Member] | Customer WP [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 35% | |
Accounts receivable amount | $ 279,273 | |
Accounts Receivable [Member] | Customer CU [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 17% | |
Accounts receivable amount | $ 137,566 |
SCHEDULE OF OTHER INFORMATION R
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2022 | Sep. 30, 2022 | |
Accounting Policies [Abstract] | ||
ROU Asset – October 1, 2022 | $ 642,624 | |
ROU Asset added during the period | ||
Amortization during the period | (73,103) | |
ROU Asset – December 31, 2022 | 569,521 | |
Lease Liability – October 1, 2022 | 656,111 | |
Lease Liability added during the period | ||
Amortization during the period | (78,046) | |
Lease Liability – December 31, 2022 | 578,065 | |
Lease Liability - Short-Term | 392,714 | $ 388,325 |
Lease Liability - Long-Term | 185,351 | 267,786 |
Lease Liability - Total | $ 578,065 | $ 656,111 |
SCHEDULE OF FUTURE MINIMUM RENT
SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES (Details) - USD ($) | Dec. 31, 2022 | Sep. 30, 2022 |
Accounting Policies [Abstract] | ||
2023 | $ 379,603 | |
2024 | 217,301 | |
2025 | 33,908 | |
Total Minimum Lease Payments | 630,812 | |
Less Effect of Discounting | (52,747) | |
Present Value of Future Minimum Lease Payments | 578,065 | $ 656,111 |
Less Current Portion of Operating Lease Liabilities | 392,714 | 388,325 |
Long-Term Operating Lease Liabilities | $ 185,351 | $ 267,786 |
SCHEDULE OF FUTURE MINIMUM LEAS
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES (Details) - USD ($) | Dec. 31, 2022 | Sep. 30, 2022 |
Accounting Policies [Abstract] | ||
2023 | $ 33,113 | |
2024 | 19,315 | |
Total Minimum Lease Payments | 52,428 | |
Amount representing interest | (5,177) | |
Present Value of Minimum Lease Payments | 47,251 | |
Current Portion of Finance Lease Obligations | 28,729 | $ 24,518 |
Finance Lease Obligations, Less Current Portion | $ 18,522 | $ 29,622 |
SCHEDULE OF CASH AND NON-CASH A
SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES (Details) | 3 Months Ended |
Dec. 31, 2022 USD ($) | |
Accounting Policies [Abstract] | |
Operating cash outflows from operating leases: | $ 114,131 |
Operating cash outflows from finance lease: | 1,474 |
Financing cash outflows from finance lease: | $ 6,889 |
SCHEDULE OF FUTURE MINIMUM LE_2
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE (Details) | Dec. 31, 2022 USD ($) |
Accounting Policies [Abstract] | |
2023 | $ 127,926 |
2024 | 64,918 |
Total | $ 192,844 |
SCHEDULE OF LOAN PAYMENTS (Deta
SCHEDULE OF LOAN PAYMENTS (Details) - Ford Motor Credit [Member] - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Line of Credit Facility [Line Items] | ||
2023 | $ 8,005 | |
2024 | 2,719 | |
Grand Total | $ 10,724 | $ 12,692 |
SCHEDULE OF PREPAID EXPENSES AN
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2022 | Sep. 30, 2022 |
Accounting Policies [Abstract] | ||
Prepaid expenses and other current assets | $ 376,264 | $ 547,773 |
SCHEDULE OF INVENTORY (Details)
SCHEDULE OF INVENTORY (Details) - USD ($) | Dec. 31, 2022 | Sep. 30, 2022 |
Accounting Policies [Abstract] | ||
Raw materials | $ 1,086,761 | $ 887,632 |
Finished goods | 3,140 | 60,363 |
Less – Inventory reserve | ||
Total | $ 1,089,901 | $ 947,995 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||
Dec. 28, 2022 | Feb. 25, 2022 USD ($) | Jan. 09, 2020 USD ($) | Oct. 09, 2019 USD ($) | Apr. 01, 2019 USD ($) | May 31, 2022 USD ($) ft² | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Recalssification from operating expenses to other expenses | $ 41,604 | |||||||||
Reverse stock split, descrption | l-for-35 reverse stock split | |||||||||
Common stock equivalents | shares | 262,030 | 250,471 | ||||||||
Cash | $ 6,491,819 | $ 6,491,819 | $ 8,315,053 | |||||||
Working capital | 6,781,959 | $ 6,781,959 | ||||||||
Operating lease, expense | $ 73,103 | $ 36,822 | ||||||||
Operating leases weighted average remaining lease term | 1 year 6 months | 1 year 6 months | ||||||||
Operating lease weighted average discount rate percent | 5% | 5% | ||||||||
Finance lease, weighted average remaining lease term | 1 year 6 months | 1 year 6 months | ||||||||
Finance lease discount rate | 12.75% | 12.75% | ||||||||
Interest expense on finance lease liabilities | $ 1,474 | |||||||||
Sublease income | 50,738 | |||||||||
Purchase price of delivery van | 16,514 | 3,009 | ||||||||
Foreign currency translation adjustment | 115,583 | 32,688 | ||||||||
Prepaid expenses and other current assets | 376,264 | $ 376,264 | 547,773 | |||||||
Carrying value of inventory | 1,089,901 | 1,089,901 | $ 947,995 | |||||||
Loss from investment | 1,823 | 1,157 | ||||||||
Ford Motor Credit [Member] | ||||||||||
Long-term debt | 10,724 | 12,692 | 10,724 | |||||||
General and Administrative Expense [Member] | ||||||||||
Payments for rent | 91,119 | 48,921 | ||||||||
Other rent expense | $ 35,790 | $ 41,604 | ||||||||
NLA [Member] | ||||||||||
Gain on investments | $ 110,000 | |||||||||
Investment | 160,000 | |||||||||
Lease Agreement [Member] | Alliance Funding Group [Member] | ||||||||||
Sale leaseback value | $ 2,987 | |||||||||
Purchase price of equipment | $ 124,500 | |||||||||
Principal Executive Office [Member] | ||||||||||
Operating lease, cost | $ 1,510 | |||||||||
Vehicles [Member] | Ford Motor Credit [Member] | ||||||||||
Purchase price of delivery van | $ 41,627 | |||||||||
Down payment | 3,500 | |||||||||
Financed amount | $ 38,127 | |||||||||
Debt instrument term | 60 months | |||||||||
Interest rate | 2.90% | |||||||||
Machines [Member] | NLA [Member] | ||||||||||
Loss on contribution on machines | 43,012 | |||||||||
CALIFORNIA | ||||||||||
Lease expiration date | Mar. 31, 2025 | |||||||||
Payments for rent | $ 8,451 | |||||||||
Sub-leased, option to extend description | we leased an additional 1,796 square feet that has a monthly base rent of $2,514 through | |||||||||
CALIFORNIA | Additional Lease Area [Member] | ||||||||||
Area of Land | ft² | 1,796 | |||||||||
Operating lease income | $ 2,514 | |||||||||
CALIFORNIA | Sub-Leased Property [Member] | ||||||||||
Lease expiration date | Jan. 31, 2023 | |||||||||
Operating lease income | $ 2,111 | |||||||||
KOREA, REPUBLIC OF | ||||||||||
Operating lease, expense | $ 7,040 | |||||||||
Joint Venture Agreement [Member] | ||||||||||
Machine carrying cost | $ 313,012 | |||||||||
Joint Venture Agreement [Member] | Industrial Marino, S.A. de C.V. and NuZee Latin America, S.A. de C.V. [Member] | NuZee Latin America [Member] | ||||||||||
Equity percentage | 50% | |||||||||
Dripkit Inc. [Member] | ||||||||||
Payments to acquire assets | $ 257,000 | |||||||||
Dripkit Inc. [Member] | Asset Purchase Agreement [Member] | ||||||||||
Payments to acquire assets | $ 860,000 |
SCHEDULE OF GEOGRAPHICAL OPERAT
SCHEDULE OF GEOGRAPHICAL OPERATIONS (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | |
Net Revenue | $ 1,136,348 | $ 1,019,253 | |
Property and equipment, net | 475,284 | $ 525,075 | |
North America [Member] | |||
Net Revenue | 665,741 | 817,341 | |
Property and equipment, net | 303,835 | 378,546 | |
KOREA, REPUBLIC OF | |||
Net Revenue | 470,607 | $ 201,912 | |
Property and equipment, net | 170,033 | 144,865 | |
JAPAN | |||
Property and equipment, net | $ 1,416 | $ 1,664 |
SCHEDULE OF ALLOCATION OF AGGRE
SCHEDULE OF ALLOCATION OF AGGREGATE PURCHASE PRICE (Details) - USD ($) | 3 Months Ended | ||
Feb. 25, 2022 | Dec. 31, 2022 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | |||
Total purchase price | $ 876,176 | ||
Assets acquired: | |||
Goodwill | $ 0 | ||
Dripkit Inc. [Member] | |||
Business Acquisition [Line Items] | |||
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
SCHEDULE OF UNAUDITED PRO FORMA FINANCIAL INFORMATION (Details) | 3 Months Ended |
Dec. 31, 2021 USD ($) | |
Business Combination and Asset Acquisition [Abstract] | |
Revenues | $ 1,039,258 |
Net loss | $ 2,840,383 |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Feb. 25, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Accounts payable, current | $ 462,655 | $ 113,708 | ||
Business combination, consideration transferred, amount | 876,176 | |||
Asset impairment charges | 531,412 | |||
Goodwill | 0 | |||
Dripkit tradename | 80,555 | |||
Acquried customer | 63,167 | |||
Revenue | 1,136,348 | $ 1,019,253 | ||
Net loss | (2,183,206) | (2,804,203) | ||
Depreciation and amortization | 7,500 | |||
Dripkit Inc. [Member] | ||||
Business Acquisition [Line Items] | ||||
Purchase price paid for acquisition | $ 860,000 | |||
Bridge loan, amount | 13,000 | |||
Accounts payable, current | 3,176 | |||
Business combination, consideration transferred, amount | $ 876,176 | |||
Purchase price description | the cash portion of the purchase price was reduced by the following amounts: (a) $22,000, in satisfaction of a 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 | |||
Economic injury disaster loan paid | 78,656 | |||
Liability related to potential future amounts | 115,500 | |||
Bulk sales holdback | $ 80,000 | |||
Amount distributed | $ 39,237 | |||
Goodwill | 531,412 | |||
Revenue | 42,159 | |||
Net loss | 101,806 | |||
Depreciation and amortization | $ 7,500 | |||
Transaction costs eliminated | $ 16,939 |
SCHEDULE OF INTANGIBLE ASSETS (
SCHEDULE OF INTANGIBLE ASSETS (Details) - Trade Names [Member] | 3 Months Ended |
Dec. 31, 2022 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Amortization period (Years) | 5 years |
Intangible assets, Gross | $ 140,000 |
Intangible assets, Accumulated Amortization | 7,500 |
Intangible assets, Net | $ 132,500 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) | 3 Months Ended |
Dec. 31, 2022 USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization expense of intangible assets | $ 7,500 |
ISSUANCE OF EQUITY SECURITIES (
ISSUANCE OF EQUITY SECURITIES (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 17, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Proceeds from exercise of warrants, net of issuance costs | $ 1,721,018 | ||
Series A Warrant [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Number of warrants exercised | 10,870 | ||
Series B Warrant [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Shares issued for exercise of warrants | 114 | ||
Number of warrants exercised | 228 | ||
Common Stock [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Number of shares issued | 10,984 | ||
Shares issued for exercise of warrants | 10,984 | ||
Common Stock [Member] | Series A Warrant [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Shares issued for exercise of warrants | 10,870 | ||
Independent Director Five [Member] | 2013 Stock Incentive Plan [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Granted restricted shares | 674 | ||
Five Independent Directors [Member] | 2013 Stock Incentive Plan [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Granted restricted shares | 3,370 | ||
Stock compensation expense | $ 62,839 |
SUMMARY OF STOCK OPTION ACTIVIT
SUMMARY OF STOCK OPTION ACTIVITY (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2022 | Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||
Number of Shares Outstanding, Beginning Balance | 113,650 | |
Weighted Average Exercise Price Outstanding, Beginning Balance | $ 149.88 | |
Weighted Average Remaining Contractual Life (years) Stock Options Outstanding | 7 years 2 months 12 days | 7 years 4 months 24 days |
Aggregate Intrinsic Value Options Outstanding, Beginning Balance | $ 1,207 | |
Number of Shares, Expired | (286) | |
Weighted Average Exercise Price, Expired | $ 109.55 | |
Number of Shares, Forfeited | (3,732) | |
Weighted Average Exercise Price, Forfeited | $ 114.37 | |
Weighted Average Remaining Contractual Life (years) Stock Options Outstanding | ||
Number of Shares Outstanding, Ending Balance | 109,632 | 113,650 |
Weighted Average Exercise Price Outstanding, Ending Balance | $ 151.19 | $ 149.88 |
Aggregate Intrinsic Value Options Outstanding, Ending Balance | $ 1,207 | |
Number of Shares, Exercisable | 66,761 | |
Weighted Average Exercise Price, Exercisable | $ 171.55 | |
Weighted Average Remaining Contractual Life (years) Stock Options, Exercisable | 6 years 4 months 24 days | |
Aggregate Intrinsic Value Options, Exercisable |
SUMMARY OF UNVESTED SHARES (Det
SUMMARY OF UNVESTED SHARES (Details) | 3 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Share-Based Payment Arrangement [Abstract] | |
Number of Nonvested Shares, Beginning Balance | shares | 50,009 |
Weighted Average Grant Date Fair Value Nonvested Shares Beginning Balance | $ / shares | $ 154.24 |
Number of Nonvested Shares, Granted | shares | |
Weighted Average Grant Date Fair Value, Granted | $ / shares | |
Number of Nonvested Shares, Forfeited | shares | (3,732) |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | $ 114.90 |
Number of Nonvested Shares, Vested | shares | (3,406) |
Weighted Average Grant Date Fair Value, Vested | $ / shares | $ 368.19 |
Number of Nonvested Shares, Ending Balance | shares | 42,871 |
Weighted Average Grant Date Fair Value Nonvested Shares Ending Balance | $ / shares | $ 140.67 |
SCHEDULE OF WARRANT ACTIVITY (D
SCHEDULE OF WARRANT ACTIVITY (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2022 | Sep. 30, 2022 | |
Share-Based Payment Arrangement [Abstract] | ||
Number of Warrants Outstanding, Beginning Balance | 152,398 | |
Weighted Average Exercise Price, Beginning Balance | $ 158.24 | |
Weighted Average Remaining Contractual Life (years) Stock Warrants | 3 years 8 months 12 days | |
Aggregate Intrinsic Value Warrants Outstanding, Beginning Balance | ||
Number of Warrants, Issued | ||
Weighted Average Exercise Price, Issued | ||
Number of Warrants, Exercised | ||
Weighted Average Exercise Price, Exercised | ||
Number of Warrants, Expired | ||
Weighted Average Exercise Price, Expired | ||
Number of Warrants Outstanding, Ending Balance | 152,398 | 152,398 |
Weighted Average Exercise Price, Ending Balance | $ 158.24 | $ 158.24 |
Weighted Average Remaining Contractual Life (years) Stock Warrants | 3 years 4 months 24 days | |
Aggregate Intrinsic Value Warrants Outstanding, Ending Balance | ||
Number of Warrants Exercisable | 152,398 | |
Weighted Average Exercise Price, Exercisable | $ 158.24 | |
Weighted Average Remaining Contractual Life (years) Stock Warrants, Exercisable | 3 years 4 months 24 days | |
Aggregate Intrinsic Value Warrants, Exercisable |
STOCK OPTIONS AND WARRANTS (Det
STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock option forfeited during period | 3,732 | |
Expired | 286 | |
Stock option expense | $ 197,108 | $ 1,124,187 |
Weighted average period for recognition | 6 years 4 months 24 days | |
Share-Based Payment Arrangement, Option [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock option expense | $ 197,108 | $ 1,124,187 |
Unamortized option expense | $ 655,073 | |
Weighted average period for recognition | 1 year 1 month 2 days | |
Termination of Employment [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of shares granted | 0 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - shares | Jan. 06, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Subsequent Event [Line Items] | |||
Common stock, shares issued | 685,088 | 676,229 | |
Subsequent Event [Member] | Professional Services Provider [Member] | |||
Subsequent Event [Line Items] | |||
Common stock, shares issued | 6,000 |