Company Quick10K Filing
Nuzee
Price8.50 EPS-1
Shares14 P/E-10
MCap118 P/FCF-27
Net Debt-1 EBIT-12
TEV117 TEV/EBIT-10
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-07
10-Q 2019-12-31 Filed 2020-02-10
S-1 2019-11-12 Public Filing
10-K 2019-09-30 Filed 2019-12-26
10-Q 2019-06-30 Filed 2019-08-14
10-Q 2019-03-31 Filed 2019-05-15
10-Q 2018-12-31 Filed 2019-03-29
10-K 2018-09-30 Filed 2019-02-11
10-Q 2018-06-30 Filed 2018-08-16
10-Q 2018-03-31 Filed 2018-05-16
10-Q 2017-12-31 Filed 2018-04-06
10-K 2017-09-30 Filed 2018-02-21
10-Q 2017-06-30 Filed 2017-08-21
10-Q 2017-03-31 Filed 2017-05-19
10-Q 2016-12-31 Filed 2017-02-21
10-K 2016-09-30 Filed 2016-12-29
10-Q 2016-06-30 Filed 2016-08-15
10-Q 2016-03-31 Filed 2016-05-11
10-Q 2015-12-31 Filed 2016-02-16
10-K 2015-09-30 Filed 2016-01-13
10-Q 2015-06-30 Filed 2015-08-14
10-Q 2015-03-31 Filed 2015-05-18
10-Q 2014-12-31 Filed 2015-02-23
10-K 2014-09-30 Filed 2015-02-12
10-Q 2014-06-30 Filed 2014-08-19
10-Q 2014-03-31 Filed 2014-05-15
10-Q 2013-12-31 Filed 2014-02-12
10-K 2013-09-30 Filed 2014-01-14
10-Q 2013-06-30 Filed 2013-08-14
10-Q 2013-01-31 Filed 2013-03-08
10-Q 2012-10-31 Filed 2012-12-14
10-K 2012-07-31 Filed 2012-10-29
10-Q 2012-04-30 Filed 2012-07-09
8-K 2020-08-28 Other Events
8-K 2020-07-10 Officers, Other Events, Exhibits
8-K 2020-06-23
8-K 2020-06-18
8-K 2020-01-09
8-K 2019-10-22
8-K 2019-10-15
8-K 2019-08-28
8-K 2019-07-30
8-K 2019-05-09
8-K 2019-05-07
8-K 2019-01-23
8-K 2018-12-09
8-K 2018-08-31
8-K 2018-07-02
8-K 2018-06-27

NUZE 10Q Quarterly Report

Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II.
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 nz_ex31z1.htm
EX-31.2 nz_ex31z2.htm
EX-32.1 nz_ex32z1.htm
EX-32.2 nz_ex32z2.htm

Nuzee Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
10.07.95.83.71.6-0.52012201420172020
Assets, Equity
1.3-1.0-3.2-5.5-7.7-10.02012201420172020
Rev, G Profit, Net Income
3.82.71.60.5-0.6-1.72012201420172020
Ops, Inv, Fin

NUZEE, INC. - Form 10-Q SEC filing
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

 

or

 

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to ________

 

Commission File No. 000-55157

 

NUZEE, INC.

 

(exact name of registrant as specified in its charter)

 

Nevada

 

38-3849791

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification Number)

 

1700 Capital Avenue, Suite 100, Plano, TX, 75074

 

(Address of principal executive offices)   (zip code)

 

(760) 295-2408

 

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading symbol(s)

 

Name of each exchange on which registered

None

 

N/A

 

N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x   No ¨

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes x   No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

¨

 

Accelerated Filer

x

Non-accelerated filer

¨

                                           

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No x

 

As of August 3, 2020, NuZee, Inc. had 14,557,755 shares of common stock outstanding.


1


 

Table of Contents

 

                                                                                                                                                                        

Page

 

 

PART I

 

 

 

Item 1.  Financial Statements

4

Consolidated Balance Sheets (unaudited)

4

Consolidated Statements of Operations (unaudited)

5

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

6

Consolidated Statements of Stockholders' Equity (unaudited)

7

Consolidated Statements of Cash Flows (unaudited)

8

Notes to Consolidated Financial Statements (unaudited)

10

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3. Quantitative and Qualitative Disclosures About Market Risk

22

Item 4. Controls and Procedures

22

 

 

PART II.

23

 

 

Item 1. Legal Proceedings

23

Item 1A. Risk Factors

23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

23

Item 3. Defaults Upon Senior Securities

23

Item 4. Mine Safety Disclosures

24

Item 5. Other Information

24

Item 6.  Exhibits

24

 

 

SIGNATURES

25


2


 

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

 

This report includes “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Such forward-looking statements reflect the views of NuZee, Inc. (hereinafter "NuZee" or the "Company") with respect to future events and financial performance. These forward-looking statements are subject to certain uncertainties and other factors that could cause actual results to differ materially from such statements. From time to time, our management or persons acting on our behalf may make forward-looking statements to inform existing and potential security holders about our Company. All statements other than statements of historical facts included in this report regarding our financial position, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance, or any other matters, are forward-looking statements. When used in this report, forward-looking statements are generally accompanied by terms or phrases such as "estimate," "expects", "project," "predict," "believe," "expect," "anticipate," "target," "plan," "intend," "seek," "goal," "will," "should," "may," "targets" or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: dilution of shareholder investments as a result of necessary capital raises, expenditures to produce and distribute our product, changes in sale levels, changes in the nutritional beverage market, competitor growth, third-party relationship dependent growth, general economic or industry conditions, nationally and/or in the communities in which we conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our operations, products, services, and prices.

 

We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. You should consider carefully the statements in the section of our Annual Report on Form 10-K/A filed with the SEC on December 31, 2019 entitled "Risk Factors" and sections of this report that describe factors that could cause our actual results to differ from those set forth in the forward-looking statements.

 

Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the Securities and Exchange Commission which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operation and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.


3


 

Item 1. Financial Statements.

 

NuZee, Inc.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

June 30, 2020

 

September 30, 2019

ASSETS

 

                                 

 

                                 

Current assets:

 

 

 

 

Cash

 

$5,215,809  

 

$1,326,040  

Accounts receivable, net

 

67,455  

 

540,310  

Accounts receivable - Related party

 

118  

 

-  

Inventories, net

 

274,975  

 

500,986  

Deferred offering costs

 

-  

 

225,089  

Other current assets

 

269,793  

 

147,367  

Other current assets - Related party

 

-  

 

460  

Total current assets

 

5,828,150  

 

2,740,252  

 

 

 

 

 

Property and equipment, net

 

1,736,432  

 

1,875,591  

 

 

 

 

 

Other assets:

 

 

 

 

Right-of-use asset - operating lease

 

$645,882  

 

$-  

Right-of-use asset - finance lease

 

112,050  

 

-  

Investment

 

160,000  

 

-  

Other asset

 

84,028  

 

634,701  

Total other assets

 

1,001,960  

 

634,701  

 

 

 

 

 

Total assets

 

$8,566,542  

 

$5,250,544  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$22,311  

 

$341,095  

Current portion of long-term loan payable

 

101,345  

 

101,148  

Accrued expenses and other current liabilities

 

803,645  

 

531,861  

Current portion of lease liability - operating lease

 

216,454  

 

-  

Current portion of lease liability - finance lease

 

20,924  

 

-  

Other current liabilities - Related party

 

2,108  

 

2,812  

Total current liabilities

 

1,166,787  

 

976,916  

 

 

 

 

 

Non-current liabilities:

 

 

 

 

Lease liability - operating lease, net of current portion

 

435,420  

 

-  

Lease liability - finance lease, net of current portion

 

84,058  

 

-  

Loan payable - long term, net of current portion

 

80,803  

 

156,816  

Other noncurrent liabilities

 

8,894  

 

1,750  

Total non-current liabilities

 

609,175  

 

158,566  

 

 

 

 

 

Total liabilities

 

1,775,962  

 

1,135,482  

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

Common stock; 100,000,000 shares authorized, $0.00001 par value;
14,429,104 and 13,617,366 shares issued

 

145  

 

137  

Additional paid in capital

 

40,046,531  

 

28,898,344  

Accumulated deficit

 

(33,249,588) 

 

(24,795,687) 

Accumulated other comprehensive loss

 

(150,145) 

 

(90,635) 

Total NuZee, Inc. stockholders' equity

 

6,646,943  

 

4,012,159  

Noncontrolling interest

 

143,637  

 

102,903  

Total stockholders' equity

 

6,790,580  

 

4,115,062  

 

 

 

 

 

Total liabilities and stockholders' equity

 

$8,566,542  

 

$5,250,544  

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.


4


 

NuZee, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

                                                                                                                       

 

Three Months Ended
June 30, 2020

 

Three Months Ended
June 30, 2019

 

Nine Months Ended
June 30, 2020

 

Nine Months Ended
June 30, 2019

Revenues

 

$        191,962   

 

$       585,202   

 

$    1,131,562   

 

$     1,304,566   

Cost of sales

 

331,039   

 

469,045   

 

1,250,904   

 

923,903   

Gross Profit (Loss)

 

(139,077)  

 

116,157   

 

(119,342)  

 

380,663   

 

 

 

 

 

 

 

 

 

Operating expenses

 

2,378,947   

 

9,514,003   

 

8,342,412   

 

13,668,299   

Loss from operations

 

(2,518,024)  

 

(9,397,846)  

 

(8,461,754)  

 

(13,287,636)  

 

 

 

 

 

 

 

 

 

Other income

 

25,523   

 

10,158   

 

28,504   

 

14,424   

Other expense

 

(42,113)  

 

(4,768)  

 

(44,712)  

 

(140,805)  

Interest expense

 

(6,448)  

 

(1,471)  

 

(16,573)  

 

(2,679)  

Net loss

 

(2,541,062)  

 

(9,393,927)  

 

(8,494,535)  

 

(13,416,696)  

Net income (loss) attributable to noncontrolling interest

 

1,356   

 

12,576   

 

(40,634)  

 

19,501   

Net loss attributable to NuZee, Inc.

 

$   (2,542,418)  

 

$   (9,406,503)  

 

$   (8,453,901)  

 

$ (13,436,197)  

 

 

 

 

 

 

 

 

 

Basic and diluted loss per common share

 

$            (0.18)  

 

$            (0.70)  

 

$            (0.62)  

 

$            (1.01)  

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average number of common stock outstanding

 

13,782,950   

 

13,412,541   

 

13,724,590   

 

13,353,005   

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.


5


 

NuZee, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

                                                                                       

 

NuZee, Inc.

 

Noncontrolling
Interests

 

Total

For the three months ended June 30

 

         2020        

 

         2019        

 

         2020        

 

         2019        

 

         2020        

 

         2019        

Net income (loss)

 

$ (2,542,418)  

 

$ (9,406,503)  

 

$        1,356   

 

$      12,576   

 

$ (2,541,062)  

 

$ (9,393,927)  

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

10,209   

 

(43,416)  

 

530   

 

(18,607)  

 

10,739   

 

(62,023)  

Total other comprehensive income (loss), net of tax

 

10,209   

 

(43,416)  

 

530   

 

(18,607)  

 

10,739   

 

(62,023)  

Comprehensive income (loss)

 

$ (2,532,209)  

 

$ (9,449,919)  

 

$        1,886   

 

$       (6,031)  

 

$ (2,530,323)  

 

$ (9,455,950)  

 

                                                                                       

 

NuZee, Inc.

 

Noncontrolling
Interests

 

Total

For the nine months ended June 30

 

         2020        

 

         2019        

 

         2020        

 

         2019        

 

         2020        

 

         2019        

Net income (loss)

 

$ (8,453,901)  

 

(13,436,197)  

 

$     (40,634)  

 

$      19,501   

 

$ (8,494,535)  

 

$ (13,416,696)  

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

(59,510)  

 

(35,035)  

 

81,368   

 

34,114   

 

21,858   

 

(921)  

Total other comprehensive income (loss), net of tax

 

(59,510)  

 

(35,035)  

 

81,368   

 

34,114   

 

21,858   

 

(921)  

Comprehensive income (loss)

 

$ (8,513,411)  

 

$ (13,471,232)  

 

$      40,734   

 

$      53,615   

 

$ (8,472,677)  

 

$ (13,417,617)  

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.


6


 

NuZee , Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

other

 

 

 

 

Common stock

 

paid-in

 

Accumulated

 

Noncontrolling

 

comprehensive

 

 

 

Shares

 

Amount

 

capital

 

deficit

 

interest

 

income (loss)

 

Total

                                                                            

 

                             

 

                             

 

                             

 

                             

 

                             

 

                             

 

                             

Balance September 30, 2019

 

13,617,366 

 

$137 

 

$28,898,344  

 

$(24,795,687) 

 

$102,903  

 

$(90,635) 

 

$4,115,062  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

111,738 

 

1 

 

1,994,522  

 

-  

 

-  

 

-  

 

1,994,523  

Stock option expense

 

- 

 

- 

 

2,220,861  

 

-  

 

-  

 

-  

 

2,220,861  

Other comprehensive gain

 

- 

 

- 

 

-  

 

-  

 

5,642  

 

27,230  

 

32,872  

Net loss for ther period

 

- 

 

- 

 

-  

 

(3,421,232) 

 

(11,021) 

 

-  

 

(3,432,253) 

Balance December 31, 2019

 

13,729,104 

 

$138 

 

$33,113,727  

 

$(28,216,919) 

 

$97,524  

 

$(63,405) 

 

$4,931,065  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock option expense

 

- 

 

- 

 

962,490  

 

-  

 

-  

 

-  

 

962,490  

Other comprehensive gain / (loss)

 

- 

 

- 

 

-  

 

-  

 

75,196  

 

(96,949) 

 

(21,753) 

Net loss for the period

 

- 

 

- 

 

-  

 

(2,490,251) 

 

(30,969) 

 

-  

 

(2,521,220) 

Balance March 31, 2020

 

13,729,104 

 

$138 

 

$34,076,217  

 

$(30,707,170) 

 

$141,751  

 

$(160,354) 

 

$3,350,582  

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

700,000 

 

7 

 

4,648,167 

 

-  

 

- 

 

-  

 

4,648,174  

Stock option expense

 

- 

 

- 

 

1,322,147 

 

-  

 

- 

 

-  

 

1,322,147  

Other comprehensive gain

 

- 

 

- 

 

- 

 

-  

 

530 

 

10,209  

 

10,739  

Net income (loss) for ther period

 

- 

 

- 

 

- 

 

(2,542,418) 

 

1,356 

 

-  

 

(2,541,062) 

Balance June 30, 2020

 

14,429,104 

 

$145 

 

$40,046,531 

 

$(33,249,588) 

 

$143,637 

 

$(150,145) 

 

$6,790,580  

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

other

 

 

 

 

Common stock

 

paid-in

 

Accumulated

 

Noncontrolling

 

comprehensive

 

 

 

Shares

 

Amount

 

capital

 

deficit

 

interest

 

income (loss)

 

Total

                                                                            

 

                             

 

                             

 

                             

 

                             

 

                             

 

                             

 

                             

Balance September 30, 2018

 

13,194,591 

 

$132 

 

$14,957,491  

 

$(12,607,722) 

 

$93,131  

 

$(30,967) 

 

$2,412,065  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for cash

 

116,891 

 

1 

 

1,494,804  

 

-  

 

-  

 

-  

 

1,494,805  

Common stock issued to settle payables

 

5,118 

 

- 

 

107,478  

 

-  

 

-  

 

-  

 

107,478  

Stock option expense

 

- 

 

- 

 

1,789,751  

 

-  

 

-  

 

-  

 

1,789,751  

NuZee foreign currency gain (loss)

 

- 

 

- 

 

-  

 

-  

 

4,855  

 

11,328  

 

16,183  

Net loss for the period

 

- 

 

- 

 

-  

 

(2,576,692) 

 

(11,714) 

 

-  

 

(2,588,406) 

Balance December 31, 2018

 

13,316,600 

 

133 

 

18,349,524  

 

(15,184,414) 

 

86,272  

 

(19,639) 

 

3,231,876  

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for cash

 

13,870 

 

- 

 

228,204  

 

-  

 

-  

 

-  

 

228,204  

Stock issuance costs

 

- 

 

- 

 

(27,628) 

 

-  

 

-  

 

-  

 

(27,628) 

Common stock issued for services

 

50,000 

 

1 

 

37,499  

 

-  

 

-  

 

-  

 

37,500  

Common stock issued to settle payables

 

843 

 

- 

 

16,445  

 

-  

 

-  

 

-  

 

16,445  

Stock option expense

 

- 

 

- 

 

481,742  

 

-  

 

-  

 

-  

 

481,742  

NuZee foreign currency gain (loss)

 

- 

 

- 

 

-  

 

-  

 

47,866  

 

(2,947) 

 

44,919  

Net loss for the period

 

- 

 

- 

 

-  

 

(1,453,002) 

 

18,639  

 

-  

 

(1,434,363) 

Balance March 31, 2019

 

13,381,313 

 

$134 

 

$19,085,786  

 

$(16,637,416) 

 

$152,777  

 

$(22,586) 

 

$2,578,695  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares issued for cash

 

206,267 

 

2 

 

3,612,181 

 

-  

 

-  

 

-  

 

3,612,183  

Stock option expense

 

- 

 

- 

 

8,337,258 

 

-  

 

-  

 

-  

 

8,337,258  

NuZee foreign currency gain (loss)

 

- 

 

- 

 

- 

 

-  

 

(18,607) 

 

(43,416) 

 

(62,023) 

Net income (loss) for the period

 

- 

 

- 

 

- 

 

(9,406,503) 

 

12,576  

 

-  

 

(9,393,927) 

Balance June 30, 2019

 

13,587,580 

 

$136 

 

$31,035,225 

 

$(26,043,919) 

 

$146,746  

 

$(66,002) 

 

$5,072,186  

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.


7


 

NuZee, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Nine Months Ended
June 30, 2020

 

Nine Months Ended
June 30, 2019

                                                                                                                                                   

 

                                

 

                                

Operating activities:

 

 

 

 

Net loss

 

$(8,494,535) 

 

$(13,416,696) 

Adjustments to reconcile net loss to net cash used by operating activities:

 

 

 

 

Depreciation and Amortization

 

310,393  

 

165,752  

Noncash lease expense

 

101,505  

 

-  

Option expense

 

4,505,498  

 

10,608,751  

Inventory impairment

 

74,944  

 

27,983  

Allowance for sales return

 

3,835  

 

22,510  

Loss on sale of assets

 

43,012  

 

6,096  

Loss on settlement of payable

 

-  

 

91,684  

Common stock issued for services

 

-  

 

37,500  

Change in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

469,020  

 

(235,860) 

Accounts receivable - Related party

 

(118) 

 

105  

Inventories

 

151,067  

 

(182,962) 

Other current assets

 

(122,426) 

 

(144,934) 

Other current assets - Related party

 

460  

 

(681) 

Other asset

 

(41,767) 

 

(649) 

Accounts payable

 

(199,763) 

 

116,005  

Other current liabilities - related party

 

(704) 

 

(1,714) 

Other noncurrent liabilities

 

7,144  

 

(6,317) 

Lease liability - operating lease

 

(83,063) 

 

-  

Accrued expense and other current liabilities

 

271,784  

 

(36,142) 

Net cash used by operating activities

 

(3,003,714) 

 

(2,949,569) 

 

 

 

 

 

Investing activities:

 

 

 

 

Purchase of equipment

 

(16,306) 

 

(1,243,933) 

Proceeds from sales of equipment

 

110,000  

 

23,600  

Net cash provided (used) in investing activities

 

93,694  

 

(1,220,333) 

 

 

 

 

 

Financing activities:

 

 

 

 

Repayment of finance lease

 

(14,039) 

 

-  

Repayment of loans

 

(75,816) 

 

(32,580) 

Borrowing of loans

 

-  

 

147,081  

Stock issuance costs

 

-  

 

(27,628) 

Proceeds from issuance of common stock

 

6,867,786  

 

5,335,192  

Net cash provided by financing activities

 

6,777,931  

 

5,422,065  

 

 

 

 

 

Effect of foreign exchange on cash and cash equivalents

 

21,858  

 

2,601  

 

 

 

 

 

Net change in cash

 

3,889,769  

 

1,254,764  

Cash, beginning of period

 

1,326,040  

 

1,806,666  

Cash, end of period

 

$5,215,809  

 

$3,061,430  

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash paid for interest

 

$16,573  

 

$183  

Cash paid for taxes

 

$800  

 

$-  

Noncash investing and financing activities:

 

 

 

 

Stock issued to settle payables

 

$-  

 

$32,239  

Equipment purchased through debt

 

$-  

 

$38,127  

Equipment purchased on credit

 

$-  

 

$218,140  

Recognition of right-of-use asset and lease liability upon adoption of ASU 2016-02

 

$517,263  

 

$-  

Recognition of right-of-use asset and lease liability during the period

 

$217,674  

 

$-  

Reclassification of common stock offering costs to additional paid-in capital

 

$1,150,989  

 

 

Finance lease of equipment to pay off accounts payable

 

$124,500  

 

$-  

Investment in NLA

 

$160,000  

 

$-  

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.


8


 

NuZee, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)    June 30, 2020

 

 

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/A for the year ended September 30, 2019 as filed with the SEC on December 31, 2019. In the opinion of management, all adjustments, consisting of recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the annual report on Form 10-K have been omitted.

 

Reclassification

 

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements. These reclassifications had no effect on the previously reported net loss.

 

Principles of Consolidation

 

The Company prepares its financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and its majority owned subsidiary, which has a fiscal year end of September 30. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation.

 

The Company has three international subsidiaries in NuZee KOREA Ltd. ("NuZee KR"), NuZee JAPAN Co., Ltd ("NuZee JP") and NuZee Investment Co., Ltd. ("NuZee INV"). NuZee KR and NuZee INV are wholly owned subsidiaries of the Company, and NuZee JP is a majority owned subsidiary of the Company.

 

Stock Split

 

On October 28, 2019, we completed a l-for-3 reverse stock split, which became effective on November 12, 2019. All share and per share information included in these financial statements and notes thereto give effect to the reverse stock split.

 

Earnings per Share

 

Basic earnings per common share is equal to net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As of June 30, 2020 and June 30, 2019, the total number of common stock equivalents was 1,725,000 and 1,787,333, respectively, comprised entirely of stock options. The Company incurred a net loss for the three and nine months ended June 30, 2020 and 2019, respectively, and therefore basic and diluted earnings per share for those periods are the same because all potential common equivalent shares would be antidilutive.

 

Going Concern and Capital Resources

 

Since its inception on July 15, 2011, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets and raising capital. The Company has generated limited revenues from its principal operations, and there is no assurance of future revenues.

 

As of June 30, 2020, the Company had cash of $5,215,809. The Company has not attained profitable operations since inception.

 

The accompanying 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 and is dependent on sales of its equity, including to its majority shareholder, to provide additional funding for operating expenses. These items raise substantial doubt as to the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company's continued existence is dependent upon management's ability to develop profitable operations, continued contributions from its majority shareholder to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of the Company's products and business.


9


 

Major Customers

 

In the nine months ended June 30, 2020 and 2019, revenue was primarily derived from major customers disclosed below.

 

Nine months ended June 30, 2020:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer K

$ 284,099

25%

$ -

0%

Customer WP

$ 259,925

23%

$7,767

11%

Customer J

$ 188,574

17%

$175

0%

 

Nine months ended June 30, 2019:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer J

$333,971

26 %

$ -

0%

Customer WP

$254,765

20%

$ 153,344

28%

Customer C

$153,167

12%

$ 55,245

10%

 

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 core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from all leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases. However, the principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases should be recognized in the consolidated balance sheet. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The Company implemented ASU No. 2016-02 on October 1, 2019.

 

The Company elected the practical expedient under ASU 2018-11 “Leases: Targeted Improvements” which allows the Company to apply the transition provision for Topic 842 at the Company’s adoption date instead of at the earlies comparative period presented in the financial statements. Therefore, the Company recognized and measured leases existing at October 1, 2019 but without retrospective application. In addition, the Company elected the optional practical expedient permitted under the transition guidance which allows the Company to carry forward the historical accounting treatment for existing lease upon adoption. No impact was recorded to the income statement or beginning retained earnings for Topic 842.

 

Beginning October 1, 2019, operating ROU assets and operating lease liabilities are recognized based on the present value of lease payments, including annual rent increases, over the lease term at commencement date. Operating leases in effect prior to October 1, 2019 were recognized at the present value of the remaining payments on the remaining lease term as of October 1, 2019. Because the lease in question did not have an implicit rate of return, we used our incremental secured borrowing rate based on lease term information available as of the adoption date or lease commencement date in determining the present value of lease payments. The incremental borrowing rate on ROU Asset lease is 5%.

 

The Company does a quarterly analysis of leases to determine if there are any operating leases that require recognition under ASC 842. As of October 1, 2019, the Company had one significant long-term operating lease for office and manufacturing space in Plano, Texas.  The leased property in Plano, Texas, has a remaining lease term through June of 2024. The lease has an option to extend beyond the stated termination date, but exercise of this option is not probable. The Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less.

 


10


The impact of ASU No. 2016-02 (“Leases (Topic 842)” on our consolidated balance sheet beginning October 1, 2019, through the recognition of ROU assets and lease liabilities for operating leases are as follows:

 

 

October 1, 2019

ROU Assets

 

$517,263

Lease Liability

 

$517,263

 

During the June 30, 2020 analysis of leases, we determined to renew the office and manufacturing space in Vista, CA through January 31, 2022, which was previously scheduled to be vacated at June 30, 2020. Additionally, the Korean office and manufacturing space lease was extended through June 2022 and an apartment lease was signed through June 2022. Accordingly, we have added ROU assets and lease liabilities related to those leases at June 30, 2020.

 

The direct-leased property in Vista, California has a remaining lease term through January of 2022. The leased properties in both Korea and Vista, California have options to extend beyond the stated termination date, but exercise of these options are not probable. The sub-leased property in Vista, California, is leased month-to-month and has been calculated as a ROU Asset co-terminous with the direct-leased property.

 

As of June 30, 2020, our operating leases had a weighted average remaining lease term of 3.1 years. Other information related to our operating leases is as follows:

 

ROU Asset – October 1, 2019

 

517,263   

ROU Asset added during the period

 

217,674   

Amortization during the period

 

(89,055)  

ROU Asset – June 30, 2020

 

645,882   

 

 

 

Lease Liability – October 1, 2019

 

517,263   

Lease Liability added during the period

 

217,674   

Amortization during the period

 

(83,063)  

Lease Liability – June 30, 2020

 

651,874   

 

Lease Liability – Short-Term

 

216,454   

Lease Liability – Long-Term

 

435,420   

Lease Liability – Total

 

651,874   

 

During the nine months ended June 30, 2020, we had the following cash and non-cash activities associated with our leases:

                                                                                                                                                  

 

                       

Cash paid for amounts included in the measurement of lease liabilities:

 

 

Operating cash flows from operating leases

 

$103,298 

Operating cash flows from finance leases

 

$10,794 

Financing cash flows from finance leases

 

$14,039 

 

 

 

Non-cash transactions:

 

 

Recognition of ROU asset and lease liability of operating lease
upon adoption of ASU 2016-02

 

$517,263 

 

 

 

Additions to ROU assets obtained from:

 

 

New operating lease:

 

$217,674 

New finance lease:

 

$124,500 

 

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 June 30, 2020:

 

Amounts due within 12 months of June 30,

 

2021

 

243,941   

2022

 

206,711   

2023

 

126,091   

2024

 

129,873   

2025

 

-   

Total Minimum Lease Payments

 

706,616   

Less Effect of Discounting

 

54,742   

Present Value of Future Minimum Lease Payments

 

651,874   

Less Current Portion of Operating Lease Obligations

 

216,454   

Long-Term Operating Lease Obligations

 

435,420   

 


11


NuZee JP is the lessee of certain equipment under a finance lease extending through January 2021. The asset and liability under the finance lease are recorded at the lower of the present value of the minimum lease payments, or the fair value of the asset. Leased equipment is depreciated over a 6-year life. The leased equipment is reported in the accompanying consolidated balance sheets in property and equipment of $4,536 as of June 30, 2020. The finance lease liability is included in other current liabilities on the consolidated balance sheets.

 

Future minimum lease payments under finance lease obligations as of June 30, 2020 for each of the remaining fiscal years are as follows:

 

2020

 

$2,268

2021

 

$2,268

Total Minimum Lease Payments

 

$4,536

 

On October 9, 2019, the Company entered into a lease agreement with Alliance Funding Group which provided for a sale lease back on certain packing equipment. The terms of this agreement require us to pay $2,987 per month for the next 60 months. As part of this agreement, Alliance Funding Group provided our equipment supplier with $124,540 for the purchase of this equipment. This transaction was accounted for as a financing lease.

 

The following summarizes ROU assets under finance leases at June 30, 2020:

 

ROU asset-finance lease at October 9, 2019

 

124,500   

Amortization

 

(12,450)  

ROU asset-finance lease at June 30, 2020

 

112,050   

 

The table below summarizes future minimum finance lease payments at June 30, 2020 for the 12 months ended June 30 of each year indicated:

 

2021

 

33,113   

2022

 

33,113   

2023

 

33,113   

2024

 

33,113   

2025

 

2,759   

Total Minimum Lease Payments

 

135,211   

Amount representing interest

 

(30,229)  

Present Value of Minimum Lease Payments

 

104,982   

Current Portion of Finance Lease Obligations

 

20,924   

Finance Lease Obligations, Less Current Portion

 

84,058   

 

The Company leases office space with terms ranging from month to month to 61 months. Rent expense included in general and administrative expense for the nine months ended June 30, 2020 and 2019 was $251,207 and $99,526, respectively.

 

Future minimum rents for the office space leased as of June 30, 2020, for each of the remaining fiscal years are as follows:

 

2020

 

$   69,264   

2021

 

278,530   

2022

 

208,885   

2023

 

160,149   

2024

 

124,999   

Total Minimum Lease Payments

 

841,827   

 

Loans

 

On June 30, 2016, NuZee JP entered into a loan agreement with Tono Shinyo Kinko Bank. NuZee JP borrowed the sum of approximately $145,758 to be repaid on or before June 5, 2021 at an annual interest rate of 1.2%. The loan is unsecured and guaranteed by a director. The outstanding balance on the loan at June 30, 2020 amounted to $27,835. On January 27, 2017, NuZee JP entered into a loan agreement with Nihon Seisaku Kouko. NuZee JP borrowed approximately $87,268 to be repaid on or before January 20, 2022 at an interest rate of 0.16%. The loan is unsecured and not guaranteed by a director. The outstanding balance on the loan at June 30, 2020 amounted to $30,060.

 

On April 1, 2019, NuZee purchased a delivery van from Ford Motor Credit for $41,627. The Company paid $3,500 as a down payment and financed $38,127 for 60 months at a rate of 2.9%. The loan is secured by the van. The outstanding balance on the loan at June 30, 2020 amounted to $29,757.

 

On February 15, 2019 NuZee KR entered into equipment financing for production equipment with ShinHan Bank for $60,563. In June 28, 2019 NuZee KR purchased additional equipment and increased the loan with ShinHan Bank by $86,518. The loan is secured by our production equipment at NuZee KR. The financing bears a term of 36 months at a rate of 4.33% per annum. Principal payments began in July of 2019. The outstanding balance on this loan at June 30, 2020 amounts to $94,496.


12


 

The loan payments required for the next five remaining fiscal years are as follows:

 

 

 

 

Nihon

Ford

 

 

 

 

 

Tono Shinyo

Seisaku

Motor

ShinHan

 

 

 

 

Kinko Bank

Kouko

Credit

Bank

 

Total

 

 

2020

 

6,959   

4,704   

1,841   

11,812   

 

 

2021

 

20,876   

14,112   

5,605   

35,436   

 

 

Total Current Portion

 

$ 27,835   

$ 18,816   

$ 7,446   

$ 47,248   

 

$ 101,345   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

4,704   

1,895   

11,812   

 

 

2022

 

 

6,540   

7,720   

35,436   

 

 

2023

 

 

 

7,947   

 

 

 

2024

 

 

 

4,749   

 

 

 

Total Long Term Portion

 

 

$ 11,244   

$ 22,311   

$ 47,248   

 

$ 80,803   

Grand Total

 

27,835   

30,060   

29,757   

94,496   

 

182,148   

 

Revenue Recognition

 

We determine revenue recognition through the following steps in accordance with FASB Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from Contracts with Customers", which we adopted as of October 1, 2018 on a modified retrospective basis:

 

·identification of the contract, or contracts, with a customer; 

·identification of the performance obligations in the contract; 

·determination of the transaction price; 

·allocation of the transaction price to the performance obligations in the contract; and 

·recognition of revenue when, or as, we satisfy a performance obligation. 

 

Revenue is recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

 

Foreign Currency Translation

 

The financial position and results of operations of each of the Company's foreign subsidiary are measured using the foreign subsidiary's local currency as the functional currency. Revenues and expenses of each such subsidiary have been translated into U.S. dollars at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders' equity unless there is a sale or complete liquidation of the underlying foreign investment. Foreign currency translation adjustments comprising accumulated other comprehensive loss amounted to $(59,510) and $(35,035) for the nine months ended June 30, 2020 and 2019, respectively.

 

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

 

Inventories

 

Inventory, consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower of cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. At June 30, 2020 and September 30, 2019, the carrying value of inventory of $274,975 and $500,986 respectively, reflected on the consolidated balance sheets is net of this adjustment.

 

 

June 30, 2020

 

September 30, 2019

Raw materials

 

$   15,585   

 

327,985   

Finished goods

 

259,390   

 

173,001   

Less – Inventory reserve

 

-   

 

-   

Total

 

274,975   

 

500,986   

 

Recent Accounting Pronouncements

 

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


13


Compensation") will also apply to non-employee share-based transactions (accounted for under ASC Topic 505, "Equity"). ASU 2018-07 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company implemented ASU 2018-07 on October 1, 2019 and the impact of the implementation is not material to the financial statements.

 

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception. The ASU was issued to address the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The ASU, among other things, eliminates the need to consider the effects of down round features when analyzing convertible debt, warrants and other financing instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The amendments are effective for fiscal years beginning after December 15, 2018, and should be applied retrospectively. Early adoption is permitted, including adoption in an interim period. The Company implemented ASU 2017-11 on October 1, 2019, and the impact of the implementation is not material to the financial statements.

 

Joint Venture

 

On January 9, 2020, a joint venture agreement was signed between Industrial Marino, S.A. de C.V. (50%) and the Company (50%) forming NuZee LATIN AMERICA, S.A. de C.V. ("NLA"). NLA was formed pursuant to the laws of Mexico, with corporate domicile in Mazatlan, Mexico. As part of the capitalization of NLA, the Company contributed two machines to the joint venture. These machines had an aggregate carrying cost of $313,012. The Company received $110,000 in cash for this contribution and recorded an investment in NLA of $160,000 and a loss of $43,012 on the contribution of the machines to NLA.

 

The Company will account for NLA using the equity method of accounting. As of June 30, 2020, the only activity in NLA was the contribution of two machines as described above.

 

2.  GEOGRAPHIC CONCENTRATION

 

The Company is organized based on fundamentally one geographic segment although it does sell its products on a world-wide basis. Information about the Company’s geographic operations are as follows:

 

Geographic Concentrations

Nine Months Ended

 

Nine Months Ended

June 30, 2020

 

June 30, 2019

Net Revenue:

 

 

 

North America

$   756,000   

 

$   715,702   

Japan

258,526   

 

549,431   

South Korea

117,036   

 

39,433   

1,131,562   

 

1,304,566   

 

 

 

 

Property and equipment, net:

As of

June 30, 2020

 

As of

September 30, 2019

North America

1,459,948   

 

1,471,859   

Japan

3,424   

 

6,329   

South Korea

273,060   

 

397,403   

1,736,432   

 

1,875,591   

 

3.  RELATED PARTY TRANSACTIONS

 

Sales, Purchases and Operating Expenses

 

For the nine months ended June 30, 2020 and 2019, NuZee JP sold their products to Eguchi Holdings Co., Ltd ("EHCL"), and the sales to them totaled approximately $3,154 and $3,174 respectively. The corresponding accounts receivable balance from EHCL was $118 and $(106) as of June 30, 2020 and September 30, 2019, respectively. EHCL is controlled by Mr. Katsuyoshi Eguchi, who beneficially owns in excess of 5% of NuZee’s outstanding common stock and serves as the chief executive officer of NuZee JP.

 

Rent

 

During October 2016, NuZee JP entered into a rental agreement of an office space with NuZee Co., Ltd., an entity 100% beneficially owned by our chief executive officer. The Company pays $1,169 per month for the office on the last day of each month on behalf of NuZee JP. There is no set expiration date on the agreement. As of June 30, 2020, and September 30, 2019, NuZee JP had a payable balance to NuZee Co., Ltd. of $1,503 and $1,552, respectively.

 


14


During September 2016, the Company entered into a rental agreement of an office space and warehouse with EHCL. The Company pays $609 per month for the office and the warehouse on the last day of each month. The lease expired on December 31, 2019, and is expected to continue on a month-to-month basis. At June 30, 2020 and September 30, 2019, the payable balance under this lease was $605 and $1,154, respectively.

 

During February 2015, the Company entered into a rental agreement of a warehouse with Eguchi Steel Co.,Ltd ("ESCL"). The Company pays $449 per month for the warehouse on the last day of each month. There is no set expiration date on the agreement.

 

4.  COMMON STOCK

 

During the nine months ended June 30, 2020, the Company sold (i) 111,738 shares of common stock at a weighted average price of $17.85 per share, for an aggregate purchase price of $1,994,523 pursuant to private offerings of common stock and (ii) 700,000 shares of common stock at a price of $9.00 per share for an aggregate purchase price of $6,300,000 pursuant to the Company’s underwritten public offering of common stock. After deducting underwriting commission of $500,837, and expenses paid by the Company that were directly attributable to the registered offering of $1,150,989, including $225,089 that was paid in the year ended September 30, 2019, the Company received net proceeds from the registered public offering of common stock of $4,648,174. All discounts, fees, and expenses are treated as a reduction of the Company’s additional paid-in capital balance.

 

See Note 6 – Subsequent Events for more information.

 

5.  STOCK OPTIONS AND WARRANTS

 

The following table summarizes stock option activity for nine months ended June 30, 2020:

 

 

 

 

 

Weighted

 

Weighted

 

 

 

 

 

 

Average

 

Average

 

 

 

 

Number of

 

Exercise

 

Remaining

 

Aggregate

 

 

Shares

 

Price

 

Contractual Life (years)

 

Intrinsic Value

Outstanding at September 30, 2019

 

1,811,667   

 

6.86   

 

8.4   

 

33,705,960   

Granted

 

23,333   

 

1.53   

 

 

 

 

Exercised

 

-   

 

-   

 

 

 

 

Expired

 

-   

 

-   

 

 

 

 

Forfeited

 

(110,000)  

 

18.14   

 

 

 

 

Outstanding at June 30, 2020

 

1,725,000   

 

6.07   

 

7.5   

 

10,243,687   

 

 

 

 

 

 

 

 

 

Exercisable at June 30, 2020

 

663,750   

 

6.83  

 

7.4   

 

$   3,802,116   

 

The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized stock option expenses of $4,505,498 for the nine months ended June 30, 2020. Unamortized option expense as of June 30, 2020, for all options outstanding amounted to $4,566,831. These costs are expected to be recognized over a weighted- average period of 2.1 years. The Company recognized stock option expenses of $10,608,751 for the nine months ended June 30, 2019.

 

On June 23, 2020, as part of our agreement with Benchmark Company, LLC the underwriter of the Company’s registered public offering of common stock, we issued 40,250 warrants to purchase our common stock at an exercise price of $9.00 a share. These warrants are exercisable beginning on December 23, 2020 and expire on June 18, 2025.

 

A summary of the status of the Company’s nonvested options as of June 30, 2020, is presented below:

 

Nonvested options

 

 

 

 

 

 

 

Number of

 

 

Nonvested Shares

Nonvested shares at September 30, 2019

1,355,000   

Granted

 

23,333   

Exercised

 

-   

Forfeited

 

(110,000)  

Vested

 

(207,083)  

Nonvested shares at June 30, 2020

 

1,061,250   

 


15


The following table summarizes warrant activity for the nine months ended June 30, 2020:

 

 

 

 

 

Weighted

 

Weighted

 

 

 

 

 

 

Average

 

Average

 

 

 

 

Number of

 

Exercise

 

Remaining

 

Aggregate

 

 

Warrants

 

Price

 

Contractual Life (years)

 

Intrinsic Value

Outstanding at September 30, 2019

 

-   

 

$      -   

 

 

$             -   

Granted

 

40,250   

 

9.00   

 

 

 

 

Exercised

 

-   

 

-   

 

 

 

 

Expired

 

-   

 

-   

 

 

 

 

Forfeited

 

-   

 

-   

 

 

 

 

Outstanding at June 30, 2020

 

40,250   

 

9.00   

 

5.0   

 

36,012   

 

 

 

 

 

 

 

 

 

Exercisable at June 30, 2020

 

-   

 

$      -   

 

 

$             -   

 

6.  SUBSEQUENT EVENT

 

Exercise of over-allotment option

 

On July 21, 2020, the underwriters in the Company’s registered public offering of common stock exercised their over-allotment option, resulting in the issuance of an additional 105,000 shares at $9.00 per share. As part of this exercise, the Company received net proceeds of $878,850 (net of underwriting commissions).

 

Exercise of options

 

On July 31, 2020, 23,334 shares were issued upon the exercise of stock options. As part of this exercise, the Company received $35,700 in proceeds.


16


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward- looking statements. These forward-looking statements are subject to certain risk s and uncertainties that could cause actual results to differ materially from our predictions.

 

Overview

 

We are a specialty coffee company and, we believe, the leading single serve pour over coffee co-packer in the United States. Our mission is to leverage our position as a co-packer at the forefront of the North American single serve pour over coffee market to revolutionize the way single serve coffee is enjoyed in the United States. While the United States is our core market, we also have single serve pour over coffee sales operations in Japan as well as manufacturing and sales operations in Korea and a joint venture in Latin America. In addition, we plan to opportunistically leverage our strengths and relationships to grow our proprietary NuZee and Coffee Blenders brands in the United States and select international markets.

 

We believe we are the only commercial-scale producer of single serve drip cup coffee and that we have certain advantages in place within the North American market. We intend to leverage our position to be the commercial manufacturer of choice for major companies seeking to enter the single serve drip cup market in North America. We target existing large, high-margin companies and are paid per- package based on the number of single serve pour over drip cups produced by us. Accordingly, we consider our business model to be a form of tolling arrangement, as we receive a fee for every single serve drip cup our co-packing customers sell in the North American market. While we financially benefit from the success of our manufacturing customers through the sales of their respective single serve drip cup products, we are also able to avoid the risks associated with owning and managing the product and its related inventory. As these companies gain market acceptance of single serve drip cup coffee in North America, we plan to leverage that market expansion to further grow our own brands.

 

Our primary focus is the development of single serve pour over coffee in the North American market targeting the individual consumer for use at home and office or other settings that would benefit from single serve pour over products, such as our recent expansion into the lodging market through our arrangement with Royal Cup Coffee & Tea, and positioning ourselves as the leading commercial-scale co- packer of single serve pour over coffee products. We may also look to co-package other products that are complementary to single serve pour over drip coffee and provide us with a deeper access to our customers, such as tea bag coffee. The competitive landscape for our services and products can be illustrated as follows:

 

Picture 

 

Since 2016, we have been primarily focused on single serve pour over coffee production. Over this time we have developed expertise in the operation of our sophisticated packing equipment and the related production of the single serve pour over product at both our Vista, California facility and at our production operations in Korea. We plan to carry over this expertise to our recently announced Plano, Texas manufacturing facility, which will serve as our new single serve pour over co-packing hub and corporate headquarters to capture the location’s logistical advantages and lower cost structure.


17


Recent Developments

 

Expiration of Exclusivity Agreement with FUSO Industries Co. Ltd.

 

We were engaged in negotiations with FUSO Industries Co. Ltd. (“FUSO”) to extend the term of the exclusivity agreement between us and FUSO (the “FUSO Agreement”). We acquired certain of the machines we use in the production of our single serve pour over coffee products pursuant to the terms of the FUSO Agreement. The FUSO Agreement expired pursuant to its terms on June 30, 2020.

 

Employees

 

During March 2020, we terminated the employment of two part-time and three full-time employees located in the U.S. Each such employee was offered two weeks’ pay as a severance package. We do not expect the departure of these employees to adversely impact our ability to provide our top-quality services and products.

 

Geographic Concentration

 

Our operations are primarily split between two geographic areas: North America and Asia.

 

For the three months ended June 30, 2020, net revenues attributable to our operations in North America totaled $119,313 compared to $420,083 of net revenues attributable to our operations in North America for the three months ended June 30, 2019. For the nine months ended June 30, 2020, net revenues attributable to our operations in North America totaled $756,000 compared to $715,702 of net revenues attributable to our operations in North America for the nine months ended June 30, 2019. Additionally, as of June 30, 2020, $1,459,948 of our Property and equipment, net was attributable to our North American operations, compared to $1,471,859 attributable to our North American operations as of September 30, 2019.

 

For the three months ended June 30, 2020, net revenues attributable to our operations in Asia totaled $72,649 compared to $165,119 of net revenues attributable to our operations in Asia during the three months ended June 30, 2019. For the nine months ended June 30, 2020, net revenues attributable to our operations in Asia totaled $375,562 compared to $588,864 of net revenues attributable to our operations in Asia during the nine months ended June 30, 2019. Additionally, as of June 30, 2020, $276,484 of our Property and equipment, net was attributable to our Asian operations, compared to $403,732 attributable to our Asian operations as of September 30, 2019.

 

Results of Operations

 

Comparison of three months ended June 30, 2020 and 2019:

 

Revenue

 

 

 

Three months ended
June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Dollars

 

 

%

 

Revenue

 

$ 191,962   

 

 

 

$

585,202   

 

 

$ (393,240)  

 

 

 

(67%)

 

 

 

For the three months ended June 30, 2020, our revenue decreased by $393,240, or approximately 67%, compared with the three months ended June 30, 2019. This decrease was related to the loss of a major co-packing in North America and in Japan as well the worldwide impacts of COVID-19.

 

Cost of sales and gross margin

 

 

 

Three months ended
June 30,

 

 

Change

 

 

2020

 

 

2019

 

 

Dollars

 

 

%

Cost of sales

 

$ 331,039   

 

 

 

 

$ 469,045   

 

 

($138,006)  

 

 

 

(29%)  

 

Gross margin

 

($139,077)  

 

 

 

 

$ 116,157   

 

 

($255,234)  

 

 

 

(220%)  

 

Gross margin %

 

(72%)  

 

 

 

 

20 %

 

 

 

 

 

 

 

 

 

For the three months ended June 30, 2020, we incurred a total gross loss of $139,077, from sales of our products and co-packing services, compared to a total gross profit of $116,157 for the three months ended June 30, 2019. The gross margin rate was (72%) for the three months ended June 30, 2020, and 20% for the three months ended June 30, 2019. This decrease in margin was driven primarily by significantly reduced revenues and greater operating capacity during the period compared to the prior year with significantly higher revenues with lower operating capacity. Greater operating capacity has increased our labor and other expenses.


18


 

Operating Expenses

 

 

 

Three months ended
June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Dollars

 

 

%

 

Operating Expenses

 

$ 2,378,947   

 

 

 

$ 9,514,003   

 

 

 

($7,135,056)  

 

 

 

(75%)  

 

 

 

For the three months ended June 30, 2020, the Company’s operating expenses totaled $2,378,947 compared to $9,514,003 for the three months ended June 30, 2019, representing a 75% decrease. This decrease is primarily attributable to a decrease in stock based compensation expense.

 

Net Loss

 

 

 

Three months ended
June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Dollars

 

 

%

 

Net Loss attributable to NuZee, Inc.

 

$ 2,542,418   

 

 

 

$

9,406,503   

 

 

$ (6,864,085)  

 

 

 

 

(73%)

 

 

For the three months ended June 30, 2020, we generated net losses attributable to NuZee, Inc. of $2,542,418 versus $9,406,503 for the three months ended June 30, 2019. This improvement in net losses is primarily attributable to lower stock compensation expense.

 

Comparison of nine months ended June 30, 2020 and 2019:

 

Revenue

 

 

 

Nine months ended
June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Dollars

 

 

%

 

Revenue

 

$ 1,131,562   

 

 

 

$

1,304,566   

 

 

$ (173,004)  

 

 

 

(13%)

 

 

 

For the nine months ended June 30, 2020, our revenue decreased by $173,004, or approximately 13%, compared with the nine months ended June 30, 2019. This decrease was primarily related to a decrease in co-packing revenues attributable to a loss of a major customer in North America and Japan during the current period.

 

Cost of sales and gross margin

 

 

 

Nine months ended
June 30,

 

 

Change

 

 

2020

 

 

2019

 

 

Dollars

 

 

%

Cost of sales

 

$ 1,250,904   

 

 

 

 

$ 923,903   

 

 

$  327,001   

 

 

 

35 %

 

Gross profit

 

$  (119,342)  

 

 

 

 

$ 380,663   

 

 

$ (500,005)  

 

 

 

(131%)  

 

Gross profit margin %

 

(11%)  

 

 

 

 

29 %

 

 

 

 

 

 

 

 

 

For the nine months ended June 30, 2020, we incurred a total gross loss $119,342 from sales of our products and co-packing services, compared to a total gross profit of $380,663 for the nine months ended June 30, 2019. The gross margin rate was (11%) for the nine months ended June 30, 2020, and 29% for the nine months ended June 30, 2019. This decrease in margin was driven primarily by significantly reduced revenues and greater operating capacity during the period compared to the prior year with significantly higher revenues with lower operating capacity.

 

Operating Expenses

 

 

 

Nine months ended
June 30,

 

 

Change

 

 

2020

 

 

2019

 

 

Dollars

 

 

%

Operating Expenses

 

$ 8,342,412   

 

 

 

$

13,668,299   

 

 

$ (5,325,887)  

 

 

 

 

(39%)

 

For the nine months ended June 30, 2020, the Company’s operating expenses totaled $8,342,412, compared to $13,668,299 for the nine months ended June 30, 2019, representing a 39% decrease. This decrease is primarily attributable to a decrease in stock based compensation expense.


19


Net Loss

 

 

 

Nine months ended
June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Dollars

 

 

%

 

Net Loss attributable to NuZee, Inc.

 

$ 8,453,901   

 

 

 

$ 13,436,197   

 

 

 

$ (4,982,296)  

 

 

 

 

(37%)

 

 

For the nine months ended June 30, 2020, we generated net losses attributable to NuZee, Inc. of $8,453,901, versus $13,436,197 for the nine months ended June 30, 2019. This improvement in net losses is primarily attributable to lower stock compensation expense.

 

Liquidity and Capital Resources

 

Since our inception in 2011, we have incurred significant losses, and as of June 30, 2020, we had an accumulated deficit of approximately $33 million. We have not yet achieved profitability, and anticipate that we will continue to incur significant sales and marketing expenses prior to recording sufficient revenue from our operations to offset these expenses. In the United States, we expect to incur additional losses as a result of the costs associated with operating as an exchange-listed public company in the future.

 

To date, we have funded our operations primarily with proceeds from the public and private sale of shares of our common stock.

 

Our principal use of cash is to fund our operations, which includes the commercialization of our pour over coffee products, the continuation of efforts to improve our products, administrative support of our operations and other working capital requirements.

 

We may need to raise additional funds to support our operating activities, and such funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected. We may seek to raise additional funds through equity, equity-linked or debt financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations. Any additional equity financing may be dilutive to our stockholders.

 

As of June 30, 2020, we had a cash balance of $5,215,809.

 

Summary of Cash Flows

 

                                                                         

 

 

Nine Months Ended
June 30,

 

 

 

 

          2020          

 

 

          2019          

 

Cash used in operating activities

 

 

 

$(3,003,714) 

 

 

 

$(2,949,569) 

 

Cash provided (used) in investing activities

 

 

 

$93,694  

 

 

 

$(1,220,333) 

 

Cash provided by financing activities

 

 

 

$6,777,931 

 

 

 

$5,422,065  

 

Effect of foreign exchange on cash

 

 

 

$21,858  

 

 

 

$2,601  

 

Net increase in cash

 

 

 

$3,889,769  

 

 

 

$1,254,764  

 

 

Operating Activities

 

We used $3,003,714 and $2,949,569 of cash in operating activities during the nine months ended June 30, 2020 and 2019, respectively, principally to fund our operating loss. Excluding the impact of stock compensation expense, the increase in cash used in operating activities of $54,145 was primarily attributable to the increase in net loss for the nine months ended June 30, 2020 as compared to the nine months ended June 30, 2019 partially offset by an improvement in cash flow from accounts receivables and inventories.

 

Investing Activities

 

We provided $93,694 of cash versus used $1,220,333 of cash in investing activities during the nine months ended June 30, 2020 and 2019, respectively, principally to fund the purchase of equipment.

 

Financing Activities

 

Historically, we have funded our operations primarily through the issuance of our common stock.

 

Cash provided by financing activities increased to $6,777,931 for the nine months ended June 30, 2020 from $5,422,065 for the nine months ended June 30, 2019. During the nine months ended June 30, 2020, we issued 811,738 shares of common stock which generated net cash proceeds of $6,867,786.


20


Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

Item 4. Controls and Procedures

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our Company is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is collected and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures for our Company. In designing and evaluating our disclosure controls and procedures, management recognizes that no matter how well conceived and operated, disclosure controls and procedures can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our "disclosure controls and procedures" (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date") Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are not effective, at the reasonable assurance level, to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure, in part due to the material weaknesses in our internal control over financial reporting described in our Annual Report on Form 10-K/A for the year ended September 30, 2019 filed with the SEC on December 31, 2019, which have not yet been remediated. Management is responsible for implementing changes and improvements to internal control over financial reporting and for remediating the control deficiencies that gave rise to the material weaknesses. We will not consider these material weaknesses fully remediated until management has tested those internal controls and found them to be operating effectively.

 

Changes in Internal Control Over Financial Reporting

 

Other than as described above, there have been no changes in our internal control over financial reporting during the three-month period ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


21


PART II.

 

Item 1. Legal Proceedings

 

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.

 

Item 1A. Risk Factors

 

Except as set forth below, there have been no changes to our risk factors from those disclosed in our annual report on Form 10-K/A filed with the SEC on December 31, 2019.

 

The COVID-19 pandemic is significantly affecting our operations and financial condition, and our liquidity could also be negatively impacted, particularly if the U.S. economy remains unstable for a significant amount of time.

 

The novel coronavirus (“COVID-19”) global pandemic is significantly affecting our business operations, as well as the U.S. economy and financial markets. As the COVID-19 crisis is still rapidly evolving, much of its impact remains unknown and difficult to predict. The COVID-19 crisis may have an adverse impact on our business and financial results that we are not currently able to fully quantify.

 

Broad economic factors resulting from the current COVID-19 pandemic, including increasing unemployment rates and reduced consumer spending, may affect our revenues and our ability to collect outstanding receivables. Business closings and layoffs, along with travel bans and restrictions and shelter-in-place or similar orders issued to combat the spread of COVID-19, may adversely affect demand for our products, as well as the ability of our customers to pay for goods delivered. Any increase in the amount or deterioration in the collectability of accounts receivable will adversely affect our cash flows and results of operations, requiring an increased level of working capital. If general economic conditions continue to deteriorate or remain uncertain for an extended period of time, our liquidity may be harmed and the trading price of our common stock could decline significantly.

 

In addition, our results and financial condition may be adversely affected by federal or state laws, regulations, orders, or other governmental or regulatory actions addressing the current COVID-19 pandemic which, if adopted, could result in direct or indirect restrictions to our business, financial condition, results of operations and cash flow. We may also be subject to lawsuits from employees and others exposed to COVID-19 at our facilities. Such actions may involve large demands, as well as substantial defense costs. Our professional and general liability insurance may not cover all claims against us.

 

The COVID-19 pandemic is significantly affecting our business operations.

 

In December 2019, COVID-19 originated in Wuhan, China, and quickly spread to infect many people in the city and surrounding area.  In some cases, COVID-19 causes severe illness and even death.  Since its discovery, COVID-19 has spread worldwide and significantly impacted global economies.  Restrictive measures that have been implemented in the United States and other countries to combat the virus and its spread, such as travel bans, social distancing, quarantines and shelter-in-place orders may also adversely affect our ability to produce as well as the demand for our products and therefore have an adverse effect on our operations, business and financial condition. 

 

We have a sales office in Japan and a manufacturing and sales office in Korea, and we source our manufacturing equipment and filters from East Asian companies. The continued spread of COVID-19 and implementation of restrictive measures may adversely affect our operations in North America and Asia and our business generally, depending on the extent of its spread of the virus, the rate of infection, the severity of illness and the probability of lethality, the relative effect on various portions of the population (such as the aged), the effect on international trade and commerce and on foreign and domestic travel generally of any measures taken to combat the virus, any action taken (such as the lowering of interest rates) by government entities to combat the negative macroeconomic effects of these measures, the timing and availability of any vaccine for the virus, and other factors. If such circumstances continue to deteriorate, our production capabilities and demand for our products may decline, which would have an adverse effect on our results of operations and financial condition.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.


22


Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6.  Exhibits

 

EXHIBIT NO.

DESCRIPTION

31.1*

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101***

Interactive Data Files

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

 

*  Filed herewith

 

** Furnished herewith

 

** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed  or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.


23


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date:

August 6, 2020

 

NUZEE, INC.

 

 

 

 

 

By:

/s/ Masateru Higashida

 

 

 

Masateru Higashida, Chief Executive Officer

(Principal Executive Officer)

 

 

By:

/s/ Shanoop Kothari

 

 

 

Shanoop Kothari, Chief Financial Officer

(Principal Financial Officer)


24