UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 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 Number 001-39338 CIMG Inc. (Exact name of registrant as specified in its charter) Nevada 38-3849791 (State or other jurisdiction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2024 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 Number 001-39338 CIMG Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporat ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-39338 CIMG Inc. (exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Nevada 38-3849791 (I.R.S. Employer Identificat ...

VISTA, Calif., Sept. 19, 2024 /PRNewswire/ -- NUZEE, INC., ("NUZEE"or the "Company") (NASDAQ： NUZE) a Company with a heritage in specialty coffee and an emerging business in broader consumer food and beverage products, today announced that the Company has signed an endorsement agreement with five sports champions who will endorse the maca beverages (the "Macanuoli") distributed and sold by the Company (the "Agreement"). The five sport champions are Ms. Shurui Li, women's basketball champion; Ms. Chenlin Zho ...

As filed with the Securities and Exchange Commission on August 9, 2024 Registration No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 NuZee, Inc. (Exact name of registrant as specified in its charter) (I.R.S. Employer Identification No.) 2865 Scott St. Suite 107 Vista, California 92081 (760) 295-2408 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offic ...

Nuzee (NASDAQ:NUZE) stock is up on Wednesday with heavy pre-market trading of the coffee and tea company's shares this morning. That has more than 4 million shares of NUZE stock on the move as of this writing. This is already above its daily average trading volume of about 3 million shares. It's also worth noting that the company's float is roughly 406,140 units. This movement comes without any clear news from Nuzee. The single-serve coffee company hasn't released any press releases or filings that would ca ...

As filed with the Securities and Exchange Commission on June 14, 2024 Registration No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 NuZee, Inc. (Exact name of registrant as specified in its charter) (State or Other Jurisdiction of Incorporation or Organization) Nevada 5900 38-3849791 (Primary Standard Industrial Classification Code No.) (I.R.S. Employer Identification No.) 2865 Scott St. Suite 107 Vista, Califor ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Commission File No. 001-39338 NUZEE, INC. (exact name of registrant as specified in its charter) 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 March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________to________ (State or other jurisdiction of incorporation or orga ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-39338 NUZEE, INC. (exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Nevada 38-3849791 (I.R.S. Employer Identific ...

[General Information](index=1&type=section&id=General%20Information) NuZee, Inc. filed a Quarterly Report on Form 10-Q for Q2 2023, identifying as a non-accelerated, smaller reporting company with 776,739 shares outstanding [Filing Details](index=1&type=section&id=Filing%20Details) This section provides key administrative details regarding the company's regulatory filing status and outstanding common stock - The report is a Quarterly Report on Form 10-Q for the period ended June 30, 2023[2](index=2&type=chunk) - As of August 11, 2023, **776,739 shares** of common stock were outstanding[5](index=5&type=chunk) Filing Status | Category | Status | | :--- | :--- | | Filer Type | Non-accelerated filer ☒ | | Reporting Status | Smaller reporting company ☒ | | Emerging Growth Company | ☐ | | Shell Company | No ☒ | [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD%20LOOKING%20STATEMENTS) This section cautions readers that the report contains forward-looking statements subject to inherent risks and uncertainties, which the company does not commit to update [Nature of Forward-Looking Statements](index=4&type=section&id=Nature%20of%20Forward-Looking%20Statements) The report contains forward-looking statements about future events and financial performance, subject to uncertainties, with no obligation for updates - The report includes forward-looking statements on future events and financial performance, subject to uncertainties that may cause actual results to differ materially[10](index=10&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements due to new information or future events[10](index=10&type=chunk) [Key Areas of Forward-Looking Statements](index=4&type=section&id=Key%20Areas%20of%20Forward-Looking%20Statements) Forward-looking statements encompass funding, capital, financial estimates, market conditions, competitive ability, strategic transactions, product development, and litigation outcomes - Forward-looking statements cover plans for obtaining funding, the expectation of needing additional capital beyond three months, and the accuracy of expense and revenue estimates[11](index=11&type=chunk) - Statements also cover the impact of economic conditions, evolving coffee preferences, market size and growth, competitive ability, and anticipated results of strategic transactions[11](index=11&type=chunk) - Other areas include the ability to develop innovative products, expand co-packing services, reliance on third-party partners, regulatory developments, retention of key personnel, intellectual property protection, corporate infrastructure, litigation outcomes, and overall financial performance[11](index=11&type=chunk)[13](index=13&type=chunk) [PART I. Financial Information](index=5&type=section&id=PART%20I) This section presents NuZee's unaudited consolidated financial statements and management's discussion and analysis for the quarter ended June 30, 2023 [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents NuZee's unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows [Consolidated Balance Sheets (unaudited)](index=6&type=section&id=Consolidated%20Balance%20Sheets%20(unaudited)) The unaudited consolidated balance sheets show NuZee's financial position, highlighting significant decreases in cash and total equity - Cash significantly decreased by over **60%** from **$8.3 million to $3.3 million**, leading to a **50% reduction in total current assets** and a **46.6% decrease in total assets**[15](index=15&type=chunk) - Total stockholders' equity declined by **57.27%** from **$9.7 million to $4.2 million**[15](index=15&type=chunk) Consolidated Balance Sheet Highlights | Metric | June 30, 2023 | September 30, 2022 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Cash | $3,280,425 | $8,315,053 | $(5,034,628) | -60.55% | | Total current assets | $5,059,532 | $10,156,079 | $(5,096,547) | -50.18% | | Total assets | $6,255,962 | $11,711,374 | $(5,455,412) | -46.58% | | Total current liabilities | $1,879,038 | $1,599,938 | $279,100 | 17.44% | | Total liabilities | $2,093,267 | $1,968,575 | $124,692 | 6.33% | | Total stockholders' equity | $4,162,695 | $9,742,799 | $(5,580,104) | -57.27% | [Consolidated Statements of Operations (unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Operations%20(unaudited)) The unaudited consolidated statements of operations detail NuZee's revenue, costs, and net loss for the three and nine months ended June 30, 2023 - For the three months ended June 30, 2023, revenue decreased by **16.20%**, gross profit turned positive, and net loss decreased by **23.10%**[17](index=17&type=chunk) - For the nine months ended June 30, 2023, revenue increased by **2.30%**, gross profit turned positive, and net loss decreased by **28.69%**[17](index=17&type=chunk) Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | June 30, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $648,607 | $774,019 | $(125,412) | -16.20% | | Cost of sales | $596,454 | $857,672 | $(261,218) | -30.46% | | Gross profit (loss) | $52,153 | $(83,653) | $135,806 | -162.35% | | Operating expenses | $2,067,915 | $2,546,608 | $(478,693) | -18.79% | | Net loss | $(2,025,337) | $(2,633,892) | $608,555 | -23.10% | | Basic and diluted loss per common share | $(2.63) | $(4.77) | $2.14 | -44.86% | Consolidated Statements of Operations Highlights (Nine Months Ended June 30) | Metric | June 30, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $2,566,121 | $2,508,345 | $57,776 | 2.30% | | Cost of sales | $2,401,806 | $2,575,646 | $(173,840) | -6.75% | | Gross profit (loss) | $164,315 | $(67,301) | $231,616 | -344.15% | | Operating expenses | $6,328,044 | $8,554,276 | $(2,226,232) | -26.02% | | Net loss | $(6,176,416) | $(8,661,792) | $2,485,376 | -28.69% | | Basic and diluted loss per common share | $(8.62) | $(16.41) | $7.79 | -47.47% | [Consolidated Statements of Comprehensive Income (Loss) (unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20(unaudited)) The unaudited consolidated statements of comprehensive income (loss) present net loss and other comprehensive income components - For the nine months ended June 30, 2023, comprehensive loss was **$(6,123,129)**, an improvement from **$(8,681,396)**, primarily due to a positive foreign currency translation adjustment of **$53,287**[20](index=20&type=chunk) Consolidated Statements of Comprehensive Income (Loss) Highlights | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Nine Months Ended June 30, 2023 | Nine Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(2,025,337) | $(2,633,892) | $(6,176,416) | $(8,661,792) | | Foreign currency translation | $(19,331) | $(45,197) | $53,287 | $(19,604) | | Total other comprehensive income (loss), net of tax | $(19,331) | $(45,197) | $53,287 | $(19,604) | | Comprehensive loss | $(2,044,668) | $(2,679,089) | $(6,123,129) | $(8,681,396) | [Consolidated Statements of Stockholders' Equity (unaudited)](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) The unaudited consolidated statements of stockholders' equity detail changes in equity components, including accumulated deficit and additional paid-in capital - Total stockholders' equity decreased by **$5,580,104** from September 30, 2022, to June 30, 2023, primarily due to increased accumulated deficit from net losses[23](index=23&type=chunk) - Additional paid-in capital increased by **$543,024**, reflecting stock option expense, restricted stock compensation, and common stock issued for services[23](index=23&type=chunk) Consolidated Statements of Stockholders' Equity Highlights | Metric | September 30, 2022 | June 30, 2023 | Change (Absolute) | | :--- | :--- | :--- | :--- | | Total Stockholders' Equity | $9,742,799 | $4,162,695 | $(5,580,104) | | Accumulated Deficit | $(64,622,520) | $(70,798,936) | $(6,176,416) | | Additional Paid-in Capital | $74,281,418 | $74,824,442 | $543,024 | | Shares Issued and Outstanding | 676,229 | 776,739 | 100,510 | [Consolidated Statements of Cash Flows (unaudited)](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) The unaudited consolidated statements of cash flows summarize cash movements from operating, investing, and financing activities - Net cash used in operating activities improved by **$651,919**, from **$(5,677,298)** in 2022 to **$(5,025,379)** in 2023[27](index=27&type=chunk) - Net cash used in investing activities significantly decreased from **$(627,593)** in 2022 to **$(34,875)** in 2023, primarily due to the Dripkit acquisition in the prior year[27](index=27&type=chunk) - Financing activities shifted from providing **$3,031,640** in 2022 to using **$(27,661)** in 2023, mainly due to non-recurring proceeds from prior year stock/warrant issuances[27](index=27&type=chunk) Consolidated Statements of Cash Flows Highlights (Nine Months Ended June 30) | Activity | June 30, 2023 | June 30, 2022 | Change (Absolute) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(5,025,379) | $(5,677,298) | $651,919 | | Net cash used in investing activities | $(34,875) | $(627,593) | $592,718 | | Net cash provided by (used in) financing activities | $(27,661) | $3,031,640 | $(3,059,301) | | Net change in cash | $(5,034,628) | $(3,292,855) | $(1,741,773) | | Cash, end of period | $3,280,425 | $7,523,099 | $(4,242,674) | [Notes to Consolidated Financial Statements (unaudited)](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) These notes provide detailed explanations and disclosures supporting the unaudited consolidated financial statements, covering accounting policies, business combinations, and equity activities [1. Basis of Presentation and Summary of Significant Accounting Policies](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details GAAP compliance, consolidation principles, reverse stock split adjustments, going concern status, and key accounting policies for revenue, leases, and equity investments - The financial statements are prepared in accordance with GAAP and include wholly-owned subsidiaries NuZee KOREA Ltd. and NuZee Investment Co., Ltd[30](index=30&type=chunk)[31](index=31&type=chunk) - A **1-for-35 reverse stock split** was completed on December 28, 2022, with all share and per share information retroactively adjusted[33](index=33&type=chunk)[34](index=34&type=chunk) - The company has recurring losses and an accumulated deficit of approximately **$71 million** as of June 30, 2023, raising substantial doubt about its ability to continue as a going concern[38](index=38&type=chunk)[39](index=39&type=chunk) - The company accounts for its joint venture, NuZee LATIN AMERICA (NLA), S.A. de C.V., using the equity method, recognizing losses of **$5,350** and **$4,215** for the nine months ended June 30, 2023 and 2022, respectively[57](index=57&type=chunk)[58](index=58&type=chunk) Major Customers Revenue Concentration (Nine Months Ended June 30, 2023) | Customer Name | Sales Amount | % of Total Revenue | Accounts Receivable Amount | % of Total Accounts Receivable | | :--- | :--- | :--- | :--- | :--- | | Customer CL | $391,232 | 15% | $94,847 | 44% | | Customer CN | $426,748 | 17% | $22,064 | 10% | Major Customers Revenue Concentration (Nine Months Ended June 30, 2022) | Customer Name | Sales Amount | % of Total Revenue | Accounts Receivable Amount | % of Total Accounts Receivable | | :--- | :--- | :--- | :--- | :--- | | Customer WP | $660,997 | 26% | $239,579 | 42% | | Customer CU | $252,137 | 10% | $52,564 | 9% | | Customer S | $242,580 | 10% | $62,590 | 11% | [2. Geographic Concentration](index=18&type=section&id=2.%20GEOGRAPHIC%20CONCENTRATION) NuZee operates in North America and South Korea, with South Korea's net revenue significantly increasing while North America's decreased for the nine months ended June 30, 2023 - South Korea's net revenue increased by **166.65%** for the nine months ended June 30, 2023, while North America's revenue decreased by **36.25%**[61](index=61&type=chunk) Net Revenue by Geographic Segment (Nine Months Ended June 30) | Segment | June 30, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | North America | $1,295,338 | $2,031,781 | $(736,443) | -36.25% | | South Korea | $1,270,783 | $476,564 | $794,219 | 166.65% | | Total | $2,566,121 | $2,508,345 | $57,776 | 2.30% | Property and Equipment, Net by Geographic Segment | Segment | June 30, 2023 | September 30, 2022 | Change (Absolute) | | :--- | :--- | :--- | :--- | | North America | $215,756 | $378,546 | $(162,790) | | South Korea | $143,449 | $144,865 | $(1,416) | | Japan | $805 | $1,664 | $(859) | | Total | $360,010 | $525,075 | $(165,065) | [3. Business Combinations (Dripkit Acquisition)](index=18&type=section&id=3.%20BUSINESS%20COMBINATIONS) NuZee acquired Dripkit, Inc. for **$876,176** in February 2022, recognizing goodwill that was fully impaired by September 2022, with Dripkit contributing **$144,884** in revenue and a net loss of **$385,617** for the nine months ended June 30, 2023 - NuZee acquired Dripkit, Inc. on February 25, 2022, for an acquisition accounting purchase price of **$876,176**[62](index=62&type=chunk) - Goodwill of **$531,412** recognized from the acquisition was fully impaired to **$0** by September 30, 2022[68](index=68&type=chunk) - Dripkit contributed **$144,884** in revenue and a net loss of **$385,617** to NuZee's consolidated statement of operations for the nine months ended June 30, 2023[69](index=69&type=chunk) Dripkit Acquisition Purchase Price Allocation | Item | Amount | | :--- | :--- | | Total purchase price | $876,176 | | Inventory acquired | $9,664 | | Property and equipment acquired | $5,100 | | Identifiable intangible assets acquired | $330,000 | | Total assets acquired | $344,764 | | Goodwill | $531,412 | [4. Intangible Assets](index=20&type=section&id=4.%20INTANGIBLE%20ASSETS) As of June 30, 2023, NuZee's intangible assets primarily comprised tradenames with a net value of **$117,500**, incurring **$22,500** in amortization expense - Amortization expense for intangible assets was **$22,500** for the nine months ended June 30, 2023[74](index=74&type=chunk) Intangible Assets as of June 30, 2023 | Asset | Amortization Period (Years) | Gross | Accumulated Amortization | Net | | :--- | :--- | :--- | :--- | :--- | | Tradenames | 5 | $140,000 | $22,500 | $117,500 | [5. Issuance of Equity Securities](index=20&type=section&id=5.%20ISSUANCE%20OF%20EQUITY%20SECURITIES) This note details the issuance of restricted stock and common stock for services, including **80,609 restricted shares** granted and **13,500 common shares** issued for consulting, incurring **$176,775** and **$135,870** in compensation expense, respectively - Common stock compensation expense for restricted shares was **$176,775** for the nine months ended June 30, 2023, compared to **$71,916** in 2022[75](index=75&type=chunk) - **58,619 performance-based restricted shares** were granted, but management estimates Fiscal Year 2023 performance goals will not be achieved, resulting in **$0** compensation expense[76](index=76&type=chunk)[77](index=77&type=chunk) - The company issued **13,500 shares** of common stock for services to third-party professional services providers, recognizing **$135,870** in compensation expense for the nine months ended June 30, 2023[80](index=80&type=chunk)[81](index=81&type=chunk) Restricted Common Shares Activity (Nine Months Ended June 30) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Number of shares outstanding at September 30 | 3,370 | - | | Restricted shares granted | 80,609 | 3,370 | | Restricted shares forfeited | (2,458) | - | | Restricted shares vested | (3,370) | - | | Number of shares outstanding at June 30 | 78,151 | 3,370 | [6. Stock Options and Warrants](index=21&type=section&id=6.%20STOCK%20OPTIONS%20AND%20WARRANTS) This note summarizes stock option and warrant activity, with **12,186 stock options** forfeited and expense significantly reduced to **$190,380** for the nine months ended June 30, 2023 - Stock option expense decreased significantly to **$190,380** for the nine months ended June 30, 2023, from **$2,687,529** in the prior year[83](index=83&type=chunk) Stock Option Activity (Nine Months Ended June 30, 2023) | Metric | Number of Shares Issuable | Weighted Average Exercise Price | | :--- | :--- | :--- | | Outstanding at October 1, 2022 | 113,650 | $149.88 | | Forfeited and expired | (12,186) | $118.02 | | Outstanding at June 30, 2023 | 101,464 | $154.48 | | Exercisable at June 30, 2023 | 70,146 | $174.03 | Warrant Activity (Nine Months Ended June 30, 2023) | Metric | Number of Shares Issuable | Weighted Average Exercise Price | | :--- | :--- | :--- | | Outstanding at September 30, 2022 | 152,398 | $158.24 | | Outstanding at June 30, 2023 | 152,398 | $158.24 | | Exercisable at June 30, 2023 | 152,398 | $158.24 | [7. Contingency (Steeped Litigation)](index=22&type=section&id=7.%20CONTINGENCY) NuZee has accrued **$150,000** for litigation costs related to an ongoing trademark infringement complaint from Steeped, Inc., based on a declined settlement proposal - NuZee has accrued **$150,000** for litigation costs related to an ongoing trademark infringement complaint from Steeped, Inc[87](index=87&type=chunk) - The accrual is based on an initial settlement proposed by the opposing party, which NuZee declined[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses NuZee's financial condition and results, covering revenue, costs, net loss, liquidity, and cash flows, highlighting its specialty coffee and co-packing business [Overview](index=23&type=section&id=Overview) NuZee is a specialty coffee company and leading co-packer, expanding its product portfolio and exploring strategic partnerships while operating on a tolling arrangement model - NuZee is a specialty coffee company and a leading co-packer of single-serve pour-over and coffee brew bag products in the US, with operations in Korea and a joint venture in Latin America[88](index=88&type=chunk) - The company expanded its product portfolio with DRIPKIT pour-over products through the acquisition of Dripkit, Inc[88](index=88&type=chunk) - NuZee operates on a tolling arrangement model, receiving a per-package fee for co-packing services, benefiting from customer success while avoiding inventory risks[89](index=89&type=chunk) - The company sells NuZee branded single-serve coffee products and is exploring strategic partnerships and acquisitions to expand its portfolio and market reach[90](index=90&type=chunk)[91](index=91&type=chunk) [2022 Reverse Stock Split](index=23&type=section&id=2022%20Reverse%20Stock%20Split) Stockholders approved a 1-for-35 reverse stock split, which became effective on December 28, 2022 - A **1-for-35 reverse stock split** was approved by stockholders on December 9, 2022, and became effective on December 28, 2022[92](index=92&type=chunk) [Impact of the COVID-19 Pandemic](index=23&type=section&id=Impact%20of%20the%20COVID-19%20Pandemic) The COVID-19 pandemic has not significantly impacted operations to date, but may affect customer payment ability and working capital - The COVID-19 pandemic has not significantly affected business or operations to date, with adverse effects mitigated by alternative suppliers[93](index=93&type=chunk) - However, the crisis may adversely affect customer payment ability, impacting cash flows and requiring increased working capital[93](index=93&type=chunk) [Geographic Concentration](index=24&type=section&id=Geographic%20Concentration) This section analyzes net revenues by geographic area, showing a significant increase in Asia and a decrease in North America for the reported periods - North American net revenues decreased significantly for both the three-month (**-54.22%**) and nine-month (**-36.25%**) periods, while Asian net revenues saw substantial increases (**150.82%** and **166.65%** respectively)[95](index=95&type=chunk)[96](index=96&type=chunk) Net Revenues by Geographic Operations (Three Months Ended June 30) | Geographic Area | June 30, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | North America | $288,621 | $630,496 | $(341,875) | -54.22% | | Asia | $359,986 | $143,523 | $216,463 | 150.82% | Net Revenues by Geographic Operations (Nine Months Ended June 30) | Geographic Area | June 30, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | North America | $1,295,338 | $2,031,781 | $(736,443) | -36.25% | | Asia | $1,270,783 | $476,564 | $794,219 | 166.65% | [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section compares NuZee's financial performance for the three and nine months ended June 30, 2023, against the prior year, detailing revenue, gross profit, and net loss - NuZee entered into a five-year global licensing agreement with Stone Brewing to co-manufacture and distribute specialist coffee products nationwide[97](index=97&type=chunk) - The company established a long-term relationship with Corberosa Premium Air-Roasted Coffee to produce and distribute its air-roasted coffees using the brew bag format[97](index=97&type=chunk) - NuZee secured its first private label agreement with Wakefern Food Corp. for single-serve coffee brew-bag products[98](index=98&type=chunk) - A manufacturing agreement with a California-based coffee roaster was signed to expand the West Coast manufacturing footprint and test TiMELESS® technology[99](index=99&type=chunk) [Comparison of three months ended June 30, 2023 and 2022](index=25&type=section&id=Comparison%20of%20three%20months%20ended%20June%2030,%202023%20and%202022) This section compares NuZee's financial performance for the three months ended June 30, 2023, and 2022, focusing on revenue, gross profit, and net loss - Revenue decreased by **16%** due to customers pushing out orders in the US[102](index=102&type=chunk) - Gross profit improved significantly from a loss of **$(83,653)** to a profit of **$52,153**, with gross margin increasing from **-11% to 8%**, primarily due to decreased production salaries and temporary labor[103](index=103&type=chunk) - Operating expenses decreased by **19%**, mainly attributable to a **$441,721 decrease** in stock-based compensation expense[104](index=104&type=chunk) - Net loss decreased by **23%** to **$(2,025,337)**, driven by lower stock-based compensation expense[105](index=105&type=chunk) Financial Performance (Three Months Ended June 30) | Metric | June 30, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $648,607 | $774,019 | $(125,412) | -16% | | Cost of sales | $596,454 | $857,672 | $(261,218) | -30% | | Gross profit (loss) | $52,153 | $(83,653) | $135,806 | -162% | | Gross profit (loss) % | 8% | -11% | 19% | - | | Operating Expenses | $2,067,915 | $2,546,608 | $(478,693) | -19% | | Net Loss | $(2,025,337) | $(2,633,892) | $608,555 | -23% | [Comparison of nine months ended June 30, 2023 and 2022](index=25&type=section&id=Comparison%20of%20nine%20months%20ended%20June%2030,%202023%20and%202022) This section compares NuZee's financial performance for the nine months ended June 30, 2023, and 2022, focusing on revenue, gross profit, and net loss - Revenue increased by **2%**, primarily driven by increased revenue in South Korea from a new co-packing arrangement and increased orders from an existing customer[107](index=107&type=chunk) - Gross profit improved significantly from a loss of **$(67,301)** to a profit of **$164,315**, with gross margin increasing from **-3% to 6%**, mainly due to decreased labor costs in South Korea and reduced production/temporary labor in North America[108](index=108&type=chunk) - Operating expenses decreased by **26%**, primarily due to a **$2,256,420 decrease** in stock-based compensation expense[109](index=109&type=chunk) - Net loss decreased by **29%** to **$(6,176,416)**, mainly attributable to the decrease in stock-based compensation expense[110](index=110&type=chunk) Financial Performance (Nine Months Ended June 30) | Metric | June 30, 2023 | June 30, 2022 | Change (Absolute) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,566,121 | $2,508,345 | $57,776 | 2% | | Cost of sales | $2,401,806 | $2,575,646 | $(173,840) | -7% | | Gross profit (loss) | $164,315 | $(67,301) | $231,616 | -344% | | Gross profit (loss) % | 6% | -3% | 9% | - | | Operating Expenses | $6,328,044 | $8,554,276 | $(2,226,232) | -26% | | Net Loss | $(6,176,416) | $(8,661,792) | $2,485,376 | -29% | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses NuZee's liquidity position, capital needs, and ability to fund operations, highlighting recurring losses and the need for additional capital - The company has incurred significant losses since inception, with an accumulated deficit of approximately **$71 million** as of June 30, 2023, and has not yet achieved profitability[111](index=111&type=chunk) - As of June 30, 2023, the cash balance was **$3,280,425**, expected to fund operations for only about three months from August 11, 2023[113](index=113&type=chunk) - NuZee intends to raise additional capital through public or private equity offerings to support operations beyond the next three months, acknowledging potential funding availability challenges[115](index=115&type=chunk) - Inability to raise additional funds would adversely affect operations and business strategy, with current capital insufficient for the next twelve months, raising substantial doubt about going concern[116](index=116&type=chunk)[117](index=117&type=chunk) [Contractual Obligations](index=28&type=section&id=Contractual%20Obligations) This section outlines NuZee's significant contractual cash requirements, including lease liabilities and loan payments, as of June 30, 2023 - As of June 30, 2023, significant contractual cash requirements for lease liabilities and loan payments totaled approximately **$499,916**[118](index=118&type=chunk) - Of the total contractual obligations, **$332,910** is payable within 12 months as of June 30, 2023[118](index=118&type=chunk) - The company had no purchase obligations as of June 30, 2023[118](index=118&type=chunk) [Summary of Cash Flows](index=28&type=section&id=Summary%20of%20Cash%20Flows) This section summarizes NuZee's cash flows from operating, investing, and financing activities for the nine months ended June 30, 2023 - Cash used in operating activities decreased by **$651,919**, from **$(5,677,298)** in 2022 to **$(5,025,379)** in 2023[120](index=120&type=chunk) - Cash used in investing activities significantly decreased from **$(627,593)** in 2022 to **$(34,875)** in 2023, primarily due to the Dripkit acquisition and equipment purchases in the prior year[121](index=121&type=chunk) - Financing activities shifted from providing **$3,031,640** in 2022 to using **$(27,661)** in 2023, primarily due to loan and lease repayments[122](index=122&type=chunk) Summary of Cash Flows (Nine Months Ended June 30) | Activity | June 30, 2023 | June 30, 2022 | | :--- | :--- | :--- | | Cash used in operating activities | $(5,025,379) | $(5,677,298) | | Cash used in investing activities | $(34,875) | $(627,593) | | Cash provided by (used in) financing activities | $(27,661) | $3,031,640 | | Effect of foreign exchange on cash | $53,287 | $(19,604) | | Net change in cash | $(5,034,628) | $(3,292,855) | [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section confirms no material changes to critical accounting policies and estimates during the reported periods - No significant and material changes occurred in critical accounting policies and estimates during the three and nine months ended June 30, 2023, compared to the prior Annual Report on Form 10-K[124](index=124&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, NuZee, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - NuZee, Inc. is a smaller reporting company and is not required to provide disclosures about market risk[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and Interim CFO, concluded that disclosure controls and procedures were effective as of June 30, 2023[127](index=127&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023[128](index=128&type=chunk) [PART II. Other Information](index=29&type=section&id=PART%20II) This section provides other information, including legal proceedings, risk factors, equity security sales, and exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing legal proceedings against NuZee, Inc., including litigation from Next Vision, Steeped, and a former employee, which the company intends to vigorously defend - Next Vision, Inc. filed a complaint alleging breach of contract, improper six-month restriction on resale of shares, and overstated income on IRS Form 1099-B[130](index=130&type=chunk) - Steeped, Inc. filed a new complaint alleging breach of a prior settlement agreement and trademark infringement, seeking injunctions, damages, and attorney's fees[133](index=133&type=chunk) - A former employee, Rosaline Curtin, filed a complaint alleging harassment, gender discrimination, retaliation, and wrongful termination[135](index=135&type=chunk) - NuZee believes the allegations are without merit and intends to defend vigorously, but cannot predict the outcome of these litigations[132](index=132&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred to the risk factors previously disclosed in the Annual Report on Form 10-K filed on December 23, 2022 - No material changes to risk factors from the Annual Report on Form 10-K filed on December 23, 2022[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2023, NuZee issued **13,500 shares** of common stock to a third-party professional services provider for consulting, relying on Section 4(a)(2) and/or Regulation D exemptions - On January 6, 2023, **6,000 shares** of common stock were issued to a third-party professional services provider for consulting advice[139](index=139&type=chunk) - On June 20, 2023, an additional **7,500 shares** of common stock were issued to a third-party professional services provider for consulting advice[140](index=140&type=chunk) - Both issuances relied on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D[139](index=139&type=chunk)[140](index=140&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the reported period - No defaults upon senior securities[141](index=141&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures were required for the reported period - No mine safety disclosures[142](index=142&type=chunk) [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2023 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2023[143](index=143&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, equity plans, and CEO/CFO certifications - Exhibits include amendments to Articles of Incorporation, Third Amended and Restated Bylaws, and the NuZee, Inc. 2023 Equity Incentive Plan[144](index=144&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 and Section 302/906 of the Sarbanes-Oxley Act of 2002 are included[145](index=145&type=chunk) - Inline XBRL documents for taxonomy extension schema, calculation, definition, label, and presentation linkbase are also part of the exhibits[145](index=145&type=chunk) [SIGNATURES](index=33&type=section&id=SIGNATURES) This section contains the official signatures of the principal executive and financial officers, certifying the report [Report Signatories](index=33&type=section&id=Report%20Signatories) The report was signed on August 11, 2023, by Masateru Higashida, CEO, and Shana Bowman, Interim CFO - The report was signed on August 11, 2023[150](index=150&type=chunk) - Signatories include Masateru Higashida, Chief Executive Officer and President, and Shana Bowman, Interim Chief Financial Officer[150](index=150&type=chunk)