NuZee(NUZE) - 2025 Q3 - Quarterly Report

Financial Performance - Total revenues for the three months ended December 31, 2024, were $22,853, a significant decrease of 97.6% compared to $965,932 for the same period in 2023[17] - Gross profit for the same period was $15,479, down from $124,534, reflecting a decline of 87.6% year-over-year[17] - The net loss for the three months ended December 31, 2024, was $1,536,249, compared to a net loss of $2,148,611 for the same period in 2023, indicating an improvement of 28.5%[20] - Operating expenses for the three months ended December 31, 2024, were $1,517,758, a decrease from $2,145,642 in the same period of 2023, reflecting a reduction in personnel and marketing costs[72][73] - Other income for the three months ended December 31, 2024, was $9,047, down from $46,832 in the same period of 2023, primarily due to a decrease in rental income[74][75] Assets and Liabilities - Total current assets decreased to $5,034,920 as of December 31, 2024, from $5,405,641 as of September 30, 2024, a decline of 6.9%[14] - Total liabilities decreased to $3,640,244 as of December 31, 2024, from $6,238,323 as of September 30, 2024, a reduction of 41.7%[14] - Cash and cash equivalents at the end of the period were $124,715, down from $464,222 at the end of the previous quarter, a decrease of 73.1%[14] - As of December 31, 2024, total accounts receivable was $0, down from $3,450,141 as of September 30, 2024[46] - As of December 31, 2024, accounts payable totaled $1,109,759, while accrued expenses were $710,441, resulting in total liabilities of $1,820,200[69] Capital and Financing - The company expects to need additional capital to fund planned operations beyond the next three months[12] - The company entered into a convertible note purchase agreement to issue convertible notes totaling $1,300,000, with a conversion price of $0.94 per share[39] - On October 31, 2024, the Company issued 1,396,813 shares of Common Stock following the conversion of $1,300,000 in convertible notes[109] - A private placement was completed on January 16 and 17, 2025, raising $10,000,000 through the issuance of 25,641,023 shares of common stock[122] - The Company issued 19,457,618 shares of common stock following the conversion of notes by investors on March 18, 2025[122] Business Operations - The company is expanding its sales and distribution channels in Asia to include a broader range of consumer food and beverage products[28] - The company is focusing on developing innovative new products and services, as well as expanding co-packing services to complementary products[12] - The company has reduced its single-serving pour-over coffee packaging business and introduced new products such as maca peptide coffee in 2024[62] - The Company operates in one business segment, focusing on the commercialization and development of functional beverages[90] Legal Matters - The Company is facing a lawsuit from former directors claiming unpaid fees and expenses exceeding $200,000 from Q4 FY2023 to Q2 FY2024[121] - The Company is currently involved in ongoing litigation with Mr. Sooncha Kim, who is seeking $1,041,216 in damages related to a Convertible Note and Warrant Purchase Agreement[124] - The Company believes it has a strong defense against the claims in the Kim Litigation[125] - The Company has not yet entered a default in the Ex-Directors lawsuit, and negotiations are ongoing[126] Shareholder Information - The Company reported a basic and diluted loss per common share of $0.17 for the three months ended December 31, 2024, compared to $1.84 for the same period in 2023[17] - The Company reported a total of 5,226,325 restricted common shares outstanding as of December 31, 2024, compared to 45,756 shares in 2023[111] - The Company has not granted any new stock options during the three months ended December 31, 2024, and recognized stock option expense of $Nil for this period[112] Inventory and Assets - The carrying value of inventory as of December 31, 2024, was $4,608,307, consisting mainly of raw materials valued at $4,540,113[78][79] - Property and equipment net value as of December 31, 2024, was $1,997, a significant decrease from $2,268 as of September 30, 2024, due to accumulated depreciation[80] - Prepaid expenses and other current assets totaled $291,162 as of December 31, 2024, down from $382,648 as of September 30, 2024[77] Other Financial Adjustments - The company recorded an allowance for credit loss of $Nil as of December 31, 2024, compared to $3,450,141 as of September 30, 2024[45] - The foreign currency translation adjustment for the three months ended December 31, 2024, was $(192,038), compared to $42,408 for the same period in 2023[60] - Other expenses for the three months ended December 31, 2024, were $43,017, compared to $49,195 in the same period of 2023, indicating a reduction in deferred financing costs[76]