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, 2021

☐	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. 001-39338

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)

1 401 Capital Avenue, Suite B, 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
Common Stock, $0.00001 par value		NUZE		The NASDAQ Stock Market LLC

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 ☒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 ☒ 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, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated Filer	☐
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 ☒

As of August 16, 2021, the registrant had 17,820,390 shares of common stock outstanding.

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)	9
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 6. Exhibits	23
SIGNATURES	24

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. (“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 the 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” 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 in this report may include, without limitation, statements regarding:

	●	our plans to obtain funding for our operations, including funding necessary to develop, manufacture and commercialize our products;

	●	the impact to our business from the COVID-19 global crisis;

	●	the evolving coffee preferences of North American coffee consumers;

	●	the size and growth of the markets for our products and services;

	●	our ability to compete with companies producing similar beverage products;

	●	our expectation that our existing capital resources will be sufficient to fund our operations for at least the next 12 months;

	●	regulatory developments in the U.S. and in non-U.S. countries;

	●	our ability to retain key management personnel;

	●	the scope of protection we are able to establish and maintain for intellectual property rights covering our products and technology;

	●	the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

	●	our ability to develop and maintain our corporate infrastructure, including our internal control over financial reporting;

	●	our ability to develop innovative new products; and

	●	our financial performance.

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. 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 filed with the SEC on December 28, 2020 titled “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.

Item 1. Financial Statements.

NuZee, Inc.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2021			September 30, 2020
ASSETS
Current assets:
Cash	$	12,704,257		$	4,398,545
Accounts receivable, net		320,030			195,610
Inventories, net		428,856			245,370
Prepaid expenses and other current assets		321,651			645,375
Total current assets		13,774,794			5,484,900

Property and equipment, net		807,848			1,668,348

Other assets:
Right-of-use asset - operating lease		449,250			652,197
Right-of-use asset - finance lease		-			105,825
Investments		179,238			183,314
Other assets		81,921			80,559
Total other assets		710,409			1,021,895

Total assets	$	15,293,051		$	8,175,143

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	81,318		$	49,778
Current portion of long-term loan payable		57,920			56,072
Current portion of lease liability - operating lease		162,674			263,678
Current portion of lease liability - finance lease		26,964			21,598
Accrued expenses		202,147			703,069
Deferred income		95,032			34,000
Other current liabilities		255,198			104,525
Total current liabilities		881,253			1,232,720

Non-current liabilities:
Lease liability - operating lease, net of current portion		303,599			395,713
Lease liability - finance lease, net of current portion		57,095			78,400
Loan payable - long term, net of current portion		14,590			56,845
Other noncurrent liabilities		22,435			21,707
Total noncurrent liabilities		397,719			552,665

Total liabilities		1,278,972			1,785,385

Stockholders’ equity:
Common stock; 100,000,000 shares authorized, $0.00001 par value; 17,820,390 and 14,570,105 shares issued		178			146
Additional paid in capital		63,147,614			40,472,229
Accumulated deficit		(49,321,500	)		(34,272,778	)
Accumulated other comprehensive income		187,787			190,161
Total stockholders’ equity		14,014,079			6,389,758

Total liabilities and stockholders’ equity	$	15,293,051		$	8,175,143

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

NuZee, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Revenues	$	510,032		$	191,962		$	1,442,083		$	1,131,562
Cost of sales		413,446			331,039			1,352,843			1,250,904
Gross Profit (Loss)		96,586			(139,077	)		89,240			(119,342	)

Operating expenses		3,206,552			2,378,947			15,222,137			8,342,412
Loss from operations		(3,109,966	)		(2,518,024	)		(15,132,897	)		(8,461,754	)

Loss from investment in uncosolidated affiliate		(102	)		-			(4,077	)		-
Other income		47,909			25,523			101,623			28,504
Other expense		(1,280	)		(42,113	)		(2,093	)		(44,712	)
Interest expense		(3,603	)		(6,448	)		(11,278	)		(16,573	)
Net loss		(3,067,042	)		(2,541,062	)		(15,048,722	)		(8,494,535	)
Net income (loss) attributable to noncontrolling interest		-			1,356			-			(40,634	)
Net loss attributable to NuZee, Inc.	$	(3,067,042	)	$	(2,542,418	)	$	(15,048,722	)	$	(8,453,901	)

Basic and diluted loss per common share	$	(0.17	)	$	(0.18	)	$	(0.94	)	$	(0.62	)

Basic and diluted weighted average number of common stock outstanding		17,820,390			13,782,950			15,938,931			13,724,590

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

NuZee, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


							Noncontrolling
	NuZee, Inc.						Interests				Total
For the three months eneded June 30	2021			2020			2021		2020		2021			2020
Net income (loss)	$	(3,067,042	)	$	(2,542,418	)	$	-	$	1,356	$	(3,067,042	)	$	(2,541,062	)

Foreign currency translation		(7,854	)		10,209			-		530		(7,854	)		10,739
Total other comprehensive income (loss), net of tax		(7,854	)		10,209			-		530		(7,854	)		10,739
Comprehensive income (loss)	$	(3,074,896	)	$	(2,532,209	)	$	-	$	1,886	$	(3,074,896	)	$	(2,530,323	)


							Noncontrolling
	NuZee, Inc.						Interests					Total
For the nine months eneded June 30	2021			2020			2021		2020			2021			2020
Net loss	$	(15,048,722	)	$	(8,453,901	)	$	-	$	(40,634	)	$	(15,048,722	)	$	(8,494,535	)

Foreign currency translation		(2,374	)		(59,510	)		-		81,368			(2,374	)		21,858
Total other comprehensive income (loss), net of tax		(2,374	)		(59,510	)		-		81,368			(2,374	)		21,858
Comprehensive income (loss)	$	(15,051,096	)	$	(8,513,411	)	$	-	$	40,734		$	(15,051,096	)	$	(8,472,677	)

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

NuZee , Inc.

Consolidated Statements of Stockholders’ Equity

(unaudited)

										Accumulated
					Additional					other
	Common stock				paid-in		Accumulated			comprehensive
	Shares		Amount		capital		deficit			income		Total

Balance September 30, 2020		14,570,105	$	146	$	40,472,229	$	(34,272,778	)	$	190,161	$	6,389,758

Equity securities issued for cash		324,959		3		2,683,977		-			-		2,683,980
Common stock issued for compensation
Common stock issued for compensation, shares

SEC Form 10-Q filed by NuZee, Inc.