0001376474-20-000042.txt : 20200210 0001376474-20-000042.hdr.sgml : 20200210 20200210154945 ACCESSION NUMBER: 0001376474-20-000042 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 78 CONFORMED PERIOD OF REPORT: 20191231 FILED AS OF DATE: 20200210 DATE AS OF CHANGE: 20200210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NuZee, Inc. CENTRAL INDEX KEY: 0001527613 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS RETAIL [5900] IRS NUMBER: 383849791 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55157 FILM NUMBER: 20591781 BUSINESS ADDRESS: STREET 1: 1700 CAPITAL AVENUE STREET 2: SUITE 100 CITY: PLANO STATE: TX ZIP: 75074 BUSINESS PHONE: 713.530.7688 MAIL ADDRESS: STREET 1: 1700 CAPITAL AVENUE STREET 2: SUITE 100 CITY: PLANO STATE: TX ZIP: 75074 FORMER COMPANY: FORMER CONFORMED NAME: Havana Furnishings Inc. DATE OF NAME CHANGE: 20110815 FORMER COMPANY: FORMER CONFORMED NAME: Havanna Furnishings Inc. DATE OF NAME CHANGE: 20110809 10-Q 1 nuze-20191231.htm NUZEE, INC. - FORM 10-Q SEC FILING 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 December 31, 2019

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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

 

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes ¨  No ¨

 

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of February 10, 2020, NuZee, Inc. had 13,729,104 shares of common stock outstanding.


1


 

Table of Contents

 

                                                                                                                                                                        

Page

 

 

PART I

 

 

 

Item 1.  Financial Statements

4

Consolidated Balance Sheets (unaudited)

5

Consolidated Statements of Operations (unaudited)

6

Consolidated Statements of Comprehensive Income (Loss) (unaudited)

7

Consolidated Statements of Stockholders' Equity (unaudited)

8

Consolidated Statements of Cash Flows (unaudited)

9

Notes to Consolidated Financial Statements (unaudited)

10

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

17

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

20

Item 4.  Controls and Procedures

20

 

 

PART II

21

 

 

Item 1.  Legal Proceedings

21

Item 1A.  Risk Factors

21

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

21

Item 3.  Defaults Upon Senior Securities

21

Item 4.   Mine Safety Disclosures

21

Item 5.  Other Information

21

Item 6.  Exhibits

22

 

 

SIGNATURES

23


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, 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, changes in health benefits of our ingredients as a result of subsequent studies, 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.


4


 

NuZee, Inc.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

 

December 31, 2019

 

September 30, 2019

ASSETS

 

 

 

 

Current assets:  

 

 

 

 

Cash  

 

1,830,952   

 

1,326,040   

Accounts receivable, net  

 

518,261   

 

540,310   

Accounts receivable - Related party  

 

114   

 

-   

Inventories, net  

 

680,195   

 

500,986   

Deferred offering costs

 

461,501   

 

225,089   

Other current assets  

 

179,537   

 

147,367   

Other current assets - Related party  

 

-   

 

460   

Total current assets  

 

3,670,560   

 

2,740,252   

 

 

 

 

 

Property and equipment, net  

 

2,382,010   

 

1,875,591   

 

 

 

 

 

Other assets:  

 

 

 

 

Right-of-use Asset  

 

462,267   

 

-   

Other asset  

 

68,012   

 

634,701   

 

 

530,279   

 

634,701   

 

 

 

 

 

Total assets  

 

6,582,849   

 

5,250,544   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY  

 

 

 

 

Current liabilities:  

 

 

 

 

Accounts payable  

 

$   135,583   

 

$   341,095   

Current portion of long-term loan payable

 

120,892   

 

101,148   

Accrued expenses and other current liabilities

 

693,201   

 

531,861   

Current portion of lease liability

 

94,327   

 

-   

Other current liabilities - Related party

 

1,068   

 

2,812   

Total current liabilities  

 

1,045,071   

 

976,916   

 

 

 

 

 

Non-current liabilities:  

 

 

 

 

Lease Liability  

 

369,818   

 

-   

Loan payable - long term, net of current portion

 

230,284   

 

156,816   

Other noncurrent liabilities  

 

6,611   

 

1,750   

Total non-current liabilities

 

606,713   

 

158,566   

 

 

 

 

 

Total liabilities  

 

1,651,784   

 

1,135,482   

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:  

 

 

 

 

Common stock; 100,000,000 shares authorized,
$0.00001 par value; 13,729,104 and 13,617,366 shares issued

 

138   

 

137   

Additional paid in capital  

 

33,113,727   

 

28,898,344   

Accumulated deficit  

 

(28,216,919)  

 

(24,795,687)  

Accumulated other comprehensive loss  

 

(63,405)  

 

(90,635)  

Total NuZee, Inc. shareholders' equity

 

4,833,541   

 

4,012,159   

Noncontrolling interest  

 

97,524   

 

102,903   

Total stockholders' equity  

 

4,931,065   

 

4,115,062   

 

 

 

 

 

Total liabilities and stockholders' equity

 

6,582,849   

 

5,250,544   

 

 

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


5


 

NuZee, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

 

Three Months Ended
December 31 ,2019

 

Three Months Ended
December 31 ,2018

Revenues  

 

$    546,208   

 

$    353,408   

Cost of sales  

 

423,173   

 

209,670   

Gross Profit  

 

123,035   

 

143,738   

 

 

 

 

 

Operating expenses  

 

3,549,833   

 

2,732,628   

Loss from operations  

 

(3,426,798)  

 

(2,588,890)  

 

 

 

 

 

Other income  

 

1,671   

 

4,185   

Interest income  

 

176   

 

-   

Other expense  

 

(2,584)  

 

(3,244)  

Interest expense  

 

(4,718)  

 

(457)  

Net loss  

 

(3,432,253)  

 

(2,588,406)  

Net loss attributable to noncontrolling interest

 

(11,021)  

 

(11,714)  

Net loss attributable to NuZee, Inc.  

 

$ (3,421,232)  

 

$ (2,576,692)  

 

 

 

 

 

Basic and diluted loss per common share  

 

$        (0.25)  

 

$        (0.19)  

 

 

 

 

 

Basic and diluted weighted average number of common stock outstanding

 

13,598,001   

 

13,232,256   

 

 

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


6


 

NuZee, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

 

 

 

 

 

 

 

Noncontrolling

 

 

 

 

 

NuZee, Inc.

 

Interests

 

Total

For the three months eneded December 31

 

2019

2018

 

2019

2018

 

2019

2018

Net loss  

 

$ (3,421,232)  

$ (2,576,692)  

 

$ (11,021)  

$ (11,714)  

 

$ (3,432,253)  

$ (2,588,406)  

 

 

 

 

 

 

 

 

 

 

Foreign currency translation

 

27,230   

11,328   

 

5,642   

4,855   

 

32,872   

16,183   

Total other comprehensive income, net of tax

 

27,230   

11,328   

 

5,642   

4,855   

 

32,872   

16,183   

Comprehensive loss

 

$ (3,394,002)  

$ (2,565,364)  

 

$ (5,379)  

$ (6,859)  

 

$ (3,399,381)  

$ (2,572,223)  

 

 

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


7


 

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

 

-   

 

-   

 

-   

 

(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   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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   

Stock issuance costs

 

-   

 

-   

 

-   

 

-   

 

-   

 

-   

 

-   

NuZee foreign currency gain

 

-   

 

-   

 

-   

 

-   

 

4,855   

 

11,328   

 

16,183   

Net loss

 

-   

 

-   

 

-   

 

(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   

 

 

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


8


 

NuZee, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

Three Months Ended
December 31, 2019

 

Three Months Ended
December 31, 2018

 

 

 

 

 

Operating activities:

 

 

 

 

Net loss

 

$(3,432,253) 

 

$(2,588,406) 

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

 

 

 

 

Depreciation and Amortization

 

97,812  

 

65,711  

Noncash lease expense

 

24,733  

 

-  

Option expense

 

2,220,861  

 

1,789,751  

Inventory impairment

 

-  

 

4,560  

Allowance for doubtful accounts

 

40,230  

 

7,740  

Loss on sale of assets

 

-  

 

3,217  

Loss on settlement of payable

 

-  

 

89,053  

Change in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

(18,181) 

 

29,876  

Accounts receivable - Related party

 

(114) 

 

(1,168) 

Inventories

 

(179,209) 

 

(154,444) 

Prepaid expense, deferred offering costs and other current assets

 

(268,582) 

 

(72,711) 

Other current assets - Related party

 

460  

 

33,436  

Other asset

 

(25,751) 

 

(541) 

Accounts payable

 

(80,972) 

 

68,918  

Other liabilities

 

4,861  

 

211  

Lease liability

 

(22,855) 

 

-  

Other current liabilities - related party

 

(1,744) 

 

93  

Accrued expense and other current liabilities

 

161,340  

 

(18,286) 

Net cash used in operating activities

 

(1,479,364) 

 

(742,990) 

 

 

 

 

 

Investing activities:

 

 

 

 

Purchase of equipment

 

(11,791) 

 

(149,540) 

Proceeds from sales of equipment

 

-  

 

23,600  

Net cash used in investing activities

 

(11,791) 

 

(125,940) 

 

 

 

 

 

Financing activities:

 

 

 

 

Repayment of loans

 

(31,328) 

 

(9,949) 

Proceeds from issuance of common stock

 

1,994,523  

 

1,494,805  

Net cash provided by financing activities

 

1,963,195  

 

1,484,856  

 

 

 

 

 

Effect of foreign exchange on cash and cash equivalents

 

32,872  

 

19,125  

 

 

 

 

 

Net change in cash

 

504,912  

 

635,051  

 

 

 

 

 

Cash, beginning of period

 

1,326,040  

 

1,806,666  

Cash, end of period

 

$1,830,952  

 

$2,441,717  

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash paid for interest

 

$1,774  

 

$-  

Cash paid for taxes

 

$800  

 

$-  

 

 

 

 

 

Noncash investing and financing activities:

 

 

 

 

Stock issued to settle payables

 

$-  

 

$18,425  

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

 

$487,000  

 

-  

Finance lease of equipment to pay off accounts payable

 

$124,540  

 

-  

 

 

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


9


 

NuZee, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

December 31, 2019

 

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 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 have been retroactively adjusted to give effect to the reverse stock split.

 

Earnings per Share

 

Basic earnings per common share is equal to net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As of December 31, 2019 and December 31, 2018, the total number of common stock equivalents was 1,795,667 and 1,314,000, respectively, that is comprised totally of stock options. The Company incurred a net loss for the three months ended December 31, 2019 and 2018, 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 December 31, 2019, the Company had cash of $1,830,952. 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 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 the Company's executive officers 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.

 


10


Major Customers

 

In the three months ended December 31, 2019 and 2018, revenue was primarily from major customers disclosed below.

 

Three months ended December 31, 2019:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer WP

233,283   

43 %

178,114   

34 %

Customer K

106,664   

20 %

264,842   

51 %

Customer J

$   90,085   

16 %

$   35,091   

7 %

 

Three months ended December 31, 2018:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer J

157,653   

45 %

$            0   

0 %

Customer WP

$   56,285   

16 %

$     8,093   

1 %

 

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.

 

As of December 31, 2019, the Company has one significant long-term operating lease for office and manufacturing space and the Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less. On October 9, 2019, NuZee entered into a lease agreement with Alliance Funding Group which provided for a sale lease back on certain packing equipment for 60 months. The lease equipment is reported in the accompanying consolidated balance sheets in property and equipment as of December 31, 2019. The finance lease liability is included in loan payable on the consolidated balance sheets as of December 31, 2019. See "Loans" disclosure below. The impact of ASU No. 2016-02 (“Leases (Topic 842)” on our consolidated balance sheet beginning October 1, 2019 was through the recognition of ROU assets and lease liabilities for operating leases. Amounts recognized at October 1, 2019 for operating leases are as follows:

 

 

 

October 1, 2019

ROU Assets

 

$487,000

Lease Liability

 

$487,000

 

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.

 

The leased property has a remaining lease term of 57 months as of October 1, 2019. The lease has an option to extend beyond the stated termination date, but exercise of this option is not probable.

 

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


11


as of the adoption date or lease commencement date in determining the present value of lease payments. The incremental borrowing rate on lease is 5%.

 

Other information related to our operating lease considered to be a ROU Asset is as follows:

 

 

 

ROU Asset – October 1, 2019

 

487,000   

Amortization

 

(24,733)  

ROU Asset – December 31, 2019

 

462,267   

 

 

 

Lease Liability – October 1, 2019

 

487,000   

Amortization

 

(22,855)  

Lease Liability – December 31, 2019

 

464,145   

 

 

 

Lease Liability – Short-Term

 

$   94,327   

Lease Liability – Long-Term

 

369,818   

Lease Liability – Total

 

464,145   

 

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2019:

 

Amounts due within 12 months of December 31,

 

 

 

2019

 

117,122   

2020

 

120,635   

2021

 

124,254   

2022

 

127,982   

2023

 

64,937   

Total Minimum Lease Payments

 

554,930   

Less Effect of Discounting

 

90,785   

Present Value of Future Minimum Lease Payments

 

464,145   

Less Current Obligations Under Lease

 

94,327   

Long-Term Lease Obligations

 

369,818   

 

NuZee JAPAN Co., Ltd 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 $6,296 as of December 31, 2019. 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 December 31, 2019 for each of the remaining fiscal years are as follows:

 

2020

 

 

$4,722

2021

 

 

$1,574

Total Minimum Lease Payments

 

 

$6,296

 

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 three months ended December 31, 2019 and 2018 was $84,820 and $33,175, respectively.

 

Future minimum rents for the office space leased as of December 31, 2019, for each of the remaining fiscal years are as follows:

 

2020

 

 

$178,025

2021

 

 

$185,472

2022

 

 

$163,516

2023

 

 

$167,216

2024

 

 

$127,539

 

 

 

 

Total Minimum Lease Payments

$821,768

 


12


Loans

 

On June 30, 2016, NuZee JP entered into a loan agreement with Tono Shinyo Kinko Bank. The Company 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 December 31, 2019 amounted to $41,425. On January 27, 2017, NuZee JP entered into a loan agreement with Nihon Seiaku Kouko. The Company borrowed of 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 December 31, 2019 amounted to $39,159.

 

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 December 31, 2019 amounted to $33,339.

 

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 terms of 36 months at a rate of 4.33%. Principal payments began in July of 2019. The outstanding balance on this loan at December 31, 2019 amounts to $122,703.

 

On October 9, 2019NuZee 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. The outstanding balance on this loan at December 31, 2019 amounts to $114,490.

 

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

 

 

 

 

Nihon

Ford

 

Alliance

 

 

 

 

Tono Shinyo

Seisaku

Motor

ShinHan

Funding

 

 

 

 

Kinko Bank

Kouko

Credit

Bank

Group

 

Total

 

 

 

 

 

 

 

 

 

2020

 

$   20,712   

$   14,002   

$     5,484   

$   36,811   

$   14,493   

 

 

2021

 

5,178   

4,667   

1,875   

12,270   

5,400   

 

 

Total Current Portion

 

$   25,890   

$   18,669   

$     7,359   

$   49,081   

$   19,893  

 

$ 120,892   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

$   15,534   

$   14,002   

$     5,625   

$   36,811   

$   16,198   

 

 

2022

 

 

6,488   

7,720   

36,811   

24,518   

 

 

2023

 

 

 

7,947   

 

27,833   

 

 

2024

 

 

 

4,748   

 

26,049   

 

 

Total Long Term Portion

 

$   15,534   

$   20,490   

$   26,040   

$   73,622   

$   94,598   

 

$ 230,284   

Grand Total

 

$   41,424   

$   39,159   

$   33,399   

122,703   

114,491   

 

351,176   

 

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.

 


13


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 $27,230 and $11,328 for the three months ended December 31, 2019 and 2018, 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 December 31, 2019 and September 30, 2019, the carrying value of inventory of $680,195 and $500,986 respectively, reflected on the consolidated balance sheets is net of this adjustment.

 

 

 

December 31, 2019

 

September 30, 2019

Raw materials

 

430,393   

 

327,985   

Finished goods

 

249,802   

 

173,001   

Less – Inventory reserve

 

-   

 

-   

Total

 

680,195   

 

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 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.

 

 

2. GEOGRAPHIC CONCENTRATION

 

The Company is organized based on fundamentally one business segment although it does sell its products on a world-wide basis.

 

Information about the Company’s geographic operations are as follows:

 


14


Geographic Concentrations

 

 

 

 

 

 

 

                                                      

Three Months Ended

December 31, 2019

 

Three Months Ended

December 31, 2018

Net Revenue:

 

 

 

North America

380,586   

 

156,768   

Japan

126,969   

 

187,968   

South Korea

38,653   

 

8,672   

 

546,208   

 

353,408   

 

 

 

 

Property and equipment, net:

As of

December 31, 2019

 

As of

September 30, 2019

North America

2,005,035   

 

1,471,859   

Japan

5,327   

 

6,329   

South Korea

371,648   

 

397,403   

 

2,382,010   

 

1,875,591   

 

 

3. RELATED PARTY TRANSACTIONS

 

Sales, Purchases and Operating Expenses

 

For the three months ended December 31, 2019 and 2018, NuZee JP sold their products to Eguchi Holdings Co., Ltd ("EHCL"), and the sales to them totaled approximately $1,395 and $741 respectively. The corresponding accounts receivable balance from EHCL was $114 and $(106) as of December 31, 2019 and September 30, 2019, respectively.

 

Rent

 

During October 2016, NuZee JP entered into a rental agreement of an office space with NuZee Co., Ltd.   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 September 30, 2019, NuZee JP had a payable balance to NuZee Co., Ltd. of $1,552 and NuZee JP has a receivable balance from NuZee Co., Ltd. of $460.

 

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 December 31, 2019 and September 30, 2019, the payable balance under this lease was $1,068 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 three months ended December 31, 2019, the Company sold 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. The proceeds will be used for general corporate purposes.

 

 

5.  STOCK OPTIONS

 

The following table summarizes stock option activity for three months ended December 31, 2019:

 

 

 

 

 

Weighted

 

Weighted

 

 

 

 

 

 

Average

 

Average

 

 

 

 

Number of

 

Exercise

 

Remaining

 

Aggregate

 

 

Shares

 

Price

 

Contractual Life (years)

 

Intrinsic Value

Outstanding at September 30, 2019

 

1,795,667   

 

6.91   

 

8.4   

 

33,384,360   

Granted

 

-   

 

-   

 

 

 

 

Exercised

 

-   

 

-   

 

 

 

 

Expired

 

-   

 

-   

 

 

 

 

Forfeited

 

-   

 

-   

 

 

 

 

Outstanding at December 31, 2019

 

1,795,667   

 

6.91   

 

8.1   

 

158,183,193   

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2019

 

520,667   

 

2.36   

 

7.7   

 

48,236,293   

 

The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized


15


stock option expenses of $2,220,861 for the three months ended December 31, 2019. Unamortized option expense as of December 31, 2019, for all options outstanding amounted to approximately $7,973,468. These costs are expected to be recognized over a weighted-average period of 1.2 years. The Company recognized stock option expenses of $1,789,751 for three months ended December 31, 2018.

 

A summary of the status of the Company’s nonvested shares as of December 31, 2019, is presented below:

 

Nonvested options

 

 

 

 

 

 

 

Number of

 

 

Nonvested Shares

Nonvested shares at September 30, 2019

1,278,333   

Granted

 

-   

Exercised

 

-   

Forfeited

 

-   

Vested

 

(3,333)  

Nonvested shares at December 31, 2019

 

1,275,000   

 

 

6. SUBSEQUENT EVENT

 

NuZee Latin America Joint Venture

 

On January 9, 2020, we entered into a Joint Venture Agreement (the “JV Agreement”) with Industrias Marino, S.A. de C.V., a company incorporated under the laws of Mexico (“El Marino”), to form a joint venture in Mexico between us and El Marino in Mexico (“NuZee Latin America”).  NuZee Latin America will be organized under the laws of Mexico, and its primary business operations are intended to consist of the manufacture of zero-landfill, single serve pour over and tea bag coffee products for sale in Mexico, Central and South America. Both El Marino and we intend to sell raw materials to NuZee Latin America at respective cost plus a 5% margin, with any resulting profits from sales in Mexico, Central and South America to be shared equally among us and El Marino.


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 recently announced 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 provides 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.

 

Recent Developments

 

NuZee Latin America Joint Venture

 

On January 9, 2020, we entered into a Joint Venture Agreement (the “JV Agreement”) with Industrias Marino, S.A. de C.V., a company incorporated under the laws of Mexico (“El Marino”), to form a joint venture in Mexico between us and El Marino in Mexico (“NuZee


17


Latin America”).  NuZee Latin America will be organized under the laws of Mexico, and its primary business operations are intended to consist of the manufacture of zero-landfill, single serve pour over and tea bag coffee products for sale in Mexico, Central and South America. Both El Marino and we intend to sell raw materials to NuZee Latin America at respective cost plus a 5% margin, with any resulting profits from sales in Mexico, Central and South America to be shared equally among us and El Marino.

 

Status of Agreement with FUSO Industries Co. Ltd.

 

We have been engaged in active 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, which due to certain exclusivity provisions we believe also restricts our competitors’ access to these machines in North America. However, FUSO has exercised its rights to terminate the FUSO Agreement on 6 months’ prior written notice. While alternative sources exist for the machinery we use to make our products, we intend to continue negotiations with FUSO to extend the term of the FUSO Agreement, and the ultimate outcome cannot be predicted. If we are unsuccessful in extending the term of the FUSO Agreement, it will expire pursuant to its terms on June 30, 2020.

 

Geographic Concentration

 

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

 

For the three months ended December 31, 2019, net revenues attributable to our operations in North America totaled $380,586 compared to $156,768 of net revenues attributable to our operations in North America for the three months ended December 31, 2018. Additionally, as of December 31, 2019, $2,005,035 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 December 31, 2019, net revenues attributable to our operations in Asia totaled $165,622 compared to $196,640 of net revenues attributable to our operations in Asia during the three months ended December 31, 2018. Additionally, as of December 31, 2019, $376,975 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 December 31, 2019 and 2018

 

Revenue

 

 

 

Three months ended
December 31,

 

 

Change

 

 

 

2019

 

 

2018

 

 

Dollars

 

 

%

 

Revenue

 

$ 546,208   

 

 

 

$

353,408   

 

 

$ 192,800   

 

 

 

55   

%

 

 

For the three months ended December 31, 2019, our revenue increased by $192,800, or approximately 55%, compared with the three months ended December 31, 2018. This increase was primarily related to increase in co-packing in North America partially offset by decrease in sales in Japan.

 

Cost of sales and gross margin

 

 

 

Three months ended
December 31,

 

 

Change

 

 

2019

 

 

2018

 

 

Dollars

 

 

%

Cost of sales

 

$ 423,173   

 

 

 

$

209,670   

 

 

$ 213,503   

 

 

 

102 %

 

Gross profit

 

$ 123,035   

 

 

 

$

143,738   

 

 

($20,703)  

 

 

 

(14)%

 

Gross profit margin %

 

23 %

 

 

 

 

41 %

 

 

 

 

 

 

 

 

 

For the three months ended December 31, 2019, we earned a total gross profit of $123,035 from sales of our products direct to consumers, compared to a total gross profit of $143,738 for the three months ended December 31, 2018. The gross margin rate was 23% for the three months ended December 31, 2019, and 41% for the three months ended December 31, 2018. This decrease in margin is driven by operating a shift from machine-based coffee pods in North American in the prior year to a co-packing model for larger customers in the current year. The North American operations is going through a significant ramp up period for larger co-packing orders that included additional labor and other expenses that will improve on a per unit basis as the Company achieves more scale.

 


18


Operating Expenses

 

 

 

Three months ended
December 31,

 

 

Change

 

 

 

2019

 

 

2018

 

 

Dollars

 

 

%

 

Operating Expenses

 

$3,549,833

 

 

 

$

2,732,628

 

 

$817,205

 

 

 

 30

 

%

 

For the three months ended December 31, 2019, the Company’s operating expenses totaled $3,549,833, compared to $2,732,628 for the three months ended December 31, 2018, representing a 30% increase. This increase is primarily attributable to an increase in employee costs, legal costs, facilities costs and stock based compensation expense.

 

Net Loss

 

 

 

Three months ended
December 31,

 

 

Change

 

 

 

2019

 

 

2018

 

 

Dollars

 

 

%

 

Net Loss attributable to NuZee, Inc.

 

$3,421,232

 

 

 

$

2,576,692

 

 

$844,540

 

 

 

 

33%

 

 

For the three months ended December 31, 2019, we generated net losses attributable to NuZee, Inc. of $3,421,232 versus $2,576,692 for the three months ended December 31, 2018. This increase is primarily attributable to lower margins, an increase in employee costs, legal costs and facilities costs and an increase in stock compensation expense.

 

Liquidity and Capital Resources

 

Since our inception in 2011, we have incurred significant losses, and as of December 31, 2019, we had an accumulated deficit of approximately $28 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 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 December 31, 2019, we had a cash balance of $1,830,952.

 

Summary of Cash Flows

 

 

 

 

Three Months Ended
December 31,

 

 

 

 

2019

 

 

2018

 

Cash used in operating activities

 

 

$

(1,479,364)  

 

 

$

(742,990)  

 

Cash used in investing activities

 

 

$

(11,791)  

 

 

$

(125,940)  

 

Cash provided by financing activities

 

 

$

1,963,195   

 

 

$

1,484,856   

 

Effect of foreign exchange on cash

 

 

$

32,872  

 

 

$

19,125 

 

Net increase in cash

 

 

$

504,912  

 

 

$

635,051   

 

 

Operating Activities

 

We used $1,479,364 and $742,990 of cash in operating activities during the three months ended December 31, 2019 and 2018, respectively, principally to fund our operating loss. The increase in cash used in operating activities of $736,374 was primarily attributable to the increase in net loss for the three months ended December 31, 2019 as compared to the three months ended December 31, 2018.

 


19


Investing Activities

 

We used $11,791 and $125,940 of cash in investing activities during the three months ended December 31, 2019 and 2018, respectively, principally to fund the purchase of equipment.

 

Financing Activities

 

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

 

Cash provided from financing activities increased from $1,484,856 for the three months ended December 31, 2018 to $1,963,195 for the three months ended December 31, 2019. During the three months ended December 31, 2019, we issued 111,738 shares of common stock which generated net cash proceeds of $1,994,523.

 

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 December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


20


 

PART II.

 

Item 1. Legal Proceedings

 

As previously disclosed, Steeped, Inc. d/b/a Steeped Coffee (the "Plaintiff") has filed a complaint (the "Complaint") against us in the United States District Court for the Northern District of California (the "Court"), alleging that our promotion of certain coffee products and services in 2019 constituted an infringement upon the Plaintiff's registered trademark. The Complaint seeks an injunction against the continued use of the Plaintiff's trademarks, as well as actual and punitive damages. Also as previously disclosed, the Court on November 22, 2019 denied our motion to dismiss. However, we continue to believe the allegations set forth in the Complaint are without merit, and we are continuing to defend vigorously against the allegations. However, we are not able to predict the outcome, and there is no assurance that we will prevail.

 

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

 

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.

 

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

 

During the three months ended December 31, 2019, the Company sold 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. The proceeds will be used for general corporate purposes.

 

All the investors were non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended (the "Securities Act")) who purchased in transactions outside of the United States.  In issuing shares to those investors, we relied on the exemptions from the registration requirements provided for in Regulation S and/or Section 4(a)(2) of the Securities Act, as amended.

 

Item 3. Defaults Upon Senior Securities None.

 

Item 4.   Mine Safety Disclosures Not applicable.

 

Item 5. Other Information

 

None.


21


 

 

Item 6.  Exhibits

 

EXHIBIT NO.

DESCRIPTION

10.1*

Multi-Tenant Industrial Triple Net Lease, dated May 9, 2019 by and

 

between Nuzee, Inc. and Icon Owner Pool I Texas LLC

10.2*

Joint Venture Agreement with respect to NuZee Latin America, S.A. de C.V., dated January 9, 2020, by and between Industrias Marino, S.A. de C.V., and NuZee, Inc.

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. 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.


22


 

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:

February 10, 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)


23

EX-31.1 2 nz_ex31z1.htm CERTIFICATION Certification

Exhibit 31.1

  

  

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

  

I, Masateru Higashida, certify that:

  

1.I have reviewed this report on Form 10-Q of NuZee, Inc. for the quarter ended December 31, 2019; 

  

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

  

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

  

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

  

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

  

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

  

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; 

 

5.The registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditor and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

 

  

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

  

Date:

February 10, 2020

 

NUZEE, INC.

 

 

 

 

 

By:

/s/ Masateru Higashida

 

 

 

Masateru Higashida, Chief Executive Officer (Principal Executive Officer)


EX-31.2 3 nz_ex31z2.htm CERTIFICATION Certification

Exhibit 31.2

  

  

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

  

I, Shanoop Kothari, certify that:

 

1.I have reviewed this report on Form 10-Q of NuZee, Inc. for the quarter ended December 31, 2019; 

  

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 

  

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 

  

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 

  

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

  

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and 

  

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; 

 

5.The registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditor and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and 

 

  

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 

  

Date:

February 10, 2020

 

NUZEE, INC.

 

 

 

 

 

By:

/s/ Shanoop Kothari

 

 

 

Shanoop Kothari, Chief Financial Officer (Principal Financial Officer)


EX-32.1 4 nz_ex32z1.htm CERTIFICATION Certification

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of NuZee, Inc. and its subsidiaries (the "Company") on Form 10-Q for the period ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the Company's Chief Executive Officer, Masateru Higashida, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d-)14 of the Securities Exchange Act of 1934; and

 

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date:    

February 10, 2020  

 

NUZEE, INC.

 

 

 

 

 

 

 

 

By:

/s/ Masateru Higashida

 

 

 

Masateru Higashida, Chief Executive Officer (Principal Executive Officer)


EX-32.2 5 nz_ex32z2.htm CERTIFICATION Certification

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of NuZee, Inc. and its subsidiaries (the "Company") on Form 10-Q for the period ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the Company's Chief Financial Officer, Shanoop Kothari, certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

Date:   

February 10, 2020

 

NUZEE, INC.

 

 

 

 

 

 

 

 

By:

/s/ Shanoop Kothari

 

 

 

Shanoop Kothari, Chief Financial Officer (Principal Financial Officer)


EX-101.CAL 6 nuze-20191231_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT EX-101.DEF 7 nuze-20191231_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT EX-101.LAB 8 nuze-20191231_lab.xml XBRL TAXONOMY EXTENSION LABELS LINKBASE DOCUMENT Subsequent Event, Description Maximum Statistical Measurement [Axis] Lessee, Operating Lease, Liability, Payments, Due Operating Activities [Axis] Geographical 2023 Loan 3 Represents the Loan 3, during the indicated time period. Payments for Rent Less Current Obligations Under Lease Less Current Obligations Under Lease Represents the monetary amount of Less Current Obligations Under Lease, as of the indicated date. Total Minimum Lease Payments Total Minimum Lease Payments Represents the monetary amount of Total Minimum Lease Payments, as of the indicated date. Recent Accounting Pronouncements Going Concern and Capital Resources Notes Proceeds from sales of equipment Other current liabilities - related party Accounts receivable - Related party {1} Accounts receivable - Related party Depreciation and Amortization Accumulated deficit Additional paid in capital Current portion of long-term loan payable Entity Address, Address Description Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price Stock Issued JAPAN Loan 2 Represents the Loan 2, during the indicated time period. Amounts due within 12 months of December 31, 2022 Represents the monetary amount of Amounts due within 12 months of December 31, 2022, as of the indicated date. Finance lease of equipment to pay off accounts payable Accounts receivable Accounts receivable Inventory impairment Cost of sales Noncontrolling interest Accumulated other comprehensive loss Assets, Noncurrent Assets, Noncurrent Accounts receivable, net Entity Common Stock, Shares Outstanding Entity Address, Address Line Two South Korea Represents the South Korea, during the indicated time period. Lease Liability - Short-Term Represents the monetary amount of Lease Liability - Short-Term, as of the indicated date. Accounts Receivable Amount Cash paid for interest Accrued expense and other current liabilities Lease liability Other liabilities Increase (Decrease) in Contract with Customer, Asset Increase (Decrease) in Contract with Customer, Asset AOCI Attributable to Parent Equity Component Other expense Other expense Lease Liability Non-current liabilities: Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance Sale of Stock, Description of Transaction Sale of Stock [Axis] Sales or Purchase Transaction 1 Represents the Sales or Purchase Transaction 1, during the indicated time period. 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Stock Issued During Period, Value, New Issues Common Stock Other income Common Stock, Shares, Outstanding Common Stock, Shares Authorized Property and equipment, net Current assets: Subsequent Event, Date Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross Minimum Stock Transaction 1 Represents the Stock Transaction 1, during the indicated time period. Total Represents the Total, during the indicated time period. Finished goods 2022 Nihon Seisaku Kouko Represents the Nihon Seisaku Kouko, during the indicated time period. Loan 1 Represents the Loan 1, during the indicated time period. 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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Details    
Revenues $ 546,208 $ 353,408
Cost of sales 423,173 209,670
Gross Profit 123,035 143,738
Operating expenses 3,549,833 2,732,628
Loss from operations (3,426,798) (2,588,890)
Other income 1,671 4,185
Interest income 176 0
Other expense (2,584) (3,244)
Interest expense (4,718) (457)
Net loss (3,432,253) (2,588,406)
Net loss attributable to noncontrolling interest (11,021) (11,714)
Net loss attributable to NuZee, Inc. $ (3,421,232) $ (2,576,692)
Basic and diluted loss per common share $ (0.25) $ (0.19)
Basic and diluted weighted average number of common stock outstanding 13,598,001 13,232,256
XML 13 R8.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Dec. 31, 2019
Notes  
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The accompanying unaudited interim consolidated financial statements of NuZee, Inc. (together with its subsidiaries, referred to herein as the "Company", "we" or "NuZee") have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), and rules of the Securities and Exchange Commission (the "SEC"), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K/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 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 have been retroactively adjusted to give effect to the reverse stock split.

 

Earnings per Share

 

Basic earnings per common share is equal to net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As of December 31, 2019 and December 31, 2018, the total number of common stock equivalents was 1,795,667 and 1,314,000, respectively, that is comprised totally of stock options. The Company incurred a net loss for the three months ended December 31, 2019 and 2018, 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 December 31, 2019, the Company had cash of $1,830,952. 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 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 the Company's executive officers 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.

 

Major Customers

 

In the three months ended December 31, 2019 and 2018, revenue was primarily from major customers disclosed below.

 

Three months ended December 31, 2019:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer WP

$ 233,283   

43 %

$ 178,114   

34 %

Customer K

$ 106,664   

20 %

$ 264,842   

51 %

Customer J

$   90,085   

16 %

$   35,091   

7 %

 

Three months ended December 31, 2018:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer J

$ 157,653   

45 %

$            0   

0 %

Customer WP

$   56,285   

16 %

$     8,093   

1 %

 

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.

 

As of December 31, 2019, the Company has one significant long-term operating lease for office and manufacturing space and the Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less. On October 9, 2019, NuZee entered into a lease agreement with Alliance Funding Group which provided for a sale lease back on certain packing equipment for 60 months. The lease equipment is reported in the accompanying consolidated balance sheets in property and equipment as of December 31, 2019. The finance lease liability is included in loan payable on the consolidated balance sheets as of December 31, 2019. See "Loans" disclosure below. The impact of ASU No. 2016-02 (“Leases (Topic 842)” on our consolidated balance sheet beginning October 1, 2019 was through the recognition of ROU assets and lease liabilities for operating leases. Amounts recognized at October 1, 2019 for operating leases are as follows:

 

 

 

October 1, 2019

ROU Assets

 

$487,000

Lease Liability

 

$487,000

 

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.

 

The leased property has a remaining lease term of 57 months as of October 1, 2019. The lease has an option to extend beyond the stated termination date, but exercise of this option is not probable.

 

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 lease is 5%.

 

Other information related to our operating lease considered to be a ROU Asset is as follows:

 

 

 

ROU Asset – October 1, 2019

 

$ 487,000   

Amortization

 

(24,733)  

ROU Asset – December 31, 2019

 

$ 462,267   

 

 

 

Lease Liability – October 1, 2019

 

$ 487,000   

Amortization

 

(22,855)  

Lease Liability – December 31, 2019

 

$ 464,145   

 

 

 

Lease Liability – Short-Term

 

$   94,327   

Lease Liability – Long-Term

 

369,818   

Lease Liability – Total

 

$ 464,145   

 

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2019:

 

Amounts due within 12 months of December 31,

 

 

 

2019

 

$ 117,122   

2020

 

120,635   

2021

 

124,254   

2022

 

127,982   

2023

 

64,937   

Total Minimum Lease Payments

 

554,930   

Less Effect of Discounting

 

90,785   

Present Value of Future Minimum Lease Payments

 

464,145   

Less Current Obligations Under Lease

 

94,327   

Long-Term Lease Obligations

 

$ 369,818   

 

NuZee JAPAN Co., Ltd 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 $6,296 as of December 31, 2019. 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 December 31, 2019 for each of the remaining fiscal years are as follows:

 

2020

 

 

$4,722

2021

 

 

$1,574

Total Minimum Lease Payments

 

 

$6,296

 

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 three months ended December 31, 2019 and 2018 was $84,820 and $33,175, respectively.

 

Future minimum rents for the office space leased as of December 31, 2019, for each of the remaining fiscal years are as follows:

 

2020

 

 

$178,025

2021

 

 

$185,472

2022

 

 

$163,516

2023

 

 

$167,216

2024

 

 

$127,539

 

 

 

 

Total Minimum Lease Payments

$821,768

 

Loans

 

On June 30, 2016, NuZee JP entered into a loan agreement with Tono Shinyo Kinko Bank. The Company 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 December 31, 2019 amounted to $41,425. On January 27, 2017, NuZee JP entered into a loan agreement with Nihon Seiaku Kouko. The Company borrowed of 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 December 31, 2019 amounted to $39,159.

 

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 December 31, 2019 amounted to $33,339.

 

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 terms of 36 months at a rate of 4.33%. Principal payments began in July of 2019. The outstanding balance on this loan at December 31, 2019 amounts to $122,703.

 

On October 9, 2019, NuZee 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. The outstanding balance on this loan at December 31, 2019 amounts to $114,490.

 

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

 

 

 

 

Nihon

Ford

 

Alliance

 

 

 

 

Tono Shinyo

Seisaku

Motor

ShinHan

Funding

 

 

 

 

Kinko Bank

Kouko

Credit

Bank

Group

 

Total

 

 

 

 

 

 

 

 

 

2020

 

$   20,712   

$   14,002   

$     5,484   

$   36,811   

$   14,493   

 

 

2021

 

5,178   

4,667   

1,875   

12,270   

5,400   

 

 

Total Current Portion

 

$   25,890   

$   18,669   

$     7,359   

$   49,081   

$   19,893  

 

$ 120,892   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

$   15,534   

$   14,002   

$     5,625   

$   36,811   

$   16,198   

 

 

2022

 

 

6,488   

7,720   

36,811   

24,518   

 

 

2023

 

 

 

7,947   

 

27,833   

 

 

2024

 

 

 

4,748   

 

26,049   

 

 

Total Long Term Portion

 

$   15,534   

$   20,490   

$   26,040   

$   73,622   

$   94,598   

 

$ 230,284   

Grand Total

 

$   41,424   

$   39,159   

$   33,399   

$ 122,703   

$ 114,491   

 

$ 351,176   

 

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 $27,230 and $11,328 for the three months ended December 31, 2019 and 2018, 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 December 31, 2019 and September 30, 2019, the carrying value of inventory of $680,195 and $500,986 respectively, reflected on the consolidated balance sheets is net of this adjustment.

 

 

 

December 31, 2019

 

September 30, 2019

Raw materials

 

$ 430,393   

 

$ 327,985   

Finished goods

 

249,802   

 

173,001   

Less – Inventory reserve

 

-   

 

-   

Total

 

$ 680,195   

 

$ 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 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.

XML 14 R56.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
4. COMMON STOCK (Details) - Stock Transaction 1
3 Months Ended
Dec. 31, 2019
USD ($)
$ / shares
shares
Sale of Stock, Description of Transaction Company sold 111,738 shares of common stock
Shares, Issued | shares 111,738
Sale of Stock, Price Per Share | $ / shares $ 17.85
Stock Issued | $ $ 1,994,523
XML 15 R52.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories (Details) - USD ($)
Dec. 31, 2019
Sep. 30, 2019
Details    
Inventories, net $ 680,195 $ 500,986
XML 16 R33.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Loans (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Loans

Loans

 

On June 30, 2016, NuZee JP entered into a loan agreement with Tono Shinyo Kinko Bank. The Company 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 December 31, 2019 amounted to $41,425. On January 27, 2017, NuZee JP entered into a loan agreement with Nihon Seiaku Kouko. The Company borrowed of 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 December 31, 2019 amounted to $39,159.

 

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 December 31, 2019 amounted to $33,339.

 

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 terms of 36 months at a rate of 4.33%. Principal payments began in July of 2019. The outstanding balance on this loan at December 31, 2019 amounts to $122,703.

 

On October 9, 2019, NuZee 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. The outstanding balance on this loan at December 31, 2019 amounts to $114,490.

 

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

 

 

 

 

Nihon

Ford

 

Alliance

 

 

 

 

Tono Shinyo

Seisaku

Motor

ShinHan

Funding

 

 

 

 

Kinko Bank

Kouko

Credit

Bank

Group

 

Total

 

 

 

 

 

 

 

 

 

2020

 

$   20,712   

$   14,002   

$     5,484   

$   36,811   

$   14,493   

 

 

2021

 

5,178   

4,667   

1,875   

12,270   

5,400   

 

 

Total Current Portion

 

$   25,890   

$   18,669   

$     7,359   

$   49,081   

$   19,893  

 

$ 120,892   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

$   15,534   

$   14,002   

$     5,625   

$   36,811   

$   16,198   

 

 

2022

 

 

6,488   

7,720   

36,811   

24,518   

 

 

2023

 

 

 

7,947   

 

27,833   

 

 

2024

 

 

 

4,748   

 

26,049   

 

 

Total Long Term Portion

 

$   15,534   

$   20,490   

$   26,040   

$   73,622   

$   94,598   

 

$ 230,284   

Grand Total

 

$   41,424   

$   39,159   

$   33,399   

$ 122,703   

$ 114,491   

 

$ 351,176   

XML 17 R37.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
5. STOCK OPTIONS: Schedule of Stock Option Activity (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Stock Option Activity

 

 

 

 

 

Weighted

 

Weighted

 

 

 

 

 

 

Average

 

Average

 

 

 

 

Number of

 

Exercise

 

Remaining

 

Aggregate

 

 

Shares

 

Price

 

Contractual Life (years)

 

Intrinsic Value

Outstanding at September 30, 2019

 

1,795,667   

 

$ 6.91   

 

8.4   

 

$ 33,384,360   

Granted

 

-   

 

-   

 

 

 

 

Exercised

 

-   

 

-   

 

 

 

 

Expired

 

-   

 

-   

 

 

 

 

Forfeited

 

-   

 

-   

 

 

 

 

Outstanding at December 31, 2019

 

1,795,667   

 

$ 6.91   

 

8.1   

 

158,183,193   

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2019

 

520,667   

 

$ 2.36   

 

7.7   

 

$ 48,236,293   

XML 18 R14.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Accounting, Policy (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Basis of Accounting, Policy

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.

XML 19 R10.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
3. RELATED PARTY TRANSACTIONS
3 Months Ended
Dec. 31, 2019
Notes  
3. RELATED PARTY TRANSACTIONS

3. RELATED PARTY TRANSACTIONS

 

Sales, Purchases and Operating Expenses

 

For the three months ended December 31, 2019 and 2018, NuZee JP sold their products to Eguchi Holdings Co., Ltd ("EHCL"), and the sales to them totaled approximately $1,395 and $741 respectively. The corresponding accounts receivable balance from EHCL was $114 and $(106) as of December 31, 2019 and September 30, 2019, respectively.

 

Rent

 

During October 2016, NuZee JP entered into a rental agreement of an office space with NuZee Co., Ltd.   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 September 30, 2019, NuZee JP had a payable balance to NuZee Co., Ltd. of $1,552 and NuZee JP has a receivable balance from NuZee Co., Ltd. of $460.

 

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 December 31, 2019 and September 30, 2019, the payable balance under this lease was $1,068 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.

XML 20 R18.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings per Share (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Earnings per Share

Earnings per Share

 

Basic earnings per common share is equal to net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As of December 31, 2019 and December 31, 2018, the total number of common stock equivalents was 1,795,667 and 1,314,000, respectively, that is comprised totally of stock options. The Company incurred a net loss for the three months ended December 31, 2019 and 2018, respectively and therefore, basic and diluted earnings per share for those periods are the same because all potential common equivalent shares would be antidilutive.

XML 21 R26.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Major Customers: Schedule of Revenue by Major Customers by Reporting Segments (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Revenue by Major Customers by Reporting Segments

Three months ended December 31, 2019:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer WP

$ 233,283   

43 %

$ 178,114   

34 %

Customer K

$ 106,664   

20 %

$ 264,842   

51 %

Customer J

$   90,085   

16 %

$   35,091   

7 %

 

Three months ended December 31, 2018:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer J

$ 157,653   

45 %

$            0   

0 %

Customer WP

$   56,285   

16 %

$     8,093   

1 %

XML 22 R22.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Revenue Recognition

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.

XML 23 R60.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
6. SUBSEQUENT EVENTS (Details) - Event 1
3 Months Ended
Dec. 31, 2019
Subsequent Event, Date Jan. 09, 2020
Subsequent Event, Description we entered into a Joint Venture Agreement (the “JV Agreement”) with Industrias Marino, S.A. de C.V.
XML 24 R43.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Other information related to operating lease (Details)
3 Months Ended
Dec. 31, 2019
USD ($)
Details  
ROU Asset - October 1, 2019 $ 487,000
Amortization (24,733)
ROU Asset - December 31, 2019 462,267
Lease Liability - October 1, 2019 487,000
Amortization (22,855)
Lease Liability - December 31, 2019 $ 464,145
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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Reclassification</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Principles of Consolidation</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">The Company prepares its financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiary, which has a fiscal year end of September 30. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Stock Split</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 have been retroactively adjusted to give effect to the reverse stock split.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Earnings per Share</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 December 31, 2019 and December 31, 2018, the total number of common stock equivalents was 1,795,667 and 1,314,000, respectively, that is comprised totally of stock options. The Company incurred a net loss for the three months ended December 31, 2019 and 2018, respectively and therefore, basic and diluted earnings per share for those periods are the same because all potential common equivalent shares would be antidilutive.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Going Concern and Capital Resources</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">As of December 31, 2019, the Company had cash of $1,830,952. The Company has not attained profitable operations since inception.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 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 the Company's executive officers 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.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Major Customers</i></b></p> <p style="font:9pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0">In the three months ended December 31, 2019 and 2018, revenue was primarily from major customers disclosed below.</p> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0">Three months ended December 31, 2019:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Customer Name</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Sales Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Revenue</b></span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Accounts Receivable Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Accounts Receivable </b></span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer WP</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 233,283   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">43 %</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 178,114   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">34 %</span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer K</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 106,664   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">20 %</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 264,842   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">51 %</span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer J</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   90,085   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">16 %</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   35,091   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">7 %</span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0">Three months ended December 31, 2018:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Customer Name</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Sales Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Revenue</b></span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Accounts Receivable Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Accounts Receivable</b></span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer J</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 157,653   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">45 %</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$            0   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">0 %</span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer WP</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   56,285   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">16 %</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$     8,093   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">1 %</span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Lease</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">As of December 31, 2019, the Company has one significant long-term operating lease for office and manufacturing space and the Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less. On October 9, 2019, NuZee entered into a lease agreement with Alliance Funding Group which provided for a sale lease back on certain packing equipment for 60 months. The lease equipment is reported in the accompanying consolidated balance sheets in property and equipment as of December 31, 2019. The finance lease liability is included in loan payable on the consolidated balance sheets as of December 31, 2019. See "Loans" disclosure below. The impact of ASU No. 2016-02 (“Leases (Topic 842)” on our consolidated balance sheet beginning October 1, 2019 was through the recognition of ROU assets and lease liabilities for operating leases. Amounts recognized at October 1, 2019 for operating leases are as follows:</p> <p style="font:11pt Calibri;margin:0;color:#000000"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">October 1, 2019</p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">ROU Assets</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$487,000</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">Lease Liability</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$487,000</p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">The leased property has a remaining lease term of 57 months as of October 1, 2019. The lease has an option to extend beyond the stated termination date, but exercise of this option is not probable.</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">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 </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"><span style="font:10pt Times New Roman">as of the adoption date or lease commencement date in determining the present value of lease payments. The incremental borrowing rate on lease is 5%.</span></p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">Other information related to our operating lease considered to be a ROU Asset is as follows:</p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">ROU Asset – October 1, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 487,000   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Amortization</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">(24,733)  </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">ROU Asset – December 31, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 462,267   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – October 1, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 487,000   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Amortization</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">(22,855)  </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – December 31, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 464,145   </span></p> </td></tr> </table> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – Short-Term</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   94,327   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – Long-Term</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">369,818   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – Total</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 464,145   </span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2019:</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">Amounts due within 12 months of December 31,</p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2019</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 117,122   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2020</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">120,635   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2021</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">124,254   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2022</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">127,982   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2023</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">64,937   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Total Minimum Lease Payments</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">554,930   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Less Effect of Discounting</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">90,785   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Present Value of Future Minimum Lease Payments</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">464,145   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Less Current Obligations Under Lease</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">94,327   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Long-Term Lease Obligations</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 369,818   </span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">NuZee JAPAN Co., Ltd 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 $6,296 as of December 31, 2019. The finance lease liability is included in other current liabilities on the consolidated balance sheets.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">Future minimum lease payments under finance lease obligations as of December 31, 2019 for each of the remaining fiscal years are as follows:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2020</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$4,722 </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2021</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$1,574 </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">Total Minimum Lease Payments</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$6,296</p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 three months ended December 31, 2019 and 2018 was $84,820 and $33,175, respectively.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">Future minimum rents for the office space leased as of December 31, 2019, for each of the remaining fiscal years are as follows:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2020</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$178,025</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2021</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$185,472 </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2022</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$163,516</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2023</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$167,216</p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2024</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$127,539 </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000">  </p> </td></tr> <tr><td colspan="3" style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000">Total Minimum Lease Payments</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$821,768</p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Loans</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">On June 30, 2016, NuZee JP entered into a loan agreement with Tono Shinyo Kinko Bank. The Company 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 December 31, 2019 amounted to $41,425. On January 27, 2017, NuZee JP entered into a loan agreement with Nihon Seiaku Kouko. The Company borrowed of 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 December 31, 2019 amounted to $39,159. </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">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 December 31, 2019 amounted to $33,339.</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">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 terms of 36 months at a rate of 4.33%. Principal payments began in July of 2019. The outstanding balance on this loan at December 31, 2019 amounts to $122,703. </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">On October 9, 2019, NuZee 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. The outstanding balance on this loan at December 31, 2019 amounts to $114,490. </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">The loan payments required for the next five years are as follows:</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Nihon</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Ford</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Alliance</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Tono Shinyo</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Seisaku</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Motor</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">ShinHan</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Funding</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Kinko Bank</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Kouko</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Credit</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Bank</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Group</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Total</span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2020</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   20,712   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   14,002   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$     5,484   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   36,811   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   14,493   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2021</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">5,178   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">4,667   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">1,875   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">12,270   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">5,400   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Total Current Portion</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   25,890   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   18,669   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$     7,359   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   49,081   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   19,893  </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 120,892   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2021</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   15,534   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   14,002   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$     5,625   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   36,811   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   16,198   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2022</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">6,488   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">7,720   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">36,811   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">24,518   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2023</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">7,947   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">27,833   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2024</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">4,748   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">26,049   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Total Long Term Portion</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   15,534   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   20,490   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   26,040   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   73,622   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   94,598   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 230,284   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Grand Total</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   41,424   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   39,159   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   33,399   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 122,703   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 114,491   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 351,176   </span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Revenue Recognition</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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:</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>identification of the contract, or contracts, with a customer; </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>identification of the performance obligations in the contract; </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>determination of the transaction price; </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>allocation of the transaction price to the performance obligations in the contract; and </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>recognition of revenue when, or as, we satisfy a performance obligation. </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Foreign Currency Translation</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 $27,230 and $11,328 for the three months ended December 31, 2019 and 2018, respectively.</p> <p style="font:10pt Times New Roman;margin:0;margin-left:13.85pt;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Inventories</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">Inventory, consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower of cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. At December 31, 2019 and September 30, 2019, the carrying value of inventory of $680,195 and $500,986 respectively, reflected on the consolidated balance sheets is net of this adjustment.</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">December 31, 2019</span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">September 30, 2019</span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Raw materials</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 430,393   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 327,985   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Finished goods</span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">249,802   </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">173,001   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Less – Inventory reserve</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">-   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">-   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Total</span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 680,195   </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 500,986   </span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Recent Accounting Pronouncements</i></b></p> <p style="font:9pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"><span style="font-size:10pt">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 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.</span></p> <p style="font:9pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"><span style="font-size:10pt">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.</span></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0"><b><i>Reclassification</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0"><b><i>Principles of Consolidation</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">The Company prepares its financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its majority owned subsidiary, which has a fiscal year end of September 30. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0"><b><i>Stock Split</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 have been retroactively adjusted to give effect to the reverse stock split.</p> <p style="font:10pt Times New Roman;margin:0"><b><i>Earnings per Share</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 December 31, 2019 and December 31, 2018, the total number of common stock equivalents was 1,795,667 and 1,314,000, respectively, that is comprised totally of stock options. The Company incurred a net loss for the three months ended December 31, 2019 and 2018, respectively and therefore, basic and diluted earnings per share for those periods are the same because all potential common equivalent shares would be antidilutive.</p> 1795667 1314000 <p style="font:10pt Times New Roman;margin:0"><b><i>Going Concern and Capital Resources</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">As of December 31, 2019, the Company had cash of $1,830,952. The Company has not attained profitable operations since inception.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 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 the Company's executive officers 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.</p> 1830952 <p style="font:10pt Times New Roman;margin:0"><b><i>Major Customers</i></b></p> <p style="font:9pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0">In the three months ended December 31, 2019 and 2018, revenue was primarily from major customers disclosed below.</p> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0">Three months ended December 31, 2019:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Customer Name</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Sales Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Revenue</b></span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Accounts Receivable Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Accounts Receivable </b></span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer WP</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 233,283   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">43 %</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 178,114   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">34 %</span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer K</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 106,664   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">20 %</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 264,842   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">51 %</span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer J</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   90,085   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">16 %</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   35,091   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">7 %</span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0">Three months ended December 31, 2018:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Customer Name</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Sales Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Revenue</b></span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Accounts Receivable Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Accounts Receivable</b></span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer J</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 157,653   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">45 %</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$            0   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">0 %</span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer WP</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   56,285   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">16 %</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$     8,093   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">1 %</span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0">Three months ended December 31, 2019:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Customer Name</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Sales Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Revenue</b></span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Accounts Receivable Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Accounts Receivable </b></span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer WP</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 233,283   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">43 %</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 178,114   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">34 %</span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer K</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 106,664   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">20 %</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 264,842   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">51 %</span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer J</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   90,085   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">16 %</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   35,091   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">7 %</span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0">Three months ended December 31, 2018:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Customer Name</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Sales Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Revenue</b></span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>Accounts Receivable Amount</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><span style="font-size:10pt;border-bottom:1px solid #000000"><b>% of Total Accounts Receivable</b></span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer J</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 157,653   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">45 %</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$            0   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">0 %</span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Customer WP</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   56,285   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">16 %</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$     8,093   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">1 %</span></p> </td></tr> </table> 233283 0.43 178114 0.34 106664 0.20 264842 0.51 90085 0.16 35091 0.07 157653 0.45 0 0 56285 0.16 8093 0.01 <p style="font:10pt Times New Roman;margin:0"><b><i>Lease</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">As of December 31, 2019, the Company has one significant long-term operating lease for office and manufacturing space and the Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less. On October 9, 2019, NuZee entered into a lease agreement with Alliance Funding Group which provided for a sale lease back on certain packing equipment for 60 months. The lease equipment is reported in the accompanying consolidated balance sheets in property and equipment as of December 31, 2019. The finance lease liability is included in loan payable on the consolidated balance sheets as of December 31, 2019. See "Loans" disclosure below. The impact of ASU No. 2016-02 (“Leases (Topic 842)” on our consolidated balance sheet beginning October 1, 2019 was through the recognition of ROU assets and lease liabilities for operating leases. Amounts recognized at October 1, 2019 for operating leases are as follows:</p> <p style="font:11pt Calibri;margin:0;color:#000000"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">October 1, 2019</p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">ROU Assets</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$487,000</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">Lease Liability</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$487,000</p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">The leased property has a remaining lease term of 57 months as of October 1, 2019. The lease has an option to extend beyond the stated termination date, but exercise of this option is not probable.</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">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 </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"><span style="font:10pt Times New Roman">as of the adoption date or lease commencement date in determining the present value of lease payments. The incremental borrowing rate on lease is 5%.</span></p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">Other information related to our operating lease considered to be a ROU Asset is as follows:</p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">ROU Asset – October 1, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 487,000   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Amortization</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">(24,733)  </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">ROU Asset – December 31, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 462,267   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – October 1, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 487,000   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Amortization</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">(22,855)  </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – December 31, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 464,145   </span></p> </td></tr> </table> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – Short-Term</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   94,327   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – Long-Term</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">369,818   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – Total</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 464,145   </span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2019:</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">Amounts due within 12 months of December 31,</p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2019</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 117,122   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2020</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">120,635   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2021</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">124,254   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2022</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">127,982   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2023</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">64,937   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Total Minimum Lease Payments</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">554,930   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Less Effect of Discounting</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">90,785   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Present Value of Future Minimum Lease Payments</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">464,145   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Less Current Obligations Under Lease</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">94,327   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Long-Term Lease Obligations</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 369,818   </span></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">NuZee JAPAN Co., Ltd 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 $6,296 as of December 31, 2019. The finance lease liability is included in other current liabilities on the consolidated balance sheets.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">Future minimum lease payments under finance lease obligations as of December 31, 2019 for each of the remaining fiscal years are as follows:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2020</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$4,722 </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2021</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$1,574 </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">Total Minimum Lease Payments</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$6,296</p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 three months ended December 31, 2019 and 2018 was $84,820 and $33,175, respectively.</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">Future minimum rents for the office space leased as of December 31, 2019, for each of the remaining fiscal years are as follows:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2020</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$178,025</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2021</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$185,472 </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2022</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$163,516</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2023</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$167,216</p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2024</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$127,539 </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000">  </p> </td></tr> <tr><td colspan="3" style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000">Total Minimum Lease Payments</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$821,768</p> </td></tr> </table> <p style="font:11pt Calibri;margin:0;color:#000000"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">October 1, 2019</p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">ROU Assets</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$487,000</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">Lease Liability</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$487,000</p> </td></tr> </table> 487000 487000 <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">ROU Asset – October 1, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 487,000   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Amortization</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">(24,733)  </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">ROU Asset – December 31, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 462,267   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – October 1, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 487,000   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Amortization</span></p> </td><td style="padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">(22,855)  </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – December 31, 2019</span></p> </td><td style="background-color:#E1E1E1;padding-left:2pt;padding-right:2pt" valign="top"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 464,145   </span></p> </td></tr> </table> 487000 -24733 462267 487000 -22855 464145 <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – Short-Term</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$   94,327   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – Long-Term</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">369,818   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Lease Liability – Total</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 464,145   </span></p> </td></tr> </table> 94327 369818 464145 <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2019</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 117,122   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2020</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">120,635   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2021</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">124,254   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2022</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">127,982   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">2023</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">64,937   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Total Minimum Lease Payments</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">554,930   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Less Effect of Discounting</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">90,785   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Present Value of Future Minimum Lease Payments</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">464,145   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Less Current Obligations Under Lease</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">94,327   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Long-Term Lease Obligations</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 369,818   </span></p> </td></tr> </table> 117122 120635 124254 127982 64937 554930 -90785 464145 -94327 369818 6296 <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2020</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$4,722 </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2021</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$1,574 </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">Total Minimum Lease Payments</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$6,296</p> </td></tr> </table> 4722 1574 6296 84820 33175 <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2020</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$178,025</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2021</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$185,472 </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2022</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$163,516</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2023</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$167,216</p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">2024</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$127,539 </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000">  </p> </td></tr> <tr><td colspan="3" style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000">Total Minimum Lease Payments</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:right">$821,768</p> </td></tr> </table> 178025 185472 163516 167216 127539 821768 <p style="font:10pt Times New Roman;margin:0"><b><i>Loans</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">On June 30, 2016, NuZee JP entered into a loan agreement with Tono Shinyo Kinko Bank. The Company 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 December 31, 2019 amounted to $41,425. On January 27, 2017, NuZee JP entered into a loan agreement with Nihon Seiaku Kouko. The Company borrowed of 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 December 31, 2019 amounted to $39,159. </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">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 December 31, 2019 amounted to $33,339.</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">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 terms of 36 months at a rate of 4.33%. Principal payments began in July of 2019. The outstanding balance on this loan at December 31, 2019 amounts to $122,703. </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">On October 9, 2019, NuZee 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. The outstanding balance on this loan at December 31, 2019 amounts to $114,490. </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">The loan payments required for the next five years are as follows:</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Nihon</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Ford</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Alliance</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Tono Shinyo</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Seisaku</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Motor</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">ShinHan</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Funding</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Kinko Bank</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Kouko</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Credit</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Bank</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Group</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Total</span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2020</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   20,712   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   14,002   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$     5,484   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   36,811   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   14,493   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2021</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">5,178   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">4,667   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">1,875   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">12,270   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">5,400   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Total Current Portion</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   25,890   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   18,669   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$     7,359   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   49,081   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   19,893  </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 120,892   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2021</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   15,534   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   14,002   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$     5,625   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   36,811   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   16,198   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2022</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">6,488   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">7,720   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">36,811   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">24,518   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2023</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">7,947   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">27,833   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2024</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">4,748   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">26,049   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Total Long Term Portion</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   15,534   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   20,490   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   26,040   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   73,622   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   94,598   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 230,284   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Grand Total</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   41,424   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   39,159   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   33,399   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 122,703   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 114,491   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 351,176   </span></p> </td></tr> </table> 2016-06-30 NuZee JP loan agreement with Tono Shinyo Kinko Bank 145758 2021-06-05 0.012 unsecured and guaranteed by a director 41425 2017-01-27 NuZee JP loan agreement with Nihon Seiaku Kouko 87268 2022-01-20 0.0016 unsecured and not guaranteed by a director 39159 2019-04-01 NuZee purchased a delivery van from Ford Motor Credit 41627 0.029 secured by the van 33339 2019-02-15 NuZee KR entered into equipment financing for production equipment 60563 secured by our production equipment 0.0433 122703 2019-10-09 NuZee entered into a lease agreement with Alliance Funding Group 124540 114490 <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Nihon</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Ford</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Alliance</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Tono Shinyo</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Seisaku</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Motor</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">ShinHan</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Funding</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Kinko Bank</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Kouko</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Credit</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Bank</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Group</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Total</span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2020</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   20,712   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   14,002   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$     5,484   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   36,811   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   14,493   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2021</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">5,178   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">4,667   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">1,875   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">12,270   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">5,400   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Total Current Portion</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   25,890   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   18,669   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$     7,359   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   49,081   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   19,893  </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 120,892   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2021</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   15,534   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   14,002   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$     5,625   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   36,811   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   16,198   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2022</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">6,488   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">7,720   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">36,811   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">24,518   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2023</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">7,947   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">27,833   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">2024</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">4,748   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">26,049   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Total Long Term Portion</span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   15,534   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   20,490   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   26,040   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   73,622   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   94,598   </span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 230,284   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Calibri;margin:0;color:#000000;text-align:center"><span style="font-family:Times New Roman">Grand Total</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   41,424   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   39,159   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$   33,399   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 122,703   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 114,491   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Calibri;margin:0;color:#000000;text-align:right"><span style="font-family:Times New Roman">$ 351,176   </span></p> </td></tr> </table> 20712 14002 5484 36811 14493 5178 4667 1875 12270 5400 15534 14002 5625 36811 16198 6488 7720 36811 24518 7947 27833 4748 26049 41424 39159 33399 122703 114491 351176 <p style="font:10pt Times New Roman;margin:0"><b><i>Revenue Recognition</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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:</p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>identification of the contract, or contracts, with a customer; </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>identification of the performance obligations in the contract; </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>determination of the transaction price; </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>allocation of the transaction price to the performance obligations in the contract; and </p> <p style="font:10pt Times New Roman;margin:0;margin-left:36pt;text-align:justify"><kbd style="position:absolute;font:10pt Symbol;margin-left:-18pt"></kbd>recognition of revenue when, or as, we satisfy a performance obligation. </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> <p style="font:10pt Times New Roman;margin:0"><b><i>Foreign Currency Translation</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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 $27,230 and $11,328 for the three months ended December 31, 2019 and 2018, respectively.</p> <p style="font:10pt Times New Roman;margin:0;margin-left:13.85pt;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">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.</p> 27230 11328 <p style="font:10pt Times New Roman;margin:0"><b><i>Inventories</i></b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">Inventory, consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower of cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. At December 31, 2019 and September 30, 2019, the carrying value of inventory of $680,195 and $500,986 respectively, reflected on the consolidated balance sheets is net of this adjustment.</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">December 31, 2019</span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">September 30, 2019</span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Raw materials</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 430,393   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 327,985   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Finished goods</span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">249,802   </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">173,001   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Less – Inventory reserve</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">-   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">-   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Total</span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 680,195   </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 500,986   </span></p> </td></tr> </table> 680195 500986 <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">December 31, 2019</span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">September 30, 2019</span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Raw materials</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 430,393   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.25pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 327,985   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Finished goods</span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">249,802   </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">173,001   </span></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Less – Inventory reserve</span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">-   </span></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">-   </span></p> </td></tr> <tr><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt">Total</span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"><span style="font-size:10pt"> </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 680,195   </span></p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-top:0.75pt;padding-left:2pt;padding-bottom:0.75pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right"><span style="font-size:10pt">$ 500,986   </span></p> </td></tr> </table> 430393 327985 249802 173001 0 0 680195 500986 <p style="font:10pt Times New Roman;margin:0"><b><i>Recent Accounting Pronouncements</i></b></p> <p style="font:9pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"><span style="font-size:10pt">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 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.</span></p> <p style="font:9pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"><span style="font-size:10pt">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.</span></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"><b>2. GEOGRAPHIC CONCENTRATION</b></p> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;color:#212121"><span style="background-color:#FFFFFF">The Company is organized based on fundamentally one business segment although it does sell its products on a world-wide basis. </span></p> <p style="font:10pt Times New Roman;margin:0;color:#212121"> </p> <p style="font:10pt Times New Roman;margin:0;color:#212121"><span style="background-color:#FFFFFF">Information about the Company’s geographic operations are as follows:</span></p> <p style="font:10pt Times New Roman;margin:0;color:#212121"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"><span style="font:9pt Times New Roman"><b>Geographic Concentrations</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">                                                      </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:center">Three Months Ended</p> <p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center">December 31, 2019</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:center">Three Months Ended</p> <p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center">December 31, 2018</p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"><b>Net Revenue:</b></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">North America</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$ 380,586   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$ 156,768   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">Japan</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">126,969   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">187,968   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">South Korea </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">38,653   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">8,672   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"><b>$ 546,208   </b></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"><b>$ 353,408   </b></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"><b>Property and equipment, net:</b></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center">As of</p> <p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center">December 31, 2019</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center">As of</p> <p style="font:9pt Times New Roman;margin:0;text-align:center">September 30, 2019</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">North America</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$ 2,005,035   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$ 1,471,859   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">Japan</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">5,327   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">6,329   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">South Korea</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">371,648   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">397,403   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"><b>$ 2,382,010   </b></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"><b>$ 1,875,591   </b></p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0;color:#212121"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Calibri;margin:0;text-align:center"><span style="font:9pt Times New Roman"><b>Geographic Concentrations</b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">                                                      </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:center">Three Months Ended</p> <p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center">December 31, 2019</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:center">Three Months Ended</p> <p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center">December 31, 2018</p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"><b>Net Revenue:</b></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">North America</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$ 380,586   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$ 156,768   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">Japan</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">126,969   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">187,968   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">South Korea </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">38,653   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">8,672   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"><b>$ 546,208   </b></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000;border-bottom:1pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"><b>$ 353,408   </b></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000"><b>Property and equipment, net:</b></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center">As of</p> <p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center">December 31, 2019</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:center"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center">As of</p> <p style="font:9pt Times New Roman;margin:0;text-align:center">September 30, 2019</p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">North America</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$ 2,005,035   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">$ 1,471,859   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">Japan</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">5,327   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">6,329   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;color:#000000">South Korea</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">371,648   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right">397,403   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"><b>$ 2,382,010   </b></p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;color:#000000;text-align:right"><b>$ 1,875,591   </b></p> </td></tr> </table> 380586 156768 126969 187968 38653 8672 546208 353408 2005035 1471859 5327 6329 371648 397403 2382010 1875591 <p style="font:10pt Times New Roman;margin:0;text-align:justify"><b>3. RELATED PARTY TRANSACTIONS</b></p> <p style="font:10pt Times New Roman;margin:0;color:#212121;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Sales, Purchases and Operating Expenses</i></b></p> <p style="font:10pt Times New Roman;margin:0;color:#212121;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify">For the three months ended December 31, 2019 and 2018, NuZee JP sold their products to Eguchi Holdings Co., Ltd ("EHCL"), and the sales to them totaled approximately $1,395 and $741 respectively. The corresponding accounts receivable balance from EHCL was $114 and $(106) as of December 31, 2019 and September 30, 2019, respectively.</p> <p style="font:10pt Times New Roman;margin:0;color:#000000;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0"><b><i>Rent</i></b></p> <p style="font:10pt Times New Roman;margin:0;color:#212121;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#212121;text-align:justify">During October 2016, NuZee JP entered into a rental agreement of an office space with NuZee Co., Ltd.   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 September 30, 2019, NuZee JP had a payable balance to NuZee Co., Ltd. of $1,552 and NuZee JP has a receivable balance from NuZee Co., Ltd. of $460.</p> <p style="font:10pt Times New Roman;margin:0;color:#212121;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#212121;text-align:justify">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 December 31, 2019 and September 30, 2019, the payable balance under this lease was $1,068 and $1,154, respectively.</p> <p style="font:10pt Times New Roman;margin:0;color:#212121;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;color:#212121;text-align:justify">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.</p> 1395 741 114 -106 1068 1154 <p style="font:10pt Times New Roman;margin:0;text-align:justify"><b>4. COMMON STOCK</b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">During the three months ended December 31, 2019, the Company sold 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. The proceeds will be used for general corporate purposes.</p> Company sold 111,738 shares of common stock 111738 17.85 1994523 <p style="font:10pt Times New Roman;margin:0;text-align:justify"><b>5.  STOCK OPTIONS</b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0">The following table summarizes stock option activity for three months ended December 31, 2019:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Weighted</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Weighted</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Average</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Average</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Number of</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Exercise</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Remaining</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Aggregate</b></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Shares</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Price</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Contractual Life (years)</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Intrinsic Value</b></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Outstanding at September 30, 2019</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">1,795,667   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 6.91   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">8.4   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 33,384,360   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Granted</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Exercised</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Expired </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Forfeited</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Outstanding at December 31, 2019</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">1,795,667   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 6.91   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">8.1   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">158,183,193   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Exercisable at December 31, 2019</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">520,667   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 2.36   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">7.7   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 48,236,293   </p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">The Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"><span style="font:10pt Times New Roman">stock option expenses of $2,220,861 for the three months ended December 31, 2019. Unamortized option expense as of December 31, 2019, for all options outstanding amounted to approximately $7,973,468. These costs are expected to be recognized over a weighted-average period of 1.2 years. The Company recognized stock option expenses of $1,789,751 for three months ended December 31, 2018. </span></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">A summary of the status of the Company’s nonvested shares as of December 31, 2019, is presented below:</p> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"><span style="border-bottom:1px solid #000000"><b>Nonvested options </b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Number of</b></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Nonvested Shares</b></p> </td></tr> <tr><td colspan="2" style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Nonvested shares at September 30, 2019</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">1,278,333   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Granted</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">-   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Exercised</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">-   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Forfeited</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">-   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Vested</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">(3,333)  </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Nonvested shares at December 31, 2019</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">1,275,000   </p> </td></tr> </table> <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Weighted</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Weighted</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Average</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Average</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Number of</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Exercise</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Remaining</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Aggregate</b></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Shares</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Price</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Contractual Life (years)</b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b> </b></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Intrinsic Value</b></p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Outstanding at September 30, 2019</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-top:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">1,795,667   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 6.91   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">8.4   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 33,384,360   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Granted</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Exercised</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Expired </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Forfeited</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">-   </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Outstanding at December 31, 2019</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">1,795,667   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 6.91   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">8.1   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">158,183,193   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Exercisable at December 31, 2019</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">520,667   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 2.36   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">7.7   </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:right">$ 48,236,293   </p> </td></tr> </table> 1795667 6.91 P8Y4M24D 33384360 0 0 0 0 0 0 0 0 1795667 6.91 P8Y1M6D 158183193 520667 2.36 P7Y8M12D 48236293 2220861 1789751 <p style="font:10pt Times New Roman;margin:0"> </p> <table style="margin:0 auto;border-collapse:collapse"><tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"><span style="border-bottom:1px solid #000000"><b>Nonvested options </b></span></p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:center"><b>Number of</b></p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0;text-align:center"><b>Nonvested Shares</b></p> </td></tr> <tr><td colspan="2" style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Nonvested shares at September 30, 2019</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">1,278,333   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Granted</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">-   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Exercised</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">-   </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Forfeited</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">-   </p> </td></tr> <tr><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Vested</p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="background-color:#E1E1E1;white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:0.5pt solid #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">(3,333)  </p> </td></tr> <tr><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:10pt Times New Roman;margin:0">Nonvested shares at December 31, 2019</p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt" valign="bottom"><p style="font:9pt Times New Roman;margin:0"> </p> </td><td style="white-space:nowrap;padding-left:2pt;padding-right:2pt;border-bottom:3px double #000000" valign="bottom"><p style="font:9pt Times New Roman;margin:0;text-align:right">1,275,000   </p> </td></tr> </table> 1278333 0 0 0 -3333 1275000 <p style="font:10pt Times New Roman;margin:0;text-align:justify"><b>6. SUBSEQUENT EVENT</b></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"><i>NuZee Latin America Joint Venture </i></p> <p style="font:10pt Times New Roman;margin:0;text-align:justify"> </p> <p style="font:10pt Times New Roman;margin:0;text-align:justify">On January 9, 2020, we entered into a Joint Venture Agreement (the “JV Agreement”) with Industrias Marino, S.A. de C.V., a company incorporated under the laws of Mexico (“El Marino”), to form a joint venture in Mexico between us and El Marino in Mexico (“NuZee Latin America”).  NuZee Latin America will be organized under the laws of Mexico, and its primary business operations are intended to consist of the manufacture of zero-landfill, single serve pour over and tea bag coffee products for sale in Mexico, Central and South America. Both El Marino and we intend to sell raw materials to NuZee Latin America at respective cost plus a 5% margin, with any resulting profits from sales in Mexico, Central and South America to be shared equally among us and El Marino.</p> 2020-01-09 we entered into a Joint Venture Agreement (the “JV Agreement”) with Industrias Marino, S.A. de C.V. XML 26 R47.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Details)
Dec. 31, 2019
USD ($)
Details  
Capital Leases, Future Minimum Payments Due, Next Twelve Months $ 4,722
Capital Leases, Future Minimum Payments Due in Two Years 1,574
Capital Leases, Future Minimum Payments Due $ 6,296
XML 27 R27.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of ROU Assets and Lease Liability (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of ROU Assets and Lease Liability

 

 

 

October 1, 2019

ROU Assets

 

$487,000

Lease Liability

 

$487,000

XML 28 R23.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Foreign Currency Translation (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Foreign Currency Translation

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 $27,230 and $11,328 for the three months ended December 31, 2019 and 2018, 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.

XML 30 R42.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of ROU Assets and Lease Liability (Details) - USD ($)
Dec. 31, 2019
Sep. 30, 2019
Details    
ROU Assets $ 462,267 $ 487,000
Lease Liability $ 464,145 $ 487,000
XML 31 Show.js IDEA: XBRL DOCUMENT // Edgar(tm) Renderer was created by staff of the U.S. Securities and Exchange Commission. Data and content created by government employees within the scope of their employment are not subject to domestic copyright protection. 17 U.S.C. 105. var Show={};Show.LastAR=null,Show.showAR=function(a,r,w){if(Show.LastAR)Show.hideAR();var e=a;while(e&&e.nodeName!='TABLE')e=e.nextSibling;if(!e||e.nodeName!='TABLE'){var ref=((window)?w.document:document).getElementById(r);if(ref){e=ref.cloneNode(!0); e.removeAttribute('id');a.parentNode.appendChild(e)}} if(e)e.style.display='block';Show.LastAR=e};Show.hideAR=function(){Show.LastAR.style.display='none'};Show.toggleNext=function(a){var e=a;while(e.nodeName!='DIV')e=e.nextSibling;if(!e.style){}else if(!e.style.display){}else{var d,p_;if(e.style.display=='none'){d='block';p='-'}else{d='none';p='+'} e.style.display=d;if(a.textContent){a.textContent=p+a.textContent.substring(1)}else{a.innerText=p+a.innerText.substring(1)}}} XML 32 R46.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Details    
Capital Leases, Future Minimum Payments Due $ 6,296  
Payments for Rent $ 84,820 $ 33,175
XML 33 R9.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
2. GEOGRAPHIC CONCENTRATION
3 Months Ended
Dec. 31, 2019
Notes  
2. GEOGRAPHIC CONCENTRATION

2. GEOGRAPHIC CONCENTRATION

 

The Company is organized based on fundamentally one business segment although it does sell its products on a world-wide basis.

 

Information about the Company’s geographic operations are as follows:

 

Geographic Concentrations

 

 

 

 

 

 

 

                                                      

Three Months Ended

December 31, 2019

 

Three Months Ended

December 31, 2018

Net Revenue:

 

 

 

North America

$ 380,586   

 

$ 156,768   

Japan

126,969   

 

187,968   

South Korea

38,653   

 

8,672   

 

$ 546,208   

 

$ 353,408   

 

 

 

 

Property and equipment, net:

As of

December 31, 2019

 

As of

September 30, 2019

North America

$ 2,005,035   

 

$ 1,471,859   

Japan

5,327   

 

6,329   

South Korea

371,648   

 

397,403   

 

$ 2,382,010   

 

$ 1,875,591   

XML 34 R1.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Document and Entity Information - shares
3 Months Ended
Dec. 31, 2019
Feb. 10, 2020
Details    
Registrant CIK 0001527613  
Fiscal Year End --09-30  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Dec. 31, 2019  
Document Transition Report false  
Entity File Number 000-55157  
Entity Registrant Name NUZEE, INC.  
Entity Incorporation, State or Country Code NV  
Entity Tax Identification Number 38-3849791  
Entity Address, Address Line One 1700 Capital Avenue  
Entity Address, Address Line Two Suite 100  
Entity Address, City or Town Plano  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 75074  
Entity Address, Address Description Address of principal executive offices  
City Area Code 760  
Local Phone Number 295-2408  
Phone Fax Number Description Registrant’s telephone number, including area code  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   13,729,104
Amendment Flag false  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q1  
XML 35 R5.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Net loss $ (3,432,253) $ (2,588,406)
Foreign currency translation 32,872 16,183
Other Comprehensive Income (Loss), Net of Tax 32,872 16,183
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest (3,399,381) (2,572,223)
Parent    
Net loss (3,421,232) (2,576,692)
Foreign currency translation 27,230 11,328
Other Comprehensive Income (Loss), Net of Tax 27,230 11,328
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest (3,394,002) (2,565,364)
Noncontrolling Interest    
Net loss (11,021) (11,714)
Foreign currency translation 5,642 4,855
Other Comprehensive Income (Loss), Net of Tax 5,642 4,855
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest $ (5,379) $ (6,859)
XML 36 R57.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
5. STOCK OPTIONS: Schedule of Stock Option Activity (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Sep. 30, 2019
Dec. 31, 2019
Details      
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance     1,795,667
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance     $ 6.91
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term 8 years 1 month 6 days 8 years 4 months 24 days  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value     $ 33,384,360
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross     0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price     $ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period     0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price     $ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period     0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price     $ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period     0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price     $ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance 1,795,667 1,795,667 1,795,667
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance $ 6.91 $ 6.91 $ 6.91
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value $ 158,183,193 $ 33,384,360 $ 158,183,193
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number 520,667   520,667
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price $ 2.36   $ 2.36
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term     7 years 8 months 12 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value $ 48,236,293   $ 48,236,293
XML 37 R53.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories: Schedule of Inventory, Current (Details) - USD ($)
Dec. 31, 2019
Sep. 30, 2019
Details    
Raw materials $ 430,393 $ 327,985
Finished goods 249,802 173,001
Less - Inventory reserve 0 0
Inventories, net $ 680,195 $ 500,986
XML 39 R32.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Rental Payments for Operating Leases (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Future Minimum Rental Payments for Operating Leases

 

2020

 

 

$178,025

2021

 

 

$185,472

2022

 

 

$163,516

2023

 

 

$167,216

2024

 

 

$127,539

 

 

 

 

Total Minimum Lease Payments

$821,768

XML 40 R36.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
2. GEOGRAPHIC CONCENTRATION: Schedule of Geographic Operations (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Geographic Operations

 

Geographic Concentrations

 

 

 

 

 

 

 

                                                      

Three Months Ended

December 31, 2019

 

Three Months Ended

December 31, 2018

Net Revenue:

 

 

 

North America

$ 380,586   

 

$ 156,768   

Japan

126,969   

 

187,968   

South Korea

38,653   

 

8,672   

 

$ 546,208   

 

$ 353,408   

 

 

 

 

Property and equipment, net:

As of

December 31, 2019

 

As of

September 30, 2019

North America

$ 2,005,035   

 

$ 1,471,859   

Japan

5,327   

 

6,329   

South Korea

371,648   

 

397,403   

 

$ 2,382,010   

 

$ 1,875,591   

XML 41 R19.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Going Concern and Capital Resources (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Going Concern and Capital Resources

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 December 31, 2019, the Company had cash of $1,830,952. 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 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 the Company's executive officers 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.

XML 42 R15.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Reclassification (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Reclassification

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.

XML 43 R11.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
4. COMMON STOCK
3 Months Ended
Dec. 31, 2019
Notes  
4. COMMON STOCK

4. COMMON STOCK

 

During the three months ended December 31, 2019, the Company sold 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. The proceeds will be used for general corporate purposes.

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1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Recent Accounting Pronouncements (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Recent Accounting Pronouncements

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 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.

XML 47 R21.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Lease

Lease

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities on the consolidated balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different types of leases. The 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.

 

As of December 31, 2019, the Company has one significant long-term operating lease for office and manufacturing space and the Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less. On October 9, 2019, NuZee entered into a lease agreement with Alliance Funding Group which provided for a sale lease back on certain packing equipment for 60 months. The lease equipment is reported in the accompanying consolidated balance sheets in property and equipment as of December 31, 2019. The finance lease liability is included in loan payable on the consolidated balance sheets as of December 31, 2019. See "Loans" disclosure below. The impact of ASU No. 2016-02 (“Leases (Topic 842)” on our consolidated balance sheet beginning October 1, 2019 was through the recognition of ROU assets and lease liabilities for operating leases. Amounts recognized at October 1, 2019 for operating leases are as follows:

 

 

 

October 1, 2019

ROU Assets

 

$487,000

Lease Liability

 

$487,000

 

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.

 

The leased property has a remaining lease term of 57 months as of October 1, 2019. The lease has an option to extend beyond the stated termination date, but exercise of this option is not probable.

 

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 lease is 5%.

 

Other information related to our operating lease considered to be a ROU Asset is as follows:

 

 

 

ROU Asset – October 1, 2019

 

$ 487,000   

Amortization

 

(24,733)  

ROU Asset – December 31, 2019

 

$ 462,267   

 

 

 

Lease Liability – October 1, 2019

 

$ 487,000   

Amortization

 

(22,855)  

Lease Liability – December 31, 2019

 

$ 464,145   

 

 

 

Lease Liability – Short-Term

 

$   94,327   

Lease Liability – Long-Term

 

369,818   

Lease Liability – Total

 

$ 464,145   

 

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2019:

 

Amounts due within 12 months of December 31,

 

 

 

2019

 

$ 117,122   

2020

 

120,635   

2021

 

124,254   

2022

 

127,982   

2023

 

64,937   

Total Minimum Lease Payments

 

554,930   

Less Effect of Discounting

 

90,785   

Present Value of Future Minimum Lease Payments

 

464,145   

Less Current Obligations Under Lease

 

94,327   

Long-Term Lease Obligations

 

$ 369,818   

 

NuZee JAPAN Co., Ltd 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 $6,296 as of December 31, 2019. 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 December 31, 2019 for each of the remaining fiscal years are as follows:

 

2020

 

 

$4,722

2021

 

 

$1,574

Total Minimum Lease Payments

 

 

$6,296

 

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 three months ended December 31, 2019 and 2018 was $84,820 and $33,175, respectively.

 

Future minimum rents for the office space leased as of December 31, 2019, for each of the remaining fiscal years are as follows:

 

2020

 

 

$178,025

2021

 

 

$185,472

2022

 

 

$163,516

2023

 

 

$167,216

2024

 

 

$127,539

 

 

 

 

Total Minimum Lease Payments

$821,768

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1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Total Lease Liability (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Total Lease Liability

 

 

 

Lease Liability – Short-Term

 

$   94,327   

Lease Liability – Long-Term

 

369,818   

Lease Liability – Total

 

$ 464,145   

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Other information related to operating lease (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseScheduleOfOtherInformationRelatedToOperatingLeaseTables 43 false false R44.htm 000440 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Total Lease Liability (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseScheduleOfTotalLeaseLiabilityDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Total Lease Liability (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseScheduleOfROUAssetsAndLeaseLiabilityTables 44 false false R45.htm 000450 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Amounts due on lease liabilities (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseScheduleOfAmountsDueOnLeaseLiabilitiesDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Amounts due on lease liabilities (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseScheduleOfAmountsDueOnLeaseLiabilitiesTables 45 false false R46.htm 000460 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESMajorCustomersScheduleOfRevenueByMajorCustomersByReportingSegmentsTables 46 false false R47.htm 000470 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseScheduleOfFutureMinimumLeasePaymentsForCapitalLeasesDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseScheduleOfFutureMinimumLeasePaymentsForCapitalLeasesTables 47 false false R48.htm 000480 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Rental Payments for Operating Leases (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseScheduleOfFutureMinimumRentalPaymentsForOperatingLeasesDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Rental Payments for Operating Leases (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLeaseScheduleOfFutureMinimumRentalPaymentsForOperatingLeasesTables 48 false false R49.htm 000490 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Loans (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESLoansDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Loans (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESMajorCustomersScheduleOfRevenueByMajorCustomersByReportingSegmentsTables 49 false false R50.htm 000500 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Schedule of Loan Payments (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESScheduleOfLoanPaymentsDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Schedule of Loan Payments (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESScheduleOfLoanPaymentsTables 50 false false R51.htm 000510 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Foreign Currency Translation (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESForeignCurrencyTranslationDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Foreign Currency Translation (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESForeignCurrencyTranslationPolicies 51 false false R52.htm 000520 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESInventoriesDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESMajorCustomersScheduleOfRevenueByMajorCustomersByReportingSegmentsTables 52 false false R53.htm 000530 - Disclosure - 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories: Schedule of Inventory, Current (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESInventoriesScheduleOfInventoryCurrentDetails 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories: Schedule of Inventory, Current (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure1BASISOFPRESENTATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESInventoriesScheduleOfInventoryCurrentTables 53 false false R54.htm 000540 - Disclosure - 2. GEOGRAPHIC CONCENTRATION: Schedule of Geographic Operations (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure2GEOGRAPHICCONCENTRATIONScheduleOfGeographicOperationsDetails 2. GEOGRAPHIC CONCENTRATION: Schedule of Geographic Operations (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure2GEOGRAPHICCONCENTRATIONScheduleOfGeographicOperationsTables 54 false false R55.htm 000550 - Disclosure - 3. RELATED PARTY TRANSACTIONS (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure3RELATEDPARTYTRANSACTIONSDetails 3. RELATED PARTY TRANSACTIONS (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure3RELATEDPARTYTRANSACTIONS 55 false false R56.htm 000560 - Disclosure - 4. COMMON STOCK (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure4COMMONSTOCKDetails 4. COMMON STOCK (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure4COMMONSTOCK 56 false false R57.htm 000570 - Disclosure - 5. STOCK OPTIONS: Schedule of Stock Option Activity (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure5STOCKOPTIONSScheduleOfStockOptionActivityDetails 5. STOCK OPTIONS: Schedule of Stock Option Activity (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure5STOCKOPTIONSScheduleOfStockOptionActivityTables 57 false false R58.htm 000580 - Disclosure - 5. STOCK OPTIONS (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure5STOCKOPTIONSDetails 5. STOCK OPTIONS (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure5STOCKOPTIONSScheduleOfStockOptionActivityTables 58 false false R59.htm 000590 - Disclosure - 5. STOCK OPTIONS: Schedule of Company's unvested shares (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure5STOCKOPTIONSScheduleOfCompanySUnvestedSharesDetails 5. STOCK OPTIONS: Schedule of Company's unvested shares (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure5STOCKOPTIONSScheduleOfCompanySUnvestedSharesTables 59 false false R60.htm 000600 - Disclosure - 6. SUBSEQUENT EVENTS (Details) Sheet http://www.nuzee.com/20191231/role/idr_Disclosure6SUBSEQUENTEVENTSDetails 6. SUBSEQUENT EVENTS (Details) Details http://www.nuzee.com/20191231/role/idr_Disclosure6SUBSEQUENTEVENTS 60 false false All Reports Book All Reports nuze-20191231.htm nuze-20191231.xsd nuze-20191231_cal.xml nuze-20191231_def.xml nuze-20191231_lab.xml nuze-20191231_pre.xml nz_ex31z1.htm nz_ex31z2.htm nz_ex32z1.htm nz_ex32z2.htm nuze201912311.jpg http://fasb.org/srt/2019-01-31 http://xbrl.sec.gov/dei/2019-01-31 http://fasb.org/us-gaap/2019-01-31 http://xbrl.sec.gov/country/2017-01-31 true true XML 51 R48.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Rental Payments for Operating Leases (Details)
Dec. 31, 2019
USD ($)
Details  
Operating Leases, Future Minimum Payments Due, Next Twelve Months $ 178,025
Operating Leases, Future Minimum Payments, Due in Two Years 185,472
Operating Leases, Future Minimum Payments, Due in Three Years 163,516
Operating Leases, Future Minimum Payments, Due in Four Years 167,216
Operating Leases, Future Minimum Payments, Due in Five Years 127,539
Operating Leases, Future Minimum Payments Due $ 821,768
XML 52 R40.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Going Concern and Capital Resources (Details) - USD ($)
Dec. 31, 2019
Sep. 30, 2019
Dec. 31, 2018
Sep. 30, 2018
Details        
Cash $ 1,830,952 $ 1,326,040 $ 2,441,717 $ 1,806,666
XML 53 R44.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Total Lease Liability (Details)
Dec. 31, 2019
USD ($)
Details  
Lease Liability - Short-Term $ 94,327
Lease Liability - Long-Term 369,818
Lease Liability - Total $ 464,145
XML 54 R55.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
3. RELATED PARTY TRANSACTIONS (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Sep. 30, 2019
Lessee, Operating Lease, Liability, Payments, Due $ 1,068   $ 1,154
Sales or Purchase Transaction 1      
Sales-type Lease, Revenue 1,395 $ 741  
Accounts Receivable, after Allowance for Credit Loss $ 114   $ (106)
XML 55 R51.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Foreign Currency Translation (Details) - USD ($)
Dec. 31, 2019
Sep. 30, 2019
Details    
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax $ 27,230 $ 11,328
XML 56 R59.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
5. STOCK OPTIONS: Schedule of Company's unvested shares (Details)
3 Months Ended
Dec. 31, 2019
shares
Details  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares, Beginning Balance 1,278,333
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Number of Shares, Period Increase (Decrease) 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Number of Shares 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares (3,333)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares, Ending Balance 1,275,000
XML 57 R3.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CONSOLIDATED BALANCE SHEETS (Unaudited) - Parenthetical - $ / shares
Dec. 31, 2019
Sep. 30, 2019
Details    
Common Stock, Shares Authorized 100,000,000 100,000,000
Common Stock, Par or Stated Value Per Share $ 0.00001 $ 0.00001
Common Stock, Shares, Issued 13,729,104 3,617,366
Common Stock, Shares, Outstanding 13,729,104 3,617,366
XML 58 R7.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Operating activities:    
Net loss $ (3,432,253) $ (2,588,406)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and Amortization 97,812 65,711
Noncash lease expense 24,733 0
Option expense 2,220,861 1,789,751
Inventory impairment 0 4,560
Allowance for doubtful accounts 40,230 7,740
Loss on sale of assets 0 3,217
Loss on settlement of payable 0 89,053
Change in operating assets and liabilities:    
Accounts receivable (18,181) 29,876
Accounts receivable - Related party (114) (1,168)
Inventories (179,209) (154,444)
Prepaid expense, deferred offering costs and other current assets (268,582) (72,711)
Increase (Decrease) in Contract with Customer, Asset 460 33,436
Other asset (25,751) (541)
Accounts payable (80,972) 68,918
Other liabilities 4,861 211
Lease liability (22,855) 0
Other current liabilities - related party (1,744) 93
Accrued expense and other current liabilities 161,340 (18,286)
Net cash used in operating activities (1,479,364) (742,990)
Investing activities:    
Purchase of equipment (11,791) (149,540)
Proceeds from sales of equipment 0 23,600
Net cash used in investing activities (11,791) (125,940)
Financing activities:    
Repayment of loans (31,328) (9,949)
Proceeds from issuance of common stock 1,994,523 1,494,805
Net cash provided by financing activities 1,963,195 1,484,856
Effect of foreign exchange on cash and cash equivalents 32,872 19,125
Net change in cash 504,912 635,051
Cash and Cash Equivalents, at Carrying Value, Beginning Balance 1,326,040 1,806,666
Cash and Cash Equivalents, at Carrying Value, Ending Balance 1,830,952 2,441,717
Supplemental disclosure of cash flow information:    
Cash paid for interest 1,774 0
Cash paid for taxes 800 0
Noncash investing and financing activities:    
Stock issued to settle payables 0 18,425
Recognition of right-of-use asset and lease liability upon adoption of ASU 2016-02 487,000 0
Finance lease of equipment to pay off accounts payable $ 124,540 $ 0
XML 59 R17.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Stock Split (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Stock Split

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 have been retroactively adjusted to give effect to the reverse stock split.

XML 60 R13.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
6. SUBSEQUENT EVENTS
3 Months Ended
Dec. 31, 2019
Notes  
6. SUBSEQUENT EVENTS

6. SUBSEQUENT EVENT

 

NuZee Latin America Joint Venture

 

On January 9, 2020, we entered into a Joint Venture Agreement (the “JV Agreement”) with Industrias Marino, S.A. de C.V., a company incorporated under the laws of Mexico (“El Marino”), to form a joint venture in Mexico between us and El Marino in Mexico (“NuZee Latin America”).  NuZee Latin America will be organized under the laws of Mexico, and its primary business operations are intended to consist of the manufacture of zero-landfill, single serve pour over and tea bag coffee products for sale in Mexico, Central and South America. Both El Marino and we intend to sell raw materials to NuZee Latin America at respective cost plus a 5% margin, with any resulting profits from sales in Mexico, Central and South America to be shared equally among us and El Marino.

XML 61 R38.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
5. STOCK OPTIONS: Schedule of Company's unvested shares (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Company's unvested shares

 

Nonvested options

 

 

 

 

 

 

 

Number of

 

 

Nonvested Shares

Nonvested shares at September 30, 2019

1,278,333   

Granted

 

-   

Exercised

 

-   

Forfeited

 

-   

Vested

 

(3,333)  

Nonvested shares at December 31, 2019

 

1,275,000   

XML 62 R30.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Amounts due on lease liabilities (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Amounts due on lease liabilities

 

 

 

2019

 

$ 117,122   

2020

 

120,635   

2021

 

124,254   

2022

 

127,982   

2023

 

64,937   

Total Minimum Lease Payments

 

554,930   

Less Effect of Discounting

 

90,785   

Present Value of Future Minimum Lease Payments

 

464,145   

Less Current Obligations Under Lease

 

94,327   

Long-Term Lease Obligations

 

$ 369,818   

XML 63 R34.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Schedule of Loan Payments (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Loan Payments

 

 

 

 

Nihon

Ford

 

Alliance

 

 

 

 

Tono Shinyo

Seisaku

Motor

ShinHan

Funding

 

 

 

 

Kinko Bank

Kouko

Credit

Bank

Group

 

Total

 

 

 

 

 

 

 

 

 

2020

 

$   20,712   

$   14,002   

$     5,484   

$   36,811   

$   14,493   

 

 

2021

 

5,178   

4,667   

1,875   

12,270   

5,400   

 

 

Total Current Portion

 

$   25,890   

$   18,669   

$     7,359   

$   49,081   

$   19,893  

 

$ 120,892   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

$   15,534   

$   14,002   

$     5,625   

$   36,811   

$   16,198   

 

 

2022

 

 

6,488   

7,720   

36,811   

24,518   

 

 

2023

 

 

 

7,947   

 

27,833   

 

 

2024

 

 

 

4,748   

 

26,049   

 

 

Total Long Term Portion

 

$   15,534   

$   20,490   

$   26,040   

$   73,622   

$   94,598   

 

$ 230,284   

Grand Total

 

$   41,424   

$   39,159   

$   33,399   

$ 122,703   

$ 114,491   

 

$ 351,176   

XML 64 R58.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
5. STOCK OPTIONS (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Details    
Option expense $ 2,220,861 $ 1,789,751
XML 65 R54.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
2. GEOGRAPHIC CONCENTRATION: Schedule of Geographic Operations (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Sep. 30, 2019
Net Revenue $ 546,208 $ 353,408  
Property and equipment, net 2,382,010   $ 1,875,591
North America      
Net Revenue 380,586 156,768  
Property and equipment, net 2,005,035 1,471,859  
JAPAN      
Net Revenue 126,969 187,968  
Property and equipment, net 5,327 6,329  
South Korea      
Net Revenue 38,653 8,672  
Property and equipment, net 371,648 397,403  
Total      
Net Revenue 546,208 353,408  
Property and equipment, net $ 2,382,010 $ 1,875,591  
XML 66 R50.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Schedule of Loan Payments (Details)
Dec. 31, 2019
USD ($)
Grand Total $ 351,176
Tono Shinyo Kinko Bank  
Grand Total 41,424
Tono Shinyo Kinko Bank | Current Portion  
2020 20,712
2021 5,178
Tono Shinyo Kinko Bank | Non-Current Portion  
2021 15,534
Nihon Seisaku Kouko  
Grand Total 39,159
Nihon Seisaku Kouko | Current Portion  
2020 14,002
2021 4,667
Nihon Seisaku Kouko | Non-Current Portion  
2021 14,002
2022 6,488
Ford Motor Credit  
Grand Total 33,399
Ford Motor Credit | Current Portion  
2020 5,484
2021 1,875
Ford Motor Credit | Non-Current Portion  
2021 5,625
2022 7,720
2023 7,947
2024 4,748
(ShinHan Bank)  
Grand Total 122,703
(ShinHan Bank) | Current Portion  
2020 36,811
2021 12,270
(ShinHan Bank) | Non-Current Portion  
2021 36,811
2022 36,811
Alliance Funding Group  
Grand Total 114,491
Alliance Funding Group | Current Portion  
2020 14,493
2021 5,400
Alliance Funding Group | Non-Current Portion  
2021 16,198
2022 24,518
2023 27,833
2024 $ 26,049
XML 67 R2.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
Dec. 31, 2019
Sep. 30, 2019
Current assets:    
Cash $ 1,830,952 $ 1,326,040
Accounts receivable, net 518,261 540,310
Accounts receivable - Related party 114 0
Inventories, net 680,195 500,986
Deferred offering costs 461,501 225,089
Other current assets 179,537 147,367
Other current assets - Related party 0 460
Total current assets 3,670,560 2,740,252
Property and equipment, net 2,382,010 1,875,591
Other assets:    
Right-of-use Asset 462,267 0
Other asset 68,012 634,701
Assets, Noncurrent 530,279 634,701
Total assets 6,582,849 5,250,544
Current liabilities:    
Accounts payable 135,583 341,095
Current portion of long-term loan payable 120,892 101,148
Accrued expenses and other current liabilities 693,201 531,861
Current portion of lease liability 94,327 0
Other current liabilities - Related party 1,068 2,812
Total current liabilities 1,045,071 976,916
Non-current liabilities:    
Lease Liability 369,818 0
Loan payable - long term, net of current portion 230,284 156,816
Other noncurrent liabilities 6,611 1,750
Total non-current liabilities 606,713 158,566
Total liabilities 1,651,784 1,135,482
Stockholders' equity:    
Common Stock, Value 138 137
Additional paid in capital 33,113,727 28,898,344
Accumulated deficit (28,216,919) (24,795,687)
Accumulated other comprehensive loss (63,405) (90,635)
Total NuZee, Inc. shareholders' equity 4,833,541 4,012,159
Noncontrolling interest 97,524 102,903
Total stockholders' equity 4,931,065 4,115,062
Total liabilities and stockholders' equity $ 6,582,849 $ 5,250,544
XML 68 R6.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($)
Common Stock
Additional Paid-in Capital
Retained Earnings
Noncontrolling Interest
AOCI Attributable to Parent
Total
Equity Balance, Starting at Sep. 30, 2018 $ 132 $ 14,957,491 $ (12,607,722) $ 93,131 $ (30,967) $ 2,412,065
Shares Outstanding, Starting at Sep. 30, 2018 13,194,591          
Stock Issued During Period, Value, New Issues $ 1 1,494,804 0 0 0 1,494,805
Stock Issued During Period, Shares, New Issues 116,891          
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture $ 0 1,789,751 0 0 0 1,789,751
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures 0          
Other Comprehensive Gain (Loss)       4,855   16,183
Stock Issued During Period, Value, Other $ 0 107,478 0 0 0 107,478
Stock Issued During Period, Shares, Other 5,118          
Stock issuance costs $ 0 0 0 0 0 0
NuZee foreign currency gain (loss) 0 0 0 4,855 11,328 16,183
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest $ 0 0 (2,576,692) (11,714) 0 (2,588,406)
Shares Outstanding, Ending at Dec. 31, 2018 13,316,600          
Equity Balance, Ending at Dec. 31, 2018 $ 133 18,349,524 (15,184,414) 86,272 (19,639) 3,231,876
Equity Balance, Starting at Sep. 30, 2019 $ 137 28,898,344 (24,795,687) 102,903 (90,635) 4,115,062
Shares Outstanding, Starting at Sep. 30, 2019 13,617,366          
Stock Issued During Period, Value, New Issues $ 1 1,994,522 0 0 0 1,994,523
Stock Issued During Period, Shares, New Issues 111,738          
Shares Granted, Value, Share-based Payment Arrangement, after Forfeiture $ 0 2,220,861 0 0 0 2,220,861
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures 0          
Other Comprehensive Gain (Loss) $ 0 0 0 5,642 27,230 32,872
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest $ 0 0 (3,421,232) (11,021) 0 (3,432,253)
Shares Outstanding, Ending at Dec. 31, 2019 13,729,104          
Equity Balance, Ending at Dec. 31, 2019 $ 138 $ 33,113,727 $ (28,216,919) $ 97,524 $ (63,405) $ 4,931,065
XML 69 R16.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Principles of Consolidation

Principles of Consolidation

 

The Company prepares its financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its 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.

XML 70 R12.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
5. STOCK OPTIONS
3 Months Ended
Dec. 31, 2019
Notes  
5. STOCK OPTIONS

5.  STOCK OPTIONS

 

The following table summarizes stock option activity for three months ended December 31, 2019:

 

 

 

 

 

Weighted

 

Weighted

 

 

 

 

 

 

Average

 

Average

 

 

 

 

Number of

 

Exercise

 

Remaining

 

Aggregate

 

 

Shares

 

Price

 

Contractual Life (years)

 

Intrinsic Value

Outstanding at September 30, 2019

 

1,795,667   

 

$ 6.91   

 

8.4   

 

$ 33,384,360   

Granted

 

-   

 

-   

 

 

 

 

Exercised

 

-   

 

-   

 

 

 

 

Expired

 

-   

 

-   

 

 

 

 

Forfeited

 

-   

 

-   

 

 

 

 

Outstanding at December 31, 2019

 

1,795,667   

 

$ 6.91   

 

8.1   

 

158,183,193   

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2019

 

520,667   

 

$ 2.36   

 

7.7   

 

$ 48,236,293   

 

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 $2,220,861 for the three months ended December 31, 2019. Unamortized option expense as of December 31, 2019, for all options outstanding amounted to approximately $7,973,468. These costs are expected to be recognized over a weighted-average period of 1.2 years. The Company recognized stock option expenses of $1,789,751 for three months ended December 31, 2018.

 

A summary of the status of the Company’s nonvested shares as of December 31, 2019, is presented below:

 

Nonvested options

 

 

 

 

 

 

 

Number of

 

 

Nonvested Shares

Nonvested shares at September 30, 2019

1,278,333   

Granted

 

-   

Exercised

 

-   

Forfeited

 

-   

Vested

 

(3,333)  

Nonvested shares at December 31, 2019

 

1,275,000   

XML 71 R31.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Future Minimum Lease Payments for Capital Leases

 

2020

 

 

$4,722

2021

 

 

$1,574

Total Minimum Lease Payments

 

 

$6,296

XML 72 R35.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories: Schedule of Inventory, Current (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Inventory, Current

 

 

 

December 31, 2019

 

September 30, 2019

Raw materials

 

$ 430,393   

 

$ 327,985   

Finished goods

 

249,802   

 

173,001   

Less – Inventory reserve

 

-   

 

-   

Total

 

$ 680,195   

 

$ 500,986   

XML 73 R39.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Earnings per Share (Details) - shares
Dec. 31, 2019
Sep. 30, 2019
Details    
Common stock equivalents 1,795,667 1,314,000
XML 74 R28.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Other information related to operating lease (Tables)
3 Months Ended
Dec. 31, 2019
Tables/Schedules  
Schedule of Other information related to operating lease

 

 

 

ROU Asset – October 1, 2019

 

$ 487,000   

Amortization

 

(24,733)  

ROU Asset – December 31, 2019

 

$ 462,267   

 

 

 

Lease Liability – October 1, 2019

 

$ 487,000   

Amortization

 

(22,855)  

Lease Liability – December 31, 2019

 

$ 464,145   

XML 75 R24.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Inventories (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Inventories

Inventories

 

Inventory, consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower of cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. At December 31, 2019 and September 30, 2019, the carrying value of inventory of $680,195 and $500,986 respectively, reflected on the consolidated balance sheets is net of this adjustment.

 

 

 

December 31, 2019

 

September 30, 2019

Raw materials

 

$ 430,393   

 

$ 327,985   

Finished goods

 

249,802   

 

173,001   

Less – Inventory reserve

 

-   

 

-   

Total

 

$ 680,195   

 

$ 500,986   

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1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Major Customers (Policies)
3 Months Ended
Dec. 31, 2019
Policies  
Major Customers

Major Customers

 

In the three months ended December 31, 2019 and 2018, revenue was primarily from major customers disclosed below.

 

Three months ended December 31, 2019:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer WP

$ 233,283   

43 %

$ 178,114   

34 %

Customer K

$ 106,664   

20 %

$ 264,842   

51 %

Customer J

$   90,085   

16 %

$   35,091   

7 %

 

Three months ended December 31, 2018:

 

Customer Name

Sales Amount

% of Total Revenue

Accounts Receivable Amount

% of Total Accounts Receivable

Customer J

$ 157,653   

45 %

$            0   

0 %

Customer WP

$   56,285   

16 %

$     8,093   

1 %

XML 78 R41.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Major Customers: Schedule of Revenue by Major Customers by Reporting Segments (Details) - USD ($)
3 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Customer WP    
Sales Amount $ 233,283 $ 56,285
Percent of Total Revenue 43.00% 16.00%
Accounts Receivable Amount $ 178,114 $ 8,093
Percent of Total Accounts Receivable 34.00% 1.00%
Customer K    
Sales Amount $ 106,664  
Percent of Total Revenue 20.00%  
Accounts Receivable Amount $ 264,842  
Percent of Total Accounts Receivable 51.00%  
Customer J    
Sales Amount $ 90,085 $ 157,653
Percent of Total Revenue 16.00% 45.00%
Accounts Receivable Amount $ 35,091 $ 0
Percent of Total Accounts Receivable 7.00% 0.00%
XML 79 R45.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Lease: Schedule of Amounts due on lease liabilities (Details)
Dec. 31, 2019
USD ($)
Details  
Amounts due within 12 months of December 31, 2019 $ 117,122
Amounts due within 12 months of December 31, 2020 120,635
Amounts due within 12 months of December 31, 2021 124,254
Amounts due within 12 months of December 31, 2022 127,982
Amounts due within 12 months of December 31, 2023 64,937
Total Minimum Lease Payments 554,930
Less Effect of Discounting 90,785
Present Value of Future Minimum Lease Payments 464,145
Less Current Obligations Under Lease 94,327
Long-Term Lease Obligations $ 369,818
XML 80 R49.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Loans (Details)
3 Months Ended
Dec. 31, 2019
USD ($)
Long-term Debt $ 351,176
Loan 1  
Debt Instrument, Issuance Date Jun. 30, 2016
Debt Instrument, Issuer NuZee JP
Debt Instrument, Description loan agreement with Tono Shinyo Kinko Bank
Debt Instrument, Face Amount $ 145,758
Debt Instrument, Maturity Date Jun. 05, 2021
Debt Instrument, Interest Rate, Stated Percentage 1.20%
Debt Instrument, Collateral unsecured and guaranteed by a director
Long-term Debt $ 41,425
Loan 2  
Debt Instrument, Issuance Date Jan. 27, 2017
Debt Instrument, Issuer NuZee JP
Debt Instrument, Description loan agreement with Nihon Seiaku Kouko
Debt Instrument, Face Amount $ 87,268
Debt Instrument, Maturity Date Jan. 20, 2022
Debt Instrument, Interest Rate, Stated Percentage 0.16%
Debt Instrument, Collateral unsecured and not guaranteed by a director
Long-term Debt $ 39,159
Loan 3  
Debt Instrument, Issuance Date Apr. 01, 2019
Debt Instrument, Description NuZee purchased a delivery van from Ford Motor Credit
Debt Instrument, Face Amount $ 41,627
Debt Instrument, Interest Rate, Stated Percentage 2.90%
Debt Instrument, Collateral secured by the van
Long-term Debt $ 33,339
Loan 4  
Debt Instrument, Issuance Date Feb. 15, 2019
Debt Instrument, Description NuZee KR entered into equipment financing for production equipment
Debt Instrument, Face Amount $ 60,563
Debt Instrument, Interest Rate, Stated Percentage 4.33%
Debt Instrument, Collateral secured by our production equipment
Long-term Debt $ 122,703
Loan 5  
Debt Instrument, Issuance Date Oct. 09, 2019
Debt Instrument, Description NuZee entered into a lease agreement with Alliance Funding Group
Debt Instrument, Face Amount $ 124,540
Long-term Debt $ 114,490

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