What changed in CIMG Inc.'s 2023 10-K compared to 2022?

Across the narrative sections we track, CIMG Inc. (IMG) added 278 paragraphs, removed 303, and edited 194 between the 2022 and 2023 10-K filings. The biggest movers are Item 1A. Risk Factors (+109/−133), Item 1. Business (+92/−71), Item 7. Management's Discussion & Analysis (+56/−88).

Did CIMG Inc. add new Risk Factors in the 2023 10-K?

Yes — Item 1A Risk Factors shows 109 new/edited paragraphs and 133 removed paragraphs versus the 2022 10-K.

What changed in CIMG Inc.'s MD&A (Item 7) in 2023?

Item 7 Management's Discussion & Analysis shows 56 new/edited paragraphs and 88 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did CIMG Inc.'s Legal Proceedings (Item 3) change in 2023?

Item 3 shows 16 added/edited paragraphs and 6 removed paragraphs — usually indicating new litigation disclosed or settled cases removed.

Where does this IMG 10-K diff come from?

The source filings are CIMG Inc.'s official 2022 and 2023 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in CIMG Inc.'s 10-K — 2022 vs 2023

Paragraph-level year-over-year comparison of CIMG Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+278 added−303 removedSource: 10-K (2024-01-16) vs 10-K (2022-12-23)

Top changes in CIMG Inc.'s 2023 10-K

278 paragraphs added · 303 removed · 194 edited across 6 sections

Item 1A. Risk Factors+109 / −133 · 91 edited
Item 1. Business+92 / −71 · 52 edited
Item 7. Management's Discussion & Analysis+56 / −88 · 40 edited
Item 3. Legal Proceedings+16 / −6 · 6 edited
Item 2. Properties+3 / −3 · 3 edited

Item 1. Business

Business — how the company describes what it does

52 edited+40 added−19 removed42 unchanged

2022 filing

2023 filing

Biggest changeWe have also filed for “NuZee”, “NuZee Coffee (Stylized)”, “NuZee Coffee and Design”, in Canada, Japan, Korea, and Mexico; “Dripkit (Words only)” and Design in Japan, Mexico, and Korea; and “Dripkit and Design” in Canada, Japan, and Korea.

Biggest changeAs of the date of this Report, we have the following registered trademarks: ● Japan - “Coffee Blenders”; “Twin Peaks”; “Nuzee Coffee and Design”; “Active Cup”; “Nude Cup”; “Think Cup”; “Relax Cup”; “Lean Cup” ● Korea - “Twin Peaks”; “It’s Coffee Reimagined”; “Think Cup”; “Lean Cup” ● Canada – “NuZee Coffee and Design”; “NuZee”; “NuZee Coffee (Stylized)” ● Mexico - “NuZee”, “NuZee Coffee (Stylized)”, “NuZee Coffee and Design”; “It’s Coffee Reimagined” We also have pending applications for “Dripkit (Words only)” and Design in Japan, Mexico, and Korea; and “Dripkit and Design” in Canada, Japan, and Korea.

We believe that the saturation of coffee pods in the North American market, coupled with changing tastes, provides our single serve coffee products with a substantial market opportunity in North America. Accordingly, we believe there are opportunities for growth in the North American market for our single serve pour over and coffee brew bag coffee products.

We anticipate that pod-based, single serve coffee will face increasing pressure given their heavy reliance on the use of plastics. In our view, consumer preferences in North America have evolved over the last decade to substantially mirror those of Japanese consumers, who have traditionally focused on the taste, eco-footprint and quality of ingredients.

We anticipate that traditional pod-based, single serve coffee will face increasing pressure given their heavy reliance on the use of plastics. In our view, consumer preferences in North America have evolved over the last decade to substantially mirror those of Japanese consumers, who have traditionally focused on the taste, eco-footprint and quality of ingredients.

In addition to our NuZee branded products, our premium DRIPKIT pour over format features a large-size single serve pour over pack that sits on top of the cup and delivers in our view a barista-quality coffee experience. We offer DRIPKIT pour over packs direct to consumers through our website, wholesale business-to-business to hospitality customers, and co-pack for coffee roasters.

In addition to our other NuZee branded products, our premium DRIPKIT pour over format features a large-size single serve pour over pack that sits on top of the cup and delivers in our view a barista-quality coffee experience. We offer DRIPKIT pour over packs direct to consumers through our website, wholesale business-to-business to hospitality customers, and co-pack for coffee roasters.

ITEM 1. BUSINESS. Overview We are a specialty coffee company and, we believe, a leading co-packer of single serve pour over coffee in the United States, as well as a preeminent co-packer of coffee brew bags, which is also referred to as tea-bag style coffee.

ITEM 1. BUSINESS. Overview We are a specialty coffee and technologies company and, we believe, a leading co-packer of single serve pour over coffee in the United States, as well as a preeminent co-packer of coffee brew bags, which is also referred to as tea-bag style coffee.

In addition to our single serve pour over and coffee brew bag coffee products, we have recently expanded our product portfolio to offer a third type of single serve coffee format, DRIPKIT pour over products, as a result of our acquisition of substantially all of the assets of Dripkit, Inc. (“Dripkit”).

In addition to our single serve pour over and coffee brew bag coffee products, we have expanded our product portfolio to offer a third type of single serve coffee format, DRIPKIT pour over products, as a result of our acquisition of substantially all of the assets of Dripkit, Inc. (“Dripkit”).

Patent rights (1) and (2) stem from the Acquisition of Dripkit in 2022. 9 We intend to aggressively protect, police and assert our intellectual property rights, including product designs, proprietary product research and concepts as well as our trademark portfolio.

Patent rights (1) and (2) stem from the Acquisition of Dripkit in 2022. We intend to aggressively protect, police and assert our intellectual property rights, including product designs, proprietary product research and concepts as well as our trademark portfolio.

On December 9, 2022, at a Special Meeting of Stockholders, our stockholders approved a proposal granting the board of directors of the Company (the “Board”) discretionary authority to file an amendment (the “Certificate of Amendment”) to the Company’s Articles of Incorporation, as amended (the “Articles”), which amends the Articles to add a Section 1A to effect a reverse stock split of the Company’s common stock, at any ratio from 1-for-10 to 1-for-50 at the Board’s discretion (the “2022 Reverse Stock Split”).

In furtherance of our goal to become the “go-to” commercial coffee manufacturer and preeminent partner for coffee companies seeking to enter into and grow within the single serve coffee market in North America, we focus on entering into co-packing agreements with large international companies, including co-packing arrangements pursuant to our private label coffee development program.

In furtherance of our goal to become the “go-to” commercial coffee producer and preeminent partner for coffee companies seeking to enter into and grow within the single serve coffee market in North America, we focus on entering into co-packing agreements with large international companies, including co-packing arrangements pursuant to our private label coffee development program.

As a result of our ongoing efforts, we feel we are well positioned to be a “go-to” coffee manufacturer for companies offering single serve coffee products in the North American market. We understand that as single serve pour over and coffee brew bag coffee products gain momentum in the North American market we will face increasing competition.

As a result of our ongoing efforts, we feel we are well positioned to be a “go-to” coffee producer for companies offering single serve coffee products in the North American market. We understand that as single serve pour over and coffee brew bag coffee products gain momentum in the North American market we will face increasing competition.

We believe capturing these influential roasters would help us provide format visibility to the bigger roasters as well as influential consumers. ● Efficiently grow our manufacturing footprint and capacity, including by leveraging new and current partnerships, in response to anticipated demand for co-packing .

We believe capturing these influential roasters would help us provide format visibility to the bigger roasters as well as influential consumers. ● Efficiently grow our manufacturing footprint and capacity, including by leveraging partnerships, in response to anticipated demand for co-packing .

We have also developed and sell NuZee branded single serve coffee products, including our flagship Coffee Blenders line of both single serve pour over coffee and coffee brew bags, which we believe offers consumers some of the best coffee available in a single serve application in the world.

We have also developed and sell NuZee branded single serve coffee products, including our flagship Coffee Blenders line of both single serve pour over coffee and coffee brew bag coffee products, which we believe offers consumers some of the best coffee available in a single serve application in the world.

Our DRIPKIT pour over format features a large-size single serve pour over pack that sits on top of the cup and delivers in our view a barista-quality coffee experience to coffee drinkers in the United States, Canada, and Mexico.

Our DRIPKIT pour over format features a large-size single serve pour over pack that sits on top of the cup and delivers in our view a barista-quality coffee experience to customers in the United States, Canada, and Mexico.

The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov. 11

With this partnership, we expect to offer a holistic coffee supply and manufacturing program to our existing and new customers, including coffee roasting and non-single serve coffee product co-packing in addition to our other single serve coffee formats. ● Strategically grow and expand our international operations that align with our vision.

With these partnerships, we expect to offer a holistic coffee supply and manufacturing program to our existing and new customers, including coffee roasting and non-single serve coffee product co-packing in addition to our other single serve coffee formats. ● Strategically grow and expand our international operations that align with our vision.

To date, the only activities in NuZee Latin America were the contribution of two machines, and start up and initial marketing and sales activities. Its primary business operations are intended to consist of the manufacture of single serve coffee products for sale in Mexico, Central and South America.

NuZee Latin America is organized under the laws of Mexico. To date, the primary activities in NuZee Latin America were the contribution of two machines, and start up and initial marketing and sales activities. Its primary business operations are intended to consist of the manufacture of single serve coffee products for sale in Mexico, Central and South America.

We may also consider co-packaging other products that are complementary to our current single serve coffee product offerings and provide us with a deeper access to our customers. Since 2016, we have been primarily focused on single serve pour over coffee production.

We also co-package other products, such as bagged coffees, that are complementary to our current single serve coffee product offerings and provide us with a deeper access to our customers. Since 2016, we have been primarily focused on single serve pour over coffee production.

Sales of our NuZee branded products, including through Amazon, also help promote consumer adoption into the format and to educate coffee drinkers in the United States about this coffee format that is new to North America but widely known in East Asia. Our NuZee branded products are further described below. ● Coffee Blenders .

Sales of our NuZee branded products also help promote consumer adoption into the format and to educate coffee drinkers in the United States about this coffee format that is new to North America but widely known in East Asia.

We are also in the process of obtaining rights to the “It’s Coffee Reimagined” and “Dripkit and Design” trademarks. We intend to continue growing our trademark portfolio in the United States with other related slogans and brands as new products are launched.

We are also in the process of obtaining rights to the “Dripkit and Design,” “NuZee”, “NuZee Coffee (Stylized)”, “NuZee Coffee and Design”, and “COLDPRESSO” trademarks. We intend to continue growing our trademark portfolio in the United States with other related slogans and brands as new products are launched.

Accordingly, we consider our business model to be a form of tolling arrangement, as we receive a fee for almost every single serve coffee product our co-packing customers sell in the North American and Korean markets.

Accordingly, we consider a portion of our business model to be a form of tolling arrangement, as we receive a fee for almost every single serve coffee product our co-packing customers sell in the North American and Korean markets. Under the single serve model, our risk related to owning and managing inventory is limited.

Single serve pour over coffee uses the same brewing technique without a machine, with the coffee flowing straight into a cup using only hot water and the prepacked coffee filter. Coffee brew bag coffee We introduced our coffee brew bag, or tea-bag style coffee, in 2019.

Proponents of pour over coffee believe this method makes better coffee. Single serve pour over coffee uses the same brewing technique without a machine, with the coffee flowing straight into a cup using only hot water and the prepacked coffee filter. 4 What is coffee brew bag coffee? We introduced our coffee brew bag, or tea-bag style coffee, in 2019.

We have also expanded our co-packing expertise and product offerings to coffee brew bag coffee products, which we believe are gaining traction in the United States, as well as our DRIPKIT pour over products.

We have also expanded our co-packing expertise and product offerings to coffee brew bag products, which we believe are gaining traction in the United States, as well as our DRIPKIT pour over products. Our goal is to continue to expand our product portfolio to raise our visibility, consumer awareness and brand profile.

If not periodically cleaned or if spent pods are not removed timely, this can lead to poor taste and bacterial growth. ● Our single serve coffee products allow consumers to brew only what they need, therefore allowing mindful, responsible consumption that can reduce food and water waste and leads to better coffee sustainability. 5 We seek to establish ourselves as the premier manufacturer of single serve coffee products for the North American market and to produce innovative coffee products that we believe will promote sustainability.

We intend to leverage our position to become the commercial coffee manufacturer of choice and aim to become the preeminent leader for coffee companies seeking to enter into and grow within the single serve coffee market in North America. We are paid per-package based on the number of single serve coffee products produced by us.

We intend to leverage our position to become the commercial coffee producer of choice and aim to become the preeminent leader for coffee companies seeking to enter into and grow within the single serve coffee market in North America.

The Board intends to effect the 2022 Reverse Stock Split as soon as practicable. In June 2020, our common stock commenced trading on the Nasdaq Capital Market under the symbol “NUZE.” Prior to that, our common stock was quoted on the OTCQB Marketplace under the same symbol. We have two international subsidiaries in NuZee KOREA Ltd.

In June 2020, our common stock commenced trading on the Nasdaq Capital Market under the symbol “NUZE.” Prior to that, our common stock was quoted on the OTCQB Marketplace under the same symbol. We have two international subsidiaries in NuZee KOREA Ltd. (“NuZee KR”), and NuZee Investment Co., Ltd. (“NuZee INV”).

We intend to continue to pursue such co-packing arrangements in the future. We believe this customer interest is primarily due to (i) the saturation of machine based single serve coffee alternatives, (ii) increase in consumer requirements for eco-friendly packaging and (iii) our superior taste quality compared to other single serve coffee alternatives.

We believe this customer interest is primarily due to (i) the saturation of machine based single serve coffee alternatives, (ii) increase in consumer requirements for eco-friendly packaging and (iii) our superior taste compared to other single serve coffee alternatives. We also sell our NuZee and DRIPKIT branded products directly to consumers.

At the request of our co-packing customers, we may also utilize a freight broker for the distribution and delivery of our products according to our co-packing customers’ instructions. Our NuZee and DRIPKIT branded products are typically delivered by common carriers directly to each customer.

At the request of our co-packing customers, we may also utilize a freight broker for the distribution and delivery of our products according to our co-packing customers’ instructions.

Latin America In January 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 is organized under the laws of Mexico.

Our strategy is to leverage our local relationships to secure large co-packing agreements for the markets in Korea, China and other Asian countries. 7 Latin America In January 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”).

Our mission is to leverage our position as a co-packer at the forefront of the North American single serve 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 manufacturing and sales operations in Korea and a joint venture in Latin America.

Our mission is to leverage our position as a co-packer at the forefront of the North American single serve coffee market to revolutionize the way single serve coffee is enjoyed in the United States.

The advertising, distribution, labeling, production, safety, sale, and transportation in the United States of our products are subject to the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Lanham Act, state consumer protection laws, competition laws, federal, state and local workplace health and safety laws, various federal, state and local environmental protection laws, and various other federal, state and local statutes and regulations.

We have not received, nor are we aware of, any inquiries or other regulatory action from the FDA or any other governmental agency regarding our products and we believe we are in full compliance with all FDA regulations. 12 The advertising, distribution, labeling, production, safety, sale, and transportation in the United States of our products are subject to the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Lanham Act, state consumer protection laws, competition laws, federal, state and local workplace health and safety laws, various federal, state and local environmental protection laws, and various other federal, state and local statutes and regulations.

We also sell our NuZee and DRIPKIT branded products directly to consumers. Currently, Amazon and our Coffee Blenders website are our only established domestic retail channels for direct sales to consumers of NuZee branded products, and our DRIPKIT products are sold through our Dripkit website and third-party online retailers.

Currently, Amazon and our Coffee Blenders website are our only established domestic retail channels for direct sales to consumers of NuZee branded products, and our DRIPKIT products are sold through our Dripkit website. We plan to sell Stone Brewing licensed products both direct-to-consumer through a variety of channels and through a wholesale network.

We intend to leverage our partnership announced in 2022 pursuant to which a manufacturing partner in Knoxville, Tennessee will provide us with additional manufacturing, coffee roasting and co-packing capabilities, and facilitate distribution efforts to the Eastern United States.

We intend to leverage our previously announced partnerships in Knoxville, Tennessee and California to provide us with additional manufacturing, coffee roasting and co-packing capabilities, and facilitate distribution efforts.

We believe we are the only commercial-scale producer within the North American market that has the dual capacity to pack both single serve pour over coffee and coffee brew bag coffee.

While the United States is our core market, we also have manufacturing and sales operations in Korea and a joint venture in Latin America. We believe we are the only commercial-scale producer within the North American market that has the dual capacity to pack both single serve pour over coffee and coffee brew bag coffee.

Ingredients in such products must be approved food additives or “Generally Regarded as Safe”. We intend to work with ingredient suppliers, manufacturers, and other trade partners that are compliant with the laws and regulation enforced by the FDA.

We intend to work with ingredient suppliers, manufacturers, and other trade partners that are compliant with the laws and regulation enforced by the FDA.

We further intend to expand our brand protections outside of the United States in line with our prospective international growth. As of the date of this Report, we had registered trademarks “Coffee Blenders” and “Twin Peaks” in Japan and registered trademarks “Twin Peaks” in Korea.

We further intend to expand our brand protections outside of the United States in line with our prospective international growth.

We believe that the skill sets of our core management team will be a primary asset in the development of our brands and trademarks. Governmental Regulation Our Coffee Blenders, DRIPKIT and other NuZee branded products are marketed and sold as conventional food or beverages for regulatory purposes. Such products are regulated by the FDA.

Governmental Regulation Our Coffee Blenders, DRIPKIT and other NuZee branded products are marketed and sold as conventional food or beverages for regulatory purposes. Such products are regulated by the FDA. Ingredients in such products must be approved food additives or “Generally Regarded as Safe”.

Although asserting our rights may result in a substantial cost to the Company, our management strongly believes that the protection of our intellectual property rights is a key component of our operating strategy. International operations Korea We established our Korean subsidiary in 2018.

Although asserting our rights may result in a substantial cost to the Company, our management strongly believes that the protection of our intellectual property rights is a key component of our operating strategy. Employees As of September 30, 2023, we had a total of 18 employees in the United States and 15 employees in Korea, all of whom are full-time.

None of our employees are represented by a labor organization or under any collective bargaining arrangements. We believe our relationships with our employees are good. Our operations are overseen directly by management that engages our employees to carry on our business. Our management oversees all responsibilities in the areas of corporate administration, product development, marketing, and research.

Our operations are overseen directly by management that engages our employees to carry on our business. Our management oversees all responsibilities in the areas of corporate administration, product development, marketing, and research. We may expand our current management to retain other skilled directors, officers, and employees with experience relevant to our business focus.

Manufacturing and Operational Capacity We currently lease manufacturing facilities in Vista, California and Seoul, Korea to produce our single serve pour over or coffee brew bag coffee products. In November 2021, we entered into a new lease in Seoul, Korea for a larger office and manufacturing space.

Operational capacity We currently lease manufacturing facilities in Vista, California and Seoul, Korea to produce our single serve pour over, coffee brew bag products, DripKit products and bagged coffees. In addition, we partner with other manufacturers to roast and package our products.

Single serve coffee products Single serve pour over coffee Single serve pour over coffee, or hand drip coffee, is a traditional and time-honored technique that pours hot water onto ground coffee with a prepacked coffee filter. Proponents of pour over coffee believe this method makes better coffee.

Our goal is to continue to expand our product portfolio to raise our visibility, consumer awareness and brand profile. What is single serve pour over coffee? Single serve pour over coffee, or hand drip coffee, is a traditional and time-honored technique that pours hot water onto ground coffee with a prepacked coffee filter.

We are one of many producers of single serve pour over coffee products in Korea and do not have any exclusive rights for this region. Our strategy is to leverage our local relationships to secure large co-packing agreements for the markets in Korea, China and other Asian countries.

International operations Korea We established our Korean subsidiary in 2018. We are one of many producers of single serve pour over coffee products in Korea and do not have any exclusive rights for this region.

Our business strategy We intend to achieve our mission and further grow our business by pursuing the following strategies: ● Continually grow our base of large national or international co-packing customers.

We believe that having an office in Korea provides us with direct access to our key vendors that helps us to maintain such relationships as well as helps us operationally in our core U.S. market. 10 Our business strategy We intend to achieve our mission and further grow our business by pursuing the following strategies: ● Continually grow our base of large national or international co-packing customers.

Our executive office and administrative operations are now located in Richardson, Texas. 8 We own high-quality and sophisticated packing equipment developed by premier East Asian suppliers for pour over and coffee brew bag coffee production. We believe these manufacturers are the world leaders for supplying such machines.

We own high-quality and sophisticated packing equipment developed by premier East Asian suppliers for pour over and coffee brew bag coffee production. We believe these manufacturers are the world leaders for supplying such machines. Nitrogen and air compression machinery is capable of handling expansion, which helps to minimize any ongoing related capital expenditures for such machinery as we expand.

We also compete to secure distributors who will agree to market our product over those of our competitors, provide stable and reliable distribution, and secure adequate shelf space in retail outlets and search placement in online stores. 10 Employees As of September 30, 2022, we had a total of 22 employees in the United States and 13 employees in Korea, all of whom are full-time.

We also compete to secure distributors who will agree to market our product over those of our competitors, provide stable and reliable distribution, and secure adequate shelf space in retail outlets and search placement in online stores. 9 Our competitive strengths We believe that the following strengths contribute to our success: ● Favorable industry trends benefit us .

Our goal is to continue to expand our product portfolio to raise our visibility, consumer awareness and brand profile. 5 Our sources of revenue Co-packing We operate as a third-party contract packager for the finished goods of other major companies operating in the coffee beverage industry.

Entering the bagged coffee market allows us to leverage our marketing, production and inventory investments across a wide product line while continuing to build our single serve market. 6 Our sources of revenue Co-packing We operate as a third-party contract packager for the finished goods of other major companies operating in the coffee beverage industry.

Our coffee brew bags are intended to be industrially compostable, allowing consumers to deposit the used coffee brew bag in the curbside compostable bins where available. 4 Revolutionizing the single serve coffee market in North America We believe the typical coffee consumer is increasingly focused on the environmental impact of the product, as well as the taste and quality of the ingredients.

We will also periodically introduce new flavors to provide consumers the opportunity to try additional options under the Stone Brewing Coffee brand. Revolutionizing the single serve coffee market in North America We believe the typical coffee consumer is increasingly focused on the environmental impact of the product, as well as the taste and quality of the ingredients.

In addition, we have recently expanded our Coffee Blenders offerings to include a new Coldpresso latte product line that is available to purchase in Korea online. We sell Coffee Blenders products mainly online.

We have recently expanded our Coffee Blenders offerings to include a new Cold pressed latte product line that is available to purchase in Korea and online. We offer DRIPKIT pour over packs direct to consumers through our website, wholesale business-to-business to hospitality customers, and co-pack for coffee roasters.

(“NuZee KR”), and NuZee Investment Co., Ltd. (“NuZee INV”). NuZee KR and NuZee INV are wholly owned subsidiaries of the Company. We also have a joint venture in Mexico, as further discussed above. Our principal executive offices are located at 1350 East Arapaho Road, Suite #230, Richardson, Texas 75081, and our telephone number is (760) 295-2408.

NuZee KR and NuZee INV are wholly owned subsidiaries of the Company. We also have a joint venture in Mexico, as further discussed above.

Our manufacturing partner in Knoxville, Tennessee facilitates distribution of certain of our products to the Eastern United States. Intellectual Property Trademarks We currently own the following United States trademarks: “NuZee”, “NuZee Coffee (Stylized)”, “NuZee Coffee and Design”, “Coffee Blenders”, “Twin Peaks”, “Active Cup”, “Relax Cup”, “Think Cup”, “Nude Cup”, “Pine Ranch Coffee”, and “Dripkit”.

Entering the bagged coffee market allows us to leverage our marketing, production and inventory investments across a wide product line while continuing to build our single serve market. 11 Intellectual Property Trademarks We currently own the following United States trademarks: “Coffee Blenders”, “Twin Peaks”, “Active Cup”, “Relax Cup”, “Think Cup”, “Nude Cup”, “Pine Ranch Coffee”, and “Dripkit”.

We may expand our current management to retain other skilled directors, officers, and employees with experience relevant to our business focus. Our management’s relationships will provide the foundation through which we expect to grow our business in the future.

Our management’s relationships will provide the foundation through which we expect to grow our business in the future. We believe that the skill sets of our core management team will be a primary asset in the development of our brands and trademarks.

We believe we are compliant with all applicable laws and regulations. We have not received and are not aware of any inquiries or other legal or regulatory actions from any entity. Corporate Information We were incorporated in 2011 in Nevada as Havana Furnishings, Inc. NuZee Co. Ltd. was incorporated in 2011. NuZee Co.

Corporate Information We were incorporated in 2011 in Nevada as Havana Furnishings, Inc. NuZee Co. Ltd., a California corporation, was incorporated under California law in 2011. NuZee Co. Ltd. (California) merged into Havana Furnishings, Inc. in 2013, at which time we changed our name to NuZee, Inc.

Ltd. merged into Havana Furnishings, Inc. in 2013, at which time we changed our name to NuZee, Inc. Our principal executive and administrative offices are located at 2865 Scott St. Suite 107, Vista, California 92081, and our telephone number is (760) 295-2408.

Removed

While we financially benefit from the success of our co-packing customers through the sales of their respective single serve coffee products, we believe we are also able to avoid the risks associated with owning and managing the product and its related inventory.

Added

Recently, we further expanded our product offerings to include bagged coffees for existing single serve customers as well as a new licensing relationship with Stone Brewing which will include both bagged and single serve format coffee products. We believe this expansion will allow us to increase manufacturing efficiency and better serve our customers and the market.

Removed

We seek to establish ourselves as the premier manufacturer of single serve coffee products for the North American market and to produce innovative coffee products that we believe will promote sustainability.

Added

With our single serve pour over and brew bag coffee we are paid per-package based on the number of single serve coffee products produced by us. With our bagged coffee products, we will be paid based on the number of completed bags delivered.

Removed

Our Coffee Blenders line of products, including both single serve pour over coffee products and coffee brew bag coffee, is a high-end product line that, in addition to showcasing our production expertise, also includes what we believe to be some of the best coffee available in a single serve application in the world.

Added

With our bagged coffees and the Stone Brewing licensing relationship, we will manage the production and related inventory which will involve increased risk levels.

Removed

We also have a number of potential co-packing opportunities in which our customers would contract for us to replicate one or more of our Coffee Blenders products with their film and packing, providing further evidence of the high-quality nature of this line and coffee. 6 ● Twin Peaks.

Added

Our coffee brew bags are intended to be industrially compostable, allowing consumers to deposit the used coffee brew bag in the curbside compostable bins where available. What is bagged coffee? Bagged coffee is roasted whole bean or ground coffee, generally sold in 12 ounce to five pound bags.

Removed

We currently sell our Twin Peaks single serve pour over coffee exclusively via Amazon. This program commenced in 2019 and we expect that as Amazon and its customers become more familiar with single serve pour over coffee, we will increase our revenue for this product.

Added

We recently agreed to begin producing bagged coffee in a 12 ounce format for one of our largest customers. We will also begin producing bagged coffees in a 12 ounce and two pound format for Stone Brewing under a licensing relationship. Bagged coffees are used in homes, offices and restaurant/hospitality settings to brew multiple cups of coffee simultaneously.

Removed

As we look at other potential international manufacturing locations, we look for characteristics similar to the Korean, Latin American and U.S. markets. We plan to further leverage our international operations to support our customers’ expansion into the markets in which we operate. This includes assisting our U.S. customers launching their products in Korea and Mexico.

Added

What is the Stone Brewing License Relationship? Recently, we entered into a five-year global licensing agreement with Stone Brewing. Stone Brewing is the nation’s seventh largest craft brewery with products sold in all 50 states and internationally. We intend to build a strong direct-to-consumer business by marketing the coffee line to craft beverage customers on a dedicated website www.stoneroasting.com.

Removed

Dripkit Transaction On February 25, 2022 (the “Closing Date”), we acquired substantially all of the assets and certain specified liabilities of Dripkit (the “Acquisition”) pursuant to the Asset Purchase Agreement, dated as of February 21, 2022 (the “Asset Purchase Agreement”), by and among the Company, Dripkit, and Dripkit’s existing investors (the “Stock Recipients”) who executed joinders to the Asset Purchase Agreement as of the Closing Date.

Added

We also intend to distribute Stone Brewing specialty coffee products through a wholesale network of natural grocery, traditional grocery and convenience store channels as well as office coffee and hotel brokers and distributors. In order to assist in building out the wholesale network, we engaged C.A. Fortune, a consumer brands agency, to spearhead sales and marketing efforts.

Removed

Pursuant to the terms of the Asset Purchase Agreement, the aggregate purchase price paid by us for the Acquisition was $860,000, consisting of cash paid by the Company to Dripkit and the Company’s issuance to the Stock Recipients of an aggregate of 178,681 shares of the Company’s common stock, plus the assumption of certain assumed liabilities, subject to certain adjustments and holdbacks as provided in the Asset Purchase Agreement. 7 On May 2, 2022, pursuant to the terms of the Asset Purchase Agreement, the bulk sales holdback amount was used to satisfy sales and use taxes owed by Dripkit to the State of New York as of the Closing Date.

Added

Under the Stone Brewing License Relationship, we will produce a full line of specialty products including DRIPKIT, single-serve brew bags and 12 ounce bagged coffees. The full line of products will be distributed both direct-to-consumer and through the wholesale network. The products will adopt the branding and flavor characteristics of three of Stone’s most popular brands.

Removed

Pursuant to the terms of the Asset Purchase Agreement, the amounts remaining after offsetting the cost of these sales and use taxes were distributed as follows: (i) $39,237 was distributed to Dripkit on May 9, 2022, in connection with the cash bulk sales holdback amount, and (ii) 18,475 shares of our common stock were issued to the Stock Recipients on April 25, 2022, in connection with the stock bulk sales holdback amount.

Added

Capitalizing on the existing bagged coffee market Recently, we agreed to begin producing bagged coffee products in a 12 ounce format for one of our largest customers. The customer has a developed market and distribution network for both bagged coffees and coffee brew bag products.

Removed

For additional information regarding the Acquisition and the Asset Purchase Agreement, see “Note 6—Business Combinations” to the Consolidated Financial Statements. Dripkit operates as a new Dripkit Coffee business division that is wholly owned by NuZee, Inc. Customers and Sales Our co-packing customers primarily include large and small size coffee roasters and food service companies.

Added

Expanding our existing relationship with this customer allows us to increase our manufacturing volume and efficiency by focusing on larger production runs. The customer has indicated to us that it expects continued growth in the single serve products and the bagged coffee purchases from us.

Removed

Sales to relatively few co-packing customers account for a significant percentage of our net sales, and our success depends in part on our ability to maintain good relationships with these key co-packing customers and other key retail and grocery customers.

Added

We are continuing to explore additional product manufacturing opportunities with this customer as well as other customers. We also entered into a five-year global licensing agreement with Stone Brewing to produce a full line of specialty products including DRIPKIT, single-serve brew bags and 12 ounce bagged coffees.

Removed

One major customer accounted for approximately 28% and 32% of our total revenue in the years ended September 30, 2022 and 2021, respectively, as further described in “ Note 2—Basis of Presentation And Summary of Significant Accounting Policies—Major Customers ” to our Consolidated Financial Statements.

Added

The sales activities generated thus far are minimal. Our customers and products Our co-packing customers primarily include large and small size coffee roasters and food service companies. We intend to continue to pursue such co-packing arrangements in the future.

Removed

Generally, under our co-packing arrangements as well as our fulfillment of purchase orders for the distribution of NuZee branded products through nationally recognized retailers, customers must issue purchase orders for our products and co-packing services.

Added

Further, in March 2023, we entered into a manufacturing agreement with a California-based coffee roaster to expand the Company’s footprint on the West Coast. 8 Our executive office and administrative operations are now located in Vista and Carlsbad, California.

Removed

Although these purchase orders stipulate key terms including order quantity, product specifications, price, payment terms, packaging method and delivery instructions, our co-packing arrangements and our arrangements with nationally recognized retailers are typically not governed by any written agreement and have no ongoing minimum purchase requirements; however, we do impose minimum quantity requirements when an order is placed.

Added

In order to satisfy the demand for bagged coffee production for our largest customer as well as our new Stone Coffee brand product line, we will be investing in additional equipment to increase our capacity for bagged coffee production.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

91 edited+18 added−42 removed185 unchanged

2022 filing

2023 filing

Biggest changeUnder standards established by the Public Company Accounting Oversight Board, a material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, detected or corrected on a timely basis. 28 If material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future, then there exists a risk that our consolidated financial statements may contain material misstatements that are unknown to us at that time, and such misstatements could require us to restate our financial results.

We expect to incur significant costs and devote substantial management time to maintaining our disclosure controls and procedures and internal control over financial reporting, and regardless we may be unable to prevent or detect all errors or acts of fraud or to accurately and timely report our financial results or file our periodic reports in a timely manner.

The supply and price of coffee we and our co-packing customers purchase can also be affected by multiple factors in the producing countries, including weather, natural disasters, crop disease (such as coffee rust) and pests, general increase in farm inputs and costs of production, armed conflict, labor actions, government actions and trade barriers or tariffs, inventory levels and political and economic conditions, as well as real or perceived supply shortages, an increase in green coffee purchased and sold on a negotiated basis rather than directly on commodity markets in response to higher production costs relative to “C” market prices, pandemics or other disease outbreaks (including COVID-19), and the actions of certain organizations and associations that have historically attempted to influence prices of coffee through agreements establishing export quotas or by restricting coffee supplies.

The supply and price of coffee we and our co-packing customers purchase can also be affected by multiple factors in the producing countries, including weather, natural disasters, crop disease (such as coffee rust) and pests, general increase in farm inputs and costs of production, armed conflict, labor actions, government actions and trade barriers or tariffs, inventory levels and political and economic conditions, as well as real or perceived supply shortages, an increase in green coffee purchased and sold on a negotiated basis rather than directly on commodity markets in response to higher production costs relative to “C” market prices, pandemics or other disease outbreaks, and the actions of certain organizations and associations that have historically attempted to influence prices of coffee through agreements establishing export quotas or by restricting coffee supplies.

Because the laws and regulations governing U.S. foreign tax credits are complex and subject to periodic legislative amendment, we cannot be sure that we would in fact be able to take advantage of any foreign tax credits in the future. Our business operations are conducted in multiple languages and could be disrupted due to miscommunications or translation errors.

Because the laws and regulations governing U.S. foreign tax credits are complex and subject to periodic legislative amendment, we cannot be sure that we would in fact be able to take advantage of any foreign tax credits in the future. 24 Our business operations are conducted in multiple languages and could be disrupted due to miscommunications or translation errors.

In addition, broad price and volume fluctuations in the stock market as a whole, as well as general economic, business and political conditions, may adversely affect the price of our stock in ways that may be unrelated to our financial performance. 18 Our international sales and operations subject us to various additional legal, regulatory, financial and other risks.

In addition, broad price and volume fluctuations in the stock market as a whole, as well as general economic, business and political conditions, may adversely affect the price of our stock in ways that may be unrelated to our financial performance. Our international sales and operations subject us to various additional legal, regulatory, financial and other risks.

Successful infringement or licensing claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use of the intellectual property in question. 23 Failure to comply with applicable transfer pricing and similar regulations could harm our business and financial results.

Successful infringement or licensing claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use of the intellectual property in question. Failure to comply with applicable transfer pricing and similar regulations could harm our business and financial results.

If those conditions are not met, then after the expiration of the two-year period the corporation may not engage in a business combination with such shareholder unless certain other conditions are met. These provisions, alone or together, could delay hostile takeovers and changes in control or changes in our management.

If those conditions are not met, then after the expiration of the two-year period the corporation may not engage in a business combination with such shareholder unless certain other conditions are met. 29 These provisions, alone or together, could delay hostile takeovers and changes in control or changes in our management.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. 28 Because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

Our growth strategy includes, among other things, further developing our NuZee and DRIPKIT branded product lines and growing our private label coffee development program to reach new co-packing customers, as well as increasing sales of our coffee brew bag coffee products.

In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Report, these factors include but are not limited to: ● the success of, or developments in, competitive products, services or technologies; ● regulatory actions with respect to our products and our competitors; ● the level of success of our marketing strategy; ● our ability to obtain top-grade packing equipment for single serve coffee production; ● announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments; ● regulatory or legal developments in the United States and other countries; 24 ● recruitment or departure of key personnel; ● expenses related to any of our development programs and our business in general; ● actual or anticipated changes in financial estimates, development timelines or recommendations by securities analysts; ● failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; ● variations in our financial results or those of companies that are perceived to be similar to us; ● fluctuations in the valuation of companies perceived by investors to be comparable to us; ● share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; ● our ability or failure to raise additional capital in equity or debt transactions; ● costs associated with our sales and marketing initiatives; ● costs and timing of obtaining and maintaining FDA and other regulatory clearances and approvals for our products; ● sales of our common stock by us, our insiders or our other stockholders; and ● general economic, business, industry, market and political conditions, including prevailing interest rates and the rate of inflation.

In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Report, these factors include but are not limited to: ● the success of, or developments in, competitive products, services or technologies; ● regulatory actions with respect to our products and our competitors; ● the level of success of our marketing strategy; ● our ability to obtain top-grade packing equipment for coffee production; ● announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments; ● regulatory or legal developments in the United States and other countries; 25 ● recruitment or departure of key personnel; ● expenses related to any of our development programs and our business in general; ● actual or anticipated changes in financial estimates, development timelines or recommendations by securities analysts; ● failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; ● variations in our financial results or those of companies that are perceived to be similar to us; ● fluctuations in the valuation of companies perceived by investors to be comparable to us; ● share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; ● our ability or failure to raise additional capital in equity or debt transactions; ● costs associated with our sales and marketing initiatives; ● costs and timing of obtaining and maintaining FDA and other regulatory clearances and approvals for our products; ● sales of our common stock by us, our insiders or our other stockholders; and ● general economic, business, industry, market and political conditions, including prevailing interest rates and the rate of inflation.

Such actions could adversely impact our results of operations, cash flows and financial condition, and our inability to effectively and timely comply with such regulations could adversely impact our competitive position. Employment litigation and unfavorable publicity could negatively affect our future business.

Such actions could adversely impact our results of operations, cash flows and financial condition, and our inability to effectively and timely comply with such regulations could adversely impact our competitive position. 31 Employment litigation and unfavorable publicity could negatively affect our future business.

Our future financial results are difficult to predict, and failure to meet market expectations for our financial performance or any publicly announced guidance may cause the price of our stock to decline.

Recruiting and retention difficulties will limit our ability to support our development and sales programs and to build a commercially viable business. 20 The competition for talent is currently extremely high.

Recruiting and retention difficulties will limit our ability to support our development and sales programs and to build a commercially viable business. The competition for talent is currently extremely high.

Anti-takeover provisions in our third amended and restated bylaws and Nevada law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our securities. 33. We have never paid dividends on our capital stock and we do not anticipate paying any dividends in the foreseeable future.

Anti-takeover provisions in our third amended and restated bylaws and Nevada law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our securities. 31. We have never paid dividends on our capital stock and we do not anticipate paying any dividends in the foreseeable future.

Our future financial performance and our ability to expand and market our single serve coffee products and to compete effectively will depend, in part, on our ability to manage this potential future growth effectively, without compromising quality. 22 Any failure by us to accurately forecast customer demand for our products, or to quickly adjust to forecast changes, could adversely affect our business and financial results.

Our future financial performance and our ability to expand and market our single serve coffee products and to compete effectively will depend, in part, on our ability to manage this potential future growth effectively, without compromising quality. 23 Any failure by us to accurately forecast customer demand for our products, or to quickly adjust to forecast changes, could adversely affect our business and financial results.

Increased competition, including as a result of industry consolidation, could hurt our businesses, and changes in the coffee, tea and beverage environment and retail landscape could impact our financial results. 12. Our business, growth and profitability depend on the performance of third-parties and our relationship with them, including third-party coffee roasters and manufacturing partners. 13.

Increased competition, including as a result of industry consolidation, could hurt our businesses, and changes in the coffee, tea and beverage environment and retail landscape could impact our financial results. 11. Our business, growth and profitability depend on the performance of third-parties and our relationship with them, including third-party coffee roasters and manufacturing partners. 12.

We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy. 18. Any failure by us to accurately forecast customer demand for our products and co-packing services, or to quickly adjust to forecast changes, could adversely affect our business and financial results. 19.

We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy. 17. Any failure by us to accurately forecast customer demand for our products and co-packing services, or to quickly adjust to forecast changes, could adversely affect our business and financial results. 18.

Increases in the cost or decreases in the availability of high-quality coffee beans or other commodities could have an adverse impact on our business and financial results. Additionally, price increases may not be sufficient to offset cost increases and maintain profitability or may result in sales volume declines. 17.

Although inflation in the United States had been relatively low for many years, there was a significant increase in inflation beginning in the second half of 2021, which has continued into 2022. We expect for the foreseeable future to experience inflationary pressure on our cost structure.

Although inflation in the United States had been relatively low for many years, there was a significant increase in inflation beginning in the second half of 2021, which has continued into 2023. We expect for the foreseeable future to experience inflationary pressure on our cost structure.

The loss of any member of our senior management team or our inability to attract and retain highly skilled personnel could have a material adverse effect on our business. 15. Because our management structure is not centralized, the management of our business operations may be more expensive and more difficult. 16.

The loss of any member of our senior management team or our inability to attract and retain highly skilled personnel could have a material adverse effect on our business. 14. Because our management structure is not centralized, the management of our business operations may be more expensive and more difficult. 15.

Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods. 13 Risks Related to Our Financial Condition and Capital Requirements We have a history of net losses.

Additional risks not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods. 15 Risks Related to Our Financial Condition and Capital Requirements We have a history of net losses.

Our independent auditor’s report for the fiscal year ended September 30, 2022 includes an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, and absent additional financing we may be unable to remain a going concern. 3.

Our independent auditor’s report for the fiscal year ended September 30, 2023 includes an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, and absent additional financing we may be unable to remain a going concern. 3.

Failure to comply with applicable transfer pricing and similar regulations could harm our business and financial results. 21. Our business operations could be disrupted due to miscommunications or translation errors. Additionally, our international sales and operations subject us to additional legal, regulatory, financial and other risks. 22.

Failure to comply with applicable transfer pricing and similar regulations could harm our business and financial results. 20. Our business operations could be disrupted due to miscommunications or translation errors. Additionally, our international sales and operations subject us to additional legal, regulatory, financial and other risks. 21.

Our Consolidated Financial Statements for the year ended September 30, 2022 were prepared on the basis of a going concern, which contemplates that we will be able to realize our assets and discharge liabilities in the normal course of business.

Our Consolidated Financial Statements for the year ended September 30, 2023 were prepared on the basis of a going concern, which contemplates that we will be able to realize our assets and discharge liabilities in the normal course of business.

After being sourced by us, the green whole bean coffee is then shipped to our roasting partners where the coffee is roasted and then shipped to us for grinding, blending and packaging. 21 The price of coffee is subject to significant volatility, and may increase due to the factors described below.

After being sourced by us, the green whole bean coffee is then shipped to our roasting partners where the coffee is roasted and then shipped to us for grinding, blending and packaging. 22 The price of coffee is subject to significant volatility, and may increase due to the factors described below.

While we are currently a small company and, therefore, limited in our product development, marketing and sales activities, we anticipate continued growth in our business operations commensurate with the expansion of our sales and support operations and distribution network and the commercialization of our single serve coffee products.

In addition, to the extent we finance any acquisition or investment in cash, it would reduce our cash reserves, and to the extent the purchase price is paid with shares of our common stock, it could be dilutive to our current stockholders. 31

Significant additional labeling or warning requirements or limitations on the availability of our products may inhibit sales of affected products. 23. The market price of our stock may be volatile, and you could lose all or part of your investment. 24.

Significant additional labeling or warning requirements or limitations on the availability of our products may inhibit sales of affected products. 22. The market price of our stock may be volatile, and you could lose all or part of your investment. 23.

If we are unable to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results, timely file our periodic reports, maintain our reporting status or prevent fraud. 32.

In this competitive environment, our business could be adversely impacted by increases in labor costs, including wages and benefits, including those increases triggered by regulatory actions regarding wages, scheduling and benefits; increased health care and workers’ compensation insurance costs; increased wages and costs of other benefits necessary to attract and retain high quality employees with the right skill sets, and increased wages, and benefits and costs related to COVID-19.

We incur significant costs as a result of operating as a public company, and our management must devote substantial time to compliance initiatives as a result of the listing of our common stock on the Nasdaq Capital Market. 31.

Currently pending, threatened or future litigation or governmental proceedings or inquiries could result in material adverse consequences, including judgments or settlements. 38. Future acquisitions of and investments in new businesses could impact our business and financial condition.

Currently pending, threatened or future litigation or governmental proceedings or inquiries could result in material adverse consequences, including judgments or settlements. 36. Future acquisitions of and investments in new businesses could impact our business and financial condition.

Interruption or increased costs of our supply chain and sales network, including a disruption in operations at any of our facilities, could affect our ability to manufacture or distribute products and could adversely affect our business and sales. 14.

Our ability to become and remain profitable will depend on our ability to generate significantly higher revenues from the sales of our single serve coffee products and co-packing services, which depends upon a number of factors, including but not limited to successful sales, manufacturing, marketing and distribution of our products and services.

Our ability to become and remain profitable will depend on our ability to generate significantly higher revenues from the sales of our single serve coffee products, co-packing services and bagged coffee production and packaging, which depends upon a number of factors, including but not limited to successful sales, manufacturing, marketing and distribution of our products and services.

The loss of one or more of our key customers, or cancellation of or reduction in the amount of purchase by our key customers, could have an adverse effect on our results of operations and financial condition.

The loss of one or more of our key customers, or cancellation of or reduction in the amount of purchases by our key customers, could have an adverse effect on our results of operations and financial condition.

We set target levels for the manufacture of our single serve coffee products and for the purchase of coffee in advance of customer orders based upon our forecasts of customer demand and those of our business partners.

We set target levels for the manufacture of our coffee products and for the purchase of coffee in advance of customer orders based upon our forecasts of customer demand and those of our business partners.

Continued innovation and the successful development and timely launch of new products and co-packing services are critical to our financial results and achievement of our growth strategy. 10.

Continued innovation and the successful development and timely launch of new products and co-packing services are critical to our financial results and achievement of our growth strategy. 9.

Product safety and quality concerns could negatively affect our business. 36. If we are unable to protect our information systems against service interruption or failure, misappropriation of data or breaches of security, our operations could be disrupted, we could be subject to costly government enforcement actions and private litigation and our reputation may be damaged. 37.

Product safety and quality concerns could negatively affect our business. 34. If we are unable to protect our information systems against service interruption or failure, misappropriation of data or breaches of security, our operations could be disrupted, we could be subject to costly government enforcement actions and private litigation and our reputation may be damaged. 35.

We do not control these analysts. The price of our common stock could decline if one or more equity analysts downgrade our common stock or if analysts issue other unfavorable commentary or cease publishing reports about us or our business. We may be subject to securities litigation, which is expensive and could divert management attention.

The price of our common stock could decline if one or more equity analysts downgrade our common stock or if analysts issue other unfavorable commentary or cease publishing reports about us or our business. We may be subject to securities litigation, which is expensive and could divert management attention.

Consequently, any profits from an investment in our common stock will depend on whether the price of our common stock increases. 34. Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us. 35.

Consequently, any profits from an investment in our common stock will depend on whether the price of our common stock increases. 32. Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us. 33.

We may not be able to adequately protect our intellectual property rights, and our competitors may be able to offer similar products and co-packing services, which would harm our competitive position. Additionally, we may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations. 12 20.

Speculative trading in coffee commodities can also influence coffee prices. Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices and hedging activities, increases in the cost of high-quality coffee beans could have an adverse impact on our profitability, financial condition or results of operations.

Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices and hedging activities, increases in the cost of high-quality coffee beans could have an adverse impact on our profitability, financial condition or results of operations.

The success of these distribution networks depends on the performance of brokers, distributors, common carriers and retailers, as well as our third-party manufacturing partner as it relates to distribution of certain of our products to the Eastern United States.

The success of these distribution networks depends on the performance of brokers, distributors, common carriers and retailers, as well as our third-party manufacturing partners as it relates to distribution of certain of our products.

The loss of a key customer, including by consolidation in the retail channel, and efforts by our customers to improve their profitability could reduce sales of NuZee branded products and adversely affect our financial performance.

Changes in the coffee, tea and beverage environment and retail landscape could impact our financial results. The coffee, tea and beverage environment is rapidly evolving as a result of, among other things, changes in consumer preferences; shifting consumer tastes and needs; changes in consumer lifestyles; and competitive product and pricing pressures.

The coffee, tea and beverage environment is rapidly evolving as a result of, among other things, changes in consumer preferences; shifting consumer tastes and needs; changes in consumer lifestyles; and competitive product and pricing pressures.

We may also consider raising additional capital in the future to expand our business, to pursue strategic investments or acquisitions, to take advantage of financing opportunities or for other reasons, including to: ● fund development of our products and co-packing services; ● acquire, license or invest in technologies or intellectual property relating to our existing products; ● acquire or invest in complementary businesses or assets; and ● finance capital expenditures and general and administrative expenses.

These conditions raise substantial doubt about our ability to continue as a going concern. 16 We may also consider raising additional capital in the future to expand our business, to pursue strategic investments or acquisitions, to take advantage of financing opportunities or for other reasons, including to: ● fund development of our products and co-packing services; ● acquire, license or invest in technologies or intellectual property relating to our existing products; ● acquire or invest in complementary businesses or assets; and ● finance capital expenditures and general and administrative expenses.

Sales to a limited number of customers represent a significant portion of our net sales. The loss of a key customer and efforts by our customers to improve their profitability could reduce sales of NuZee branded products and revenues generated from our co-packing services and adversely affect our financial performance. 9.

The loss of a key customer and efforts by our customers to improve their profitability could reduce sales of NuZee branded products and revenues generated from our co-packing services and adversely affect our financial performance. 8.

There is inherent risk in forecasting demand due to the uncertainties involved in assessing the current level of maturity of the single serve component of our business.

There is inherent risk in forecasting demand due to the uncertainties involved in assessing the current level of maturity of the single serve component of our business as well as the current and future needs of our customers.

Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations. The Tax Cuts and Jobs Act (the “TCJA”), enacted in 2017, limited the use of net operating loss carryforwards arising in periods beginning after 2017 to eighty-percent of taxable income in the period to which the losses are carried.

The Tax Cuts and Jobs Act (the “TCJA”), enacted in 2017, limited the use of net operating loss carryforwards arising in periods beginning after 2017 to eighty-percent of taxable income in the period to which the losses are carried.

Our ability to gain or maintain share of sales in the global marketplace or in various local marketplaces or maintain or enhance our relationships with our partners and customers may be limited as a result of actions by competitors, including as a result of increased consolidation in the food and beverage industry.

The Nasdaq Capital Market’s rules for listed companies requires us to meet certain financial, public float, bid price and liquidity standards on an ongoing basis in order to continue the listing of our common stock.

The Nasdaq Capital Market may subsequently delist our securities if we fail to comply with ongoing listing standards. The Nasdaq Capital Market’s rules for listed companies requires us to meet certain financial, public float, bid price and liquidity standards on an ongoing basis in order to continue the listing of our common stock.

We also rely on our manufacturing partner in Knoxville, Tennessee to provide us with additional manufacturing, coffee roasting and co-packing capabilities, and facilitate distribution efforts to the Eastern United States.

We also rely on our manufacturing partners to provide us with additional manufacturing, coffee roasting and co-packing capabilities, and facilitate distribution efforts throughout the United States.

In addition, our wages and benefits programs, combined with the challenging conditions due to COVID-19, may be insufficient to attract and retain talent. Because our management structure is not centralized, the management of our business operations may be more expensive and more difficult.

In addition, our wages and benefits programs, combined with the periodic challenges in the labor market, may be insufficient to attract and retain talent. Because our management structure is not centralized, the management of our business operations may be more expensive and more difficult.

Some of these risks relate to our potential inability to: ● effectively manage our business and proprietary information; ● recruit and retain sales and marketing, technical and managerial personnel; ● recruit and retain appropriate distributor relationships; ● successfully develop and protect our intellectual property portfolio; ● successfully provide high quality products and co-packing services as our business expands; and ● successfully address other risks, as described in this Report or otherwise. 15 If we do not address these risks successfully, it could have a material adverse effect on our business and financial condition.

Due to the specialized nature of the business and our small size, we are highly dependent upon our ability to attract and retain qualified sales and marketing, technical and managerial personnel.

We do not maintain “key person” insurance on any of our employees. Due to the specialized nature of the business and our small size, we are highly dependent upon our ability to attract and retain qualified sales and marketing, technical and managerial personnel.

Any of the foregoing could negatively affect sales of our products and co-packing services and our profitability. Continued innovation and the successful development and timely launch of new products and co-packing services are critical to our financial results and achievement of our growth strategy .

Strategic partners may also choose to vertically integrate their brands’ manufacturing and distribution. Any of the foregoing could negatively affect sales of our products and co-packing services and our profitability. Continued innovation and the successful development and timely launch of new products and co-packing services are critical to our financial results and achievement of our growth strategy .

Further, if we are unable to continue to offer terms that are acceptable to our significant customers or our customers determine that they need fewer inventories to service consumers, these customers could reduce purchases of our products or may increase purchases of products from our competitors, which would harm our sales and profitability. 17 Our industry is also being affected by the trend toward consolidation in the retail channel.

A reduction in consumer demand for, or revenues from the sale of, our single serve coffee products and co-packing services could further constrain our cash resources. 14 We intend to seek to raise additional capital through public or private equity offerings. However, we may not be able raise such additional capital on favorable terms or at all.

A reduction in consumer demand for, or revenues from the sale of, our single serve coffee products, co-packing services and bagged coffee production and packaging could further constrain our cash resources. We intend to seek to raise additional capital through public or private equity offerings.

If any of these third-party roasters or manufacturing partners fail to perform as required, this could cause delays in our receipt of roasted whole-bean coffee that is necessary to manufacture our products and provide our co-packing services or otherwise adversely affect our business. 19 In addition, a significant portion of our distribution network, and correspondingly our success in distributing our single serve coffee products, depends on the performance of third-parties.

A significant portion of our total outstanding shares of common stock are eligible to be sold into the market in the near future, which could cause the market price of our common stock to drop significantly. 29.

A significant portion of our total outstanding shares of common stock are eligible to be sold into the market in the near future, including pursuant to Rule 144, which could cause the market price of our common stock to drop significantly, even if our business is doing well. 27.

If we issue additional common stock, or securities convertible into or exchangeable or exercisable for common stock, our stockholders may experience additional dilution, and any such issuances may result in downward pressure on the price of our common stock. Further, investors purchasing shares or other securities in the future could have rights superior to existing stockholders.

If we issue additional common stock, or securities convertible into or exchangeable or exercisable for common stock, our stockholders, including investors who purchased shares of common stock in the recent offering, may experience additional dilution, and any such issuances may result in downward pressure on the price of our common stock.

Our Chief Executive Officer, President and Chairman of the Board individually beneficially owns approximately 22% of our voting stock. This concentration of control creates a number of risks.

As of December 31, 2023, our executive officers and directors beneficially owned approximately 12.1% of our voting stock. Our Chief Executive Officer, President and Chairman of the Board individually beneficially owns approximately 10.1% of our voting stock. This concentration of control creates a number of risks.

In the event that customers with whom we have co-packing or retail fulfillment arrangements issue fewer or smaller purchase orders than we expect, or we experience any delays or cancellations in orders (due to current distress in the global economy caused by COVID-19, or otherwise), our revenues could decline substantially.

In the event that customers with whom we have co-packing or retail fulfillment arrangements issue fewer or smaller purchase orders than we expect, or we experience any delays or cancellations in orders (due to continued distress in the global economy for any reason, including supply chain disruptions, inflation, commodity price fluctuations, etc.), our revenues could decline substantially.

We have not paid dividends on any of our classes of capital stock to date and we currently intend to retain our future earnings, if any, to fund the development and growth of our business.

We have not paid dividends on any of our classes of capital stock to date and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be our stockholders’ sole source of gain for the foreseeable future.

We expect to continue to incur net losses in the future and we may never generate sufficient revenue from the commercialization of our single serve coffee products or co-packing services to achieve or sustain profitability. 2.

We expect to continue to incur net losses in the future and we may never generate sufficient revenue to achieve or sustain profitability. 2.

Our financial results and our ability to maintain or improve our competitive position will depend on our ability to effectively gauge the direction of our key marketplaces and successfully identify, develop, manufacture, market and sell new or improved products and co-packing services in these changing marketplaces. 19 Our future financial results are difficult to predict, and failure to meet market expectations for our financial performance or any publicly announced guidance may cause the price of our stock to decline.

Any adverse consequences resulting from the performance of third-parties or our relationship with them could undermine our operations and profitability. Interruption or increased costs of our supply chain and sales network, including a disruption in operations at any of our facilities, could affect our ability to manufacture or distribute products and could adversely affect our business and sales.

Interruption or increased costs of our supply chain and sales network, including a disruption in operations at any of our facilities or our manufacturer partners’ facilities, could affect our ability to manufacture or distribute products and could adversely affect our business and sales.

To date, in some cases we have been able to mitigate these adverse effects in part by sourcing coffee and other supplies from alternative suppliers in the United States, but any such mitigation efforts may not be successful in the future. 21 The loss of any member of our senior management team or our inability to attract and retain highly skilled personnel could have a material adverse effect on our business.

If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline. The trading market for our common stock will rely in part on the research and reports that equity research analysts publish about us and our business.

The trading market for our common stock will rely in part on the research and reports that equity research analysts publish about us and our business. We do not control these analysts.

Retailers have and will likely continue to seek lower prices from us and demand increased marketing or promotional expenditures. Large retailers also may be more likely to use their distribution networks to introduce and develop private label brands. Strategic partners may also choose to vertically integrate their brands’ manufacturing and distribution.

Our industry is also being affected by the trend toward consolidation in the retail channel. Retailers have and will likely continue to seek lower prices from us and demand increased marketing or promotional expenditures. Large retailers also may be more likely to use their distribution networks to introduce and develop private label brands.

Our third amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Nevada law.

Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us. Our third amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Nevada law.

If these third parties fail to adopt or adhere to adequate information security practices, or fail to comply with our online policies, or in the event of a breach of their networks, our users’ data may be improperly accessed, used or disclosed. 30 If our systems are harmed or fail to function properly, we may need to expend significant financial resources to repair or replace systems or to otherwise protect against security breaches or to address problems caused by breaches.

If we are unsuccessful in efforts to raise additional capital, based on our current levels of operating expenses, our current capital is not expected to be sufficient to fund our operations for the next twelve months. These conditions raise substantial doubt about our ability to continue as a going concern.

However, we may not be able raise such additional capital on favorable terms or at all. If we are unsuccessful in efforts to raise additional capital, based on our current levels of operating expenses, our current capital is not expected to be sufficient to fund our operations for the next twelve months.

As a result, these shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described in our filings with the SEC.

We have also registered all shares of common stock that are reserved for issuance under the NuZee, Inc. 2023, 2019, and 2013 Stock Incentive Plans. As a result, these shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described in our filings with the SEC.

Such issues could result in the destruction of product inventory and lost sales due to the unavailability of product for a period of time, which could cause our business to suffer and affect our results of operations. 30 If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline.

These requirements may divert the attention of our management and personnel from other business concerns, and they could have a material adverse effect on our business, financial condition, and results of operations.

We expect our ongoing compliance with such rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. These requirements may divert the attention of our management and personnel from other business concerns, and they could have a material adverse effect on our business, financial condition, and results of operations.

In the fiscal years ended September 30, 2022 and September 30, 2021, as a result of responses to COVID-19 and its variants, we have experienced delays in the shipment to us of coffee and packaging materials for co-packing.

In the fiscal years ended September 30, 2023 and September 30, 2022, we have experienced delays in the shipment to us of coffee and packaging materials for co-packing for a variety of reasons including seasonal availability, supply chain delays and supplier interruptions.

Specifically, severe frosts and drought in Brazil currently threaten to negatively impact crop yields for multiple harvests, which could reduce supply and increase cost. In addition, the political situation in many of the Arabica coffee growing regions, including Africa, Indonesia, and Central and South America, can be unstable, and such instability could also reduce supply and increase cost.

In addition, the political situation in many of the coffee growing regions, including Africa, Indonesia, and Central and South America, can be unstable, and such instability could also reduce supply and increase cost. Speculative trading in coffee commodities can also influence coffee prices.

We expect to incur significant sales and marketing expenses, as well as costs associated with operating as an exchange-listed public company, prior to recording sufficient revenue from our operations to offset these expenses. These losses have had, and will continue to have, an adverse effect on our working capital, total assets and stockholders’ equity.

As of September 30, 2023, our accumulated deficit was approximately $73.4 million. We expect to incur significant sales and marketing expenses, as well as costs associated with operating as an exchange-listed public company, prior to recording sufficient revenue from our operations to offset these expenses.

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Item 2. Properties

Properties — owned and leased real estate

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2022 filing

2023 filing

Biggest changeWe also sublease property in Vista, California, through January 31, 2023 with a monthly lease expense of $2,111. Our manufacturing and sales office in Seoul, Korea has a monthly lease expense of $7,040, and expires on November 15, 2023.

Biggest changeOur manufacturing and sales office in Seoul, Korea has a monthly lease expense of $7,040, and expires on November 15, 2023. According to Korean lease regulations, the lease contract automatically renews for one year through implicit renewal. When implicit renewal occurs, it is considered as a new lease under the same conditions as the previous lease.

We currently lease manufacturing facilities in Vista, California and Seoul, Korea to produce our single serve pour over or coffee brew bag coffee products. Our manufacturing and sales office in Vista, California has a total monthly lease expense of approximately $11,000, plus common area expenses, and expires on March 31, 2025.

We currently lease manufacturing facilities in Vista, California and Seoul, Korea to produce our coffee products. Our manufacturing and executive office in Vista, California has a total monthly lease expense of approximately $11,000, plus common area expenses, and expires on March 31, 2025.

ITEM 2. PROPERTIES Our principal executive office is located at 1350 East Arapaho Road, Suite #230, Richardson, Texas 75081. We lease the Richardson office on an annual basis, at a cost of $1,510 per month, through November 30, 2023.

ITEM 2. PROPERTIES Our principal executive office is located at 2865 Scott Street, Suite 107, Vista, California 92081 in our Vista facility. Previously, we leased an office in Richardson, Texas which served as the executive office at a cost of $1,510 per month, which lease expired as of November 30, 2023.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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2022 filing

2023 filing

Biggest changeThe Complaint alleges that the Company’s delay in issuing shares of the Company’s common stock (the “Shares”) to the Consultant after receiving due notice from the Consultant of its intent to exercise vested stock options to acquire 70,000 Shares, as initially granted in 2018 (or, as adjusted to account for the Company’s reverse stock split effected on November 12, 2019, vested stock options to acquire 23,334 Shares) (the “Options”), which had previously been issued to the Consultant as compensation for consulting services provided in 2018, breached express and implied contractual obligations to the Consultant and resulted in the Company reporting an overstated amount of income on the IRS Form 1099-B that was issued to the Consultant for U.S. federal tax purposes.

Biggest changeThe Next Vision Complaint alleges that the Company’s delay in issuing shares of the Company’s common stock (the “Shares”) to the Consultant after receiving due notice from the Consultant of its intent to exercise vested stock options to acquire 70,000 Shares, as initially granted in 2018 (or, as adjusted to account for the reverse stock splits effected by the Company on each of November 12, 2019 and December 28, 2022, vested stock options to acquire 667 Shares) (the “Options”), which had previously been issued to the Consultant as compensation for consulting services provided in 2018, breached express and implied contractual obligations to the Consultant and resulted in the Company reporting an overstated amount of income on the IRS Form 1099-B that was issued to the Consultant for U.S. federal tax purposes.

The Complaint seeks compensatory damages, including to recover for alleged lost profits due to the alleged improper six-month restriction on resale for the Shares, as well as punitive damages, costs of suit, attorney’s fees and interest.

The Next Vision Complaint seeks compensatory damages, including to recover for alleged lost profits due to the alleged improper six-month restriction on resale for the Shares, as well as punitive damages, costs of suit, attorney’s fees and interest.

ITEM 3. LEGAL PROCEEDINGS As previously disclosed, on November 23, 2021, Next Vision, Inc. (the “Consultant”) filed a complaint against the Company in the Superior Court of California, County of San Diego Central Division (Case No. 37-2021-00049557-CU-BC-CTL).

ITEM 3. LEGAL PROCEEDINGS Next Vision Litigation As previously disclosed, on November 23, 2021, Next Vision, Inc. (the “Consultant”) filed a complaint against the Company in the Superior Court of California, County of San Diego Central Division (Case No. 37-2021-00049557-CU-BC-CTL) (the “Next Vision Complaint”).

In addition, the Complaint alleges that the 23,334 Shares issued to the Consultant upon exercise of the Options improperly contained a six-month restriction on resale and that such restriction prevented the Consultant from selling the Shares at the desired time.

In addition, the Next Vision Complaint alleges that the 667 Shares issued to the Consultant upon exercise of the Options improperly contained a six-month restriction on resale and that such restriction prevented the Consultant from selling the Shares at the desired time.

We believe the allegations set forth in the Complaint are without merit and intend to defend vigorously against the allegations. However, the Company is not able to predict the outcome, and there is no assurance that the Company will be successful in its defense.

Curtin to initiate arbitration proceedings in January 2024. We believe the allegations set forth in the Curtin Complaint are without merit and intend to defend vigorously against the allegations. However, the Company is not able to predict the outcome, and there is no assurance that the Company will be successful in its defense.

On January 20, 2022, the Company filed its general denial and answer in which it raised affirmative defenses and disputed the claims contained in the Complaint. On November 29, 2022, the parties engaged in Court-ordered mediation but did not resolve the matter. The Court has set a trial date for August 11, 2023.

On January 20, 2022, the Company filed its general denial and answer in which it raised affirmative defenses and disputed the claims contained in the Next Vision Complaint. On November 29, 2022, the parties engaged in Court-ordered mediation but did not resolve the matter.

Added

The Court has set a trial date for August 11, 2023, which was continued to December 1, 2023. A new legal counsel was substituted for the Company. On July 31, 2023, the parties entered into a settlement agreement and resolved the lawsuit.

Added

In exchange for a general release and dismissal of the lawsuit with prejudice, the Company paid the Consultant $5,000. The Plaintiff filed a Request for Dismissal on September 18, 2023, and on November 10, 2023, the case was dismissed. Steeped, Inc.

Added

Litigation As previously disclosed, on January 27, 2023, Steeped, Inc. d/b/a Steeped Coffee (“Steeped”) filed a complaint against the Company in the Superior Court of California, Santa Cruz County (Case No. 23CV00234) (the “Steeped Litigation”). The Steeped Litigation relates to Steeped’s claim that the Company breached a 2021 settlement agreement that resolved Steeped’s 2019 trademark infringement case against the Company.

Added

The earlier case involved Steeped’s purported trademark protection for “steeped coffee” and related phrases. 33 Steeped’s operative complaint in the pending Steeped Litigation alleges breach of contract, intentional interference with contractual relations, intentional interference with prospective economic advantage, and fraud in the inducement of contract.

Added

Plaintiff seeks a trial by jury and relief in the form of a permanent injunction for use of “Steep Coffee” or any confusingly similar variant of “STEEPED COFFEE”; the impoundment and destruction of allegedly violating packaging materials and/or finished goods; a final judgment for all profits derived from the Company’s allegedly unlawful conduct, actual damages, damages to the Plaintiff’s reputation and goodwill among its customers and partners; and reasonable attorneys’ fees and costs.

Added

NuZee answered Steeped’s complaint with a general denial and asserted twenty-five affirmative defenses. Discovery in the case is ongoing and no trial date has been set.

Added

The Company believes it has basis to defend the claims in the Steeped Litigation, however, the Company is not able to predict the outcome, and there is no assurance that the Company will be successful in any defense or counterclaim. Curtin Litigation On January 6, 2023, a former employee of the Company, Rosaline Curtin (“Ms.

Added

Curtin”), filed a complaint against the Company and another former employee of the Company, Jose Ramirez (“Mr. Ramirez”), in the Superior Court of California, County of San Diego (Case No. 37-2023-00000841-CU-WT-NC) (the “Curtin Complaint”). The Curtin Complaint alleges that Ms. Curtin was subject to harassment by her supervisor, Mr.

Added

Ramirez, and gender discrimination throughout her employment, that she reported this discrimination and harassment to the Company, and that the Company retaliated against her and wrongfully terminated her for whistleblowing and failed to prevent discrimination, harassment, and retaliation.

Added

The Curtin Complaint seeks compensatory damages, including loss of past, present and future earnings, and benefits, as well as punitive damages, penalties, attorney’s fees and costs and interest. The Company has responded to the complaint on behalf of the Company and Mr. Ramirez and prevailed on December 22, 2023, prevailed on its motion to compel. We expect Ms.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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2022 filing

2023 filing

Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the Nasdaq Capital Market under the symbol “NUZE.” As of December 15, 2022, there were approximately 271 holders of record of our common stock.

Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the Nasdaq Capital Market under the symbol “NUZE.” As of January 11, 2024, there were approximately 632 holders of record of our common stock.

Any future determination relating to our dividend policy will be made at the discretion of our Board and will depend on a number of factors, including future earnings, capital requirements, financial conditions, future prospects, contractual restrictions and covenants and other factors that our Board may deem relevant.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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2022 filing

2023 filing

Biggest changeThe decrease is primarily attributable to more funds raised in the year ended September 30, 2021 from the sale of our equity securities, as compared to the proceeds received in the year ended September 30, 2022 upon the exercise of outstanding 2021 Warrants by the 2021 Warrant holders, the sale of equity securities from our exempt offering in April 2022, the issuance of shares of our common stock under the Equity Distribution Agreement that, as previously disclosed, we terminated on August 5, 2022, and the August 2022 issuance of equity securities under the registered offering. 40 Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that may have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Biggest changeIn the year ended September 30, 2023 financing activities consisted of repayments of loans and leases. 40 Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that may have a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Recent Accounting Pronouncements Recent accounting pronouncements which may be applicable to us are described in “ Note 2—Basis of Presentation and Summary of Significant Accounting Policies ” to the Consolidated Financial Statements included as part of this Report. 42

The timing and amount of funds that we will need to raise will depend on a number of factors, including our ability to generate a sufficient amount of revenues from the sale of our single serve coffee products to fund our business operations and the timing and amount of funds received upon the exercise for cash of outstanding warrants by the warrant holders.

The timing and amount of funds that we will need to raise will depend on a number of factors, including our ability to generate a sufficient amount of revenues from the sale of our coffee products to fund our business operations and the timing and amount of funds received upon the exercise for cash of outstanding warrants by the warrant holders.

To cure this deficiency, on December 9, 2022, at a Special Meeting of Stockholders, our stockholders approved a proposal granting the Company’s board of directors (the “Board”) discretionary authority to file an amendment (the “Certificate of Amendment”) to the Company’s Articles of Incorporation, as amended (the “Articles”), which amends the Articles to add a Section 1A to effect a reverse stock split of the Company’s common stock, at any ratio from 1-for-10 to 1-for-50 at the Board’s discretion (the “2022 Reverse Stock Split”).

To cure this deficiency, on December 9, 2022, at a Special Meeting of Stockholders, our stockholders approved a proposal granting the board of directors of the Company (the “Board”) discretionary authority to file an amendment (the “Certificate of Amendment”) to the Company’s Articles of Incorporation, as amended (the “Articles”), which amends the Articles to add a Section 1A to effect a reverse stock split of the Company’s common stock, at any ratio from 1-for-10 to 1-for-50 at the Board’s discretion.

Contractual Obligations Our significant contractual cash requirements as of September 30, 2022 primarily include payments for operating and finance lease liabilities and principal and interest on loans.

Contractual Obligations Our significant contractual cash requirements as of September 30, 2023 primarily include payments for operating and finance lease liabilities and principal and interest on loans.

Corporate Overview Our Company We are a specialty coffee company and, we believe, a leading co-packer of single serve pour over coffee in the United States, as well as a preeminent co-packer of coffee brew bags, which is also referred to as tea-bag style coffee.

Corporate Overview Our Company We are a specialty coffee and technologies company and, we believe, a leading co-packer of single serve pour over coffee in the United States, as well as a preeminent co-packer of other coffee products including coffee brew bags, which is also referred to as tea-bag style coffee.

Considering our current cash resources and our current and expected levels of operating expenses for the next twelve months, we expect to need additional capital to fund our planned operations for at least twelve months from December 23, 2022. This evaluation is based on relevant conditions and events that are currently known or reasonably knowable.

Considering our current cash resources and our current and expected levels of operating expenses for the next twelve months, we expect to need additional capital to fund our planned operations for at least twelve months from January 12, 2024. This evaluation is based on relevant conditions and events that are currently known or reasonably knowable.

As disclosed, we have 180 days from the date of the applicable notice to cure the deficiency.

As disclosed, we had 180 days from the date of the applicable notice to cure the deficiency.

This increase is primarily attributable to increased material and labor costs related to the increase in sales. For the year ended September 30, 2022, we had a total gross loss of ($110,413) from sales of our products and co-packing services, compared to a total gross loss of ($80,093) for the year ended September 30, 2021.

This increase is primarily attributable to increased material and labor costs related to the increase in sales. For the year ended September 30, 2023, we had a total gross profit of $8,818 from sales of our products and co-packing services, compared to a total gross loss of ($110,413) for the year ended September 30, 2022.

Our principal use of cash is to fund our operations, which includes the commercialization of our single serve coffee products, the continuation of efforts to improve our products, administrative support of our operations and other working capital requirements. As of September 30, 2022, we had a cash balance of $8,315,053.

For the fiscal year ended September 30, 2022, net revenues attributable to our operations in North America totaled $2,443,863 compared to $1,441,274 of net revenues attributable to our operations in North America during the fiscal year ended September 30, 2021.

For the fiscal year ended September 30, 2023, net revenues attributable to our operations in North America totaled $1,757,968 compared to $2,443,863 of net revenues attributable to our operations in North America during the fiscal year ended September 30, 2022.

Financing Activities Historically, we have funded our operations through the issuance of our equity securities. Cash provided from financing activities decreased from $13,632,263 for the year ended September 30, 2021, to $5,679,983 for the year ended September 30, 2022.

Financing Activities Historically, we have funded our operations through the issuance of our equity securities. Cash provided from financing activities decreased from $5,679,983 for the year ended September 30, 2022, to $(36,031) for the year ended September 30, 2023.

Our DRIPKIT pour over format features a large-size single serve pour over pack that sits on top of the cup and delivers in our view a barista-quality coffee experience.

Investing Activities We used $604,834 and $115,361 of cash in investing activities during the years ended September 30, 2022 and 2021, respectively. Cash used in the year ended September 30, 2022 was for the Acquisition as well as the purchase of equipment. Cash used in the year ended September 30, 2021 was for the purchase of equipment.

Investing Activities We used $16,241 and $604,834 of cash in investing activities during the years ended September 30, 2023 and 2022, respectively. Cash used in the year ended September 30, 2023 was for the purchase of equipment. Cash used in the year ended September 30, 2022 was for the acquisition of DripKit as well as the purchase of equipment.

Additionally, as of September 30, 2022, $378,546 of our property and equipment, net was attributable to our North American operations, compared to $517,966 attributable to our North American operations as of September 30, 2021.

Additionally, as of September 30, 2023, $184,763 of our property and equipment, net was attributable to our North American operations, compared to $378,546 attributable to our North American operations as of September 30, 2022.

Additionally, as of September 30, 2022, $146,529 of our property and equipment, net was attributable to our Asian operations, compared to $156,058 attributable to our Asian operations as of September 30, 2021.

Additionally, as of September 30, 2023, $124,792 of our property and equipment, net was attributable to our Asian operations, compared to $146,529 attributable to our Asian operations as of September 30, 2022.

For the fiscal year ended September 30, 2022, net revenues attributable to our operations in Asia totaled $665,299 compared to $485,386 of net revenues attributable to our operations in Asia during the fiscal year ended September 30, 2021.

For the fiscal year ended September 30, 2023, net revenues attributable to our operations in Asia totaled $1,590,863 compared to $665,299 of net revenues attributable to our operations in Asia during the fiscal year ended September 30, 2022.

In addition to being available for direct sale to consumers, our NuZee and DRIPKIT branded products serve as samples that are provided to potential new co-packing customers to showcase our co-packing capabilities and production expertise. Our NuZee branded products are from our perspective a ‘stepping-stone’ product for our co-packing customers that market high quality packaging and coffee.

We have based these estimates on assumptions that may prove to be wrong, and our operating projections, including our projected revenues from sales of our single serve coffee products, may change as a result of many factors currently unknown to us.

A reduction in consumer demand for, or revenues from the sale of, our coffee products could further constrain our cash resources. We have based these estimates on assumptions that may prove to be wrong, and our operating projections, including our projected revenues from sales of our coffee products, may change as a result of many factors currently unknown to us.

As of September 30, 2022, we had payments for lease and loan obligations of approximately $722,943, of which $420,790 are payable within 12 months as of September 30, 2022. We had no purchase obligations as of September 30, 2022.

As of September 30, 2023, we had payments for lease and loan obligations of approximately $409,230, of which $246,929 are payable within 12 months as of September 30, 2023. We had no purchase obligations as of September 30, 2023.

Summary of Cash Flows Year Ended September 30, 2022 2021 Cash used in operating activities $ (7,462,121 ) $ (7,107,155 ) Cash used in investing activities $ (604,834 ) $ (115,361 ) Cash provided by financing activities $ 5,679,983 $ 13,632,263 Effect of foreign exchange on cash $ (113,929 ) $ 7,662 Net (decrease) increase in cash $ (2,500,901 ) $ 6,417,409 Operating Activities We used $7,462,121 and $7,107,155 of cash in operating activities during the years ended September 30, 2022 and 2021, respectively, principally to fund our operating loss.

Summary of Cash Flows Year Ended September 30, 2023 2022 Cash (used in) operating activities $ (6,926,279 ) $ (7,462,121 ) Cash (used in) investing activities $ (16,241 ) $ (604,834 ) Cash provided by (used in) financing activities $ (36,031 ) $ 5,679,983 Effect of foreign exchange on cash $ 36,599 $ (113,929 ) Net (decrease) in cash $ (6,941,952 ) $ (2,500,901 ) Operating Activities We used $6,956,279 and $7,462,121 of cash in operating activities during the years ended September 30, 2023 and 2022, respectively, principally to fund our operating loss.

Nasdaq Listing Deficiency; 2022 Reverse Stock Split As previously reported, we have received a notice from The Nasdaq Stock Market, LLC regarding our failure to satisfy the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

We offer DRIPKIT pour over packs direct to consumers through our website, wholesale business-to-business to hospitality customers, and co-pack for coffee roasters. 36 Nasdaq Listing Deficiency; 2022 Reverse Stock Split As previously reported, we received a notice from The Nasdaq Stock Market, LLC regarding our failure to satisfy the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

Our mission is to leverage our position as a co-packer at the forefront of the North American single serve coffee market to revolutionize the way single serve coffee is enjoyed in the United States.

We believe we are the only commercial-scale producer within the North American market that has the dual capacity to pack both single serve pour over coffee and coffee brew bag coffee.

Comparison of Years ended September 30, 2022 and 2021 Revenue Year ended September 30, Change 2022 2021 Dollars % Revenue $ 3,109,162 $ 1,926,660 $ 1,182,502 61 % 37 For the year ended September 30, 2022, revenues increased by $1,182,502, or approximately 61%, compared with the year ended September 30, 2021.

Results of Operations Comparison of Years ended September 30, 2023 and 2022 Revenue Year ended September 30, Change 2023 2022 Dollars % Revenue $ 3,348,831 $ 3,109,162 $ 239,669 7.7 % For the year ended September 30, 2023, revenues increased by $239,669, or approximately 7.7%, compared with the year ended September 30, 2022.

We estimate the fair value of acquired customer relationships using a weighted average of the income. The income approach applies a fair value methodology based on discounted cash flows. If the carrying value of an intangible asset exceeds the fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value.

We estimate the fair value of acquired customer relationships using a weighted average of the income. The income approach applies a fair value methodology based on discounted cash flows.

During the fiscal year ended September 30, 2022, we issued 384,447 shares of common stock related to exercises of 2021 Warrants (as defined below), including 380,447 shares of common stock issued upon exercise of 380,447 Series A Warrants (as defined below) and 4,000 shares of common stock issued upon exercise of 8,000 Series B Warrants (as defined below).

During the fiscal year ended September 30, 2023, we issued no shares of common stock related to exercises of 2021 Warrants (as defined below) and received no proceeds from the exercise of warrants.

We have also developed and sell NuZee branded single serve coffee products of both single serve pour over and coffee brew bag coffee products, which we believe offers consumers some of the best coffee available in a single serve application. 35 We may also consider co-packaging other products that are complementary to our current product offerings and provide us with a deeper access to our customers.

Net Loss Year ended September 30, Change 2022 2021 Dollars % Net Loss $ 11,797,712 $ 18,552,030 $ (6,754,318 ) (36 %) For the year ended September 30, 2022, we generated net losses of $11,797,712 compared to $18,552,030 for the year ended September 30, 2021.

Net Loss Year ended September 30, Change 2023 2022 Dollars % Net Loss $ 8,749,467 $ 11,797,712 $ (3,048,245 ) (25.8) % For the year ended September 30, 2023, we generated net losses of $8,749,467 compared to $11,797,712 for the year ended September 30, 2022.

We are unable to predict the extent of any future losses or when we will become profitable, if at all. 38 To date, we have funded our operations primarily with proceeds from registered public offerings and private placements of shares of our common stock.

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

Cost of sales and gross margin Year ended September 30, Change 2022 2021 Dollars % Cost of sales $ 3,219,575 $ 2,006,753 $ 1,212,822 60 % Gross loss $ (110,413 ) $ (80,093 ) $ (30,320 ) (38 %) Gross margin % (4 )% (4 )% For the year ended September 30, 2022, our cost of sales totaled $3,219,575, as compared to cost of sales for the year ended September 30, 2021 of $2,006,753, representing a 60% increase.

Cost of sales and gross margin Year ended September 30, Change 2023 2022 Dollars % Cost of sales $ 3,340,013 $ 3,219,575 $ 120,438 3.7 % Gross profit (loss) $ 8,818 $ (110,413 ) $ 119,231 108.0 % Gross margin % 0.3 % (3.4 )% For the year ended September 30, 2023, our cost of sales totaled $3,340,013, as compared to cost of sales for the year ended September 30, 2022 of $3,219,575 , representing a 3.7% increase.

This decrease in net loss is primarily attributable to a decrease in stock-based compensation expense, lower professional services costs and a decrease in property and equipment impairment charges, offset by an increase in operating expenses associated with greater staffing levels, marketing activities, and administrative costs.

This decrease in net loss is primarily attributable to a decrease in stock-based compensation expense, lower impairment charges and reduced payroll, marketing consulting, insurance and facilities costs partially offset by an increase in legal costs.

Operating Expenses Year ended September 30, Change 2022 2021 Dollars % Operating Expenses $ 11,292,105 $ 18,398,788 $ (7,106,683 ) (39 %) For the year ended September 30, 2022, our operating expenses totaled $11,292,105, compared to $18,398,788 for the year ended September 30, 2021, representing a 39% decrease.

Operating Expenses Year ended September 30, Change 2023 2022 Dollars % Operating Expenses $ 8,880,435 $ 11,292,105 $ (2,411,670 ) (21.4) % 38 For the year ended September 30, 2023, our operating expenses totaled $8,880,435, compared to $11,292,105 for the year ended September 30, 2022, representing a decrease of $2,411,670 or 21.4%.

This increase was primarily related to co-packing revenues in North America and Korea driven by existing and new customers. In the third and fourth quarters of fiscal year 2021, we expanded our U.S. sales and support operations, which resulted in increased orders and increased co-packing opportunities in the year ended September 30, 2022.

This increase was primarily related to higher co-packing revenues in Korea driven by existing and new customers partially offset by lower revenues in North America. The lower North America revenues were primarily a result of lower revenues to our largest customer in the year ended September 30, 2022.

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 because of the costs associated with operating as an exchange-listed public company.

Liquidity and Capital Resources Since our inception in 2011, we have incurred significant losses, and as of September 30, 2023, we had an accumulated deficit of approximately $73.4 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.

For additional details regarding our business, see the discussion under Business in Item 1 of Part I of this Report, which is incorporated by reference into this Part II, Item 7 of this Report. 34 Our sources of revenue Co-packing We operate as a third-party contract packager for the finished goods of other major companies operating in the coffee beverage industry.

Our goal is to continue to expand our product portfolio to raise our visibility, consumer awareness and brand profile. Our sources of revenue Co-packing We operate as a third-party contract packager for the finished goods of other major companies operating in the coffee beverage industry.

The gross margin rate was (4%) for each of the years ended September 30, 2022 and September 30, 2021.

The gross margin rate was 0.3% for the year ended September 30, 2023 and (3.4%) for the year ended September 30, 2022. The marginal improvement was primarily attributable to increased efficiencies from higher overall revenues.

Removed

Added

Recently, we expanded our product offerings to include bagged coffees for existing single serve customers as well as a new licensing relationship with Stone Brewing which will include both bagged and single serve format. We believe this expansion will allow us to increase manufacturing efficiency and better serve our customers and the market.

Removed

Added

With our single serve pour over and brew bag coffee, we are paid per-package based on the number of single serve coffee products produced by us. With our bagged coffee products, we will be paid based on the number of completed bags delivered.

Removed

We offer DRIPKIT pour over packs direct to consumers through our website, wholesale business-to-business to hospitality customers, and co-pack for coffee roasters. We may also consider co-packaging other products that are complementary to our current product offerings and provide us with a deeper access to our customers.

Added

With our bagged coffees and the Stone Brewing licensing relationship, we will manage the production and related inventory which will involve increased risk levels.

Removed

Our goal is to continue to expand our product portfolio to raise our visibility, consumer awareness and brand profile.

Added

We currently focus on fostering co-packing arrangements with larger companies developing pour over and coffee brew bag coffee products, in addition to smaller scale, innovative companies that we believe are rapidly growing, as further described below.

Removed

Added

We believe that as our potential co-packing customers continue to realize that we have the experience co-packing for a variety of customer sizes, we will become the co-packer of choice. The standards required to co-pack for large international companies almost always meet or exceed the standards required to co-pack for any other customer.

Removed

The 2022 Reverse Stock Split would decrease the total number of shares of our common stock outstanding and should, absent other factors, proportionately increase the market price of our common stock, which would be above $1.00 per share.

Added

We also believe that as our co-packing customers’ competitors realize they have single serve pour over and coffee brew bag coffee solutions, they will be more motivated to develop their own such solutions and that will lead to increased co-packing opportunities for us. In addition to larger companies, we package for smaller companies that we believe have significant growth potential.

Removed

Therefore, the Board believes that the 2022 Reverse Stock Split is an effective means for us to regain compliance with the Bid Price Rule. The Board intends to effect the 2022 Reverse Stock Split as soon as practicable.

Added

We are continually looking for new and innovative companies with whom we may work and grow. On September 26, 2023, NuZee announced an expanded relationship with one of its largest customers, received a forecast for shipments from the customer, and agreed to begin supplying additional products to the customer starting in the first and second quarters of fiscal year 2024.

Removed

See Part II, Item 1A, “Risk Factors.” Our common stock may be subject to immediate delisting from the Nasdaq Capital Market if our Common Stock has a closing bid price of $0.10 or less for any ten consecutive trading days.

Added

Revenues from this customer for the fiscal year 2023 totaled approximately $500,000.

Removed

Added

Our NuZee branded products, including Coffee Blenders and Twin Peaks, are from our perspective a ‘stepping-stone’ product for our co-packing customers that market high quality packaging and coffee.

Removed

Pursuant to the terms of the Asset Purchase Agreement, the aggregate purchase price paid by the Company on the Closing Date was $860,000, consisting of (i) $257,000 in cash paid by the Company to Dripkit, and (ii) the Company’s issuance to the Stock Recipients of an aggregate of 178,681 shares of the Company’s common stock, plus the assumption of certain assumed liabilities including the Company’s repayment of the entire outstanding principal amount of Dripkit’s Small Business Association Economic Injury Disaster Loan in the amount of $78,656, subject to certain adjustments and holdbacks as provided in the Asset Purchase Agreement.

Added

On December 28, 2022, we completed a l-for-35 reverse stock split, which became effective on December 28, 2022 upon acceptance of the Company’s filing of an amendment to the Company’s Articles of Incorporation, as amended, with the Secretary of State of Nevada (the “ 2022 Reverse Stock Split”).

Removed

Dripkit operates as a new Dripkit Coffee business division that is wholly owned by NuZee, Inc. 35 On May 2, 2022, pursuant to the terms of the Asset Purchase Agreement, the Bulk Sales Holdback Amount was used to satisfy sales and use taxes owed by Dripkit to the State of New York as of the Closing Date.

Added

Removed

Pursuant to the terms of the Asset Purchase Agreement, the amounts remaining after offsetting the cost of these sales and use taxes were distributed as follows: (i) $39,237 was distributed to Dripkit on May 9, 2022, in connection with the Cash Bulk Sales Holdback Amount, and (ii) 18,475 shares of common stock were issued to the Stock Recipients on April 25, 2022, in connection with the Stock Bulk Sales Holdback Amount.

Added

On January 17, 2023, the Company received a letter from the Staff notifying the Company that the Staff has determined that for the last 10 consecutive business days, from December 29, 2022 to January 13, 2023, the closing bid price of the Company’s common stock had been at $1.00 per share or greater and that accordingly, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2).

Removed

For additional information regarding the Acquisition and the Asset Purchase Agreement, see “Note 6—Business Combinations” and the Consolidated Financial Statements.

Added

If the carrying value of an intangible asset exceeds the fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value. 37 Geographic Concentration Our operations are primarily split between two geographic areas: North America and Asia.

Removed

As further described in “ Note 7—Goodwill And Intangible Assets” to our Consolidated Financial Statements, during the fiscal year ended September 30, 2022, we recorded non-cash impairment charges for the Dripkit tradename and acquired customer relationships of $80,555 and $63,167, respectively, which was included in impairment expense within operating expenses in our Consolidated Statements of Operations for the year ended September 30, 2022.

Added

This decrease is primarily attributable to a decrease of $2.4 million in stock-based compensation expense, lower impairment charges of approximately $675,000, lower payroll, marketing consulting, insurance and facilities costs of approximately $530,000 all of which was partially offset by increased legal expenses of $1.2 million.

Removed

The charge was primarily the result of a change in forecast related to estimated future revenue growth for Dripkit, sales channel mix, and estimated costs to support such growth, which had the effect of decreasing our forecast of estimated future cash flows.

Added

In the United States, we expect to incur additional losses because of the costs associated with operating as an exchange-listed public company. We are unable to predict the extent of any future losses or when we will become profitable, if at all.

Removed

As of September 30, 2022, the remaining tradename asset balance adjusting for impairment was $140,000, and the customer relationship asset balance was fully written off. 36 Impact of COVID-19 The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets.

Added

The decrease is primarily attributable to funds raised in the year ended September 30, 2022 from the sale of our equity securities, as compared to no funds being raised in the year ended September 30, 2023.

Removed

In the fiscal years ended September 30, 2022 and September 30, 2021, as a result of COVID-19 and its variants, certain of our customers slowed or delayed purchases of our co-packing services or single serve coffee products, and we also believe that potential sales of our single serve coffee products to new or potential customers in the hospitality industry were adversely impacted.

Removed

We have also experienced delays in the submission and approval of custom artwork and packaging as well as the shipment to us of coffee for co-packing. In addition, we incurred lost production time due to employee absences.

Removed

We do not believe, however, that these delays and disruptions had a significant effect on our business or results of operations to date, and in some cases, we have been able to mitigate these adverse effects in part by sourcing coffee and other supplies from alternative suppliers in the United States.

Removed

COVID-19 may have an adverse impact on our business and financial results going forward that we are not currently able to fully determine or quantify. See Item 1A of Part I of this Report for further discussion of risk factors related to COVID-19. Geographic Concentration Our operations are primarily split between two geographic areas: North America and Asia.

Removed

In March 2021, the Company wrote off $840,391 of assets in North America as these assets were deemed to be no longer useful for the Company’s current business operations at that time. $93,375 of the impairment was related to the ROU asset and $747,016 was to property and equipment.

Removed

This write-off is included in impairment expense within operating expenses on our consolidated statement of operations for the year ended September 30, 2021. These assets are co-packing equipment that have limited capabilities compared with other equipment the Company is currently utilizing.

Removed

Since we have yet to utilize this equipment since it was delivered, we have determined their usefulness to our future operations is limited.

Removed

Results of Operations Our results of operations for the fiscal year ended September 30, 2022 includes the operations of Dripkit for the period from February 25, 2022, the date of the Acquisition, to September 30, 2022.

… 24 more changes not shown on this page.

Top changes in CIMG Inc.'s 2023 10-K

Item 1. Business

Item 1A. Risk Factors

Item 2. Properties

Item 3. Legal Proceedings

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other IMG 10-K year-over-year comparisons