What changed in CIMG Inc.'s 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of CIMG Inc.'s 2023 and 2024 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 2024 report.
+548 added−411 removedSource: 10-K (2025-07-21) vs 10-K (2024-01-16)
Top changes in CIMG Inc.'s 2024 10-K
548 paragraphs added · 411 removed · 120 edited across 7 sections
- Item 1A. Risk Factors+291 / −168 · 81 edited
- Item 1. Business+106 / −132 · 9 edited
- Item 7. Management's Discussion & Analysis+63 / −79 · 16 edited
- Item 6. [Reserved]+63 / −8 · 6 edited
- Item 3. Legal Proceedings+19 / −17 · 6 edited
Item 1. Business
Business — how the company describes what it does
9 edited+97 added−123 removed2 unchanged
Item 1. Business
Business — how the company describes what it does
9 edited+97 added−123 removed2 unchanged
2023 filing
2024 filing
Biggest changeOn 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).
Biggest changeIf at any time before July 14, 2025 the closing bid price of the Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, NASDAQ will provide written notification that the Company has achieved compliance with the minimum bid price requirement, and the matter will be resolved.
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. 13
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. 17
Available Information Our annual and quarterly reports, along with all other reports and amendments filed with or furnished to the SEC, are publicly available free of charge on the Investor Relations section of our website at www.mynuzee.com as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
Available Information Our annual and quarterly reports, along with all other reports and amendments filed with or furnished to the SEC, are publicly available free of charge on the Investor Relations section of our website at http://www.ccmg.tech as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
Risks Associated with Our Business and History of Losses We have incurred net losses since we commenced operations as NuZee, Inc. in 2013, including net losses of $8.75 million and $11.8 million for the years ended September 30, 2023 and 2022, respectively. As of September 30, 2023, our accumulated deficit was approximately $73.4 million.
Risks Associated with Our Business and History of Losses We have incurred net losses since we commenced operations as CIMG Inc. in 2013, including net losses of $8.56 million and $8.75 million for the years ended September 30, 2024 and 2023, respectively. As of September 30, 2024, our accumulated deficit was approximately $81.93 million.
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”).
Ltd. merged into Havana Furnishings, Inc. in 2013, at which time we changed our name to NuZee, Inc. 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.
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.
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 the 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 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 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.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial period of 180 calendar days, or until March 20, 2023, to regain compliance with the Bid Price Rule.
The Minimum Bid Price Notice has no immediate effect on the listing of the Company’s Common Stock, which continues to trade on The Nasdaq Capital Market under the symbol “IMG.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 calendar days from the date of the Minimum Bid Price Notice, or until July 14, 2025, to regain compliance.
On September 20, 2022, Nasdaq notified us that, for 30 consecutive business days, the bid price for our common stock had closed below 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”).
Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.
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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.
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ITEM 1. BUSINESS. Overview CIMG Inc. is a company incorporated in Nevada and listed on Nasdaq since June 2020. We were formerly known as “Nuzee, Inc.” with a previous ticker symbol “NUZE”, and we changed our corporate name and ticker symbol to “CIMG Inc.” and “IMG” in October 2024.
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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”).
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We previously focused on specialty coffee and related technologies but are now expanding our sales and distribution channels in Asia to encompass a broader range of consumer food and beverage products. This expansion is fueled by our online sales platform, which leverages a natural language search function.
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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.
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On June 7, 2024, we entered into a Share Purchase Agreement (“Share Purchase Agreement”) with Masateru Higashida, our former Chief Executive Officer and Director, under which we sold all issued and outstanding shares of our wholly-owned subsidiaries, NuZee KOREA Ltd. and NuZee Investment Co., Ltd., to Mr. Higashida, which sale was completed in June 2024.
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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.
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Since July 2024, CIMG has been undergoing a transformation in digital marketing, distribution, and sales. As part of this transformation, we have extended our sales and distribution network to include maca-enhanced food and beverages, reaffirming our commitment to reshaping the online marketing, sales, and distribution landscape for consumer products.
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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.
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Maca, a plant of the Brassicaceae family that originated in South America, has oval leaves and a rootstock shaped like a small round radish. It is edible and renowned as a natural superfood. Maca is rich in nutrients, boasts high levels of essential nutrients, and is believed to nourish and strengthen the human body.
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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.
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It is often referred to as “South American ginseng.” The primary cultivation regions for maca include the Andes Mountains in South America and the Jade Dragon Snow Mountain in Lijiang, Yunnan, China. CIMG has successfully secured the exclusive distribution and sales rights for all maca products produced by Jiangsu Kangduoyuan Beverage Co., Ltd., a leading maca production base in Asia.
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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.
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These products include Maca Peptide Coffee, Maca-Noni, Maca Wine, Maca Purified Powder, and other full-range offerings. Through a comprehensive digital marketing strategy, CIMG is optimistic in its ability to achieve sales growth and enhance the Company’s enterprise value. CIMG aims to become a leading distributor of premium maca products, a natural superfood known for its numerous health benefits.
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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.
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Our business focuses on sourcing, marketing, and distributing a wide range of maca-based dietary supplements, functional foods, and beauty products. We operate with a commitment to providing high-quality, sustainably sourced products to consumers who seek to enhance their health and wellness.
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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.
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Our products are sold through both online channels and a network of retail partners, including grocery stores, convenience stores, and vending machines.
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With our bagged coffees and the Stone Brewing licensing relationship, we will manage the production and related inventory which will involve increased risk levels.
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The diagram below is our corporate structure as of the date of this report. 8 Our sources of revenue Co-Packing and Product Innovation With years of experience as a third-party contract packer for leading companies in the coffee beverage industry, combined with our own coffee sales and market insights from the Asian region, we have expanded our business strategy to deepen our industry engagement.
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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.
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This evolution includes a shift toward reshaping product value by integrating health-oriented concepts and applying advanced technologies such as artificial intelligence, neuroscience, and big data. These efforts have culminated in the establishment of a global digital health and sales development business group.
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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.
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While we remain committed to delivering our high-quality single-serving coffee and DRIPKIT products, our entry into the Asian market has prompted a broader commitment to health, sustainability, and nutrition. The Maca Series In the fourth quarter of the year ended September 30, 2024, we introduced our first health-focused product line in Asia: the Maca Series.
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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.
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This product line includes Maca Peptide Coffee, Maca-Noni, Maca Purified Powder, and Maca Wine. Each product features green purification factors derived from the maca plant, ensuring a natural and clean composition. 9 Maca, a plant native to South America and a member of the Brassicaceae family, is known for its nutritional value and adaptogenic properties.
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In addition, we are continually exploring potential strategic partnerships, co-ventures, and mergers, acquisitions, or other transactions with existing and future business partners to generate additional business, drive growth, reduce manufacturing costs, expand our product portfolio, enter into new markets, and further penetrate the markets in which we currently operate.
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Often referred to as “South American ginseng,” maca is prized for its ability to support stamina, vitality, and overall wellness.
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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.
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It is primarily cultivated in the Andes Mountains in south America, and Jade Dragon Snow Mountain in Yunnan Province, China. ● Maca-Noni – a plant-based energy drink designed to support sexual vitality, with maca root as its key ingredient. ● Maca Peptide Coffee – a functional coffee beverage infused with maca peptides for enhanced wellness benefits. ● Maca Purified Powder – a concentrated, versatile maca powder ideal for daily nutritional use. ● Maca Wine – a unique beverage that combines traditional wine with the nourishing properties of maca.
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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.
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We currently distribute our products through wholesale channels, supplying grocery stores, convenience stores, and vending machine operators. Looking ahead, we plan to expand into retail services and leverage digital technologies to optimize marketing strategies and diversify our sales models. Our distribution network already spans both online platforms and offline points of sale.
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The brewing method is similar to brewing tea; put the coffee brew bag in a cup, add hot water and let it sit for approximately five minutes.
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Our commitment extends beyond product quality and health benefits—we also focus on enhancing the packaging experience. Each design is crafted to resonate with professionals across various industries, making our products more personalized, youthful, and distinctive. For example, Maca-Noni represents a new entry into the functional beverage market, blending health-forward branding with innovative design.
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This coffee brewing method is relatively new to North America and we believe has gained attention from roasters and end consumers who desire eco-friendlier alternatives to coffee pods and other types of single serve coffee.
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Our customer base includes wholesale distributors such as grocery stores, convenience stores, and vending machine providers. International operations Hong Kong and PRC We acquired DZR Tech and Beijing Zhongyan in June 2024, followed by the establishment of Singapore CIMG on January 13, 2025, and Henan Zhongyan on March 21, 2025.
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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.
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We subsequently acquired Shanghai Huomao on April 22, 2025, and Beijing Xilin on March 31, 2025. Today, we are one of the largest distributors of maca products in Hong Kong, the PRC, and other Asian markets. Our strategy focuses on leveraging local relationships to establish long-term partnerships across these regions. Our customers and products Our customers primarily include wholesale distributors.
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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.
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We sell the Maca Series products to wholesale distributors such as grocery stores, convenience stores, and vending machine providers. Our core product line mainly consists of a variety of maca-based products designed to cater to the growing demand for natural health supplements. These products include Maca Peptide Coffee, Maca-Noni, Maca Purified Powder, and Maca Wine.
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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.
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Maca-Noni Maca-Noni is a maca-enhanced plant-based energy drink, with its consumption scenarios overlapping with traditional energy drinks such as Red Bull. It helps consumers quickly replenish energy in various situations such as traveling, working, and exercising, allowing them to maintain good performance. Unlike traditional energy drinks, Maca-Noni is made primarily from maca extracts, and does not contain caffeine.
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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.
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As a result, it is a healthier alternative compared to conventional energy drinks, and long-term consumption also offers health benefits. 10 The first batch of Maca-Noni plant-based energy drinks is available in 250ml cans, with packaging designed to appeal to younger consumers.
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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.
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The bottle features a “professional role bottle” design, selecting 66 professions and 132 facial expressions from the target consumer group, including drivers, workers, students, athletes, fitness enthusiasts, lawyers, doctors, streamers, and e-commerce operators, which adds emotional appeal and storytelling to the product. We emphasize the importance of quality, sustainability, and transparency in the sourcing and production of our maca.
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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.
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Our maca is primarily sourced from Yunnan, China, where it is cultivated in high-altitude regions that naturally enhance its potency. We work closely with local sources in Jiangsu Kangduoyuan Beverage Co., Ltd to ensure sustainable farming practices and fair-trade standards.
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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.
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Maca Peptide Coffee Our Maca Peptide Coffee is known for its strong yet smooth, non-bitter taste with a subtle fruity aroma. It is medium-roasted and contains no added sugar, preserving the original flavor profile. The main ingredients include maca peptide, yellow essence, and Malaysian white coffee.
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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 products.
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In our formulation, coffee is added primarily to enhance flavor and deliver the familiar taste of coffee, while the functional benefits come primarily from the maca and yellow essence. We use high-quality maca grown at altitudes of no less than 3,200 meters, with a low yield of approximately 70 kilograms per mu.
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Our single serve coffee products also have a number of advantages over other single serve coffee alternatives: ● Our single serve coffee solutions are portable and do not require a machine for brewing. Therefore, the consumer investment required to enjoy our product is very minimal (as opposed to machine-based solutions).
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Maca is cultivated without the use of pesticides, fertilizers, or growth enhancers. To maximize its potency, harvesting only occurs when the leaves have turned brown, ensuring peak effectiveness of the raw ingredient. Maca Wine As a combination of maca and alcohol drinks, Maca Wine has become a popular choice for family gatherings due to its distinctive taste and health benefits.
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Single serve coffee products can easily travel and have a number of consume-later applications not available to machine-based solutions (camping, travel, office, etc.). ● We believe our product offerings are more hygienic than other, machine-based single serve alternatives. For example, the use of a machine requires cleaning and maintenance.
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It not only adds a special flavor to meals but also helps relieve fatigue and improve mental alertness, allowing families to enjoy their food while promoting wellness. Maca Wine is also known for its traditional health functions, including promoting blood circulation, relieving blood stasis, dispelling wind and dampness, and alleviating symptoms such as cold hands and feet.
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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.
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As a daily wellness beverage, moderate consumption can support physical regulation, enhance vitality, and improve sleep quality. For those experiencing insomnia, restless sleep, or poor sleep, moderate intake of Maca Wine may contribute to more restful and restorative sleep.
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We also seek to further expand our own brands of single serve coffee products for sale directly to end consumers in order to generate increased revenues and to help accelerate consumer adoption of these brewing formats.
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Maca Purified Powder Maca Purified Powder as a nutritional supplement, rich in protein, amino acids, polysaccharides, minerals and bioactive substances such as macamide and macalene, these ingredients help to enhance human immunity and improve the body’s resistance. Its natural ingredients can regulate the human endocrine system, balance hormone levels, help relieve menopause symptoms, improve endocrine disorders and other problems.
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We believe that top tier brands that want to compete in the North American single serve coffee market will demand the highest levels of quality from their manufacturing partners.
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At the same time, antioxidant ingredients help to clear free radicals in the body, reduce skin damage, improve skin condition, make skin smoother and more delicate, enhance skin elasticity, and help delay the aging process.
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We further believe that we remain a commercial-scale leader in the single serve coffee market in North America as a result of our history of working with sophisticated packing equipment manufacturers, SQF Certification from the Safe Quality Food Institute, organic certification, our commitment to sustainability, operational knowledge and the co-packing arrangements we are continuing to develop with companies.
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Market Opportunity The global market for natural and plant-based dietary supplements has seen significant growth in recent years, driven by increasing consumer awareness of health and wellness. As a result, the demand for maca products has grown substantially, particularly in the wellness, beauty, and fitness industries.
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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.
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According to market research firm Research Nester’s public report, it is projected that from 2025 to 2037, the compound annual growth rate (CAGR) of the global maca market will exceed 4.2%.
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However, (i) we have, and continue to develop, manufacturing expertise on increasingly complex and larger orders, (ii) we have experience dealing with companies of all sizes and their specific requirements (from small roasters to international companies) and (iii) we have SQF, organic and Kosher certification.
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It is predicted that this figure will exceed 106 million US dollars by 2037. 11 Our company is well-positioned to capitalize on this trend due to our established brand, product offerings, and commitment to quality. We believe that maca’s versatility as a superfood, combined with its growing recognition in the wellness community, will drive continued growth for our business.
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We received SQF Certification from the Safe Quality Food Institute, which is a customary requirement to produce for large multi-national and international companies.
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Operational capacity We currently lease office space in Florida, United States, Hong Kong, and Beijing, China, to serve as offices for our daily operations. We believe our office space is sufficient to meet our current and anticipated operational requirements.
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Our primary focus is the development of single serve coffee products in the North American market targeting the individual consumer for use at home and office or other settings that would benefit from single serve product offerings and positioning ourselves as the leading commercial-scale co-packer of single serve pour over and coffee brew bag coffee products.
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Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
81 edited+210 added−87 removed126 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
81 edited+210 added−87 removed126 unchanged
2023 filing
2024 filing
Biggest changeThese 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.
Biggest changeWe 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; ● 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. 23 Our present and future funding requirements will depend on many factors, including: ● success of our current marketing efforts; ● our revenue growth rate and ability to generate cash flows from sales of our products; ● effects of competing technological and market developments; and ● changes in regulatory oversight applicable to our products.
We have limited operating history, which may make it difficult to evaluate our current business and to forecast our future performance. We have little operating history and are addressing an emerging market. As a result, our current and future business prospects are difficult to evaluate.
We have a limited operating history, which may make it difficult to evaluate our current business and to forecast our future performance. We have little operating history and are addressing an emerging market. As a result, our current and future business prospects are difficult to evaluate.
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.
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. 25 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. 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. 29 Failure to comply with applicable transfer pricing and similar regulations could harm our business and financial results.
If we are unsuccessful in our efforts to raise additional capital, based on our current and expected 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.
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.
In addition to specific listing and maintenance standards, the Nasdaq Capital Market has broad discretionary authority over the continued listing of securities, which it could exercise with respect to the listing of our common stock. As a listed company, we are required to meet the continued listing requirements applicable to all Nasdaq Capital Market companies.
In addition to specific listing and maintenance standards, the Nasdaq Capital Market has broad discretionary authority over the continued listing of securities, which it could exercise with respect to the listing of our Common Stock. 40 As a listed company, we are required to meet the continued listing requirements applicable to all Nasdaq Capital Market companies.
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.
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.
In addition, our third amended and restated bylaws and our indemnification agreements that we have entered into with our directors and officers provide for the following: ● We will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Nevada law.
In addition, our third amended and restated bylaws and our indemnification agreements that we have entered into with our directors and officers provide for the following: 44 ● We will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Nevada law.
On September 20, 2022, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that the Company was not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing (the “Bid Price Rule”).
On September 20, 2022, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“NASDAQ”) indicating that the Company was not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing (the “Bid Price Rule”).
If we do not address these risks successfully, it could have a material adverse effect on our business and financial condition. 17 Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.
If we do not address these risks successfully, it could have a material adverse effect on our business and financial condition. Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.
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.
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.
If we were to face any employment related claims, our business could be negatively affected. Future changes in financial accounting standards or practices may cause adverse unexpected financial reporting fluctuations and affect reported results of operations.
If we were to face any employment related claims, our business could be negatively affected. 46 Future changes in financial accounting standards or practices may cause adverse unexpected financial reporting fluctuations and affect reported results of operations.
We may not be able to utilize our existing net operating losses or any portion thereof in the current tax year or any available carryforward period. In addition, Section 382 may limit the utilization of net operating loss carryforwards.
We may not be able to utilize our existing net operating losses or any portion thereof in the current tax year or any available carryforward period. 24 In addition, Section 382 may limit the utilization of net operating loss carryforwards.
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. 32
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.
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. 30.
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.
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.
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.
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. 10.
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.
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.
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. 28 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.
We expect to continue to incur net losses in the future and we may never generate sufficient revenue 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.
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.
Our independent auditor’s report for the fiscal year ended September 30, 2024 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.
If we cannot secure additional funding when needed, including due to changes in our business plan, a lower demand for our products or co-packing services or other risks described in this Report, we may have to delay, reduce the scope of or eliminate one or more sales and marketing initiatives and development programs, which would have a materially adverse effect on our business.
If we cannot secure additional funding when needed, including due to changes in our business plan, a lower demand for our products or other risks described in this Report, we may have to delay, reduce the scope of or eliminate one or more sales and marketing initiatives and development programs, which would have a materially adverse effect on our business.
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.
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 as our business expands; and ● successfully address other risks, as described in this Report or otherwise.
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.
(see page 42) ● 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.
In addition, the beverage retail landscape is dynamic and constantly evolving, not only in emerging and developing marketplaces, where modern trade is growing at a faster pace than traditional trade outlets, but also in developed marketplaces, where discounters and value stores, as well as the volume of transactions through e-commerce, are growing at a rapid pace.
In addition, the maca products retail landscape is dynamic and constantly evolving, not only in emerging and developing marketplaces, where modern trade is growing at a faster pace than traditional trade outlets, but also in developed marketplaces, where discounters and value stores, as well as the volume of transactions through e-commerce, are growing at a rapid pace.
In addition to the other information set forth in this Report and other filings we have made and make in the future with the SEC, you should carefully consider the following risk factors and uncertainties, which could materially affect our business, financial condition or results of operations in future periods.
(see page 47) In addition to the other information set forth in this Report and other filings we have made and make in the future with the SEC, you should carefully consider the following risk factors and uncertainties, which could materially affect our business, financial condition or results of operations in future periods.
Increased competition, including as a result of industry consolidation, could hurt our businesses. The beverage industry is intensely competitive and we compete with respect to product, quality, convenience, technology, innovation, and price. We face significant competition in each of our channels and marketplaces.
Increased competition, including as a result of industry consolidation, could hurt our businesses. The maca products industry is intensely competitive and we compete with respect to product, quality, convenience, technology, innovation, and price. We face significant competition in each of our channels and marketplaces.
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.
(see page 45) ● 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.
Our reliance on third-party roasters and manufacturing partners subjects us to additional risks, including the possible termination of the arrangement by a third-party roaster or manufacturing partner at a time that is costly or inconvenient for us.
Our reliance on third-party suppliers and manufacturing partners subjects us to additional risks, including the possible termination of the arrangement by a third-party suppliers or manufacturing partner at a time that is costly or inconvenient for us.
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.
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.
These risks are discussed more fully in the section titled “Risk Factors.” Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, the following: 1. We have a history of net losses.
These risks are discussed more fully in the section titled “Risk Factors.” Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, the following: Risks Related to Our Financial Condition and Capital Requirements ● We have a history of net losses.
Our businesses involve the collection, storage and transmission of personal, financial or other information that is entrusted to us by our customers and employees. Our information systems also contain the Company’s proprietary and other confidential information related to our businesses.
Our business involves the collection, storage and transmission of personal, financial or other information that is entrusted to us by our customers and employees. Our information systems also contain the Company’s proprietary and other confidential information related to our businesses.
Our past issuances of stock and other changes in our stock ownership may have resulted in one or more ownership changes within the meaning of Section 382 of the Code; accordingly, our pre-change NOLs may be subject to limitation under Section 382. State NOL carryforwards may be similarly limited.
Our past issuance of stock and other changes in our stock ownership may have resulted in one or more ownership changes within the meaning of Section 382 of the Code; accordingly, our pre-change NOLs may be subject to limitations under Section 382. State NOL carryforwards may be similarly limited.
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.
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; ● 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; ● 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; ● 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.
We expect to need to obtain additional capital to fund our existing operations and, if we are unable to obtain such financing, we may be unable to continue to operate as a going concern.
(see page 23) ● We expect to need to obtain additional capital to fund our existing operations and, if we are unable to obtain such financing, we may be unable to continue to operate as a going concern.
Changes to regulation of the beverage industry could include increased limitations on advertising and promotional activities or other non-tariff measures that could adversely impact our business.
Changes to regulation of the maca products industry could include increased limitations on advertising and promotional activities or other non-tariff measures that could adversely impact our business.
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. 29.
(see page 42) ● 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.
We compete with major international beverage companies that operate in multiple geographic areas, many of which have greater financial and other resources than we do, as well as numerous companies that are primarily local in operation. Our NuZee and DRIPKIT branded products also compete against local or regional brands as well as against private label brands developed by retailers.
We compete with major international maca products companies that operate in multiple geographic areas, many of which have greater financial and other resources than we do, as well as numerous companies that are primarily local in operation. Our Maca Series products also compete against local or regional brands as well as against private label brands developed by retailers.
Despite our listing on the Nasdaq Capital Market, there can be no assurance that an active trading market for our common stock will be sustained. 24. The Nasdaq Capital Market may subsequently delist our securities if we fail to comply with ongoing listing standards. 25.
(see page 40) ● Despite our listing on the Nasdaq Capital Market, there can be no assurance that an active trading market for our Common Stock will be sustained. (see page 40) ● The Nasdaq Capital Market may subsequently delist our securities if we fail to comply with ongoing listing standards.
As we and our industry evolve, we expect to face new challenges with respect to our introduction of innovative products and the changing competitive landscape within the single serve category and the beverage industry. These challenges can occur at various stages, including design, supply chain and sales cycle.
As we and our industry evolve, we expect to face new challenges with respect to our introduction of innovative products and the changing competitive landscape within the maca products industry. These challenges can occur at various stages, including design, supply chain and sales cycle.
We expect to continue to experience inflationary pressure on our cost structure, and price increases may not be sufficient to offset cost increases or may result in sales volume declines.
We expect to continue to experience inflationary pressure on our cost structure, and price increases may not be sufficient to offset cost increases or may result in sales volume declines. 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. 14. Because our management structure is not centralized, the management of our business operations may be more expensive and more difficult. 15.
(see page 27) ● 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. (see page 28) ● Because our management structure is not centralized, the management of our business operations may be more expensive and more difficult.
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.
(see page 47) ● Currently pending, threatened or future litigation or governmental proceedings or inquiries could result in material adverse consequences, including judgments or settlements. (see page 47) ● Future acquisitions of and investments in new businesses could impact on 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. 13.
(see page 27) ● 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 distribute products and could adversely affect our business and sales.
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. 20 Changes in the coffee, tea and beverage environment and retail landscape could impact our financial results.
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 maca products industry. 26 Changes in the maca products environment and retail landscape could impact our financial results.
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.
Additional risks are 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. 22 Risks Related to Our Financial Condition and Capital Requirements We have a history of net losses. We expect to continue to incur net losses in the future.
A disruption in operations at any of our facilities or any other disruption in our supply chain or increase in prices relating to service by our retailers, distributors, common carriers that ship goods within our distribution channels, or otherwise, whether as a result of shipping costs and delays, trade restrictions, casualty, natural disaster, weather, power loss, telecommunications failure, terrorism, labor shortages, contractual disputes, interruptions in port operations or highway arteries, pandemic, strikes, work stoppages, the financial or operational instability of key suppliers, distributors and transportation providers, or other causes, could significantly impair our ability to operate our business, adversely affect our relationship with our customers, and impact our financial condition or results of operations.
A disruption in operations at any of our facilities or any other disruption in our supply chain or increase in prices relating to service by our retailers, distributors, common carriers that ship goods within our distribution channels, or otherwise, whether as a result of shipping costs and delays, trade restrictions, casualty, natural disaster, weather, power loss, telecommunications failure, terrorism, labor shortages, contractual disputes, interruptions in port operations or highway arteries, pandemic, strikes, work stoppages, the financial or operational instability of key suppliers, distributors and transportation providers, or other causes, could significantly impair our ability to operate our business, adversely affect our relationship with our customers, and impact our financial condition or results of operations. 27 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.
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 maca products 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 have broad discretion in the use of the net proceeds from our recent offering and may not use them effectively, which could affect our results of operations and cause our stock price to decline. Our management will have broad discretion in the application of the net proceeds from our recent offering.
(see page 40) ● We have broad discretion in the use of the net proceeds from our recent offering and may not use them effectively, which could affect our results of operations and cause our stock price to decline.
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.
(see page 28) ● We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy. (see page 28) ● 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.
We have a manufacturing and sales office in Seoul, Korea. We operate globally and are attempting to develop products and provide co-packing services in multiple countries. Consequently, we face complex legal and regulatory requirements in multiple jurisdictions, which may expose us to certain financial and other risks.
We have a manufacturing and sales office in Hong Kong. We operate globally and are attempting to develop products in multiple countries. Consequently, we face complex legal and regulatory requirements in multiple jurisdictions, which may expose us to certain financial and other risks.
In June 2020, our common stock commenced trading on the Nasdaq Capital Market under the symbol “NUZE.” Although our common stock is listed on the Nasdaq Capital Market, an active trading market for our shares may never be sustained.
In June 2020, our Common Stock commenced trading on the Nasdaq Capital Market under the symbol “NUZE.” On October 31, 2024, we changed our symbol to “IMG.” Although our Common Stock is listed on the Nasdaq Capital Market, an active trading market for our shares may never be sustained.
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. 14 19.
(see page 29) ● We may not be able to adequately protect our intellectual property rights, and our competitors may be able to offer similar products, 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.
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.
Our ability to become and remain profitable will depend on our ability to generate significantly higher revenues from the sales of our single-service coffee products, Maca series products, etc., which depends upon a number of factors, including but not limited to successful sales, manufacturing, marketing and distribution of our products and services.
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.
(see page 25) ● 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. (see page 26) ● Our business, growth and profitability depend on the performance of third-parties and our relationship with them, including third-party maca product providers.
In addition, the existence of any material weaknesses in our internal control over financial reporting may affect our ability to timely file periodic reports under the Exchange Act and may consequently result in the SEC revoking the registration of our common stock, or the delisting of our common stock.
The existence of a material weakness in our internal control over financial reporting may result in current and potential stockholders losing confidence in our financial reporting, which could negatively impact the market price of our Common Stock. 43 In addition, the existence of any material weaknesses in our internal control over financial reporting may affect our ability to timely file periodic reports under the Exchange Act and may consequently result in the SEC revoking the registration of our Common Stock, or the delisting of our Common Stock.
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.
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.
We intend to use the net proceeds from the offering to acquire complementary businesses, acquire or license products or technologies that are complementary to our own, although we have no current plans, commitments or agreements with respect to any such use of proceeds for acquisitions or licenses as of the date of this prospectus supplement, and for working capital, general corporate purposes and the expansion and growth of certain recently announced co-packing relationships, including Stone Brewing and other large customers.
We intend to use the net proceeds from the offering to acquire complementary businesses, acquire or license products or technologies that are complementary to our own, although we have no current plans, commitments or agreements with respect to any such use of proceeds for acquisitions or licenses, and for working capital and general corporate purposes.
However, achievement of our growth strategy is dependent, among other things, on our ability to extend the product offerings of our existing brands and introduce innovative new products and co-packing services.
Our future success depends, largely, on our ability to implement these and our other growth strategies effectively. However, the achievement of our growth strategy is dependent, among other things, on our ability to extend the product offerings of our existing brands and introduce innovative new.
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. Any non-performance or deficient performance by such parties may undermine our operations and profitability.
In addition, a significant portion of our distribution network, and correspondingly our success in distributing our maca products, depends on the performance of third-parties. Any non-performance or deficient performance by such parties may undermine our operations and profitability. For distribution of our maca products, we typically rely on third party distribution networks, including freight companies and common carriers.
Risks Related to Ownership of our Common Stock The market price of our stock may be volatile, and you could lose all or part of your investment. The trading price of our common stock is likely to be highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control.
The trading price of our Common Stock is likely to be highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control.
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.
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.
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.
(see page 24) 18 Risks Related to Our Business ● Continued innovation and the successful development and timely launch of new products are critical to our financial results and the achievement of our growth strategy.
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 impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our Board, our Board committees or as executive officers. 42 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 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.
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.
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.
(see page 43) ● 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.
We have broad discretion in the use of the net proceeds from stock offerings and may not use them effectively, which could affect our results of operations and cause our stock price to decline. 28.
In addition, in the event of such delisting, we could experience a decreased ability to issue additional securities and obtain additional financing in the future. We have broad discretion in the use of the net proceeds from our recent offering and may not use them effectively, which could affect our results of operations and cause our stock price to decline.
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.
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.
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.
A reduction in consumer demand for, or revenues from the sale of, our maca related products could further constrain our cash resources. 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.
If we do not invest or apply the net proceeds from the offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline. 27 Our principal stockholder and management, including our Chief Executive Officer in particular, own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.
Our management might not apply our net proceeds in ways that ultimately increase the value of your investment. If we do not invest or apply the net proceeds from the offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.
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.
Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could have a material adverse effect on our business and financial condition. 45 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.
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.
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.
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.
Our third-party suppliers and manufacturing partners are independent entities subject to their own unique operational and financial risks that are out of our control. If any of these third-party suppliers or manufacturing partners fail to perform as required, this could cause delays in our receipt of the maca products or otherwise adversely affect our business.
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 connection with the distribution of maca products, we rely on third-party suppliers and manufacturing partners to provide high quality maca products. We also rely on our manufacturing partners to provide us with additional manufacturing and facilitate distribution efforts throughout China.
We expect to continue to incur net losses in the future and we may never generate sufficient revenue to achieve or sustain profitability. We have incurred net losses since our inception in 2013, including net losses of $8.75 million and $11.8 million for the years ended September 30, 2023, and 2022, respectively.
We have incurred net losses since our inception in 2013, including net losses of $8.56 million and $8.75 million for the years ended September 30, 2024, and 2023, respectively. As of September 30, 2024, our accumulated deficit was approximately $81.93 million.
Although we devote significant focus to the development of new products, including NuZee and DRIPKIT branded products, we may not be successful in developing innovative new products or our new products may not be commercially successful. We also may be unsuccessful in expanding our co-packaging services to other products that are complementary to our current single serve coffee product offerings.
Although we devote significant focus to the development of new products, including Maca Peptide Coffee, Maca-Noni, Maca Wine, Maca Purified Powder, we may not be successful in developing innovative new products or our new products may not be commercially successful.
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.
(see page 44) ● 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. (see page 44) 21 General Risk Factors ● Product safety and quality concerns could negatively affect our business.
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.
(see page 29) ● Failure to comply with applicable transfer pricing and similar regulations could harm our business and financial results.
Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations. 6. A substantial portion of our sales are completed on a purchase order basis.
(see page 23) ● We have a limited operating history, which may make it difficult to evaluate our current business and to forecast our future performance. (see page 24) ● Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations.
Our primary focus is the development of single serve coffee products in the North American market targeting the individual consumer for use at home and office or other settings.
Risks Related to Our Business Continued innovation and the successful development and timely launch of new products are critical to our financial results and the achievement of our growth strategy . Our primary focus is on developing maca-based products for the Asian market, targeting consumers for use at home, in the office, and in other everyday settings.
Miscommunications or inaccurate foreign language translations could have a material adverse effect on our business operations and financial condition. Significant additional labeling or warning requirements or limitations on the availability of our products may inhibit sales of affected products.
(see page 47) ● Ongoing geopolitical tensions around the world may have a material adverse effect on our business, financial condition, and results of operations.
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Item 2. Properties
Properties — owned and leased real estate
0 edited+3 added−5 removed0 unchanged
Item 2. Properties
Properties — owned and leased real estate
0 edited+3 added−5 removed0 unchanged
2023 filing
2024 filing
Removed
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.
Added
ITEM 2. PROPERTIES Our principal executive office is located at Room R2, FTY D, 16/F, Kin Ga Industrial Building, 9 San On Street, Tuen Mun, Hong Kong, at a monthly rental cost of RMB 4,167 (approximately $594), with the lease expiring on December 17, 2025.
Removed
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.
Added
We currently lease office space and facilities in Delray Beach, Florida; Tuen Mun, Hong Kong; and Beijing, China. Our office in Delray Beach, Florida has a total monthly lease expense of approximately $3,500, with the lease expiring on August 31, 2025.
Removed
Our 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.
Added
Our office in Beijing, China has a total yearly lease expense of approximately RMB 3,000 (approximately $428), with the lease expiring on August 12, 2027. We have analyzed our current facilities in light of our anticipated requirements, and we expect to continue optimizing our office space and facilities to meet our future needs.
Removed
We presently have the annual capacity to produce up to 150 million single serve coffee products (pour over or coffee brew bags) at our two manufacturing facilities, which we believe is sufficient to meet our current and anticipated manufacturing requirements.
Removed
We have analyzed our current facilities considering our anticipated requirements, and we expect to continue to optimize our manufacturing facilities to meet our future needs.
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
6 edited+13 added−11 removed0 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
6 edited+13 added−11 removed0 unchanged
2023 filing
2024 filing
Biggest changeLitigation 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.
Biggest changeITEM 3. LEGAL PROCEEDINGS Steeped 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 “Complaint”).
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.
Ramirez, 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. Ms.
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.
Plaintiff sought 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 Steeped’s reputation and goodwill among its customers and partners; and reasonable attorneys’ fees and costs.
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.
Curtin Litigation As previously disclosed, on January 6, 2023, a former employee of the Company, Rosalina Curtin filed a complaint against the Company and another former employee of the Company, Jose Ramirez, in the Superior Court of California, County of San Diego (Case No. 37-2023-00000841-CU-WT-NC) (the “Complaint”). The Complaint alleged that Ms. Curtin was subject to harassment by Mr.
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.
Curtin sought 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. Pursuant to the terms of Ms.
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.
Steeped alleged breach of contract, intentional interference with contractual relations, intentional interference with prospective economic advantage, and fraud in the inducement of contract.
Removed
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”).
Added
The Complaint related to Steeped’s claim that the Company breached a 2021 settlement agreement that resolved Steeped’s 2019 trademark infringement case against the Company. The earlier case involved Steeped’s purported trademark protection for “steeped coffee” and related phrases.
Removed
The 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.
Added
The Company answered the Complaint with a general denial and asserted twenty-five affirmative defenses. On January 16, 2024, without a finding or admission of wrongdoing, the Company entered into a settlement agreement with Steeped. In exchange for mutual releases and a dismissal of the lawsuit with prejudice, the Company paid Steeped $500,000.
Removed
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.
Added
Steeped filed a Notice of Settlement on January 30, 2024, and on April 18, 2024, the case was dismissed. On June 19, 2024, both parties officially signed the “SETTLEMENT AGREEMENT AND MUTUAL RELEASE”, the Company paid Steeped $500,000.
Removed
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.
Added
Curtin’s Employment Agreement with the Company, on December 22, 2023, the Court compelled the case to arbitration with the American Arbitration Association (Case Number 01-24-0002-3225). 48 On November 8, 2024, without a finding or admission of wrongdoing, the Company entered into a settlement agreement with Ms. Curtin.
Removed
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
In exchange for mutual general releases and a dismissal of the lawsuit with prejudice, the Company paid Ms. Curtin $125,000. On December 6, 2024, the case was dismissed in its entirety. Kim Litigation On October 3, 2024, Mr. Sooncha Kim filed a complaint against the Company in the Southern District of New York, (Case No. 1:24-cv-7485) (the “Complaint”).
Removed
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
The Complaint alleges that the Company breached a Convertible Note and Warrant Purchase Agreement, dated June 6, 2024, between the Company and Mr. Kim, by, among other things, failing to deliver the registration rights agreement, excluding Mr. Kim from the S1 registration statement, delaying conversion of Mr. Kim’s notes, undertaking steps to dilute Mr. Kim’s shares, failing to honor Mr.
Removed
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
Kim’s 50% participation right in any subsequent financing and failing to appoint a designated director, as set forth in the parties’ agreement. Mr. Kim seeks specific performance of the Convertible Note and Warrant Purchase Agreement, and monetary damages in the amount of $1,041,216, plus applicable interest. The Company filed its answer to the Complaint on December 3, 2024.
Removed
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
On January 7, 2025, Mr. Kim filed a motion seeking a preliminary injunction against the Company (the “Motion”). The Company opposed the Motion on January 22, 2025, and on February 13, 2025, the Court denied Mr. Kim’s Motion. Discovery in the case is ongoing, and no trial date has been set.
Removed
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
The Company believes it has a basis to defend the claims in the Kim Litigation. The company believes that it is very likely to succeed in the defense. Ex-Directors Lawsuit On March 10, 2025, former directors of the Company, Kevin J. Connor, Chris J.
Removed
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.
Added
Jones, Nobuki Kurita, and David Robson (collectively, the “Ex-Directors”), filed a complaint against the Company in the Superior Court of California, County of San Diego (Case No. 25CU012922N) (the “Complaint”).
Removed
From time to time, we may be subject to other legal proceedings and claims in the ordinary course of business. The results of any future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Added
The Complaint alleges the Company failed to pay directors’ fees and expenses from the last quarter of the fiscal year ended 2023 through the first two quarters of the fiscal year ended 2024, and is claiming breach of contract, quantum meruit, unjust enrichment, promissory estoppel, breach of the implied covenant of good faith and fair dealing, and unfair business practices.
Added
The Ex-Directors seek monetary damages in excess of $200,000, with applicable interest, costs and attorneys’ fees. The Company’s answer to the Complaint was due on April 16, 2025. On April 17, 2025, the Ex-Director’s filed a request for entry of default. To date, no default has been entered against the Company.
Added
As of the date of this annual report, two parties are still negotiating.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
2 edited+1 added−0 removed2 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
2 edited+1 added−0 removed2 unchanged
2023 filing
2024 filing
Biggest changeAny 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 6. [RESERVED]
Biggest changeAny 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. 2024 Incentive plan See “Item 12.
ITEM 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.
ITEM 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 “IMG.” As of July 2, 2025, there were approximately 298 holders of record of our Common Stock.
Added
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. - Equity Compensation Plan Information”. Repurchases of Shares There were no repurchases of shares of common stock during for the year ended September 30, 2024. ITEM 6. [RESERVED]
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
6 edited+57 added−2 removed5 unchanged
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
6 edited+57 added−2 removed5 unchanged
2023 filing
2024 filing
Biggest changeFORM 10-K SUMMARY 45 SIGNATURES 46 2 CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K (this “Report”) contains forward-looking statements, including, without limitation, in the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere.
Biggest changeThese developments could add uncertainties to our listing on the Nasdaq Capital Market and Nasdaq may determine to delist our securities if the PCAOB determines that it cannot inspect or fully investigate our auditor, which may cause the value of our securities to decline or become worthless. 5 CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K (this “Report”) contains forward-looking statements, including, without limitation, in the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere.
ITEM 6. [RESERVED] 35 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 35 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 41 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 41 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 41 ITEM 9A. CONTROLS AND PROCEDURES 41 ITEM 9B.
ITEM 6. [RESERVED] 50 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 50 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 56 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 56 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 56 ITEM 9A. CONTROLS AND PROCEDURES 56 ITEM 9B.
OTHER INFORMATION 42 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 42 PART III 43 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 43 ITEM 11. EXECUTIVE COMPENSATION. 43 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. 43 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 43 ITEM 14.
OTHER INFORMATION 57 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 57 PART III 58 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. 58 ITEM 11. EXECUTIVE COMPENSATION. 63 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. 65 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 67 ITEM 14.
Given these uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. We disclaim any obligation to update the forward-looking statements contained in this Report to reflect any new information or future events or circumstances or otherwise, except as required by law.
Given these uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. We disclaim any obligation to update the forward-looking statements contained in this Report to reflect any new information or future events or circumstances or otherwise, except as required by law. REFERENCES As used in this Report: ● “$”, “US$”, “USD” or “U.S.
PRINCIPAL ACCOUNTING FEES AND SERVICES 43 PART IV 44 ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES 44 ITEM 16.
PRINCIPAL ACCOUNTING FEES AND SERVICES 67 PART IV 69 ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES 69 ITEM 16.
Any forward-looking statements in this Report reflect our current views with respect to future events or to our future financial performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.
Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. 6 Any forward-looking statements in this Report reflect our current views with respect to future events or to our future financial performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.
Removed
Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties.
Added
FORM 10-K SUMMARY 71 SIGNATURES 72 2 Our Holding Company Structure and Risks Related to Doing Business in China Our business operations are partially based in China, and our PRC Subsidiaries are subject to certain legal and operational risks associated with being based in China.
Removed
REFERENCES As used in this Report: (i) the terms “we”, “us”, “our”, “NuZee” and the “Company” mean NuZee, Inc. and its subsidiaries, taken together; (ii) “SEC” refers to the Securities and Exchange Commission; (iii) “Securities Act” refers to the Securities Act of 1933, as amended; (iv) “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated. 3 PART I
Added
On December 28, 2021, the Cyberspace Administration of China (“CAC”), and 12 other relevant PRC government authorities published the amended Cybersecurity Review Measures, which came into effect on February 15, 2022.
Added
The final Cybersecurity Review Measures provide that a “network platform operator” that possesses personal information of more than one million users and seeks a listing in a foreign country must apply for a cybersecurity review.
Added
Further, the relevant PRC governmental authorities may initiate a cybersecurity review against any company if they determine certain network products, services, or data processing activities of such company affect or may affect national security.
Added
As of the date of this report, our Company and its subsidiaries have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice or sanction.
Added
As advised by our PRC counsel, Guangdong Shenmou Law Firm (“Guangdong Shenmou”), we do not believe that we are subject to: (a) the cybersecurity review with the CAC, as we do not possess a large amount of personal information in our business operations, and our business does not involve the collection of data that affects or may affect national security, implicates cybersecurity, or involves any type of restricted industry; or (b) merger control review by China’s anti-monopoly enforcement agency due to the fact that we do not engage in monopolistic behaviors that are subject to these statements or regulatory actions.
Added
On February 17, 2023, the China Securities Regulatory Commission (“CSRC”) issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, which became effective on March 31, 2023.
Added
Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC.
Added
As advised by our PRC counsel, Guangdong Shenmou, we are a domestic company incorporated in the United States, and the operation of a portion of our business in the PRC does not, by itself, subject us to the Trial Measures or related filing requirements.
Added
However, due to uncertainties in the interpretation of PRC laws and regulations, as well as ongoing regulatory reviews of overseas listings involving PRC companies through offshore holding structures, we may be required to submit a filing with the CSRC in the future in connection with our operations in China.
Added
Such risks could result in a material change in our operations and/or the value of our securities and could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
Added
Please see “Item 1A —Risk Factors—Risks Associated With Doing Business in China” and the associated risk factor on page 30.
Added
Since 2021, the Chinese government has strengthened its anti-monopoly supervision, mainly in three aspects: (1) establishing the National Anti-Monopoly Bureau; (2) revising and promulgating anti-monopoly laws and regulations, including: the Anti-Monopoly Law (draft Amendment published on October 23, 2021 for public opinions), the anti-monopoly guidelines for various industries, and the detailed Rules for the Implementation of the Fair Competition Review System; and (3) expanding the anti-monopoly law enforcement targeting Internet companies and large enterprises.
Added
As of the date of this report, the Chinese government’s recent statements and regulatory actions related to anti-monopoly concerns have not impacted our ability to conduct business, accept foreign investments, or list on a U.S. or other foreign exchange because neither the Company nor its PRC operating entities engage in monopolistic behaviors that are subject to these statements or regulatory actions.
Added
Please see “Item 1A —Risk Factors—Risks Associated With Doing Business in China” and the associated risk factor on page 30. Permissions Required from the PRC Authorities for Our Operations We are also subject to legal and operational risks associated with being based in and having part of the Company’s operations in China.
Added
These risks may result in a material change in our operations, or a complete hindrance of our ability to offer or continue to offer our securities to investors, and could cause the value of such securities to significantly decline or become worthless.
Added
Recently, the PRC government initiated a series of regulatory actions and guidelines to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement.
Added
On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council, or the State Council, jointly issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws.
Added
On December 28, 2021, the CAC, together with 12 other governmental departments of the PRC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022.
Added
Article 7 of the Cybersecurity Review Measures stipulates that “Network platform operators that hold personal information of more than one million users and plan to go public abroad must report to the Cybersecurity Review Office for a cybersecurity review.” 3 As confirmed by our PRC counsel, Guangdong Shenmou Law Firm since we are not an online platform operator that possesses over one million users’ personal information, we are not subject to the cybersecurity review with the CAC under the Cybersecurity Review Measures, and for the same reason, we will not be subject to the network data security review by the CAC though another bill, the Regulations on the Security Management of Network Data, came into effect on January 1, 2025.
Added
As such, we believe that, as of the date of this Annual Report, we are compliant with the regulations and policies that have been issued by the CAC.
Added
As of the date of this Annual Report, these new laws and guidelines have not impacted the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or other foreign exchange; however, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could materially and adversely impact our business and financial outlook.
Added
See “Item 1A —Risk Factors— Risks Associated With Doing Business in China.” On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023.
Added
The Standing Committee of the National People’s Congress (the “SCNPC”) or PRC regulatory authorities may in the future promulgate additional laws, regulations, or implementing rules that require us to obtain regulatory approval from Chinese authorities.
Added
If we do not receive or maintain such approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our shares of common stock, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.
Added
Cash Flows through Our Organization CIMG, and our non-PRC Subsidiaries, may transfer cash to our PRC subsidiaries, through capital injections and intra-group loans.
Added
As advised by our PRC counsel, Guangdong Shenmou Law Firm, current PRC regulations permit Beijing Zhongyan to pay dividends to DZR Tech, only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
Added
If we determine to pay dividends on any of our Common Stock in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, DZR Tech. DZR Tech will rely on payments made from Beijing Zhongyan, which will in turn rely on payments made from Beijing Xilin, Shanghai Huomao and Henan Zhongyan.
Added
In addition, Beijing Zhongyan requires at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. During the fiscal years ended September 30, 2024 and 2023, there is cash transfers of $220,000 and $ Nil occurred between the Company and its subsidiaries.
Added
Under mainland China laws and regulations, we are subject to restrictions on foreign exchange and cross-border cash transfers, including to CIMG, our non-PRC Subsidiaries, and U.S. investors. Our ability to distribute earnings to CIMG, non-PRC Subsidiaries, and U.S. investors is also limited.
Added
We are partially relying on dividends and other distributions on equity from our PRC Subsidiaries for our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur outside of mainland China.
Added
Current mainland China regulations permit our PRC Subsidiaries to pay dividends to us only out of their accumulated after-tax profits upon satisfaction of relevant statutory conditions and procedures, if any, determined in accordance with Chinese accounting standards and regulations.
Added
In addition, each of our PRC Subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves, together with the registered capital, are not distributable as cash dividends.
Added
Additionally, if our PRC Subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends or make other distributions to us. In addition, the revenue and assets of our PRC Subsidiaries are generally denominated in Renminbi, which is not freely convertible into other currencies.
Added
As a result, any restriction on currency exchange may limit the ability of our PRC Subsidiaries to pay dividends to us. 4 We have established certain controls and procedures for cash flows within our organization.
Added
Each transfer of cash among our Nevada holding company holding company and our subsidiaries is subject to internal approval to maximize oversight, minimize risk, and ensure compliance with applicable laws and regulations.
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See “Item 1A—Risk Factors— Risks Associated With Doing Business in China.” Cash Management Policies The Company has comprehensive cash management policies in place, including specific policies governing approvals with respect to fund transfers throughout our organization. Our Board of Directors and the audit committee oversee the Company’s major financial risk exposures.
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The Company maintains an authorization policy on cash management, setting forth the scope of authority for certain treasury matters that are delegated by the Board of Directors to management.
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Under this policy, certain treasury matters, such as intercompany loans, bank borrowings, short-term and long-term investments and dividends distributed from the Company’s subsidiaries to the holding company, are clearly defined, with the level of approval required for each matter specifically identified.
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Our management regularly monitors the liquidity position, funding requirements and investment returns in different jurisdictions of our subsidiaries, and takes into consideration regulatory requirements in the jurisdictions in which the Company has subsidiaries or operations. When funding is required, all necessary approvals are obtained from Company management and relevant governmental authorities, including China’s State Administration of Foreign Exchange.
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The Holding Foreign Companies Accountable Act On April 21, 2020, the SEC and PCAOB released a joint statement highlighting the risks associated with investing in companies based in or having substantial operations in emerging markets including China.
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The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.
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On December 16, 2021, the PCAOB issued a report on its determination that the PCAOB was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions.
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The Board made these determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the HFCA Act. On August 26, 2022, the CSRC, the Ministry of Finance (“MOF”), and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong.
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On December 15, 2022, the PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated its previous determinations to the contrary.
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However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB may consider the need to issue a new determination.
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On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was signed into law as part of the Consolidated Appropriations Act, amending the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.
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Any lack of access to the PCAOB inspection in China may prevent the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections.
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The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors to lose confidence in audit procedures and reported financial information and the quality of financial statements of China-based companies.
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Our auditor, Assentsure PAC, the independent registered public accounting firm is a PCAOB-registered public accounting firm headquartered in Singapore. Our current auditor is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess an auditor’s compliance with the applicable professional standards, and have been inspected by the PCAOB on a regular basis.
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As such, as of the date of this Annual Report, our listing is not affected by the HFCA Act and related regulations.
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However, the recent developments would add uncertainties to our listing and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as related to the audit of our financial statements.
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Furthermore, there is a risk that our auditor cannot be inspected by the PCAOB in the future.
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The lack of inspection could cause trading in our securities to be prohibited on a national exchange or in the over-the-counter trading market under the HFCA Act and related regulations, and, as a result, Nasdaq may determine to delist our securities, which may cause the value of our securities to decline or become worthless. See “Item 1A.
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Risk Factors— Risks Associated With Doing Business in China” call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the Public Company Accounting Oversight Board of the United States (the “PCAOB”).
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Dollars” refers to the legal currency of the United States; ● “Beijing Xilin” refers to Xilin Online (Beijing) E-commerce Co., Ltd, a limited liability company organized under the laws of the People’s Republic of China, which is 51% owned by Beijing Zhongyan; ● “Beijing Zhongyan” refers to Zhongyan Shangyue Technology Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China, which is wholly owned by DZR Tech; ● “Common Stock” refers to our common stock, US$0.00001 par value per share; ● “DZR Tech” refers to DZR Tech Limited, a Hong Kong limited company, which is wholly owned by the Company; ● “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; ● “Henan Zhongyan” refers to Henan Zhongyan Shangyue Technology Co., Ltd, a limited liability company organized under the laws of the People’s Republic of China, which is wholly owned by Beijing Zhongyan; “non-PRC Subsidiaries” refers to Wewin, DZR Tech, and Singapore CIMG; ● “PRC Subsidiaries” refers to Beijing Zhongyan, Henan Zhongyan, Beijing Xilin and Shanghai Huomao; ● “PRC” or “China” refers to the People’s Republic of China, excluding, for the purpose of this report only, Hong Kong SAR, Macau SAR and Taiwan; ● “RMB” or “Renminbi” refers to the legal currency of China; ● “SEC” refers to the Securities and Exchange Commission; ● “Securities Act” refers to the Securities Act of 1933, as amended; ● “Shanghai Huomao” refers to Shanghai Huomao Cultural Development Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China, which is 51% owned by Beijing Zhongyan; ● “Singapore CIMG” refers to CIMG PTE.
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LTD., a Singapore limited liability company, which is wholly owned by the Company; ● “we”, “us”, “our”, “CIMG” and the “Company” refers CIMG Inc. and its subsidiaries, taken together; and ● “Wewin” refers to WEWIN TECHNOLOGY LLC, a Florida limited liability company, which is wholly owned by the Company; 7 PART I
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
16 edited+47 added−63 removed5 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
16 edited+47 added−63 removed5 unchanged
2023 filing
2024 filing
Biggest changeOn 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).
Biggest changeIf at any time before July 14, 2025 the closing bid price of the Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, NASDAQ will provide written notification that the Company has achieved compliance with the minimum bid price requirement, and the matter will be resolved.
US GAAP provides the framework from which to make these estimates, assumption and disclosures. We choose accounting policies within US GAAP that management believes are appropriate to accurately and fairly report our operating results and financial position in a consistent manner. Management regularly assesses these policies in light of current and forecasted economic conditions.
US GAAP provides the framework from which to make these estimates, assumptions and disclosures. We choose accounting policies within US GAAP that management believes are appropriate to accurately and fairly report our operating results and financial position in a consistent manner. Management regularly assesses these policies in light of current and forecasted economic conditions.
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.
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 This evaluation is based on relevant conditions and events that are currently known or reasonably knowable.
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.
See the “ Note 2—Basis of Presentation and Summary of Significant Accounting Policies ” to the Consolidated Financial Statements for a summary of our accounting policies. 55 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.
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, 2023, we had a cash balance of $1.37 million.
Our principal use of cash is to fund our operations, which includes the commercialization of our products, the continuation of efforts to improve our products, administrative support of our operations and other working capital requirements. As of September 30, 2024, we had a cash balance of $0.46 million.
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.
The timing and amount of capital we need to raise will depend on a number of factors, including our ability to generate sufficient revenue from the sale of our products to fund our business operations, and the timing and amount of funds received by warrant holders when they exercise their outstanding warrant cash.
In 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.
During the year ending September 30, 2024, financing activities included private placement and convertible notes. 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.
We discuss such risks, uncertainties and other factors throughout this Report and specifically under Item 1A of Part I of this Report, Risk Factors. For additional discussion, see “CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS” above.
We discuss such risks, uncertainties and other factors throughout this Report and specifically under Item 1A of Part I of this Report, Risk Factors. For additional discussion, see “CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS” above. Corporate Overview CIMG Inc. is a company incorporated in Nevada and listed on Nasdaq since June 2020.
For additional information regarding the 2021 Warrants, see “Note 9—Stock Options and Warrants” to the Consolidated Financial Statements. We intend to seek to raise additional capital, including through public or private equity offerings, to support our operating activities for the next twelve months and beyond, and such funding may not be available to us on acceptable terms, or at all.
We intend to seek to raise additional capital, including through a public or private equity offering, to support our operating activities over the next 12 months and beyond, which may not be available to us on acceptable terms or may not be available at all.
To date, we have funded our operations primarily with proceeds from registered public offerings and private placements of shares of our common stock.
The main reason for the reduction in net loss is the decrease in packaging services for the coffee business and the main launch of a new maca series of products. Liquidity and Capital Resources To date, we have funded our operations primarily with proceeds from registered public offerings and private placements of shares of our Common Stock.
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.
Net Loss Year ended September 30, Change 2024 2023 Dollars % Net Loss $ 8,555,388 $ 8,749,467 $ (194,079 ) (2.22 )% For the fiscal year ended September 30, 2024, the Company reported a net loss of $8,555,388 compared to a net loss of $8,749,467 for the fiscal year ended September 30, 2023.
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.
Investing Activities We used $320,043 and $31,813 of cash in investing activities during the years ended September 30, 2024 and 2023, the cash outflow arising from the purchase of equipment. Financing Activities Historically, we have funded our operations through the issuance of our equity securities.
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.
This is mainly due to the reduction in material and labor costs related to sales. For the year ended September 30, 2024, our total gross profit was $32,169, while the gross profit for the year ended September 30, 2023 was $(210,817). This is also mainly due to the reduction in material and labor costs related to sales.
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.
Cost of sales and gross margin Year ended September 30, Change 2024 2023 Dollars % Cost of sales $ 1,898,122 $ 1,968,785 $ (70,663 ) (3.59 )% Gross profit (loss) $ 32,169 $ (210,817 ) $ 242,986 (115.26 )% Gross margin % 1.69 % (10.71 )% For the year ended September 30, 2024, our cost of sales totaled $1,898,122, as compared to cost of sales for the year ended September 30, 2023 of $1,968,785, representing a 3.59% 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%.
Operating Expenses Year ended September 30, Change 2024 2023 Dollars % Operating Expenses $ 5,9 80,521 $ 8,174,200 $ (2,193,679 ) (2 6.84 )% 54 For the fiscal year ended September 30, 2024, our operating expenses totaled $5,980,521 compared to $8,174,200 for the fiscal year ended September 30, 2023, a decrease of $(2,193,679), or (2 6.84 )%.This reduction is mainly due to the decrease in labor costs and travel expenses.
Until we can generate a sufficient amount of revenue, we may seek to raise additional funds through equity, equity-linked or debt financings. If we raise additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could contain covenants that restrict our operations.
Until we are able to generate sufficient revenue, we may seek to raise additional capital through equity, equity-linked or debt financing.
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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.
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We were formerly known as “Nuzee, Inc.” with a previous ticker symbol “NUZE”, and we changed our corporate name and ticker symbol to “CIMG Inc.” and “IMG” in October 2024.
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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.
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We previously focused on specialty coffee and related technologies but are now expanding our sales and distribution channels in Asia to encompass a broader range of consumer food and beverage products. This expansion is fueled by our online sales platform, which leverages a natural language search function.
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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.
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On June 7, 2024, we entered into a Share Purchase Agreement (“Share Purchase Agreement”) with Masateru Higashida, our former Chief Executive Officer and Director, under which we sold all issued and outstanding shares of our wholly-owned subsidiaries, NuZee KOREA Ltd. and NuZee Investment Co., Ltd., to Mr. Higashida, which sale was completed in June 2024.
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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.
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Since July 2024, CIMG has been undergoing a transformation in digital marketing, distribution, and sales.
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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.
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As part of this transformation, we have extended our sales and distribution network to include maca-infused food and beverages, reaffirming our commitment to reshaping the online marketing, sales, and distribution landscape for consumer products. 50 Maca, a plant of the Brassicaceae family that originated in South America, has oval leaves and a rootstock shaped like a small round radish.
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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.
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It is edible and renowned as a natural superfood. Maca is rich in nutrients, boasts high levels of essential nutrients, and is believed to nourish and strengthen the human body.
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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.
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It is often referred to as “South American ginseng.” The primary cultivation regions for maca include the Andes Mountains in South America and the Jade Dragon Snow Mountain in Lijiang, Yunnan, China. CIMG has successfully secured the exclusive distribution and sales rights for all maca products produced by Jiangsu Kangduoyuan Beverage Co., Ltd., a leading maca production base in Asia.
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With our bagged coffees and the Stone Brewing licensing relationship, we will manage the production and related inventory which will involve increased risk levels.
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These products include Maca Peptide Coffee, Maca-Noni, Maca Wine, Maca Purified Powder, and other full-range offerings. Through a comprehensive digital marketing strategy, CIMG is optimistic in its ability to achieve sales growth and enhance the Company’s enterprise value. CIMG aims to become a leading distributor of premium maca products, a natural superfood known for its numerous health benefits.
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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.
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Our business focuses on sourcing, marketing, and distributing a wide range of maca-based dietary supplements, functional foods, and beauty products. We operate with a commitment to providing high-quality, sustainably sourced products to consumers who seek to enhance their health and wellness.
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In addition, we are continually exploring potential strategic partnerships, co-ventures, and mergers, acquisitions, or other transactions with existing and future business partners to generate additional business, drive growth, reduce manufacturing costs, expand our product portfolio, enter into new markets, and further penetrate the markets in which we currently operate.
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Our products are sold through both online channels and a network of retail partners, including grocery stores, convenience stores, and vending machines.
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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.
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The diagram below is our corporate structure as of the date of this report. 51 Our sources of revenue Co-Packing and Product Innovation With years of experience as a third-party contract packer for leading companies in the coffee beverage industry, combined with our own coffee sales and market insights from the Asian region, we have expanded our business strategy to deepen our industry engagement.
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Under these arrangements, our co-packing customers typically supply us with roasted, whole bean coffee that we package into single serve pour over and coffee brew bag coffee products according to their formulations and specifications. In addition, under our private label coffee development program, our team works directly with our co-packing customers in developing private labels of signature coffees.
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This evolution includes a shift toward reshaping product value by integrating health-oriented concepts and applying advanced technologies such as artificial intelligence, neuroscience, and big data. These efforts have culminated in the establishment of a global digital health and sales development business group.
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Under this program, our team of coffee experts works extensively with our co-packing customers to develop a coffee taste profile to their unique needs and then we source, roast (utilizing our third-party roasting or manufacturing partners), blend, pack (in either our traditional single serve pour over, DRIPKIT pour over or coffee brew bag coffee products), and package single serve coffee products to their exact specifications.
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While we remain committed to delivering our high-quality Nuzee single-serving coffee and DRIPKIT products, our entry into the Asian market has prompted a broader commitment to health, sustainability, and nutrition. 52 The Maca Series In the fourth quarter of the year ended September 30, 2024, we introduced our first health-focused product line in Asia: the Maca Series.
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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.
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This product line includes Maca Peptide Coffee, Maca-Noni, Maca Purified Powder, and Maca Wine. Each product features green purification factors derived from the maca plant, ensuring a natural and clean composition. Maca, a plant native to South America and a member of the Brassicaceae family, is known for its nutritional value and adaptogenic properties.
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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.
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Often referred to as “South American ginseng,” maca is prized for its ability to support stamina, vitality, and overall wellness.
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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.
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It is primarily cultivated in the Andes Mountains in south America, and Jade Dragon Snow Mountain in Yunnan Province, China. ● Maca-Noni – a plant-based energy drink designed to support sexual vitality, with maca root as its key ingredient. ● Maca Peptide Coffee – a functional coffee beverage infused with maca peptides for enhanced wellness benefits. ● Maca Purified Powder – a concentrated, versatile maca powder ideal for daily nutritional use. ● Maca Wine – a unique beverage that combines traditional wine with the nourishing properties of maca.
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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.
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We currently distribute our products through wholesale channels, supplying grocery stores, convenience stores, and vending machine operators. Looking ahead, we plan to expand into retail services and leverage digital technologies to optimize marketing strategies and diversify our sales models. Our distribution network already spans both online platforms and offline points of sale.
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Revenues from this customer for the fiscal year 2023 totaled approximately $500,000.
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Our commitment extends beyond product quality and health benefits—we also focus on enhancing the packaging experience. Each design is crafted to resonate with professionals across various industries, making our products more personalized, youthful, and distinctive. For example, Maca-Noni represents a new entry into the functional beverage market, blending health-forward branding with innovative design.
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NuZee and DRIPKIT branded products Although our primary focus is on the manufacture of single serve coffee products pursuant to co-packing arrangements with our co-packing clients, we have also developed high-quality NuZee branded single serve coffee products that, in addition to our DRIPKIT branded products, are sold directly to consumers.
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Our customer base includes wholesale distributors such as grocery stores, convenience stores, and vending machine providers. Nasdaq Listing Deficiency The Company received a notification letter from NASDAQ on January 23, 2024 (the “NASDAQ Notification Letter”), indicating that the Company was not in compliance with NASDAQ Listing Rule 5550(b)(1) (the “Stockholders’ Equity Requirement”).
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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.
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The NASDAQ Notification Letter stated that the Company failed to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing, as required by the Stockholders’ Equity Requirement.
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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.
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Subsequently, the Company completed a convertible note financing of $320,000 on April 27, 2024, an equity financing of $1,500,000 on June 4, 2024, and an equity financing of $3,000,000 on July 11, 2024.
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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.
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On July 23, 2024, the Company received a letter from NASDAQ stating that based on the Company’s Form 8-K, filed with the Commission on July 19, 2024, NASDAQ has determined that the Company has complied with Listing Rule 5550(b)(1).
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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.
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On January 14, 2025, the Company received a notification letter (the “Minimum Bid Price Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that the Company is not in compliance with the minimum bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2).
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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”).
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Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.
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As disclosed, we had 180 days from the date of the applicable notice to cure the deficiency.
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The Minimum Bid Price Notice has no immediate effect on the listing of the Company’s Common Stock, which continues to trade on The Nasdaq Capital Market under the symbol “IMG.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 calendar days from the date of the Minimum Bid Price Notice, or until July 14, 2025, to regain compliance.
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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.
Added
If the Company does not regain compliance during the compliance period ending July 14, 2025, then NASDAQ may in its discretion determine to grant the Company an additional 180 calendar day period to regain compliance, provided that the Company on July 14, 2025 meets the continued listing requirement for market value of publicly held shares and all other applicable initial listing standards for The Nasdaq Capital Market, with the exception of the minimum bid price requirement, and will need to provide NASDAQ written notice of its intent to cure the deficiency during the second compliance period. 53 On January 17, 2025, the Company received another notice (the “Annual Report Notice”) from NASDAQ indicating that the Company is not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Annual Report on Form 10-K for the period ended September 30, 2024 with the SEC.
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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”).
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The Annual Report Notice has no immediate effect on the listing of the Company’s stock on Nasdaq, and it states that the Company is required to submit a plan to regain compliance with Nasdaq Listing Rule 5250(c)(1) within 60 calendar days from the date of the Annual Report Notice.
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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.
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If the plan is accepted by Nasdaq, then Nasdaq can grant the Company up to 180 calendar days from the due date of the Form 10-K for the fiscal year ended September 30, 2025 to regain compliance.
Removed
Goodwill and Intangible Assets Impairment As further described in “ Note 2—Basis of Presentation And Summary of Significant Accounting Policies—Goodwill and intangible assets ” to our Consolidated Financial Statements, we evaluate goodwill for impairment on an annual basis as of the last day of our fiscal fourth quarter, and whenever events or circumstances make it more likely than not that an impairment may have occurred.
Added
In determining whether to accept such plan, Nasdaq will consider such things as the likelihood that the remedial filing, along with any subsequent periodic filing that will be due, can be made within the 180 day period, the Company’s past compliance history, the reasons for the late filing, other corporate events that may occur within our review period, the Company’s overall financial condition and its public disclosures.
Removed
We test for goodwill impairment at the reporting unit level and consider the Company as a reporting unit for goodwill impairment testing. We determined the Company has one operating segment and two components, NuZee, Inc. and NuZee KR, which are combined into one reporting unit as they are considered to be economically similar.
Added
Any subsequent periodic filing that is due within the 180-day exception period must be filed no later than the end of the period.
Removed
The impairment test involves comparing the fair value of the reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the fair value exceeds the carrying value, we conclude that no goodwill impairment has occurred.
Added
On February 19, 2025, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that the Company is not in compliance with Listing Rule 5250(c)(1) because the Company did not timely file its quarterly report on Form 10-Q for the period ended December 31, 2024 with the SEC.
Removed
If the carrying value of the reporting unit exceeds its fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value of the goodwill.
Added
We have submitted a Nasdaq compliance plan to Nasdaq on March 18, 2025 and Nasdaq grant the Company extension to (i) file the Form 10-K for the period ended September 30, 2024 on or before June 13, 2025; and (ii) file the Form 10-Q for the period ended December 31, 2024 on or before July 14, 2025.
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