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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 WASHINGTON,
D.C. 20549

 FORM

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended September 30, 2023

 or

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 Commission
File No. 001-39338

 NUZEE,
INC.

 (exact
name of registrant as specified in its charter)

 Nevada

 38-3849791

 (State
or other jurisdiction of

 incorporation
 or organization)

 (I.R.S.
Employer

 Identification
 Number)

 2865
Scott St. Suite 107, Vista, California 92081

 (Address
of principal executive offices)

 Registrant's
telephone number, including area code — (760) 295-2408

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common
 Stock, $0.00001 par value

 NUZE

 The
 Nasdaq Stock Market LLC

 Securities
registered pursuant to Section 12(g) of the Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 Emerging
 growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of the registrant's Common Stock held by non-affiliates of the registrant (based on the price at which the
registrant's Common Stock was last sold as of March 31, 2023, the last business day of the most recently completed second fiscal
quarter), was approximately $ 7,263,908.

 As
of January 11, 2024, there were outstanding 1,281,736 shares of the registrant's Common Stock, $0.00001 par value.

 DOCUMENTS
INCORPORATED BY REFERENCE

 Specified
portions of the registrant's definitive Proxy Statement to be filed in connection with its 2024 Annual Meeting of Stockholders
are incorporated by reference into Part III of this Annual Report on Form 10-K. The information in Part III hereof for the fiscal year
ended September 30, 2023, will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year
to which this Report relates.

 TABLE
OF CONTENTS

 ITEM 1. BUSINESS.

 ITEM 1A. RISK FACTORS

 ITEM 1B. UNRESOLVED STAFF COMMENTS

 ITEM 2. PROPERTIES

 ITEM 3. LEGAL PROCEEDINGS

 ITEM 4. MINE SAFETY DISCLOSURES

 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 ITEM 6. [RESERVED]

 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 ITEM 9A. CONTROLS AND PROCEDURES

 ITEM 9B. OTHER INFORMATION

 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 ITEM 11. EXECUTIVE COMPENSATION.

 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

 ITEM 16. FORM 10-K SUMMARY

 SIGNATURES

 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. Any and all statements contained in this Report that are not statements of historical fact may be deemed forward-looking
statements. Terms such as "may," "might," "would," "should," "could," "project,"
"target," "seek," "estimate," "predict," "potential," "strategy,"
"anticipate," "attempt," "develop," "plan," "help," "believe,"
"continue," "intend," "expect," "future" and terms of similar import (including the negative
of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain
one or more of these identifying terms. Forward-looking statements in this Report may include, without limitation, statements regarding:

 our
 plans to obtain funding for our operations, including funding necessary to develop, manufacture and commercialize our products, provide
 our co-packing services, and to continue as a going concern;

 our
 expectation that our existing capital resources will be sufficient to fund our operations for at least the next three months and
 our expectation to need additional capital to fund our planned operations beyond that;

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

 our
 expectations regarding our ability to maintain compliance with the listing requirements of the Nasdaq Capital Market;

 the
 impact to our business, including any supply chain interruptions, resulting from changes in
 general economic, business and political conditions, including changes in the financial markets and macroeconomic conditions resulting
 from a pandemic;

 the
 evolving coffee preferences of coffee consumers in North America and East Asia;

 the
 size and growth of the markets for our products and co-packing services;

 our
 ability to compete with companies producing similar products or providing similar co-packing services;

 our
 ability to successfully achieve the anticipated results of strategic transactions;

 our
 expectation regarding our future co-packing revenues;

 our
 ability to develop or offer innovative new products and services, and expand our co-packing services to other products that are complementary
 to our current single serve coffee product offerings;

 our
 expectations regarding additional manufacturing, coffee roasting and co-packing capabilities to be provided through our manufacturing
 partners, as well as our manufacturing partners' ability to successfully facilitate distribution efforts;

 our
 reliance on third-party roasters or manufacturing partners to roast coffee beans necessary to manufacture our products and to fulfill
 every aspect of our co-packing services;

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

 our
 ability to retain key management, sales and marketing personnel;

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

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

 the
 outcome of pending, threatened or future litigation;

 our
 financial performance; and

 our
 use of the net proceeds from our recent offering.

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

 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. Factors that may influence
or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from current expectations
include, among other things, those listed under Item 1A below, titled "Risk Factors," and discussed elsewhere in this Report
and in our other reports filed with the SEC. 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: (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.

 PART
I

 ITEM
1. BUSINESS.

 Overview

 We
are a specialty coffee and technologies company and, we believe, a leading co-packer of single serve pour over coffee in the United States,
as well as a preeminent co-packer of coffee brew bags, which is also referred to as tea-bag style coffee. In addition to our single serve
pour over and coffee brew bag coffee products, we have 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").
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. 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. 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. 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. 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. 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. 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. With our bagged coffees and the Stone Brewing licensing relationship, we will manage the production and
related inventory which will involve increased risk levels.

 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. 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.

 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. 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. 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. 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.

 What
is coffee brew bag coffee?

 We
introduced our coffee brew bag, or tea-bag style coffee, in 2019. 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. 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. 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. 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.

 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. 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.

 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. 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. 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.

 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. 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). 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. 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.

 We
seek to establish ourselves as the premier manufacturer of single serve coffee products for the North American market and to produce
innovative coffee products that we believe will promote sustainability. We 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. 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. 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. 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. 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. We received SQF Certification from the Safe Quality Food Institute, which is
a customary requirement to produce for large multi-national and international companies.

 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. We also co-package other products, such as
bagged coffees, that are complementary to our current single serve coffee product offerings and provide us with a deeper access to our
customers.

 Since
2016, we have been primarily focused on single serve pour over coffee production. Over this time, we have developed expertise in the
operation of our sophisticated packing equipment and the related production of our single serve pour over coffee products at our manufacturing
facilities. We have also expanded our co-packing expertise and product offerings to coffee brew bag products, which we believe are gaining
traction in the United States, as well as our DRIPKIT pour over products. Our goal is to continue to expand our product portfolio to
raise our visibility, consumer awareness and brand profile.

 Capitalizing
on the existing bagged coffee market

 Recently,
we agreed to begin producing bagged coffee products in a 12 ounce format for one of our largest customers. The customer has a developed
market and distribution network for both bagged coffees and coffee brew bag products. Expanding our existing relationship with this customer
allows us to increase our manufacturing volume and efficiency by focusing on larger production runs. The customer has indicated to us
that it expects continued growth in the single serve products and the bagged coffee purchases from us. We are continuing to explore additional
product manufacturing opportunities with this customer as well as other customers.

 We
also entered into a five-year global licensing agreement with Stone Brewing to produce a full line of specialty products including DRIPKIT,
single-serve brew bags and 12 ounce bagged coffees. Entering the bagged coffee market allows us to leverage our marketing, production
and inventory investments across a wide product line while continuing to build our single serve market.

 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.
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.
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.

 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. 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. 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. For example, we started
packaging for a particular smaller company in 2017 and continue to do so today. This company started with smaller batch, single product
offerings but over the years has meaningfully increased order sizes as well as the number of product offerings. We are continually looking
for new and innovative companies with whom we may work and grow.

 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. In addition to being available for direct sale to consumers, our NuZee and DRIPKIT branded products serve
as samples that are provided to potential new co-packing customers to showcase our co-packing capabilities and production expertise.

 Our
NuZee branded products are from our perspective a 'stepping-stone' product for our co-packing customers that market high
quality packaging and coffee. 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.

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

 International
operations

 Korea

 We
established our Korean subsidiary in 2018. We are one of many producers of single serve pour over coffee products in Korea and do not
have any exclusive rights for this region. Our strategy is to leverage our local relationships to secure large co-packing agreements
for the markets in Korea, China and other Asian countries.

 Latin
America

 In
January 2020, we entered into a Joint Venture Agreement (the "JV Agreement") with Industrias Marino, S.A. de C.V., a company
incorporated under the laws of Mexico ("El Marino"), to form a joint venture in Mexico between us and El Marino in Mexico
("NuZee Latin America"). NuZee Latin America is organized under the laws of Mexico. To date, the primary activities in NuZee
Latin America were the contribution of two machines, and start up and initial marketing and sales activities. Its primary business operations
are intended to consist of the manufacture of single serve coffee products for sale in Mexico, Central and South America. The sales activities
generated thus far are minimal.

 Our
customers and products

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

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

 We
plan to sell Stone Brewing licensed products both direct-to-consumer through a variety of channels and through a wholesale network.

 Raw
Materials

 Under
our co-packing arrangements, our co-packing customers typically supply us with roasted, whole bean coffee that we then produce and package
into single serve pour over and coffee brew bag coffee products according to their formulations and specifications. In addition, in connection
with the production of our NuZee and DRIPKIT branded products and specialty coffees that we have developed for co-packing customers under
our private label coffee development program, we source and purchase green coffee from multiple green coffee suppliers, and from multiple
regions around the world. After being sourced by us, the green coffee is then shipped to our roasting or manufacturing partners where
the coffee is roasted and then shipped to us for grinding, blending, packing, and packaging. Maintaining a steady supply of roasted coffee
beans from our co-packing customers is essential to our co-packing arrangements, and securing an adequate supply of green coffee is essential
to our ability to manufacture NuZee and DRIPKIT branded products and to support the development of private labels for our co-packing
customers under our private label development program. We have arrangements based on purchase orders in place with suppliers and partners
for all components required to provide our co-packing services and deliver our NuZee and DRIPKIT branded products.

 Our
principal packaging materials include filters, foils, cartons, and craft master cases. We conduct business with multiple vendors of packaging
materials on a purchase order basis.

 Operational
capacity

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

 As
a result of our capital investments since 2015, including our acquisition of packing equipment from manufacturers whom we believe are
the global leaders for supplying such machines, 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. In addition, in May 2022, we announced a new partnership pursuant to which a manufacturing partner
in Knoxville, Tennessee has agreed to provide us with additional manufacturing, coffee roasting and co-packing capabilities, and facilitate
distribution efforts to the Eastern United States. Further, in March 2023, we entered into a manufacturing agreement with a California-based
coffee roaster to expand the Company's footprint on the West Coast.

 Our
executive office and administrative operations are now located in Vista and Carlsbad, California.

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

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

 Distribution

 For
distribution of our single serve coffee products to our co-packing customers, we typically rely on the distribution networks of our co-packing
customers, including freight companies and common carriers arranged by them. At the request of our co-packing customers, we may also
utilize a freight broker for the distribution and delivery of our products according to our co-packing customers' instructions.
Our NuZee and DRIPKIT branded products as well as bagged coffee products are typically delivered by common carriers directly to each
customer or by direct delivery in the case of our direct-to-consumer customers.

 Competition

 Prior
to the success of coffee pods within the last two decades, coffee was primarily consumed at home and via traditional pot-based drip brewers
and, to a lesser extent, instant coffee. Pot-based brewers are typically known for good quality coffee that produces multiple cups but
are not well-suited for single serve alternatives. In recent years with the advent of coffee pods and increased coffee consumption outside
the home, the North American market has been focused on speed and convenience. Coffee pods addressed the need for a single serve coffee
solution that was viewed as superior to instant coffee. As coffee consumption has also moved outside the home in recent years, consumer
preferences have also changed, leading to greater demand for higher quality coffee alternatives.

 The
beverage industry in general, and the coffee sector, is extremely competitive. The principal areas of competition include product, quality,
convenience, price, packaging, development of new products and flavors, and marketing campaigns. Our Coffee Blenders, DRIPKIT and other
NuZee branded products are competing directly with Green Mountain brands and other licensed brands, as well as third-parties in the single
serve coffee category who have similar formats to our products. Green Mountain brands have enjoyed broad, well-established national distribution
through well-funded advertising, and product awareness. Our Coffee Blenders, DRIPKIT and other NuZee branded products also compete generally
with all hot liquid refreshments, including specialty coffees and teas. Companies and brands manufacturing these products generally have
far greater financial, marketing, and distribution resources than we do.

 Important
factors that will affect our ability to compete successfully include functional delivery of our products and co-packing services, trade
and consumer promotions, the development of new, unique functions in new and various packaging formats, attractive and unique promotions,
branded product advertising, pricing, and the success of the distribution networks on which we rely.

 We
also compete to secure distributors who will agree to market our product over those of our competitors, provide stable and reliable distribution,
and secure adequate shelf space in retail outlets and search placement in online stores.

 Our
competitive strengths

 We
believe that the following strengths contribute to our success:

 Favorable
 industry trends benefit us. With changing consumer preferences over the last decade
 that include a greater demand for higher quality coffee alternatives as well as greater flexibility
 and convenience, we believe we provide a unique alternative to non-single serve drip products
 currently on the market. For example, we believe our single serve coffee products, including
 our traditional single serve pour over coffee products, DRIPKIT pour over products and coffee
 brew bag products, provide a premium alternative to other single serve coffee alternatives.
 Recent consumer trends are moving towards premium alternatives to existing mainstream products
 (i.e., gourmet burgers, craft beers, specialty sodas, organic supermarkets, etc.).

 Significant
 production and operational experience in single serve coffee products. We have been
 producing single serve coffee products for over five years in increasing scale and complexity.
 We believe the process and equipment for producing single serve coffee products is complex,
 and a potential new entrant into our market would encounter a significant learning curve
 to reach our level of operational experience and expertise.

 Co-packing
 agreements with large companies. We currently focus on fostering co-packing arrangements
 with larger companies developing single serve coffee products. 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. We also believe that as our co-packing customers' competitors
 realize they have single serve pour over and tea-bag style coffee solutions, they will be
 more motivated to develop their own such solutions and that will lead to increased co-packing
 opportunities for us.

 Private
 Label Coffee and Co-Packing Private Label Programs. Under our Private Label Coffee
 Program, we offer our services primarily to non-coffee roaster customers pursuant to which
 our team works directly with them in developing private labels of signature coffees. 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. Under our Co-Packing Private
 Label Program, coffee roasters that are incapable of packing single serve formats send us
 their coffee of choice, which we pack into our single serve formats on their behalf.

 SQF
 and other certifications. SQF Certification from the Safe Quality Food Institute
 can take up to a year and may require additional resources to obtain. Our existing SQF certification
 allows us to co-pack for large, diversified companies. These companies usually have very
 strict certification standards and will not outsource production to companies that do not
 meet the highest level of industry certifications. SQF certification requires us to meet
 very high quality and compliance standards for production and warehousing as well as chain
 of custody record keeping and supplier standards. We are also certified as organic and Kosher.
 In addition, we are committed to sustainability. Our single serve coffee products do not
 require a machine to prepare, and we use coffee brew bag filters intended to be industrially
 compostable, along with recyclable boxes.

 Our
 Korean subsidiary supports our U.S. operations. We have a manufacturing and sales
 office in Korea. Our strategy is to leverage our local relationships to secure large co-packing
 agreements for the markets in Korea, China and other Asian countries. We also source our
 manufacturing equipment and filters from East Asian companies. For example, our single serve
 coffee products are produced on packaging machines produced by leading manufacturers of packaging
 machines in Asia. We believe that having an office in Korea provides us with direct access
 to our key vendors that helps us to maintain such relationships as well as helps us operationally
 in our core U.S. market.

 Our
business strategy

 We
intend to achieve our mission and further grow our business by pursuing the following strategies:

 Continually grow our base of large national or international
co-packing customers. In furtherance of our goal to become the "go-to" commercial coffee producer and preeminent partner
for coffee companies seeking to enter into and grow within the single serve coffee market in North America, we focus on entering into
co-packing agreements with large international companies, including co-packing arrangements pursuant to our private label coffee development
program. We also intend to continue to educate and advocate for the development of pour over coffee products within the broader single
serve category. We believe that, as the U.S. market continues to gain awareness of our traditional single serve pour over, DRIPKIT pour
over and coffee brew bag coffee products, we will continue to grow our base of large domestic or international co-packing customers.

 Co-pack for smaller scale, innovative coffee customers that
we believe are rapidly growing and capture their growth over time. In addition to co-packing for large domestic or international
customers, we believe that select smaller scale, rapidly growing, innovative co-packing customers provide us with different opportunities
versus larger customers. Large national roasters often look to these smaller scale customers for inspiration. We believe capturing these
influential roasters would help us provide format visibility to the bigger roasters as well as influential consumers.

 Efficiently grow our manufacturing footprint and capacity,
including by leveraging partnerships, in response to anticipated demand for co-packing. We intend to leverage our previously announced
partnerships in Knoxville, Tennessee and California to provide us with additional manufacturing, coffee roasting and co-packing capabilities,
and facilitate distribution efforts. With these partnerships, we expect to offer a holistic coffee supply and manufacturing program to
our existing and new customers, including coffee roasting and non-single serve coffee product co-packing in addition to our other single
serve coffee formats.

 Strategically grow and expand our international operations
that align with our vision. We plan to strategically grow our current international operations as well as potentially expand internationally
if this growth or expansion is strategic to our vision. We believe the Korean market, albeit competitive, still has significant growth
potential as well as strong market acceptance for coffee and single serve pour overs. We have also formed a joint venture in Latin America.

 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. We expect to incur significant sales and marketing expenses prior to recording sufficient revenue from our operations to offset
existing expenses. In the United States, we expect to incur additional losses as a result of the costs associated with operating as an
exchange-listed public company.

 Recent
Developments

 Entry
into the existing bagged coffee market

 Recently,
we agreed to begin producing bagged coffee products in a 12 ounce format for one of our largest customers. The customer has a developed
market and distribution network for both products. Expanding our existing relationship with this customer allows us to increase our manufacturing
volume and efficiency by focusing on larger production runs. The customer has indicated to us that it expects continued growth in the
single serve products and the bagged coffee purchases from us to increase over single serve purchase amounts. We are continuing to explore
additional product manufacturing opportunities with this customer as well as other customers.

 We
also entered into a five-year global licensing agreement with Stone Brewing to produce a full line of specialty products including DRIPKIT,
single-serve brew bags and 12 ounce bagged coffees. Entering the bagged coffee market allows us to leverage our marketing, production
and inventory investments across a wide product line while continuing to build our single serve market.

 Intellectual
Property

 Trademarks

 We
currently own the following United States trademarks: "Coffee Blenders", "Twin Peaks", "Active Cup",
"Relax Cup", "Think Cup", "Nude Cup", "Pine Ranch Coffee", and "Dripkit".
We are also in the process of obtaining rights to the "Dripkit and Design," "NuZee", "NuZee Coffee (Stylized)",
"NuZee Coffee and Design", and "COLDPRESSO" trademarks. We intend to continue growing our trademark portfolio
in the United States with other related slogans and brands as new products are launched.

 We
further intend to expand our brand protections outside of the United States in line with our prospective international growth. As of
the date of this Report, we have the following registered trademarks:

 Japan
 - "Coffee Blenders"; "Twin Peaks"; "Nuzee Coffee and Design";
 "Active Cup"; "Nude Cup"; "Think Cup"; "Relax Cup";
 "Lean Cup"

 Korea
 - "Twin Peaks"; "It's Coffee Reimagined"; "Think
 Cup"; "Lean Cup"

 Canada
 – "NuZee Coffee and Design"; "NuZee"; "NuZee Coffee
 (Stylized)"

 Mexico
 - "NuZee", "NuZee Coffee (Stylized)", "NuZee Coffee and
 Design"; "It's Coffee Reimagined"

 We
also have pending applications for "Dripkit (Words only)" and Design in Japan, Mexico, and Korea; and "Dripkit and
Design" in Canada, Japan, and Korea.

 Patents

 We
currently own the following patents relating to our DRIPKIT pour over product: (1) a U.S. design patent that protects the visual ornamental
characteristics associated with the DRIPKIT pour over coffee apparatus design, which expires in November 2035; (2) a U.S. utility patent
that covers utility patent features of the DRIPKIT portable drip apparatus, which expires in July 2038; and (3) one pending utility patent
application that is a continuation patent application for pursuing broader/different utility patent features for the DRIPKIT portable
drip apparatus, which is currently pending and awaiting examination. Patent rights (1) and (2) stem from the Acquisition of Dripkit in
2022.

 We
intend to aggressively protect, police and assert our intellectual property rights, including product designs, proprietary product research
and concepts as well as our trademark portfolio. Although asserting our rights may result in a substantial cost to the Company, our management
strongly believes that the protection of our intellectual property rights is a key component of our operating strategy.

 Employees

 As
of September 30, 2023, we had a total of 18 employees in the United States and 15 employees in Korea, all of whom are full-time. In addition,
at September 30, we employed 5 temporary employees in the United States, all of whom are involved in the packaging and shipping of products.
None of our employees are represented by a labor organization or under any collective bargaining arrangements. We believe our relationships
with our employees are good.

 Our
operations are overseen directly by management that engages our employees to carry on our business. Our management oversees all responsibilities
in the areas of corporate administration, product development, marketing, and research. 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. We believe that the skill sets of our core management
team will be a primary asset in the development of our brands and trademarks.

 Governmental
Regulation

 Our
Coffee Blenders, DRIPKIT and other NuZee branded products are marketed and sold as conventional food or beverages for regulatory purposes.
Such products are regulated by the FDA. Ingredients in such products must be approved food additives or "Generally Regarded as
Safe". We intend to work with ingredient suppliers, manufacturers, and other trade partners that are compliant with the laws and
regulation enforced by the FDA. We have not received, nor are we aware of, any inquiries or other regulatory action from the FDA or any
other governmental agency regarding our products and we believe we are in full compliance with all FDA regulations.

 The
advertising, distribution, labeling, production, safety, sale, and transportation in the United States of our products are subject to
the Federal Food, Drug, and Cosmetic Act, the Federal Trade Commission Act, the Lanham Act, state consumer protection laws, competition
laws, federal, state and local workplace health and safety laws, various federal, state and local environmental protection laws, and
various other federal, state and local statutes and regulations. We believe we are compliant with all applicable laws and regulations.
We have not received and are not aware of any inquiries or other legal or regulatory actions from any entity.

 Corporate
Information

 We
were incorporated in 2011 in Nevada as Havana Furnishings, Inc. NuZee Co. Ltd. was incorporated in 2011. NuZee Co. Ltd. merged into Havana
Furnishings, Inc. in 2013, at which time we changed our name to NuZee, Inc. Our principal executive and administrative offices are located
at 2865 Scott St. Suite 107, Vista, California 92081, and our telephone number is (760) 295-2408.

 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. 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").

 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"). 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. In order to regain compliance, the bid price of our common
stock must close at a price of at least $1.00 per share for a minimum of 10 consecutive trading days. As of the date of this Report,
we regained compliance with the Bid Price Rule. The 2022 Reverse Stock Split decreased the total number of shares of our common stock
outstanding and proportionately increased the market price of our common stock above $1.00 per share. Therefore, the 2022 Reverse Stock
Split was an effective means for us to regain compliance with the Bid Price Rule.

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

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

 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. Our website and the information contained on, or that can be accessed through, the website will
not be deemed to be incorporated by reference in, and are not considered part of, this Report. Our corporate governance policies, ethics
code and board of directors' committee charters are posted under the Investor Relations section of the website. 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.

 ITEM
1A. RISK FACTORS

 Risk
Factor Summary

 The
risk factors summarized below could materially harm our business, operating results and/or financial condition, impair our future prospects
and/or cause the price of our common stock to decline. 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. We expect to continue to incur net losses in the future and we may never generate sufficient revenue
 to achieve or sustain profitability.

 2.

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

 3.

 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.

 4.

 We
 have limited operating history, which may make it difficult to evaluate our current business and to forecast our future performance.

 5.

 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. Customers may issue fewer or smaller purchase orders than
 we expect under our co-packing or retail fulfillment arrangements or decide to delay or cancel orders, which could negatively impact
 our revenues.

 7.

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

 8.

 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.

 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.

 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.

 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.

 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.

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

 16.

 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.

 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.

 19.

 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.

 Significant
 additional labeling or warning requirements or limitations on the availability of our products may inhibit sales of affected products.

 22.

 The
 market price of our stock may be volatile, and you could lose all or part of your investment.

 23.

 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.

 If
 we attempt to raise additional capital through an announced offering you may experience an immediate decline in the value of your
 investment. You will experience further dilution if we issue additional equity securities in future financing transactions.

 26.

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

 27.

 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.

 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.

 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. 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.

 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. 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.

 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.

 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.

 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. 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.

 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 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. 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.

 These
losses have had, and will continue to have, an adverse effect on our working capital, total assets and stockholders' equity. 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.

 Because
of the numerous risks and uncertainties associated with our commercialization efforts, we are unable to predict when we will become profitable,
and we may never become profitable. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a
quarterly or annual basis. Our inability to achieve and then sustain profitability would have a material adverse effect on our business
and financial condition.

 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.

 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. The Report of Independent Registered Public Accounting Firm at the beginning of the
Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Report
includes an explanatory paragraph about our ability to continue as a going concern.

 Our
Consolidated Financial Statements for the year ended September 30, 2023 were prepared on the basis of a going concern, which contemplates
that we will be able to realize our assets and discharge liabilities in the normal course of business. Our ability to meet our liabilities
and to continue as a going concern is dependent upon the availability of future funding. The financial statements do not include any
adjustments that might be necessary if we are unable to continue as a going concern. If we are
unable to continue as a going concern, we might have to liquidate our assets and the values we receive for our assets in liquidation
or dissolution could be significantly lower than the values reflected in our financial statements.

 In
addition, our current financial situation, and the presence of the explanatory paragraph about our ability to continue as a going concern,
could also make it more difficult to raise the capital necessary to address our current needs and may
materially adversely affect the price of our common stock.

 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.

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

 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.

 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 and co-packing services;

 effects
 of competing technological and market developments; and

 changes
 in regulatory oversight applicable to our products.

 The
various alternatives for raising additional capital include short-term or long-term debt financings, equity offerings, collaborations
or licensing arrangements and each one carries potential risks. If we raise funds by issuing equity securities, our stockholders will
be further diluted. If we raise funds by issuing debt securities, those debt securities would have rights, preferences and privileges
senior to those of holders of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could
impose significant restrictions on our operations or our ability to issue additional equity securities or issue additional indebtedness.
We may also be required under additional debt financing to grant security interests on our assets, including our intellectual property.
If we raise funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to our intellectual
property, or grant licenses on terms that are not favorable to us which could lower the economic value of those items to us.

 The
credit markets and the financial services industry have in the past experienced turmoil and upheaval characterized by the bankruptcy,
failure, collapse, or sale of various financial institutions and intervention from the U.S. federal government. Furthermore, the capital
markets and the financial services industry are currently and expected to continue to be unpredictable and volatile. These events typically
make equity and debt financing more difficult to obtain. Accordingly, additional equity or debt financing might not be available on reasonable
terms, if at all. 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.

 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. All potential investors must consider our business prospects in light of the risks and difficulties we have encountered
and will continue to encounter as a company operating in a rapidly evolving market. 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.

 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.

 The
Tax Cuts and Jobs Act (the "TCJA"), enacted in 2017, limited the use of net operating loss carryforwards arising in periods
beginning after 2017 to eighty-percent of taxable income in the period to which the losses are carried. The TCJA also extended the expiration
period for net operating losses arising in periods after 2017 from 20 years to an unlimited period.

 However,
the taxable income limitation on the use of net operating loss carryforwards was eliminated by the Coronavirus Aid, Relief and Economic
Security Act (the "CARES" Act) for tax years beginning before January 1, 2021. 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. In general, under Section 382 of the Internal Revenue
Code of 1986, as amended (the "Code"), a corporation that undergoes an "ownership change" is subject to annual
limitations on its ability to use its pre-change net operating loss carryforwards, or NOLs, and certain other tax attributes to offset
future taxable income or reduce taxes. 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. Furthermore, transactions in our stock that have occurred in the
past and could occur in the future may trigger another ownership change pursuant to Section 382. Because of the cost and complexity involved
in the analysis of a Section 382 ownership change and the fact that we do not have any taxable income to offset, we have not undertaken
a study to assess whether an "ownership change" has occurred or whether there have been multiple ownership changes since
we became a "loss corporation" as defined in Section 382. Future changes in our stock ownership could result in ownership
changes under Section 382 of the Code further limiting our ability to utilize our NOLs. Finally, our ability to use NOLs of companies
that we may acquire in the future may be subject to limitations. For these reasons, even if we attain profitability, we may not be able
to use a material portion of our NOLs, and this could reduce our earnings and potentially affect the valuation of our stock.

 Risks
Related to Our Business

 A
substantial portion of our sales are completed on a purchase order basis without any written agreements, including sales under our co-packing
arrangements as well as purchase orders for NuZee branded products from nationally recognized retailers. Such co-packing customers or
retailers may issue fewer or smaller purchase orders than we expect under our co-packing arrangements, which could negatively impact
our revenues. In addition, although these purchase orders are generally not cancelable, such customers may decide to delay or cancel
orders, which could also negatively impact our revenues.

 Generally,
under our co-packing arrangements as well as our fulfillment of purchase orders for the distribution of NuZee branded products through
nationally recognized retailers, customers must issue purchase orders for our products and co-packing services. Although these purchase
orders stipulate key terms including order quantity, product specifications, price, payment terms, packaging method and delivery instructions,
our co-packing arrangements and our arrangements with nationally recognized retailers are typically not governed by any written agreement
and have no ongoing minimum purchase requirements. Accordingly, we cannot predict or make any guarantee of the amount of any future orders
from co-packing customers or national retailers. In addition, although orders covered by firm purchase orders are generally not cancelable,
customers may decide to delay or cancel orders, and we may have difficulty enforcing the provisions of the purchase order. In the event
that customers with whom we have co-packing or retail fulfillment arrangements issue fewer or smaller purchase orders than we expect,
or we experience any delays or cancellations in orders (due to continued distress in the global economy for any reason, including supply
chain disruptions, inflation, commodity price fluctuations, etc.), our revenues could decline substantially. Any such decline could result
in us incurring additional net losses, increasing our accumulated deficit and needing to raise additional capital to fund our operations.

 Sales
to a limited number of customers represent a significant portion of our net sales. The loss of a key customer, including by consolidation
in the retail channel, and efforts by our customers to improve their profitability could reduce sales of NuZee branded products and sales
from our co-packing services which would adversely affect our financial performance.

 Sales
to relatively few co-packing customers account for a significant percentage of our net sales, and our success depends in part on our
ability to maintain good relationships with these and other key retail and grocery customers. Currently, Amazon and our Coffee Blenders
website are our only established domestic retail channels for direct sales to consumers of NuZee branded products. However, we can provide
no assurance that any of these customers or any of our other customers will continue to utilize our products or our co-packing services
at current levels, or at all. We have arrangements with our co-packing customers primarily based on purchase orders which stipulate key
terms including order quantity, product specifications, price, payment terms, packaging method and delivery instructions.

 As
a result, many of our key customers may cease purchasing our products or utilizing our co-packing services at any time without penalty
and are free to purchase products from our competitors. There can be no assurance that our customers will continue to purchase our products
or utilize our co-packing services in the same mix or quantities or on the same terms as they have in the past. The loss of one or more
of our key customers, or cancellation of or reduction in the amount of purchases by our key customers, could have an adverse effect on
our results of operations and financial condition.

 In
addition, because of the competitive environment facing retailers, many of our customers have increasingly sought to improve their profitability
through increased promotional programs, pricing concessions, more favorable trade terms and increased emphasis on private label products.
To the extent we provide concessions or trade terms that are favorable to customers, our margins would be reduced. Further, if we are
unable to continue to offer terms that are acceptable to our significant customers or our customers determine that they need fewer inventories
to service consumers, these customers could reduce purchases of our products or may increase purchases of products from our competitors,
which would harm our sales and profitability.

 Our
industry is also being affected by the trend toward consolidation in the retail channel. Retailers have and will likely continue to seek
lower prices from us and demand increased marketing or promotional expenditures. Large retailers also may be more likely to use their
distribution networks to introduce and develop private label brands. Strategic partners may also choose to vertically integrate their
brands' manufacturing and distribution. Any of the foregoing could negatively affect sales of our products and co-packing services
and our profitability.

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

 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. Under our private label coffee development program, we intend to continue working with current
and new customers in developing private labels of signature coffees and, in this regard, use our expertise to source, roast (utilizing
our third-party roasting or manufacturing partners), blend, and package coffee to their exact specifications. We have also developed
and sell NuZee and DRIPKIT branded products. Our growth strategy includes, among other things, further developing our NuZee and DRIPKIT
branded product lines and growing our private label coffee development program to reach new co-packing customers, as well as increasing
sales of our coffee brew bag and bagged coffee products. In the future, as part of our growth strategy, we may also consider co-packaging
other products that are complementary to our current single serve coffee product offerings and provide us with a deeper access to our
customers.

 Our
future success depends, largely, on our ability to implement these and our other growth strategies effectively. 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. 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. Additionally, our new product introductions are often time sensitive, and thus failure to deliver
innovations on schedule could be detrimental to our ability to successfully launch such new products and retain partners, in addition
to potentially harming our reputation and customer loyalty. If we fail to implement our growth strategies or if we invest resources in
growth strategies that ultimately prove unsuccessful, our sales and profitability may be negatively affected, which would materially
and adversely affect our business, financial condition and results of operations. 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.

 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.

 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. Any public forecasts regarding the expected performance of our business and future operating results
are forward-looking statements subject to risks and uncertainties, including the risks and uncertainties described in our filings with
the SEC and in our other public statements, and necessarily reflect current assumptions and judgments that may prove incorrect. As a
result, there can be no assurance that our performance will be consistent with any public forecasts or that any variation from such forecasts
will not be material and adverse. Failure to meet expectations, particularly with respect to operating margins, earnings per share, operating
cash flows and net revenues may result in a decline and/or increased volatility in the price of our stock. 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.

 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. International operations are subject to a variety of risks, including:

 foreign
 currency exchange rate fluctuations;

 greater
 difficulty in overseeing foreign operations;

 logistical
 and communications challenges;

 potential
 adverse changes in laws and regulatory practices, including export license requirements, trade barriers, tariffs and tax laws;

 burdens
 and costs of compliance with a variety of foreign laws;

 political
 and economic instability;

 foreign
 tax laws and potential increased costs associated with overlapping tax structures;

 greater
 difficulty in protecting intellectual property;

 the
 risk of third-party disputes over ownership of intellectual property and infringement of third-party intellectual property by our
 products; and

 general
 social, economic and political conditions in these foreign markets.

 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. 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. 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.

 Changes
in the coffee, tea and beverage environment and retail landscape could impact our financial results.

 The
coffee, tea and beverage environment is rapidly evolving as a result of, among other things, changes in consumer preferences; shifting
consumer tastes and needs; changes in consumer lifestyles; and competitive product and pricing pressures. 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. If we are unable to successfully adapt to the rapidly changing environment
and retail landscape, our share of sales, volume growth and overall financial results could be negatively affected.

 Our
business, growth and profitability depend on the performance of third-parties and our relationship with them.

 In
connection with the manufacture of NuZee and DRIPKIT branded products and private labels for our co-packing customers under our private
label development program, we rely on third-party roasters and manufacturing partners to roast green whole bean coffee according to our
specifications before shipping to us for grinding, blending, packing and packaging. 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. 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 third-party
roasters 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 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.

 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. For distribution of our single serve coffee products as well as our bagged coffee products to our co-packing
customers, we typically rely on third party distribution networks, including freight companies and common carriers. At the request of
our co-packing customers, we may also utilize a freight broker for the distribution and delivery of our products according to our co-packing
customers' instructions. The success of these distribution networks depends on the performance of brokers, distributors, common
carriers and retailers, as well as our third-party manufacturing partners as it relates to distribution of certain of our products. There
is a risk that a broker, distributor, common carrier or retailer may refuse to or cease to market or carry our product, or that any such
entity or our third-party manufacturing partner may not adequately perform its functions within the network by, without limitation, failing
to distribute our products.

 Furthermore,
such third-parties' financial position or market share may deteriorate, which could adversely affect our distribution, marketing
and sale activities. We must also maintain good commercial relationships with third-party brokers, distributors and retailers so that
they will promote and carry our product. Any adverse consequences resulting from the performance of third-parties or our relationship
with them could undermine our operations and profitability.

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

 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. In the fiscal years ended September 30, 2023 and September 30, 2022, we have experienced delays in the shipment to us
of coffee and packaging materials for co-packing for a variety of reasons including seasonal availability, supply chain delays and supplier
interruptions. To date, in some cases we have been able to mitigate these adverse effects in part by sourcing coffee and other supplies
from alternative suppliers in the United States, but any such mitigation efforts may not be successful in the future.

 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.

 Our
success depends on the skills, experience and performance of key members of our senior management team. The individual and collective
efforts of our senior management team will be important as we continue to expand our commercial activities and develop additional products.
The loss or incapacity of existing members of our senior management team could have a material adverse effect on our business and financial
condition if we experience difficulties in hiring qualified successors. Our employment agreements with our executive officers are "at
will", and the retention of our executive officers for any period of time cannot be guaranteed. We do not maintain "key person"
insurance on any of our employees.

 Due
to the specialized nature of the business and our small size, we are highly dependent upon our ability to attract and retain qualified
sales and marketing, technical and managerial personnel. The loss of the services of existing personnel, as well as the failure to recruit
key sales, marketing, technical and managerial personnel in a timely manner would be detrimental to our development and could have a
material adverse effect on our business and financial condition. Our anticipated growth and expansion into areas and activities requiring
additional expertise, such as sales and marketing, may require the addition of new management personnel, both domestic and international.
All of our employees may terminate their employment at any time with short or no advance notice. We may have difficulties locating, recruiting
or retaining qualified sales people. Recruiting and retention difficulties will limit our ability to support our development and sales
programs and to build a commercially viable business.

 The
competition for talent is currently extremely high. In this competitive environment, our business could be adversely impacted by increases
in labor costs, including wages and benefits, including those increases triggered by regulatory actions regarding wages, scheduling and
benefits; increased health care and workers' compensation insurance costs; increased wages and costs of other benefits necessary
to attract and retain high quality employees with the right skill sets, and increased wages, and benefits and other costs. In addition,
our wages and benefits programs, combined with the periodic challenges in the labor market, may be insufficient to attract and retain
talent.

 Because
our management structure is not centralized, the management of our business operations may be more expensive and more difficult.

 As
part of our strategy to attract the most qualified individuals, we do not require the members of our management team to relocate to a
particular geographic area. Accordingly, the members of our management team are geographically dispersed. This decentralized structure
might cause additional expenses in the conduct of our business, and may also delay communication between members of our management team,
lower the quality of our management decisions or decrease our ability to take action quickly.

 Increases
in the cost of high-quality coffee beans or other commodities or decreases in the availability of high quality coffee beans or other
commodities could have an adverse impact on our business and financial results.

 Under
our co-packing arrangements, our co-packing customers typically supply us with roasted, whole bean coffee that we then produce and package
into single serve pour over, DRIPKIT pour over and coffee brew bag coffee products according to their formulations and specifications.
We also purchase green whole bean coffee from multiple green coffee suppliers to support the manufacture of our NuZee and DRIPKIT branded
coffee products and the development of private labels under our private label development program, in which we work with co-packing customers
in developing private labels of signature coffees by sourcing, blending, and packaging coffee to their exact specifications. After being
sourced by us, the green whole bean coffee is then shipped to our roasting partners where the coffee is roasted and then shipped to us
for grinding, blending and packaging.

 The
price of coffee is subject to significant volatility, and may increase due to the factors described below. The high-quality coffee beans
we and our co-packing customers seek tend to trade on a negotiated basis at a premium above the commodity trading price of coffee as
quoted on the Intercontinental Exchange, also known as the "C" price of coffee. This premium depends upon the supply and
demand at the time of purchase and the amount of the premium can vary significantly. Increases in the "C" coffee commodity
price do increase the price of high-quality coffee and also impact our ability to enter into fixed-price purchase commitments. The supply
and price of coffee we and our co-packing customers purchase can also be affected by multiple factors in the producing countries, including
weather, natural disasters, crop disease (such as coffee rust) and pests, general increase in farm inputs and costs of production, armed
conflict, labor actions, government actions and trade barriers or tariffs, inventory levels and political and economic conditions, as
well as real or perceived supply shortages, an increase in green coffee purchased and sold on a negotiated basis rather than directly
on commodity markets in response to higher production costs relative to "C" market prices, pandemics or other disease outbreaks,
and the actions of certain organizations and associations that have historically attempted to influence prices of coffee through agreements
establishing export quotas or by restricting coffee supplies. Recently, there has been increased volatility in the "C" market
price, with prices at times increasing to five-year highs. The uncertainty over several factors, including the impact of weather patterns
in coffee producing regions, and global supply chain constraints and shipping shortages, caused greater uncertainty in the markets. In
addition, the political situation in many of the coffee growing regions, including Africa, Indonesia, and Central and South America,
can be unstable, and such instability could also reduce supply and increase cost. Speculative trading in coffee commodities can also
influence coffee prices. Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate
future price risk through purchasing practices and hedging activities, increases in the cost of high-quality coffee beans could have
an adverse impact on our profitability, financial condition or results of operations.

 Maintaining
a steady supply of roasted coffee beans from our co-packing customers is essential to our co-packing arrangements, and securing an adequate
supply of green whole bean coffee is essential to our ability to manufacture NuZee and DRIPKIT branded products and to support the development
of private labels for our co-packing customers. We and certain of our co-packing customers rely upon relationships with key suppliers
to source coffee. If any of these supply relationships deteriorate or we or our co-packing customers are unable to renegotiate contracts
with suppliers (with similar or more favorable terms) or find alternative sources for supply, we or our co-packing customers may be unable
to procure a sufficient quantity of high-quality coffee beans at acceptable prices or at all. If we or our co-packing customers are not
able to purchase sufficient quantities of coffee due to any of the above factors or a worldwide or regional shortage, we may not be able
to fulfill the demand for our products or may suffer reduced demand for our co-packing services, which could have an adverse impact on
our business and financial results.

 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.

 Although
inflation in the United States had been relatively low for many years, there was a significant increase in inflation beginning in the
second half of 2021, which has continued into 2023. We expect for the foreseeable future to experience inflationary pressure on our cost
structure. We may be able to pass some or all raw materials, energy and other input cost increases to customers by increasing the selling
prices of our products or decreasing the size of our products; however, higher product prices or decreased product sizes may also result
in a reduction in sales volume and/or consumption. If we are not able to mitigate these inflationary pressures, such as by increasing
our selling prices or reducing product sizes sufficiently to offset increased raw material, energy or other input costs, including but
not limited to packaging, direct labor, overhead and employee benefits, or if our sales volume decreases significantly, there could be
a negative impact on our results of operations and financial condition.

 We
may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy.

 While
we are currently a small company and, therefore, limited in our product development, marketing and sales activities, we anticipate continued
growth in our business operations commensurate with the expansion of our sales and support operations and distribution network and the
commercialization of our coffee products. Any future growth could impose significant added responsibilities on members of our existing
management and create strain on our organizational, administrative, and operational infrastructure, including sales and marketing, quality
control, and customer service. Our ability to manage our growth properly will require us to continue to improve our operational, financial
and management controls, as well as our reporting systems and procedures, which in the past have been determined to be inadequate. Our
status as an exchange-listed public company will require us to increase our investment in financial accounting and reporting. If our
current infrastructure is unable to handle our growth, we may need to expand our infrastructure, to identify and recruit new staff and
to implement new reporting systems. The time and resources required to implement such expansion and systems could adversely affect our
operations. 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.

 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.

 There
is inherent risk in forecasting demand due to the uncertainties involved in assessing the current level of maturity of the single serve
component of our business as well as the current and future needs of our customers. We set target levels for the manufacture of our coffee
products and for the purchase of coffee in advance of customer orders based upon our forecasts of customer demand and those of our business
partners. If our forecasts exceed demand, we could experience excess inventory in the short-term, excess manufacturing capacity in the
short and long-term, and/or price decreases, all of which could impact our financial performance. Alternatively, if demand exceeds our
forecasts significantly beyond our current manufacturing capacity, we may not be able to satisfy customer demand, which could result
in a loss of share if our competitors are able to meet customer demands. A failure to accurately predict the level of demand for our
products could adversely affect our net revenues and net income.

 We
may not be able to adequately protect our intellectual property rights, and our competitors may be able to offer similar products and
services, which would harm our competitive position.

 Our
success depends in part upon our intellectual property rights. We rely primarily on trademark, trade secret laws, confidentiality procedures,
license agreements and contractual provisions to establish and protect our proprietary rights over our products, procedures and services.
Other persons could copy or otherwise obtain and use our intellectual properties without authorization or create intellectual properties
similar to ours independently. We may also pursue the registration of our domain names, trademarks and service marks in other jurisdictions,
including the United States. However, we cannot assure you that we will be able to protect our proprietary rights. Further, our competitors
may be able to independently develop similar intellectual property, duplicate our products and services or design around any intellectual
property rights we hold. Further, our intellectual property rights may be subject to termination or expirations. The loss of intellectual
property protections or the inability to timely regain intellectual property protections could harm our business and ability to compete.

 We
may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.

 We
cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks,
patents, copyrights, know-how or other intellectual property rights held by third parties. We may be from time to time subject to legal
proceedings and claims relating to the intellectual property rights of others.

 There
may be third-party intellectual property that is infringed by our products, services or other aspects of our business. There could also
be existing patents or other intellectual property rights of which we are not aware that our products may inadvertently infringe. We
cannot assure you that holders of the relevant intellectual property rights purportedly relating to some aspect of our technology platform
or business, if any such holders exist, would not seek to enforce such intellectual property rights against us in the United States or
any other jurisdiction. We also cannot be certain that our efforts will be effective in completely preventing the infringement of trademarks,
patents, copyrights, know-how or other intellectual property rights held by third parties. If we are found to have violated the intellectual
property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual
property, and we may incur licensing fees or be forced to develop alternatives of our own. In addition, we may incur significant expenses,
and may be forced to divert management's time and other resources from our business and operations to defend against these third-party
infringement claims, regardless of their merits. 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.

 In
many countries, including the United States, we are subject to transfer pricing and other tax regulations designed to ensure that appropriate
levels of income are reported as earned and are taxed accordingly. Although we believe that we are in substantial compliance with all
applicable regulations and restrictions, we are subject to the risk that governmental authorities could audit our transfer pricing and
related practices and assert that additional taxes are owed. In the event that the audits or assessments are concluded adversely to us,
we may or may not be able to offset or mitigate the consolidated effect of foreign income tax assessments through the use of U.S. foreign
tax credits. Because the laws and regulations governing U.S. foreign tax credits are complex and subject to periodic legislative amendment,
we cannot be sure that we would in fact be able to take advantage of any foreign tax credits in the future.

 Our
business operations are conducted in multiple languages and could be disrupted due to miscommunications or translation errors.

 The
success of our business depends in part on our marketing efforts in the United States and various countries in East Asia and Latin America,
each of which is conducted in the local language. Additionally, our operations often require that complex contracts, communications and
technical information be accurately translated into foreign languages. 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.

 Various
jurisdictions may seek to adopt significant additional product labeling (such as requiring labeling of products that contain genetically
modified organisms) or warning requirements or limitations on the availability of our products relating to the content or perceived adverse
health consequences of certain of our products. If these types of requirements become applicable to one or more of our major products
under current or future environmental or health laws or regulations, they may inhibit sales of such products. One such law, which is
in effect in California and is known as Proposition 65, requires that a warning appear on any product sold in California that contains
a substance that, in the view of the state, causes cancer or birth defects. The state maintains lists of these substances and periodically
adds other substances to these lists. Proposition 65 exposes all food and beverage producers to the possibility of having to provide
warnings on their products in California because it does not provide for any generally applicable quantitative threshold below which
the presence of a listed substance is exempt from the warning requirement. Consequently, the detection of even a trace amount of a listed
substance can subject an affected product to the requirement of a warning label. However, Proposition 65 does not require a warning if
the manufacturer of a product can demonstrate that the use of the product in question exposes consumers to a daily quantity of a listed
substance that is below a "safe harbor" threshold that may be established, is naturally occurring, is the result of necessary
cooking, or is subject to another applicable exception. While currently substances created by and inherent in the processes of roasting
coffee beans or brewing coffee have been determined by the State of California not to pose a significant risk, such chemicals could be
added to the Proposition 65 lists in the future. With respect to substances that have not yet been listed under Proposition 65, the Company
takes the position that listing is not scientifically justified. The State of California or other parties, however, may take a contrary
position. If we were required to add Proposition 65 warnings on the labels of one or more of our beverage products produced for sale
in California, the resulting consumer reaction to the warnings and possible adverse publicity could negatively affect our sales both
in California and in other marketplaces.

 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. 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;

 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, the stock market in general has in the past experienced extreme price and volume fluctuations that have often been unrelated
or disproportionate to the operating performance of the relevant companies. Broad market and industry factors may negatively affect the
market price of our common stock, regardless of our actual operating performance. The realization of any of the above risks or any of
a broad range of other risks, including those described in this "Risk Factors" section, could have a dramatic and material
adverse impact on the market price of our common stock.

 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.

 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. You may not be able to sell your
shares quickly or at the market price if trading in shares of our securities is not active. Further, an inactive market may also impair
our ability to raise capital by selling shares of our securities and may impair our ability to enter into strategic partnerships or acquire
companies or products by using shares of our securities as consideration, which could have a material adverse effect on our business,
financial condition, and results of operations.

 The
Nasdaq Capital Market may subsequently delist our securities if we fail to comply with ongoing listing standards.

 The
Nasdaq Capital Market's rules for listed companies requires us to meet certain financial, public float, bid price and liquidity
standards on an ongoing basis in order to continue the listing of our common stock. 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. 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 December 28, 2022, the Company completed a 1-for-35 reverse stock split, which became
effective on December 28, 2022. On January 17, 2023, the Company received notice that the Company had regained compliance with the Bid
Price Rule. In addition to the Bid Price Rule previously described, Nasdaq Capital Market listing rules require us to maintain a minimum
stockholders' equity of $2.5 million under Nasdaq Listing Rule 5550(b)(1), a minimum market value of listed securities of $35 million
under Nasdaq Listing Rule 5550(b)(2), or a minimum net income of $500,000 under Nasdaq Listing Rule 5550(b)(3). If we fail to meet one
of those standards or any other Nasdaq Capital Market continued listing requirement, our common stock may be subject to delisting, as
applied by Nasdaq in its discretion. We intend to take all commercially reasonable actions to maintain our Nasdaq Capital Market listing.
If our common stock is delisted in the future, it is not likely that we will be able to list our common stock on another national securities
exchange on a timely basis or at all and, as a result, we expect our securities would be quoted on an over-the-counter market; however,
if this were to occur, our stockholders could face significant material adverse consequences, including limited availability of market
quotations for our common stock and reduced liquidity for the trading of our securities. 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.

 If
you purchase shares of common stock in our recent offering, you will experience immediate dilution in your investment. You will experience
further dilution if we issue additional equity securities in future financing transactions.

 Purchasers
of shares of common stock in our recent offering paid a price per share that was less than the net tangible book value per share of our
common stock. After giving effect to our receipt of approximately $1.011 million of estimated net proceeds, after deducting underwriting
discounts and commissions and estimated offering expenses payable by us, from our sale of common stock in this offering at the public
offering price of $3.00 per share, our pro forma net tangible book value as of June 30, 2023, as adjusted, would have been $5,055,945
or $4.19 per share. This amount represents an immediate decrease in net tangible book value of $0.98 per share of our common stock to
existing stockholders and an immediate increase in net tangible book value of $1.19 per share of our common stock to new investors purchasing
shares of common stock in the offering.

 If
we issue additional common stock, or securities convertible into or exchangeable or exercisable for common stock, our stockholders, including
investors who purchased shares of common stock in the recent offering, may experience additional dilution, and any such issuances may
result in downward pressure on the price of our common stock. We also cannot assure you that we will be able to sell shares or other
securities in any future offering at a price per share that is equal to or greater than the price per share paid by investors in this
offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders.

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

 Sales
of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in
the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. We
have also registered all shares of common stock that are reserved for issuance under the NuZee, Inc. 2023, 2019, and 2013 Stock Incentive
Plans. As a result, these shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates
and the lock-up agreements described in our filings with the SEC. A sale under Rule 144 or under any other exemption from the Securities
Act, if available, or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price
of our shares of common stock in any active market that may develop. We believe that a significant portion of our total outstanding shares
of common stock may be sold in the public market without restriction by non-affiliates pursuant to Rule 144.

 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. 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. As a result, you will be relying upon
management's judgment with only limited information about our specific intentions for the use of the balance of the net proceeds
of the offering. You will not have the opportunity, as part of your investment decision, to assess whether we are using the proceeds
appropriately. 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.

 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.

 As
of December 31, 2023, our executive officers and directors beneficially owned approximately 12.1% of our voting stock. Our Chief Executive
Officer, President and Chairman of the Board individually beneficially owns approximately 10.1% of our voting stock. This concentration
of control creates a number of risks. Our executive officers and directors, along with other holders of 5% or more of our capital stock
and their respective affiliates, have the ability to exert significant influence over us through this ownership position. These stockholders
may be able to exert significant influence over all matters requiring stockholder approval, including with respect to elections of directors,
amendments of our organizational documents, or approval of any merger, sale of assets or other major corporate transaction, and our stockholders
may find it difficult to replace members of management should our stockholders disagree with the manner in which the Company is operated.
Furthermore, this concentration of ownership may prevent or discourage unsolicited acquisition proposals or offers for our common stock
that you may feel are in your best interest as one of our stockholders. The interests of this group of stockholders may not always coincide
with your interests or the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily
those of other stockholders.

 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.

 As
a listed company, we are required to meet the continued listing requirements applicable to all NASDAQ Capital Market companies. We expect
our ongoing compliance with such rules and regulations to substantially increase our legal and financial compliance costs and to make
some activities more time-consuming and costly. These requirements may divert the attention of our management and personnel from other
business concerns, and they could have a material adverse effect on our business, financial condition, and results of operations. The
increased costs will decrease our net income or increase our net loss, and may require us to reduce costs in other areas of our business
or increase the prices of our products or services. For example, these rules and regulations may make it more difficult and more expensive
for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar
coverage. We cannot accurately predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.
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.

 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.

 As
a publicly traded company, our management is required to report annually on the effectiveness of our internal control over financial
reporting pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404. The rules governing the standards that must be met for our
management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible
remediation.

 We
designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under
the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures,
no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system
are met.

 These
inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of
simple error or mistake. 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. We cannot assure
you that the measures we have taken will be effective in mitigating or preventing significant deficiencies or material weaknesses in
our internal control over financial reporting in the future.

 If
we fail to maintain effective internal control over financial reporting to meet the demands that are placed upon us as a public company,
including the requirements of the Sarbanes-Oxley Act, we may be unable to accurately report our financial results, or to report them
within the timeframes required by law or exchange regulations.

 Additionally,
we have engaged only a very limited number of accounting and finance personnel and we rely in part on outside consultants. We may need
to incur additional expenses to hire additional personnel with public company financial reporting expertise to build our financial management
and reporting infrastructure, and further develop and document our accounting policies and financial reporting procedures. In the event
we need to hire additional personnel with public company financial reporting expertise but we are unable to do so, we may not be able
to accurately report our financial results or file our periodic reports in a timely manner, which may cause investors to lose confidence
in our reported financial information and may lead to a decline in our stock price.

 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.

 Under
standards established by the Public Company Accounting Oversight Board, a material weakness is a deficiency, or combination of deficiencies,
in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or
interim financial statements will not be prevented, detected or corrected on a timely basis.

 If
material weaknesses or significant deficiencies in our internal control over financial reporting are discovered or occur in the future,
then there exists a risk that our consolidated financial statements may contain material misstatements that are unknown to us at that
time, and such misstatements could require us to restate our financial results. 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.

 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. Any of these events, if they were to occur, could have a material adverse effect on the market price
of our common stock or on our business, financial condition and results of operations.

 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.

 Our
third amended and restated bylaws contain provisions that could have the effect of rendering more difficult or discouraging an acquisition
deemed undesirable by our Board. Our third amended and restated bylaws include provisions:

 limiting
 the liability of, and providing indemnification to, our directors, including provisions that require the Company to advance payment
 for defending pending or threatened claims;

 controlling
 the procedures for the conduct and scheduling of board and stockholder meetings; and

 limiting
 the number of directors on our board and the filling of vacancies or newly created seats on the board to our Board then in office.

 In
addition, we are subject to anti-takeover laws for Nevada corporations. These anti-takeover laws prevent Nevada corporations from engaging
in a business combination with any shareholder, including all affiliates and associates of the shareholder, who is the beneficial owner
of 10% or more of the corporation's outstanding voting stock, for two years following the date that the shareholder first became
the beneficial owner of 10% or more of the corporation's voting stock, unless specified conditions are met. 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. The existence of the
foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. They
could also deter potential acquirers of our company, thereby reducing the likelihood that our stockholders could receive a premium for
their common stock in an acquisition.

 We
have never paid dividends on our capital stock and we do not anticipate paying any dividends in the foreseeable future. Consequently,
any profits from an investment in our common stock will depend on whether the price of our common stock increases.

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

 Claims
for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us
and may reduce the amount of money available to us.

 Our
third amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted
by Nevada law. 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. Nevada law provides that a corporation may indemnify such person if such person acted
 in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and,
 with respect to any criminal proceeding, had no reasonable cause to believe such person's conduct was unlawful.

 We
 will also indemnify employees and agents in those circumstances where indemnification is permitted by applicable law.

 We
 are required to advance expenses, as incurred, to any indemnitee in connection with defending a proceeding, except that such indemnitee
 shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

 The
 rights conferred in our third amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification
 agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons.

 General
Risk Factors

 Product
safety and quality concerns could negatively affect our business.

 Our
success depends in part on our ability to maintain consumer confidence in the safety and quality of all of our products. While we are
committed to the safety and quality of our products, we may not achieve our product safety and quality standards. Product safety or quality
issues, or mislabeling, actual or perceived, or allegations of product contamination or quality or safety issues, even when false or
unfounded, could subject us to product liability and consumer claims, negative publicity, a loss of consumer confidence and trust, may
require us from time to time to conduct costly recalls from some or all of the channels in which the affected product was distributed,
could damage the goodwill associated with our brands, and may cause consumers to choose other products. 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.

 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. We do not control these analysts. The price of our common stock could decline if one or more equity analysts downgrade
our common stock or if analysts issue other unfavorable commentary or cease publishing reports about us or our business.

 We
may be subject to securities litigation, which is expensive and could divert management attention.

 The
market price of our common stock has been, and may in the future be, volatile. In the past, companies that have experienced volatility
in the market price of their stock have been subject to securities litigation, including but not limited to securities class action litigation.
We may be the target of this type of litigation in the future. 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.

 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
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. Despite the implementation of network security measures, our systems and those of third parties on which we rely may
also be susceptible to damage, disruptions or shutdowns due to failures during the process of upgrading or replacing software, databases
or components; power outages; telecommunications or system failures; server or cloud provider breaches; computer viruses; physical or
electronic break-ins; cyber-attacks; catastrophic events; or breaches due to employee error or malfeasance or other attempts to harm
our systems. Cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to information
technology networks and systems to more sophisticated and targeted measures, known as advanced persistent threats, directed at the Company,
its products, its customers and/or its third-party service providers. Because the techniques used to obtain unauthorized access, disable
or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, we may be unable
to anticipate these techniques or to implement adequate preventative measures in time. We could also experience a loss of critical data
and delays or interruptions in our ability to manage inventories or process transactions. Some of our commercial partners, such as those
that help us deliver our website, may receive or store information provided by us or our users through our websites. If these third parties
fail to adopt or adhere to adequate information security practices, or fail to comply with our online policies, or in the event of a
breach of their networks, our users' data may be improperly accessed, used or disclosed.

 If
our systems are harmed or fail to function properly, we may need to expend significant financial resources to repair or replace systems
or to otherwise protect against security breaches or to address problems caused by breaches. If we experience a significant security
breach or fail to detect and appropriately respond to a significant security breach, we could be exposed to costly legal or regulatory
actions against us in connection with such incidents, which could result in orders or consent decrees forcing us to modify our business
practices. Any incidents involving unauthorized access to or improper use of user information, or incidents that are a violation of our
online privacy policy, could harm our brand reputation and diminish our competitive position. Any of these events could have a material
and adverse effect on our business, reputation or financial results. Our insurance policies carry coverage limits, which may not be adequate
to reimburse us for losses caused by security breaches.

 Changes
in regulatory standards could adversely affect our business.

 Our
business is subject to extensive domestic and international regulatory requirements regarding distribution, production, labeling and
marketing. 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. In addition, we face government regulations pertaining to the
health and safety of our employees and our consumers as well as regulations addressing the impact of our business on the environment,
domestically as well as internationally. Compliance with these health, safety and environmental regulations may require us to alter our
manufacturing processes and our sourcing. 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.

 Employees
may, from time to time, bring lawsuits against us regarding injury, creation of a hostile work place, discrimination, wage and hour,
sexual harassment and other employment issues. In recent years there has been an increase in the number of discrimination and harassment
claims generally. Coupled with the expansion of social media platforms and similar devices that allow individuals access to a broad audience,
these claims have had a significant negative impact on some businesses. Companies that have faced employment or harassment related lawsuits
have had to terminate management or other key personnel and have suffered reputational harm that has negatively impacted their sales.
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.

 A
change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of
transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements
have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may adversely affect our
reported financial results or the way we conduct business.

 Currently
pending, threatened or future litigation or governmental or regulatory proceedings or inquiries could result in material adverse consequences,
including judgments or settlements.

 We
are, or may from time to time become, involved in lawsuits and other legal, governmental or regulatory proceedings or inquiries. See
"Item 3. Legal Proceedings" included in this Annual Report for information regarding currently pending litigation that could
have a material impact on the Company. Many of these matters raise complicated factual and legal issues and are subject to uncertainties
and complexities, all of which make the matters costly to address. The timing of the final resolutions to any such lawsuits, inquiries,
and other legal proceedings is uncertain.

 Additionally,
the possible outcomes or resolutions to these matters could include adverse judgments or settlements, either of which could require substantial
payments, adversely affecting our consolidated financial condition, results of operations and cash flows. Any judgment against us, the
entry into any settlement agreement, or the imposition of any fine could have a material adverse effect on our consolidated financial
condition, results of operations and cash flows.

 Future
acquisitions of and investments in new businesses could impact our business and financial condition.

 From
time to time, we may acquire or invest in businesses or partnerships that we believe could complement our business. The pursuit of such
acquisitions or investments may divert the attention of management and cause us to incur various expenses, regardless of whether the
acquisition or investment is ultimately completed. In addition, acquisitions and investments may not perform as expected and we may be
unable to realize the expected benefits, synergies, or developments that we may initially anticipate. Further, if we are able to successfully
identify and acquire additional businesses, we may not be able to successfully integrate the acquired personnel or operations, or effectively
manage the combined business following the acquisition, any of which could harm our business and financial condition.

 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.

 ITEM
1B. UNRESOLVED STAFF COMMENTS

 Not
applicable.

 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.

 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. 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.

 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. 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

 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"). 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. 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. 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.

 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. 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. 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. Litigation

 As
previously disclosed, on January 27, 2023, Steeped, Inc. d/b/a Steeped Coffee ("Steeped") filed a complaint against the Company
in the Superior Court of California, Santa Cruz County (Case No. 23CV00234) (the "Steeped Litigation"). The Steeped Litigation
relates to Steeped's claim that the Company breached a 2021 settlement agreement that resolved Steeped's 2019 trademark infringement
case against the Company. The earlier case involved Steeped's purported trademark protection for "steeped coffee" and
related phrases.

 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. 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. 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.

 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. 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. 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. 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 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.

 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.

 ITEM
4. MINE SAFETY DISCLOSURES

 None.

 PART
II

 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. The actual number of stockholders is greater than this number of record holders, and
includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.

 Dividends

 We
have not paid dividends on any of our classes of capital stock to date and do not anticipate paying any cash dividends on shares of our
common stock in the foreseeable future. We currently intend to retain all of our future earnings, if any, to fund the development and
growth of our business. Any future determination relating to our dividend policy will be made at the discretion of our Board and will
depend on a number of factors, including future earnings, capital requirements, financial conditions, future prospects, contractual restrictions
and covenants and other factors that our Board may deem relevant.

 ITEM
6. [RESERVED]

 ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 The
following discussion provides information which management believes is relevant to an assessment and understanding of our results of
operations and financial condition. The discussion should be read along with our financial statements and notes thereto included elsewhere
in this Report. Except for historical information contained herein, the following discussion contains forward-looking statements which
are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those
expressed or implied by such forward-looking statements. 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

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

 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.

 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. 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. 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.
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.
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.

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

 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. In addition to being available for direct sale to consumers, our NuZee and DRIPKIT branded products serve
as samples that are provided to potential new co-packing customers to showcase our co-packing capabilities and production expertise.

 Our
NuZee branded products, 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. 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.

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

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

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

 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.
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. 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. 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. Since the Company is one reporting unit, the fair value of the Company equals market capitalization,
thus net book value is compared to market capitalization to determine if there is any impairment.

 As
further described in " Note 7—Goodwill And Intangible Assets" to our Consolidated Financial Statements, during
the year ended September 30, 2022, we recorded a non-cash impairment charge of $531,412 related to goodwill, which was included in impairment
expense within operating expenses in our Consolidated Statements of Operations for the year ended September 30, 2022. The charge was
as a result of our net book value being lower than our market capitalization. As of September 30, 2022, the goodwill balance net of the
impairment loss was $0.

 In
addition, 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 test intangible assets annually for impairment, and when
indications of potential impairment exist. We utilize the relief from royalty method to determine the fair value of the tradename. We
estimate the fair value of acquired customer relationships using a weighted average of the income. The income approach applies a fair
value methodology based on discounted cash flows. If the carrying value of an intangible asset exceeds the fair value, we recognize an
impairment loss in an amount equal to the excess, not to exceed the carrying value.

 Geographic
Concentration

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

 For
the fiscal year ended September 30, 2023, net revenues attributable to our operations in North America totaled $1,757,968 compared to
$2,443,863 of net revenues attributable to our operations in North America during the fiscal year ended September 30, 2022. Additionally,
as of September 30, 2023, $184,763 of our property and equipment, net was attributable to our North American operations, compared to
$378,546 attributable to our North American operations as of September 30, 2022.

 For
the fiscal year ended September 30, 2023, net revenues attributable to our operations in Asia totaled $1,590,863 compared to $665,299
of net revenues attributable to our operations in Asia during the fiscal year ended September 30, 2022. Additionally, as of September
30, 2023, $124,792 of our property and equipment, net was attributable to our Asian operations, compared to $146,529 attributable to
our Asian operations as of September 30, 2022.

 Results
of Operations

 Comparison
of Years ended September 30, 2023 and 2022

 Year ended

 Change

 2023

 2022

 Dollars

 %

 $
 3,348,831

 $
 3,109,162

 $
 239,669

 7.7
 %

 For
the year ended September 30, 2023, revenues increased by $239,669, or approximately 7.7%, compared with the year ended September 30,
2022. This increase was primarily related to higher co-packing revenues in Korea driven by existing and new customers partially offset
by lower revenues in North America. The lower North America revenues were primarily a result of lower revenues to our largest customer
in the year ended September 30, 2022.

 Cost
of sales and gross margin

 Year ended

 Change

 2023

 2022

 Dollars

 %

 Cost of sales

 $
 3,340,013

 $
 3,219,575

 $
 120,438

 3.7
 %

 Gross profit (loss)

 $
 8,818

 $
 (110,413
)

 $
 119,231

 108.0
 %

 Gross margin %

 0.3
 %

 (3.4
)%

 For
the year ended September 30, 2023, our cost of sales totaled $3,340,013, as compared to cost of sales for the year ended September 30,
2022 of $3,219,575, representing a 3.7% increase. This 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. The gross margin rate was 0.3%
for the year ended September 30, 2023 and (3.4%) for the year ended September 30, 2022. The marginal improvement was primarily attributable
to increased efficiencies from higher overall revenues.

 Operating
Expenses

 Year
 ended
 September
 30,

 Change

 2023

 2022

 Dollars

 %

 Operating
 Expenses

 $
 8,880,435

 $
 11,292,105

 $
 (2,411,670
)

 (21.4)
 %

 For
the year ended September 30, 2023, our operating expenses totaled $8,880,435, compared to $11,292,105 for the year ended September 30,
2022, representing a decrease of $2,411,670 or 21.4%. This decrease is primarily attributable to a decrease of $2.4 million in stock-based
compensation expense, lower impairment charges of approximately $675,000, lower payroll, marketing consulting, insurance and facilities
costs of approximately $530,000 all of which was partially offset by increased legal expenses of $1.2 million.

 Net
Loss

 Year ended

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

 Liquidity
and Capital Resources

 Since
our inception in 2011, we have incurred significant losses, and as of September 30, 2023, we had an accumulated deficit of approximately
$73.4 million. We have not yet achieved profitability and anticipate that we will continue to incur significant sales and marketing expenses
prior to recording sufficient revenue from our operations to offset these expenses. In the United States, we expect to incur additional
losses because of the costs associated with operating as an exchange-listed public company. We are unable to predict the extent of any
future losses or when we will become profitable, if at all.

 To
date, we have funded our operations primarily with proceeds from registered public offerings and private placements of shares of our
common stock. 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. 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.
A reduction in consumer demand for, or revenues from the sale of, our coffee products could further constrain our cash resources. We
have based these estimates on assumptions that may prove to be wrong, and our operating projections, including our projected revenues
from sales of our coffee products, may change as a result of many factors currently unknown to us.

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

 In
the future, we may receive additional funds upon the exercise for cash of outstanding warrants, if and when exercised for cash at the
election of the warrant holders, including the Series A warrants (the "Series A Warrants") and Series B warrants (the "Series
B Warrants" and, collectively with the Series A Warrants, the "2021 Warrants") that were sold by us in March 2021 in
an underwritten registered public offering and the 2022 Warrants. The 2021 Warrant holders are obligated to pay the exercise price in
cash upon exercise of the 2021 Warrants unless we fail to maintain a current prospectus relating to the common stock issuable upon the
exercise of the 2021 Warrants (in which case, the 2021 Warrants may only be exercised via a "cashless" exercise provision).
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. 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. 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. Any additional
equity financing may be dilutive to our stockholders.

 While
we believe our plans to raise additional funds will alleviate the conditions that raise substantial doubt about our ability to continue
as a going concern, these plans are not entirely within our control and cannot be assessed as being probable of occurring at this time.
If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely
affected.

 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.

Obligations

 Our
significant contractual cash requirements as of September 30, 2023 primarily include payments for operating and finance lease liabilities
and principal and interest on loans. Our current and long-term obligations related to these items are outlined in the leases portion
of " Note 2—Basis of Presentation and Summary of Significant Accounting Policies," and " Note 3—Loans,"
of the Notes to Consolidated Financial Statements within this Report. Additionally, we may incur purchase obligations in the ordinary
course of business that are enforceable and legally binding and enter into enforceable agreements to purchase goods or services that
specify all significant terms, including fixed or minimum quantities to be purchased and fixed or estimated prices to be paid at the
time of settlement. As of September 30, 2023, we had payments for lease and loan obligations of approximately $409,230, of which $246,929
are payable within 12 months as of September 30, 2023. We had no purchase obligations as of September 30, 2023.

 Summary
of Cash Flows

 2023

 2022

 Cash (used in) operating activities

 $
 (6,926,279
)

 $
 (7,462,121
)

 Cash (used in) investing activities

 $
 (16,241
)

 $
 (604,834
)

 Cash provided by (used in) financing activities

 $
 (36,031
)

 $
 5,679,983

 Effect of foreign exchange on cash

 $

 $
 (113,929
)

 Net (decrease) in cash

 $
 (6,941,952
)

 $
 (2,500,901
)

 Operating
Activities

 We
used $6,956,279 and $7,462,121 of cash in operating activities during the years ended September 30, 2023 and 2022, respectively, principally
to fund our operating loss.

 Investing
Activities

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

 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. The decrease is primarily attributable to funds raised in the year ended September 30, 2022 from the sale of our equity securities,
as compared to no funds being raised in the year ended September 30, 2023. In the year ended September 30, 2023 financing activities
consisted of repayments of loans and leases.

 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.

 Critical
Accounting Policies and Estimates

 Our
discussion and analysis of our financial condition and results of operations are based upon our financial statements that have been prepared
in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). As discussed in
" Note 2—Basis of Presentation and Summary of Significant Accounting Policies " to the Consolidated Financial
Statements, the preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities.
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. 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.

 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.

 ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 We
are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this
item.

 ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 Our
Consolidated Financial Statements and The Report of Independent Registered Public Accounting Firm required by this item are included
in this Report on pages F-1 through F-28 and are incorporated herein by reference.

 ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 There
have been no disagreements with our Independent Registered Public Accounting Firm on any matter of accounting principles or financial
disclosures.

 ITEM
9A. CONTROLS AND PROCEDURES

 a.

 Evaluation
 on Disclosure Controls and Procedures

 Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our
Company is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that
such information is collected and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate,
to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer are responsible for
establishing and maintaining disclosure controls and procedures for our Company. In designing and evaluating our disclosure controls
and procedures, management recognizes that no matter how well conceived and operated, disclosure controls and procedures can provide
only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.

 Our
management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness
of our "disclosure controls and procedures" (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the
period covered by this Report (the "Evaluation Date"). Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective, at the reasonable
assurance level, to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act
(i) is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms and (ii) is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.

 b.

 Management's
 report on internal control over financial reporting

 Our
management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control system was designed
to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published
financial statements. Our management assessed the effectiveness of the Company's internal control over financial reporting as of
the end of the period covered by this Report based on the criteria for effective internal control described in Internal Control-Integrated
Framework (2013) issued by the Committee of Sponsoring Organization of the Treadway Commission (COSO). Based on this assessment, our
management has concluded the Company's internal control over financial reporting was effective as of September 30, 2023.

 As
we are a non-accelerated filer, our independent registered public accounting firm is not required to issue an attestation report on our
internal control over financial reporting.

 Changes
In Internal Control Over Financial Reporting

 There
are no changes in our internal control over financial reporting that occurred during the fiscal year ended September 30, 2023 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 ITEM
9B. OTHER INFORMATION

 None.

 ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not
applicable.

 PART
III

 ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 The
information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation
14A of the Exchange Act for our 2024 Annual Meeting of Stockholders. Within 120 days after the close of our fiscal year, we intend to

 ITEM
11. EXECUTIVE COMPENSATION.

 The
information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation
14A of the Exchange Act for our 2024 Annual Meeting of Stockholders. Within 120 days after the close of our fiscal year, we intend to

 ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 The
information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation
14A of the Exchange Act for our 2024 Annual Meeting of Stockholders. Within 120 days after the close of our fiscal year, we intend to

 ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 The
information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation
14A of the Exchange Act for our 2024 Annual Meeting of Stockholders. Within 120 days after the close of our fiscal year, we intend to

 ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 The
information required by this Item is incorporated herein by reference to the definitive Proxy Statement to be filed pursuant to Regulation
14A of the Exchange Act for our 2024 Annual Meeting of Stockholders. Within 120 days after the close of our fiscal year, we intend to

 PART
IV

 ITEM
15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

 (a)

 The
 following documents are filed as part of this Report:

 (1)

 The
 following consolidated financial statements of the Company are incorporated by reference in Part II, Item 8—See Index to Consolidated
 Financial Statements

 (2)

 All
 financial statement schedules have been omitted because they are not applicable or not required or because the information is included
 elsewhere in the financial statements or the Notes thereto.

 (3)

 See
 exhibits listed under Part (b) below.

 (b)

 Exhibits:

 Exhibit
 No.

 Description

 1.1

 Underwriting
 Agreement (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K filed on October 20, 2023,
 SEC File Number 001-39338).

 3.1

 Articles of Incorporation of the Company, dated July 15, 2011 (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K filed on December 23, 2022, SEC File Number 001-39338).

 3.2

 Certificate
 of Amendment to Articles of Incorporation of the Company, dated May 6, 2013 (incorporated by reference to Exhibit 3.01(b) to the
 Company's Current Report on Form 8-K filed on April 25, 2013, SEC File Number 333-176684).

 3.3

 Certificate
 of Amendment to Articles of Incorporation of the Company, dated October 28, 2019 (incorporated by reference to Exhibit 3.1 to the
 Company's Current Report on Form 8-K filed on October 28, 2019, SEC File Number 000-55157).

 3.4

 Third
 Amended and Restated Bylaws of the Company, effective March 17, 2022 (incorporated by reference to Exhibit 3.1 to the Company's
 Current Report on Form 8-K filed on March 23, 2022, SEC File Number 001-39338).

 4.1

 Description of Securities (incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K filed on December 23, 2022, SEC File Number 001-39338).

 4.3

 Series
 A Warrant Agent Agreement (including the terms of the Series A Warrant) (incorporated by reference to Exhibit 4.1 to the Company's
 Current Report on Form 8-K filed on March 23, 2021, SEC File Number 001-39338).

 4.4

 Series
 B Warrant Agent Agreement (including the terms of the Series B Warrant) (incorporated by reference to Exhibit 4.2 to the Company's
 Current Report on Form 8-K filed on March 23, 2021, SEC File Number 001-39338).

 4.5

 Form
 of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed
 on April 15, 2022, SEC File Number 001-39338).

 4.6

 Common
 Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on November
 15, 2023, SEC File Number 001-39338).

 10.3

 Inc. 2013 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company's Registration Statement on Form S-1
 filed on November 12, 2019, SEC File Number 333-234643).

 10.4

 Inc. 2019 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to the Company's Registration Statement on Form S-1
 filed on November 12, 2019, SEC File Number 333-234643).

 10.5

 Multi-Tenant
 Industrial Triple Net Lease, dated May 9, 2019 by and between Nuzee, Inc. and Icon Owner Pool I Texas LLC (incorporated by reference
 to Exhibit 10.6 to the Company's Registration Statement on Form S-1/A filed on March 10, 2020, SEC File Number 333-234643).

 10.7

 Form
 of Stock Option Agreement (2013 Stock Incentive Plan) (incorporated by reference to Exhibit 10.10 to the Company's Annual Report
 on Form 10-K filed on December 28, 2020, SEC File Number 001-39338).

 10.8

 Form
 of Stock Option Agreement (2019 Stock Incentive Plan) (incorporated by reference to Exhibit 10.11 to the Company's Annual Report
 on Form 10-K filed on December 28, 2020, SEC File Number 001-39338).

 10.9

 Form
 of Restricted Stock Award Agreement under the NuZee, Inc. 2019 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to
 the Company's Current Report on Form 8-K filed on January 15, 2021, SEC File Number 001-39338).

 10.12

 Form
 of Stock Option Agreement under the NuZee, Inc. 2019 Stock Incentive Plan (Performance-Based) (incorporated by reference to Exhibit
 10.3 to the Company's Current Report on Form 8-K filed on July 7, 2021, SEC File Number 001-39338).

 10.14

 Form
 of Stock Option Agreement under NuZee, Inc. 2013 Stock Incentive Plan (Time-Based) (incorporated by reference to Exhibit 10.2 to
 the Company's Quarterly Report on Form 10-Q filed on February 11, 2022, SEC File Number 001-39338).

 10.15

 Form
 of Stock Option Agreement under NuZee, Inc. 2013 Stock Incentive Plan (Performance-Based) (incorporated by reference to Exhibit 10.3
 to the Company's Quarterly Report on Form 10-Q filed on February 11, 2022, SEC File Number 001-39338).

 10.16

 Form
 of Restricted Stock Award Agreement under the NuZee, Inc. 2013 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to
 the Company's Quarterly Report on Form 10-Q filed on February 11, 2022, SEC File Number 001-39338).

 10.17

 Description
 of Registrant's Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.1 to the Company's
 Annual Report on Form 10-Q filed on May 12, 2022, SEC File Number 001-39338).

 10.19

 Second
 Amended and Restated Employment Agreement, dated as of November 4, 2022, by and between NuZee, Inc. and Shana Bowman (incorporated
 by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 4, 2022, SEC File Number 001-39338).

 10.20

 Employment Agreement, dated as of August 16, 2023, by and between NuZee, Inc. and Randell Weaver.

 10.21

 Third Amended and Restated Employment Agreement, dated as of August 16, 2023, by and between NuZee, Inc. and Shana Bowman.

 21.1

 Subsidiaries of NuZee, Inc. (incorporated by reference to Exhibit 21.1 to the Company's Annual Report on Form 10-K filed on December 23, 2022, SEC File Number 001-39338).

 23.1*

 Consent of MaloneBailey, LLP, independent registered public accounting firm

 31.1*

 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 31.2*

 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 32.1*

 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 32.2*

 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 101.INS

 document.

 101.SCH

 Schema Document

 101.CAL

 Calculation Linkbase Document

 101.DEF

 Definition Linkbase Document

 101.LAB

 Label Linkbase Document

 101.PRE

 Presentation Linkbase Document

 Cover Page Interactive

 *
Filed or furnished herewith.

Indicates management contract or compensatory plan.

 +
Certain schedules to this agreement have been omitted pursuant to Item 601 of Regulation S-K. A copy of any omitted schedule will be
furnished supplementally to the Securities and Exchange Commission upon request.

 ITEM
16. FORM 10-K SUMMARY

 None.

 SIGNATURES

 Pursuant
to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized on January 16, 2024.

 Inc.

 By:

 /s/
 Masateru Higashida

 Name:

 Masateru
 Higashida

 Title:

 Chief
 Executive Officer

 (Principal
 Executive Officer), Secretary, Treasurer, and Director

 Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

 Signature

 Title

 Date

 /s/
 Masateru Higashida

 Masateru
 Higashida

 Chief
 Executive Officer (Principal Executive Officer), Secretary, Treasurer, and Director

 /s/
 Randell Weaver

 Randell
 Weaver

 President
 & Chief Operating Officer, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

 /s/
 Kevin J. Conner

 Kevin
 J. Conner

 Director

 /s/
 J. Chris Jones

 J.
 Chris Jones

 Director

 /s/
 Nobuki Kurita

 Nobuki
 Kurita

 Director

 /s/
 David G. Robson

 David
 G. Robson

 Director

 NUZEE,
INC.

to Consolidated Financial Statements

 Contents

 Page

 Consolidated
 Financial Statements

 Report of Independent Registered Public Accounting Firm (PCAOB ID: 206)

 Consolidated Balance Sheets

 Consolidated Statements of Operations

 Consolidated Statements of Comprehensive Income (Loss)

 Consolidated Statements of Changes in Stockholders' Equity

 Consolidated Statements of Cash Flows

 Notes to Consolidated Financial Statements

 F- 1

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Stockholders and Board of Directors of NuZee, Inc.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheets of NuZee, Inc. and its subsidiaries (collectively, the "Company")
as of September 30, 2023 and 2022, and the related consolidated statements of operations, comprehensive loss, stockholders' equity,
and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September
30, 2023 and 2022, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

 Going
Concern Matter

 The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company has suffered recurring losses and negative cash flows from operations that raises substantial
doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note
2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits
provide a reasonable basis for our opinion.

 Critical
Audit Matters

 The
critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit
matters.

 /s/
 MaloneBailey, LLP

 www.malonebailey.com

 We
have served as the Company's auditor since 2013.

 Houston,
Texas

 F- 2

Inc.

BALANCE SHEETS

 September 30, 2023

 September 30, 2022

 ASSETS

 Current assets:

 Cash

 $
 1,373,101

 $
 8,315,053

 Accounts receivable, net

 586,878

 345,258

 Inventories, net

 998,070

 947,995

 Prepaid expenses and other current assets

 418,200

 547,773

 Total current assets

 3,376,249

 10,156,079

 Property and equipment, net

 309,555

 525,075

 Other assets:

 Right-of-use asset – operating lease

 403,258

 642,624

 Investment in unconsolidated affiliate

 162,259

 169,634

 Intangible assets, net

 110,000

 140,000

 Other assets

 79,677

 77,962

 Total other assets

 755,194

 1,030,220

 Total assets

 $
 4,440,998

 $
 11,711,374

 LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:

 Accounts payable and accrued expenses

 $
 1,903,923

 $
 820,200

 Current portion of long-term loan payable

 4,753

 7,947

 Current portion of lease liability - operating lease

 216,128

 388,325

 Current portion of lease liability - finance lease

 26,048

 24,518

 Deferred income

 379,795

 319,707

 Other current liabilities

 25,756

 39,241

 Total current liabilities

 2,556,403

 1,599,938

 Non-current liabilities:

 Lease liability - operating lease, net of current portion

 162,301

 267,786

 Lease liability - finance lease, net of current portion

 -

 29,622

 Loan payable - long term, net of current portion

 -

 4,745

 Other noncurrent liabilities

 47,937

 66,484

 Total non-current liabilities

 210,238

 368,637

 Total liabilities

 $
 2,766,641

 $
 1,968,575

 Stockholders' equity:

 Common stock; 200,000,000 shares authorized, $ 0.00001 par value; 748,644 and 676,229 shares issued and outstanding as of September 30, 2023 and 2022, respectively

 Additional paid in capital

 74,925,843

 74,281,418

 Accumulated deficit

 ( 73,371,987
)

 ( 64,622,520
)

 Accumulated other comprehensive income

 120,493

 83,894

 Total stockholders' equity

 1,674,357

 9,742,799

 Total liabilities and stockholders' equity

 $
 4,440,998

 $
 11,711,374

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

 F- 3

Inc.

STATEMENTS OF OPERATIONS

 September 30, 2023

 September 30, 2022

 Revenues, net

 $
 3,348,831

 3,109,162

 Cost of sales

 3,340,013

 3,219,575

 Gross profit (loss)

 8,818

 ( 110,413
)

 Operating expenses

 8,880,435

 11,292,105

 Loss from operations

 ( 8,871,617
)

 ( 11,402,518
)

 Other income

 365,766

 191,631

 Loss from equity method investment

 ( 7,375
)

 ( 5,791
)

 Other expense

 ( 251,656
)

 ( 574,710
)

 Interest income(expense), net

 15,415

 ( 6,324
)

 $
)

)

 Basic and diluted loss per common share

 $
 ( 11.95
)

 ( 21.32
)

 Basic and diluted weighted average number of common stock outstanding

 732,421

 553,322

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

 F- 4

Inc.

STATEMENTS OF COMPREHENSIVE LOSS

 NuZee, Inc.

 For the years ended September 30, 2023 and 2022

 2023

 2022

 $
)

 $
)

 Foreign currency translation

)

 Total other comprehensive income (loss), net of tax

)

 Comprehensive loss

 $
 ( 8,712,868
)

 $
 ( 11,911,641
)

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

 F- 5

Inc.

STATEMENTS OF STOCKHOLDERS' EQUITY

 Common stock

 Additional
 paid-in

 Accumulated

 Accumulated
 Other
 Comprehensive

 capital

 deficit

 income

 Total

 Balance September 30, 2022

 676,229

 $

 $
 74,281,418

 $
 ( 64,622,520
)

 $
 83,894

 $
 9,742,799

 Forgiveness of stock issuance costs

 -

 -

 40,000

 -

 -

 40,000

 Round-up shares issued in reverse split

 8,859

 -

 -

 -

 -

 -

 Common stock issued for services

 13,500

 135,870

 -

 -

 135,870

 Stock option expense

 -

 -

 288,030

 -

 -

 288,030

 Restricted stock compensation

 50,056

 180,525

 -

 -

 180,526

 Other comprehensive gain

 -

 -

 -

 -

 -

 -

 -

)

 -

)

 Balance September 30, 2023

 748,644

 $

 $
 74,925,843

 $
 ( 73,371,987
)

 $
 120,493

 $
 1,674,357

 Common stock

 Additional

 paid-in

 Accumulated

 Accumulated
 Other
 Comprehensive

 capital

 deficit

 income

 Total

 Balance September 30, 2021

 509,154

 $

 $
 64,839,427

 $
 ( 52,824,808
)

 $
 197,823

 $
 12,212,447

 Exercise of warrants, net of issuance costs

 10,984

 -

 1,702,596

 -

 -

 1,702,596

 Common stock issued for cash, ATM offering, net of issuance costs

 1,409

 -

 95,256

 -

 -

 95,256

 Equity securities issued for cash, exempt offering, net of issuance costs

 25,279

 1,649,735

 -

 -

 1,649,736

 Common stock issued for cash, registered offering, net of issuance costs

 120,000

 2,520,867

 -

 -

 2,520,868

 Common stock issued for Dripkit acquisition

 5,633

 -

 426,844

 -

 -

 426,844

 Stock option expense

 -

 -

 2,899,338

 -

 -

 2,899,338

 Exercise of stock options

 -

 12,600

 -

 -

 12,600

 Restricted stock award issuance

 3,370

 -

 134,755

 -

 -

 134,755

 Other comprehensive loss

 -

 -

 -

 -

)

)

 -

 -

 -

)

 -

)

 Balance September 30, 2022

 676,229

 74,281,418

 ( 64,622,520
)

 83,894

 9,742,799

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

 F- 6

Inc.

STATEMENTS OF CASH FLOWS

 For the Year Ended

 September 30, 2023

 For the Year Ended

 September 30, 2022

 Operating activities:

 $
)

)

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

 Depreciation and amortization

 220,653

 379,474

 Noncash lease expense

 239,366

 302,334

 Loss on disposition of assets

 41,108

 12,618

 Stock option expense

 288,030

 2,899,338

 Restricted stock award compensation

 180,526

 134,755

 Issuance of common stock for services

 135,870

 -

 Bad debt expense

 117,015

 34,351

 Loss from equity method investment

 7,375

 5,791

 Goodwill and intangible asset impairment

 -

 675,134

 Write-off of deferred financing costs

 -

 368,783

 Change in operating assets and liabilities:

 Accounts receivable

 ( 358,635
)

 175,629

 Inventories

 ( 50,075
)

 ( 364,867
)

 Prepaid expenses and other current assets

 186,653

 ( 65,485
)

 Other assets

 ( 1,715
)

 1,860

 Accounts payable, Accrued Expenses & Other Current Liabilities

 1,053,158

 ( 67,844
)

 Deferred income

 60,088

 143,885

 Lease liability - operating lease

 ( 277,682
)

 ( 300,847
)

 Other non-current liabilities

 ( 18,547
)

 Net cash used in operating activities

 ( 6,926,279
)

 ( 7,462,121
)

 Investing activities:

 Purchase of equipment

 ( 16,241
)

 ( 191,765
)

 Acquisition of Dripkit

 -

 ( 413,069
)

 Net cash used in investing activities

 ( 16,241
)

 ( 604,834
)

 Financing activities:

 Repayment of loans

 ( 7,939
)

 ( 43,622
)

 Proceeds from issuance of common stock, ATM offering, net of issuance costs

 -

 95,256

 Proceeds from issuance of common stock, exercise of warrants, net of issuance costs

 -

 1,702,596

 Proceeds from issuance of equity securities, exempt offering, net of issuance costs

 -

 1,649,736

 Proceeds from issuance of common stock, registered offering, net of issuance costs

 -

 2,656,460

 Repayment of finance lease

 ( 28,092
)

 ( 24,260
)

 Cash paid for offering costs

 ( 368,783
)

 Proceeds from issuance of common stock, exercise of stock options

 12,600

 Net cash provided by (used in) financing activities

 ( 36,031
)

 5,679,983

 Effect of foreign exchange on cash

)

 Net change in cash

 ( 6,941,952
)

 ( 2,500,901
)

 Cash, beginning of period

 8,315,053

 10,815,954

 Cash, end of period

 $
 1,373,101

 8,315,053

 Supplemental disclosure of cash flow information:

 Cash paid for interest

 $
 4,944

 9,811

 Cash paid for taxes

 $

 Noncash investing and financing activities:

 Common stock issued in acquisition of Dripkit

 $
 -

 426,844

 Stock issuance costs accrued

 $
 -

 135,592

 Forgiveness of stock issuance costs

 $
 40,000

 Deferred
 Stock Offering cost accrued ROU assets and liabilities added during the period

 $
 57,080

 558,371

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

 F- 7

Inc.

 Notes
to Consolidated Financial Statements

 September
30, 2023

 1.
 ORGANIZATION

Inc. (the "Company", "we", "our", "us') was incorporated on November 9, 2011, in Nevada.
The Company is a specialty coffee company and is a leading co-packer of single serve pour over coffee in the United States, coffee brew
bags (also referred to as tea-bag style coffee), DRIPKIT pour over products and bagged whole bean and ground coffee. While the United
States is the Company's core market, it also has single serve pour over coffee manufacturing and sales operations in Korea and
a joint venture in Latin America.

 The
Company has two wholly owned international subsidiaries in NuZee KOREA Ltd. ("NuZee KR") and NuZee Investment Co., Ltd. ("NuZee
INV").

 2.
 BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 The
summary of significant accounting policies presented below is designed to assist in understanding the Company's financial statements.
Such financial statements and accompanying notes are the representations of the Company's management, who are responsible for their
integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America
("GAAP") in all material respects and have been consistently applied in preparing the accompanying financial statements.

 Principles
of Consolidation

 The
Company prepares its financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts, balances and transactions have
been eliminated upon consolidation.

 The
Company consolidates NuZee KR and NuZee INV in accordance with ASC 810, and specifically ASC 810-10-15-8 which states, the usual condition
for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting
entity, directly or indirectly, of over 50 % of the outstanding voting shares of another entity is a condition pointing toward consolidation.

 On
February 25, 2022 (the "Closing Date"), the Company acquired substantially all the assets and certain specified liabilities
(the "Acquisition") of Dripkit, Inc., a Delaware corporation ("Dripkit"), pursuant to the Asset Purchase Agreement,
dated as of February 21, 2022 (the "Asset Purchase Agreement"), by and among the Company, Dripkit, and Dripkit's existing
investors (the "Stock Recipients") who executed joinders to the Asset Purchase Agreement as of the Closing Date. Pursuant
to the terms of the Asset Purchase Agreement, the aggregate purchase price paid by the Company for the Acquisition was $ 860,000, consisting
of cash paid by the Company to Dripkit and the Company's issuance to the Stock Recipients of an aggregate of 5,633 shares of
the Company's common stock (including the 528 shares of common stock issued to the Stock Recipients on April 25, 2022, in connection
with the stock bulk sales holdback amount, as further described below), plus the assumption of certain assumed liabilities, subject to
certain adjustments and holdbacks as provided in the Asset Purchase Agreement. Dripkit is engaged in the business of manufacturing and
sales of a single serve pour over coffee format that has a large-size single serve pour over pack that sits on top of the cup. Dripkit
operates as a new Dripkit Coffee business division that is wholly owned by NuZee, Inc. The Company analyzed the Acquisition under ASC
805 and concluded that it should be accounted for as a business combination. The Acquisition has been included in the Company's
financial statements from the date of the Acquisition.

 F- 8

 2022
Reverse Stock Split

 On
December 9, 2022, 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 our Articles of Incorporation, as amended (the "Articles"),
which amends the Articles to add a Section 1A to effect a reverse stock split of our common stock, at any ratio from 1-for-10 to 1-for-50
at the Board's discretion. On December 21, 2022, the Board approved a 1-for-35 reverse stock split of our common stock (the "Reverse
Stock Split"). The Certificate of Amendment was filed by the Company on December 28, 2022 and became effective upon acceptance
of the Company's filing of the Certificate of Amendment with the Secretary of State of Nevada. Accordingly, each holder of our
common stock received one share of common stock for every 35 shares such stockholder held immediately prior to the effectiveness of the
Reverse Stock Split. All shares and per share information included in these financial statements and notes thereto have been retroactively
adjusted to give effect to the Reverse Stock Split.

 Earnings
per Share

 Basic
earnings per common share is equal to net earnings or loss divided by the weighted average of shares outstanding during the reporting
period. Diluted earnings per share reflects the potential dilution that could occur if stock options, warrants and other commitments
to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings
of the Company. As of September 30, 2023 and September 30, 2022, the total number of common stock equivalents was 248,856 and 265,941,
respectively, and composed of stock options and warrants. The Company incurred a net loss for the years ended September 30, 2023 and
2022, respectively and therefore, basic and diluted earnings per share for those periods are the same because all potential common equivalent
shares would be antidilutive.

 Going
Concern and Capital Resources

 Since
its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management
and technical staff, acquiring operating assets, raising capital and the commercialization and
manufacture of its single serve coffee products. The Company has grown revenues from its principal operations; however, there
is no assurance of future revenue growth similar to historical levels. As of September 30, 2023, the Company had cash of $ 1,373,101
and working capital of $ 819,846. However, the Company has not attained profitable operations since inception. The accompanying consolidated
financial statements have been prepared in accordance with GAAP, which contemplates continuation of the Company as a going concern. The
Company has had limited revenues, recurring losses and an accumulated deficit. These items raise substantial doubt as to the Company's
ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty. The Company's continued existence is dependent upon management's ability to
develop profitable operations and to raise additional capital for the further development and marketing of the Company's products
and business.

 Use
of Estimates

 In
preparing these consolidated financial statements, management is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and
the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 Fair
Value of Financial Instruments

 Fair
value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants (i.e., the exit price at the measurement date). Fair value measurements are not
adjusted for transaction cost. Fair value measurement under generally accepted accounting principles provides for use of a fair value
hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three levels:

 Level
1: Unadjusted quoted prices in active markets for identical assets or liabilities.

 F- 9

 Level
2: Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs
reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained
from sources independent of the Company.

 Level
3: Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants
would use in valuing the asset or liability.

 The
Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.

 The
carrying amounts of cash, accounts receivable, accounts payable, accrued liabilities and short-term debt approximate fair value because
of the short-term nature of these instruments. The carrying amount of long-term debt approximates fair value because the debt is based
on current rates at which the Company could borrow funds with similar remaining maturities. Fair value estimates are made at a specific
point in time, based on relevant market information about the financial instruments when available. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions
could significantly affect the estimates.

 Cash
and Cash Equivalents

 The
Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.
The Company had no cash equivalents as of September 30, 2023 and 2022.

 Concentration
of Credit Risk

 Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The
Company places its cash with high quality banking institutions. From time to time, the Company may or may not maintain cash balances
at certain institutions in excess of the Federal Deposit Insurance Corporation limit.

 Trade
accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial
condition. Bad debts expense or write offs of receivables are determined on the basis of loss experience, known and inherent risks in
the receivable portfolio and current economic conditions. The Company had $ 58,636 of allowance for doubtful accounts as of September
30, 2023 and $ 6,862 allowance for doubtful accounts as of September 30, 2022.

 Major
Customers

 For
the years ended September 30, 2023 and 2022, the Company's largest single source of revenue was from one major customer disclosed
below.

 SCHEDULE OF REVENUE BY MAJOR CUSTOMERS

 For
the year ended September 30, 2023:

 Customer Name

 Sales

 % of Total

 % of Total

 Customer WP

 $
 508,816

 %

 $
 112,412

 %

 Customer CN

 567,108

 %

 114,313

 %

 Customer AD

 437,417

 %

 -

 -

 For
the year ended September 30, 2022:

 Customer Name

 Sales

 % of Total

 % of Total

 Customer WP

 $
 882,392

 %

 $
 95,351

 %

 F- 10

 Leases

 In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities
on the consolidated balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different
types of leases. The Company implemented ASU No. 2016-02 on October 1, 2019.

 The
Company performs a quarterly analysis of leases to determine if there are any operating leases that require recognition under ASC 842.
The Company has a long-term operating lease for office and manufacturing space in Plano, Texas. The leased property in Plano, Texas,
has a remaining lease term through June 2024. The lease has an option to extend beyond the stated termination date, but exercise of this
option is not probable. The Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease
term of 12 months or less.

 In
May 2022, the Company renewed the office and manufacturing space in Vista, California through March 31, 2025, which was scheduled to
expire on January 31, 2023. The lease has a monthly base rent of $ 8,451, plus common area expenses. Along with the extension, we leased
an additional 1,796 square feet that has a monthly base rent of $ 2,514 through March 31, 2025. We extended our subleased property in
Vista, California through January 31, 2023. The lease has a monthly rent of $ 2,111 and has been calculated as a ROU Asset co-terminus
with the direct leased property. The Company leased a new larger office and manufacturing space in Seoul, Korea beginning November 15,
2021, through November 15, 2023. The lease has a monthly expense of $ 7,040. Accordingly, we have added ROU Assets and Lease Liabilities
related to those leases as of September 30, 2023.

 Effective
December 1, 2022, we entered into a new operating lease for our principal executive office, which is located at 1350 East Arapaho Road,
Suite #230, Richardson, Texas 75081. We lease the Richardson office on an annual basis, at a cost of $ 1,510 per month, through November
30, 2023. The lease expired November 30, 2023 and was not renewed.

 As
of September 30, 2023, the Company's operating leases had a weighted average remaining lease term of 1 years and a weighted-average
discount rate of 5 %. Other information related to our operating leases is as follows:

 SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE

 ROU Asset – October 1, 2022

 $
 642,624

 ROU Asset added during the period

 -

 Amortization during the period

 ( 239,366
)

 ROU Asset – September 30, 2023

 $
 403,258

 Lease Liability – October 1, 2022

 $
 656,111

 Lease Liability added during the period

 -

 Amortization during the period

 ( 277,682
)

 Lease Liability – September 30, 2023

 $
 378,429

 Lease Liability – Short-Term

 $
 216,128

 Lease Liability – Long-Term

 162,301

 Lease Liability – Total

 $
 378,429

 The
table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years
to the lease liabilities recorded on the Consolidated Balance Sheet as of September 30, 2023.

 Amounts
due within 12 months of September 30,

 SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

 2024

 326,362

 2025

 67,310

 Total Minimum Lease Payments

 393,672

 Less Effect of Discounting

 15,243

 Present Value of Future Minimum Lease Payments

 378,429

 Less Current Portion of Operating Lease Obligations

 216,128

 Long-Term Operating Lease Obligations

 $
 162,301

 F- 11

 On
October 9, 2019, the Company entered into a lease agreement with Alliance Funding Group which provided for a sale lease back on certain
packing equipment. The terms of this agreement require us to pay $ 2,987 per month through June 2024. As part of this agreement, Alliance
Funding Group provided our equipment supplier with $ 124,500 for the purchase of this equipment. This transaction was accounted for as
a financing lease. As of September 30, 2023, our financing lease had a remaining lease term of.6 years and a discount rate of 12.75 %.
The interest expense on finance lease liabilities for the year ended September 30, 2023 was $ 4,944.

 The
table below summarizes future minimum finance lease payments at September 30, 2023 for the 12 months ended September 30:

 SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS FOR FINANCE LEASES

 2024

 $
 27,594

 Total Minimum Lease Payments

 27,594

 Amount representing interest

 ( 1,546
)

 Present Value of Minimum Lease Payments

 26,048

 Current Portion of Finance Lease Obligations

 26,048

 Finance Lease Obligations, Less Current Portion

 $
 -

 Lease
expense included in Operating expense for the year ended September 30, 2023 and 2022 was $ 263,881 and $ 320,813, respectively. Lease expense,
which represents sublease expense, is included in Other expense for the year ended September 30, 2023 and 2022 was $ 205,052 and $ 189,223,
respectively. Further details are included in this lease footnote below.

the year ended September 30, 2023, we had the following cash and non-cash activities associated with our leases:

 SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES

 Operating cash outflows from operating leases:

 $
 349,890

 Operating cash outflows from finance leases:

 $
 4,385

 Financing cash outflows from finance lease:

 $
 28,092

 In
September 2020, we subleased the space at 1700 Capital Avenue in Plano, Texas, effective October 1, 2020 under favorable terms that are
co-terminus with the original lease ending June 30, 2024. During the year ended September 30, 2023, we recognized sublease income of
$ 214,108 pursuant to the sublease included in Other income on our financial statements. Future minimum lease payments to be received
under that sublease as of September 30, 2023, for each of the fiscal years are as follows:

 SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF SUBLEASE

 2024

 $

 97,377

 Total
 Minimum Lease Payments to be Received

 $

 97,377

 Foreign
Currency Translation

 The
financial position and results of operations of each of the Company's foreign subsidiaries are measured using the foreign subsidiary's
local currency as the functional currency. Revenues and expenses of each such subsidiary have been translated into U.S. dollars at average
exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet
date. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders' equity,
unless there is a sale or complete liquidation of the underlying foreign investment. Foreign currency translation adjustment attributable
to NuZee, Inc. recorded to other comprehensive income and loss amounted to $ 36,599 and ($ 113,929) as of September 30, 2023 and 2022,
respectively.

 Transaction
gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency
are included in the results of operations as incurred.

 F- 12

 Equity
Method

 Investee
companies that are not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method
of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several
factors including, among others, representation on the investee company's board of directors and ownership level, which is generally
a 20 % to 50 % interest in the voting securities of the investee company. Under the equity method of accounting, an investee company's
accounts are not reflected within the Company's consolidated balance sheets and consolidated statements of operations; however,
the Company's share of the earnings or losses of the Investee company is reflected in the caption Gain (loss) from equity method
investment in the consolidated statements of operations. The Company's carrying value in an equity method investee company is reflected
in the caption "Investment in unconsolidated affiliate'' in the Company's consolidated balance sheets.

 When
the Company's carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company's
consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding.
When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount
of its share of losses not previously recognized.

 On
January 9, 2020, a joint venture agreement was signed between Industrial Marino, S.A. de C.V. ( 50 %) and the Company ( 50 %) forming NuZee
LATIN AMERICA, S.A. de C.V. ("NLA"). NLA was formed pursuant to the laws of Mexico, with corporate domicile in Mazatl n,
Mexico. As part of the capitalization of NLA, the Company contributed two co-packing machines to the joint venture. These machines had
an aggregate carrying cost of $ 313,012. The Company received $ 110,000 in cash for this contribution and recorded an investment in NLA
of $ 160,000 and a loss of $ 43,012 on the contribution of the machines to NLA.

 The
Company accounts for NLA using the equity method of accounting since the management of day-to-day operations at NLA ultimately lies with
the Company's joint venture partner as the operations of NLA are based in its partners facilities as well as our partner appoints
the Chairman of the joint Board. As of September 30, 2023, the activity in NLA consisted of the contribution of two machines as described
above and other start up and initial sales and marketing related activities. $ 7,375 and $ 5,791 of losses were recognized under the equity
method of accounting during the years ended September 30, 2023 and September 30, 2022, respectively.

Recognition

 In
May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) "Revenue from Contracts with Customers." Topic
606 supersedes the revenue recognition requirements in Topic 605 "Revenue Recognition" (Topic 605). The new standard's
core principle is that an entity will recognize revenue at an amount that reflects the consideration to which the entity expects to be
entitled in exchange for transferring goods or services to a customer. The principles in the standard are applied in five steps: 1) Identify
the contract(s) with a customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate
the transaction price to the performance obligations in the contract; and 5) Recognize revenue when (or as) the entity satisfies a performance
obligation. We adopted Topic 606 as of October 1, 2018 on a modified retrospective basis. The adoption of Topic 606 did not have a material
impact on our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations.

 Return
and Exchange Policy

 The
Company provides a 30-day money-back guarantee if a buyer is not satisfied with a product. All products are thoroughly inspected and
securely packaged before they are shipped to ensure buyers receive the best possible product. If for any reason buyers are unsatisfied
with the products, they can return them and the Company will exchange or refund the purchase minus any shipping charges. For wholesale
customers, return policies vary based on their specific agreements with customers. Under chargebacks agreements with the customers, the
Company agrees to reimburse the seller for a portion of the costs incurred by the seller to advertise and promote certain of the Company's
products. The Company estimates, accrues and recognizes such chargebacks. These amounts are included in the determination of net sales.

 As
of September 30, 2023 and September 30, 2022, the Company had no sales allowances for estimated chargebacks and returns, respectively.
Revenue recognized is net of sales allowances.

 F- 13

 Cost
Recognition

 Cost
of products sold is primarily comprised of direct materials consumed in the manufacturing of co-packing arrangements or the production
of our own products for resale. Cost of products sold also includes directly related labor salaries and other overhead cost including
depreciation, temporary labor and shipping costs for shipment of raw materials to our facilities.

 Selling,
General and Administrative Expense

 Selling,
general and administrative expense (SG&A) is primarily comprised of personnel costs, sales and marketing expenses, depreciation and
amortization, insurance expenses, professional services fees, travel and office expenses, and facilities costs. In some situations, the
Company covers shipping fees for delivering customer orders, and the shipping and handling expenses are recorded under operating expenses
in the consolidated statements of operations.

 Advertising
Expenses

 The
Company expenses advertising costs when incurred. Advertising expense for the years ended September 30, 2023 and 2022 is as follows:

 SCHEDULE OF ADVERTISING EXPENSE

 2023

 2022

 Advertising

 $
 273,965

 $
 192,316

 Other
Expense

 Other
expense of $ 251,656 and $ 574,710 for the years ended September 30, 2023 and 2022, respectively, primarily includes write off of deferred
financing costs and sublease expense.

 Prepaid
expenses and other current assets

 Prepaid
expenses and other current assets for the years ended September 30, 2023 and 2022 is as follows:

 SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

 2023

 2022

 Prepaid expenses and other current assets

 $
 418,200

 $
 547,773

 The
Prepaid expenses and other current assets balance of $ 418,200 as of September 30, 2023 primarily consists of prepaid rent, prepaid insurance,
a retainer for professional services, and deferred offering costs. The balance of $ 547,773 as of September 30, 2022 primarily consists
of prepaid insurance, deposits on inventory purchases, and a retainer for professional services.

 Inventory

 Inventory,
consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower of cost
or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least
quarterly and records a valuation allowance when appropriate. At September 30, 2023 and 2022, the carrying value of inventory of $ 998,070
and $ 947,995 respectively, reflected on the consolidated balance sheets is net of this adjustment.

 SCHEDULE OF INVENTORY

 2023

 2022

 Raw materials

 $
 982,626

 887,632

 Finished goods

 $
 15,444

 60,363

 Total

 $
 998,070

 $
 947,995

 F- 14

 Property
and Equipment

 Property
and equipment is stated at cost, net of accumulated depreciation. The Company generally depreciates property and equipment on a straight-line
basis over the estimated useful lives of the assets after the assets are placed in service except for NuZee KR which uses the declining
balance method. Office equipment is depreciated over a 3 -year life, furniture over a 7 -year life, and other equipment over a 5 -year life.
Depreciation expense for the years ended September 30, 2023 and 2022 was $ 190,653 and $ 333,196, respectively. Repair and maintenance
costs are expensed as incurred. Expenditures associated with upgrades and enhancements that improve, add functionality, or otherwise
extend the life of property and equipment that exceed $1,000 are capitalized. Property and equipment as of September 30, 2023 and 2022
consist of:

 SCHEDULE OF PROPERTY AND EQUIPMENT

 September 30.

 2023

 2022

 Machinery & Equipment

 1,895,859

 1,930,898

 Vehicles

 73,980

 73,008

 Leasehold Improvements

 -

 62,122

 Less - Accumulated Depreciation

 ( 1,660,284
)

 ( 1,540,953
)

 Net Property and Equipment

 $
 309,555

 $
 525,075

 The
Company is required to make deposits or prepayments and progress payments on equipment purchases before the Company receives possession
and title. As a result, the Company accounts for such payments as Other Assets until it has possession at which time the equipment is
recorded as Property and Equipment. There were no such deposits as of September 30, 2023 or September 30, 2022.

 Samples

 The
Company distributes samples of its products as a component of its marketing program. Costs for samples are expensed at the time the samples
are produced and recorded under operating expenses in the consolidated statements of operations.

 Long-Lived
Assets

 The
Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicated that their carrying
amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the
market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly
in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses
combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation
that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability
is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted
cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances.

 Goodwill
and intangible assets

 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. These events or circumstances could include a significant change in
the business climate, legal factors, operating performance indicators, competition, client engagement, or sale or disposition. We monitor
the existence of potential impairment indicators throughout the fiscal year. We test for goodwill impairment at the reporting unit level.
We 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.
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. 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. Since the Company is one reporting
unit, the fair value of the Company equals market capitalization, thus net book value is compared to market capitalization to determine
if there is any impairment.

 F- 15

the year ended September 30, 2022, we recorded a goodwill impairment loss of $ 531,412 as a result of our market capitalization being
below our net book value, which is included in impairment expense within Operating expenses in our Consolidated Statements of Operations.
Refer to Note 7: Goodwill and Intangible Assets for further details regarding the goodwill impairment charge recorded during the
year ended September 30, 2022. As of September 30, 2022 and 2023, the goodwill balance net of the impairment loss was $ 0.

 Intangible
assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line
basis over their economic or legal life, whichever is shorter. We have identifiable useful life intangible assets related to acquired
Dripkit tradename and customer relationships. We test these intangible assets annually for impairment, and when indications of potential
impairment exist. We utilize the relief from royalty method to determine the fair value of the tradename. Management uses considerable
judgment to determine key assumptions, including projected revenue, royalty rates and appropriate discount rates. We estimate the fair
value of acquired customer relationships using a weighted average of the income. The income approach applies a fair value methodology
based on discounted cash flows. This analysis requires significant estimates and judgments, including estimation of future cash flows,
which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life
over which cash flows will occur, customer attrition, and determination of our weighted average cost of capital. If the carrying value
of an intangible asset exceeds the fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying
value. Refer to Note 7: Goodwill and Intangible Assets for further details regarding the tradename and customer relationship impairment
charges recorded during the year ended September 30, 2023 and 2022. During the year ended September 30,2022, we recorded an impairment
loss of $ 63,167 related to tradename, and $ 80,555 related to customer relationships, which are included in impairment expense within
Operating expenses in our Consolidated Statement of Operations. After the noted impairments above, the Company had intangible assets
related to the Dripkit tradename of $ 110,000 and $ 140,000, respectively, as of September 30, 2023 and 2022.

 Income
Taxes

 In
accordance with ASC 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting
and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided
for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

 The
Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes,
the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would
more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount
recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate
settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of September 30, 2023 and 2022.

 Related
parties

 A
party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls,
is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its management and other parties with which the Company may
deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of
the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence
the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties
and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing
its own separate interests is also a related party.

 F- 16

 Stock-based
Compensation

 We
account for share-based awards issued to employees in accordance with Accounting Standards Codification (ASC) 718, "Compensation-Stock
Compensation". Accordingly, employee share-based payment compensation is measured at the grant date, based on the fair value of
the award, and is recognized as an expense over the requisite service period, which is normally the vesting period. Share-based compensation
to directors is treated in the same manner as share-based compensation to employees, regardless of whether the directors are also employees.
In June 2018, the FASB issued ASU 2018-07 which simplifies several aspects of the accounting for non-employee transactions by stipulating
that the existing accounting guidance for share-based payments to employees (accounted for under ASC Topic 718, "Compensation-Stock
Compensation") will also apply to non-employee share-based transactions (accounted for under ASC Topic 505, "Equity").
The Company implemented ASU 2018-07 on October 1, 2019 and the impact of the implementation was not material to the financial statements.

 We
determine the fair value of share-based payments using the Black Scholes option-pricing model for common stock options and warrants and
the closing price of our common stock for common share issuances. We recognize forfeitures as they occurred.

 Comprehensive
income/loss

 Comprehensive
income/loss is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.
Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive
income/loss are required to be reported in a financial statement that is presented with the same prominence as other financial statements.
The Company's current component of other comprehensive income/loss pertain to foreign currency translation adjustments.

 Segment
Information

 ASC
Topic 280, "Disclosures about Segments of an Enterprise and Related Information," established standards for the way that
public business enterprises report information about operating segments in annual financial statements and requires those enterprises
to report selected information about operating segments in interim financial reports issued to stockholders. Management has determined
that the Company operates in one business segment, which is the commercialization and development of functional beverages.

 Recent
Accounting Pronouncements

 Changes
to accounting principles are established by the Financial Accounting Standards Board's ("FASB") in the form of Accounting
Standards Update ("ASU") to the FASB's Codification. We consider the applicability and impact of all ASUs on our financial
position, results of operations, cash flows, or presentation thereof.

 The
Company reviewed all recently issued pronouncements in 2023, but not yet effective, and does not believe the future adoption of any such
pronouncements may be expected to cause a material impact on the Company's financial condition or the results of its operations.

 3.
 LOANS

 On
April 1, 2019, the Company purchased a delivery van from Ford Motor Credit for $ 41,627. The Company paid $ 3,500 as a down payment and
financed $ 38,127 for 60 months at a rate of 2.9 %. The loan is secured by the van. The outstanding balance on the loan at September 30,
2023 and 2022 amounted to $ 4,753 and $ 12,692, respectively.

 The
remainder of the loan is due in fiscal year ending September 30, 2024 in the amount of $ 4,753.

 F- 17

 4.
 GEOGRAPHIC CONCENTRATIONS

 The
Company is organized based on fundamentally one business segment although it does sell its products on a world-wide basis. The Company
is organized in three geographical segments. The Company co-packs product for customers and produces and sells its products directly
in North America and Korea. In fiscal year 2023, the Company had a minimally staffed office in Japan that provided support for import
and export of product and materials between the U.S. and Japan, as well as investor relations support to our stockholders based in Japan;
these functions are now supported by our personnel residing in the United States. Information about the Company's geographic operations
for the years ended September 30, 2023 and 2022 are as follows:

 SCHEDULE OF GEOGRAPHICAL OPERATIONS

 2023

 2022

 Net Revenue:

 North America

 $
 1,757,968

 $
 2,443,863

 South Korea

 1,590,863

 665,299

 Net Revenue

 $
 3,348,831

 $
 3,109,162

2023

2022

 Property and equipment, net:

 North America

 $
 184,763

 $
 378,546

 Japan

 1,664

 South Korea

 124,246

 144,865

 Property and equipment,
 net

 $
 309,555

 $
 525,075

 5.
 RELATED PARTY TRANSACTIONS

the years ended September 30, 2023 and 2022, NuZee KR sold $ 648 and $ 8,117 of single serve pour over and coffee brew bag coffee products,
respectively, to Mystery Golf Ltd., a company owned by the chief executive officer of NuZee KR.

 6.
 BUSINESS COMBINATIONS

 As
described in Note 2, on February 25, 2022, the Company acquired substantially all the assets and certain specified liabilities of Dripkit
pursuant to the Asset Purchase Agreement, dated as of February 21, 2022, by and among the Company, Dripkit, and Dripkit's existing
investors who executed joinders to the Asset Purchase Agreement as of the Closing Date. Pursuant to the terms of the Asset Purchase Agreement,
the aggregate purchase price paid by the Company for the Acquisition was $ 860,000, consisting of cash
paid by the Company to Dripkit and the Company's issuance to the Stock Recipients of shares of the Company's common stock,
 plus the assumption of certain assumed liabilities, including a $ 13,000 bridge loan and approximately $ 3,176 of payables, subject
to certain adjustments and holdbacks as provided in the Asset Purchase Agreement resulting in an acquisition accounting purchase price
of $ 876,176. The Company analyzed the Acquisition under ASC 805 and concluded that it should be accounted for as a business combination.
Dripkit operates as a new Dripkit Coffee business division that is wholly-owned by NuZee, Inc.

 Pursuant
to the terms of the Asset Purchase Agreement, on the Closing Date, the cash portion of the purchase price was reduced by the following
amounts: (a) $ 22,000, in satisfaction of the bridge loan made from the Company to Dripkit in February 2022 to provide Dripkit with operational
financing prior to the Closing Date, (b) $ 35,500, as an indemnity holdback for the purpose of satisfying any indemnification claims made
by the Company pursuant to the Asset Purchase Agreement, and (c) $ 40,000, as a cash bulk sales holdback (the "Cash Bulk Sales Holdback
Amount"). In addition, on the Closing Date, the Company held back $ 40,000 worth of stock consideration as the Stock Bulk Sales
Holdback Amount (together with the Cash Bulk Sales Holdback Amount, the "Bulk Sales Holdback Amount").

 F- 18

 On
the Closing Date, after adjustments and holdbacks under the Asset Purchase Agreement, the Company paid the aggregate purchase price as
follows: (i) cash paid by the Company to Dripkit was $ 257,000, and (ii) the Company issued to the Stock Recipients an aggregate of 5,105
shares of the Company's common stock. The Company repaid the entire outstanding principal amount of Dripkit's Small Business
Association Economic Injury Disaster Loan in the amount of $ 78,656. In addition, the Company recorded a liability on its balance sheet
in Accounts Payable of $ 115,500 related to potential future amounts due related to the Bulk Sales Holdback of $ 80,000 and the indemnity
holdback of $ 35,500.

the year ended September 30, 2022, pursuant to the terms of the Asset Purchase Agreement, the Bulk Sales Holdback Amount was used to
satisfy sales and use taxes owed by Dripkit to the State of New York as of the Closing Date. Pursuant to the terms of the Asset
Purchase Agreement, the amounts remaining after offsetting the cost of these sales and use taxes were distributed as follows in the
quarter ended June 30, 2022: (i) $ 39,237
was distributed to Dripkit on May 9, 2022, in connection with the Cash Bulk Sales Holdback Amount, and (ii) 528
shares of common stock were issued to the Stock Recipients on April 25, 2022, in connection with the Stock Bulk Sales Holdback
Amount.

 On October 4, 2023, $ 35,500 was
distributed to Dripkit investors in connection with the indemnity holdback.

 The
following table presents the allocation of the aggregate purchase price paid by the Company for the Acquisition of $ 860,000, plus the
assumption of certain assumed liabilities, including a $ 13,000 bridge loan and approximately $ 3,176 of payables, resulting
in an acquisition accounting purchase price of $ 876,176, to the assets acquired for the acquisition of Dripkit:

 SCHEDULE OF ALLOCATION OF AGGREGATE PURCHASE PRICE

 Total purchase price

 $
 876,176

 Assets acquired:

 Inventory

 $
 9,664

 Property and equipment

 5,100

 Identifiable intangible assets

 330,000

 Total assets acquired

 $
 344,764

 Estimated fair value of net assets acquired

 $
 344,764

 Goodwill

 $
 531,412

 Identified
Intangibles and Goodwill

 The
Company identified tradename and customer relationships intangible assets. The tradename and customer relationships intangible assets
will be amortized on a straight-line basis over their respective estimated useful lives. The goodwill recognized results from such factors
as an assembled workforce and management's industry know-how. See Note 7-Goodwill and Intangible Assets for additional information
on identified intangible assets and goodwill.

 7.
 GOODWILL AND INTANGIBLE ASSETS

 Impairments

 Goodwill

the year ended September 30, 2022, we recorded a non-cash impairment charge of $ 531,412 related to goodwill, which was included in impairment
expense within operating expenses in our Consolidated Statements of Operations. The charge was a result of our net book value being lower
than our market capitalization. The remaining goodwill as of September 30, 2022 and 2023 was $ 0.

 F- 19

 Identifiable
life intangible assets

the year ended September 30, 2022, we recorded non-cash impairment charges for the Dripkit tradename and acquired customer relationships
of $ 80,555 and $ 63,167 which was included in impairment expense within operating expenses in our Consolidated Statements of Operations.
The charge was primarily the result of a change in forecast related to estimated future revenue growth for Dripkit, sales channel mix,
and estimated costs to support such growth, which had the effect of decreasing our forecast of estimated future cash flows. As of September
30, 2022 and 2023, the remaining tradename asset balance adjusting for impairment was $ 140,000 and $ 110,000, respectively and the customer
relationship asset balance was fully written off as of September 30, 2022.

 As
of September 30, 2023, the Company's intangible assets consisted of unamortized tradename asset of $ 110,000 which is being amortized
over five years from the date of acquisition at a rate of $ 30,000 per year.

 Amortization
expense was $ 30,000 and $ 46,278 for the year ended September 30, 2023 and 2022.

 Amortization
expense for the next four fiscal years is as follows:

 SCHEDULE OF AMORTIZATION EXPENSE

 Tradename
 Amortization

 2024

 30,000

 2025

 30,000

 2026

 30,000

 2027

 20,000

 Grand Total

 $
 110,000

 8.
 ISSUANCE OF EQUITY SECURITIES

 On December 28, 2021, the Company entered into an
Equity Distribution Agreement (the "Equity Distribution Agreement") with Maxim Group LLC, as agent (the "Agent"),
pursuant to which the Company could offer and sell, from time to time, shares of common stock through the Agent in "at-the-market-offerings",
as defined in Rule 415 under the Securities Act, having an aggregate offering price of up to $ 20,000,000. Pursuant to the Equity Distribution
Agreement, the Company paid the Agent a commission rate, in cash, equal to 3.0 % of the aggregate gross proceeds from each sale of shares
of the Company's common stock under the Equity Distribution Agreement. The offer and sale of shares under the Equity Distribution
Agreement were made pursuant to the Company's effective shelf registration statement on Form S-3 (Registration No. 333-248531) and
the related prospectus. In the year ended September 30, 2022, the Company issued and sold 1,409 shares of common stock under the Equity
Distribution Agreement, raising net proceeds of $ 95,256. In connection with such sales, the Company paid compensation to the Agent in
the amount of $ 3,003. On August 5, 2022, the Company terminated the Equity Distribution Agreement. The Company's consolidated statement
of cash flows for the year ended September 30, 2022 includes write-off of stock issuance expenses of $ 368,783, which is included in Other
expense in our consolidated statement of operations, in connection with the terminated Equity Distribution Agreement with the Agent.

 On April 13, 2022, pursuant to Securities Act registration
exemptions under Regulation S and/or Section 4(a)(2) of the Securities Act, the Company sold 25,279 units (the "2022 Units"),
at a price of $ 70 per 2022 Unit for aggregate net proceeds of $ 1,649,736, with each 2022 Unit consisting of (a) one share of our common
stock and (b) one warrant (each, a "2022 Warrant" and collectively, the "2022 Warrants") to purchase one whole
share of our common stock with an initial exercise price of $70 per share.

 On August 10, 2022, the Company completed an underwritten public offering
of 120,000 shares of common stock, pursuant to an Underwriting Agreement dated as of August 7, 2022 and a prospectus supplement to the
Company's effective shelf registration statement on Form S-3 (Registration No. 333-248531). The Company received aggregate net proceeds
of approximately $ 2.5 million($ 2,656,460 of proceeds from issuance of common stock minus $ 135,592 of accrued stock issuance costs in our
consolidated statement of cash flows for the year ended September 30, 2022), after deducting underwriting discounts and commissions and
offering expenses payable by the Company.

 Restricted

 On
August 11, 2023, the Compensation Committee (the "Compensation Committee") of the Company's Board of Directors
granted to Randell Weaver, the Company's newly appointed Chief Financial Officer, in connection with his employment agreement,
an award of 6,000
restricted shares (the "Restricted Shares") of the Company's common stock under the 2023 Stock Incentive Plan.
These Restricted Shares vested as follows: (i) 2,000
Restricted Shares shall vest upon the first anniversary of the commencement date; (ii) 2,000
Restricted Shares shall vest upon the second anniversary of the commencement date; and (iii) 2,000
Restricted Shares shall vest upon the third anniversary of the commencement date. The Company recognized common stock compensation
expense of $ 3,751
for the year ended September 30, 2023 related to these Restricted Shares.

 On March 15, 2023, the Company granted 58,619 performance-based restricted
shares to executive officers, employees and consultants as part of the 2013 Stock Incentive Plan and the 2019 Stock Incentive Plan. 50 %
of the Performance-Based Restricted Shares would vest, if at all, in Fiscal Year 2023, based on the Company's achievement of a specified
amount of cash on hand, sales growth, increased gross margin, and reduced operating losses in Fiscal Year 2023, and the other 50 % of the
Performance-Based Restricted Shares will vest, if at all, in Fiscal Year 2024, based on performance metrics to be set by the Board in
its sole and absolute discretion. The performance goals for Fiscal Year 2023 were not achieved and the Company recognized common stock
compensation expense of $0 for the year ended September 30, 2023, related to these Restricted Shares.

 F- 20

 Grant
of Restricted Stock Awards to the Company's Independent Board Members

 On
March 17, 2022, pursuant to the Company's non-employee director compensation policy, the Compensation Committee (the "Committee")
of the Company's Board of Directors (the "Board") granted 674 restricted shares (the "Restricted Shares")
of the Company's common stock to each of the Company's five independent directors pursuant to the NuZee, Inc. 2013 Stock
Incentive Plan. The restricted shares vested in full on the one-year anniversary of the grant date, March 17, 2023.

 On
March 22, 2023, the Company granted 4,398 Restricted Shares of the Company's common stock to each of the Company's five independent
directors. The restricted shares are scheduled to vest in full on the one-year anniversary of the grant date, subject to each independent
director's continued service as a director of the Company.

 The
Company recognized common stock compensation expense of $ 134,755 and $ 176,775 in fiscal year ending September 30, 2022 and September
30, 2023, respectively.

 Forfeiture
of Restricted Shares

the year ended September 30, 2023, 36,553 restricted shares were forfeited because of the termination of employment or performance goals
not achieved.

 Common
Stock issued for services

 On
January 6, 2023, the Company issued 6,000 shares of common stock to a third-party unaffiliated professional services provider in exchange
for certain consulting advice to be provided to the Company. The shares are valued using the closing stock price on the grant date and
the Company recognized common stock compensation expense of $ 57,120 for the year ended September 30, 2023, related to these common stock
shares.

 On
June 20, 2023, the Company issued 7,500 shares of common stock to a third-party unaffiliated professional services provider in exchange
for certain consulting advice to be provided to the Company. The shares are valued using the closing stock price on the grant date and
the Company recognized common stock compensation expense of $ 78,750 for the year ended September 30, 2023, related to these common stock
shares.

 Exercise
of options

the year ended September 30, 2022, 400
 shares were issued upon the exercise of stock
options, and the Company received $ 12,600
 as part of this exercise.

 9.
 STOCK OPTIONS AND WARRANTS

 Options

the fiscal year ended September 30, 2023, the Company granted 6,000 new stock options at an exercise price of $ 8.15 to an employee.
These options shall vest and become exercisable 1/3 on each anniversary of the grant date. The options will expire ten years from
the grant date, unless terminated earlier as provided by the option agreements.

the fiscal year ended September 30, 2022, the Company granted 5,286 new stock options at an average exercise price of $ 45.85 to employees.
For employees, these options shall vest and become exercisable (i) in the case of time-based options, generally as to 1/3 on each anniversary
of the grant date, although different vesting patterns exist, or (ii) in the case of performance-based options (the "Performance-Based
Options"), based on the Company's or individual's achievement of certain performance milestones established by the
Compensation Committee for each fiscal year in the fiscal years ending September 30, 2023, 2024 and 2025. During the fiscal year ended
September 30, 2022, the Company issued a total of 3,657 Performance-Based Options, which represents the maximum number of Performance-Based
Options that may be earned if all performance milestones are achieved for the applicable performance periods.

 F- 21

 The
exercise price for the options issued in the year ended September 30, 2022 ranged from $ 10.96 - $ 75.60 per share. The options will expire
 ten years from the grant date, unless terminated earlier as provided by the option agreements.

 The
fair value of each option award was estimated on the date of grant using the Black-Scholes option valuation model using the assumptions
noted as follows: expected volatility was based on the volatility of a peer group of companies for the years ended September 30, 2023
and 2022. For the year ended September 30, 2023 and 2022, the expected term of options granted was determined using the simplified method
under SAB 107 which represents the mid-point between the vesting term and the contractual term. The risk-free rate is calculated using the U.S. Treasury
yield curve and is based on the expected term of the option.

 The
Black-Scholes option pricing model was used with the following weighted average assumptions for options granted during the year ended
September 30, 2023 and 2022, respectively:

 SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR FAIR VALUE MEASUREMENT OF OPTIONS GRANTED

 For employees

 2023

 2022

 Risk-free interest rate

 4.39
 %

 2.38 - 3.71
 %

 Expected option life

years

years

 Expected volatility

 68.6
 %

 68.2 - 70.5
 %

 Expected dividend yield

 0.00
 %

 0.00
 %

 Exercise price

 $
 8.15

 $ 0.31 -$ 2.16

 The
Company is expensing these stock option awards on a straight-line basis over the requisite service period. The Company recognized
stock option expense of $ 288,030
and $ 2,899,338,
respectively, for the years ended September 30, 2023 and 2022. Unamortized option expense as of September 30, 2023, for all options
outstanding amounted to approximately $ 108,672.
These costs are expected to be recognized over a weighted-average period of 1.47
years.

the year ended September 30, 2023, 23,192 stock options were forfeited because of termination of employment, expiration of options and performance conditions
not met.

 The
following table summarizes stock option activity for the year ended September 30, 2023.

 SUMMARY OF STOCK OPTION ACTIVITY

 Exercise Price

 Remaining

 Life (years)

 Aggregate

 Intrinsic

 Value

 Outstanding at September 30, 2022

 113,650

 $
 149.88

 7.4

 $
 1,207

 Granted

 6,000

 8.15

 9.88

 - 0 -

 (-)

 -

 -

 -

 Expired

 ( 3,343
)

 145.41

 -

 -

 Forfeited

 ( 19,849
)

 105.27

 4.17

 -

 Outstanding at September 30, 2023

 96,458

 150.39

 5.84

 $
 -

 Exercisable at September 30, 2023

 72,429

 $
 173.24

 4.99

 $
 -

the year ended September 30, 2022, the Company issued 400 shares of common stock upon the exercise of outstanding stock options and 16,086
stock options were forfeited because of termination of employment, expiration of options
and performance conditions not met.

 F- 22

 The
following table summarizes stock option activity for the year ended September 30, 2022.

 Exercise Price

 Remaining

 Life (years)

 Aggregate

 Intrinsic

 Value

 Outstanding at September 30, 2021

 128,965

 $
 165.55

 8.4

 $
 452,206

 Granted

 5,285

 46.9

 ( 400
)

 31.50

 Expired

 ( 4,114
)

 679.70

 Forfeited

 ( 16,086
)

 109.20

 Outstanding at September 30, 2022

 113,650

 149.88

 7.4

 $
 1,207

 Exercisable at September 30, 2022

 63,641

 $
 150.65

 6.5

 $
 -

 A
summary of the status of the Company's unvested options as of September 30, 2023 and 2022, are presented below:

 SUMMARY OF UNVESTED SHARES

 Nonvested

 Options

 Average Grant

 Date Fair
Value

 Nonvested options at September 30, 2021

 82,057

 $
 175.70

 Granted

 5,285

 $
 29.40

 —

 $
 —

 Forfeited

 ( 16,086
)

 $
 108.15

 Vested

 ( 21,247
)

 $
 213.85

 Nonvested options at September 30, 2022

 50,009

 $
 154.24

 Granted

 6,000

 $
 5.30

 -

 $
 -

 Forfeited

 ( 19,849
)

 $
 104.41

 Vested

 ( 12,131
)

 $
 307.72

 Nonvested options at September 30, 2023

 24,029

 $
 81.33

 Warrants

 F- 23

 2022
Warrants

 On
April 13, 2022, the Company sold 25,279
2022 Units, with each 2022 Unit consisting of (a) one share of our common stock and (b) one 2022 Warrant. Each 2022 Warrant entitles
the holder to purchase one share of our common stock at an exercise price of $ 70.00
per share. The 2022 Warrants have a term of 5 years. Holders may exercise their 2022 Warrants on a "cashless" basis
pursuant to a formula set forth in the form of 2022 Warrant.

 The
following table summarizes warrant activity for the year ended September 30, 2023:

 SCHEDULE OF WARRANT ACTIVITY

 Issuable Upon

 Exercise of

 Warrants

 Exercise
 Price

 Remaining
 Life (years)

 Aggregate
 Intrinsic

 Value

 Outstanding at September 30, 2022

 $

 3.7

 $
 -

 Issued

 -

 -

 Expired

 -

 -

 Outstanding at September 30, 2023

 $

 2.65

 -

 Exercisable at September 30, 2023

 $

 2.65

 $
 -

 The
following table summarizes warrant activity for the year ended September 30, 2022:

 Issuable Upon

 Exercise of

 Warrants

 Exercise Price

 Remaining

 Life (years)

 Aggregate

 Intrinsic

 Value

 Outstanding at September 30, 2021

 138,103

 $
 174.30

 4.5

 $
 -

 Issued

 25,279

 70.00

 ( 10,984
)

 157.85

 Expired

 -

 -

 Outstanding at September 30, 2022

 $

 3.7

 -

 Exercisable at September 30, 2022

 $

 3.7

 $
 -

 In
the year ended September 30, 2022, we issued 10,984 shares of common stock related to exercises of 2021 Warrants, including 10,869 shares
of common stock issued upon exercise of 10,869 Series A Warrants and 115 shares of common stock issued upon exercise of 230 Series B
Warrants. In connection with such exercises, in the year ended September 30, 2022, we received aggregate net proceeds of $ 1,702,596.

 10.
 INCOME TAX

 The
company recorded $ 0 income tax expense for the years ended September 30, 2023 and 2022.

 Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.

 The
Company will have tax losses available to be applied against future years' income as result of the losses incurred. However,
due to the losses incurred in the period and expected future operating results, management determined that it is more likely than
not that the deferred tax asset resulting from the tax losses available for carry forward will not be realized through the reduction
of future income tax payments. Accordingly, a 100 %
valuation allowance has been recorded for deferred income tax assets. Cumulative net operating loss carry forward is $ 45,340,996
and $ 37,663,761 as
of September 30, 2023 and 2022, respectively, and will begin expiring in 2033. Utilization of these NOLs might be subject to various
limitations such as the IRC Section 382 limitation and the 80% taxable income limitation. A full study of the NOL limitations has
not been completed yet.

 F- 24

 The
earliest tax year which remains open to examination is 2020.

 The
Company used statutory blended tax rates of 28 %, 11 % and 33.58 % for its deferred tax assets that arose in the US, Korea, and Japan respectively.

 Deferred
tax assets consisted of the following as of September 30, 2023 and 2022:

 SCHEDULE OF DEFERRED TAX ASSETS

 2023

 2022

 Net Operating Losses

 12,413,540

 $
 10,263,914

 Stock based compensation

 5,944,806

 5,775,567

 Fixed assets and intangible assets

 21,071

 168,498

 Total deferred tax assets

 18,379,417

 $
 16,207,979

 Valuation Allowance

 ( 18,379,417
)

 $
 ( 16,207,979
)

 Deferred tax assets net of valuation allowance

 -

 $
 -

 11.
 CONTINGENCIES

 Steeped,
Inc. Litigation

 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. The earlier case involved Steeped's purported trademark protection for "steeped coffee" and related phrases.

 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. 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. 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.

 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. 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. 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. 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 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.

 From
time to time, we may be subject to legal proceedings and claims in the ordinary course of business. The results of any future litigation
cannot be predicted with certainty, and, regardless of the outcome, litigation can have an adverse impact on us because of defense and
settlement costs, diversion of management resources, and other factors. Matters that are probable of unfavorable outcomes to us and which
can be reasonably estimated are accrued. Such accruals are based on information known about the matters, our estimates of the outcomes
of such matters and our experience in contesting, litigating and settling similar matters.

 F- 25

 12.
 SUBSEQUENT EVENTS

 New
Operating Lease

 Effective
January 1, 2024, we entered into a new lease in Carlsbad, California for additional office space. The lease term is two years and initial
monthly rents are approximately $ 5,760 per month plus common area expenses.

 Registered
Offering

 The
Company offered in an underwritten public offering (the "Offering"), 425,000 shares of common stock, par value $ 0.00001 per
share (the "Common Stock"), at a price to the public of $ 3.00 per share of Common Stock (the "Offering Price").
The Offering was made pursuant to a shelf registration statement filed with and declared effective by the Securities and Exchange Commission
(the "SEC") (Registration No. 333-274818), a base prospectus, dated October 5, 2023, included as part of the registration
statement, and a prospectus supplement, dated October 17, 2023.

 On
October 18, 2023, the Company entered into an underwriting agreement (the "Underwriting Agreement") with Maxim Group LLC,
as the sole book-running manager and underwriter (the "Underwriter"), relating to the Offering. Pursuant to the Underwriting
Agreement, the Company granted the Underwriter a 45-day option to purchase up to 63,750 additional shares of Common Stock at the Offering
Price, less underwriting discounts and commissions. The Company received approximately $ 1.0 million in net proceeds from the Offering,
after deducting underwriting discounts and commissions and other estimated Offering expenses payable by the Company. In addition, on
December 5, 2023, the Underwriter utilized its option to purchase additional shares of Common Stock resulting in additional net proceeds
of $ 178,000 after deducting underwriting discounts and commissions.

 Private
Placement

 On
November 9, 2023, the Company issued in a private placement to an accredited investor ("Shareholder") 46,800 shares of Common
Stock, together with warrants to purchase a total of approximately 5,200 shares of Common Stock at an exercise price of $ 2.77 per share
(collectively, the "Subscription Shares") in accordance with the terms of a Subscription Agreement and common stock purchase
warrant. The warrants have a five year term and are exercisable upon the six-month anniversary of the original issuance date. The Subscription
Shares were issued with a purchase price of $ 129,683.

 F- 26