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| 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 StreetSuite 107Vista, CA 92081 |
|-------------------------------------------|
| (Address of principal executive offices)  |

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| Large accelerated filer | ☐ |                                        |   | Accelerated filer         | ☐ |
|-------------------------|---------|---------------------------------------------|--------|---------------------------|---------|
| Non-accelerated filer   | ☐ | (Do not check if smaller reporting company) |   | Smaller reporting company | ☒ |

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| PART II                      | 5                                                                                                                       |
|-----------------------------------|-------------------------------------------------------------------------------------------------------------------------|
| ITEM 1.                           | BUSINESS.                                                                                                               | 5 |
| ITEM 1A.                          | RISK FACTORS.                                                                                                           | 16 |
| ITEM 2.                           | PROPERTIES.                                                                                                             | 23 |
| ITEM 3.                           | LEGAL PROCEEDINGS.                                                                                                      | 23 |
| ITEM 4.                           | SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS.                                                                | 23 |
|                              |                                                                                                                    |  |
| PART II                           | 24                                                                                                                      |
| ITEM 5.                           | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. | 24 |
| ITEM 6.                           | SELECTED FINANCIAL DATA.                                                                                                | 25 |
| ITEM 7.                           | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION                                    | 26 |
| ITEM 7A.                          | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                                                             | 30 |
| ITEM 8.                           | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                                                                            | 30 |
| ITEM 9.                           | CHANGES IN AND DIAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.                                    | 30 |
| ITEM 9A(I).                  | CONTROLS AND PROCEDURES                                                                                                 | 30 |
| ITEM 9B.           | OTHER INFORMATION                                                                                                       | 31 |
|                              |                                                                                                                    |  |
| PART III                          | 32                                                                                                                      |
| ITEM 10.                | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.                                                                 | 32 |
| ITEM 11.                | EXECUTIVE COMPENSATION.                                                                                                 | 34 |
| ITEM 12.                | SECURITY OWERSHIIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.                         | 35 |
| ITEM 13.                | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR  INDEPENDENCE.                                            | 36 |
| ITEM 14.                | PRINCIPAL ACCOUNTING FEES AND SERVICES.                                                                                 | 36 |
| ITEM 15.      | EXHIBITS, FINANCIAL STATEMENT SCHEDULES.                                                                                | 37 |
|                              |                                                                                                                    |
| SIGNATURES                        | 37                                                                                                                      |

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| Coffee Blenders ®                 | Product Branding and Packaging for the Single Serve Line |
|----------------------------------------|----------------------------------------------------------|
| www.CoffeeBlenders.com                 |                                                          |
| Relax Cup (®)for Stress Reduction |                                                          |

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| Lean Cup (®)for Weight Loss                          |  |
|-----------------------------------------------------------|--|
| Think Cup (®)for Improved Cognitive Performance |  |
| Nude Cup (®)Organic Coffee                      |  |
| Active Cup (®)for Improved Workout Performance  |  |
| Matcha Cup Green Tea                                      |  |

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| Coffee Blenders --®                              | Product Branding and Packaging for the Drip Cup Line |
|-------------------------------------------------------|------------------------------------------------------|
| www.CoffeeBlenders.comThe Gourmet Pour-Over           |                                                      |
| Nude Cup (®) Organic Coffee                 |                                                      |
| Relax Cup (®) for Stress Reduction               |                                                 |
| Lean Cup (®) for Weight Loss                     |                                                      |
| Think Cup (®) for Improved Cognitive Performance |                                                      |

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|  |  |
|--|--|
| Coffee Blenders ®                   | Product Branding and Packaging for Whole Bean Coffee Bag |
|------------------------------------------|----------------------------------------------------------|
| Honduran Blend Organic Dark Roast Coffee |                                                          |
| Honduran Blend LEAN, THINK, & RELAX 12 oz bagged ground coffee         |  |
|----------------------------------------------------------------------------|--|
| Coffee Blenders Ready-To-Drink Cold Brew in NUDE, LEAN, THINK, & RELAX |  |

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| Twin Peaks Single Serve Pour Over Coffee |  |
|------------------------------------------|--|
| Twin Peaks Bagged 12oz Coffee            |  |

| ● | Secure additional working capital to support growth and development of NuZee, Inc. sales and support operations |
|---------|-----------------------------------------------------------------------------------------------------------------|

| ● | Build onto our existing product and brand awareness through marketing and communication programs |
|---------|--------------------------------------------------------------------------------------------------|

| ● | Continue to build our enthusiast and loyal base of consumers for Coffee Blenders |
|---------|----------------------------------------------------------------------------------|

| ● | Expand our co-packing operation |
|---------|---------------------------------|

| ● | Expand distribution across retail, online and affiliate channels |
|---------|------------------------------------------------------------------|

| ● | Contract with multiple manufacturing partners to scale production as required |
|---------|-------------------------------------------------------------------------------|

| ● | Work with brokers to help quicken the process our product gets to distributors and grocery chains |
|---------|---------------------------------------------------------------------------------------------------|

| ● | Work alongside with other roasters, nationwide, and co-pack their roasts into our Drip Cups |
|---------|---------------------------------------------------------------------------------------------|

| ● | Build up our coffee extraction business |
|---------|-----------------------------------------|

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| ● | Drip Cup Kona Blend Coffee Blenders line extension |
|---------|----------------------------------------------------|

| ● | Coffee Blenders ready-to-drink line of functional cold brew |
|---------|-------------------------------------------------------------|

| ● | Twin Peaks single serve pour-over and whole bean coffee lines |
|---------|---------------------------------------------------------------|

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| ● | Expanding our contract co-packing operation in Vista, CA to accommodate national coffee roasters and grocery chain |
|---------|--------------------------------------------------------------------------------------------------------------------|

| ● | Continuing the exploration of our coffee extraction technologies |
|---------|------------------------------------------------------------------|

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| ● | Unexpected increases in production costs; |
|---------|-------------------------------------------|

| ● | Unexpected scheduling delays; |
|---------|-------------------------------|

| ● | Unexpected shortage of ingredients; |
|---------|-------------------------------------|

| ● | Loss of priority assignment of any and all supplies and materials; |
|---------|--------------------------------------------------------------------|

| ● | The failure from any of our partners to deliver components or finished goods.  |
|---------|-------------------------------------------------------------------------------------|

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| ● | develop better and more variety of products |
|---------|---------------------------------------------|

| ● | develop less expensive products |
|---------|---------------------------------|

| ● | develop broader channels |
|---------|--------------------------|

| ● | as well as the ability to respond more rapidly to changing market conditions |
|---------|------------------------------------------------------------------------------|

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|               |   | BID PRICE PER SHARE |
|--------------------|--------|---------------------|
| Quarters Ended     |   | HIGH                | LOW |
| September 30, 2017 |   | 0.51                | 0.51 |
| June 30, 2017      |   | 0.51                | 0.51 |
| March 31, 2017     |   | 0.51                | 0.51 |
| December 31, 2016  |   | 0.78                | 0.78 |
| September 30, 2016 |   | 0.225               | 0.225 |
| June 30, 2016      |   | 0.40                | 0.15 |
| March 31, 2016     |   | 0.6                 | 0.2 |
| December 31, 2015  |   | 0.6                 | 0.2 |

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| Equity Compensation Plan Information                       |
|------------------------------------------------------------|
| Plan category                                              | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|                                                       | (a) | (b) | (c) |
| Equity compensation plans approved by security holders     | 3,064,500 | 0.58 | 6,935,500 |
| Equity compensation plans not approved by security holders | n/a | n/a | n/a |
| Total                                                      | 3,064,500 | 0.58 | 6,935,500 |

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| ● | Direct – coffeeblenders.com shopping via search and digital marketing |
|---------|-----------------------------------------------------------------------------|

| ● | E-commerce affiliates (Amazon Exclusives, Groupon, Jet.com, Bulu box) |
|---------|-----------------------------------------------------------------------|

| ● | Select health and wellness retailers |
|---------|--------------------------------------|

| ● | Key mass/grocery retailers – Kroger, HEB, Safeway, Whole Foods, Lowes, Jewel-Osco, Rouses |
|---------|-------------------------------------------------------------------------------------------------|

| ● | Co-Packing with other coffee roasters on our pour-over drip cup |
|---------|-----------------------------------------------------------------|

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| (a) | Evaluation on Disclosure Controls and Procedures |
|-----|--------------------------------------------------|

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| (b) | Management's report on internal control over financial reporting |
|-----|------------------------------------------------------------------|

| ● | Financial Reporting Systems: We did not maintain a fully integrated financial reporting system throughout the period and as a result, extensive manual analysis, reconciliation and adjustments were required in order to produce financial statements for external reporting purposes. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Segregation of Duties: We do not currently have a sufficient complement of technical accounting and external reporting personal commensurate to support standalone external financial reporting under public company or SEC requirements. Specifically, the Company did not effectively segregate certain accounting duties due to the small size of its accounting staff, and inability to maintain a sufficient number of adequately trained personnel who have the knowledge and experience with GAAP and SEC reporting necessary to anticipate and identify risks critical to financial reporting and the closing process. In addition, there were inadequate reviews and approvals by the Company's personnel of certain reconciliations and other processes in day-to-day operations due to the lack of a full complement of accounting staff. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| NAME           |   | AGE    |   | POSITION(S) AND OFFICE(S) HELD                                                              |
|----------------|--------|--------|--------|---------------------------------------------------------------------------------------------|
| Masa Higashida |   | 46     |   | Chief Executive Officer, Secretary, Treasurer, Chief Financial Officer, Director (Chairman) |
|           |   |   |   |                                                                                        |
| Travis Gorney  |   | 37     |   | President, & Chief Operations Officer                                                   |

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| 1. | any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| SUMMARY COMPENSATION TABLE                                 |
|------------------------------------------------------------|
|                                                       |   |   |   |   |   |   |   |   |   |
| Name andprincipal position(a)                              | Year(b) | Salary(US$)(c) | Bonus(US$)(d) | Stock Awards(US$)(e) | OptionAwards(US$)(f) | Non-EquityIncentive PlanCompensation(US$)(g) | NonqualifiedDeferredCompensationEarnings(US$)(h) | All OtherCompensation(US$)(i) | Total(US$)(j) |
| Masateru HigashidaCEO, CFO,  Secretary, Treasurer (1) | 20172016 | 15,0000 | 100,0000 | 00 | 617,4850 | 00 | 00 | 00 | 732,4850 |
|                                                       |   |   |   |   |   |   |   |   |   |
| Travis GorneyPresident, COO(2)                             |  2017 | 83,450 | 0 | 0 | 15,134 | 0 | 0 | 0 | 98,584 |

| (1)    |  Masateru Higashida was appointed as the Company's President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary, and Chief Operations Officer ("COO") on August 19, 2014.  Mr. Higashida resigned as the Company's President and COO on August 28, 2017. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                    |
| (2)    | Travis Gorney was appointed as the Company's President & Chief Operations Officer on August 28, 2017.                                                                                                                                                                               |

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| Title of Class                                | Name and Address of Beneficial Owner | Amount of Beneficial Ownership | Percent of Class (1) |
|-----------------------------------------------|--------------------------------------|--------------------------------|---------------------------|
| Executive Officers and Directors              |
| Common                                        | Masateru Higashida                   | 14,233,633                     | 39.47%                    |
| Common                                        | Travis Gorney                        | 1,642,000                      | 4.55%                     |
| Total of All Executive Officers and Directors | 15,875,633                           | 44.02%                         |
| Shareholders Holding 5% or Greater            |
| Common                                        | Masateru Higashida                   | 14,233,633                     | 39.47%                    |
| Total of All Shareholders With 5% or Greater  | 14,233,633                           | 39.47%                         |

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|                            |   | 2017   |   |   | 2016   |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|
| FEE CATEGORY                    |   |   |   |   |   |   |
| Audit Fees (Malone &Bailey) |   | $      | 52,036 |   |   | $      | 43,922 |   |
| Tax Fee                         |   |   | -      |   |   |   | - |   |
| Audit-Related Fees              |   |   | -      |   |   |   | - |   |
| TOTAL FEES                      |   | $      | 52,036 |   |   | $      | 43,922 |   |

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|                                                                           | Page   |         |
|--------------------------------------------------------------------------------|--------|--------------|
| Consolidated Financial Statements For The Fiscal Year Ended September 30, 2017 |   |         |
| Report of Independent Registered Public Accounting Firm                        | F-1    |    |
| Consolidated Balance Sheets                                                    | F-2    |    |
| Consolidated Statements of Operations                                          | F-3    |    |
| Consolidated Statements of Comprehensive Loss                                  | F-4    |    |
| Consolidated Statements of Changes in Stockholder's Equity (Deficit)           | F-5    |         |
| Consolidated Statements of Cash Flows                                          | F-6    |    |
| Notes to Consolidated Financial Statements                                     | F-7    |    |
| EXHIBIT NO. |   | DESCRIPTION                                                                                                                    |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------|
| 31.1        |   | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|        |   |                                                                                                                           |
| 32.1        |   | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |

|   | NuZee, Inc.       |                                                                                                                                             |
|--------|-------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|   |              |                                                                                                                                             |   |
|   | By:               | */s/ Masateru Higashida*                                                                                                                         |   |
|   | Name:   | Masateru Higashida                                                                                                                               |   |
|   | Title:            | Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer), Secretary, Treasurer, and Director |   |

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| NuZee, Inc.                                                      |   |
|------------------------------------------------------------------|--------|
| CONSOLIDATED BALANCE SHEETS                                      |   |
|                                                             |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |
|                                                             |   | September 30, 2017 |   |   | September 30, 2016 |   |
| ASSETS                                                           |   |   |   |   |   |   |
| Current assets:                                                  |   |   |   |   |   |   |
| Cash                                                             |   | $ | 347,327 |   |   | $ | 40,613 |   |
| Accounts receivable, net                                         |   |   | 143,893 |   |   |   | 57,711 |   |
| Accounts receivable - Related party                              |   |   | 12,380 |   |   |   | - |   |
| Inventories, net                                                 |   |   | 266,620 |   |   |   | 206,356 |   |
| Other current assets                                             |   |   | 102,926 |   |   |   | 65,726 |   |
| Other current assets - Related party                             |   |   | 29,378 |   |   |   | - |   |
| Total current assets                                             |   |   | 902,524 |   |   |   | 370,406 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Property and equipment, net                                      |   |   | 277,987 |   |   |   | 151,946 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Other assets:                                                    |   |   |   |   |   |   |   |   |
| Goodwill                                                         |   |   | 17,112 |   |   |   | - |   |
| Customer List, net                                               |   |   | 45,899 |   |   |   | - |   |
| Investment in unconsolidated affiliate                           |   |   | 10,733 |   |   |   | - |   |
|                                                             |   |   | 73,744 |   |   |   | - |   |
|                                                             |   |   |   |   |   |   |   |   |
| Total assets                                                     |   | $ | 1,254,255 |   |   | $ | 522,352 |   |
|                                                             |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                   |   |   |   |   |   |   |   |   |
| Current liabilities:                                             |   |   |   |   |   |   |   |   |
| Accounts payable                                                 |   | $ | 104,973 |   |   | $ | 189,317 |   |
| Loan payable - short term - Related party                        |   |   | 200 |   |   |   | 145,377 |   |
| Current portion of long-term loan payable                        |   |   | 44,681 |   |   |   | - |   |
| Convertible Notes payable - Related party                        |   |   | - |   |   |   | 603,008 |   |
| Other current liabilities                                        |   |   | 126,687 |   |   |   | 717 |   |
| Other current liabilities - Related party                        |   |   | 1,089 |   |   |   | - |   |
| Deferred revenue                                                 |   |   | 72,750 |   |   |   | 6,620 |   |
| Total current liabilities                                        |   |   | 350,380 |   |   |   | 945,039 |   |
|                                                             |   |   |   |   |   |   |   |   |
| Non-current liabilities:                                         |   |   |   |   |   |   |   |   |
| Loan payable - long term, net of current portion                 |   | $ | 133,644 |   |   | $ | - |   |
| Other noncurrent liabilities                                     |   |   | 9,610 |   |   |   | - |   |
|                                                             |   |   | 143,254 |   |   |   | - |   |
|                                                             |   |   |   |   |   |   |   |   |
| Total liabilities                                                |   |   | 493,634 |   |   |   | 945,039 |   |
|                                                             |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |   |   |   |   |
| Stockholders' equity (deficit):                                  |   |   |   |   |   |   |   |   |
| Common stock; 100,000,000 shares authorized, $0.00001 par value; |   |   |   |   |   |
| 34,720,538 and 31,154,951 shares issued                          |   | $ | 347 |   |   | $ | 311 |   |
| Additional paid in capital                                       |   |   | 9,718,648 |   |   |   | 6,909,523 |   |
| Accumulated deficit                                              |   |   | (9,030,551 | ) |   |   | (7,263,412 | ) |
| Less: treasury stock, at cost                                    |   |   |   |   |   |   |   |   |
| (0 and 1,800,844 shares held in treasury)                        |   |   | - |   |   |   | (69,109 | ) |
| Accumulated other comprehensive loss                             |   |   | (20,680 | ) |   |   | - |   |
| Total NuZee, Inc. shareholders' equity (deficit)                 |   |   | 667,764 |   |   |   | (422,687 | ) |
| Noncontrolling interest                                          |   |   | 92,857 |   |   |   | - |   |
| Total stockholders' equity (deficit)                             |   |   | 760,621 |   |   |   | (422,687 | ) |
|                                                             |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity (deficit)             |   | $ | 1,254,255 |   |   | $ | 522,352 |   |

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| NuZee, Inc.                                                           |   |
|-----------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF OPERATIONS                                 |   |
|                                                                  |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   |   |
|                                                                  |   | Year EndedSeptember 30,2017 |   |   | Year EndedSeptember 30,2016 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| Revenues, net                                                         |   | $ | 1,628,410 |   |   | $ | 455,491 |   |
| Cost of sales                                                         |   |   | 1,319,232 |   |   |   | 408,150 |   |
| Gross Profit                                                          |   |   | 309,178 |   |   |   | 47,341 |   |
|                                                                  |   |   |   |   |   |   |   |   |
| Operating expenses                                                    |   |   | 2,076,654 |   |   |   | 1,325,463 |   |
| Loss from operations                                                  |   |   | (1,767,476 | ) |   |   | (1,278,122 | ) |
|                                                                  |   |   |   |   |   |   |   |   |
| Other income                                                          |   |   | 40,764 |   |   |   | 11,897 |   |
| Equity in loss of unconsolidated affiliate                            |   |   | (39,267 | ) |   |   | - |   |
| Other expense                                                         |   |   | (3,235 | ) |   |   | (5,683 | ) |
| Interest expense                                                      |   |   | (6,976 | ) |   |   | (3,385 | ) |
| Net loss                                                              |   |   | (1,776,190 | ) |   |   | (1,275,293 | ) |
| Net loss attributable to noncontrolling interest                      |   |   | (9,051 | ) |   |   | - |   |
|                                                                  |   |   |   |   |   |   |   |   |
| Net loss attributable to NuZee, Inc.                                  |   | $  | (1,767,139 | ) |   | $  | (1,275,293 | ) |
|                                                                  |   |   |   |   |   |   |   |   |
| Basic and diluted loss per common share                               |   | $ | (0.05 | ) |   | $ | (0.04 | ) |
|                                                                  |   |   |   |   |   |   |   |   |
| Basic and diluted weighted average number of common stock outstanding |   |   | 32,135,363 |   |   |   | 30,752,267 |   |

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| NuZee, Inc.                                   |        |
|-----------------------------------------------|-------------|
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS |        |
|                                          |        |   |   |   |   |   |   |   |   |   |   |   |
|                                          |        |   |   |   |   |   |   |   |   |   |   |   |
|                                          |        |   |   |   | Noncontrolling |   |   |   |   |   |
|                                          | NuZee, Inc. |   | Interests |   | Total |   |
| For the year eneded September 30, 2017        | 2017        |   | 2016 |   | 2017 |   | 2016 |   | 2017 |   | 2016 |   |
| Net loss                                      |        | $ | (1,767,139 | ) |   | $ | (1,275,293 | ) |   | $ | (9,051 | ) |   | $ | - |   |   | $ | (1,776,190 | ) |   | $ | (1,275,293 | ) |
|                                          |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation                  |        |   | (20,680 | ) |   |   | - |   |   |   | (8,863 | ) |   |   | - |   |   |   | (29,543 | ) |   |   | - |   |
| Total other comprehensive loss, net of tax    |        |   | (20,680 | ) |   |   | - |   |   |   | (8,863 | ) |   |   | - |   |   |   | (29,543 | ) |   |   | - |   |
| Comprehensive loss                            |        | $ | (1,787,819 | ) |   | $ | (1,275,293 | ) |   | $ | (17,914 | ) |   | $ | - |   |   | $ | (1,805,733 | ) |   | $ | (1,275,293 | ) |

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| NuZee, Inc.                                                          |   |
|----------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) |   |
| For the period from October 1, 2015 to September 30, 2017            |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   |   |   |   | Additional |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | Total |   |
|                                                                 |   | Common Stock |   |   | Paid-in |   |   | Treasury Stock |   |   | Accumulated |   |   | Noncontrolling |   |   |   |   |   | Stockholders' |   |
|                                                                 |   | Shares |   |   | Amount |   |   | Capital |   |   | Shares |   |   | Amount |   |   | Deficit |   |   | Interest |   |   | OCI |   |   | Equity |   |
| Balance September 30, 2015                                           |   |   | 30,124,951 |   |   | $ | 301 |   |   | $ | 5,940,337 |   |   |   | 2,016,000 |   |   | $ | (77,366 | ) |   | $ | (5,988,119 | ) |   | $ | - |   |   | $ | - |   |   | $ | (124,847 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for cash                                         |   |   | 1,025,000 |   |   |   | 10 |   |   |   | 800,991 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 801,001 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasury stock issued for cash                                       |   |   | - |   |   |   | - |   |   |   | 129,442 |   |   |   | (215,156 | ) |   |   | 8,257 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 137,699 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock option expense                                                 |   |   | - |   |   |   | - |   |   |   | 37,253 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 37,253 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock options-exercised                                              |   |   | 5,000 |   |   |   | - |   |   |   | 1,500 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,500 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,275,293 | ) |   |   | - |   |   |   | - |   |   |   | (1,275,293 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance September 30, 2016                                           |   |   | 31,154,951 |   |   |   | 311 |   |   |   | 6,909,523 |   |   |   | (1,800,844 | ) |   |   | (69,109 | ) |   |   | (7,263,412 | ) |   |   | - |   |   |   | - |   |   |   | (422,687 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for cash                                         |   |   | 1,032,539 |   |   |   | 11 |   |   |   | 860,034 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 860,045 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasury stock issued for cash                                       |   |   | - |   |   |   | - |   |   |   | 833,002 |   |   |   | 1,766,242 |   |   |   | 67,781 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 900,783 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Treasury stock issued for service                                    |   |   | - |   |   |   | - |   |   |   | 13,551 |   |   |   | 34,602 |   |   |   | 1,328 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 14,879 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for conversion of note payable                   |   |   | 1,384,314 |   |   |   | 14 |   |   |   | 705,986 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 706,000 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock option expense                                                 |   |   | - |   |   |   | - |   |   |   | 138,098 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 138,098 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock issued for NuZee JP acquisition                                |   |   | 1,148,734 |   |   |   | 11 |   |   |   | 258,454 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 110,771 |   |   |   | - |   |   |   | 369,236 |   |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NuZee Japan foreign currency gain(loss)                              |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (8,863 | ) |   |   | (20,680 | ) |   |   | (29,543 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1,767,139 | ) |   |   | (9,051 | ) |   |   | - |   |   |   | (1,776,190 | ) |
|                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance September 30, 2017                                           |   |   | 34,720,538 |   |   | $ | 347 |   |   | $ | 9,718,648 |   |   |   | - |   |   | $ | - |   |   | $ | (9,030,551 | ) |   | $ | 92,857 |   |   | $ | (20,680 | ) |   | $ | 760,621 |   |

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| NuZee, Inc.                                                                 |   |
|-----------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                       |   |
|                                                                        |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |
|                                                                        |   | For the Year EndedSeptember 30,2017 |   |   | For the Year EndedSeptember 30,2016 |   |
|                                                                        |   |   |   |   |   |   |
| Operating activities:                                                       |   |   |   |   |   |   |
| Net loss                                                                    |   | $ | (1,776,190 | ) |   | $ | (1,275,293 | ) |
| Adjustments to reconcile net loss to net cash used by operating activities: |   |   |   |   |   |   |   |   |
| Depreciation and Amortization                                               |   |   | 87,392 |   |   |   | 41,921 |   |
| Loss on disposition of equipments                                           |   |   | - |   |   |   | 2,715 |   |
| Share issued for services                                                   |   |   | 14,879 |   |   |   | - |   |
| Option expense                                                              |   |   | 138,098 |   |   |   | 37,253 |   |
| Interest expense                                                            |   |   | 2,615 |   |   |   | 3,385 |   |
| Inventory impairment                                                        |   |   | 9,086 |   |   |   | 49,223 |   |
| Provision for sales returns and chargebacks                                 |   |   | 86,487 |   |   |   | - |   |
| Equity in loss of unconsolidated affiliate                                  |   |   | 39,267 |   |   |   | - |   |
| Change in operating assets and liabilities:                                 |   |   |   |   |   |   |   |   |
| Accounts receivable                                                         |   |   | (165,614 | ) |   |   | (39,506 | ) |
| Accounts receivable - Related party                                         |   |   | 35,174 |   |   |   | - |   |
| Inventories                                                                 |   |   | 140,784 |   |   |   | (53,816 | ) |
| Other current assets                                                        |   |   | 31,564 |   |   |   | (44,194 | ) |
| Other current assets - Related party                                        |   |   | (29,378 | ) |   |   | - |   |
| Accounts payable                                                            |   |   | (159,859 | ) |   |   | 123,796 |   |
| Other current liabilities                                                   |   |   | 80,648 |   |   |   | 6,730 |   |
| Other current liabilities - Related party                                   |   |   | 1,089 |   |   |   | - |   |
| Deferred revenue                                                            |   |   | 66,130 |   |   |   | - |   |
| Net cash used by operating activities                                       |   |   | (1,397,828 | ) |   |   | (1,147,786 | ) |
|                                                                        |   |   |   |   |   |   |   |   |
| Investing activities:                                                       |   |   |   |   |   |   |   |   |
| Purchase of equipment                                                       |   |   | (186,973 | ) |   |   | (4,479 | ) |
| Acquisition of investment in unconsolidated affiliate                       |   |   | (50,000 | ) |   |   | - |   |
| Net cash acquired from business acquisition                                 |   |   | 201,676 |   |   |   | - |   |
| Net cash used by investing activities                                       |   |   | (35,297 | ) |   |   | (4,479 | ) |
|                                                                        |   |   |   |   |   |   |   |   |
| Financing activities:                                                       |   |   |   |   |   |   |   |   |
| Proceeds from issuance of Loan - short term - Related party                 |   |   | 572,306 |   |   |   | - |   |
| Repayment of loans - short term - Related party                             |   |   | (617,106 | ) |   |   | - |   |
| Proceeds from issuance of Loan - short term                                 |   |   | 87,268 |   |   |   | 200,000 |   |
| Repayment of loans - short term                                             |   |   | (37,600 | ) |   |   | (55,000 | ) |
| Payments on capital lease                                                   |   |   | (7,866 | ) |   |   | - |   |
| Proceeds from issuance of common stock                                      |   |   | 860,045 |   |   |   | 801,001 |   |
| Proceeds from issuance of exercise of options                               |   |   | - |   |   |   | 1,500 |   |
| Proceeds from issuance of treasury stock                                    |   |   | 900,783 |   |   |   | 137,699 |   |
| Net cash provided by financing activities                                   |   |   | 1,757,830 |   |   |   | 1,085,200 |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Effect of foreign exchange on cash                                          |   |   | (17,991 | ) |   |   | - |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Net change in cash                                                          |   |   | 306,714 |   |   |   | (67,065 | ) |
|                                                                        |   |   |   |   |   |   |   |   |
| Cash, beginning of period                                                   |   |   | 40,613 |   |   |   | 107,678 |   |
| Cash, end of period                                                         |   | $ | 347,327 |   |   | $ | 40,613 |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information:                           |   |   |   |   |   |   |   |   |
| Cash paid for interest                                                      |   | $ | 2,649 |   |   | $ | - |   |
| Cash paid for taxes                                                         |   | $ | 800 |   |   | $ | 800 |   |
|                                                                        |   |   |   |   |   |   |   |   |
| Noncash investing and financing activities:                                 |   |   |   |   |   |   |   |   |
| Acquisition of NuZee JAPAN Co., Ltd through issuance of common shares       |   | $ | 258,465 |   |   | $ | - |   |
| Conversion of note payable to common stock                                  |   | $ | 606,000 |   |   | $ | - |   |
| Conversion of note payable to common stock - Related party                  |   | $ | 100,000 |   |   | $ | - |   |

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| For the year ended September 30, 2017: |   |         |    |   |               |   |
|----------------------------------------|--------|--------------|---------|--------|--------------------|--------|
|                                   |   |         |    |   |               |   |
| Customer Name                          |   | Sales Amount |    |   | % of Total Revenue |   |
| Customer PO                            |   | $            | 536,511 |   |               |   | 33 | % |
| Customer N                             |   | $            | 489,058 |   |               |   | 30 | % |
|                                   |   |         |    |   |               |   |   |   |
|                                   |   |         |    |   |               |   |   |   |
| For the year ended September 30, 2016: |   |         |    |   |               |
|                                   |   |         |    |   |               |   |   |   |
| Customer Name                          |   | Sales Amount |    |   | % of Total Revenue |   |
| Customer S                             |   | $            | 259,104 |   |               |   | 57 | % |
| Customer H                             |   | $            | 91,712  |   |               |   | 21 | % |
| Customer C                             |   | $            | 70,462  |   |               |   | 15 | % |

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| 2017                         |   | $ | 4,271  |   |
|------------------------------|--------|---|--------|--------|
| 2018                         |   | $ | 4,271  |   |
| 2019                         |   | $ | 4,271  |   |
| 2020                         |   | $ | 1,068  |   |
| Total Minimum Lease Payments |   | $ | 13,881 |   |
| 2017                         |   | $ | 56,784  |   |
|------------------------------|--------|---|---------|--------|
| 2018                         |   | $ | 58,488  |   |
| 2019                         |   | $ | 39,760  |   |
| Total Minimum Lease Payments |   | $ | 155,032 |   |

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| ● | Persuasive evidence of an arrangement exists; |
|---------|-----------------------------------------------|

| ● | Delivery has occurred or services have been rendered; |
|---------|-------------------------------------------------------|

| ● | The fee for the arrangement is fixed or determinable; and |
|---------|-----------------------------------------------------------|

| ● | Collectability is reasonably assured. |
|---------|---------------------------------------|

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|        |   | September 30, 2017 |   |   | September 30, 2016 |   |
|-------------|--------|--------------------|--------|--------|--------------------|--------|
| Advertising |   | $                  | 61,202 |   |               | $      | 33,030 |   |

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|                                    |   | September 30, 2017 |    |   | September 30, 2016 |   |
|-----------------------------------------|--------|--------------------|---------|--------|--------------------|--------|
| Raw materials                           |   | $                  | 111,043 |   |               | $      | 124,035 |   |
| Work in process     |   |               | 5,535   |   |               |   | 14,366 |   |
| Finished goods                          |   |               | 159,128 |   |               |   | 67,955 |   |
| Less - Inventory reserve                |   |               | 9,086   |   |               |   | 0 |   |
| Total                                   |   | $                  | 266,620 |   |               | $      | 206,356 |   |

|                      |   | September 30, 2017 |     |   | September 30, 2016 |    |
|---------------------------|--------|--------------------|----------|--------|--------------------|---------|
| Furniture & Fixture   |   | $                  | 31,514   |   |               | $       | 31,514 |   |
| Machinery & Equipment |   | $                  | 323,706  |   |               | $       | 169,864 |   |
| Vehicles                  |   | $                  | 44,657   |   |               | $       | 9,657 |   |
| Software                  |   | $                  | 14,807   |   |               | $       | 0 |   |
| Accumulated Depreciation  |   | $             | (136,697 | )      |               | $  | (59,089 | ) |
| Net PP & E            |   | $                  | 277,987  |   |               | $       | 151,946 |   |

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|                    |   | September 30, 2017 |   |
|------------------------------|--------|--------------------|--------|
|                    |   | Gross Carrying     |   |   | Accumulated |   |   | Net Carrying |   |
|                    |   | Amount             |   |   | Amortization |   |   | Amount |   |
| Amortized intangible assets: |   |               |   |   |   |   |   |   |   |
| Customer List                |   | $                  | 57,374 |   |   | $  | (11,475 | ) |   | $ | 45,899 |   |
| Total                        |   | $                  | 57,374 |   |   | $  | (11,475 | ) |   | $ | 45,899 |   |
| For the Year Ending September 30 | Estimated Amortization Expense |
|----------------------------------|--------------------------------|
| 2018                             | $11,475                        |
| 2019                             | $11,475                        |
| 2020                             | $11,475                        |
| 2021                             | $11,474                        |

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| Acquisition of NuZee Japan Co., Ltd.          |   |   |     |
|-----------------------------------------------|--------|--------|----------|
|                                          |   |   |     |
| Assets acquired:                              |   |   |     |
| Cash                                          |   | $      | 201,676  |   |
| Accounts receivable                           |   |   | 60,770   |   |
| Inventories                                   |   |   | 233,845  |   |
| Other current assets                          |   |   | 76,524   |   |
| Customer list                                 |   |   | 57,374   |   |
| Property and equipment                        |   |   | 16,677   |   |
| Goodwill                                      |   |   | 17,112   |   |
| Total assets acquired                         |   |   | 663,978  |   |
| Less liabilities assumed                      |   |   |     |   |
| Accounts payable and accrued liabilities      |   |   | (153,820 | ) |
| Loan payable                                  |   |   | (140,922 | ) |
| Total liabilities assumed                     |   |   | (294,742 | ) |
|                                          |   |   |     |   |
| Less noncontrolling interest                  |   |   | (110,771 | ) |
|                                          |   |   |     |   |
| Net assets acquired from NuZee JP acquisition |   |   | 258,465  |   |

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| NuZee, Inc.                                      |   |
|--------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF OPERATIONS            |   |
| (UNAUDITED)                                      |   |
|                                             |   |   |   |
|                                             |   |   |   |
|                                             |   | Year Ended |   |
|                                             |   | September 30,2016 |   |
|                                             |   | (Pro Forma) |   |
|                                             |   |   |   |   |
| Revenues                                         |   | $ | 1,526,057 |   |
| Cost of sales                                    |   |   | 1,141,403 |   |
| Gross Profit                                     |   |   | 384,654 |   |
|                                             |   |   |   |   |
| Operating expenses                               |   |   | 1,656,796 |   |
| Loss from operations                             |   |   | (1,272,142 | ) |
|                                             |   |   |   |   |
| Other income                                     |   |   | 39,686 |   |
|                                             |   |   |   |   |
| Other expense                                    |   |   | (22,704 | ) |
| Net loss                                         |   |   | (1,255,160 | ) |
| Net loss attributable to noncontrolling interest |   |   | - |   |
| Net loss attributable to NuZee, Inc.             |   | $  | (1,255,160 | ) |
|                                             |   |   |   |   |
| Net loss per share, basic and fully diluted      |   | $ | (0.04 | ) |
|                                             |   |   |   |   |
| Weighted average of shares outstanding           |   |   | 31,901,001 |   |

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|                                                    |   | 2017   |    |
|---------------------------------------------------------|--------|--------|---------|
| Beginning of period                                     |   | $      | -       |   |
| Additional investments in unconsolidated affiliate      |   | $      | 50,000  |   |
| Distributions received                                  |   | $      | -       |   |
| Sale of investment in unconsolidated affiliate          |   | $      | -       |   |
| Equity in net income (loss) of unconsolidated affiliate |   | $      | (39,267 | ) |
|                                                    |   |   |    |   |
| End of period                                           |   | $      | 10,733  |   |
|               |   | Tono Shinyo Kinko Bank |   |   | Nihon Seisaku Kouko |   |
|--------------------|--------|------------------------|--------|--------|---------------------|--------|
| 2017               |   | $                      | 26,660 |   |                | $      | 18,022 |   |
| 2018               |   | $                      | 26,660 |   |                | $      | 18,022 |   |
| 2019               |   | $                      | 26,660 |   |                | $      | 18,022 |   |
| 2020               |   | $                      | 19,993 |   |                | $      | 18,022 |   |
| 2012               |   | $                      | -      |   |                | $      | 6,264 |   |
| Total Loan Payment |   | $                      | 99,973 |   |                | $      | 78,352 |   |

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| Net Revenue:                 |   | 2017   |      |   | 2016   |   |
|------------------------------|--------|--------|-----------|--------|--------|--------|
| North America                |   | $      | 458,042   |   |   | $      | 194,150 |   |
| Japan                        |   |   | 1,170,368 |   |   |   | 2,237 |   |
| South Korea                  |   |   | 0         |   |   |   | 259,104 |   |
|                    |   | $      | 1,628,410 |   |   | $      | 455,491 |   |
|                         |   |   |      |   |   |   |   |   |
| Property and equipment, net: |   |   |      |   |   |   |   |   |
| North America                |   | $      | 266,522   |   |   | $      | 151,946 |   |
| Japan                        |   |   | 11,465    |   |   |   | 0 |   |
|                    |   | $      | 277,987   |   |   | $      | 151,946 |   |

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| For employees           | September 30, 2017 |   | September 30, 2016 |   |
|-------------------------|--------------------|--------|--------------------|--------|
| Risk-free interest rate |               |   | 1.64% - 1.75       | %      |   |   | 1.11% - 1.43 | % |
| Expected option life    | 5.5 - 6.5 years    |   | 4.5 years          |   |
| Expected volatility     |               |   | 97.6% - 99.1       | %      |   |   | 80.2% - 83.6 | %% |
| Expected dividend yield |               |   | 0.00               | %      |   |   | 0.00 | % |
| Exercise price          |               | $      | 0.40 - $0.56       |   |   | $ | 0.30 - $0.88 |   |
|                    |               |   |               |   |   |   |   |   |
| For non-employees       | September 30, 2017 |   | September 30, 2016 |   |
| Risk-free interest rate |               |   | 2.27               | %      |   |   | 1.74 | % |
| Expected option life    | 10 years           |   | 10 years           |   |
| Expected volatility     |               |   | 115.70             | %      |   |   | 104.70 | % |
| Expected dividend yield |               |   | 0.00               | %      |   |   | 0.00 | % |
| Exercise price          |               | $      | 0.51 - $0.56       |   |   | $ | 0.30 - $0.60 |   |

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|                              |   |            |      |   |          |   |   | Weighted                 |   |   |           |   |
|-----------------------------------|--------|-----------------|-----------|--------|---------------|--------|--------|--------------------------|--------|--------|----------------|--------|
|                              |   |            |      |   | Weighted      |   |   | Average                  |   |   |           |   |
|                              |   |            |      |   | Average       |   |   | Remaining                |   |   | Aggregate      |   |
|                              |   | Number ofShares |      |   | ExercisePrice |   |   | Contractual Life (years) |   |   | IntrinsicValue |   |
| Outstanding at September 30, 2016 |   |            | 573,000   |   |          | $      | 0.54   |                     |   |   |           |   |   |   |
| Granted                           |   |            | 2,684,000 |   |          |   | 0.48   |                     |   |   |           |   |   |   |
| Exercised                         |   |            | -         |   |          |   | -      |                     |   |   |           |   |   |   |
| Expired                           |   |            | (192,500  | )      |          |   | 0.48   |                     |   |   |           |   |   |   |
| Forfeited                         |   |            | -         |   |          |   | -      |                     |   |   |           |   |   |   |
| Outstanding at September 30, 2017 |   |            | 3,064,500 |   |          | $      | 0.58   |                     |   |   | 9.6            |   |   |   | 17,425 |   |
|                              |   |            |      |   |          |   |   |                     |   |   |           |   |   |   |   |   |
| Exercisable at September 30, 2017 |   |            | 180,500   |   |          | $      | 0.48   |                     |   |   | 8.4            |   |   |   | 17,425 |   |
|                              |   |            |       |   | Weighted      |   |   | Weighted                 |   |   |           |   |
|-----------------------------------|--------|-----------------|------------|--------|---------------|--------|--------|--------------------------|--------|--------|----------------|--------|
|                              |   |            |       |   | Average       |   |   | Average                  |   |   |           |   |
|                              |   |            |       |   |          |   |   | Remaining                |   |   | Aggregate      |   |
|                              |   | Number ofShares |       |   | ExercisePrice |   |   | Contractual Life (years) |   |   | IntrinsicValue |   |
| Outstanding at September 30, 2015 |   |            | 2,833,333  |   |          | $      | 0.48   |                     |   |   |           |   |   |   |
| Granted                           |   |            | 618,000    |   |          |   | 0.67   |                     |   |   |           |   |   |   |
| Exercised                         |   |            | (5,000     | )      |          |   | 0.30   |                     |   |   |           |   |   |   |
| Expired                           |   |            | (40,000    | )      |          |   | 0.30   |                     |   |   |           |   |   |   |
| Forfeited                         |   |            | (2,833,333 | )      |          |   | 0.48   |                     |   |   |           |   |   |   |
| Outstanding at September 30, 2016 |   |            | 573,000    |   |          | $      | 0.70   |                     |   |   | 9.6            |   |   | $ | - |   |
|                              |   |            |       |   |          |   |   |                     |   |   |           |   |   |   |   |   |
| Exercisable at September 30, 2016 |   |            | 195,000    |   |          | $      | 0.42   |                     |   |   | 9.6            |   |   | $ | - |   |

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| Nonvested options                      |   |             |      |
|----------------------------------------|--------|------------------|-----------|
|                                   |   | Number of        |      |
|                                   |   | Nonvested Shares |      |
| Nonvested shares at September 30, 2015 |   |             | -         |   |
| Granted                                |   |             | 618,000   |   |
| Exercised                              |   |             | (5,000    | ) |
| Forfeited                              |   |             | (40,000   | ) |
| Vested                                 |   |             | (195,000  | ) |
| Nonvested shares at September 30, 2016 |   |             | 378,000   |   |
| Granted                                |   |             | 2,684,000 |   |
| Exercised                              |   |             | -         |   |
| Forfeited                              |   |             | (120,000  | ) |
| Vested                                 |   |             | (58,000   | ) |
| Nonvested shares at September 30, 2017 |   |             | 2,884,000 |   |
|                 |   | 2017   |       |   | 2016   |   |
|----------------------|--------|--------|------------|--------|--------|--------|
| Net Operating Losses |   |   | 3,048,589  |   |   |   | 2,514,882 |   |
| Valuation Allowance  |   |   | (3,048,589 | )      |   |   | (2,514,882 | ) |

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