CIMG Inc 10-K for FY2025
CIMG Inc. (CIMG)
About this 10-K
CIMG Inc filed this 10-K on February 13, 2026, covering the fiscal year ended September 30, 2025 (FY2025).
Headline figures
Fiscal year ended September 30, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $10.3M
- up 433.5% from $1.93M a year earlier
- Net loss
- $4.88M
- compared with a net loss of $8.97M a year earlier
- Diluted EPS
- -$2.80
- compared with -$83.46 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the fiscal year ended
or
Commission
File No.
(exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices)
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
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).
Indicate 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 | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant 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.
Indicate 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). ☐
Indicate
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, 2025, the last business day of the most recently completed second fiscal
quarter), was approximately $
As of February 9, 2026, there were outstanding shares of the registrant’s Common Stock, $ par value.
TABLE OF CONTENTS
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Our Holding Company Structure and Risks Related to Doing Business in China
Our business operations are partially based in China, and our PRC Subsidiaries are subject to certain legal and operational risks associated with being based in China. On December 28, 2021, the Cyberspace Administration of China (“CAC”), and 12 other relevant PRC government authorities published the amended Cybersecurity Review Measures, which came into effect on February 15, 2022. The final Cybersecurity Review Measures provide that a “network platform operator” that possesses personal information of more than one million users and seeks a listing in a foreign country must apply for a cybersecurity review. Further, the relevant PRC governmental authorities may initiate a cybersecurity review against any company if they determine certain network products, services, or data processing activities of such company affect or may affect national security. As of the date of this report, our Company and its subsidiaries have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice or sanction. As advised by our PRC counsel, Guangdong Shenmou Law Firm (“Guangdong Shenmou”), we do not believe that we are subject to: (a) the cybersecurity review with the CAC, as we do not possess a large amount of personal information in our business operations, and our business does not involve the collection of data that affects or may affect national security, implicates cybersecurity, or involves any type of restricted industry; or (b) merger control review by China’s anti-monopoly enforcement agency due to the fact that we do not engage in monopolistic behaviors that are subject to these statements or regulatory actions. However, the interpretation, application and enforcement of PRC laws and regulations remain uncertain, and future regulatory developments could subject us to additional review or approval requirements.
On February 17, 2023, the China Securities Regulatory Commission (“CSRC”) issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, which became effective on March 31, 2023. Pursuant to the Trial Measures, PRC companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC. As advised by our PRC counsel, Guangdong Shenmou, we are a company incorporated in the State of Nevada, United States, and the operation of a portion of our business in the PRC does not, by itself, subject us to the Trial Measures or related filing requirements. However, due to uncertainties in the interpretation of PRC laws and regulations, as well as ongoing regulatory reviews of overseas listings involving PRC companies through offshore holding structures, we may be required to submit a filing with the CSRC in the future in connection with our operations in China. Such risks could result in a material change in our operations and/or the value of our securities and could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. Please see “Item 1A—Risk Factors—Risks Associated With Doing Business in China” and the associated risk factor on page 20.
Since 2021, the Chinese government has strengthened its anti-monopoly supervision, mainly in three aspects: (1) establishing the National Anti-Monopoly Bureau; (2) revising and promulgating anti-monopoly laws and regulations, including: the Anti-Monopoly Law (draft Amendment published on October 23, 2021 for public opinions), the anti-monopoly guidelines for various industries, and the detailed Rules for the Implementation of the Fair Competition Review System; and (3) expanding the anti-monopoly law enforcement targeting Internet companies and large enterprises. As of the date of this report, the Chinese government’s recent statements and regulatory actions related to anti-monopoly concerns have not impacted our ability to conduct business, accept foreign investments, or list on a U.S. or other foreign exchange because neither the Company nor its PRC operating entities engage in monopolistic behaviors that are subject to these statements or regulatory actions. Please see “Item 1A—Risk Factors—Risks Associated With Doing Business in China” and the associated risk factor on page 20.
Permissions Required from the PRC Authorities for Our Operations
We are also subject to legal and operational risks associated with being based in and having part of our operations in China. These risks may result in a material change in our operations, or a complete hindrance of our ability to offer or continue to offer our securities to investors, and could cause the value of such securities to significantly decline or become worthless. Recently, the PRC government initiated a series of regulatory actions and guidelines to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council, or the State Council, jointly issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. On December 28, 2021, the CAC, together with 12 other governmental departments of the PRC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. Article 7 of the Cybersecurity Review Measures stipulates that “Network platform operators that hold personal information of more than one million users and plan to go public abroad must report to the Cybersecurity Review Office for a cybersecurity review.”
As confirmed by our PRC counsel, Guangdong Shenmou, since we are not an online platform operator that possesses over one million users’ personal information, we are not subject to the cybersecurity review with the CAC under the Cybersecurity Review Measures, and for the same reason, we will not be subject to the network data security review by the CAC though another bill, the Regulations on the Security Management of Network Data, came into effect on January 1, 2025. As such, we believe that, as of the date of this report, we are compliant with the regulations and policies that have been issued by the CAC. As of the date of this report, these new laws and guidelines have not impacted the Company’s ability to conduct its business, accept foreign investments, or list on a U.S. or other foreign exchange; however, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could materially and adversely impact our business and financial outlook. See “Item 1A—Risk Factors—Risks Associated With Doing Business in China.”
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On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023. The Standing Committee of the National People’s Congress (the “SCNPC”) or PRC regulatory authorities may in the future promulgate additional laws, regulations, or implementing rules that require us to obtain regulatory approval from Chinese authorities. If we do not receive or maintain such approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of the shares of our common stock (“Common Stock”), significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.
Cash Flows through Our Organization
CIMG and DZR Tech may transfer cash to our PRC subsidiaries through capital injections and intra-group loans. As advised by our PRC counsel, Guangdong Shenmou, current PRC regulations permit Beijing Zhongyan to pay dividends to DZR Tech, only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. If we determine to pay dividends on any of our Common Stock in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiary, DZR Tech. DZR Tech will rely on payments made from Beijing Zhongyan, which will in turn rely on payments made from Beijing Xilin, Shanghai Huomao, and Henan Zhongyan. In addition, Beijing Zhongyan requires at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital.
During the fiscal years ended September 30, 2025 and 2024, there were no cash transfers between the Company and its subsidiaries.
Under the PRC laws and regulations, we are subject to restrictions on foreign exchange and cross-border cash transfers, including to CIMG, our non-PRC Subsidiaries, and U.S. investors. Our ability to distribute earnings to CIMG, non-PRC Subsidiaries, and U.S. investors is also limited. We are partially relying on dividends and other distributions on equity from our PRC Subsidiaries for our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur outside of mainland China. Current mainland China regulations permit our PRC Subsidiaries to pay dividends to us only out of their accumulated after-tax profits upon satisfaction of relevant statutory conditions and procedures, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our PRC Subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of its registered capital. These reserves, together with the registered capital, are not distributable as cash dividends. Additionally, if our PRC Subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends or make other distributions to us. In addition, the revenue and assets of our PRC Subsidiaries are generally denominated in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC Subsidiaries to pay dividends to us.
We have established certain controls and procedures for cash flows within our organization. Each transfer of cash among our Nevada holding company and our subsidiaries is subject to internal approval to maximize oversight, minimize risk, and ensure compliance with applicable laws and regulations. See “Item 1A—Risk Factors—Risks Associated With Doing Business in China.”
Cash Management Policies
The Company has comprehensive cash management policies in place, including specific policies governing approvals with respect to fund transfers throughout our organization.
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Our board of directors (“Board of Directors”) and its audit committee (“Audit Committee”) oversee the Company’s major financial risk exposures. The Company maintains an authorization policy on cash management, setting forth the scope of authority for certain treasury matters that are delegated by the Board of Directors to management. Under this policy, certain treasury matters, such as intercompany loans, bank borrowings, short-term and long-term investments and dividends distributed from the Company’s subsidiaries to the holding company, are clearly defined, with the level of approval required for each matter specifically identified.
Our management regularly monitors the liquidity position, funding requirements and investment returns in different jurisdictions of our subsidiaries, and takes into consideration regulatory requirements in the jurisdictions in which the Company has subsidiaries or operations. When funding is required, all necessary approvals are obtained from Company management and relevant governmental authorities, including China’s State Administration of Foreign Exchange.
The Holding Foreign Companies Accountable Act
On April 21, 2020, the Securities and Exchange Commission (the “SEC”) and the Public Company Accounting Oversight Board of the United States (the “PCAOB”) released a joint statement highlighting the risks associated with investing in companies based in or having substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.
On December 16, 2021, the PCAOB issued a report on its determination that the PCAOB was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, a Special Administrative Region of the PRC, because of positions taken by PRC authorities in those jurisdictions. The Board made these determinations pursuant to PCAOB Rule 6100, which provides a framework for how the PCAOB fulfills its responsibilities under the Holding Foreign Companies Accountable Act (the “HFCA Act”).
On August 26, 2022, the CSRC, the Ministry of Finance (“MOF”), and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong.
On December 15, 2022, the PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB may consider the need to issue a new determination.
On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was signed into law as part of the Consolidated Appropriations Act, amending the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.
Any lack of access to the PCAOB inspection in China may prevent the PCAOB from fully evaluating audits and quality control procedures of the auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors to lose confidence in audit procedures and reported financial information and the quality of financial statements of China-based companies.
Our auditor, Assentsure PAC, an independent registered public accounting firm, is a PCAOB-registered public accounting firm headquartered in Singapore. Our current auditor is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess an auditor’s compliance with the applicable professional standards, and have been inspected by the PCAOB on a regular basis. As such, as of the date of this report, our listing is not affected by the HFCA Act and related regulations. However, the recent developments would add uncertainties to our listing and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as related to the audit of our financial statements. Furthermore, there is a risk that our auditor cannot be inspected by the PCAOB in the future. The lack of inspection could cause trading in our securities to be prohibited on a national exchange or in the over-the-counter trading market under the HFCA Act and related regulations, and, as a result, Nasdaq may determine to delist our securities, which may cause the value of our securities to decline or become worthless. See “Item 1A. Risk Factors—Risks Associated With Doing Business in China” call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our listing on the Nasdaq Capital Market and Nasdaq may determine to delist our securities if the PCAOB determines that it cannot inspect or fully investigate our auditor, which may cause the value of our securities to decline or become worthless.
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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 the funds required for technological development, product production and product commercialization, as well as the funds necessary to ensure the company’s continuous operation.; |
| ● | our expectation that our existing capital resources will be sufficient to fund our operations for at least the next twelve 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 market size and growth trend of our products; |
| ● | our ability to compete with those companies that sell similar products; |
| ● | our ability to successfully achieve the anticipated results of strategic transactions; |
| ● | our expectations for future sales revenue; |
| ● | our reliance on raw material suppliers or product manufacturers is to enable us to better produce our products and offer a wider variety of products to our customers.; |
| ● | regulatory developments in the U.S. and in non-U.S. countries; |
| ● | our ability to retain key management, sales and marketing personnel; |
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| ● | 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:
| ● | “$”, “US$”, “USD” or “U.S. Dollars” refers to the legal currency of the United States; |
| ● | “Beijing Xilin” refers to Xilin Online (Beijing) E-commerce Co., Ltd, a limited liability company organized under the laws of the People’s Republic of China, 51% of which equity interest is owned by Beijing Zhongyan; |
| ● | “Beijing Zhongyan” refers to Zhongyan Shangyue Technology Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China, which is wholly owned by DZR Tech; |
| ● | “Beijing Shangyue” refers to Beijing Zhongyan Shangyue Holdings Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China, which is wholly owned by Beijing Zhongyan; |
| ● | “Braincon HK” refers to Braincon Limited, a Hong Kong limited company, which is wholly owned by DZR Tech; |
| ● | “Beijing Xinmiao” refers to Beijing Xin Miao Shi Dai Technology Development Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China, which is wholly owned by Braincon HK; |
| ● | “Common Stock” refers to our common stock, US$0.00001 par value per share; |
| ● | “DZR Tech” refers to DZR Tech Limited, a Hong Kong limited company, which is wholly owned by the Company; |
| ● | “Exchange Act” refers to the Securities Exchange Act of 1934, as amended; |
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| ● | “Henan Zhongyan” refers to Henan Zhongyan Shangyue Technology Co., Ltd, a limited liability company organized under the laws of the People’s Republic of China, which is wholly owned by Beijing Zhongyan; |
| ● | “Nuanyou” refers to Henan Nuanyou Agricultural Technology Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China, which is wholly owned by Henan Zhongyan; |
| ● | “non-PRC Subsidiaries” refers to Wewin, DZR Tech, and Singapore CIMG; |
| ● | “PRC Subsidiaries” refers to Beijing Zhongyan, Beijing Shangyue, Henan Zhongyan, Nuanyou, Beijing Xilin, and Shanghai Huomao, Zhimeng, and Zhutai; |
| ● | “PRC” or “China” refers to the People’s Republic of China, excluding, for the purpose of this report only, Hong Kong SAR, Macau SAR and Taiwan; |
| ● | “RMB” or “Renminbi” refers to the legal currency of China; |
| ● | “SEC” refers to the Securities and Exchange Commission; |
| ● | “Securities Act” refers to the Securities Act of 1933, as amended; |
| ● | “Shanghai Huomao” refers to Shanghai Huomao Cultural Development Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China, which is 51% owned by Beijing Zhongyan; |
| ● | “Zhutai” refers to Guizhou Zhutai Huomao Liquor Industry Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China, which is 90% owned by Shanghai Huomao; |
| ● | “Zhimeng” refers to Shenzhen Zhi Meng Qi Yang Technology Co., Ltd., a limited liability company organized under the laws of the People’s Republic of China, 51% of which equity interest is owned by Beijing Zhongyan; |
| ● | “Singapore CIMG” refers to CIMG PTE. LTD., a Singapore limited liability company, which is wholly owned by the Company; |
| ● | “we”, “us”, “our”, “CIMG” and the “Company” refer to CIMG Inc.; and |
| ● | “Wewin” refers to WEWIN TECHNOLOGY LLC, a Florida limited liability company, which is wholly owned by the Company; |
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PART I
ITEM 1. BUSINESS.
Overview
CIMG is a company incorporated in Nevada and has been listed on Nasdaq since June 2020. We were formerly known as “Nuzee, Inc.” with a previous ticker symbol “NUZE”, and we changed our corporate name and ticker symbol to “CIMG Inc.” and “IMG” in October 2024. We previously focused on specialty coffee and related technologies, but we are now expanding our sales and distribution channels in Asia to provide a wider variety of healthy foods to Asian customers. We also help our customers and distributors maximize user growth and product sales through AI computing technology. These AI services have supported our expansion in Asia.
On June 7, 2024, we entered into a Share Purchase Agreement (the “Share Purchase Agreement”) with Masateru Higashida, our former Chief Executive Officer and Director, pursuant to which we sold all issued and outstanding shares of our wholly-owned subsidiaries, NuZee KOREA Ltd. and NuZee Investment Co., Ltd., to Mr. Higashida. The sale was completed in June 2024.
Since July 2024, we have been undergoing a transformation in digital marketing, distribution, and sales. As part of this transformation, we have expanded our sales and distribution network to include Maca-enhanced food and beverages, reaffirming our commitment to reshaping the online marketing, sales, and distribution landscape for consumer products.
Maca, a plant in the Brassicaceae family that originated in South America, has oval leaves and a root that resembles a small round radish. It is edible and is widely regarded as a natural “superfood” Maca is rich in nutrients and is believed to nourish and strengthen the human body, and it is often referred to as “South American ginseng”. The primary cultivation regions for Maca include the Andes Mountains in South America and the Jade Dragon Snow Mountain area in Lijiang, Yunnan, China.
We have secured exclusive distribution and sales rights in Asia for a three-year term for “Kangduoyuan” brand Maca products. The product portfolio under this agreement includes Maca Peptide Coffee, Maca-Noni, Maca Wine, Maca Purified Powder, and other Maca-related offerings. We promote these products through a digital marketing strategy and online sales channels, which has supported our Maca series growth. See “—Recent Developments.”
Since July 2024, we launched the “Homology of Medicine and Food” series. including Huomao-branded products, exosome eye drops and other health and wellness products. The Homology of Medicine and Food Series is guided by traditional Chinese medicine theory, incorporates modern nutritional principles to identify the functional attributes of certain foods and food-derived ingredients. we are committed to providing healthier and more suitable health and wellness products for Asian customers. The launch of the new product effectively contributed to the growth of our sales.
We source, market, and distribute health and wellness products, including Maca-based dietary supplements, functional foods, and beauty products. We leverage technology and data-driven marketing tools to support product promotion and sales. We are committed to providing high-quality products with a focus on responsible and sustainable sourcing to consumers seeking to enhance their health and wellness. We sell our products through online channels and a network of retail partners, including grocery stores, convenience stores, and vending machines.
Since September 2025, we launched the “Computing Power Product” series. We provide customers with hardware devices, such as GPUs integrated with artificial intelligence data-processing modules. These modules are embedded in the GPUs and tailored to the characteristics and needs of each industry. The modules enable industry-specific data learning, helping applications develop more accurate data-processing patterns, and intelligently complete operational tasks. We primarily sell these products to business customers, who then integrate them into their own servers, core processors, and other computing infrastructure and deliver solutions to their end users. We continuously refine our artificial intelligence data-processing templates and enhance the learning capabilities of the modules to deliver more accurate intelligent services across a broad range of industries.
The diagram below is our corporate structure as of the date of this Report.
Our sources of revenue
(i) The Maca Series
In the fourth quarter of the fiscal year ended September 30, 2024, we launched our health-focused product line in Asia, the Maca Series. Maca, a plant native to South America and a member of the Brassicaceae family, is known for its nutritional value and adaptogenic properties. Often referred to as “South American ginseng,” Maca is prized for its ability to support stamina, vitality, and overall wellness. It is primarily cultivated in the Andes Mountains in south America, and Jade Dragon Snow Mountain in Yunnan Province, China.
As of the date of this Report, our Maca Series product line includes Maca Peptide Coffee, Maca-Noni, Maca Purified Powder, and Maca Wine. Each product features green purification factors derived from the Maca plant, resulting in a natural and clean composition.
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Maca Peptide Coffee
Our Maca Peptide Coffee is characterized by a strong yet smooth, non-bitter taste with a subtle fruity aroma. It is medium-roasted and contains no added sugar, preserving its original flavor profile. The primary ingredients include Maca peptide, yellow essence, and Malaysian white coffee. In our formulation, coffee is added mainly to enhance flavor and provide a familiar coffee taste, while the functional attributes are derived primarily from Maca and yellow essence.
We use high-quality Maca grown at altitudes of no less than 3,200 meters, with an average yield of approximately 70 kilograms per mu. The Maca is cultivated without the use of pesticides, fertilizers, or growth enhancers. To maximize potency, harvesting occurs only after the leaves have turned brown, which is intended to ensure the effectiveness of the raw material.
Maca-Noni
Maca-Noni is a Maca-enhanced, plant-based energy drink that is intended for consumption scenarios similar to those of traditional energy drinks, such as Red Bull. It is positioned as a plant-based beverage alternative to traditional energy drinks and is marketed for general lifestyle consumption. Unlike traditional energy drinks, Maca-Noni is primarily made from Maca extracts and does not contain caffeine. As a result, it is positioned as a healthier alternative to conventional energy drinks, and long-term consumption may offer additional wellness benefits.
The initial batch of Maca-Noni plant-based energy drinks is offered in 250 ml cans, with packaging designed to appeal to younger consumers. The packaging adopts a “professional role” design concept, incorporating representations of 66 professions and 132 facial expressions drawn from target consumer groups, including drivers, workers, students, athletes, fitness enthusiasts, lawyers, doctors, live streamers, and e-commerce operators, adding emotional engagement and storytelling elements to the product.
We emphasize quality, sustainability, and transparency in the sourcing and production of our Maca. Our Maca is primarily sourced from Yunnan, China, where it is cultivated in high-altitude regions that are favorable for Maca growth. We work closely with Jiangsu Kangduoyuan Beverage Co., Ltd. to promote sustainable sourcing practices and fair-trade standards.
Maca Purified Powder
Maca Purified Powder is positioned as a nutritional supplement and contains protein, amino acids, polysaccharides, minerals, and certain bioactive compounds, such as Macamides and Macalenes. These components are commonly associated with general nutritional support. The product is formulated using natural ingredients and is marketed as part of a balanced diet and healthy lifestyle. In addition, antioxidant-related components are commonly associated with supporting overall wellness and skin condition. We do not make medical claims or offer medical products.
We currently distribute our Maca Series products primarily through wholesale channels, supplying grocery stores, convenience stores, and vending machine operators. Going forward, we plan to expand our retail operations and leverage digital technologies to enhance marketing effectiveness and diversify our sales models. Our distribution network spans both online platforms and offline points of sale.
Our commitment extends beyond product quality to brand presentation and packaging design. We focus on creating packaging that resonates with professionals across various industries, making our products more personalized, youthful, and distinctive. For example, Maca-Noni is a newer addition to our functional beverage offerings, combining health-focused branding with an updated and innovative design.
Maca Wine
Maca Wine is an alcoholic beverage formulated with Maca and is marketed as a specialty wellness-oriented product with a distinctive flavor profile. It is positioned for social and family dining occasions, where it is consumed as part of meals and gatherings. The product is promoted for its taste characteristics and its association with traditional wellness concepts.
Maca Wine is inspired by traditional dietary and wellness practices and is marketed as a daily wellness beverage when consumed in moderation. It is not intended to diagnose, treat, cure, or prevent any disease. Moderate consumption is promoted as part of a balanced lifestyle. We do not make medical claims with respect to Maca Wine or any of our products.
For the fiscal year ended September 30, 2025, the Maca Series products contributed $144,726, or 1.41% of our total revenue.
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(ii) The Homology of Medicine and Food Series
In the fourth quarter of the fiscal year ended September 30, 2025, we expanded our product offerings in Asia to include The Homology of Medicine and Food Series, including Huomao-branded products, exosome eye drops, and other health and wellness products. We expanded our sales channels and diversified our product portfolio through the acquisition of subsidiaries, enabling us to offer Asian customers a broader range of health and wellness products. For example, we acquired Shanghai Huomao, which provided us with Huomao-branded products such as Huomao liquor. The Homology of Medicine and Food Series is guided by traditional Chinese medicine theory, incorporates modern nutritional principles to identify the functional attributes of certain foods and food-derived ingredients. We do not offer medical products or provide medical advice; rather, we are committed to providing healthier and more suitable health and wellness products for Asian customers.
We currently distribute our Homology of Medicine and Food Series products through wholesale channels. Looking ahead, we plan to expand into retail services and leverage digital technologies to optimize marketing strategies and diversify our sales models. Our distribution network already spans both online platforms and offline points of sale.
The exosome eye drops contributed the largest share of revenue among all Homology of Medicine and Food series products. The exosome eye drops are a type of soothing eye drops. Their core technology is derived from living cells of exosomes, and they do not contain hormones or antibiotics. The exosome eye drops have the effects of relieving fatigue, improving pseudo-myopia and reducing eye dryness. For users, exosome eye drops will be helpful in alleviating eye discomfort when spending long periods in front of electronic devices such as computers and mobile phones, and will contribute to protecting eye health.
For the fiscal year ended September 30, 2025, the Homology of Medicine and Food Series products contributed $6,349,252, or 61.71% of our total revenue, in which 60.10 % contributed by Exosome eye drops. Although exosome eye drops revenue was from a one-time order, we plan to expand the Homology of Medicine and Food Series in the future, including exosome eye drops, to provide customers with healthier products and increase revenue.
(iii) Computing Power Product Series
For the fiscal year ended September 30, 2025, we generated revenue from our “Computing Power Product” series. We provide distributors and other business customers in Asia with hardware devices, such as GPUs integrated with artificial intelligence-enabled data-processing modules, together with data analytics and marketing support services. The data-processing modules are embedded in the GPUs and tailored to the characteristics of each industry. These modules provide industry-specific data learning capabilities, help applications develop more accurate data-processing patterns, and intelligently complete operational tasks.
For the fiscal year ended September 30, 2025, this revenue source contributed $3,804,691, or 36.94% of our total revenue.
International operations
Hong Kong and the PRC
We acquired Beijing Xilin in March 2025, Shanghai Huomao in April 2025, Shenzhen Zhimeng in August 2025, and Braincon Limited and its subsidiaries in September 2025. On September 16, 2025, Henan Zhongyan established a wholly owned subsidiary, Nuanyou. On September 23, 2025, DZR Tech acquired Braincon Limited and its subsidiaries and now holds 100% of the shares of Braincon Limited. As a result of these acquisitions and organizational developments, we have expanded our operational footprint and distribution capabilities and currently distribute Maca products in Hong Kong, the PRC, and other Asian markets. Our strategy focuses on leveraging local relationships to establish long-term partnerships across these regions.
Our Customers
Our customers include wholesale distributors, such as grocery stores, convenience stores, and vending machine operators.
Maca Series: We sell the Maca Series products to wholesale distributors, such as grocery stores, convenience stores, and vending machine operators.
The Homology of Medicine and Food Series: We sell the Homology of Medicine and Food Series products to wholesale distributors.
The Computing Power Product series: We sell hardware devices, such as GPUs embedded with artificial intelligence data-processing modules, to enterprise customers such as China Merchants Bank.
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For the fiscal years ended September 30, 2025, our significant customers (defined as those that contributed more than 10% of our total revenue) were Customer A and Customer B, contributed 60% and 36% of our total revenue, respectively. The loss of either of these customers, or a material reduction in business from them, would have a material adverse effect on our business, results of operations and financial condition.
Our Suppliers
Our suppliers include raw material providers, finished product providers, and research and development service providers.
Maca Series: We purchase maca raw materials from raw material suppliers and entrust a third party to process them into maca series products for sale.
The Homology of Medicine and Food Series: In addition to acquiring subsidiaries to independently produce the Homology of Medicine and Food products, we also screen high-quality finished product providers to provide healthy and suitable products for Asian customers.
The Computing Power Product Series: In addition to independently developing core technologies, technology providers provide us with application services for computing power technology.
For the fiscal years ended September 30, 2025, our significant suppliers (defined as those that contributed more than 10% of our total purchase) were Supplier A and Supplier B, contributed 60.24% and 36.51% of our total purchase, respectively.
Market Opportunity
The global market for natural and plant-based dietary supplements has experienced significant growth in recent years, driven by increasing consumer awareness of health and wellness. As a result, demand for Maca products has grown substantially, particularly in the health, beauty, and fitness sectors. In addition, advances in artificial intelligence have led enterprise customers to place greater emphasis on using artificial intelligence technologies to improve product development and marketing and promotion.
According to a public report by market research firm Research Nester published on November 19, 2025, the global Maca market is projected to grow at a compound annual growth rate (“CAGR”) of more than 4.2% from 2026 to 2035 and to exceed approximately $100 million by 2035.
According to a public report released by market research and consulting firm QYResearch on March 2, 2025, the global Medicine and Food Homologous Products market is expected to grow from $1.07 billion in 2024 to $1.45 billion by 2031, representing a CAGR of 4.5% from 2025 to 2031.
According to a public report released by market research and management consulting firm Global Market Insights Inc. in July 2025, the global artificial intelligence hardware market is projected to grow from $66.8 billion in 2025 to $296.3 billion in 2034, representing a CAGR of 18%.
Operational capacity
We currently lease office space in Florida, United States, Hong Kong, and Beijing, China, to serve as offices for our daily operations. We believe our office space is sufficient to meet our current and anticipated operational requirements.
Our executive office and administrative operations are located in Room R2, FTY D, 16/F, Kin Ga Industrial Building, 9 San On Street, Tuen Mun, Hong Kong.
Distribution
We sell our Maca products and Homology of Medicine and Food products through offline channels. In the future, we plan to develop both online and offline sales channels. Offline channels will involve traditional convenience stores, chain supermarkets, chain stores, gas stations, and vending machines. The online channel will be multi-platform matrix layout, including TikTok, Alibaba.com, Tencent, JD.com +AI artificial intelligence, enhance brand exposure, precise audience positioning, multi-channel communication, and improve content exposure and interaction. Through a comprehensive and systematic e-commerce operations service model, we help brands maximize resource utilization, accurately target consumers, enhance brand exposure and sales, and optimize the user experience. Based on product attributes, we identify and coordinate suitable celebrity or influencer collaborations to build brand identity, elevate brand image, increase awareness, and drive product sales.
We sell our “Computing Power Product” series to enterprise customers, such as China Merchants Bank, through an offline sales model. In the future, we plan to independently develop these products and offer them directly to individual users.
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Competition
Consumers in Asia are increasingly concerned about health, which has intensified the competition in the massive health industry. Not only local brands but also international brands are vying for consumers’ attention. This market has strong growth potential. There is strong growth potential, especially as consumer interest in natural, functional foods continues to rise. International brands, with their strong emphasis on quality, organic ingredients, and health benefits, are well-positioned to capture market share in countries like Southeast Asia. However, local competitors have an advantage in terms of distribution networks and understanding regional consumer preferences. A focus on premium product quality, sustainability, and effective marketing will be key to success in this evolving market.
The products of massive health industry are diverse, and the product market is relatively fragmented, covering numerous local and international brands. Many competitors emphasize organic or natural ingredients and wellness benefits, and local brands often benefit from established distribution networks and familiarity with regional consumer preferences. We compete primarily on product quality, brand positioning, sustainability and the effectiveness of our digital marketing and distribution capabilities.
With the continuous development of intelligent application technology, more and more traditional technology industries have entered the field of intelligent technology, which has intensified the competition in the industry. Both individual users and enterprise users are increasingly relying on the convenience brought by intelligent technology, which has also promoted the development of the intelligent technology industry. In the development boom of the intelligent technology industry, our Computing Power Product Series mainly focus on product quality, computing power technology capabilities, and stable supply.
Our Competitive Strengths
We believe that the following strengths contribute to our success:
| ● | Premium Product Quality: Our In the massive health industry, our maca products all come from top farms in Yunnan, China. The unique environmental conditions there enable the maximum efficacy and purity of the maca roots. Our Medicine and Food Homology Series is screened through strict testing and quality control processes to ensure the stability and reliability of the products. The strict pursuit of quality thus provides consumers with high-quality products they can trust. In the Computing Power Product Series, we specialize in studying the industry characteristics of each customer, embedding different emphasis data processing modules in the hardware, so that the products can more accurately form data processing habits in applications, and thus complete operation tasks intelligently. Our focus and dedication on quality and meeting customer needs have enabled us to stand out in the market and build long-term customer loyalty. |
| ● | Sustainability and Fair Trade: We are deeply committed to sustainability and ethical sourcing practices. We work directly with local Maca suppliers in China to support responsible farming techniques that protect the environment and promote the long-term viability of Maca cultivation. In addition, whether it is the Maca Series or the Homology of Medicine and Food Series, we ensure to provide fair cooperation and reasonable compensation to all farmers and cooperatives in the supply chain. Our sustainable approach not only benefits the environment but also strengthens our reputation as a socially responsible brand. In the Computing Power Product Series, we have collaborated with China’s leading IT enterprises and obtained distribution authorization to ensure the long-term and sustainable provision of high-quality hardware products to customers. |
| ● | Strong Brand Recognition: Our brand is built on the pillars of transparency, integrity, and customer satisfaction, which has resulted in consistently positive reviews, high repurchase rates, and a loyal customer base. Through strategic branding efforts and word-of-mouth marketing, we aim to establish ourselves as a leading enterprise in the Asian large-scale healthcare product sector equipped with intelligent technologies. |
| ● | Innovative Product Offerings: Our diverse and innovative product portfolio is designed to meet the evolving needs and preferences of modern consumers. In addition to traditional Maca powders, we offer Maca-Noni, Maca Peptide Coffee, Maca Wine and Humao Wine that cater to various lifestyle choices and health goals. We continually invest in research and development to identify new applications for Maca and expand our product line to address emerging consumer trends, such as plant-based nutrition and natural wellness solutions. This adaptability allows us to stay ahead of competitors and reach a broad customer demographic. |
| ● | Experienced Management Team: Our leadership team brings together a wealth of experience in retail, marketing, e-commerce, and business management. This diverse expertise enables us to effectively navigate complex markets, make informed decisions, and scale our operations efficiently. Our team has a proven track record of launching successful marketing campaigns, optimizing sales channels, and driving customer engagement, positioning us to achieve both short-term and long-term business objectives. |
| ● | Effective Digital Marketing and Customer Engagement: One of our key strengths lies in our ability to leverage digital marketing strategies to reach a wide audience and drive brand awareness. Through targeted social media campaigns, sport champion partnerships, and content marketing, we create engaging and informative content that educates consumers about the benefits. Our e-commerce platforms are optimized for user experience, making it easy for customers to browse, purchase, and interact with our brand online. Additionally, our data-driven approach allows us to continuously refine our marketing strategies to maximize customer acquisition, retention, and lifetime value. |
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Our Development Strategies
We intend to achieve our mission and further grow our business by pursuing the following strategies:
| ● | Expanding Product Offerings: As part of our ongoing commitment to innovation and meeting the constantly changing demands of consumers, we plan to continue developing a diverse range of Maca-based products. This includes introducing new product lines such as Maca Peptide Coffee, Maca-Noni, Maca Wine, and Maca Purified Powder in the Maca series, as well as additional products in the Homology of Medicine and Food series and other functional food and beverage items. By expanding our product range, we aim to reach various consumer groups, including those seeking energy-boosting products, plant-based nutrition, and health solutions. This extensive product portfolio will enable us to diversify our revenue sources and enhance our market penetration, positioning us as a leader in the Maca product category. In the future, we plan to also offer the “Computing Power Product Series” to individual users. We plan to gradually develop our own Computing Power Product Series products and provide them to individual users in the future. |
| ● | Geographic Expansion: In line with our growth strategy, we aim to increase our global presence, particularly in international markets where the demand for natural health products is growing rapidly. Our focus will be on expanding within Asia, especially in countries like China and Southeast Asia, where there is a rising interest in plant-based, wellness-oriented foods and beverages. Additionally, we will explore opportunities in North America and Europe, leveraging the increasing consumer shift toward natural and functional ingredients. By strategically entering these markets, we will establish a strong global footprint, catering to consumers seeking alternative, natural solutions for their health and energy needs. Our geographic expansion will be supported by thorough market research, localized marketing efforts, and strategic partnerships with regional distributors and retailers. |
| ● | Enhancing Brand Awareness: Building on our existing reputation, we will significantly increase our marketing efforts to boost brand recognition across all markets. Our strategy will focus heavily on digital marketing initiatives, including targeted online advertising, to engage potential customers at every touchpoint. We also partner with social media influencers and sport champions, to promote our products and showcase their benefits to a larger audience. We will also invest in content marketing, creating valuable educational materials that highlight the health benefits of Maca, thus driving consumer awareness and trust. Our overall marketing approach will aim to create a strong emotional connection with consumers, turning them into long-term loyal customers. |
| ● | Strengthening Distribution Channels: To expand our reach and ensure product availability, we will continue to strengthen and diversify our distribution channels. We will focus on growing our e-commerce platform, optimizing the user experience. Additionally, we will increase partnerships with both large and small retailers, expanding our presence in grocery stores, convenience stores, and vending machines. We will also explore opportunities with international distributors and retailers to increase our product’s visibility in new markets. Through effective supply chain management and collaboration with logistics partners, we will ensure that our products are delivered efficiently and meet the growing demand in different regions. We aim to create a seamless, omnichannel shopping experience for consumers, enabling them to purchase our products both online and in-store. |
Recent Developments
Since July 2024, we have been undergoing a transformation in digital marketing, distribution, and sales. As part of this transformation, we have expanded our sales and distribution network to include Maca-infused food and beverages, reaffirming our commitment to reshaping the online marketing, sales, and distribution landscape for consumer products.
We have secured exclusive distribution and sales rights for “Kangduoyuan” brand Maca products. On July 10, 2024, Beijing Zhongyan and Hangzhou Yikang Yimei Health Technology Co., Ltd. (“Yimei”) entered into a cooperation agreement for omni-channel exclusive sales. Under this agreement, Yimei is obligated to (i) produce, process and deliver its branded products and (ii) grant Beijing Zhongyan exclusive omni-channel sales rights for all of its products and the full product series authorized under the “Kangduoyuan” brand. Under this agreement, Yimei will supply products to Beijing Zhongyan at cost, and Beijing Zhongyan has the right to set unified sales pricing and plan sales activities based on market conditions. The agreement has a term from July 10, 2024 to July 1, 2027, and may be terminated by mutual agreement of the parties, with any extension to be agreed in a separately signed agreement. The agreement also contains certain customary clauses such as confidentiality .
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Our PRC subsidiary, Beijing Zhongyan, has signed contracts with multiple PRC-based distribution companies, including Guangdong Jixinsheng Trading Co., Ltd., Shanghai Qingshuteng Trading Co., Ltd., Sichuan Haohua Dinghui Trading Co., Ltd., and Shanghai Jinxianfang Trading Co., Ltd. We plan to gradually expand distribution of Maca-Noni through these distribution companies and target, over the next three years, sales and distribution to 25,000 uSmile PetroChina convenience stores, 400 Guangdong Petroleum Co., Ltd. convenience stores, and 129 convenience stores at Chengdu Energy gas stations in Sichuan Province, and no fewer than 300 self-service vending machines within the next 12 months.
Intellectual Property
Trademarks
We rely on certain intellectual property rights to protect our products and ensure our competitive position in the industry. We have six registered trademarks and four registered domain names as of the date of this Report.
We own the following trademark through our subsidiaries:
| Trademark Number | File Date | Issue Date | Expiration Date | Trademark Name | Issue
Country | |||||||
| 53613382 | 2021/09/07 | 2021/09/07 | 2031/09/06 | 中烟商悦 | China | |||||||
| 53313376 | 2021/09/07 | 2021/09/07 | 2031/09/06 | 中烟商悦 | China | |||||||
| 53585197 | 2021/09/07 | 2021/09/07 | 2031/09/06 | 中烟商悦 | China | |||||||
| 53589114 | 2021/08/28 | 2021/08/28 | 2031/08/27 |  |
China | |||||||
| 7813288 | 2024/08/19 | 2025/05/27 | 2035/05/26 | coco mango | USA | |||||||
| 7813227 | 2024/08/19 | 2025/05/27 | 2035/05/26 | coco mango | USA | |||||||
Domain Names
We have the right to use the following domain names registered in the PRC:
| Number | Issue Date | Expiration Date | Registration Agency | Domain Name | ||||
| 1 | 2021/1/4 | 2026/1/5 | Alibaba Cloud Computing (Beijing) Co., Ltd. | Zhongyan.online | ||||
| 2 | 2021/1/4 | 2026/1/5 | Alibaba Cloud Computing (Beijing) Co., Ltd. | Zhongyan.tech | ||||
| 3 | 2024/4/30 | 2026/4/30 | Alibaba Cloud Computing (Beijing) Co., Ltd. | cocomango.cc | ||||
| 4 | 2024/4/30 | 2026/5/1 | Alibaba Cloud Computing (Beijing) Co., Ltd. | ccmg.tech |
Employees
As of September 30, 2025, we had a total of three employees in Hong Kong, and 10 employees in mainland China, all of whom are full-time. None of our employees are represented by a labor organization or under any collective bargaining arrangements. We believe our relationships with our employees are stable.
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Our operations are overseen directly by the management that engages our employees to carry on our business. Our management oversees all responsibilities in the areas of corporate administration, product development, marketing, and research. 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 skills sets of our core management team will be a primary asset in the development of our brands and trademarks.
Governmental Regulation
To our knowledge, our operations are conducted in compliance with applicable regulations, including those governing food safety, product labeling, and consumer protection, in the jurisdictions where we operate. We ensure that our products meet or exceed all applicable quality standards, and we work with regulatory agencies to ensure that our products are appropriately registered and approved.
According to Article 35 of the Food Safety Law of the People’s Republic of China, the state implements a licensing system for food production and marketing. This means that any unit or individual engaged in food production, food sales and catering services should obtain the appropriate license in accordance with the law. Exemptions under specific circumstances: While licensing is required for most food production and business activities, licensing is not required for the sale of edible agricultural products and for the sale of pre-packaged foods only. Units and individuals that only sell prepackaged food shall be reported to the food safety supervision and administration department of the local people’s government at or above the county level for the record. As stated in the previous report under the section “Our customers and products”, all products sold by our company are pre-packaged products; moreover, our company obtained the Food Business License issued by the Chaoyang District Market Supervision Administration of Beijing on August 23, 2024. The license number is JY11105412762093, and the business scope includes pre-packaged food sales (and bulk food sales). All of our Maca Series products are approved for sale in China.
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. 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 changed our name to CIMG Inc. and our ticker symbol from “NUZE” to “IMG” on October 31, 2024. Our principal executive and administrative offices are located at Room R2, FTY D, 16/F, Kin Ga Industrial Building, 9 San On Street, Tuen Mun, Hong Kong., and our telephone number is +85 270106695.
The Company received a notification letter from Nasdaq on January 23, 2024 (the “Nasdaq Notification Letter”), indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Requirement”). The Nasdaq Notification Letter stated that the Company failed to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing, as required by the Stockholders’ Equity Requirement.
Subsequently, the Company completed a convertible note financing of $320,000 on April 27, 2024, an equity financing of $1,500,000 on June 4, 2024, and an equity financing of $3,000,000 on July 11, 2024. On July 23, 2024, the Company received a letter from Nasdaq stating that based on the Company’s Current Report on Form 8-K filed with the Commission on July 19, 2024, Nasdaq has determined that the Company has regained compliance with Listing Rule 5550(b)(1).
On January 14, 2025, the Company received a notification letter (the “Minimum Bid Price Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that the Company was not in compliance with the minimum bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2). Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Minimum Bid Price Notice had no immediate effect on the listing of the Company’s Common Stock, which continued to trade on The Nasdaq Capital Market under the symbol “IMG.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company had 180 calendar days from the date of the Minimum Bid Price Notice, or until July 14, 2025, to regain compliance. If, at any time before July 14, 2025, the closing bid price of the Common Stock closed at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq would provide written notification that the Company had regained compliance and the matter would be resolved. If the Company did not regain compliance during the compliance period ending July 14, 2025, Nasdaq could, in its discretion, grant the Company an additional 180-calendar-day period to regain compliance, provided that the Company met the continued listing requirement for market value of publicly held shares and all other applicable initial listing standards for The Nasdaq Capital Market as of July 14, 2025 (except for the minimum bid price requirement) and provided Nasdaq with written notice of its intent to cure the deficiency during the second compliance period.
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On January 17, 2025, the Company received another notice (the “Annual Report Notice”) from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Annual Report on Form 10-K for the fiscal year ended September 30, 2024 with the SEC. The Annual Report Notice had no immediate effect on the listing of the Company’s Common Stock on Nasdaq and stated that the Company was required to submit a plan to regain compliance with Nasdaq Listing Rule 5250(c)(1) within 60 calendar days from the date of the Annual Report Notice. If the plan was accepted by Nasdaq, Nasdaq could grant the Company up to 180 calendar days from the due date of the Form 10-K for the fiscal year ended September 30, 2024 to regain compliance. In determining whether to accept such plan, Nasdaq would consider factors such as the likelihood that the remedial filing, along with any subsequent periodic filings that became due, could be made within the 180-day-period, the Company’s past compliance history, the reasons for the late filing, other corporate events that may occur during Nasdaq’s review period, the Company’s overall financial condition, and its public disclosures. Any subsequent periodic filing due within the 180-day exception period was required to be filed no later than the end of that period.
On February 19, 2025, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Quarterly Report on Form 10-Q for the period ended December 31, 2024 with the SEC.
The Company submitted a compliance plan to Nasdaq on March 18, 2025, and Nasdaq granted the Company an extension to (i) file its Form 10-K for the fiscal year ended September 30, 2024 on or before June 13, 2025, and (ii) file its Form 10-Q for the quarter ended December 31, 2024 on or before July 14, 2025.
On May 19, 2025, the Company received a notice (the “Quarterly Report Notice”) from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Quarterly Report on Form 10-Q for the three months ended March 31, 2025 with the SEC. The Quarterly Report Notice had no immediate effect on the listing of the Company’s Common Stock on Nasdaq.
As a result of this additional delinquency relating to the Form 10-Q for the three months ended March 31, 2025, the Company submitted an update to its original compliance plan on June 3, 2025.
On June 13, 2025, the Company did not file its Form 10-K for the fiscal year ended September 30, 2024. On June 27, 2025, the Company received a delisting determination letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (the “Nasdaq Delist Determination Letter”). According to the Nasdaq Delist Determination Letter, unless the Company requested an appeal of this determination by July 7, 2025, trading of the Company’s Common Stock would be suspended from The Nasdaq Capital Market at the opening of business on July 9, 2025, and Nasdaq would file a Form 25-NSE with the SEC to remove the Company’s securities from listing and registration on The Nasdaq Stock Market.
On July 7, 2025, the Company appealed the Nasdaq delisting determination letter dated June 27, 2025, and the Nasdaq Hearings Panel scheduled a hearing for the appeal on August 14, 2025. Nasdaq also notified the Company that the Panel would consider this matter in rendering a determination regarding the Company’s continued listing on The Nasdaq Capital Market. Pursuant to Nasdaq Listing Rule 5810(d), the Company intended to present its views with respect to this additional deficiency at the Panel hearing.
On July 17, 2025, the Company received an additional delisting determination letter from Nasdaq, which stated that the Company had not regained compliance with Nasdaq Listing Rule 5550(a)(2) by July 14, 2025 and was not eligible for a second 180-calendar-day compliance period, primarily because the Company did not satisfy the initial listing requirements for The Nasdaq Capital Market under the Equity Standard or the alternative standards. According to the letter, this matter served as an additional basis for delisting the Company’s securities from The Nasdaq Stock Market.
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On July 21, 2025, the Company filed with the SEC its Annual Report on Form 10-K for the fiscal year ended September 30, 2024, which was subsequently amended on July 30, 2025.
Following a hearing held on August 14, 2025, the Nasdaq Hearings Panel issued a decision on September 2, 2025 granting the Company’s request to continue its listing on The Nasdaq Stock Market, subject to the Company’s timely satisfaction of specified conditions, including (i) filing all required periodic reports and (ii) demonstrating compliance with Nasdaq Listing Rule 5550(b)(1), to be affirmed in a report to be filed under the Exchange Act on or before September 30, 2025.
On August 20, 2025, the Company received a delinquency notification letter from the Listing Qualifications Staff of Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025 with the SEC.
On August 26, 2025, the Company filed with the SEC its Quarterly Report on Form 10-Q for the three months ended December 31, 2024.
In its effort to regain compliance with the Nasdaq equity requirement, and subsequent to the quarter ended June 30, 2025 and through September 30, 2025, the Company completed certain unregistered issuances of equity securities, which increased stockholders’ equity.
On September 30, 2025, the Company filed with the SEC its Quarterly Report on Form 10-Q for the three months ended March 31, 2025.
On October 8, 2025, the Company received a delinquency notification letter from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5620(a) and Nasdaq Listing Rule 5810(c)(2)(G) because the Company did not hold an annual meeting of stockholders within 12 months of the end of the Company’s fiscal year. The Company subsequently held its Annual Meeting of Stockholders on October 28, 2025.
On November 3, 2025, the Company filed with the SEC its Quarterly Report on Form 10-Q for the three months ended June 30, 2025.
On December 4, 2025, Nasdaq notified the Company that it had regained compliance with Nasdaq Listing Rule 5250(c)(1), as well as Nasdaq Listing Rules 5550(b)(1) and 5620(a), following a hearing before the Nasdaq Hearings Panel. The Company remains subject to a bid price compliance deadline under Nasdaq Listing Rule 5550(a)(2) and a Mandatory Panel Monitor through November 14, 2026.
As of the date of this Report, the Company has 13 subsidiaries: Wewin, a Florida limited liability company; DZR Tech, a Hong Kong limited company; Braincon HK, a Hong Kong limited company; Singapore CIMG, a Singapore limited liability company; Beijing Xinmiao, a limited liability company organized under the laws of the PRC; Beijing Zhongyan, a limited liability company organized under the laws of the PRC; Henan Zhongyan, a limited liability company organized under the laws of the PRC; Nuanyou, a limited liability company organized under the laws of the PRC; Beijing Shangyue, a limited liability company organized under the laws of the PRC; Beijing Xilin, a limited liability company organized under the laws of the PRC; Shanghai Huomao, a limited liability company organized under the laws of the PRC; Zhimeng, a limited liability company organized under the laws of the PRC; and Zhutai, a limited liability company organized under the laws of the PRC.
Wewin, DZR Tech, and Singapore CIMG are wholly owned subsidiaries of the Company. Beijing Zhongyan and Braincon HK are wholly owned subsidiaries of DZR Tech. Henan Zhongyan and Beijing Shangyue are wholly owned subsidiaries of Beijing Zhongyan. Nuanyou is a wholly owned subsidiary of Henan Zhongyan. Beijing Xinmiao is a wholly owned subsidiary of Braincon HK. Beijing Xilin, Shanghai Huomao, and Zhimeng are 51%-owned by Beijing Zhongyan. Zhutai is 90% owned by Shanghai Huomao.
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Available Information
Our annual and quarterly reports, along with all other reports and amendments filed with or furnished to the SEC, are publicly available free of charge on the Investor Relations section of our website at http://www.ccmg.tech as soon as reasonably practicable after these materials are filed with or furnished to the SEC. 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:
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 (See page 23). |
| ● | Our independent auditor’s report for the fiscal year ended September 30, 2025 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 (See page 23). |
| ● | Future changes in financial accounting standards or practices may cause adverse unexpected financial reporting fluctuations and affect reported results of operations (See page 24). |
| ● | Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations (See page 24). |
Risks Related to Our Business
| ● | Product safety and quality concerns could negatively affect our business (See page 25). |
| ● | Our business is highly concentrated in our Maca Series products, and our reliance on a limited number of suppliers and customers exposes us to significant risks (See page 25). |
| ● | Continued innovation and the successful development and timely launch of new products are critical to our financial results and the achievement of our growth strategy (See page 26). |
| ● | Our future financial results are difficult to predict, and the early stage of commercialization of our current product lines may cause our operating results to fluctuate and may adversely affect the price of our securities (See page 26). |
| ● | Increased competition, including as a result of industry consolidation, could hurt our businesses (See page 27). |
| ● | Changes in the Maca products environment and retail landscape could impact our financial results (See page 28). |
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| ● | Our business, growth, and profitability depend on the performance of third-parties and our relationship with them (See page 28). |
| ● | 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 (See page 28). |
| ● | The loss of any member of our senior management team or our inability to attract and retain highly skilled personnel could have a material adverse effect on our business (See page 28). |
| ● | Because our management structure is not centralized, the management of our business operations may be more expensive and more difficult (See page 29). |
| ● | 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 (See page 29). |
| ● | We may be unable to manage our future growth effectively, which could make it difficult to execute our business strategy (See page 29). |
| ● | 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 (See page 30). |
| ● | 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 (See page 30). |
| ● | We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations (See page 30). |
| ● | Failure to comply with applicable transfer pricing and similar regulations could harm our business and financial results (See page 30). |
| ● | If we are unable to protect our information systems against service interruption or failure, misappropriation of data or breaches of security, our operations could be disrupted, we could be subject to costly government enforcement actions and private litigation and our reputation may be damaged (See page 31). |
| ● | Employment litigation and unfavorable publicity could negatively affect our future business (See page 31). |
| ● | Currently pending, threatened or future litigation or governmental or regulatory proceedings or inquiries could result in material adverse consequences, including judgments or settlements (See page 31). |
| ● | Future acquisitions of and investments in new businesses could impact our business and financial condition (See page 32). |
| ● | Ongoing geopolitical tensions around the world may have a material adverse effect on our business, financial condition, and results of operations (See page 32). |
| ● | We may be exposed to risks related to digital assets and artificial intelligence (See page 33). |
Risks Associated With Doing Business in China
| ● | Changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of our business (See page 33). |
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| ● | Our Hong Kong subsidiary, DZR Tech, is subject to various evolving Hong Kong laws and regulations regarding data security and antimonopoly, which could subject it to government enforcement actions and investigations, fines, penalties, and suspension or disruption of its operations (See page 33). |
| ● | The PRC government may intervene in, or influence, the conduct of our business to ensure our compliance with PRC laws and regulations, which could result in a material change in our operations and/or the value of our Common Stock (See page 34). |
| ● | The approval and/or other requirements of the CSRC or other mainland China governmental authorities may be required in connection with our issuance of securities overseas under mainland China rules, regulations or policies, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such other requirements (See page 34). |
| ● | A slowdown or other adverse developments in the PRC economy may harm our customers and the demand for our services and our products (See page 35). |
| ● | If relations between the United States and China worsen, investors may be unwilling to hold or buy our stock and our stock price may decrease (See page 35). |
| ● | Future inflation in China may inhibit the profitability of our business in China (See page 36). |
| ● | The fluctuation of the Renminbi may have a material adverse effect on your investment (See page 36). |
| ● | Restrictions on currency exchange may limit our ability to receive and use our revenue effectively (See page 36). |
| ● | Our subsidiary in China is subject to restrictions on making dividends and other payments to us (See page 36). |
| ● | Uncertainties with respect to the PRC legal system could have a material adverse effect on us (See page 37). |
| ● | The PRC’s legal and judicial system under special circumstances may not adequately protect our business and operations and the rights of foreign investors (See page 37). |
| ● | Certain PRC regulations, including the M&A Rules and national security regulations, may require a complicated review and approval process which could make it more difficult for us to pursue growth through acquisitions in China (See page 37). |
| ● | PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans or additional capital contributions to the PRC Subsidiaries and affiliated entities, which could harm our liquidity and our ability to fund and expand our business (See page 38). |
| ● | We must remit offering proceeds to China in a future securities issuance before they may be used to benefit our business in China, the process of which may be time-consuming, and we cannot assure that we can complete all necessary governmental registration processes in a timely manner (See page 38). |
| ● | A failure by the beneficial owners of our shares who are PRC residents to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities and subject us to liability under PRC law (See page 39). |
| ● | We may be subject to fine due to our insufficient payment of the social insurance and housing fund of the employees (See page 39). |
| ● | You may face difficulties in protecting your interests and exercising your rights as a stockholder of ours since we conduct part of our operations in China and part of our officers and directors reside in China (See page 40). |
| ● | You may experience difficulties in protecting your rights through the United States courts (See page 40). |
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| ● | Increases in labor costs in the PRC may adversely affect our business and our profitability (See page 40). |
| ● | Our auditor is headquartered in Singapore and is subject to inspection by the PCAOB on a regular basis. To the extent that our independent registered public accounting firm’s audit documentation related to their audit reports for our company become located in China, the PCAOB may not be able inspect such audit documentation and, as such, you may be deprived of the benefits of such inspection and our Common Stock could be delisted from the stock exchange pursuant to the Holding Foreign Companies Accountable Act and Accelerating Holding Foreign Companies Accountable Act (See page 40). |
| ● | In light of recent events indicating greater oversight by the CAC over data security, we may be subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material adverse effect on our business and our securities (See page 41). |
| ● | Compliance with China’s new Data Security Law, Measures on Cybersecurity Review (revised draft for public consultation), Personal Information Protection Law (second draft for consultation), regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business (See page 41). |
| ● | Failure to comply with the Foreign Corrupt Practices Act could adversely affect our business (See page 43). |
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. (See page 44) |
| ● | Despite our listing on the Nasdaq Capital Market, there can be no assurance that an active trading market for our Common Stock will be sustained. (See page 44) |
| ● | The Nasdaq Capital Market may subsequently delist our securities if we fail to comply with ongoing listing standards. (See page 44) |
| ● | 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. (See page 47) |
| ● | 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. (See page 47) |
| ● | We expect to incur significant costs and devote substantial management time to maintaining our disclosure controls and procedures and internal control over financial reporting, and regardless we may be unable to prevent or detect all errors or acts of fraud or to accurately and timely report our financial results or file our periodic reports in a timely manner (See page 48). |
| ● | 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 (See page 48). |
| ● | 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 (See page 49). |
| ● | 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 (See page 49). |
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| ● | We may be subject to securities litigation, which is expensive and could divert management attention (See page 49). |
| ● | 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 (See page 50). |
| ● | Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us (See page 50). |
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 are not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or results of operations in future periods.
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.
We have incurred net losses since our inception in 2013, including net losses of $4.89 million and $8.97 million for the fiscal years ended September 30, 2025, and 2024, respectively. As of September 30, 2025, our accumulated deficit was approximately $87.23 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 the Homology of Medicine and Food Series and Maca Series products, etc., which depends upon a number of factors, including but not limited to successful sales, manufacturing, marketing and distribution of our products and services.
Because of the 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, 2025 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.
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 the next 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 products could further constrain our cash resources.
We intend to seek to raise additional capital through public or private equity offerings. However, we may not be able to 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; |
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| ● | 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; |
| ● | 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 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.
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.
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.
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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 issuance of stock and other changes in our stock ownership may have resulted in one or more ownership changes within the meaning of Section 382 of the Code; accordingly, our pre-change NOLs may be subject to limitations under Section 382. State NOL carryforwards may be similarly limited. 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
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 inventories 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.
Our business is highly concentrated in our Maca Series products, and our reliance on a limited number of suppliers and customers exposes us to significant risks.
Our business is currently highly concentrated in our Maca Series and the Homology of Medicine and Food Series products, which represent a substantial portion of our revenue (61.51% for the fiscal year ended September 30, 2025). As a result, our operating results are highly dependent on the market acceptance, continued demand, and successful commercialization. Any adverse developments affecting, including changes in consumer preferences, increased competition, regulatory developments, supply disruptions, or reputational issues, could have a disproportionate impact on our business, financial condition, and results of operations. Our limited product diversification increases our exposure to risks specific to the Maca Series products market and may limit our ability to offset declines in demand with other product offerings.
Also, we rely on a limited number of significant suppliers for the production and supply of our Maca Series and the Homology of Medicine and Food Series products. For the fiscal year ended September 30, 2025, two suppliers collectively contributed 96.76% of our total purchases. Disruptions in our relationships with these suppliers, whether due to capacity constraints, quality issues, pricing changes, regulatory matters, or other operational challenges, could materially and adversely affect our ability to source products on a timely and cost-effective basis. We may not be able to promptly identify or qualify alternative suppliers on commercially reasonable terms, or at all, which could result in supply shortages, increased costs, delays in product availability, or reduced margins. For additional information regarding our suppliers, see “Item 1. Business—Our Suppliers.”
Our customer is also highly concentrated. For the fiscal year ended September 30, 2025, our two largest customers collectively accounted for approximately 96% of our total revenue, with one customer contributing approximately 60% and another contributing approximately 36% of our total revenue. See “Item 1. Business—Our Customers.” The loss of, or a material reduction in orders from, either of these customers could have a material adverse effect on our revenue, cash flows, and operating results. In addition, these significant customers may have substantial bargaining power with respect to pricing, payment terms, and other commercial terms, which could adversely affect our margins and liquidity.
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If we are unable to diversify our product offerings, supplier base, or customer base over time, or if demand for our Maca Series products declines, our business, financial condition, and results of operations could be materially and adversely affected.
Continued innovation and the successful development and timely launch of new products are critical to our financial results and the achievement of our growth strategy.
Our primary focus is on developing Maca-based products for the Asian market, targeting consumers for use at home, in the office, and in other everyday settings. Our future success depends, largely, on our ability to implement these and our other growth strategies effectively. However, the achievement of our growth strategy is dependent, among other things, on our ability to extend the product offerings of our existing brands and introduce innovative new. Although we devote significant focus to the development of new products, including Maca Peptide Coffee, Maca-Noni, Maca Wine, Maca Purified Powder, we may not be successful in developing innovative new products or our new products may not be commercially successful. 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 the early stage of commercialization of our current product lines may cause our operating results to fluctuate and may adversely affect the price of our securities.
Our future financial results are difficult to predict. We are at an early stage of commercialization of our current product lines in Asia, including our Maca Series and the Homology of Medicine and Food Series. We began expanding our sales and distribution activities for Maca products in Asia toward the end of 2024 and we expanded our product offerings in Asia to include the Homology of Medicine and Food Series in the fourth quarter of the fiscal year ended September 30, 2025, and this product line remains at an early stage of market rollout. Because these product lines have a limited operating history under our current business model, our historical results may not be indicative of future performance, and we may not be able to accurately forecast demand, net revenues, costs, margins, or cash flows.
As we and our industry evolve, we expect to face new challenges with respect to the introduction of new products and the changing competitive landscape within the Maca products industry. These challenges can occur at various stages, including product positioning, supply chain, channel development, and sales cycles. Our ability to successfully commercialize these product lines depends on a number of factors, many of which are outside of our control, including consumer acceptance of our products, the effectiveness of our marketing and brand-building strategies, our ability to expand and maintain distribution channels and retail relationships in Asia, our ability to maintain product quality and ensure consistent supply from key suppliers, and compliance with applicable food safety, labeling, advertising, and other regulatory requirements in the jurisdictions in which we operate. In addition, we currently distribute our products primarily through wholesale channels, and our plans to expand retail operations and online sales channels may require additional resources and operational capabilities. There can be no assurance that these efforts will be successful or timely.
Any public forecasts regarding the expected performance of our business and future operating results are forward-looking statements subject to risks and uncertainties, and necessarily reflect 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 revenue, may result in a decline and/or increased volatility in the trading price of our Common 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 trading price of our Common Stock in ways that may be unrelated to our financial performance.
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Our international operations subject us to complex legal and regulatory requirements, including requirements relating to product labeling and marketing claims, and non-compliance could adversely affect our business.
We have a manufacturing and sales office in Hong Kong. We operate globally and are attempting to develop products in multiple countries. Consequently, we face complex legal and regulatory requirements in multiple jurisdictions, including laws and regulations relating to food safety, product labeling, advertising, and marketing practices. Our products are marketed as health and wellness products, and our branding and promotional activities may reference functional attributes or traditional wellness concepts. Regulators may scrutinize our product labels, packaging, online content, influencer campaigns, and other marketing materials, including whether any statements or implications could be viewed as improper, misleading, unsubstantiated, or as making unauthorized health or disease-related claims.
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. |
Compliance requirements applicable to product labeling and marketing can be complex, subject to change, and interpreted differently by regulatory authorities. If we fail to comply with applicable requirements, or if any of our labels or marketing materials are alleged or determined to be non-compliant, we could be subject to warning letters, fines, penalties, product seizures, mandatory label changes, recalls, restrictions on sales or advertising, suspension or revocation of permits or licenses, increased compliance costs, and civil or criminal liability. In addition, even allegations of non-compliance could harm our reputation, reduce consumer confidence, disrupt our distribution relationships, and adversely affect demand for our products. Moreover, we rely in part on third parties, such as distributors, marketing service providers, and influencers, to promote our products, and we may have limited ability to control all statements made by these parties. If we are required to modify our labeling or marketing practices, delay product promotions, or incur additional compliance-related costs, our business, financial condition, and results of operations could be materially and adversely affected.
Increased competition, including as a result of industry consolidation, could hurt our businesses.
The Maca products industry is intensely competitive and we compete with respect to product, quality, convenience, technology, innovation, and price. We face significant competition in each of our channels and marketplaces. We compete with major international Maca products companies that operate in multiple geographic areas, many of which have greater financial and other resources than we do, as well as numerous companies that are primarily local in operation. Our Maca Series products also compete against local or regional brands as well as against private label brands developed by retailers. Our ability to gain or maintain share of sales in the global marketplace or in various local marketplaces or maintain or enhance our relationships with our partners and customers may be limited as a result of actions by competitors, including as a result of increased consolidation in the Maca products industry.
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Changes in the Maca products environment and retail landscape could impact our financial results.
The Maca products environment is rapidly evolving as a result of, among other things, changes in consumer preferences; shifting consumer tastes and needs; changes in consumer lifestyles; and competitive product and pricing pressures. In addition, the Maca products retail landscape is dynamic and constantly evolving, not only in emerging and developing marketplaces, where modern trade is growing at a faster pace than traditional trade outlets, but also in developed marketplaces, where discounters and value stores, as well as the volume of transactions through e-commerce, are growing at a rapid pace. 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 distribution of Maca products, we rely on third-party suppliers and manufacturing partners to provide high quality Maca products. We also rely on our manufacturing partners to provide us with additional manufacturing and facilitate distribution efforts throughout China. Our reliance on third-party suppliers and manufacturing partners subjects us to additional risks, including the possible termination of the arrangement by a third-party supplier or manufacturing partner at a time that is costly or inconvenient for us. Our third-party suppliers and manufacturing partners are independent entities subject to their own unique operational and financial risks that are out of our control. If any of these third-party suppliers or manufacturing partners fail to perform as required, this could cause delays in our receipt of the Maca products or otherwise adversely affect our business.
In addition, a significant portion of our distribution network, and correspondingly our success in distributing our Maca products, depends on the performance of third parties. Any non-performance or deficient performance by such parties may undermine our operations and profitability. For distribution of our Maca products, we typically rely on third-party distribution networks, including freight companies and common carriers. 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 they relate to the 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 products, 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.
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.
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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 personnel. 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, 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.
We expect to continue to experience inflationary pressure on our cost structure, and price increases may not be sufficient to offset cost increases or may result in sales volume declines.
We expect to experience inflationary pressure on our cost structure for the foreseeable future. We may be able to pass some or all of our 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 products and to compete effectively will depend, in part, on our ability to manage this potential future growth effectively, without compromising quality.
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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 will set the production and procurement targets for the products before receiving the customer orders. These targets will be based on our predictions of customer needs as well as the predictions 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 the demand is beyond our current production and procurement capabilities, 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 property without authorization or create intellectual property 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 expiration. 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.
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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 business involves the collection, storage, and transmission of personal, financial, or other information that is entrusted to us by our customers and employees. Our information systems also contain the Company’s proprietary and other confidential information related to our businesses. 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.
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.
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 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.
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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.
Ongoing geopolitical tensions around the world may have a material adverse effect on our business, financial condition, and results of operations.
We may face risks associated with heightened tensions in geopolitical and economic relations. Rivalries and sanctions between major powers, including the United States and China, and unrest, terrorist threats, wars and other conflicts involving Ukraine, the Middle East and elsewhere have created increased global uncertainty. Such geopolitical tensions, along with trade disputes and regional conflicts, may result in economic instability, market volatility, and regulatory changes, which could impact our supply chain, operations, and consumer demand. Recently, the United States has proposed to impose multiple rounds of tariffs on a wide range of goods imported from multiple countries, including China, and China has responded with retaliatory tariffs. Since February 2025, the U.S. administration has proposed to increase the total tariff level for imported Chinese goods to 125%, and additional tariff increases could be imposed as the trade tension between the two countries continues to heighten. On April 9, 2025, China responded by hiking its levies on U.S. imports to 84% from 34%. On April 10, 2025, the U.S. imposed a 34% “reciprocal tariff” on top of existing levies, effectively raising the minimum tariff on Chinese goods to 54%. On April 11, 2025, the U.S. announced that consumer electronics would be exempt from tariffs imposed on most countries, but a 20% tariff would remain in place for electronics imported from China. Later that same day, in a further retaliatory move, China increased tariffs on U.S. imports to 125%.
Historically, tariffs have led to increased trade and political tensions, between the U.S. and China, as well as between the U.S. and other countries. Political tensions as a result of trade policies could reduce trade volume, cross-border investment, technological exchange, and other economic activities between major economies, resulting in a material adverse effect on global economic conditions and the stability of global financial and stock markets. Moreover, the heightened geopolitical uncertainty and potential for further escalation may discourage investments in securities issued by China-based companies (including us) and affect the global macroeconomic environment. For example, it has been reported that the U.S. administration may consider imposing further restrictions or prohibitions on trading of Chinese securities. Such geopolitical developments could materially and adversely affect our overall financial performance and prices of our Common Stock.
Furthermore, such tensions may lead to consumer boycotts, increased security measures, and travel restrictions, all of which could negatively affect our ability to conduct business, maintain supply chain operations, and expand into new markets. Any restrictions on international trade and capital flows may have a negative impact on our ability to access capital and expand our operations. As a result, any of these events could have a material adverse effect on our business, financial condition, and results of operations. The Maca Series products are exclusively distributed in the Asian market, with raw materials, supply chains, and sales operations based in China. In contrast, DRIPKIT products are sold solely in the U.S. market, with their raw materials, supply chains, and sales operations entirely within the United States. As both product lines operate independently and do not involve cross-border trade, the Company is not directly affected by changes in export tariffs or foreign import policies. Accordingly, as of the date of this report, ongoing geopolitical tensions have had a limited impact on our business.
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We may be exposed to risks related to digital assets and artificial intelligence
For the fiscal year ended September 30, 2025, we introduced two new revenue streams, Computing Power Product Series and the Homology of Medicine and Food Series. See “Item 1. Business.” In addition, we hold digital assets, such as Bitcoin, from time to time in connection with various financing activities. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As a result, we may be subject to risks related to artificial intelligence and digital assets, including risks arising from potential reliance on large-scale computing models and third-party cloud infrastructure, evolving data privacy, cybersecurity and other regulatory requirements, and the volatility, custody, valuation, liquidity, accounting and regulatory uncertainty associated with digital assets. These areas are still in the early stages of development, and it is not yet clear how they may affect us. If they develop in ways that are unfavorable to us, our business, financial condition, and results of operations could be materially and adversely affected.
If future prices of Bitcoin are not sufficiently high, our business, results of operations, and financial condition could be materially and adversely affected, which may have a negative impact on the trading price of our securities.
Our business, financial condition, and results of operations depend in part on Bitcoin prices because we hold Bitcoin as part of our assets. If the value of Bitcoin declines, the value of our assets could decrease. In addition, price declines in other cryptocurrencies may dampen overall market sentiment, even if we do not hold such assets. If any of these events occur, our business, results of operations, and financial condition may be adversely affected, and the trading price of our securities could also decline. We may need to seek alternative sources of capital if this happens, which may not be available to us on acceptable terms, or at all.
Changes in blockchain validation protocols, network rules, or other fundamental changes to the Bitcoin ecosystem could reduce demand for Bitcoin and adversely affect the value of our Bitcoin holdings.
The blockchain industry continues to evolve, and the protocols, validation mechanisms, and software rules governing digital asset networks may change over time. Bitcoin currently relies on the “proof-of-work” consensus mechanism, which is integral to how transactions are validated and how the network is secured. Changes to Bitcoin’s validation protocol, core rules, transaction fee structure, or other technical features, whether through software updates, governance or community-driven decisions, forks, or other events, could negatively affect the usability, security, or perceived value of Bitcoin.
Although we do not engage in Bitcoin mining activities, we hold Bitcoin as part of our assets. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Accordingly, any reduction in demand for Bitcoin or deterioration in market confidence arising from protocol changes, competing technologies, network disruptions, or other fundamental developments in the Bitcoin ecosystem could cause the market price of Bitcoin to decline. A decline in the value of our Bitcoin holdings could adversely affect our financial condition and results of operations and could negatively impact the trading price of our securities.
Regulatory authorities may in the future determine that Bitcoin is a “security,” which could materially reduce its liquidity and value and adversely affect our financial condition and results of operations.
Bitcoin has historically been treated by many market participants as a non-security crypto asset; however, U.S. federal and state regulators, self-regulatory organizations, and courts continue to evaluate and refine the legal and regulatory framework applicable to digital assets, and there can be no assurance that Bitcoin will not be reclassified or otherwise regulated as a “security” under the U.S. federal securities laws (or similar laws in other jurisdictions) in the future. If Bitcoin were to become subject to a securities regulatory regime, the market for Bitcoin could be materially disrupted, including through reduced availability of trading venues and liquidity providers, limitations on market-making activity, and changes to custody and settlement practices, any of which could reduce trading volumes, widen bid-ask spreads, impair price discovery, increase volatility, and negatively impact the value and liquidity of Bitcoin. In turn, because we hold Bitcoin as part of our assets, any sustained decline in Bitcoin’s market price or liquidity could reduce the value of our assets, constrain our ability to access Bitcoin markets on acceptable terms, and adversely affect our business, financial condition, and results of operations, and the trading price of our securities could also be negatively impacted.
Changes in U.S. regulatory interpretation relating to digital assets could reduce the value and liquidity of the Bitcoin we hold as part of our assets and could materially and adversely affect our financial condition and results of operations.
The digital asset industry in the U.S. remains subject to evolving regulatory interpretation and enforcement, and U.S. federal and state regulators and courts continue to assess how existing laws apply to various digital assets and related market activities. Future regulatory changes affecting Bitcoin markets could materially reduce the liquidity, market accessibility, and value of Bitcoin. Any such developments could impair our ability to hold, transfer, or dispose of Bitcoin on commercially reasonable terms, increase volatility and transaction costs, and reduce the value of our assets. As a result, our financial condition and results of operations could be materially adversely affected, and the trading price of our securities could also be negatively impacted.
Risks Associated With Doing Business in China
Changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of our business.
The PRC’s economy is in a transition from a planned economy to a market-oriented economy subject to five-year and annual plans adopted by the government that set national economic development goals. Policies of the PRC government can have significant effects on the economic conditions within the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, there can be no assurance that this will be the case. A change in policies by the PRC government could adversely affect our interests by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Implementation of the negative list system. Although the PRC government has been pursuing economic reform policies for more than two decades, there is no assurance that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC’s political, economic and social environment.
Our Hong Kong subsidiary, DZR Tech, is subject to various evolving Hong Kong laws and regulations regarding data security and antimonopoly, which could subject it to government enforcement actions and investigations, fines, penalties, and suspension or disruption of its operations.
Our Hong Kong subsidiary, DZR Tech, and its subsidiary, Braincon HK, are subject to laws and regulations in Hong Kong in respect of data privacy, data security, and data protection. The main legislation in Hong Kong concerning data security is the Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong), or the “PDPO,” which regulates the collection, use, storage, and transfer of personal data and imposes a statutory duty on data users to comply with the six data protection principles contained therein. Pursuant to section 33 of the PDPO, the PDPO is applicable to the collection and processing of personal data if such activities take place in Hong Kong, or if the personal data is collected by a data user whose principal place of business is in Hong Kong. We believe that DZR Tech and Braincon HK have complied with the applicable laws and requirements in respect of data security in Hong Kong. Our directors believe that: (i) none of our directors, DZR Tech, or Braincon HK has been involved in any litigation or regulatory action relating to a breach of the PDPO; and (ii) there have been no non-compliance incidents relating to the PDPO since the date of incorporation of DZR Tech and Braincon HK. We believe that the incumbent data security statutory requirements under Hong Kong laws do not materially affect its business. However, the laws on cybersecurity and data privacy are constantly evolving and can be subject to varying interpretations, resulting in uncertainties about the scope of our responsibilities in that regard. Failure to comply with the cybersecurity and data privacy requirements in a timely manner, or at all, may subject us or our Hong Kong subsidiaries to consequences, including, but not limited to, government enforcement actions and investigations, fines, penalties, and suspension or disruption of operations.
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The Competition Ordinance (Cap. 619 of the Laws of Hong Kong) prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting, or distorting competition in Hong Kong. It provides for general prohibitions in three major areas of anti-competitive conduct described as the first conduct rule, the second conduct rule, and the merger rule. The first conduct rule prohibits business entities from making or giving effect to agreements or decisions or engaging in concerted practices that have as their object or effect the prevention, restriction, or distortion of competition in Hong Kong. The second conduct rule prohibits business entities that have a substantial degree of market power in a market from engaging in conduct that has as its object or effect the prevention, restriction, or distortion of competition in Hong Kong. The merger rule prohibits mergers that have or are likely to have the effect of substantially lessening competition in Hong Kong. The scope of application of the merger rule is limited to carrier licenses issued under the Telecommunications Ordinance (Cap. 106 of the Laws of Hong Kong). As of the date of this Report, we believe that we and our Hong Kong subsidiaries have complied with all three areas of anti-competition laws and requirements in Hong Kong. DZR Tech and Braincon HK have not engaged in any concerted practices that have an object or effect to prevent, restrict, or distort competition in Hong Kong. Additionally, neither we, DZR Tech, nor Braincon HK possesses a substantial degree of market power in the Hong Kong market that could trigger the second conduct rule. We believe the merger rule is not applicable to us, DZR Tech, or Braincon HK since neither we, DZR Tech, nor Braincon HK holds any carrier license issued under the Telecommunications Ordinance.
Accordingly, we believe neither the data security nor the antimonopoly laws and regulations in Hong Kong restrict our ability to accept foreign investment or impose limitations on our ability to list on any U.S. stock exchange under Hong Kong laws and regulations.
The PRC government may intervene in, or influence, the conduct of our business to ensure our compliance with PRC laws and regulations, which could result in a material change in our operations and/or the value of our Common Stock
The Chinese government has significant oversight and discretion over the conduct of our business and may supervise our operations to ensure we comply with PRC laws and regulations, which could result in a material change in our operations and/or the value of shares of our Common Stock.
The Chinese government has recently published new policies that have significantly affected certain industries, such as the education and internet industries, and we cannot rule out the possibility that it will, in the future, issue regulations or policies regarding our industry that could adversely affect our business, financial condition, and results of operations. Furthermore, if China adopts more stringent standards with respect to certain areas such as environmental protection or corporate social responsibilities, we may incur increased compliance costs or become subject to additional restrictions on our operations. Certain areas of PRC law, including intellectual property rights and confidentiality protections, may also not be as effective as in the United States or other countries. In addition, we cannot predict the effects of future developments in the PRC legal system on our business operations, including the promulgation of new laws, or changes to existing laws or their interpretation or enforcement. Uncertainties regarding our ability to comply with these changes could limit the legal protections available to us and our investors, including you.
The approval and/or other requirements of the CSRC or other mainland China governmental authorities may be required in connection with our issuance of securities overseas under mainland China rules, regulations or policies, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such other requirements.
The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, purport to require offshore special purpose vehicles that are controlled by mainland China companies or individuals and that have been formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of mainland China domestic companies or assets to obtain CSRC approval prior to publicly listing their securities on an overseas stock exchange. The interpretation and application of the regulations remain unclear. If CSRC approval is required, it is uncertain how long it will take for us to obtain such approval, and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or a delay in obtaining CSRC approval for our future issuance of securities overseas may subject us to sanctions imposed by the CSRC and other mainland China regulatory agencies, which could include fines and penalties on our operations in mainland China, restrictions or limitations on our ability to pay dividends outside of mainland China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations.
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Furthermore, on July 6, 2021, the PRC government promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, or the July 6 Opinions, which, among other things, called for enhanced administration and supervision of overseas-listed mainland China-based companies, proposed to strengthen the supervision of the overseas issuance and listing of shares by mainland China-based companies and clarified the responsibilities of competent domestic industry regulators and government authorities. On December 28, 2021, the CAC, together with other relevant administrative departments, jointly released the Cybersecurity Review Measures, which took effect on February 15, 2022. Pursuant to the Cybersecurity Review Measures, network platform operators with personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before going to list abroad.
The new rules for the filing-based administration of overseas securities offerings and listings by Chinese domestic companies released on February 17, 2023, or New Filing Rules, establish a new filing-based regime to regulate overseas offerings and listings by domestic companies. According to the New Filing Rules, (i) an overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC; and (ii) the issuer or its affiliated domestic company, as the case may be, shall file with the CSRC for its initial public offering, follow-on offering, issuance of convertible bonds, offshore relisting after go-private transactions and other equivalent offing activities. In addition, after a domestic company has offered and listed securities in an overseas markets, it is required to file a report to the CSRC after the occurrence and public disclosure of certain material corporate events, including but not limited to change of control and voluntary or mandatory delisting. From March 31, 2023, enterprises that have been listed overseas shall constitute existing enterprises and are not required to conduct the overseas listing filing procedure immediately, but shall carry out filing procedures as required if they conduct future offshore offerings or capital raising activities or are involved in other circumstances that require filing with the CSRC.
On February 24, 2023, the CSRC, together with other relevant government authorities, issued the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, or the Archives Rules, which became effective on March 31, 2023. According to the Archives Rules, domestic mainland China companies, whether offering and listing securities overseas directly or indirectly, must strictly abide the applicable laws and regulations when providing or publicly disclosing, either directly or through their overseas listed entities, documents and materials to securities companies, securities services providers such as accounting firms, or overseas regulators in the process of their overseas offering and listing. If such documents or materials contain any state secrets or government authorities work secrets, domestic companies must obtain the approval from competent governmental authorities according to the applicable laws, and file with the secrecy administrative department at the same level with the approving governmental authority. Furthermore, the Archives Rules also provides that securities companies and securities service providers shall also fulfill the applicable legal procedures when providing overseas regulatory institutions and other relevant institutions and individuals with documents or materials containing any state secrets or government authorities work secrets or other documents or materials that, if divulged, will jeopardize national security or public interest.
A slowdown or other adverse developments in the PRC economy may harm our customers and the demand for our services and our products.
Part of our operations are conducted in the PRC. Although the PRC economy has grown significantly in recent years, there is no assurance that this growth will continue. A slowdown in overall economic growth, an economic downturn, a recession, or other adverse economic developments in the PRC could significantly reduce the demand for our products and services.
If relations between the United States and China worsen, investors may be unwilling to hold or buy our stock and our stock price may decrease.
In recent years, the United States and China have had significant disagreements over political and economic issues. Controversies may arise in the future between these two countries that may affect our business and economic outlook in both the United States and China. Any political or trade controversies between the United States and China, whether or not directly related to our business, could reduce the price of our Common Stock.
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Future inflation in China may inhibit the profitability of our business in China.
In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. Rapid economic growth can lead to growth in the money supply and rising inflation. If prices for our services and products rise at a rate that is insufficient to compensate for the rise in the costs of supplies, it may have an adverse effect on our profitability. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our services and products.
The fluctuation of the Renminbi may have a material adverse effect on your investment.
The change in value of the Renminbi against the U.S. dollar and other currencies is affected by, various factors, such as changes in China’s political and economic conditions and China’s foreign exchange controls. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Under such policy, the Renminbi was permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. Later on, the People’s Bank of China has decided to further implement the reform of the RMB exchange regime and to enhance the flexibility of RMB exchange rates. Such changes in policy have resulted in a significant appreciation of the Renminbi against the U.S. dollar since 2005. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in a further and more significant adjustment of the Renminbi against the U.S. dollar. Any significant appreciation or revaluation of the Renminbi may have a material adverse effect on the value of, and any dividends payable on, shares of our Common Stock in foreign currency terms. More specifically, if we decide to convert our Renminbi into U.S. dollars, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. In addition, appreciation or depreciation in the exchange rate of the Renminbi to the U.S. dollar could materially and adversely affect the price of shares of our Common Stock in U.S. dollars without giving effect to any underlying change in our business or results of operations.
Restrictions on currency exchange may limit our ability to receive and use our revenue effectively.
Part of our revenue is denominated in Renminbi. As a result, restrictions on currency exchange may limit our ability to use revenue generated in Renminbi to fund any business activities we may have outside China in the future or to make dividend payments to our shareholders in U.S. dollars. Under current PRC laws and regulations, Renminbi is freely convertible for current account items, such as trade- and service-related foreign exchange transactions and dividend distributions. However, Renminbi is not freely convertible for direct investment or loans or for investments in securities outside China, unless such use is approved by SAFE. For example, foreign exchange transactions under the subsidiary’s capital account, including principal payments in respect of foreign currency-denominated obligations, remain subject to significant foreign exchange controls and the approval requirement of SAFE. These limitations could affect our ability to convert Renminbi into foreign currency for capital expenditures. The Chinese government is further strengthening the control of foreign exchange controls, and we may not be able to influence such decisions.
Our subsidiary in China is subject to restrictions on making dividends and other payments to us.
We are a holding company and rely partially on dividends paid by the PRC Subsidiaries for our cash needs, including paying dividends and other cash distributions to our shareholders to the extent we choose to do so, servicing any debt we may incur and paying our operating expenses. Current PRC regulations permit the PRC subsidiary to pay dividends to us only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, Beijing Zhongyan may only distribute dividends after it has made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends. In addition, if the subsidiaries or affiliated entities in China incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any such restrictions may materially affect such entities’ ability to pay dividends or make other payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations.
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Uncertainties with respect to the PRC legal system could have a material adverse effect on us.
The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions in a civil law system may be cited as references but have limited precedential value. Since 1979, newly introduced PRC laws and regulations have significantly enhanced the protections of interests relating to foreign investments in China. However, since these laws and regulations are relatively new and the PRC legal system continues to evolve rapidly, the interpretations of such laws and regulations may not always be consistent, and enforcement of these laws and regulations in different administrative areas involves significant uncertainties, any of which could limit the available legal protections. In addition, the PRC administrative and judicial authorities have significant discretion in interpreting, implementing or enforcing statutory rules and contractual terms, and it may be more difficult to predict the outcome of administrative and judicial proceedings and the level of legal protection we may enjoy in the PRC than under some more developed legal systems. These uncertainties may affect our decisions on the policies and actions to be taken to comply with PRC laws and regulations, and may affect our ability to enforce our contractual or tort rights. In addition, the regulatory uncertainties may be exploited through unmerited legal actions or threats in an attempt to extract payments or benefits from us. Such uncertainties may therefore increase our operating expenses and costs, and materially and adversely affect our business and results of operations.
The PRC’s legal and judicial system under special circumstances may not adequately protect our business and operations and the rights of foreign investors.
The legal and judicial systems in the PRC are still rudimentary, and enforcement of existing laws is uncertain. As a result, it may be impossible to obtain swift and equitable enforcement of laws that do exist, Different administrative regions have different legal and judicial interpretations or to obtain enforcement of the judgment of one court by a court of another jurisdiction. The PRC’s legal system is based on the civil law regime, that is, it is based on written statutes. A decision by one judge does not set a legal precedent that is required to be followed by judges in other cases. In addition, the interpretation of Chinese laws may be varied to reflect domestic political changes.
The promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign investors. There can be no assurance that a change in leadership, social or political disruption, or unforeseen circumstances affecting the PRC’s political, economic or social life, will not affect the PRC government’s ability to continue to support and pursue these reforms. Such a shift could have a material adverse effect on our business and prospects.
Certain PRC regulations, including the M&A Rules and national security regulations, may require a complicated review and approval process which could make it more difficult for us to pursue growth through acquisitions in China.
The M&A Rules established additional procedures and requirements that could make merger and acquisition activities in China by foreign investors more time-consuming and complex. For example, the Ministry of Commerce (“MOFCOM”) must be notified in the event a foreign investor takes control of a PRC domestic enterprise. In addition, certain acquisitions of domestic companies by offshore companies that are related to or affiliated with the same entities or individuals of the domestic companies, are subject to approval by the MOFCOM. In addition, the Implementing Rules Concerning Security Review on Mergers and Acquisitions by Foreign Investors of Domestic Enterprises, issued by the MOFCOM in August 2011, require that mergers and acquisitions by foreign investors in “any industry with national security concerns” be subject to national security review by the MOFCOM. In addition, any activities attempting to circumvent such review process, including structuring the transaction through a proxy or contractual control arrangement, are strictly prohibited. There is significant uncertainty regarding the interpretation and implementation of these regulations relating to merger and acquisition activities in China. In addition, complying with these requirements could be time-consuming, and the required notification, review or approval process may materially delay or affect our ability to complete merger and acquisition transactions in China. As a result, our ability to seek growth through acquisitions may be materially and adversely affected. In addition, if the MOFCOM determines that we should have obtained its approval for our entry into contractual arrangements with the affiliated entities, we may be required to file for remedial approvals. There is no assurance that we would be able to obtain such approval from the MOFCOM. We may also be subject to administrative fines or penalties by the MOFCOM that may require us to limit our business operations in the PRC, delay or restrict the conversion and remittance of our funds in foreign currencies into the PRC or take other actions that could have material and adverse effect on our business, financial condition and results of operations.
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PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from making loans or additional capital contributions to the PRC Subsidiaries and affiliated entities, which could harm our liquidity and our ability to fund and expand our business.
We are a Nevada corporation that conduct part of our operations in China and Hong Kong through our subsidiaries. We may make loans to such subsidiaries, subject to governmental approval and limitations on the amount, or we may make additional capital contributions to our subsidiaries in the PRC.
Any loans to the subsidiaries in the PRC are subject to foreign investment and are under PRC regulations and foreign exchange loan registrations. For example, loans by us to the wholly foreign-owned subsidiaries or VIE entities in China to finance their activities must be registered with the local counterpart of SAFE. In addition, a foreign invested enterprise shall use its capital pursuant to the principle of authenticity and self-use within its business scope. The capital of a foreign invested enterprise shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly use for investment in securities or investments other than banks’ principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises). On October 23, 2019, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and does not violate with the negative list on foreign investment. However, since the SAFE Circular 28 is newly promulgated, it is unclear how SAFE and competent banks will carry this out in practice. In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis.
We must remit offering proceeds to China in a future securities issuance before they may be used to benefit our business in China, the process of which may be time-consuming, and we cannot assure that we can complete all necessary governmental registration processes in a timely manner.
The proceeds of a future offering may be remitted back to the PRC, and the process for wiring such proceeds back to the PRC may be time-consuming after the closing of a future offering. We may be unable to use these proceeds to grow our business until the PRC Subsidiaries receive such proceeds in the PRC. Any transfer of funds by us to the PRC Subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration or filing with relevant governmental authorities in China. Any foreign loans procured by the PRC Subsidiaries is required to be registered with China’s State Administration of Foreign Exchange (“SAFE”) or its local branches or satisfy relevant requirements, and the PRC subsidiaries may not procure loans which exceed the difference between their respective total project investment amount and registered capital or 2 times (which may be varied year by year due to the change of PRC’s national macro-control policy) of the net worth of the PRC subsidiary. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions to the PRC subsidiaries are subject to the approval of or filing with State Administration for Market Regulation in its local branches, the Ministry of Commerce in its local branches and registration with a local bank authorized by SAFE.
In light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us to the PRC subsidiary or with respect to future capital contributions by us to the PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to capitalize or otherwise fund the PRC operations may be negatively affected, which could materially and adversely affect our liquidity, our ability to fund and expand our business and our securities.
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A failure by the beneficial owners of our shares who are PRC residents to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities and subject us to liability under PRC law.
SAFE has promulgated regulations, including the Notice on Relevant Issues Relating to Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles (or SAFE Circular No. 37), effective on July 4, 2014, and its appendices, that require PRC residents, including PRC institutions and individuals, to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular No. 37 as a “special purpose vehicle.” SAFE Circular No. 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary. Further, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion.
These regulations apply to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions or share transfers that we make in the future if our shares are issued to PRC residents. However, in practice, different local SAFE branches may have different views and procedures on the application and implementation of SAFE regulations, and since SAFE Circular No. 37 was relatively new, there remains uncertainty with respect to its implementation. As of the date of this report, all PRC residents known to us that currently hold direct or indirect interests in our company have completed the necessary registrations with SAFE as required by SAFE Circular 37. However, we may not be informed of the identities of all the PRC residents or entities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with the requirements of SAFE Circular 37. However, we cannot assure you that these individuals or any other direct or indirect shareholders or beneficial owners of our company who are PRC residents will be able to successfully complete the registration or update the registration of their direct and indirect equity interest as required in the future. If they fail to make or update the registration, our shareholders could be subject to fines and legal penalties, and SAFE could restrict our cross-border investment activities and our foreign exchange activities, including restricting the PRC subsidiary’s ability to distribute dividends to, or obtain loans denominated in foreign currencies from, our company, or prevent us from paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.
We may be subject to fine due to our insufficient payment of the social insurance and housing fund of the employees.
Pursuant to the Social Insurance Law of the PRC, as amended on December 29, 2018,and the Regulation on the Administration of Housing Accumulation Funds, as amended on March 24, 2019, employers in China shall register with relevant social insurance agency and relevant housing provident fund management center and open special housing provident fund accounts for each of their employees, and pay contributions to the social insurance plan and the housing provident fund for their employees, such contribution amount payable shall be calculated based on the employee’s actual salary in accordance with the relevant regulations. In case the employer fails to make sufficient payment of the social insurance, it may be subject to fine up to three times of the insufficient amount and pay late fees. If the employer failed to register with relevant housing provident fund management center or failed to open special housing provident fund accounts for the employees within the ordered time limit, a fine of not less than RMB10,000 nor more than RMB50,000 may be imposed. In addition, if the employer fails to pay sufficient contributions to housing provident fund as required, the housing provident fund management center shall order it to make the payment and deposit within a prescribed time limit; where the payment has not been made after the expiration of the time limit, the housing provident fund management center may request the people’s court for compulsory enforcement. On July 20, 2018, the General Office of the Communist Party of China and the General Office of the State Council jointly issued the Reform Plan on Tax Collection and Administration Systems for Local Offices of the State Administration of Taxation and Local Taxation Bureaus, according to which the collection and administration of social insurance will be transferred from the social insurance departments to competent tax authorities, and the supervision over the payment of social insurance will be significantly strengthened in the way that an enterprise must pay social insurance for its employees based on their overall salary at certain legally required rates. If we are fined due to insufficient payment of the social insurance and housing fund of the employees, our business operations could be materially and adversely affected.
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You may face difficulties in protecting your interests and exercising your rights as a stockholder of ours since we conduct part of our operations in China and part of our officers and directors reside in China.
We conduct part of our operations in the PRC through the PRC Subsidiaries. Some of our current officers and directors reside outside the United States and part of the assets of those persons are located outside of the United States. Because of this, it may be difficult for you to conduct due diligence on our Company, our executive officers or directors, or to attend stockholder meetings if the meetings are held in China. As a result, our public stockholders may have more difficulty in protecting their interests through actions against our management, directors or major stockholders than would stockholders of a corporation doing business entirely or predominantly within the United States.
You may experience difficulties in protecting your rights through the United States courts.
As of the date of this Report, part of our operations is conducted in China and part of our assets are located in China. Part our officers are nationals or residents of the PRC and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a stockholder to effect service of process within the United States upon these persons, or to enforce judgments against us which are obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.
In addition, it may be difficult or impossible for you to effect service of process within the United States upon us our directors and officers in the event that you believe that your rights have been violated under United States securities laws or otherwise. Even if you are successful in effecting service of process and bringing an action of this kind, the laws of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. There is no statutory recognition in the PRC of judgments obtained in the United States.
Increases in labor costs in the PRC may adversely affect our business and our profitability.
The economy of China has been experiencing significant growth, leading to inflation and increased labor costs. China’s overall economy and the average wage in the PRC are expected to continue to grow. Future increases in China’s inflation and material increases in the cost of labor may materially and adversely affect our profitability and results of operations.
Our auditor is headquartered in Singapore and is subject to inspection by the PCAOB on a regular basis. To the extent that our independent registered public accounting firm’s audit documentation related to their audit reports for our company become located in China, the PCAOB may not be able inspect such audit documentation and, as such, you may be deprived of the benefits of such inspection and our Common Stock could be delisted from the stock exchange pursuant to the Holding Foreign Companies Accountable Act and Accelerating Holding Foreign Companies Accountable Act.
Our independent registered public accounting firm issued an audit opinion on the financial statements included in this report filed with the SEC and will issue audit reports related to our company in the future. As auditors of companies that are traded publicly in the United States and a firm registered with the PCAOB, our auditor is required by the laws of the United States to undergo regular inspections by the PCAOB. However, to the extent that our auditor’s work papers become located in China, such work papers will not be subject to inspection by the PCAOB because the PCAOB is currently unable to conduct inspections without the approval of the Chinese authorities. Inspections of certain other firms that the PCAOB has conducted outside of China have identified deficiencies in those firms’ audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. On December 2, 2021, the Securities and Exchange Commission adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. We are required by the HFCA Act to have an auditor that is subject to the inspection by the PCAOB. Pursuant to the HFCA Act, the PCAOB issued a Determination Report on December 16, 2021, which found that the PCAOB was unable to inspect or investigate completely certain named registered public accounting firms headquartered in mainland China and Hong Kong. Our independent registered public accounting firm is headquartered in the Singapore and has been inspected by the PCAOB on a regular basis and as such, it is not affected by or subject to the PCAOB’s Determination Report. To the extent this status changes in the future and our auditor’s audit documentation related to their audit reports for our company becomes outside of the inspection by the PCAOB, our Common Stock could be delisted from the stock exchange pursuant to the Holding Foreign Companies Accountable Act.
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Our securities may be prohibited from trading on a national exchange or over-the-counter in the United States under the Holding Foreign Companies Accountable Act, if the PCAOB determines that it cannot inspect or fully investigate our auditors for two consecutive years. As a result, an exchange may determine to delist our securities.
In light of recent events indicating greater oversight by the CAC over data security, we may be subject to a variety of PRC laws and other obligations regarding cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material adverse effect on our business and our securities.
Since 2021, the Chinese government has strengthened its anti-monopoly supervision, mainly in three aspects: (1) establishing the National Anti-Monopoly Bureau; (2) revising and promulgating anti-monopoly laws and regulations, including: the Anti-Monopoly Law (draft Amendment published on October 23, 2021 for public opinions), the anti-monopoly guidelines for various industries, and the detailed Rules for the Implementation of the Fair Competition Review System; and (3) expanding the anti-monopoly law enforcement targeting Internet companies and large enterprises. As of the date of this report, the Chinese government’s recent statements and regulatory actions related to anti-monopoly concerns have not impacted our ability to conduct business, accept foreign investments, or list on a U.S. or other foreign exchange because neither the Company nor its PRC operating entities engage in monopolistic behaviors that are subject to these statements or regulatory actions.
On November 14, 2021, the CAC released the Regulations on the Network Data Security Management (Draft for Comments), or the Data Security Management Regulations Draft, to solicit public opinion and comments till December 13, 2021, which has not been promulgated as of the date of this report. Pursuant to the Data Security Management Regulations Draft, data processors holding more than one million users/users’ individual information shall be subject to cybersecurity review before listing abroad. Data processing activities refers to activities such as the collection, retention, use, processing, transmission, provision, disclosure, or deletion of data. According to the latest amended Cybersecurity Review Measures, which was promulgated on November 16, 2021 and became effective on February 15, 2022, an online platform operator holding more than one million users/users’ individual information shall be subject to cybersecurity review before listing abroad.
As of the date of this Report, CIMG and its subsidiaries have not received any notice from any authorities requiring the PRC subsidiaries to go through cybersecurity review or network data security review by the CAC. Given that CIMG and its subsidiaries do not possess personal data of at least one million individual clients and do not collect data that affects or may affect national security in their business operations as of the date of this report and do not anticipate that they will be collecting over one million users’ personal information or data that affects or may affect national security in the near future. There remains uncertainty, however, as to how the Cybersecurity Review Measures and the Security Administration Draft will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures and the Security Administration Draft. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. We cannot guarantee, however, that we will not be subject to cybersecurity review and network data security review in the future, which could materially and adversely affect our business, financial conditions, and results of operations.
Compliance with China’s new Data Security Law, Measures on Cybersecurity Review (revised draft for public consultation), Personal Information Protection Law (second draft for consultation), regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business.
China has implemented or will implement rules and is considering a number of additional proposals relating to data protection. China’s new Data Security Law promulgated by the Standing Committee of the National People’s Congress of China in June 2021, or the Data Security Law, will take effect in September 2021. The Data Security Law provides that the data processing activities must be conducted based on “data classification and hierarchical protection system” for the purpose of data protection and prohibits entities in China from transferring data stored in China to foreign law enforcement agencies or judicial authorities without prior approval by the Chinese government. As the Data Security Law has not yet come into effect, we may need to make adjustments to our data processing practices to comply with this law.
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Additionally, China’s Cyber Security Law, requires companies to take certain organizational, technical and administrative measures and other necessary measures to ensure the security of their networks and data stored on their networks. Specifically, the Cyber Security Law provides that China adopt a multi-level protection scheme (MLPS), under which network operators are required to perform obligations of security protection to ensure that the network is free from interference, disruption or unauthorized access, and prevent network data from being disclosed, stolen or tampered. Under the MLPS, entities operating information systems must have a thorough assessment of the risks and the conditions of their information and network systems to determine the level to which the entity’s information and network systems belong-from the lowest Level 1 to the highest Level 5 pursuant to the Measures for the Graded Protection and the Guidelines for Grading of Classified Protection of Cyber Security. The grading result will determine the set of security protection obligations that entities must comply with. Entities classified as Level 2 or above should report the grade to the relevant government authority for examination and approval.
Recently, the Cyberspace Administration of China has taken action against several Chinese internet companies in connection with their initial public offerings on U.S. securities exchanges, for alleged national security risks and improper collection and use of the personal information of Chinese data subjects. According to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Measures on Cybersecurity Review, which are aimed at “preventing national data security risks, maintaining national security and safeguarding public interests.” On July 10, 2021, the Cyberspace Administration of China published a revised draft of the Measures on Cybersecurity Review, expanding the cybersecurity review to data processing operators in possession of personal information of over 1 million users if the operators intend to list their securities in a foreign country.
It is unclear at the present time how widespread the cybersecurity review requirement and the enforcement action will be and what effect they will have on the life sciences sector generally and the Company in particular. China’s regulators may impose penalties for non-compliance ranging from fines or suspension of operations, and this could lead to us delisting from the U.S. stock market.
In addition, our securities may be prohibited from trading on a national exchange or over-the-counter in the United States under the Holding Foreign Companies Accountable Act, if the PCAOB determines that it cannot inspect or fully investigate our auditors for two consecutive years.
Also, on August 20, 2021, the National People’s Congress passed the Personal Information Protection Law, which will be implemented on November 1, 2021. The law creates a comprehensive set of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance obligations to cover the processing of personal information of persons by organizations and individuals in China, and the processing of personal information of persons in China outside of China if such processing is for purposes of providing products and services to, or analyzing and evaluating the behavior of, persons in China. The law also proposes that critical information infrastructure operators and personal information processing entities who process personal information meeting a volume threshold to-be-set by Chinese cyberspace regulators are also required to store in China personal information generated or collected in China, and to pass a security assessment administered by Chinese cyberspace regulators for any export of such personal information. Lastly, the draft contains proposals for significant fines for serious violations of up to RMB 50 million or 5% of annual revenues from the prior year.
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Interpretation, application and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation, amendments to existing legislation and changes in enforcement. Compliance with the Cyber Security Law and the Data Security Law could significantly increase the cost to us of providing our service offerings, require significant changes to our operations or even prevent us from providing certain service offerings in jurisdictions in which we currently operate or in which we may operate in the future. Despite our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection and information security, it is possible that our practices, offerings or platform could fail to meet all of the requirements imposed on us by the Cyber Security Law, the Data Security Law and/or related implementing regulations. Any failure on our part to comply with such law or regulations or any other obligations relating to privacy, data protection or information security, or any compromise of security that results in unauthorized access, use or release of personally identifiable information or other data, or the perception or allegation that any of the foregoing types of failure or compromise has occurred, could damage our reputation, discourage new and existing counterparties from contracting with us or result in investigations, fines, suspension or other penalties by Chinese government authorities and private claims or litigation, any of which could materially adversely affect our business, financial condition and results of operations. Even if our practices are not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand and adversely affect our business, financial condition and results of operations. Moreover, the legal uncertainty created by the Data Security Law and the recent Chinese government actions could materially adversely affect our ability, on favorable terms, to raise capital, including engaging in follow-on offerings of our securities in the U.S. market.
On November 14, 2021, the Cyberspace Administration of China released the Regulations on the Network Data Security Management (Draft for Comments), or the Data Security Management Regulations Draft, to solicit public opinion and comments till December 13, 2021, which has not been promulgated as of the date of this report. Pursuant to the Data Security Management Regulations Draft, data processors holding more than one million users/users’ individual information shall be subject to cybersecurity review before listing abroad. Data processing activities refers to activities such as the collection, retention, use, processing, transmission, provision, disclosure, or deletion of data. According to the latest amended Cybersecurity Review Measures, which was promulgated on November 16, 2021 and became effective on February 15, 2022, an online platform operator holding more than one million users/users’ individual information shall be subject to cybersecurity review before listing abroad.
As of the date of this Report, CIMG and its subsidiaries have not received any notice from any authorities requiring the PRC subsidiaries to go through cybersecurity review or network data security review by the CAC. Given that the PRC subsidiaries do not possess personal data of at least one million individual clients and do not collect data that affects or may affect national security in their business operations as of the date of this report and do not anticipate that they will be collecting over one million users’ personal information or data that affects or may affect national security in the near future. There remains uncertainty, however, as to how the Cybersecurity Review Measures and the Security Administration Draft will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures and the Security Administration Draft. If any such new laws, regulations, rules, or implementation and interpretation come into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us. We cannot guarantee, however, that we will not be subject to cybersecurity review and network data security review in the future, which could materially and adversely affect our business, financial conditions, and results of operations.
Failure to comply with the Foreign Corrupt Practices Act could adversely affect our business.
We are required to comply with the United States Foreign Corrupt Practices Act (or FCPA), which prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in mainland China. If our competitors engage in these practices, they may receive preferential treatment from personnel of other companies or government agencies, giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage.
We have operations and agreements with third parties, and we make sales, in China. Companies with operations in China have been accused and found guilty of sales practices that involve unlawful activity, including violations of the FCPA. We believe to date we have complied in all material respects with the provisions of the FCPA. However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants and/or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.
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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; |
| ● | announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures or capital commitments; |
| ● | regulatory or legal developments in the United States and other countries; |
| ● | recruitment or departure of key personnel; |
| ● | expenses related to any of our development programs and our business in general; |
| ● | actual or anticipated changes in financial estimates, development timelines or recommendations by securities analysts; |
| ● | failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; |
| ● | variations in our financial results or those of companies that are perceived to be similar to us; |
| ● | fluctuations in the valuation of companies perceived by investors to be comparable to us; |
| ● | share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; |
| ● | our ability or failure to raise additional capital in equity or debt transactions; |
| ● | costs associated with our sales and marketing initiatives; |
| ● | sales of our Common Stock by us, our insiders or our other stockholders; and |
| ● | general economic, business, industry, market and political conditions, including prevailing interest rates and the rate of inflation. |
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.” On October 31, 2024, we changed our symbol to “IMG.” Although our Common Stock is listed on the Nasdaq Capital Market, an active trading market for our shares may never be sustained. 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.
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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 (“NASDAQ”) indicating that the Company was not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing (the “Bid Price Rule”). 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).
The Company received a notification letter from Nasdaq on January 23, 2024 (the “NASDAQ Notification Letter”), indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(b)(1) (the “Stockholders’ Equity Requirement”). The Nasdaq Notification Letter stated that the Company failed to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing, as required by the Stockholders’ Equity Requirement. Subsequently, the Company completed a convertible note financing of $320,000 on April 27, 2024, an equity financing of $1,500,000 on June 4, 2024, and an equity financing of $3,000,000 on July 11, 2024. On July 23, 2024, the Company received a letter from Nasdaq stating that based on the Company’s Form 8-K, filed with the Commission on July 19, 2024, Nasdaq has determined that the Company has complied with Listing Rule 5550(b)(1).
On January 14, 2025, the Company received a notification letter (the “Minimum Bid Price Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that the Company was not in compliance with the minimum bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2). Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Minimum Bid Price Notice had no immediate effect on the listing of the Company’s Common Stock, which continued to trade on The Nasdaq Capital Market under the symbol “IMG.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company had 180 calendar days from the date of the Minimum Bid Price Notice, or until July 14, 2025, to regain compliance. If, at any time before July 14, 2025, the closing bid price of the Common Stock closed at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq would provide written notification that the Company had regained compliance and the matter would be resolved. If the Company did not regain compliance during the compliance period ending July 14, 2025, Nasdaq could, in its discretion, grant the Company an additional 180-calendar-day period to regain compliance, provided that the Company met the continued listing requirement for market value of publicly held shares and all other applicable initial listing standards for The Nasdaq Capital Market as of July 14, 2025 (except for the minimum bid price requirement) and provided Nasdaq with written notice of its intent to cure the deficiency during the second compliance period.
On January 17, 2025, the Company received another notice (the “Annual Report Notice”) from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Annual Report on Form 10-K for the fiscal year ended September 30, 2024 with the SEC. The Annual Report Notice had no immediate effect on the listing of the Company’s Common Stock on Nasdaq and stated that the Company was required to submit a plan to regain compliance with Nasdaq Listing Rule 5250(c)(1) within 60 calendar days from the date of the Annual Report Notice. If the plan was accepted by Nasdaq, Nasdaq could grant the Company up to 180 calendar days from the due date of the Form 10-K for the fiscal year ended September 30, 2024 to regain compliance. In determining whether to accept such plan, Nasdaq would consider factors such as the likelihood that the remedial filing, along with any subsequent periodic filings that became due, could be made within the 180-day period, the Company’s past compliance history, the reasons for the late filing, other corporate events that might occur during Nasdaq’s review period, the Company’s overall financial condition, and its public disclosures. Any subsequent periodic filing due within the 180-day exception period was required to be filed no later than the end of that period.
On February 19, 2025, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Quarterly Report on Form 10-Q for the period ended December 31, 2024 with the SEC.
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The Company submitted a compliance plan to Nasdaq on March 18, 2025, and Nasdaq granted the Company an extension to (i) file its Form 10-K for the fiscal year ended September 30, 2024 on or before June 13, 2025, and (ii) file its Form 10-Q for the quarter ended December 31, 2024 on or before July 14, 2025.
On May 19, 2025, the Company received a notice (the “Quarterly Report Notice”) from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Quarterly Report on Form 10-Q for the three months ended March 31, 2025 with the SEC. The Quarterly Report Notice had no immediate effect on the listing of the Company’s Common Stock on Nasdaq.
As a result of this additional delinquency relating to the Form 10-Q for the three months ended March 31, 2025, the Company submitted an update to its original compliance plan on June 3, 2025.
On June 13, 2025, the Company did not file its Form 10-K for the fiscal year ended September 30, 2024. On June 27, 2025, the Company received a delisting determination letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (the “Nasdaq Delist Determination Letter”). According to the Nasdaq Delist Determination Letter, unless the Company requested an appeal of this determination by July 7, 2025, trading of the Company’s Common Stock would be suspended from The Nasdaq Capital Market at the opening of business on July 9, 2025, and Nasdaq would file a Form 25-NSE with the SEC to remove the Company’s securities from listing and registration on The Nasdaq Stock Market.
On July 7, 2025, the Company appealed the Nasdaq delisting determination letter dated June 27, 2025, and the Nasdaq Hearings Panel scheduled a hearing for the appeal on August 14, 2025. Nasdaq also notified the Company that the Panel would consider this matter in rendering a determination regarding the Company’s continued listing on The Nasdaq Capital Market. Pursuant to Listing Rule 5810(d), the Company intended to present its views with respect to this additional deficiency at the Panel hearing.
On July 17, 2025, the Company received an additional delisting determination letter from Nasdaq, which stated that the Company had not regained compliance with Nasdaq Listing Rule 5550(a)(2) by July 14, 2025 and was not eligible for a second 180-calendar-day compliance period, primarily because the Company did not satisfy the initial listing requirements for The Nasdaq Capital Market under the Equity Standard or the alternative standards. According to the letter, this matter served as an additional basis for delisting the Company’s securities from The Nasdaq Stock Market.
On July 21, 2025, the Company filed with the SEC its Annual Report on Form 10-K for the fiscal year ended September 30, 2024, which was subsequently amended on July 30, 2025.
Following a hearing held on August 14, 2025, the Nasdaq Hearings Panel issued a decision on September 2, 2025 granting the Company’s request to continue its listing on The Nasdaq Stock Market, subject to the Company’s timely satisfaction of specified conditions, including (i) filing all required periodic reports and (ii) demonstrating compliance with Nasdaq Listing Rule 5550(b)(1), to be affirmed in a report to be filed under the Exchange Act on or before September 30, 2025.
On August 20, 2025, the Company received a delinquency notification letter from the Listing Qualifications Staff of Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025 with the SEC.
On August 26, 2025, the Company filed with the SEC its Quarterly Report on Form 10-Q for the three months ended December 31, 2024.
In its effort to regain compliance with the Nasdaq equity requirement, and subsequent to the quarter ended June 30, 2025 and through September 30, 2025, the Company completed certain unregistered issuances of equity securities, which increased stockholders’ equity.
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On September 30, 2025, the Company filed with the SEC its Quarterly Report on Form 10-Q for the three months ended March 31, 2025.
On October 8, 2025, the Company received a delinquency notification letter from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5620(a) and Nasdaq Listing Rule 5810(c)(2)(G) because the Company did not hold an annual meeting of stockholders within 12 months of the end of the Company’s fiscal year. The Company subsequently held its Annual Meeting of Stockholders on October 28, 2025.
On November 3, 2025, the Company filed with the SEC its Quarterly Report on Form 10-Q for the three months ended June 30, 2025.
On December 4, 2025, Nasdaq notified the Company that it had regained compliance with Nasdaq Listing Rule 5250(c)(1), as well as Nasdaq Listing Rules 5550(b)(1) and 5620(a), following a hearing before the Nasdaq Hearings Panel. The Company remains subject to a bid price compliance deadline under Nasdaq Listing Rule 5550(a)(2) and a Mandatory Panel Monitor through November 14, 2026.
If we fail to meet one of those standards or any other applicable Nasdaq continued listing requirement relevant to the listing of our securities, 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.
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, and for working capital and general corporate purposes. 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.
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 Nasdaq continued listing requirements. We have breached certain of these requirements in the past. See also “—The Nasdaq Capital Market may subsequently delist our securities if we fail to comply with ongoing listing standards” and “Corporate Information.”
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.
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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.
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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.
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.
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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. |
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
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ITEM 2. PROPERTIES
Our principal executive office is located at Room R2, FTY D, 16/F, Kin Ga Industrial Building, 9 San On Street, Tuen Mun, Hong Kong, at a monthly rental cost of RMB 4,167 (approximately $594), with the lease expiring on December 17, 2026.
We currently lease office space and facilities in Delray Beach, Florida; Tuen Mun, Hong Kong; and Beijing and Henan, China. Our office in Boca Raton, Florida has a total monthly lease expense of approximately $2,500, with the lease expiring on October 11, 2026. Our office in Beijing, China has a total yearly lease expense of approximately RMB 197,100(approximately $27,683), with the lease expiring on March 31, 2026. Our office in Henan, China has a total yearly lease expense of approximately RMB 98,280 (approximately $13,804), monthly rent fee RMB 8,190 (approximately $1,150), with the lease expiring on August 14, 2026. We have analyzed our current facilities in light of our anticipated requirements, and we expect to continue optimizing our office space and facilities to meet our future needs.
ITEM 3. LEGAL PROCEEDINGS
The Kim Litigation
On October 3, 2024, Mr. Sooncha Kim filed a complaint against the Company in the Southern District of New York, (Case No. 1:24-cv-7485) (the “Complaint”). The Complaint alleges that the Company breached a Convertible Note and Warrant Purchase Agreement, dated June 6, 2024, between the Company and Mr. Kim, by, among other things, failing to deliver the registration rights agreement, excluding Mr. Kim from the S-1 registration statement, delaying conversion of Mr. Kim’s notes, undertaking steps to dilute Mr. Kim’s shares, failing to honor Mr. Kim’s 50% participation right in any subsequent financing and failing to appoint a designated director, as set forth in the parties’ agreement. Mr. Kim seeks specific performance of the Convertible Note and Warrant Purchase Agreement, and monetary damages in the amount of $1,041,216, plus applicable interest. The Company filed its answer to the Complaint on December 3, 2024. On January 7, 2025, Mr. Kim filed a motion seeking a preliminary injunction against the Company (the “Motion”). The Company opposed the Motion on January 22, 2025, and on February 13, 2025, the Court denied Mr. Kim’s Motion. As of September 30, 2025, discovery in the case is ongoing, and no trial date has been set.
The Ex-Directors Lawsuit
On March 10, 2025, the following former directors of the Company, Kevin J. Connor, Chris J. Jones, Nobuki Kurita, and David Robson (collectively, the “Ex-Directors”), filed a complaint against the Company in the Superior Court of California, County of San Diego (Case No. 25CU012922N) (the “Complaint”). The Complaint alleges the Company failed to pay directors’ fees and expenses from the last quarter the fiscal year ended September 30, 2023 through the first two quarters of the fiscal year ended September 30, 2024, and is claiming breach of contract, quantum meruit, unjust enrichment, promissory estoppel, breach of the implied covenant of good faith and fair dealing, and unfair business practices. On August 22, 2025, a judgment by default was entered against the Company in the amount of $58,920.34. Counsel for Plaintiffs/Judgment Creditors, Kevin J. Conner, J. Chris Jones, Nobuki Kurita, and David Robson (collectively, “Plaintiffs”) subsequently filed a motion with the court to amend the total amount of the judgment. On November 21, 2025, the Court entered an order amending the judgment nunc pro tunc, increasing the aggregate awards to all Plaintiffs to $222,062.28, including the prejudgment interest and costs.
ITEM 4. MINE SAFETY DISCLOSURES
None.
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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 “IMG.” As of September 30, 2025, there were approximately 299 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.
Equity Incentive Plans
See “Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. - Equity Compensation Plan Information”.
Repurchases of Shares
There were no repurchases of shares of common stock during for the year ended September 30, 2025.
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.
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Corporate Overview
CIMG is a company incorporated in Nevada and has been listed on Nasdaq since June 2020. We were formerly known as “Nuzee, Inc.” with a previous ticker symbol “NUZE”, and we changed our corporate name and ticker symbol to “CIMG Inc.” and “IMG” in October 2024. We are committed to leveraging artificial intelligence and, where appropriate, blockchain related technologies to support industrial development and help our clients improve user growth and brand management. We are currently making efforts to expand our sales and distribution channels in Asia to cover a wider range of consumer food and beverage products. This expansion is driven by our online sales platform, which utilizes the natural language search function.
On June 7, 2024, we entered into a Share Purchase Agreement (“Share Purchase Agreement”) with Masateru Higashida, our former Chief Executive Officer and Director, under which we sold all issued and outstanding shares of our wholly-owned subsidiaries, NuZee KOREA Ltd. and NuZee Investment Co., Ltd., to Mr. Higashida, which sale was completed in June 2024.
Since July 2024, CIMG has been undergoing a transformation in digital marketing, distribution, and sales. As part of this transformation, we have extended our sales and distribution network to include Maca-infused food and beverages, reaffirming our commitment to reshaping the online marketing, sales, and distribution landscape for consumer products.
Maca, a plant of the Brassicaceae family that originated in South America, has oval leaves and a rootstock shaped like a small round radish. It is edible and renowned as a natural superfood. Maca is rich in nutrients, boasts high levels of essential nutrients, and is believed to nourish and strengthen the human body. It is often referred to as “South American ginseng.” The primary cultivation regions for Maca include the Andes Mountains in South America and the Jade Dragon Snow Mountain in Lijiang, Yunnan, China. Our business focuses on sourcing, marketing, and distributing a wide range of Maca-based dietary supplements, functional foods, and beauty products. We operate with a commitment to providing high-quality, sustainably sourced products to consumers who seek to enhance their health and wellness. Our products are sold through both online channels and a network of retail partners, including grocery stores, convenience stores, and vending machines.
CIMG has successfully secured the exclusive distribution and sales rights for all Maca products produced by Jiangsu Kangduoyuan Beverage Co., Ltd., a leading Maca production base in Asia. These products include Maca Peptide Coffee, Maca-Noni, Maca Wine, Maca Purified Powder, and other full-range offerings. Through a comprehensive digital marketing strategy, CIMG is optimistic in its ability to achieve sales growth and enhance the Company’s enterprise value.
Since July 2024, we launched the “Homology of Medicine and Food” series. including Huomao-branded products, Exosome eye drops and other health and wellness products. The Homology of Medicine and Food Series is guided by traditional Chinese medicine theory, incorporates modern nutritional principles to identify the functional attributes of certain foods and food-derived ingredients. we are committed to providing healthier and more suitable health and wellness products for Asian customers. The launch of the new product effectively contributed to the growth of our sales.
We source, market, and distribute health and wellness products, including Maca-based dietary supplements, functional foods, and beauty products. We leverage technology and data-driven marketing tools to support product promotion and sales. We are committed to providing high-quality products with a focus on responsible and sustainable sourcing to consumers seeking to enhance their health and wellness. We sell our products through online channels and a network of retail partners, including grocery stores, convenience stores, and vending machines.
Since September 2025, we launched the “Computing Power Product” series. We provide customers with hardware devices, such as GPUs integrated with artificial intelligence data-processing modules. These modules are embedded in the GPUs and tailored to the characteristics and needs of each industry. The modules enable industry-specific data learning, helping applications develop more accurate data-processing patterns, and intelligently complete operational tasks. We primarily sell these products to business customers, who then integrate them into their own servers, core processors, and other computing infrastructure and deliver solutions to their end users. We continuously refine our artificial intelligence data-processing templates and enhance the learning capabilities of the modules to deliver more accurate intelligent services across a broad range of industries.
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The diagram below is our corporate structure as of the date of this Report.
Nasdaq Listing Deficiency
Since January 2024, we have received several deficiency and delinquency notices from Nasdaq relating to our stockholders’ equity, minimum bid price, failure to timely file periodic reports and failure to hold an annual meeting. We have cured all of these deficiencies except the minimum bid price requirement and, as of December 4, 2025, Nasdaq has notified us that we have regained compliance with Nasdaq Listing Rules 5250(c)(1), 5550(b)(1) and 5620(a), while remaining subject to a bid price compliance deadline under Rule 5550(a)(2) and a Mandatory Panel Monitor through November 14, 2026
On January 14, 2025, the Company received a notification letter (the “Minimum Bid Price Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that the Company was not in compliance with the minimum bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2). Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. The Minimum Bid Price Notice had no immediate effect on the listing of the Company’s Common Stock, which continued to trade on The Nasdaq Capital Market under the symbol “IMG.” In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company had 180 calendar days from the date of the Minimum Bid Price Notice, or until July 14, 2025, to regain compliance. If, at any time before July 14, 2025, the closing bid price of the Common Stock closed at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq would provide written notification that the Company had regained compliance and the matter would be resolved. If the Company did not regain compliance during the compliance period ending July 14, 2025, Nasdaq could, in its discretion, grant the Company an additional 180-calendar-day period to regain compliance, provided that the Company met the continued listing requirement for market value of publicly held shares and all other applicable initial listing standards for The Nasdaq Capital Market as of July 14, 2025 (except for the minimum bid price requirement) and provided Nasdaq with written notice of its intent to cure the deficiency during the second compliance period.
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On January 17, 2025, the Company received another notice (the “Annual Report Notice”) from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Annual Report on Form 10-K for the fiscal year ended September 30, 2024 with the SEC. The Annual Report Notice had no immediate effect on the listing of the Company’s Common Stock on Nasdaq and stated that the Company was required to submit a plan to regain compliance with Nasdaq Listing Rule 5250(c)(1) within 60 calendar days from the date of the Annual Report Notice. If the plan was accepted by Nasdaq, Nasdaq could grant the Company up to 180 calendar days from the due date of the Form 10-K for the fiscal year ended September 30, 2024 to regain compliance. In determining whether to accept such plan, Nasdaq would consider factors such as the likelihood that the remedial filing, along with any subsequent periodic filings that became due, could be made within the 180-day period, the Company’s past compliance history, the reasons for the late filing, other corporate events that might occur during Nasdaq’s review period, the Company’s overall financial condition, and its public disclosures. Any subsequent periodic filing due within the 180-day exception period was required to be filed no later than the end of that period.
On February 19, 2025, the Company received a notification letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Quarterly Report on Form 10-Q for the period ended December 31, 2024 with the SEC.
The Company submitted a compliance plan to Nasdaq on March 18, 2025, and Nasdaq granted the Company an extension to (i) file its Form 10-K for the fiscal year ended September 30, 2024 on or before June 13, 2025, and (ii) file its Form 10-Q for the quarter ended December 31, 2024 on or before July 14, 2025.
On May 19, 2025, the Company received a notice (the “Quarterly Report Notice”) from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Quarterly Report on Form 10-Q for the three months ended March 31, 2025 with the SEC. The Quarterly Report Notice had no immediate effect on the listing of the Company’s Common Stock on Nasdaq.
As a result of this additional delinquency relating to the Form 10-Q for the three months ended March 31, 2025, the Company submitted an update to its original compliance plan on June 3, 2025.
On June 13, 2025, the Company did not file its Form 10-K for the fiscal year ended September 30, 2024. On June 27, 2025, the Company received a delisting determination letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (the “Nasdaq Delist Determination Letter”). According to the Nasdaq Delist Determination Letter, unless the Company requested an appeal of this determination by July 7, 2025, trading of the Company’s Common Stock would be suspended from The Nasdaq Capital Market at the opening of business on July 9, 2025, and Nasdaq would file a Form 25-NSE with the SEC to remove the Company’s securities from listing and registration on The Nasdaq Stock Market.
On July 7, 2025, the Company appealed the Nasdaq delisting determination letter dated June 27, 2025, and the Nasdaq Hearings Panel scheduled a hearing for the appeal on August 14, 2025. Nasdaq also notified the Company that the Panel would consider this matter in rendering a determination regarding the Company’s continued listing on The Nasdaq Capital Market. Pursuant to Listing Rule 5810(d), the Company intended to present its views with respect to this additional deficiency at the Panel hearing.
On July 17, 2025, the Company received an additional delisting determination letter from Nasdaq, which stated that the Company had not regained compliance with Nasdaq Listing Rule 5550(a)(2) by July 14, 2025 and was not eligible for a second 180-calendar-day compliance period, primarily because the Company did not comply with the initial listing requirements for The Nasdaq Capital Market under the Equity Standard or the alternative standards. According to the letter, this matter served as an additional basis for delisting the Company’s securities from The Nasdaq Stock Market.
On July 21, 2025, the Company filed with the SEC its Annual Report on Form 10-K for the fiscal year ended September 30, 2024, which was subsequently amended on July 30, 2025.
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Following a hearing held on August 14, 2025, the Nasdaq Hearings Panel issued a decision on September 2, 2025 granting the Company’s request to continue its listing on The Nasdaq Stock Market, subject to the Company’s timely satisfaction of specified conditions, including (i) filing all required periodic reports and (ii) demonstrating compliance with Nasdaq Listing Rule 5550(b)(1), to be affirmed in a report to be filed under the Exchange Act on or before September 30, 2025.
On August 20, 2025, the Company received a delinquency notification letter from the Listing Qualifications Staff of Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5250(c)(1) because the Company did not timely file its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025 with the SEC.
On August 26, 2025, the Company filed with the SEC its Quarterly Report on Form 10-Q for the three months ended December 31, 2024.
In its effort to regain compliance with the Nasdaq equity requirement, and subsequent to the quarter ended June 30, 2025 and through September 30, 2025, the Company completed certain unregistered issuances of equity securities, which increased stockholders’ equity.
On September 30, 2025, the Company filed with the SEC its Quarterly Report on Form 10-Q for the three months ended March 31, 2025.
On October 8, 2025, the Company received a delinquency notification letter from Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5620(a) and Nasdaq Listing Rule 5810(c)(2)(G) because the Company did not hold an annual meeting of stockholders within 12 months of the end of the Company’s fiscal year. The Company subsequently held its Annual Meeting of Stockholders on October 28, 2025.
On November 3, 2025, the Company filed with the SEC its Quarterly Report on Form 10-Q for the three months ended June 30, 2025.
On December 4, 2025, Nasdaq notified the Company that it had regained compliance with Nasdaq Listing Rule 5250(c)(1), as well as Nasdaq Listing Rules 5550(b)(1) and 5620(a), following a hearing before the Nasdaq Hearings Panel. The Company remains subject to a bid price compliance deadline under Nasdaq Listing Rule 5550(a)(2) and a Mandatory Panel Monitor through November 14, 2026.
Results of Operations
Revenue
Fiscal Year ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | Dollars | % | |||||||||||||
| Products revenues | $ | 10,231,791 | $ | 1,930,291 | $ | 8,301,500 | 430.06 | % | ||||||||
| Service revenues | 65,987 | - | 65,987 | 100 | % | |||||||||||
| Total revenue | 10,297,778 | 1,930,291 | 8,367,487 | 433.48 | % | |||||||||||
For the fiscal year ended September 30, 2025, the Homology of Medicine and Food Series, Computing Power Product Series, and Maca Product Series generated revenues of $6,349,253, $3,804,691, and $144,726, respectively, accounting for 61.65%, 36.94% and 1.41% of the total revenue. Our total revenue was $10,297,778, compared with $1,930,291 for the fiscal year ended September 30, 2024, representing a growth of 433.48%. The significant increase in revenue was primarily attributable to the inclusion of revenues from the Homology of Medicine and Food Series and the Computing Power Product Series, which were generated by entities acquired during the fiscal year ended September 30, 2025. Accordingly, the year-over-year revenue growth was driven largely by acquisitions rather than organic expansion of the Company’s existing operations.
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Cost of revenue and gross margin
Fiscal Year ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | Dollars | % | |||||||||||||
| Products cost | $ | 10,108,590 | $ | 1,898,122 | $ | 8,206,667 | 432.36 | % | ||||||||
| Service cost | 63,347 | - | 63,347 | 100 | % | |||||||||||
| Total cost | 10,171,937 | 1,898,122 | 8,273,815 | 435.89 | % | |||||||||||
| Gross profit | 125,841 | 32,169 | 93,672 | 291.19 | % | |||||||||||
| Gross margin % | 1.22 | % | 1.67 | % | ||||||||||||
Cost of revenue
For the fiscal year ended September 30, 2025, total cost of revenue amounted to $10,171,937, compared to $1,898,122 for the fiscal year ended September 30, 2024, representing an increase of 435.89%.
The cost of revenue for the year ended fiscal year ended September 30, 2025 was primarily attributable to the Homology of Medicine and Food Series, the Computing Power Product Series, and the Maca Product Series. For the fiscal year ended September 30, 2025, product costs relating to these series were $6,278,927, $3,777,292, and $116,609, accounting for 61.72%, 37.13% and 1.15% of the total cost of revenue.
The significant increase in cost of revenue was mainly due to the inclusion of the Homology of Medicine and Food Series and the Computing Power Product Series, which were generated from entities acquired during the fiscal year and primarily relate to trading activities. Accordingly, the year-over-year increase in cost of revenue was driven largely by the consolidation of newly acquired entities rather than an increase in costs incurred by the Company’s existing operations.
Gross profit
For the fiscal year ended September 30, 2025, total gross profit amounted to $125,841, compared to $32,169 for the fiscal year ended September 30, 2024. The increase in gross profit was primarily attributable to higher revenue generated from the Homology of Medicine and Food Series and the Computing Power Product Series, which were contributed by entities acquired during the fiscal year.
For the fiscal year ended September 30, 2025, gross profit from the Homology of Medicine and Food Series, the Computing Power Product Series, and the Maca Product Series was $70,325, $27,399, and $28,117, accounting for 55.88%, 21.77% and 22.35% of the total gross profit.
Gross margin
For the fiscal year ended September 30, 2025, the Company’s gross profit margin was 1.22%, compared to 1.67% for the fiscal year ended September 30, 2024. The decrease in gross profit margin was mainly due to a higher proportion of revenue generated from the Homology of Medicine and Food Series and the Computing Power Product Series, which primarily operate as trading businesses and generally generate lower gross margins than the Company’s historical operations.
Operating Expenses
Fiscal Year ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | Dollars | % | |||||||||||||
| Operating Expenses | $ | 4,419,331 | $ | 6,425,572 | $ | (2,006,241 | ) | (31.22 | )% | |||||||
For the fiscal year ended September 30, 2025, operating expenses totaled $4,419,331, compared to $6,425,572 for the fiscal year ended September 30, 2024, representing a decrease of $2,006,241 or 31.22%. This is mainly due to the reduction in labor costs, professional fees (including legal and consulting services), and office expenses.
Net Loss
Fiscal Year ended September 30, | Change | |||||||||||||||
| 2025 | 2024 | Dollars | % | |||||||||||||
| Net Loss | $ | 4,890,555 | $ | 8,972,735 | $ | (4,082,180 | ) | (45.50 | )% | |||||||
For the fiscal year ended September 30, 2025, the Company recorded a net loss of $4,890,555, compared to a net loss of $8,972,735 for the fiscal year ended September 30, 2024. The decrease in net loss was primarily attributable to lower operating expenses, which is mainly due to the decrease in labor costs, professional fees (including legal and consulting service fees), and office expenses.
Liquidity and Capital Resources
As of the date of this Report, the Company has funded its operations primarily through proceeds from registered public offerings and private placements of its Common Stock. The Company’s principal uses of cash include funding operations, product commercialization and development activities, administrative support, and working capital requirements.
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As of September 30, 2025, the Company had a cash balance of approximately $0.14 million and has incurred recurring net losses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of this Report.
Management has evaluated the Company’s ability to continue as a going concern by considering its current cash resources, the value of its digital assets, and its expected operating expenses over the next twelve months. Management’s plans to alleviate the conditions giving rise to substantial doubt include seeking additional funding through public or private equity financings, equity-linked instruments, or other capital-raising activities. The timing and availability of such funding are subject to market conditions and other factors, including the potential exercise of outstanding warrants by warrant holders.
There can be no assurance that such financing will be available on acceptable terms, or at all. Accordingly, management has concluded that substantial doubt about the Company’s ability to continue as a going concern has not been alleviated.
Summary of Cash Flows
Fiscal Year Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash used in operating activities | $ | (17,593,993 | ) | $ | (9,970,680 | ) | ||
| Cash provided by (used in) investing activities | $ | 22,365 | $ | (320,043 | ) | |||
| Cash provided by financing activities | $ | 17,247,540 | $ | 9,586,272 | ||||
| Effect of foreign exchange on cash | $ | (2,847 | ) | $ | 312,906 | |||
| Cash flows generated from discontinued business operations | $ | - | $ | (127,102 | ) | |||
| Net decrease in cash | $ | (326,935 | ) | $ | (518,647 | ) | ||
Discontinued operations
On June 7, 2024, the Company’s Board of Directors passed a resolution to sell (1) NuZee KOREA Ltd, a company incorporated in Korea and a wholly-owned subsidiary of the Company; and (2) NuZee Investment Co., Ltd, a company incorporated in Japan and a wholly-owned subsidiary of the Company.
During the fiscal years ended September 30, 2025 and September 30, 2024, the cash outflows arising from the cessation of business operations were $Nil and $127,102 respectively.
Operating Activities
We used $17,593,993 of cash in operating activities during the fiscal year ended September 30, 2025, with the cash outflow arising from purchases of raw materials and finished products.
We used $9,970,680 of cash in operating activities during the fiscal year ended September 30, 2024, with the cash outflow arising from the purchase of raw materials and finished products and the disposal of subsidiaries.
Investing Activities
In the fiscal year ended September 30, 2025, we received $22,365 in cash from investing activities, which was a cash inflow from the disposal of subsidiaries and equipment.
In the fiscal year ended September 30, 2024, we used $320,043 in cash in investing activities, which was a cash outflow arising from the purchase of equipment.
Financing Activities
Historically, we have funded our operations through the issuance of our equity securities.
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Cash provided from financing activities increased from $9,586,272 as of September 30, 2024 to $17,247,540 as of September 30, 2025. The main reason for the increase is the rise in private placement. During the fiscal year ended September 30, 2025, financing activities included the offerings and sales of the Company’s common stock and convertible notes.
Off-Balance Sheet Arrangements
As of September 30, 2025, we had no off-balance sheet arrangements that might 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, assumptions and disclosures. We choose accounting policies within US GAAP that management believes are appropriate to accurately and fairly report our operating results and financial position in a consistent manner. Management regularly assesses these policies in light of current and forecasted economic conditions. 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-29 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.
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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 September 30, 2025, 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 were not effective, at the reasonable assurance level, to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and (iii) 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.
| 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 that the Company’s internal control over financial reporting was not effective as of September 30, 2025.
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 were no changes in our internal control over financial reporting that occurred during the fiscal year ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Management and Board of Directors
Our Board of Directors is comprised of five directors. In addition to the information set forth below regarding our directors and the skills that led our Board of Directors to conclude that these individuals should serve as directors, we also believe that all of our directors have a reputation for integrity, honesty, and adherence to the highest ethical standards. We believe they each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to our Company and to their Board duties.
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The following persons currently serve as CIMG’s executive officers and directors. For biographical information concerning the executive officers and directors, see below.
| Name | Age | Position(s) Held | |||
| Executive Officers | |||||
| Jianshuang Wang | 46 | Chief Executive Officer and Chairperson of the Board | |||
| Wenlong Tong | 36 | President | |||
| Feng Tian | 38 | Acting Chief Financial Officer | |||
| Xiaocheng Hao | 46 | Chief Operating Officer | |||
| Non- Executive Directors | |||||
| Yanli Hou | 42 | Independent Director | |||
| Changzheng Ye | 34 | Independent Director | |||
| Zongmei Huang | 53 | Independent Director | |||
| Jinmei Guo Hellstroem | 51 | Independent Director |
Ms. Wang Jianshuang has served as our Chief Executive Officer and Chairperson since June 6, 2024. Prior to joining us, from 2021 to May 2024, Ms. Wang served as Director of Human Resources of Yueshang Group. From March 2012 to July 2020, Ms. Wang served as the Human Resources Director at Zhongrong Minxin Capital Management Co., Ltd., Shuyun Puhui Technology Co., Ltd., and Beijing Meixin Technology Co., Ltd. Ms. Wang received a bachelor’s degree in Human Resource Management from Hebei University of Economics and Business in 2001.
Mr. Wenlong Tong has served as our President since October 5, 2025. Prior to joining us, from 2020 to September 2025, Mr. Tong served as Manager of the South China Major Client Team at Zhongshishun Technology (Beijing) Co., Ltd., where he led financial industry infrastructure integration projects serving major banks, including China Merchants Bank and Ping’An Bank, and was responsible for regional business development across Guangdong Province. Mr. Tong obtained his Master of Business Administration (MBA) degree from Shenzhen University in 2007. Mr. Tong obtained a bachelor’s degree in Computer Network and Application from Siyuan College, Xi’an Jiaotong University in 2009.
Ms. Feng Tian has served as our Acting Chief Financial Officer since August 1, 2025. She also served as our Head of Finance from November 2024 until her appointment as our Acting Chief Financial Officer. Prior to joining us, from 2019 to 2024, Ms. Tian served as Head of Finance at Daren International (HKEX: 01957), where she led post-listing compliance and financial management, including financial disclosures for prospectuses, annual audits, and ESG reporting, to ensure compliance with HKEX requirements, and supported financial system upgrades through the establishment of a shared service center and the implementation of rolling budget mechanisms. From 2014 to 2019, Ms. Tian served as Head of Finance at Henan Aishang International Education Group, where she built the finance function from inception, established key internal systems for fund approval, contract management, and campus accounting, and developed a campus profitability model to support expansion planning and operational decision-making. Ms. Tian obtained an Executive MBA degree from Zhengzhou University. Ms. Tian graduated from Henan Industry and Trade Vocational College in 2013.
Mr. Xiaocheng Hao has served as our Chief Operating Officer since April 30, 2025. From June 2021 to March 2025, Mr. Hao served as the Chief Executive Officer of Shanghai Huomao, where he was responsible for that company’s overall management and operations, including business development and brand and sales strategy. Mr. Hao obtained an MBA degree from Southwest Jiaotong University in 2011 and a bachelor’s degree in Business Administration from Zhongnan University of Economics and Law in 2003.
Ms. Yanli Hou has served as our director since June 6, 2024. From August 2021 to May 2024, Ms. Hou served as the Chief Executive Officer of Daren International (HKEX: 01957), where she was responsible for the company’s overall management and business development in connection with its multi-channel store opening and digital transformation services. From March 2019 to July 2021, Ms. Hou served as President of the Live Streaming Business Group of Yueshang Group (Nasdaq: WETG), where she led the company’s live streaming business operations and management. Ms. Hou obtained a bachelor’s degree in Financial Management from Shandong University of Finance and Economics in 2006.
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Mr. Changzheng Ye has served as our director since May 2, 2024. Prior to joining us, Mr. Ye has served as Technical Director at Lear Group Limited since March 2023. From 2021 to 2023, he served as Technical Director at Enron Investment Management. From 2018 to 2021, he served as a Project Manager at Shenzhen Baoyide Network Technology Co., Ltd. Mr. Ye graduated from Zhengzhou University in 2014 with a bachelor’s degree in Mold Design and Manufacture.
Ms. Zongmei Huang has served as our director since June 19, 2024. Since 2019, Ms. Huang has served as CEO of XinRui Technology Co., Limited, a Hong Kong-based firm focused on helping Chinese technology companies expand globally, as well as supporting growth-stage companies through venture capital and private equity, with investments spanning enterprise services, cloud computing, cybersecurity, fintech, cross-border supply chains, retail, e-commerce, logistics, and digital entertainment. Ms. Huang graduated from City University of Hong Kong in 1996, obtaining a Bachelor of Literature.
Ms. Jinmei Guo Hellstroem has served as our director since December 19, 2024. Since 2014, Ms. Hellstroem has been serving as the CEO of Trend Interior Trading Co., Ltd. in Sweden. Ms. Hellstroem graduated from Bohai University in Liaoning in 1997.
Family Relationships
There are no family relationships among any of CIMG’s executive officers or directors.
Composition of the CIMG Board of Directors
The Board of Directors manages the business and affairs of CIMG, as provided by Nevada law, and conducts its business through meetings of the Board of Directors and its standing committees. The Board of Directors consists of five members. The primary responsibilities of the CIMG’s Board of Directors are to provide risk oversight and strategic guidance to CIMG and to counsel and direct CIMG’s management. The Board of Directors will meet on a regular basis and will convene additional meetings, as required.
Board of Directors Meetings
During the fiscal year ended September 30, 2025, our Board of Directors met eight times, including video conference meetings. Our audit committee met four times while our compensation committee and our nominating and corporate governance committee did not meet. All directors attended 100% of the aggregate number of meetings of the Board of Directors and all of the audit committee members attended 100% of the audit committee meetings.
Director Independence
As a result of its Common Stock continuing to be listed on Nasdaq following consummation of the Business Combination, CIMG adheres to the rules of Nasdaq in determining whether a director is independent. The Board of Directors has consulted with its counsel to ensure that its determinations are consistent with those rules and relevant securities and other laws and regulations regarding the independence of directors. The Nasdaq listing standards generally define an “independent director” as a person who is not an executive officer or employee, or who does not have a relationship which, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director. The parties have determined that Jinmei Guo Hellstroem, Yanli Hou, Changzheng Ye, and Zongmei Huang are considered independent directors of CIMG. CIMG’s independent directors will have regularly scheduled meetings at which only independent directors are present.
Committees of the Board of Directors
CIMG’s Board of Directors has an audit committee, a compensation committee, and a nominating and corporate governance committee. In addition, from time to time, special committees may be established under the direction of the Board of Directors when necessary to address specific issues. Copies of each committee’s charter are posted on CIMG’s website. CIMG’s website and the information contained on, or that can be accessed through, such website is not deemed to be incorporated by reference in, and are not considered part of, this Report. The composition and responsibilities of each of the committees of the Board are described below. Members serve on these committees until their resignation or until otherwise determined by the Board of Directors.
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Audit Committee
CIMG’s audit committee consists of Changzheng Ye, Yanli Hou, and Jinmei Guo Hellstroem. The Board of Directors has determined that each member of the audit committee satisfies the independence requirements under the Nasdaq Listing Rules and Rule 10A-3(b)(1) of the Exchange Act. The chair of the audit committee is Changzheng Ye. The Board of Directors has determined that Yanli Hou is an “audit committee financial expert” within the meaning of SEC regulations. Each member of the audit committee can read and understand fundamental financial statements in accordance with applicable listing standards. In arriving at these determinations, the parties have examined each audit committee member’s scope of experience and the nature of his or her employment. The primary purpose of the audit committee is to discharge the responsibilities of the Board with respect to corporate accounting and financial reporting processes, systems of internal control, and financial statement audits, and to oversee our independent registered public accounting firm. Specific responsibilities of the audit committee include:
| ● | helping the Board of Directors oversee the corporate accounting and financial reporting processes; | |
| ● | managing and/or assessing the selection, engagement, qualifications, independence, and performance of a qualified firm to serve as the independent registered public accounting firm to audit CIMG’s consolidated financial statements; | |
| ● | discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, CIMG’s interim and year-end operating results; | |
| ● | developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; | |
| ● | reviewing related party transactions; | |
| ● | reviewing CIMG’s policies on risk assessment and risk management; | |
| ● | reviewing, with the independent registered public accounting firm, CIMG’s internal quality control procedures, any material issues with such procedures and any steps taken to deal with such issues; and | |
| ● | pre-approving audit and permissible non-audit services to be performed by the independent registered public accounting firm. |
CIMG’s audit committee operates under a written charter that satisfies the applicable Nasdaq Listing Rules.
Compensation Committee
CIMG’s compensation committee consists of Jinmei Guo Hellstroem, Zongmei Huang, and Jianshuang Wang. The chair of the compensation committee is Zongmei Huang. The Board of Directors has determined that each member of the compensation committee satisfies the independence requirements under the Nasdaq Listing Rules, and is a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. The primary purpose of CIMG’s compensation committee is to discharge the responsibilities of the Board in overseeing CIMG’s compensation policies, plans, and programs and to review and determine the compensation to be paid to CIMG’s executive officers, directors, and other senior management, as appropriate. Specific responsibilities of the compensation committee include:
| ● | reviewing and recommending to the Board the compensation of executive officers; | |
| ● | reviewing and recommending to the Board the compensation of directors; |
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| ● | administering CIMG’s equity incentive plans and other benefit programs; | |
| ● | reviewing, adopting, amending, and terminating incentive compensation and equity plans, severance agreements, profit sharing plans, bonus plans, change-of-control protections, and any other compensatory arrangements for CIMG’s executive officers and other senior management; and | |
| ● | reviewing and establishing general policies relating to compensation and benefits of CIMG’s employees, including CIMG’s overall compensation philosophy. |
CIMG’s compensation committee operates under a written charter that satisfies the applicable Nasdaq Listing Rules.
Nominating and Corporate Governance Committee
CIMG’s nominating and corporate governance committee consists of Zongmei Huang, Jinmei Guo Hellstroem, and Yanli Hou. The chair of the nominating and corporate governance committee is Jinmei Guo Hellstroem. The Board of Directors has determined that each member of the nominating and corporate governance committee satisfies the independence requirements under the Nasdaq Listing Rules.
Specific responsibilities of CIMG’s nominating and corporate governance committee include:
| ● | identifying and evaluating candidates, including the nomination of incumbent directors for reelection and nominees recommended by stockholders, to serve on the Board; | |
| ● | considering and making recommendations to the Board regarding the composition and chairpersonship of the CIMG Board and committees of the Board; | |
| ● | reviewing developments in corporate governance practices; | |
| ● | developing and making recommendations to the Board regarding corporate governance guidelines and matters; and | |
| ● | overseeing periodic evaluations of the Board performance, including committees of the CIMG Board. |
CIMG’s nominating and corporate governance committee operates under a written charter that satisfies the applicable Nasdaq Listing Rules.
Code of Business Conduct and Ethics
CIMG adopted a code of business conduct and ethics, or the Code of Conduct, that applies to all directors, officers, and employees, including the principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Conduct for CIMG applies to all directors, officers, and employees of CIMG and is available on CIMG’s website at www.ccmg.tech. In addition, CIMG intends to post on its website all disclosures that are required by law or the Nasdaq Listing Rules concerning any amendments to, or waivers from, any provision of the Code of Conduct. The reference to CIMG’s website address does not constitute incorporation by reference of the information contained at or available through the website, and you should not consider it to be a part of this Report.
Compensation Committee Interlocks and Insider Participation
None of the members or intended members of the compensation committee is currently, or has been at any time, one of our executive officers or employees. None of our executive officers currently serves, or has served during the last calendar year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee.
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Corporate Governance Guidelines
Our Board of Directors adopted corporate governance guidelines in accordance with the corporate governance rules of Nasdaq that serve as a flexible framework within which our Board of Directors and its committees operate. These guidelines cover a number of areas including board membership criteria and director qualifications, director responsibilities, board agenda, roles of the chair of the board, principal executive officer and presiding director, meetings of independent directors, committee responsibilities and assignments, board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and management succession planning.
Insider Trading Policy
Our
Board of Directors has
Delinquent Section 16(a) Reports
Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires our officers, directors, and beneficial owners of more than 10% of our equity securities to timely file certain reports regarding ownership of and transactions in our securities with the Securities and Exchange Commission. Copies of the required filings must also be furnished to us. Section 16(a) compliance was required during the fiscal year ended September 30, 2025. To our knowledge, during the fiscal year ended September 30, 2025, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied .
ITEM 11. EXECUTIVE COMPENSATION.
Executive Officers Compensation for the fiscal years ended September 30, 2025 and 2024
| Name | Position | Fiscal Year ended September 30 | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||
| Jianshuang Wang(1) | Chief Executive Officer | 2025 | $ | 24,000 | $ | - | $ | - | $ | - | $ | 24,000 | ||||||||||||||
| 2024 | 8,000 | $ | - | $ | - | $ | - | $ | 8,000 | |||||||||||||||||
| Zhanzhan Shi(2) | Former Chief Financial Officer | 2025 | $ | 10,000 | $ | - | $ | - | $ | - | $ | 10,000 | ||||||||||||||
| 2024 | 1,000 | $ | - | $ | - | $ | - | $ | 1,000 | |||||||||||||||||
| Feng Tian(3) | Chief Financial Officer | 2025 | $ | 2,000 | $ | - | $ | - | $ | - | $ | 2,000 | ||||||||||||||
| 2024 | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||
| Xiaocheng Hao(4) | Chief Operating Officer | 2025 | $ | 16,778 | $ | - | $ | - | $ | - | $ | 16,778 | ||||||||||||||
| 2024 | - | - | - | - | - | |||||||||||||||||||||
| Randell Weaver(5) | Former Chief Financial Officer | 2025 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
| 2024 | $ | 245,689 | $ | - | $ | - | $ | - | $ | 245,689 | ||||||||||||||||
| Masa Higashida(6) | Former Chief Executive Officer | 2025 | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||
| 2024 | $ | 243,997 | $ | - | $ | - | $ | - | $ | 243,997 | ||||||||||||||||
Notes:
(1) Jianshuang Wang has been serving as our Chief Executive Officer and Chairperson since June 2024.
(2) Zhanzhan Shi served as our Acting Chief Financial Officer from September 2024 to August 2025.
(3) Feng Tian has been serving as our Chief Financial Officer since August 2025.
(4) Xiaocheng Hao has been serving as our Chief Operating Officer since April 2025.
(5) Randell Weaver served as our Chief Financial Officer from August 2023 to August 2024.
(6) Masa Higashida served as our Chief Executive Officer from October 2014 to June 2024.
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Director Compensation
CIMG’s non-employee directors are entitled to receive $60,000 in compensation per year for services rendered to CIMG. The following table presents the directors’ compensation during the fiscal years ended September 30, 2025 and 2024.
| Fees Earned | |||||||||||||||||||||||
| Fiscal Year | or Paid in | Stock | Option | All Other | |||||||||||||||||||
| ended | Cash(1) | Awards | Awards | Compensation | Total | ||||||||||||||||||
| Name | 30-Sep | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||
| Yanli Hou | 2025 | $ | 12,000 | $ | - | $ | - | $ | - | $ | 12,000 | ||||||||||||
| 2024 | $ | 4,000 | $ | - | $ | - | $ | - | $ | 4,000 | |||||||||||||
| Jian Liu | 2025 | $ | 2,581 | $ | - | $ | - | $ | - | $ | 2,581 | ||||||||||||
| 2024 | $ | 3,000 | $ | - | $ | - | $ | - | $ | 3,000 | |||||||||||||
| Changzheng Ye | 2025 | $ | 12,000 | $ | - | $ | - | $ | - | $ | 12,000 | ||||||||||||
| 2024 | $ | 5,000 | $ | - | $ | - | $ | - | $ | 5,000 | |||||||||||||
| Zongmei Huang | 2025 | $ | 12,000 | $ | - | $ | - | $ | - | $ | 12,000 | ||||||||||||
| 2024 | $ | 3,000 | $ | - | $ | - | $ | - | $ | 3,000 | |||||||||||||
| Jinmei Guo Hellstroem | 2025 | $ | 9,419 | $ | - | $ | - | $ | - | $ | 9,419 | ||||||||||||
| 2024 | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
| (1) | Pro-rated compensation for the fiscal year ended September 30, 2025, served as a director and chairperson of the Board. |
| ● | On December 19, 2024, Mr. Jian Liu resigned from the Company’s board of directors. |
Compensation Committee Interlocks and Insider Participation
The current members of the compensation committee are Jinmei Guo Hellstroem, Changzheng Ye, and Yanli Hou. All of these members are independent directors. The compensation committee is responsible for overseeing the Company’s compensation policies generally and making recommendations to the board of directors with respect to incentive compensation and equity-based plans of the Company that are subject to board of directors approval, evaluating executive officer performance and reviewing the Company’s management succession plan, overseeing and setting compensation for the Company’s directors and, as applicable, its executive officers and, as applicable, preparing the report on executive officer compensation that SEC rules require to be included in our Annual Report on Form 10-K. Currently, none of our executive officers are compensated by the Company and as such the compensation committee is not required to produce a report on executive officer compensation for inclusion in our Annual Report on Form 10-K.
During the fiscal year ended September 30, 2025 none of the Company’s executive officers served on the board of directors (or a compensation committee thereof or other board committee performing equivalent functions) of any entities that had one or more executive officers serve on the compensation committee or on the board of directors. No current or past executive officers or employees of the Company or its affiliates serve on the compensation committee.
Clawback Policy
On January 20, 2023, our Board of Directors adopted Incentive-Based Compensation Clawback Policy (“Clawback Policy”), which provides for the clawback of certain compensation in the event that the Company is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirements. The Clawback Policy is a supplement to any other clawback policies in effect now or in the future at the Company. The Incentive-Based Compensation subject to clawback is the Incentive-Based Compensation Received during the three completed fiscal years immediately preceding the date that the Company is required to prepare an accounting restatement.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Equity Compensation Plan Information
Our Board has terminated the equity incentive plans it adopted in 2013, 2019, and 2023. As of September 30, 2025, the Company maintained two equity incentive plans: the CIMG Inc. 2024 Equity Incentive Plan (the “2024 Plan”) and the CIMG Inc. 2025 Equity Incentive Plan (the “2025 Plan”). Under the 2024 Plan, 1,000,000 shares of the Company’s Common Stock were approved for issuance and awarded, and under the 2025 Plan, 7,279,400 shares of the Company’s Common Stock were approved for issuance and awarded.
The following table sets forth information concerning the 2024 Plan and 2025 Plan, as of September 30, 2025:
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted- average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
| Equity compensation plans approved by security holders: | ||||||||||||
| 2024 Plan | 1,000,000 | $ | - | - | ||||||||
| 2025 Plan | 7,279,400 | $ | - | - | ||||||||
| Equity compensation plans not approved by security holders | - | - | - | |||||||||
| Total | 8,279,400 | $ | 0 | 0 | ||||||||
In addition, on October 28, 2025, the Company’s stockholders approved the CIMG Inc. 2026 Equity Incentive Plan (the “2026 Plan”), which authorizes the issuance of up to 38,000,000 shares of our Common Stock, subject to adjustment as provided in the plan. As of September 30, 2025, no awards were outstanding under the 2026 Plan as it has not yet been approved or become effective.
Management and Directors
The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of September 30, 2025 by: (i) each director and nominee for director; (ii) each of the named executive officers named in the Summary Compensation Table set forth above; and (iii) all of the directors, nominees and executive officers as a group.
Except as otherwise indicated, all shares are owned directly, and the percentage shown is based on 15,483,547 shares of Common Stock issued and outstanding as of February 9, 2026.
| Name of Beneficial Owner | Shares of Common Stock Beneficially Owned | Percent of Common Stock Beneficially Owned | ||||||
| Jianshuang Wang | - | - | % | |||||
| Zhanzhan Shi | - | - | % | |||||
| Xiaocheng Hao | - | - | % | |||||
| Changzheng Ye | - | - | % | |||||
| Yanli Hou | - | - | % | |||||
| Jinmei Guo Hellstroem | - | - | % | |||||
| Zongmei Huang | - | - | % | |||||
| All directors, nominees and executive officers as a group (seven persons) | 0 | 0 | % | |||||
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Other Beneficial Owners
The following table sets forth certain information regarding beneficial ownership by persons, other than our directors and executive officers, known to us to beneficially own more than 5% of our outstanding Common Stock, based on 15,483,547 shares of Common Stock outstanding as of February 9, 2026.
| Amount and Nature of Beneficial Ownership | ||||||||||||||||||||||||
| Name and Address of | Voting Power | Investment Power | Percent of | |||||||||||||||||||||
| Beneficial Owner | Sole | Shared | Sole | Shared | Aggregate | Class | ||||||||||||||||||
| Joyer Investment Limited.(1) | 1,250,000 | - | - | - | - | 8.07 | % | |||||||||||||||||
| Joyer Tech And Information OPC(2) | 1,230,000 | - | - | - | - | 7.94 | % | |||||||||||||||||
| RR DIGITAL TECH LIMITED(3) | 1,200,000 | - | - | - | - | 7.75 | % | |||||||||||||||||
| Vmade Co., Limited(4) | 1,250,000 | - | - | - | - | 8.07 | % | |||||||||||||||||
| DADA Business Trading Co., Limited(5) | 1,250,000 | - | - | - | - | 8.07 | % | |||||||||||||||||
| EASYGO BUSINESS CO., LTD(6) | 1,195,000 | - | - | - | - | 7.71 | % | |||||||||||||||||
| Fixed Star Future Technology Ltd. (7) | 1,384,167 | - | - | - | - | 8.94 | % | |||||||||||||||||
| (1) | Based on the Schedule 13D filed with the SEC on September 2, 2025, Joyer Investment Limited beneficially owns 32,125,872 shares of the Company’s Common Stock. The number shown in the table above reflects a 1-for-20 reverse stock split effectuated at 12:01 a.m. on December 5, 2025. Joyer Investment Limited’s control person is Yumei Liu, a PRC individual. | |
| (2) | Based on the Schedule 13D filed with the SEC on September 2, 2025, Joyer Tech And Information OPC beneficially owns 24,715,473 shares of the Company’s Common Stock. The number shown in the table above reflects a 1-for-20 reverse stock split effectuated at 12:01 a.m. on December 5, 2025. Joyer Tech And Information OPC control person is Dixon Perez Dai, a Philippine individual. | |
| (3) | As reported on the Registrant’s stockholder list, as provided by its transfer agent, VStock Transfer, LLC, on December 16, 2025, RR DIGITIAL TECH LIMITED’s control person is Xiang Zhang, a Chinese individual. | |
| (4) | Based on the Schedule 13D filed with the SEC on September 2, 2025, Vmade Co., Limited beneficially owns 32,400,282 shares of the Company’s Common Stock. The number shown in the table above reflects a 1-for-20 reverse stock split effectuated at 12:01 a.m. on December 5, 2025. Vmade Co., Limited’s control person is Xiaodong Liu, a Hong Kong individual. | |
| (5) | Based on the Schedule 13D filed with the SEC on September 2, 2025, Dada Business Trading Co., Limited beneficially owns 31,739,761 shares of the Company’s Common Stock. The number shown in the table above reflects a 1-for-20 reverse stock split effectuated at 12:01 a.m. on December 5, 2025. Dada Business Trading Co., Limited’s control person is Yubo Yang, a Hong Kong individual. | |
| (6) | As reported on the Registrant’s stockholder list, as provided by its transfer agent, VStock Transfer, LLC, on December 16, 2025.EASYGO BUSINESS CO., LTD’s control person is Lijuan Wu, a Chinese individual. | |
| (7) | Based on the Schedule 13G/A filed with the SEC on September 9, 2025, Fixed Star Future Technology Ltd. beneficially owns 27,683,333 shares of the Company’s Common Stock. The number shown in the table above reflects a 1-for-20 reverse stock split effectuated at 12:01 a.m. on December 5, 2025. Fixed Star Future Technology Ltd.’s control person is Sanwei Liu, a PRC individual. split effectuated at 12:01 a.m. on December 5, 2025. Fixed Star Future Technology Ltd.’s control person is Sanwei Liu, a PRC individual. |
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
Except as set forth below, other than the director and executive officer compensation, there has not been any transaction or series of transactions since October 1, 2020, nor is there any currently proposed transaction, in which:
| ● | we have been or are to be a participant; |
| ● | the amount involved exceeded or will exceed the lesser of (i) $120,000 or (ii) 1% of the average of the Company’s total assets at year-end for the last two completed fiscal years; and |
| ● | any of our directors, executive officers or, to our knowledge, beneficial owners of 5% or more of our capital stock, or any immediate family member of or person sharing the household with any of these individuals or entities, had or will have a direct or indirect material interest. |
For the fiscal year ended September 30, 2024, the related party transactions were as follows:
| Name of related parties | Relationship with Company | Related party transactions | Year Ended September 30, 2024 | |||||
| Wenwen Yu | Director of Wewin Technology LLC | Loan advanced to Wewin technology LLC. | 7,500 | |||||
| Metaverse Intelligence Tech Ltd. | An entity whose owner is a director of Wewin Technology LLC | Convertible notes with CIMG INC | 300,000 | |||||
For the fiscal year ended September 30, 2025, the related party transactions were as follows:
| Name of related parties | Relationship with Company | Related party transactions | Year Ended September 30, 2025 | |||||
| Wanhai Liu | Shareholder of Xilin Online (Beijing) E-commerce Co., Ltd | Loan advanced to Xilin Online (Beijing) E-commerce Co., Ltd | $ | 12,262 | ||||
| Tianyong Lv | Manager of Xilin Online (Beijing) E-commerce Co., Ltd | Loan advanced to Xilin Online (Beijing) E-commerce Co., Ltd | 12,754 | |||||
| Shengqing Li | Manager of Shenzhen Zhimeng Qiyang Technology Co., Ltd. | Loan advanced to Shenzhen Zhimeng Qiyang Technology Co., Ltd. | 185,765 | |||||
| Hongfang Xie | Shareholder of Shanghai Huomao Cultural Development Co., Ltd. | Loan advanced to Shanghai Huomao Cultural Development Co., Ltd. and Guizhou Zhutai Huomao Liquor Industry Co., Ltd. | 693 | |||||
| Wenlong Tong | President of CIMG Inc. | Loan advanced from Zhongyan Shangyue Technology Co., Ltd | (18,662 | ) | ||||
| Wenwen Yu | Director of Wewin Technology LLC | Loan advanced from Wewin technology LLC. | (73,795 | ) | ||||
| Metaverse Intelligence Tech Ltd. | An entity whose owner is a director of Wewin Technology LLC | Convertible notes with CIMG INC | 3,693,041 | |||||
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Please refer to the Current Reports on Form 8-K of the Company filed on January 24, 2025, which described that the change of auditors from MaloneBailey, LLP to Assentsure PAC was approved by the audit committee of the board of directors of the Company.
The Company appointed Assentsure PAC as the Company’s new independent registered public accounting firm, effective as of January 20, 2025 to audit our financial statements for the year ended September 30, 2024 and review its unaudited financial statements for the periods ended December 31, 2024, March 31, 2025 and June 30, 2025, which was approved by its Audit Committee.
The Audit Committee of the Board of Directors of the “Company has approved the termination of MaloneBailey, LLP (“MaloneBailey”) as its independent registered public accounting firm, effective January 20, 2025. The reports of MaloneBailey on the Company’s financial statements as of and for the two most recent fiscal years ended September 30, 2023 and September 30, 2022, did not contain any adverse opinion or a disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles, except for an explanatory paragraph regarding our ability to continue as a going concern.
During the fiscal years ended September 30, 2024 and September 30, 2023, and the subsequent interim period through January 20, 2025: (1) there were no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304) with MaloneBailey on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of MaloneBailey would have caused MaloneBailey to make reference to the subject matter of such disagreements in connection with its reports on the financial statements for such periods and (2) there were no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K.
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The following table summarizes the billed/expected to be billed in each respective period for audit fees and other services of: (1) the audit fees of Assentsure PAC for the fiscal year ended September 30, 2025 and review our unaudited financial statements for the periods ended December 31, 2024, March 31, 2025 and June 30, 2025
| Fee Category | For the fiscal year ended September 30, 2025 | For the fiscal
year ended | ||||||||
| Assentsure PAC | Audit Fees (1) | $ | 190,900 | $ | 189,500 | |||||
| Audit-Related Fees | - | - | ||||||||
| Tax Fees | - | - | ||||||||
| All Other Fees(2) | 105,015 | - | ||||||||
Subtotal | 295,915 | 189,500 | ||||||||
| MaloneBailey, LLP | Audit Fees(3) | $ | 123,600 | $ | 169,950 | |||||
| Audit-Related Fees | - | - | ||||||||
| Tax Fees | - | - | ||||||||
| All Other Fees(4) | - | 119,480 | ||||||||
| Subtotal | 123,600 | 289,430 | ||||||||
| Total | $ | 419,515 | $ | 478,930 | ||||||
| (1) | Audit fees were for professional services rendered by Assentsure PAC for the audit of our annual financial statements. |
| (2) | All Other Fees were for professional services rendered by Assentsure PAC for reviewing our quarterly financial statements. |
| (3) | Audit fees were for professional services rendered by MaloneBailey, LLP for the audit of our 2024 financial statements. |
| (4) | All Other Fees refer to the professional service fees provided by MaloneBailey, LLP. These services include the review of our 2024 quarterly financial statements, as well as the regular services provided by MaloneBailey, LLP in 2024 related to statutory and regulatory filings or related business activities. |
Audit Committee Pre-Approval Policy and Procedures
The Audit Committee’s policy is to pre-approve all audit and other services rendered by our independent registered public accounting firm, subject to de minimis exceptions for non-audit services set forth in the applicable rules of the SEC. In fiscal year 2025, our independent registered public accounting firm was not engaged to perform any non-audit services.
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: |
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| * | Filed or furnished herewith. |
| ** | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 herewith are deemed to accompany this Form 10-K and will not be deemed filed for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act. |
ITEM 16. FORM 10-K SUMMARY
None.
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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 February 13, 2026.
| CIMG INC. | ||
| By: | /s/ Jianshuang Wang | |
| Name: | Jianshuang Wang | |
| Title: | Chief Executive Officer | |
| By: | /s/ Feng Tian | |
| Name: | Feng Tian | |
| Title: | Chief Financial Officer |
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/ Jianshuang Wang | Chief Executive Officer and Director | February 13, 2026 | ||
| Jianshuang Wang | (Principal Executive Officer) | |||
| /s/ Feng Tian | Chief Financial Officer | February 13, 2026 | ||
| Feng Tian | (Principal Financial and Accounting Officer) | |||
| /s/ Yanli Hou | Director | February 13, 2026 | ||
| Yanli Hou | ||||
| /s/ Changzheng Ye | Director | February 13, 2026 | ||
| Changzheng Ye | ||||
| /s/ Zongmei Huang | Director | February 13, 2026 | ||
| Zongmei Huang | ||||
| /s/ Jinmei Guo Hellstroem | Director | February 13, 2026 | ||
| Jinmei Guo Hellstroem |
| 72 |
CIMG Inc. (f.k.a. NUZEE, INC.)
Index to Consolidated Financial Statements
Contents
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of CIMG Inc.
Opinion on the Financial Statements
Explanatory Paragraph - Going Concern
The accompanying consolidated financial statements have been prepared assuming that CIMG Inc. will continue as a going concern. As discussed in Note 2.5 to the consolidated financial statements, the Company has experienced recurring losses from operations and negative working capital, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2.5. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Emphasis of Matter - Adoption of New Accounting Standards
As discussed in Note 2.20 to the consolidated financial statements, the Company early adopted Accounting Standards Update No. 2023-08, Accounting for and Disclosure of Crypto Assets (ASC 350-60), effective October 1, 2024. The standard requires retrospective application to all periods presented; however, the adoption did not have an impact on the prior period financial statements as the Company did not hold any digital assets in the comparative period. Our opinion is not modified with respect to this matter.
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 and in accordance with the auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits 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/
February 13, 2026
We have served as the Company’s auditor since 2025.
PCAOB ID Number
| F-2 |
Item 1. Financial Statements
CIMG Inc.
CONSOLIDATED BALANCE SHEETS
(In U.S. dollars, except for share and per share data, or otherwise noted)
| September 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalent | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Assets held of sale - current | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Amount due from related parties | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use asset - operating lease | ||||||||
| Intangible assets, net | ||||||||
| Digital assets | ||||||||
Goodwill | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Short term loan | ||||||||
| Current portion of lease liability - operating lease | ||||||||
| Convertible notes | ||||||||
| Convertible note-related party | ||||||||
| Amount due to related parties | ||||||||
| Contract liabilities | ||||||||
| Other current liabilities | ||||||||
| Tax payable | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | $ | $ | ||||||
| Stockholders’ equity: | ||||||||
| and common shares issued and outstanding as of September 30, 2025 and 2024, respectively* | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total shareholders’ equity of the Company | ( | ) | ||||||
| Non-controlling interests | ||||||||
| Total stockholders’ equity | ( | ) | ||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
CIMG Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In U.S. dollars, except for share and per share data, or otherwise noted)
| Year Ended | Year Ended | |||||||
September 30, 2025 | September 30, 2024 | |||||||
| Products revenues | $ | |||||||
Service revenues | ||||||||
| Total revenues, net | ||||||||
| Products cost | ( | ) | ( | ) | ||||
| Service cost | ( | ) | ||||||
| Total cost of revenue | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Operating expenses | ( | ) | ( | ) | ||||
| Allowance for credit loss | ( | ) | ( | ) | ||||
Inventory write-down | ( | ) | ( | ) | ||||
| Impairment loss on assets held for sale | ( | ) | ||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Fair value variation | ( | ) | ||||||
| Loss from investment | ( | ) | ||||||
| Other income | ||||||||
| Other expense | ( | ) | ( | ) | ||||
| Loss on acquisition | ( | ) | ||||||
| Goodwill impairment | ( | ) | ||||||
| Interest expense, net | ( | ) | ||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Gain from discontinued operations** | ||||||||
| Net loss before tax | $ | ( | ) | ( | ) | |||
| Income tax | ( | ) | ||||||
| Net loss | $ | ( | ) | ( | ) | |||
| Non-controlling interest | ( | ) | ||||||
| Net loss attributable to CIMG Inc. | ( | ) | ( | ) | ||||
| Basic and diluted loss per common share* | ) | ) | ||||||
| Basic and diluted weighted average number of common stock outstanding* | ||||||||
| * | ||
| ** |
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
CIMG Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In U.S. dollars, except for share and per share data, or otherwise noted)
Year Ended September 30, 2025 | Year Ended September 30, 2024 | |||||||
| Net loss attributable to CIMG Inc. | $ | ( | ) | $ | ( | ) | ||
| Foreign currency translation to CIMG Inc. | ( | ) | ||||||
| Total other comprehensive income net of tax to CIMG Inc. | ( | ) | ||||||
| Comprehensive loss to CIMG Inc. | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
CIMG Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In U.S. dollars, except for share and per share data, or otherwise noted)
| Common Stock | Additional paid-in | Accumulated | Accumulated Other Comprehensive | Non-controlling | ||||||||||||||||||||||||
| Shares* | Amount | capital | deficit | income | interests | Total | ||||||||||||||||||||||
| Balance September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||
| Common stock compensation | ||||||||||||||||||||||||||||
| Issued private placement | ||||||||||||||||||||||||||||
| Issued warrants | ||||||||||||||||||||||||||||
| Other comprehensive income | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Acquisition of subsidiary | ||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Balance September 30, 2025 | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
| Common Stock | Additional paid-in | Accumulated | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares* | Amount | capital | deficit | income | Total | |||||||||||||||||||
| Balance September 30, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||
| Reversal of stock option expense | - | ( | ) | ( | ) | |||||||||||||||||||
| Issued private placement | ||||||||||||||||||||||||
| Treasury stock | ||||||||||||||||||||||||
| Other comprehensive income | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
CIMG Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. dollars, except for share and per share data, or otherwise noted)
| Year Ended | Year Ended | |||||||
| September | September | |||||||
| 30, 2025 | 30, 2024 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Gain from discontinued operations | ( | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Fair value variation | ( | ) | ||||||
Loss on acquisition | ||||||||
| Depreciation and amortization | ||||||||
| Noncash lease expense | ||||||||
| Stock option expense | ( | ) | ||||||
| Stock compensation expenses | ||||||||
| Allowance for credit loss | ||||||||
| Loss from investment | ||||||||
| Property and equipment asset impairment | ||||||||
| Goodwill impairment | ||||||||
| Inventory write-down | ||||||||
| Interest income, net | ||||||||
| Forgiveness of loan payable and other payables | ( | ) | ( | ) | ||||
| Accrued interest | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ||||||
Other receivables - related party | ( | ) | ||||||
| Other assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Other payables-related party | ||||||||
| Deferred income | ( | ) | ||||||
| Lease liability – operating lease | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Discontinued Operations*: | ||||||||
| Losses caused by the termination of business* | ( | ) | ||||||
| Interest income* | ||||||||
| Depreciation from discontinued operations* | ||||||||
| Changes in operating assets and liabilities* | ||||||||
| Net cash used in discontinued business operations* | ( | ) | ||||||
| Investing activities: | ||||||||
| Purchase of equipment | ( | ) | ||||||
| Proceeds from disposal of equipment | ||||||||
| Cash received from the acquisition of subsidiaries | ||||||||
| Acquisition of subsidiary | ( | ) | ||||||
| Net cash provided by/(used in) investing activities | ( | ) | ||||||
| Financing activities: | ||||||||
| Proceed of loans | ||||||||
| Repayment of loans | ( | ) | ( | ) | ||||
| Repayment of finance lease | ( | ) | ||||||
| Proceeds from issuance of convertible note | ||||||||
| Proceeds from issuance of convertible notes-related party | ||||||||
| Proceeds from issuance of common stock, ATM offering | ||||||||
| Proceeds from private placement | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of foreign exchange on cash | ( | ) | ||||||
| Net change in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | ||||||||
| Share issuance for Bitcoin | $ | |||||||
| * |
|
The accompanying notes are an integral part of these consolidated financial statements.
| F-7 |
CIMG Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. dollars, except for share and per share data, or otherwise noted)
September 30, 2025
1. ORGANIZATION
CIMG Inc. (the “Company”) is incorporated in the State of Nevada and has been listed on the Nasdaq Stock Market since June 2020. The Company was formerly known as Nuzee, Inc., with the ticker symbol “NUZE”, and changed its corporate name and ticker symbol to “CIMG Inc.” and “IMG”, respectively, in October 2024.
The Company previously focused on specialty coffee products and related technologies. It is currently expanding its sales and distribution channels in Asia to encompass a broader range of consumer food and beverage products, supported by its online sales platform that incorporates a natural language search function.
CIMG Inc., its Hong Kong subsidiary DZR Tech Limited, and its U.S. subsidiary Wewin Technology LLC may transfer cash to the Company’s PRC subsidiaries through capital contributions and intercompany loans, subject to applicable regulatory requirements.
On January 13, 2025, the Company established a wholly owned subsidiary in Singapore, CIMG PTE. LTD. (“Singapore CIMG”).
On March 10, 2025, Zhongyan Shangyue Technology Co., Ltd. (“Beijing Zhongyan”), a wholly owned subsidiary of the Company, acquired 51% of the equity interests in Shanghai Huomao Cultural Development Co., Ltd. (“Shanghai Huomao”). Shanghai Huomao holds 90% of the equity interests in Guizhou Zhutai Huomao Liquor Industry Co., Ltd. (“Zhutai”).
On March 21, 2025, Beijing Zhongyan established a wholly owned subsidiary, Henan Zhongyan Shangyue Technology Co., Ltd. (“Henan Zhongyan”).
On March 27, 2025, Beijing Zhongyan entered into a business cooperation intent agreement with Xilin Online (Beijing) E-commerce Co., Ltd. (“Beijing Xilin”), pursuant to which certain shareholders of Beijing Xilin intended to transfer an aggregate of 51% of their equity interests to Beijing Zhongyan. The Company completed the acquisition of Beijing Xilin on March 31, 2025, following completion of the required business registration procedures in China.
On April 22, 2025, the Company completed the acquisition of Shanghai Huomao, together with the related business registration updates.
On August 1, 2025, Beijing Zhongyan entered into a business cooperation intent agreement with Shenzhen Zhimeng Qiyang Technology Co., Ltd. (“Zhimeng”), pursuant to which certain shareholders of Zhimeng agreed to transfer an aggregate of 51% of their equity interests to Beijing Zhongyan. The transfer was completed on August 1, 2025, and the related business registration change was approved on September 29, 2025.
On September 3, 2025, Beijing Zhongyan established a wholly owned subsidiary, Beijing Zhongyan Shangyue Holdings Co., Ltd. (“Beijing Shangyue”).
On September 16, 2025, Henan Zhongyan established a wholly owned subsidiary, Henan Nuanyou Agricultural Science and Technology Co., Ltd..
On September 23, 2025, DZR Tech Limited acquired Braincon Limited (“Braincon HK”) and its subsidiary, Beijing Xin Miao Shi Dai Technology Development Co., Ltd. (“Beijing Xinmiao”). DZR Tech Limited holds 100% of the equity interests in Braincon Limited.
| F-8 |
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 BASIS OF PREPARATION
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.
2.2 PRINCIPLES OF CONSOLIDATION
The Company’s consolidated financial statements include the financial statements of the Company and entities controlled by the Company and its subsidiaries.
A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting powers; or has the power to appoint or remove the majority of the members of the board of directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.
All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
2.3 NON-CONTROLLING INTERESTS
For the Company’s non-whole-owned subsidiaries, a non-controlling interest is recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Company. Non-controlling interests are classified as a separate line item in the equity section of the Company’s consolidated balance sheets and have been separately disclosed in the Company’s consolidated statements of operations and comprehensive (loss)/income to distinguish the interests from that of the Company.
Basic earnings per common share are calculated by dividing net income or loss attributable to common shareholders by the weighted-average number of common shares outstanding during the period.
Diluted earnings per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, warrants, or equity awards, were exercised or vested and resulted in the issuance of common stock that would share in the earnings of the Company. Potentially dilutive securities are excluded from the calculation of diluted earnings per share when their effect would be anti-dilutive.
On December 5, 2025, the Company effected a
As of September 30, 2025 and 2024, the Company had and common stock equivalents outstanding, respectively, consisting of stock options and warrants. For the periods presented, the Company incurred a net loss; accordingly, all common stock equivalents were anti-dilutive and excluded from the calculation of diluted net loss per common share.
2.5 GOING CONCERN AND CAPITAL CONSIDERATIONS
The Company has incurred recurring losses and negative
cash flows from operations since inception. As of September 30, 2025, the Company had cash of $
As of September 30, 2025, the
These conditions raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the consolidated financial statements are issued.
Management’s plans to address these conditions include raising additional equity or debt financing and executing its revised business strategy. However, as of the issuance date of these consolidated financial statements, management’s plans have not alleviated the substantial doubt about the Company’s ability to continue as a going concern.
The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty.
| F-9 |
2.6 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. Areas where management uses subjective judgment include, but are not limited to valuation of inventories and inventory impairment, fair value measurements of digital assets, assessment of goodwill impairment, allowance for credit losses, recoverability of deferred tax assets, and the recognition and measurement of revenue. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates.
2.7 FAIR VALUE MEASUREMENTS
The Company applies the fair value measurement guidance in ASC 820, Fair Value Measurements, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used in valuation techniques and requires disclosures of fair value measurements by hierarchy level.
The fair value hierarchy prioritizes quoted prices in active markets for identical assets or liabilities (Level 1) as the highest priority and unobservable inputs (Level 3) as the lowest priority. Valuation techniques used to measure fair value include the market approach, the income approach, and the cost approach.
The classification of an asset or liability within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three levels of the fair value hierarchy are as follows:
Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 — Unobservable inputs that reflect the Company’s own assumptions.
The Company measures certain assets and liabilities at fair value on both a recurring and non-recurring basis, including digital assets and financial instruments with embedded features, when applicable. The carrying amounts of cash, accounts receivable, accounts payable, accrued expenses, other payables, convertible notes and other current liabilities approximate their fair values due to the short-term maturities of these instruments.
2.8 CASH AND CASH EQUIVALENTS
The
Company considers cash on hand and demand deposits to be cash. Highly liquid investments with original maturities of three months or
less at the date of purchase are considered cash equivalents, provided such investments are readily convertible to known amounts of cash
and are subject to insignificant risk of changes in value. The Company did
| F-10 |
2.9 ACCOUNTS RECEIVABLES, NET
Accounts receivables are recorded at invoiced amounts and are evaluated periodically for collectability. The Company estimates an allowance for credit losses based on historical loss experience, the creditworthiness of customers, known and inherent risks in the receivable portfolio, and current economic conditions. Accounts receivables are written off against the allowance for credit losses when they are deemed uncollectible.
2.10 EXPECTED CREDIT LOSS
In 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), which requires entities to measure expected credit losses for financial assets measured at amortized cost, including accounts receivable and other receivables, using a current expected credit loss (“CECL”) model. The CECL model is based on historical experience, adjusted for management’s judgment regarding the effects of current conditions and reasonable and supportable forecasts of future economic conditions.
The Company’s accounts receivable and other receivables included in prepayments and other current assets are within the scope of ASC 326. The Company evaluates credit losses by identifying relevant risk characteristics of its customers and related receivables, including the size of the customer, the nature of the products or services provided, or a combination of these factors. Receivables with similar risk characteristics are grouped into pools.
For each pool, the Company considers historical credit loss experience, current economic conditions, reasonable and supportable forecasts of future economic conditions, and recoveries in estimating lifetime expected credit losses. Additional factors considered include customer demographics, payment terms, industry-specific risks, and relevant external and macroeconomic data.
The Company recorded allowance for credit
losses of $
2.11 INVENTORIES, NET
Inventories, consisting primarily of raw materials and finished goods held for production and sale, are stated at the lower of cost or net realizable value. Inventory cost is determined using the weighted-average cost method. The Company reviews inventory levels on a quarterly basis and records inventory valuation allowances or write-downs, as necessary, to reflect net realizable value based on factors such as inventory aging, historical and forecasted demand, and market conditions.
2.12 BUSINESS COMBINATIONS
Business combinations are recorded using the acquisition method of accounting, and the cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of the (i) the total of consideration paid, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the subsidiary acquired over (ii) the fair value of the identifiable net assets of the subsidiary acquired is recorded as goodwill. If the consideration of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized as loss on acquisition directly in the consolidated statements of operations and comprehensive (loss)/income.
| F-11 |
2.13 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.
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.
2.14 REVENUE RECOGNITION
The Company adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration expected to be received in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations it must deliver and which of these performance obligations are distinct. The Company recognizes as revenue the amount of the transaction price that is allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied.
The Company primarily generates revenue from the trading and sale of goods. Revenue from product revenue is recognized when the Company satisfies its performance obligation by transferring control of the goods to the customer, which generally occurs upon delivery, when title and risk of loss pass to the customer.
For its product trading activities, the Company acts as the principal, as it controls the goods prior to transfer to the customer, bears inventory risk, and has discretion in establishing pricing. Accordingly, product revenue is recognized on a gross basis.
For service arrangements, the Company evaluates whether it controls the services prior to transfer to the customer. When the Company is determined to be the principal, service revenue is also recognized on a gross basis.
For the year ended September 30, 2025, the Company entered into a single contract to provide specialized technology development services related to the Computing Power Product Series. The contract involved custom software development services tailored to the customer’s specifications. The Company concluded that the performance obligation was satisfied at a point in time, and revenue was recognized when control of the delivery was transferred to the customer.
| F-12 |
2.15 RETURN AND EXCHANGE POLICY
All products are inspected and securely packaged prior to shipment to help ensure that customers receive products in satisfactory condition. Customers may return products if they are not satisfied, in which case the Company will provide an exchange or refund of the purchase price, net of shipping charges. Return policies for wholesale customers vary in accordance with the terms of their respective agreements.
Under certain customer agreements, the Company provides chargebacks, pursuant to which the Company reimburses customers for a portion of the costs incurred to advertise and promote the Company’s products. The Company estimates and accrues such chargebacks based on contractual terms and historical experience. Chargebacks and returns, when applicable, are recorded as reductions of revenue and reflected in net sales.
For the years ended September 30, 2025 and 2024, the Company did not record any material sales allowances related to estimated product returns or chargebacks.
2.16 COST RECOGNITION
The Company is engaged in the trading of goods and the provision of related services, with its cost of revenue covering products under the Maca Product Series, the Homology of Medicine and Food Series, and the Computing Power Product Series.
For the Maca Product Series, which consists of plant-based products, the Company operates a trading model whereby it procures Maca raw materials and engages third-party processors for production. Costs recognized for this product series primarily include the purchase cost of Maca raw materials, packaging costs, freight and logistics costs, and other directly attributable processing-related expenses.
For the Homology of Medicine and Food Series, the Company operates as a trading intermediary, and the cost of revenue primarily comprises the procurement cost of finished goods purchased from third-party suppliers.
For the Computing Power Product Series, the Company provides technical services supported by the procurement of equipment and development services. The cost of revenue mainly consists of technical development service fees and equipment purchase costs incurred in connection with the delivery of such services.
2.17 PROPERTY AND EQUIPMENT, NET
Property and equipment are stated at cost and depreciated over their estimated useful lives, with accumulated depreciation and impairment losses recorded as reductions of carrying amounts. Depreciation is computed using the straight-line method over the following estimated useful lives:
| - | Office equipment: | |
| - | Machinery and other equipment: |
| F-13 |
2.18 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 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.
2.19 INTANGIBLE ASSETS
Intangible assets with finite useful lives that are acquired are carried at cost less accumulated amortization and accumulated impairment losses. Amortization expense is recognized on a straight-line basis over the estimated useful lives of the intangible assets. The estimated useful lives and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimates being accounted for on a prospective basis. The Company have finite useful life intangible assets related to acquired tradename and software.
2.20 DIGITAL ASSETS
The Company’s digital assets consist solely of Bitcoin. Digital assets are initially recorded at cost and subsequently remeasured at fair value in accordance with ASU 2023-08. Changes in fair value are recognized in earnings each reporting period.
The fair value of Bitcoin is determined using quoted prices in active markets on Binance, which the Company has determined to be its principal market. Fair value measurements of digital assets are classified within Level 1 of the fair value hierarchy. Changes in fair value are recognized in the consolidated statements of operations within “Fair value variation”
The Company applies the first-in, first-out (FIFO) method to determine the cost basis of digital assets disposed of, if any.
2.21 GOODWILL
Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. Goodwill is not amortized but are subject to impairment testing on an annual basis or more frequently if events or circumstances indicate a potential impairment. These events or circumstances could include a significant change in the business climate, regulatory environment, established business plans, operating performance indicators or competition. Potential impairment indicators may also include, but are not limited to, (i) significant changes to estimates and assumptions used in the most recent annual or interim impairment testing, (ii) downward revisions to internal forecasts, and the magnitude thereof, (iii) declines in our market capitalization below our book value, and the magnitude and duration of those declines, (iv) a reorganization resulting in a change to our operating segments, and (v) other macroeconomic factors, such as increases in interest rates that may affect the weighted average cost of capital, volatility in the equity and debt markets, or fluctuations in foreign currency exchange rates that may negatively impact our reported results of operations.
| F-14 |
2.22 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.
2.23 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.
2.24 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.
During the year, the Company issued an aggregate of shares of common stock under the 2024 Equity Incentive
Plan, consisting of shares issued on December 24, 2024 and shares issued on April 22, 2025. These amounts reflect the impact
of the
2.25 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 pertains to foreign currency translation adjustments.
| F-15 |
3. CONCENTRATION AND RISKS
3.1 FOREIGN CURRENCY EXCHANGE RATE RISK
The
Company’s operating transactions are mainly denominated in RMB. RMB is not freely convertible into foreign currencies. The value
of the RMB is subject to changes by the central government policies and to international economic and political developments. In the
PRC, certain foreign exchange transactions are required by law to be transacted only through authorized financial institutions at exchange
rates set by the People’s Bank of China (the “PBOC”). Remittances in currencies other than RMB by the Company in the
PRC must be processed through PBOC or other PRC foreign exchange regulatory bodies which require certain supporting documents in order
to effect the remittances. As of September 30, 2025 and 2024, the Company’s cash and cash equivalents denominated in RMB were
RMB
3.2 CONCENTRATION OF CREDIT RISK
The Company’s credit risk arises primarily from cash and cash equivalents, accounts receivable, other receivables from related parties, and other receivables included in prepaid expenses and other current assets. The carrying amounts of these financial instruments represent the Company’s maximum exposure to credit risk.
As of September 30, 2025, 86% of the Company’s cash and cash equivalents
were held by major financial institutions located in China and Hongkong, the remaining 14% was held by financial institutions located
in the United States. The Company believes that these financial institutions located in China, Hongkong and the United States of high
credit quality. Accounts at each institution in the United States are insured by the Federal Deposit Insurance Corporation (FDIC) for
up to $
Accounts receivable and other receivables are generally unsecured and arise in the ordinary course of business. Credit risk associated with these balances is mitigated through customer credit evaluations, ongoing monitoring of outstanding receivable balances, and the recognition of an allowance for expected credit losses based on historical experience, current conditions, and reasonable and supportable forecasts.
3.3 CONCENTRATION OF CUSTOMERS AND SUPPLIERS
In the years ended September 30, 2025 and 2024, revenue was primarily derived from major customers disclosed below.
SCHEDULE OF REVENUE BY MAJOR CUSTOMERS
Year ended September 30, 2025:
| Customer Name | Sales Amount | % of Total Revenue | Accounts Receivable Amount | % of Total Accounts Receivable | ||||||||||||
| Customer A | $ | % | ||||||||||||||
| Customer B | $ | % | ||||||||||||||
| F-16 |
Year ended September 30, 2024:
| Customer Name | Sales Amount | % of Total Revenue | Accounts Receivable Amount | % of Total Accounts Receivable | ||||||||||||
| Customer CN | $ | % | ||||||||||||||
| Customer WP | $ | % | ||||||||||||||
For the years ended September 30, 2025 and 2024, inventory purchases, including purchases related to the Company’s trading of goods, were primarily made from the major suppliers disclosed below.
Year ended September 30, 2025:
| Supplier Name | Purchases Amount | % of Total Purchases | ||||||
| Supplier YKYM | $ | % | ||||||
| Supplier B | % | |||||||
| Supplier C | % | |||||||
Year ended September 30, 2024:
| Supplier Name | Purchases Amount | % of Total Purchases | ||||||
| Supplier YKYM | $ | % | ||||||
4. NOTES TO THE CONSOLIDATED IN FINANCIAL STATEMENTS
4.1 ACCOUNTS RECEIVABLE, NET
As
of September 30, 2024, the Company had gross accounts receivable of $
During the year ended September 30, 2025, management concluded that these accounts receivable was uncollectible and wrote off the entire outstanding balance against the allowance for credit losses. Accordingly, no accounts receivable related to these balances remained outstanding as of September 30, 2025.
As
of September 30, 2025, the Company’s accounts receivable totaled $
SCHEDULE OF ACCOUNTS RECEIVABLES
| September 30, 2025 | September 30, 2024 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | ||||||||
The movements in the allowance for credit losses are as follows:
SCHEDULE OF MOVEMENTS IN ALLOWANCE FOR CREDIT LOSSES
| September 30, 2025 | September 30, 2024 | |||||||
| Balance at beginning of the year | $ | ( | ) | $ | ||||
| Additions | ( | ) | ( | ) | ||||
| Foreign currency translation | ( | ) | ||||||
| Write-offs | ||||||||
| Balance at end of the year | ( | ) | ( | ) | ||||
4.2 INVENTORIES, NET
Inventories, net consist of the following:
SCHEDULE OF INVENTORY
| September 30, 2025 | September 30, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Total inventories, gross | ||||||||
| Less: inventory write-down | ( | ) | ( | ) | ||||
| Inventories, net | ||||||||
| F-17 |
The movements in the inventories write-down are as follows:
SCHEDULE OF MOVEMENTS IN INVENTORIES
| September 30, 2025 | September 30, 2024 | |||||||
| Balance at beginning of the year | $ | ( | ) | $ | ||||
| Additions | ( | ) | ( | ) | ||||
| Foreign currency translation | ( | ) | ||||||
| Write-offs | ||||||||
| Balance at end of the year | ( | ) | ( | ) | ||||
4.3 ASSET HELD FOR SALE - CURRENT
As of September 30, 2025, the Company had no assets classified as held for sale.
As
of September 30, 2024, assets held for sale consisted of certain property and equipment with a gross carrying amount of $
During
the year ended September 30, 2025, the Company completed the sale of these assets and received cash proceeds of $
SCHEDULE OF ASSETS HELD FOR SALE
| September 30, 2025 | September 30, 2024 | |||||||
| Gross carrying amount | $ | $ | ||||||
| Current Assets Held for Sale | ||||||||
| less: impairment charge | ( | ) | ||||||
| Net carrying amount | ||||||||
4.4 PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets at September 30, 2025 and 2024 were comprised of the following:
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS
| September 30, 2025 | September 30, 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Prepaid tax(1) | ||||||||
| Advances to suppliers(2) | ||||||||
| Deferred equity issuance cost(3) | ||||||||
| Other current assets | ||||||||
| Total | ||||||||
| (1) |
| (2) | ||
| (3) |
| F-18 |
4.5 PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following as of September 30, 2025 and 2024:
SCHEDULE OF PROPERTY AND EQUIPMENT
| September 30, 2025 | September 30, 2024 | |||||||
| Machinery & Equipment | $ | $ | ||||||
| Vehicles | ||||||||
| Gross property and equipment | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Less: reclassification to assets held for sale | ( | ) | ||||||
| Less: disposal of property and equipment | ( | ) | ||||||
| Net property and equipment | ||||||||
During
the year ended September 30, 2024, the Company recorded an impairment charge of $
4.6 LEASES
In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842), which requires lessees to recognize right-of-use (“ROU”) assets and lease liabilities for most lease arrangements. The Company adopted ASC 842 effective October 1, 2019.
The Company evaluates lease arrangements on a quarterly basis to determine whether such arrangements meet the definition of a lease and whether recognition of ROU assets and lease liabilities is required. The Company elected the short-term lease practical expedient for leases with a term of 12 months or less and no purchase option.
4.6.1 LEASES WITH RECOGNISED ROU ASSETS AND LEASE LIABILITIES
Vista, California – Office and Manufacturing Space
In
May 2022, the Company renewed its office and manufacturing space lease in Vista, California, extending the lease term through September
30, 2025 (the prior lease was scheduled to expire on
Tuen Mun, Hong Kong – Office Space
The Company leases office space on San On Street, Tuen Mun, Hong Kong, under a lease term from December 18, 2024 to December 17, 2026,
at a monthly rent of RMB
Beijing, China – Office Space
Effective February 28, 2025, the Company entered into a lease for office space located at Room 303, 3rd Floor, Hongsheng Building, Beijing,
China. The lease requires monthly rental payments of RMB
Delray Beach, Florida – Principal Office
Effective September 1, 2024, the Company
entered into a lease for its principal office space located at 16097 Poppyseed Circle, Unit 1904, Delray Beach, Florida 33484, for a
monthly rent of $
| F-19 |
4.6.2 SHORT TERM LEASES
Boca Raton, Florida – Office Space
Effective October 10, 2025, the Company entered into a lease for office space located at 9127 Long Lake Palm Drive, Boca Raton, Florida
33496, with monthly rental payments of $
Henan, China – Office Space
The Company leases office space in Henan, China, with annual lease payments of approximately RMB
As of September 30, 2025, the Company’s
operating leases had a weighted-average remaining lease term of
SCHEDULE OF OTHER INFORMATION RELATED TO OPERATING LEASE
| Right-of-Use Assets | Amount | |||
| ROU asset – October 1, 2024 | $ | |||
| ROU assets added during the year | ||||
| Amortization during the year | ( | ) | ||
| ROU asset – September 30, 2025 | $ | |||
| Lease Liabilities | Amount | |||
| Lease liability – October 1, 2024 | $ | |||
| Lease liability added during the year | ||||
| Reduction during the year | ( | ) | ||
| Lease liability – September 30, 2025 | $ | |||
| Lease Liabilities by Maturity | Amount | |||
| Lease Liability – Short-Term | $ | |||
| Lease Liability – Total | $ |
The following table summarizes the Company’s operating lease cost, short-term lease cost, and related cash flow information for the year ended September 30, 2025:
SCHEDULE OF CASH AND NON-CASH ACTIVITIES OF LEASES
| Operating lease expenses | $ | |||
| Short-term lease expenses | ||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | ||||
| Lease amortization | ||||
| Interest portion |
4.7 INTANGIBLE ASSETS, NET
The following table summarizes the Company’s intangible assets as of September 30, 2025:
SCHEDULE OF INTANGIBLE ASSETS
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
| Trademarks | $ | $ | ( | ) | $ | |||||||
| Software | ( | ) | ||||||||||
| Total | ( | ) | ||||||||||
| F-20 |
The following table summarizes the Company’s intangible assets as of September 30, 2024:
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||
| Trademarks | $ | $ | ( | ) | $ | |||||||
| Total | ( | ) | ||||||||||
The
software intangible asset was recognized as a result of the acquisition of Shenzhen Zhimeng. Amortization expense for intangible assets
with finite useful lives was $
As of September 30, 2025, management determined that the tradename no longer had future economic benefits. Accordingly, the Company accelerated the amortization of the tradename, resulting in the full write-off of its remaining carrying value as of September 30, 2025. The accelerated amortization was included in operating expenses for the year ended September 30, 2025.
4.8 DIGITAL ASSETS
The Company’s digital assets consist solely of Bitcoin. Digital assets are measured at fair value, with changes in fair value recognized in earnings for each reporting period.
As of September 30, 2025, the Company
held
The following table is a summary of Bitcoin activity during the year ended September 30, 2025:
SCHEDULE OF BITCOIN ACTIVITY
| Amount | ||||
| Beginning balance at September 30, 2024 | $ | |||
| Receipts from issuance of common stock (Bitcoin contribution) | ||||
| Net change in fair value | ||||
| Ending balance at September 30, 2025 | $ | |||
On
August 25, 2025, the Company entered into a securities purchase agreement with nine non-U.S. investors pursuant to Regulation S for the
issuance of an aggregate of shares of common stock at a purchase price of $ per share, for total consideration of $
At the transaction date, the Company did not have sufficient authorized shares to issue the full shares. Accordingly, shares were issued on a pro rata basis using available authorized shares. The remaining shares were subject to shareholder approval and an amendment to the Company’s Articles of Incorporation to increase the authorized share capital.
On September 25, 2025, the Company’s Board of Directors approved an increase in authorized common stock from shares to shares. In October 2025, the Company amended its Articles of Incorporation to effect the increase in authorized shares. Following the amendment, the remaining shares were issued and are reflected as outstanding in the Company’s shareholder register.
Because the authorization and issuance of the remaining shares occurred after September 30, 2025, these actions represent non-recognized subsequent events. Accordingly, no adjustment was made to the consolidated financial statements as of September 30, 2025.
| F-21 |
4.9 BUSINESS COMBINATION
During the year ended September 30, 2025, the Company completed several business combinations. Each transaction was accounted for as a business combination, as the acquired sets of activities and assets met the definition of a business. The results of operations of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates. The following summarizes the significant business combinations completed during the period.
Xilin Online (Beijing) E-commerce Co., Ltd Acquisition
On
March 31, 2025, the Company acquired a
As
of the acquisition date, the fair value of the identifiable net assets acquired was a net liability position of $
The
Company recognized a non-controlling interest (“NCI”) representing the remaining
The
Company also recognized a loss on acquisition of $
No goodwill or bargain purchase gain was recognized, as no consideration was transferred and the fair value of the identifiable net assets acquired was negative.
The identifiable assets acquired and liabilities assumed in the business combination were recorded at their fair values on the acquisition date and consisted of the following major items.
SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
| Reconciliation of Net Liabilities Acquired | Amount | |||
| Cash consideration | $ | |||
| Non-controlling interests | ( | ) | ||
| Loss on acquisition | ( | ) | ||
| Net liabilities acquired | ( | ) | ||
| Identifiable Assets Acquired and Liabilities Assumed (at Fair Value) | ||||
| Cash and cash equivalents | $ | |||
| Account receivable | ||||
| Other current assets | ||||
| Property and equipment, net | ||||
| Accounts payable and accrued expenses | ( | ) | ||
| Contract liabilities | ( | ) | ||
| Other current liabilities | ( | ) | ||
| Net liabilities acquired | ( | ) | ||
| F-22 |
Shanghai Huomao Cultural Development Co., Ltd. Acquisition
On
April 22, 2025, the Company acquired a
As
of the acquisition date, the fair value of the identifiable net assets acquired was a net liability position of $
The
Company recognized a non-controlling interest (“NCI”) representing the remaining
The
Company also recognized a loss on acquisition of $
No goodwill or bargain purchase gain was recognized, as no consideration was transferred and the fair value of the identifiable net assets acquired was negative.
The identifiable assets acquired and liabilities assumed in the business combination were recorded at their fair values on the acquisition date and consisted of the following major items.
SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
| Reconciliation of Net Liabilities Acquired | Amount | |||
| Cash consideration | $ | |||
| Non-controlling interests | ( | ) | ||
| Loss on acquisition | ( | ) | ||
| Net liabilities acquired | ( | ) | ||
| Identifiable Assets Acquired and Liabilities Assumed (at Fair Value) | ||||
| Cash and cash equivalents | $ | |||
| Account receivable | ||||
| Accounts payable and accrued expenses | ( | ) | ||
| Other current liabilities | ( | ) | ||
| Net liabilities acquired | ( | ) | ||
Shenzhen Zhimeng Qiyang Technology Co., Ltd. Acquisition
On August 1, 2025, Beijing Zhongyan, a wholly owned
subsidiary of CIMG Inc. (the “Company”), entered into a Business Cooperation Intent Agreement with Shenzhen Zhimeng Qiyang
Technology Co., Ltd. (“Zhimeng”). Pursuant to the agreement, certain shareholders of Zhimeng transferred an aggregate
The consideration transferred consisted of
shares of the Company’s common stock, valued at $ per share based on the Company’s quoted market price on August 1, 2025.
The aggregate fair value of the equity consideration was $
As of the acquisition date, the fair value of the
identifiable net assets acquired was a net liability position of $
The Company recognized a non-controlling interest
(“NCI”) representing the remaining
The Company recognized goodwill of $
No bargain purchase gain was recognized.
The identifiable assets acquired and liabilities assumed in the business combination were recorded at their fair values on the acquisition date and consisted of the following major items.
| F-23 |
SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
| Reconciliation of Consideration Transferred and Net Liabilities Acquired | Amount | |||
| Fair value of equity consideration | $ | |||
| Fair value of non-controlling interest | ||||
| Less: net liabilities acquired | ( | ) | ||
| Goodwill recognized | ||||
| Identifiable Assets Acquired and Liabilities Assumed (at Fair Value) | ||||
| Cash and cash equivalents | $ | |||
| Account receivable | ||||
| Other current assets | ||||
| Property and equipment | ||||
| Intangible assets | ||||
| Other current liabilities | ( | ) | ||
| Net liabilities acquired | ( | ) | ||
Braincon Limited and its subsidiaries Acquisition
On
September 23, 2025, DZR Tech Limited acquired
As
of the acquisition date, the fair value of the identifiable net assets acquired was a net liability position of $
The Company recognized goodwill of $
No bargain purchase gain was recognized.
The identifiable assets acquired and liabilities assumed in the business combination were recorded at their fair values on the acquisition date and consisted of the following major items.
SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
| Reconciliation of Consideration Transferred | Amount | |||
| Cash consideration | $ | |||
| Less: net liabilities acquired | ( | ) | ||
| Goodwill recognized | ||||
| Identifiable Assets Acquired and Liabilities Assumed (at Fair Value) | ||||
| Cash and cash equivalents | $ | |||
| Other current liabilities | ( | ) | ||
| Net liabilities acquired | ( | ) | ||
4.10 GOODWILL
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination and is not amortized. Goodwill is tested for impairment at least annually, or more frequently when events or changes in circumstances indicate that the carrying amount may not be recoverable.
As of September 30, 2025 and 2024, goodwill consisted of the following:
SCHEDULE OF GOODWILL
| September 30, 2025 | September 30, 2024 | |||||||
| Goodwill recognized from acquisition | $ | $ | ||||||
| Less: impairment charge | ( | ) | ||||||
| Net goodwill | ||||||||
Goodwill
of $
Subsequent to the acquisitions, management performed qualitative and quantitative goodwill impairment assessments in accordance with ASC 350. In performing these assessments, management considered the Company’s post-acquisition operating performance, regulatory and operational constraints affecting Zhimeng’s business, and the Company’s decision not to make further investments in or expand the acquired operations. Based on these factors, management concluded that adverse indicators existed and that the carrying amount of the reporting unit was not recoverable as of September 30, 2025. Accordingly, the Company recognized a full impairment of goodwill during the period.
| F-24 |
4.11 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of September 30, 2025 and 2024 are as follows:
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES
| September 30, 2025 | September 30, 2024 | |||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Total | ||||||||
Accounts payable
Certain accounts payable balances outstanding as of September 30, 2025 were carried forward from the prior year and relate to legacy expenses incurred under previous management. During the year, the current management settled a portion of these outstanding payables and obtained debt forgiveness from certain creditors, which was recognized as other income during the period.
Notwithstanding these settlements and debt forgiveness, a portion of the legacy payables remained outstanding as of September 30, 2025. These balances primarily represent obligations incurred under previous management and continue to be recognized as accounts payable as management is in the process of reviewing and resolving the related obligations in the ordinary course of business, and such amounts remained payable as of the reporting date.
Accrued expenses
As
of September 30, 2025, accrued expenses totaled $
The accrued expenses related to Nuzee single-serving coffee and DRIPKIT products primarily represent legacy expenses incurred under previous management and are treated in a manner consistent with other legacy accounts payable balances. These amounts continue to be recognized as accrued expenses as management is in the process of reviewing and resolving the related obligations in the ordinary course of business, and such balances remained payable as of September 30, 2025.
Employee
compensation payable of $
4.12 SHORT TERM LOANS
As
of September 30, 2025, the Company’s short-term loans totaled $
(a) Loan due to Mr. Kim
An
amount of $
(b) Loan due to Social E-Commerce Co., Ltd.
An
amount of $
Subsequent to September 30, 2025, no repayments have been made in respect of the above short-term loans. The balance due to Mr. Kim continues to be subject to ongoing litigation.
| F-25 |
4.13 CONVERTIBLE NOTES
As
of September 30, 2025 and 2024, the Company had outstanding unconverted convertible notes of approximately $
(a) Non-related party convertible notes
| September 30, 2025 | September 30, 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Issuance of convertible notes | ||||||||
| Fair value adjustment | ||||||||
| Conversion to common stock | ( | ) | ( | ) | ||||
| Ending balance | ||||||||
All non-related party convertible notes outstanding as of September 30, 2024 were fully converted into shares of the Company’s common stock on October 31, 2024.
(b) Related party convertible notes
SCHEDULE OF CONVERTIBLE NOTES
| September 30, 2025 | September 30, 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Issuance of convertible notes | ||||||||
| Fair value adjustment | ||||||||
| Conversion to common stock | ( | ) | ||||||
| Ending balance | ||||||||
Key issuance and conversion events
(1)
August 20, 2024 – The Company issued convertible notes with an aggregate principal amount of $
October
31, 2024 – All holders of the August 2024 convertible notes elected to convert their notes into an aggregate of
(2)
December 12, 2024 – The Company issued convertible notes with an aggregate principal amount of $
February 10, 2025 – The Company obtained shareholder approval for the issuance of shares underlying the notes and warrants.
March 18, 2025 – the investors submitted their respective conversion notices, upon which the Company issued shares of common stock to the investors.
(3)
August 21, 2025 – The Company entered into a convertible bond purchase agreement with certain non-U.S. investors to issue
convertible notes with an aggregate principal amount of $
During the year ended September 30, 2025, the non-related parties notes with a carrying value of $ were converted into shares of common stock.
October 30, 2025 – The remaining related party notes of shares were issued subsequent to year-end and are disclosed as a subsequent event.
The convertible notes were measured at fair value, with changes in fair value recognized in fair value variation in the consolidated statements of operations.
| F-26 |
4.14 CONTRACT LIABILITIES
The following table summarizes the movements in contract liabilities during the periods presented:
SCHEDULE OF BALANCE OF CONTRACT ASSETS
| September 30, 2025 | September 30, 2024 | |||||||
| Balance at beginning of the year | $ | $ | ||||||
| Additions (customer advances / billings in advance) | ||||||||
| Less: revenue recognized | ||||||||
| Balance at end of year | ||||||||
As
of September 30, 2025, contract liabilities of $
Of
the contract liability balance outstanding as of September 30, 2025, $
4.15 OTHER CURRENT LIABILITIES
As of September 30, 2025 and September 30, 2024, other current liabilities
amounted to $
Other current liabilities consisted of the following:
SCHEDULE OF OTHER CURRENT LIABILITIES
| September 30, 2025 | September 30, 2024 | |||||||
| Advances received for equity subscriptions(1) | $ | $ | ||||||
| Provision for liabilities related to directors’ litigation(2) | ||||||||
| Professional service fees payable – Bitcoin transaction(3) | ||||||||
| Others | ||||||||
| Total | ||||||||
| (1) |
Advances received for equity subscriptions include
$
The issuance of shares relating to Mr. Kim’s equity subscription has been placed on hold due to ongoing litigation between Mr. Kim and the Company. Management intends to resolve the equity subscription upon conclusion of the legal proceedings.
With respect to the Bitcoin-related equity subscriptions, on September 25, 2025, the Company’s board of directors approved an increase in the authorized number of common shares from to shares. In October 2025, the Company amended its Articles of Incorporation to effect the increase. Following the amendment, shares were issued and recorded as outstanding in the Company’s shareholder register.
As the authorization and issuance of these shares occurred after September 30, 2025, the transaction represents a non-recognized subsequent event in accordance with ASC 855. Accordingly, the transaction has not been reflected in the consolidated financial statements as of September 30, 2025, but has been disclosed.
| (2) |
The provision for liabilities related to directors’
litigation of $
| (3) |
The professional service fees payable of $
As of September 30, 2025, the Company had directly
paid $
Subsequent to September 30, 2025, professional service
fees totaling $
4.16 TAX PAYABLE
As of September 30, 2025 and September
30, 2024, taxes payable amounted to $
SCHEDULE OF TAX PAYABLE
| September 30, 2025 | September 30, 2024 | |||||||
| VAT payable | $ | $ | ||||||
| Income tax payble | ||||||||
| Total | ||||||||
The balance as of September 30, 2025 primarily relates to value-added tax (“VAT”) associated with revenue recognized during the period for which the corresponding VAT invoices had not yet been issued as of the reporting date.
| F-27 |
4.17 OPERATING EXPENSES
For
the year ended September 30, 2025, total operating expenses were $
For
the year ended September 30, 2024, total operating expenses were $
In certain instances, the Company incurs shipping and handling costs in connection with customer orders. Such costs are included in operating expenses in the consolidated statements of operations.
4.18 OTHER INCOME
For the year
ended September 30, 2025, other income totaled $
For the year ended September 30, 2024,
other income totaled $
4.19 LOSS FROM INVESTMENT
For the years ended September
30, 2025 and September 30, 2024, investment income (loss) was and a loss of $
On June 7, 2024, the Company disposed of (i) NuZee Korea Ltd., a wholly owned subsidiary incorporated in Korea, and (ii) NuZee Investment Co., Ltd., a wholly owned subsidiary incorporated in Japan.
4.20 OTHER EXPENSES
For the year
ended September 30, 2025, other expense totaled $
For the year ended September 30, 2024,
other expense totaled $
| F-28 |
4.21 INCOME TAX
The Company accounts for income taxes in accordance with ASC 740, Income Taxes. No asset or liability for unrecognized tax benefits was recorded as of September 30, 2025 or September 30, 2024.
United States
CIMG Inc. and Wewin are incorporated in the United
States and are subject to U.S. federal corporate income tax at a statutory rate of
Hong Kong
DZR Tech Limited is incorporated in Hong
Kong and is subject to Hong Kong Profits Tax under the two-tiered profits tax rates regime, whereby the
People’s Republic of China
Beijing Zhongyan and Beijing Xilin are incorporated
in the People’s Republic of China and are subject to enterprise income tax at a statutory rate of
Schedule of Income Tax Expense (Benefit)
SCHEDULE OF INCOME TAX EXPENSE BENEFIT
| Year Ended September 30, 2025 | Year Ended September 30, 2024 | |||||||
| Current income tax expense | $ | $ | ||||||
| Deferred income tax expense | ||||||||
| Total income tax expense | ||||||||
| Reconciliation of Statutory Tax Benefit to Income Tax Expense | ||||||||
| Loss before income tax | $ | ( | ) | ( | ) | |||
| Tax benefit at statutory U.S. federal rate (21%) | ( | ) | ( | ) | ||||
| Non-deductible expenses | ||||||||
| Foreign rate differential | ||||||||
| Change in valuation allowance | ||||||||
| Income tax expense | $ | |||||||
Deferred Tax Assets and Valuation Allowance
For the years ended September 30, 2025 and 2024,
the Company incurred net operating losses (“NOLs”) of approximately $
The tax losses of the Company expire over different time intervals depending on the local jurisdiction. As of September 30, 2025, total net operating tax losses carried forward of the Company, if not utilized, will expire as follows:
SCHEDULE OF NET OPERATING TAX LOSSES CARRIED FORWARD
| PRC: | ||||
| Loss expiring for the year ending December 31, 2025 | $ | |||
| Loss expiring for the year ending December 31, 2026 | ||||
| Loss expiring for the year ending December 31, 2027 | ||||
| Loss expiring for the year ending December 31, 2028 | ||||
| Thereafter | ||||
| Total | ||||
| USA: | ||||
| Validity period - Unlimited | $ | |||
| Hong Kong: | ||||
| Validity period - Unlimited | $ |
Based on management’s assessment of available positive and negative evidence, including historical operating results and uncertainty regarding future taxable income, a full valuation allowance was recorded against the deferred tax assets as of September 30, 2025 and 2024. Accordingly, no income tax benefit was recognized in the consolidated financial statements for the periods presented.
| F-29 |
5. GEOGRAPHIC CONCENTRATIONS
The
Company is organized based on fundamentally three business segments although it does sell its products on a world-wide basis. The Company
is organized in
SCHEDULE OF GEOGRAPHICAL OPERATIONS
Geographic Concentration
Net Revenue: | Year Ended September 30, 2025 | Year Ended September 30, 2024 | ||||||
| North America | $ | $ | ||||||
| P.R.C | ||||||||
| Revenues, net | ||||||||
Property and equipment, net: | Year Ended September 30, 2025 | Year Ended September 30, 2024 | ||||||
| North America | $ | $ | ||||||
| P.R.C | ||||||||
| Property and equipment, net | ||||||||
6. SEGMENT INFORMATION
FASB ASC Topic 280, “Segment Reporting” (“ASC 280”) establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it may recognize revenues and incur expenses, and for which separate financial information is available that is regularly evaluated by the chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance.
The Company’s CODM has been identified as the Chief Financial Officer, who reviews the assets, operating results, and financial metrics for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, Management derived reportable segments based on business lines
As of and for the year ended September 30, 2025, the Company currently has the following reportable segments: Homology of Medicine and Food Series, Computing Power Product Series, Maca Product Series and others.
SCHEDULE OF SEGMENT INFORMATION
| Business Line | Others | |||||||||||||||||||||||||||
| Homology of Medicine and Food | Computing Power Product | Maca Product | Unallocated Headquarter | Adjustments and | ||||||||||||||||||||||||
| Series | Series | Series | Costs | Total | eliminations | Consolidated | ||||||||||||||||||||||
| Revenues, net | $ | $ | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||||
| Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Allowance for credit loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Inventories impairment loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Fair value variation | ||||||||||||||||||||||||||||
| Loss on acquisition | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Goodwill impairment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Other income | ||||||||||||||||||||||||||||
| Other expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Segment Loss | $ | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| F-30 |
| Year Ended | ||||
| September 30,2024 | ||||
| Maca Product Series | ||||
| Revenues, net | $ | |||
| Cost of revenue | ( | ) | ||
| Gross profit | ||||
| Operating expenses | ( | ) | ||
| Allowance for credit loss | ( | ) | ||
| Inventory write-down | ( | ) | ||
| Impairment loss on assets held for sale | ( | ) | ||
| Loss from operations | $ | ( | ) | |
| Fair value variation | ( | ) | ||
| Loss from investment | ( | ) | ||
| Other income | ||||
| Other expense | ( | ) | ||
| Interest expense, net | ( | ) | ||
| Gain from discontinued operations | ||||
| Net loss | $ | ( | ) | |
7. RELATED PARTY BALANCES AND TRANSACTIONS
During the years ended September 30, 2025 and 2024, respectively, other than disclosed elsewhere, the Company had the following major related party transactions:
SCHEDULE OF RELATED PARTY TRANSACTIONS
| Name of related parties | Relationship with Company | |
| Wanhai Liu | ||
| Tianyong Lv | ||
| Shengqing Li | ||
| Hongfang Xie | ||
| Wenlong Tong | ||
| Wenwen Yu | ||
Metaverse Intelligence Tech Ltd. |
| F-31 |
(a) Significant transactions with related parties
| Name of related parties | Related party transactions | Year Ended September 30, 2025 | Year Ended September 30, 2024 | |||||||
| Wanhai Liu | $ | $ | - | |||||||
| Tianyong Lv | - | |||||||||
| Shengqing Li | - | |||||||||
| Hongfang Xie | - | |||||||||
| Hongfang Xie | - | |||||||||
| Wenlong Tong | ( | ) | - | |||||||
| Wenwen Yu | ( | ) | ||||||||
| Metaverse Intelligence Tech Ltd | ||||||||||
Nature of Related Party Transactions
During the years ended September 30, 2025 and 2024, the Company and its subsidiaries entered into certain transactions with related parties in the ordinary course of business. These transactions primarily consisted of advances made by related parties to settle operating and administrative expenses on behalf of the Company’s subsidiaries, as well as financing arrangements entered into with related parties.
Except as otherwise disclosed, all advances from or to related parties were unsecured, non-interest bearing, and had no fixed repayment terms. Management believes that the terms of these transactions are not materially different from those that could have been obtained from independent third parties under similar circumstances.
(b) Balances with related parties
| 2025 | 2024 | |||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Wenlong Tong | $ | $ | ||||||
| Wenwen Yu | ||||||||
| Total amounts due from related parties | ||||||||
| Wanhai Liu | $ | $ | ||||||
| Tianyong Lv | ||||||||
| Shengqing Li | ||||||||
| Hongfang Xie | ||||||||
| Wenwen Yu | ||||||||
| Total amounts due to related parties | ||||||||
| Metaverse Intelligence Tech Ltd. | $ | $ | ||||||
| Conversion to common stock | ( | ) | ||||||
| Total convertible notes – related party | ||||||||
The amounts due from and due to related parties primarily arose from payments made on behalf of the Company or its subsidiaries for operating, administrative, and legal expenses, as well as advances and settlements in the ordinary course of business. Such balances are recorded at their original amounts, which approximate fair value due to their short-term nature.
As of the date of issuance of these financial statements, management does not expect any material credit losses in respect of amounts due from related parties.
8. ISSUANCE OF EQUITY SECURITIES
During the year ended September 30, 2025, the Company issued shares of common stock for cash, shares pursuant to the 2024 Equity Incentive Plan, shares in private placement transactions, and shares as consideration in connection with the acquisition of a subsidiary.
On December 5, 2025, the Company effected a
| F-32 |
SCHEDULE OF COMMON SHARES ISSUED
| Date | Transaction type | Description | Shares issued | Cash/consideration ($) | ||||||||
| August 20, 2024 | (Form 8-K filed on August 26, 2024, September 6, 2024, September 10, 2024 and Form S-1 filed on November 29, 2024) | On October 31, 2024, all the August 2024 Notes Investors converted their August Notes to shares of Common Stock. As a result of such conversions of the August Notes, we issued an aggregate of shares of Common Stock to the August Notes Investors. | ||||||||||
| December 12, 2024 | (Form 8-K filed on December 17, 2024, Form 8-K/A filed on January 23, 2025, Form 8-K filed on April 3, 2025) | Pursuant to the note and warrant financing, the Company issued notes with aggregate proceeds of $ The closings of the sale of the notes and warrants occurred on January 16, 2025 and January 17, 2025. On February 10, 2025, the Company obtained shareholder approval for the issuance of shares underlying the notes and warrants. On March 18, 2025, the investors submitted their respective conversion notices, upon which the Company issued shares of common stock to the investors. | ||||||||||
| August 21, 2025 | (From 8-K filed August 26, 2025, Form 8-K filed on November 12, 2025) | On August 21, 2025, the Company entered into a $ During the period ended September 30, 2025, the Company recognized $ On October 30, 2025, the Company issued the remaining shares. The issuance of these shares occurred subsequent to September 30, 2025 and is therefore not reflected in the consolidated balance sheet as of that date, but is disclosed as a subsequent event. | $ | |||||||||
| Total (Pre-Reverse Stock Split) | ||||||||||||
| Total (Post-Reverse Stock Split) | ||||||||||||
| F-33 |
(2) As of September 30, 2025, the issuance of common stocks due to the common stock compensation is as follows:
| Date | Transaction type | Description | Shares issued | Cash/consideration ($) | ||||||||
| December 6, 2025. | (From S-8 filed December 6, 2025) | The Company granted an aggregate of shares of common stock to its employees under the equity incentive plan, with shares granted on December 24, 2024 and shares granted on April 22, 2025, for total compensation cost of $. shares of common stock were registered pursuant to a Form S-8 filed on December 6, 2025. | ||||||||||
| Total (Pre-Reverse Stock Split) | ||||||||||||
| Total (Post-Reverse Stock Split) | ||||||||||||
(3) As of September 30, 2025, the issued private placement are as follows:
| Date | Transaction type | Description | Shares issued | Cash/consideration ($) | ||||||||
| September 24, 2024 | (Form 8-K filed on September 20, 2024 and Form S-1 filed on November 29, 2024) | $ shares of common stock were issued and registered pursuant to a Form S-1 filed on November 29, 2024. | ||||||||||
| June 2, 2025 | (Form 8-K filed on June 5, 2025 and June 10, 2025) | $ The closing of the sale of shares of common stock occurred on June 9, 2025, and the shares were issued on that date. | ||||||||||
| August 25, 2025* | (Form 8-K filed on August 27, 2025, Form 8-K/A filed on September 2, 2025) | On August 25, 2025, the Company entered into a securities purchase agreement with certain non-U.S. investors for total consideration of $ On September 2, 2025, the Company issued shares of common stock to certain non-U.S. investors. The issuance of the remaining | ||||||||||
| Total (Pre-Reverse Stock Split) | ||||||||||||
| Total (Post-Reverse Stock Split) | ||||||||||||
| * |
| F-34 |
(4) As of September 30, 2025, the issuance of common stocks due to the acquisition of subsidiary is as follows:
| Date | Transaction type | Description | Shares issued | Cash/consideration ($) | ||||||||
| August 1, 2025 | (Form 8-K filed on August 26, 2025) | $ On August 1, 2025, the Company acquired 51% of the shares of Shenzhen Zhimeng Qiyang Technology Co., Ltd. On September 29, 2025, the business registration in China was completed. | ||||||||||
| Total (Pre-Reverse Stock Split) | ||||||||||||
| Total (Post-Reverse Stock Split) | ||||||||||||
Restricted Stock Awards
During the year ended September 30, 2025, the Company did not grant any restricted stock awards.
The Company recognized share-based compensation expense of $ and for the fiscal years ended September 30, 2025, and September 30, 2024, respectively.
Grants to Independent Directors
No restricted stock awards were granted to the Company’s independent board members during the year ended September 30, 2025.
Forfeiture of Restricted Shares
During the year ended September 30, 2025, no restricted stock awards were forfeited.
Common Stock Issued for Services
The Company did not issue any shares of common stock in exchange for services during the year ended September 30, 2025.
Exercise of Stock Options
No stock options were exercised during the year ended September 30, 2025.
9.1 STOCK OPTIONS
During the year ended September 30, 2025, the Company did not grant new stock options.
During the same period,stock options were forfeited or expired as a result of employee terminations, expiration of option terms, or performance conditions not being met.
| F-35 |
SCHEDULE OF STOCK OPTION ACTIVITY
Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding on September 30, 2024 | $ | $ | ||||||||||||||
| Granted | - | - | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired | ( | ) | - | |||||||||||||
| Forfeited | - | - | ||||||||||||||
| Outstanding on September 30, 2025 | - | $ | ||||||||||||||
| Exercisable on September 30, 2025 | $ | - | $ | |||||||||||||
The Company recognizes stock-based compensation expense for stock options on a straight-line basis over the requisite service period. The Company recognized no stock option expense for the years ended September 30, 2025 and September 30, 2024. As of September 30, 2025, there was no unamortized stock option compensation cost, as no stock options were outstanding.
9.2 WARRANTS
The Company has issued warrants to purchase shares of common stock in connection with equity financings and convertible note transactions. The following disclosures summarize warrant issuances, exercises, and outstanding balances for the periods presented.
All share and per-share amounts, including exercise
prices and number of warrants, have been retroactively adjusted to reflect the Company’s
Significant warrant transactions
On April 27, 2024, the Company entered into a convertible
note and warrant purchase agreement with certain investors, pursuant to which the Company issued warrants to purchase shares of common
stock. On October 18, 2024, holders of such warrants exercised a portion of the warrants on a cashless basis, resulting in the issuance
of
On January 16, 2025, and January 17, 2025, the Company
issued an aggregate of warrants to purchase common stock at an exercise price of $
Warrant activity – Year ended September 30, 2025
(Retroactively adjusted for reverse stock split)
SCHEDULE OF WARRANT ACTIVITY
Number of Shares Issuable |
Weighted Average Exercise Price |
Weighted Average Remaining Life (years) |
Aggregate Intrinsic Value |
|||||||||||||
| Outstanding on September 30, 2024 | $ | $ | ||||||||||||||
| Issued | - | - | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Outstanding on September 30, 2025 | $ | |||||||||||||||
| Exercisable on September 30, 2025 | $ | $ | ||||||||||||||
Warrant activity – Year ended September 30, 2024
(Retroactively adjusted for reverse stock split)
Number of Shares Issuable | Weighted Price | Weighted Average Remaining | Aggregate Intrinsic Value | |||||||||||||
| Outstanding on September 30, 2023 | $ | $ | ||||||||||||||
| Issued | - | |||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Outstanding on September 30, 2024 | $ | |||||||||||||||
| Exercisable on September 30, 2024 | $ | $ | ||||||||||||||
| F-36 |
Reverse stock split
On December 2, 2025, the Company filed a Certificate of Change to its Articles of Incorporation with the Secretary of State of the State of Nevada to effect a 1-for-20 reverse stock split of its issued and outstanding common stock, which became effective on December 5, 2025. All share and per-share data included in these financial statements have been retroactively adjusted to reflect the reverse stock split.
10. CONTINGENCIES
The Kim Litigation
On
October 3, 2024, Mr. Sooncha Kim filed a complaint against the Company in the Southern District of New York, (Case No. 1:24-cv-7485)
(the “Complaint”). The Complaint alleges that the Company breached a Convertible Note and Warrant Purchase Agreement,
dated June 6, 2024, between the Company and Mr. Kim, by, among other things, failing to deliver the registration rights agreement,
excluding Mr. Kim from the S-1 registration statement, delaying conversion of Mr. Kim’s notes, undertaking steps to dilute Mr.
Kim’s shares, failing to honor Mr. Kim’s 50% participation right in any subsequent financing and failing to appoint a
designated director, as set forth in the parties’ agreement. Mr. Kim seeks specific performance of the Convertible Note and
Warrant Purchase Agreement, and monetary damages in the amount of $
The Ex-Directors Lawsuit
On
March 10, 2025, the following former directors of the Company, Kevin J. Connor, Chris J. Jones, Nobuki Kurita, and David Robson
(collectively, the “Ex-Directors”), filed a complaint against the Company in the Superior Court of California, County of
San Diego (Case No. 25CU012922N) (the “Complaint”). The Complaint alleges the Company failed to pay directors’
fees and expenses from the last quarter the fiscal year ended September 30, 2023 through the first two quarters of the fiscal year
ended September 30, 2024, and is claiming breach of contract, quantum meruit, unjust enrichment, promissory estoppel, breach of the
implied covenant of good faith and fair dealing, and unfair business practices. On August 22, 2025,
| F-37 |
11. SUBSEQUENT EVENTS
Approval of Amendment to Articles of Incorporation and Increase in Authorized Share Capital
On December 24, 2025, the Company’s Board of Directors and majority stockholders approved an increase in the authorized number of shares of common stock from shares to shares. In connection with this approval, the Company authorized the filing of a Certificate of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State of the State of Nevada to reflect the increase in authorized shares.
Reverse Stock Split
On December 2, 2025, the Company filed a Certificate
of Change to its Articles of Incorporation with the Secretary of State of the State of Nevada, providing for a
No fractional shares were issued in connection with the reverse stock split. Any fractional share interests resulting from the reverse stock split were rounded up to the nearest whole share at the stockholder level.
As a result of the Reverse Split, the number of issued and outstanding shares of common stock was reduced from shares to approximately shares as of September 30, 2025.
Bitcoin Purchase
On
October 20, 2025, CIMG Pte. Ltd., a Singapore limited liability company and a wholly owned subsidiary of the Company, entered into a
Bitcoin Purchase Agreement (the “Bitcoin Purchase Agreement”) with Lordan Group Ltd., as seller, pursuant to which CIMG
Pte. Ltd. agreed to purchase an aggregate of 230 Bitcoin from the seller. The transaction price was determined based on a floating
pricing mechanism tied to market prices over a 30 days period following the execution of the Bitcoin Purchase Agreement, with an
estimated aggregate purchase price of approximately $
Sale of Maca Inventories
As of September 30, 2025, the Company’s inventories
consisted primarily of maca raw materials and maca seeds with a net carrying value of $
Subsequent to year end, due to new regulatory requirements restricting the use of certain food additives, the Company determined that its existing Inventories would require formulation changes. Accordingly, on October 16, 2025, the Company decided to dispose of its historical Inventories in order to procure new raw materials that comply with the updated regulations.
On October 16, 2025, Beijing Zhongyan entered into
a purchase agreement with a customer in China and sold approximately 243.51 metric tons of maca raw materials and 680.09 kilograms of
maca seed products for total consideration of $
This transaction represents a non-recognized subsequent event and did not result in an adjustment to the consolidated financial statements as of September 30, 2025.
Termination of Medical Health Agreement and Refund of Prepayment
On July 10, 2025, Zhongyan Shangyue Technology Co., Ltd. entered into a Medical Health Agreement with a supplier
for the purchase of stem cell products. The Company remitted full payment of RMB
Legal Proceedings
The Kim Litigation
On October 3, 2024, Mr. Sooncha Kim filed a complaint
against the Company in the Southern District of New York, (Case No. 1:24-cv-7485) (the “Complaint”). The Complaint alleges
that the Company breached a Convertible Note and Warrant Purchase Agreement, dated June 6, 2024, between the Company and Mr. Kim, by,
among other things, failing to deliver the registration rights agreement, excluding Mr. Kim from the S-1 registration statement, delaying
conversion of Mr. Kim’s notes, undertaking steps to dilute Mr. Kim’s shares, failing to honor Mr. Kim’s 50% participation
right in any subsequent financing and failing to appoint a designated director, as set forth in the parties’ agreement. Mr. Kim
seeks specific performance of the Convertible Note and Warrant Purchase Agreement, and monetary damages in the amount of $
The Ex-Directors Lawsuit
On March 10, 2025, the following former
directors of the Company, Kevin J. Connor, Chris J. Jones, Nobuki Kurita, and David Robson (collectively, the
“Ex-Directors”), filed a complaint against the Company in the Superior Court of California, County of San Diego (Case
No. 25CU012922N) (the “Complaint”). The Complaint alleges the Company failed to pay directors’ fees and expenses
from the last quarter the fiscal year ended September 30, 2023 through the first two quarters of the fiscal year ended September 30,
2024, and is claiming breach of contract, quantum meruit, unjust enrichment, promissory estoppel, breach of the implied covenant of
good faith and fair dealing, and unfair business practices. On August 22, 2025, a judgment by default was entered against the
Company in the amount of $
New Subsidiary
On December 8, 2025, Beijing Zhongyan established a wholly-owned subsidiary, Shenzhen Zhixi Yunjie Technology Co., Ltd.
| F-38 |
Exhibit 10.8
CIMG INC.
2025 SHARE INCENTIVE PLAN
| 1. | Purpose of the Plan. |
This 2025 Equity Incentive Plan (the “Plan”) is intended as an incentive, to retain in the employment of and as directors, officers, consultants, advisors and employees to CIMG Inc., a Nevada corporation (the “Company”), and any Subsidiary of the Company, within the meaning of Section 424(f) of the United States Internal Revenue Code of 1986, as amended (the “Code”), persons of training, experience and ability, to attract new directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant to the Plan shall constitute incentive stock options within the meaning of Section 422 of the Code (the “Incentive Options”) while certain other options granted pursuant to the Plan shall be nonqualified stock options (the “Nonqualified Options”). Incentive Options and Nonqualified Options are hereinafter referred to collectively as “Options.”
The Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be exempt from the operation of Section 16(b) of the Exchange Act. In all cases, the terms, provisions, conditions and limitations of the Plan shall be construed and interpreted consistent with the Company’s intent as stated in this Section 1.
| 2. | Administration of the Plan. |
The authority to manage the operation of and administer the Plan shall be vested in the Board of Directors of the Company (the “Board”) or the Compensation Committee (the “Committee”) as delegated by the Board. The Board or Committee if so delegated by the Board shall be hereinafter referred to as the “Administrator.” To qualify as the Administrator, the Committee shall consist of and maintain two or more directors who are (i) “Independent Directors” (as such term is defined under the rules of the NASDAQ Stock Market) and (ii) “Non-Employee Directors” (as such term is defined in Rule 16b-3), which shall serve at the pleasure of the Board. The Administrator subject to Sections 3, 5 and 6 hereof, shall have full power and authority to designate recipients of Options and restricted stock (“Restricted Stock”), and to determine the terms and conditions of the respective Option and Restricted Stock agreements (which need not be identical) and to interpret the provisions and supervise the administration of the Plan. The Administrator shall have the authority, without limitation, to designate which Options granted under the Plan shall be Incentive Options and which shall be Nonqualified Options. To the extent any Option does not qualify as an Incentive Option, it shall constitute a separate Nonqualified Option.
Subject to the provisions of the Plan, the Administrator shall interpret the Plan and all Options and Restricted Stock (the “Securities”) granted under the Plan, shall make such rules as it deems necessary for the proper administration of the Plan, shall make all other determinations necessary or advisable for the administration of the Plan and shall correct any defects or supply any omission or reconcile any inconsistency in the Plan or in any Securities granted under the Plan in the manner and to the extent that the Administrator deems desirable to carry into effect the Plan or any Securities. The act or determination of a majority of the Administrator shall be the act or determination of the Administrator and any decision reduced to writing and signed by all of the members of the Administrator shall be fully effective as if it had been made by a majority of the Administrator at a meeting duly held for such purpose. Subject to the provisions of the Plan, any action taken or determination made by the Administrator pursuant to this and the other Sections of the Plan shall be conclusive on all parties.
In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, award or other acquisition under the Plan does not consist of two or more Non-Employee Directors, or if there shall be no such Committee, or if the Board otherwise determines to administer the Plan, then the Plan shall be administered by the Board and any such grant, award or other acquisition may be approved or ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3.
| 3. | Designation of Optionees and Grantees. |
The persons eligible for participation in the Plan as recipients of Options (the “Optionees”) or Restricted Stock (the “Grantees” and together with Optionees, the “Participants”) shall include directors, officers and employees of, and consultants and advisors to, the Company or any Subsidiary; provided that Incentive Options may only be granted to employees of the Company and any Subsidiary. In selecting Participants, and in determining the number of shares to be covered by each Option or award of Restricted Stock granted to Participants, the Administrator may consider any factors it deems relevant, including, without limitation, the office or position held by the Participant or the Participant’s relationship to the Company, the Participant’s degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary, the Participant’s length of service, promotions and potential. A Participant who has been granted an Option or Restricted Stock hereunder may be granted an additional Option or Options, or Restricted Stock if the Administrator shall so determine.
| 4. | Stock Reserved for the Plan. |
Subject to adjustment as provided in Section 8 hereof, a maximum of 7,279,400 shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”), shall be subject to the Plan. The shares of Common Stock subject to the Plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of Common Stock shall be and is hereby reserved for such purpose. Any of such shares of Common Stock that may remain unissued and that are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Common Stock to meet the requirements of the Plan. Should any Securities expire or be cancelled prior to its exercise, satisfaction of conditions or vesting in full, as applicable, or should the number of shares of Common Stock to be delivered upon the exercise or vesting in full of an Option or award of Restricted Stock be reduced for any reason, the shares of Common Stock theretofore subject to such Option or Restricted Stock, as applicable, may be subject to future Options or Restricted Stock under the Plan.
| 5. | Terms and Conditions of Options. |
Options granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable:
(a) Option Price. The purchase price of each share of Common Stock purchasable under an Incentive Option shall be determined by the Administrator at the time of grant, but shall not be less than 100% of the Fair Market Value (as defined below) of such share of Common Stock on the date the Option is granted, unless otherwise permitted pursuant to applicable Nasdaq Listing Rules and applicable regulations; provided, however, that with respect to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, the purchase price per share of Common Stock shall be at least 110% of the Fair Market Value per share of Common Stock on the date of grant. The purchase price of each share of Common Stock purchasable under a Nonqualified Option shall not be less than 100% of the Fair Market Value of such share of Common Stock on the date the Option is granted. The exercise price for each Option shall be subject to adjustment as provided in Section 8 below. “Fair Market Value” means the closing price on the final trading day immediately prior to the grant date of the Common Stock on the NASDAQ Capital Market or other principal securities exchange on which shares of Common Stock are listed (if the shares of Common Stock are so listed), or, if not so listed, the mean between the closing bid and asked prices of publicly traded shares of Common Stock in the over the counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Administrator in a manner consistent with the provisions of the Code. Anything in this Section 5(a) to the contrary notwithstanding, in no event shall the purchase price of a share of Common Stock be less than the minimum price permitted under the rules and policies of any national securities exchange on which the shares of Common Stock are listed.
(b) Option Term. The term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten years after the date such Option is granted and in the case of an Incentive Option granted to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, no such Incentive Option shall be exercisable more than five years after the date such Incentive Option is granted.
(c) Exercisability. Subject to Section 5(j) hereof, Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator at the time of grant; provided, however, that in the absence of any Option vesting periods designated by the Administrator at the time of grant, Options shall vest and become exercisable as to one-third of the total number of shares subject to the Option on each of the first, second and third anniversaries of the date of grant; and provided further that no Options shall be exercisable until such time as any vesting limitation required by Section 16 of the Exchange Act, and related rules, shall be satisfied if such limitation shall be required for continued validity of the exemption provided under Rule 16b-3(d)(3).
Upon the occurrence of a “Change in Control” (as hereinafter defined), the Administrator may accelerate the vesting and exercisability of outstanding Options, in whole or in part, as determined by the Administrator in its sole discretion. In its sole discretion, the Administrator may also determine that, upon the occurrence of a Change in Control, each outstanding Option shall terminate within a specified number of days after notice to the Optionee thereunder, and each such Optionee shall receive, with respect to each share of Common Stock subject to such Option, an amount equal to the excess of the Fair Market Value of such shares immediately prior to such Change in Control over the exercise price per share of such Option; such amount shall be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or a combination thereof, as the Administrator shall determine in its sole discretion.
For purposes of the Plan, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, a Change in Control shall be deemed to have occurred if:
(i) a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the commencement of such offer), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;
(ii) the Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;
(iii) the Company shall sell substantially all of its assets to another corporation that is not wholly owned by the Company, unless as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries and their affiliates; or
(iv) a Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the first acquisition of such securities by such Person), any employee benefit plan of the Company or its Subsidiaries, and their affiliates.
Notwithstanding the foregoing, if Change of Control is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Change of Control shall have the meaning ascribed to it in such employment agreement.
For purposes of this Section 5(c), ownership of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act. In addition, for such purposes, “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided, however, that a Person shall not include (A) the Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.
(d) Method of Exercise. Options to the extent then exercisable may be exercised in whole or in part at any time during the option period, by giving written notice to the Company specifying the number of shares of Common Stock to be purchased, accompanied by payment in full of the purchase price, in cash, or by check or such other instrument as may be acceptable to the Administrator. As determined by the Administrator, in its sole discretion, at or after grant, payment in full or in part may be made at the election of the Optionee (i) in the form of Common Stock owned by the Optionee (based on the Fair Market Value of the Common Stock which is not the subject of any pledge or security interest, (ii) in the form of shares of Common Stock withheld by the Company from the shares of Common Stock otherwise to be received with such withheld shares of Common Stock having a Fair Market Value equal to the exercise price of the Option, or (iii) by a combination of the foregoing, such Fair Market Value determined by applying the principles set forth in Section 5(a), provided that the combined value of all cash and cash equivalents and the Fair Market Value of any shares surrendered to the Company is at least equal to such exercise price and except with respect to (ii) above, such method of payment will not cause a disqualifying disposition of all or a portion of the Common Stock received upon exercise of an Incentive Option. An Optionee shall have the right to dividends and other rights of a stockholder with respect to shares of Common Stock purchased upon exercise of an Option at such time as the Optionee (i) has given written notice of exercise and has paid in full for such shares, and (ii) has satisfied such conditions that may be imposed by the Company with respect to the withholding of taxes.
(e) Non-transferability of Options. Options are not transferable and may be exercised solely by the Optionee during his lifetime or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution. The Administrator, in its sole discretion, may permit a transfer of a Nonqualified Option to (i) a trust for the benefit of the Optionee, (ii) a member of the Optionee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic relations order. Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any Option contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee.
(f) Termination by Death. Unless otherwise determined by the Administrator, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised, to the extent then exercisable (or on such accelerated basis as the Administrator shall determine at or after grant), by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or until the expiration of the stated term of such Option as provided under the Plan, whichever period is shorter.
(g) Termination by Reason of Disability. Unless otherwise determined by the Administrator, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Disability (as defined below), then any Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such accelerated basis as the Administrator shall determine at or after grant), but may not be exercised after ninety (90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever period is shorter; provided, however, that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter. “Disability” shall mean an Optionee’s total and permanent disability; provided, that if Disability is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Disability shall have the meaning ascribed to it in such employment agreement
(h) Termination by Reason of Retirement. Unless otherwise determined by the Administrator, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below), any Option held by such Optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or on such accelerated basis as the Administrator shall determine at or after grant), but may not be exercised after ninety (90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever date is earlier; provided, however, that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable, to the extent to which it was exercisable at the time of death, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter.
For purposes of this paragraph (h), “Normal Retirement” shall mean retirement from active employment with the Company or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if no such pension plan, age 65, and “Early Retirement” shall mean retirement from active employment with the Company or any Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or if no such pension plan, age 55.
(i) Other Terminations. Unless otherwise determined by the Administrator upon grant, if any Optionee’s employment with or service to the Company or any Subsidiary is terminated by such Optionee for any reason other than death, Disability, Normal or Early Retirement or Good Reason (as defined below), the Option shall thereupon terminate, except that the portion of any Option that was exercisable on the date of such termination of employment or service may be exercised for the lesser of ninety (90) days after the date of termination (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the balance of such Option’s term, which ever period is shorter. The transfer of an Optionee from the employ of or service to the Company to the employ of or service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment or service for purposes of the Plan.
(i) In the event that the Optionee’s employment or service with the Company or any Subsidiary is terminated by the Company or such Subsidiary for “cause” any unexercised portion of any Option shall immediately terminate in its entirety. For purposes hereof, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, “Cause” shall exist upon a good-faith determination by the Board, following a hearing before the Board at which an Optionee was represented by counsel and given an opportunity to be heard, that such Optionee has been accused of fraud, dishonesty or act detrimental to the interests of the Company or any Subsidiary of Company or that such Optionee has been accused of or convicted of an act of willful and material embezzlement or fraud against the Company or of a felony under any state or federal statute; provided, however, that it is specifically understood that “Cause” shall not include any act of commission or omission in the good-faith exercise of such Optionee’s business judgment as a director, officer or employee of the Company, as the case may be, or upon the advice of counsel to the Company. Notwithstanding the foregoing, if Cause is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Cause shall have the meaning ascribed to it in such employment agreement.
(ii) In the event that an Optionee is removed as a director, officer or employee by the Company at any time other than for “Cause” or resigns as a director, officer or employee for “Good Reason” the Option granted to such Optionee may be exercised by the Optionee, to the extent the Option was exercisable on the date such Optionee ceases to be a director, officer or employee. Such Option may be exercised at any time within one (1) year after the date the Optionee ceases to be a director, officer or employee (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof), or the date on which the Option otherwise expires by its terms; whichever period is shorter, at which time the Option shall terminate; provided, however, if the Optionee dies before the Options terminate and are no longer exercisable, the terms and provisions of Section 5(f) shall control. For purposes of this Section 5(i), and unless otherwise defined in an employment agreement between the Company and the relevant Optionee, Good Reason shall exist upon the occurrence of the following:
| (A) | the assignment to Optionee of any duties inconsistent with the position in the Company that Optionee held immediately prior to the assignment; |
| (B) | a Change of Control resulting in a significant adverse alteration in the status or conditions of Optionee’s participation with the Company or other nature of Optionee’s responsibilities from those in effect prior to such Change of Control, including any significant alteration in Optionee’s responsibilities immediately prior to such Change in Control; and |
| (C) | the failure by the Company to continue to provide Optionee with benefits substantially similar to those enjoyed by Optionee prior to such failure. |
Notwithstanding the foregoing, if Good Reason is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Good Reason shall have the meaning ascribed to it in such employment agreement.
(j) Limit on Value of Incentive Option. The aggregate Fair Market Value, determined as of the date the Incentive Option is granted, of Common Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year under the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000. Should it be determined that an Incentive Stock Option granted under the Plan exceeds such maximum for any reason other than a failure in good faith to value the Stock subject to such option, the excess portion of such option shall be considered a Nonqualified Option. To the extent the employee holds two (2) or more such Options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such Option as Incentive Stock Options under the Federal tax laws shall be applied on the basis of the order in which such Options are granted. If, for any reason, an entire Option does not qualify as an Incentive Stock Option by reason of exceeding such maximum, such Option shall be considered a Nonqualified Option.
| 6. | Terms and Conditions of Restricted Stock. |
Restricted Stock may be granted under this Plan aside from, or in association with, any other award and shall be subject to the following conditions and shall contain such additional terms and conditions (including provisions relating to the acceleration of vesting of Restricted Stock upon a Change of Control), not inconsistent with the terms of the Plan, as the Administrator shall deem desirable:
(a) Grantee rights. A Grantee shall have no rights to an award of Restricted Stock unless and until Grantee accepts the award within the period prescribed by the Administrator and, if the Administrator shall deem desirable, makes payment to the Company in cash, or by check or such other instrument as may be acceptable to the Administrator. After acceptance and issuance of a certificate or certificates, as provided for below, the Grantee shall have the rights of a stockholder with respect to Restricted Stock subject to the non-transferability and forfeiture restrictions described in Section 6(d) below.
(b) Issuance of Certificates. The Company shall issue in the Grantee’s name a certificate or certificates for the shares of Common Stock associated with the award promptly after the Grantee accepts such award.
(c) Delivery of Certificates. Unless otherwise provided, any certificate or certificates issued evidencing shares of Restricted Stock shall not be delivered to the Grantee until such shares are free of any restrictions specified by the Administrator at the time of grant.
(d) Forfeitability, Non-transferability of Restricted Stock. Shares of Restricted Stock are forfeitable until the terms of the Restricted Stock grant have been satisfied. Shares of Restricted Stock are not transferable until the date on which the Administrator has specified such restrictions have lapsed. Unless otherwise provided by the Administrator at or after grant, distributions in the form of dividends or otherwise of additional shares or property in respect of shares of Restricted Stock shall be subject to the same restrictions as such shares of Restricted Stock.
(e) Change of Control. Upon the occurrence of a Change in Control as defined in Section 5(c), the Administrator may accelerate the vesting of outstanding Restricted Stock, in whole or in part, as determined by the Administrator, in its sole discretion.
(f) Termination of Employment. Unless otherwise determined by the Administrator at or after grant, in the event the Grantee ceases to be an employee or otherwise associated with the Company for any other reason, all shares of Restricted Stock theretofore awarded to him which are still subject to restrictions shall be forfeited and the Company shall have the right to complete the blank stock power. The Administrator may provide (on or after grant) that restrictions or forfeiture conditions relating to shares of Restricted Stock will be waived in whole or in part in the event of termination resulting from specified causes, and the Administrator may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.
| 7. | Term of Plan. |
No Securities shall be granted pursuant to the Plan on or after the date which is ten years from the effective date of the Plan, but Options and awards of Restricted Stock theretofore granted may extend beyond that date.
| 8. | Capital Change of the Company. |
In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting the Common Stock of the Company, the Administrator shall make an appropriate and equitable adjustment in the number and kind of shares reserved for issuance under the Plan and (A) in the number and option price of shares subject to outstanding Options granted under the Plan, to the end that after such event each Optionee’s proportionate interest shall be maintained (to the extent possible) as immediately before the occurrence of such event. The Administrator shall, to the extent feasible, make such other adjustments as may be required under the tax laws so that any Incentive Options previously granted shall not be deemed modified within the meaning of Section 424(h) of the Code. Appropriate adjustments shall also be made in the case of outstanding Restricted Stock granted under the Plan.
The adjustments described above will be made only to the extent consistent with continued qualification of the Option under Section 422 of the Code (in the case of an Incentive Option) and Section 409A of the Code.
| 9. | Purchase for Investment/Conditions. |
Unless the Options and shares covered by the Plan have been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the Company has determined that such registration is unnecessary, each person exercising or receiving Securities under the Plan may be required by the Company to give a representation in writing that he is acquiring the securities for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. The Administrator may impose any additional or further restrictions on awards of Securities as shall be determined by the Administrator at the time of award.
| 10. | Taxes. |
(a) The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Securities granted under the Plan with respect to the withholding of any taxes (including income or employment taxes) or any other tax matters.
(b) If any Grantee, in connection with the acquisition of Restricted Stock, makes the election permitted under Section 83(b) of the Code (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), such Grantee shall notify the Company of the election with the Internal Revenue Service pursuant to regulations issued under the authority of Code Section 83(b).
(c) If any Grantee shall make any disposition of shares of Common Stock issued pursuant to the exercise of an Incentive Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Grantee shall notify the Company of such disposition within ten (10) days hereof.
| 11. | Effective Date of Plan. |
The Plan shall be effective on July 3, 2025 when the Plan was approved by majority vote of the Company’s stockholders on July 3, 2025.
| 12. | Amendment and Termination. |
The Board may amend, suspend, or terminate the Plan, except that no amendment shall be made that would impair the rights of any Participant under Securities theretofore granted without the Participant’s consent, and except that no amendment shall be made which, without the approval of the stockholders of the Company would:
(a) materially increase the number of shares that may be issued under the Plan, except as is provided in Section 8;
(b) materially increase the benefits accruing to the Participants under the Plan;
(c) materially modify the requirements as to eligibility for participation in the Plan;
(d) decrease the exercise price of an Incentive Option to less than 100% of the Fair Market Value per share of Common Stock on the date of grant thereof or the exercise price of a Nonqualified Option to less than 100% of the Fair Market Value per share of Common Stock on the date of grant thereof;
(e) extend the term of any Option beyond that provided for in Section 5(b);
(f) except as otherwise provided in Sections 5(d) and 8 hereof, reduce the exercise price of outstanding Options or effect repricing through cancellations and re-grants of new Options;
(g) increase the number of shares of Common Stock to be issued or issuable under the Plan to an amount that is equal to or in excess of 19.99% of the number of shares of Common Stock outstanding before the issuance of the stock or securities; or
(h) otherwise require stockholder approval pursuant to the rules and regulations of the NASDAQ Stock Market.
Subject to the forgoing, the Administrator may amend the terms of any Option theretofore granted, prospectively or retrospectively, but no such amendment shall impair the rights of any Optionee without the Optionee’s consent.
It is the intention of the Board that the Plan comply strictly with the provisions of Section 409A of the Code and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder (the “Section 409A Rules”) and the Administrator shall exercise its discretion in granting awards hereunder (and the terms of such awards), accordingly. The Plan and any grant of an award hereunder may be amended from time to time (without, in the case of an award, the consent of the Participant) as may be necessary or appropriate to comply with the Section 409A Rules.
| 13. | Government Regulations. |
The Plan, and the grant and exercise or conversion, as applicable, of Securities hereunder, and the obligation of the Company to issue and deliver shares under such Securities shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies, national securities exchanges and interdealer quotation systems as may be required.
| 14. | General Provisions. |
(a) Certificates. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Administrator may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, or other securities commission having jurisdiction, any applicable Federal or state securities law, any stock exchange or interdealer quotation system upon which the Common Stock is then listed or traded and the Administrator may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.
(b) Employment Matters. Neither the adoption of the Plan nor any grant or award under the Plan shall confer upon any Participant who is an employee of the Company or any Subsidiary any right to continued employment or, in the case of a Participant who is a director, continued service as a director, with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any of its employees, the service of any of its directors or the retention of any of its consultants or advisors at any time.
(c) Limitation of Liability. No member of the Administrator, or any officer or employee of the Company acting on behalf of the Administrator, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Administrator and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.
(d) Registration of Stock. Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Common Stock to be issued upon the exercise thereof has been registered under the Securities Act and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration in the United States. The Company shall not be under any obligation to register under applicable federal or state securities laws any Common Stock to be issued upon the exercise of an Option granted hereunder in order to permit the exercise of an Option and the issuance and sale of the Common Stock subject to such Option, although the Company may in its sole discretion register such Common Stock at such time as the Company shall determine. If the Company chooses to comply with such an exemption from registration, the Common Stock issued under the Plan may, at the direction of the Administrator, bear an appropriate restrictive legend restricting the transfer or pledge of the Common Stock represented thereby, and the Administrator may also give appropriate stop transfer instructions with respect to such Common Stock to the Company’s transfer agent.
| 15. | Non-Uniform Determinations. |
The Administrator’s determinations under the Plan, including, without limitation, (i) the determination of the Participants to receive awards, (ii) the form, amount and timing of such awards, (iii) the terms and provisions of such awards and (ii) the agreements evidencing the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, awards under the Plan, whether or not such Participants are similarly situated.
| 16. | Governing Law. |
The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the internal laws of the State of Nevada, without giving effect to principles of conflicts of laws, and applicable federal law.
Exhibit 10.9
CIMG INC.
2026 EQUITY INCENTIVE PLAN
| 1. | Purpose of the Plan. |
This 2026 Equity Incentive Plan (the “Plan”) is intended as an incentive, to retain in the employment of and as directors, officers, consultants, advisors and employees to CIMG Inc., a Nevada corporation (the “Company”), and any Subsidiary of the Company, within the meaning of Section 424(f) of the United States Internal Revenue Code of 1986, as amended (the “Code”), persons of training, experience and ability, to attract new directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage the sense of proprietorship and to stimulate the active interest of such persons in the development and financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant to the Plan shall constitute incentive stock options within the meaning of Section 422 of the Code (the “Incentive Options”) while certain other options granted pursuant to the Plan shall be nonqualified stock options (the “Nonqualified Options”). Incentive Options and Nonqualified Options are hereinafter referred to collectively as “Options.”
The Company intends that the Plan meet the requirements of Rule 16b-3 (“Rule 16b-3”) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that transactions of the type specified in subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of the Company pursuant to the Plan will be exempt from the operation of Section 16(b) of the Exchange Act. In all cases, the terms, provisions, conditions and limitations of the Plan shall be construed and interpreted consistent with the Company’s intent as stated in this Section 1.
| 2. | Administration of the Plan. |
The authority to manage the operation of and administer the Plan shall be vested in the Board of Directors of the Company (the “Board”) or the Compensation Committee (the “Committee”) as delegated by the Board. The Board or Committee if so delegated by the Board shall be hereinafter referred to as the “Administrator.” To qualify as the Administrator, the Committee shall consist of and maintain two or more directors who are (i) “Independent Directors” (as such term is defined under the rules of the NASDAQ Stock Market) and (ii) “Non-Employee Directors” (as such term is defined in Rule 16b-3), which shall serve at the pleasure of the Board. The Administrator subject to Sections 3, 5 and 6 hereof, shall have full power and authority to designate recipients of Options and restricted stock (“Restricted Stock”), and to determine the terms and conditions of the respective Option and Restricted Stock agreements (which need not be identical) and to interpret the provisions and supervise the administration of the Plan. The Administrator shall have the authority, without limitation, to designate which Options granted under the Plan shall be Incentive Options and which shall be Nonqualified Options. To the extent any Option does not qualify as an Incentive Option, it shall constitute a separate Nonqualified Option.
Subject to the provisions of the Plan, the Administrator shall interpret the Plan and all Options and Restricted Stock (the “Securities”) granted under the Plan, shall make such rules as it deems necessary for the proper administration of the Plan, shall make all other determinations necessary or advisable for the administration of the Plan and shall correct any defects or supply any omission or reconcile any inconsistency in the Plan or in any Securities granted under the Plan in the manner and to the extent that the Administrator deems desirable to carry into effect the Plan or any Securities. The act or determination of a majority of the Administrator shall be the act or determination of the Administrator and any decision reduced to writing and signed by all of the members of the Administrator shall be fully effective as if it had been made by a majority of the Administrator at a meeting duly held for such purpose. Subject to the provisions of the Plan, any action taken or determination made by the Administrator pursuant to this and the other Sections of the Plan shall be conclusive on all parties.
In the event that for any reason the Committee is unable to act or if the Committee at the time of any grant, award or other acquisition under the Plan does not consist of two or more Non-Employee Directors, or if there shall be no such Committee, or if the Board otherwise determines to administer the Plan, then the Plan shall be administered by the Board and any such grant, award or other acquisition may be approved or ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3.
| 3. | Designation of Optionees and Grantees. |
The persons eligible for participation in the Plan as recipients of Options (the “Optionees”) or Restricted Stock (the “Grantees” and together with Optionees, the “Participants”) shall include directors, officers and employees of, and consultants and advisors to, the Company or any Subsidiary; provided that Incentive Options may only be granted to employees of the Company and any Subsidiary. In selecting Participants, and in determining the number of shares to be covered by each Option or award of Restricted Stock granted to Participants, the Administrator may consider any factors it deems relevant, including, without limitation, the office or position held by the Participant or the Participant’s relationship to the Company, the Participant’s degree of responsibility for and contribution to the growth and success of the Company or any Subsidiary, the Participant’s length of service, promotions and potential. A Participant who has been granted an Option or Restricted Stock hereunder may be granted an additional Option or Options, or Restricted Stock if the Administrator shall so determine.
| 4. | Stock Reserved for the Plan. |
Subject to adjustment as provided in Section 8 hereof, a maximum of 38,000,000 shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”), shall be subject to the Plan. The shares of Common Stock subject to the Plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of Common Stock shall be and is hereby reserved for such purpose. Any of such shares of Common Stock that may remain unissued and that are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Common Stock to meet the requirements of the Plan. Should any Securities expire or be cancelled prior to its exercise, satisfaction of conditions or vesting in full, as applicable, or should the number of shares of Common Stock to be delivered upon the exercise or vesting in full of an Option or award of Restricted Stock be reduced for any reason, the shares of Common Stock theretofore subject to such Option or Restricted Stock, as applicable, may be subject to future Options or Restricted Stock under the Plan.
| 5. | Terms and Conditions of Options. |
Options granted under the Plan shall be subject to the following conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable:
(a) Option Price. The purchase price of each share of Common Stock purchasable under an Incentive Option shall be determined by the Administrator at the time of grant, but shall not be less than 100% of the Fair Market Value (as defined below) of such share of Common Stock on the date the Option is granted, unless otherwise permitted pursuant to applicable Nasdaq Listing Rules and applicable regulations; provided, however, that with respect to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, the purchase price per share of Common Stock shall be at least 110% of the Fair Market Value per share of Common Stock on the date of grant. The purchase price of each share of Common Stock purchasable under a Nonqualified Option shall not be less than 100% of the Fair Market Value of such share of Common Stock on the date the Option is granted. The exercise price for each Option shall be subject to adjustment as provided in Section 8 below. “Fair Market Value” means the closing price on the final trading day immediately prior to the grant date of the Common Stock on the NASDAQ Capital Market or other principal securities exchange on which shares of Common Stock are listed (if the shares of Common Stock are so listed), or, if not so listed, the mean between the closing bid and asked prices of publicly traded shares of Common Stock in the over the counter market, or, if such bid and asked prices shall not be available, as reported by any nationally recognized quotation service selected by the Company, or as determined by the Administrator in a manner consistent with the provisions of the Code. Anything in this Section 5(a) to the contrary notwithstanding, in no event shall the purchase price of a share of Common Stock be less than the minimum price permitted under the rules and policies of any national securities exchange on which the shares of Common Stock are listed.
(b) Option Term. The term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten years after the date such Option is granted and in the case of an Incentive Option granted to an Optionee who, at the time such Incentive Option is granted, owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of any Subsidiary, no such Incentive Option shall be exercisable more than five years after the date such Incentive Option is granted.
(c) Exercisability. Subject to Section 5(j) hereof, Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator at the time of grant; provided, however, that in the absence of any Option vesting periods designated by the Administrator at the time of grant, Options shall vest and become exercisable as to one-third of the total number of shares subject to the Option on each of the first, second and third anniversaries of the date of grant; and provided further that no Options shall be exercisable until such time as any vesting limitation required by Section 16 of the Exchange Act, and related rules, shall be satisfied if such limitation shall be required for continued validity of the exemption provided under Rule 16b-3(d)(3).
Upon the occurrence of a “Change in Control” (as hereinafter defined), the Administrator may accelerate the vesting and exercisability of outstanding Options, in whole or in part, as determined by the Administrator in its sole discretion. In its sole discretion, the Administrator may also determine that, upon the occurrence of a Change in Control, each outstanding Option shall terminate within a specified number of days after notice to the Optionee thereunder, and each such Optionee shall receive, with respect to each share of Common Stock subject to such Option, an amount equal to the excess of the Fair Market Value of such shares immediately prior to such Change in Control over the exercise price per share of such Option; such amount shall be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or a combination thereof, as the Administrator shall determine in its sole discretion.
For purposes of the Plan, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, a Change in Control shall be deemed to have occurred if:
(i) a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the commencement of such offer), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;
(ii) the Company shall be merged or consolidated with another corporation, unless as a result of such merger or consolidation more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries, and their affiliates;
(iii) the Company shall sell substantially all of its assets to another corporation that is not wholly owned by the Company, unless as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries and their affiliates; or
(iv) a Person (as defined below) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the first acquisition of such securities by such Person), any employee benefit plan of the Company or its Subsidiaries, and their affiliates.
Notwithstanding the foregoing, if Change of Control is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Change of Control shall have the meaning ascribed to it in such employment agreement.
For purposes of this Section 5(c), ownership of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act. In addition, for such purposes, “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided, however, that a Person shall not include (A) the Company or any of its Subsidiaries; (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries; (C) an underwriter temporarily holding securities pursuant to an offering of such securities; or (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.
(d) Method of Exercise. Options to the extent then exercisable may be exercised in whole or in part at any time during the option period, by giving written notice to the Company specifying the number of shares of Common Stock to be purchased, accompanied by payment in full of the purchase price, in cash, or by check or such other instrument as may be acceptable to the Administrator. As determined by the Administrator, in its sole discretion, at or after grant, payment in full or in part may be made at the election of the Optionee (i) in the form of Common Stock owned by the Optionee (based on the Fair Market Value of the Common Stock which is not the subject of any pledge or security interest, (ii) in the form of shares of Common Stock withheld by the Company from the shares of Common Stock otherwise to be received with such withheld shares of Common Stock having a Fair Market Value equal to the exercise price of the Option, or (iii) by a combination of the foregoing, such Fair Market Value determined by applying the principles set forth in Section 5(a), provided that the combined value of all cash and cash equivalents and the Fair Market Value of any shares surrendered to the Company is at least equal to such exercise price and except with respect to (ii) above, such method of payment will not cause a disqualifying disposition of all or a portion of the Common Stock received upon exercise of an Incentive Option. An Optionee shall have the right to dividends and other rights of a stockholder with respect to shares of Common Stock purchased upon exercise of an Option at such time as the Optionee (i) has given written notice of exercise and has paid in full for such shares, and (ii) has satisfied such conditions that may be imposed by the Company with respect to the withholding of taxes.
(e) Non-transferability of Options. Options are not transferable and may be exercised solely by the Optionee during his lifetime or after his death by the person or persons entitled thereto under his will or the laws of descent and distribution. The Administrator, in its sole discretion, may permit a transfer of a Nonqualified Option to (i) a trust for the benefit of the Optionee, (ii) a member of the Optionee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic relations order. Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject to execution, attachment or similar process, any Option contrary to the provisions hereof shall be void and ineffective and shall give no right to the purported transferee.
(f) Termination by Death. Unless otherwise determined by the Administrator, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of death, the Option may thereafter be exercised, to the extent then exercisable (or on such accelerated basis as the Administrator shall determine at or after grant), by the legal representative of the estate or by the legatee of the Optionee under the will of the Optionee, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or until the expiration of the stated term of such Option as provided under the Plan, whichever period is shorter.
(g) Termination by Reason of Disability. Unless otherwise determined by the Administrator, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Disability (as defined below), then any Option held by such Optionee may thereafter be exercised, to the extent it was exercisable at the time of termination due to Disability (or on such accelerated basis as the Administrator shall determine at or after grant), but may not be exercised after ninety (90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever period is shorter; provided, however, that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable to the extent to which it was exercisable at the time of death for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter. “Disability” shall mean an Optionee’s total and permanent disability; provided, that if Disability is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Disability shall have the meaning ascribed to it in such employment agreement
(h) Termination by Reason of Retirement. Unless otherwise determined by the Administrator, if any Optionee’s employment with or service to the Company or any Subsidiary terminates by reason of Normal or Early Retirement (as such terms are defined below), any Option held by such Optionee may thereafter be exercised to the extent it was exercisable at the time of such Retirement (or on such accelerated basis as the Administrator shall determine at or after grant), but may not be exercised after ninety (90) days after the date of such termination of employment or service (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the expiration of the stated term of such Option, whichever date is earlier; provided, however, that, if the Optionee dies within such ninety (90) day period, any unexercised Option held by such Optionee shall thereafter be exercisable, to the extent to which it was exercisable at the time of death, for a period of one (1) year after the date of such death (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or for the stated term of such Option, whichever period is shorter.
For purposes of this paragraph (h), “Normal Retirement” shall mean retirement from active employment with the Company or any Subsidiary on or after the normal retirement date specified in the applicable Company or Subsidiary pension plan or if no such pension plan, age 65, and “Early Retirement” shall mean retirement from active employment with the Company or any Subsidiary pursuant to the early retirement provisions of the applicable Company or Subsidiary pension plan or if no such pension plan, age 55.
(i) Other Terminations. Unless otherwise determined by the Administrator upon grant, if any Optionee’s employment with or service to the Company or any Subsidiary is terminated by such Optionee for any reason other than death, Disability, Normal or Early Retirement or Good Reason (as defined below), the Option shall thereupon terminate, except that the portion of any Option that was exercisable on the date of such termination of employment or service may be exercised for the lesser of ninety (90) days after the date of termination (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof) or the balance of such Option’s term, which ever period is shorter. The transfer of an Optionee from the employ of or service to the Company to the employ of or service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment or service for purposes of the Plan.
(i) In the event that the Optionee’s employment or service with the Company or any Subsidiary is terminated by the Company or such Subsidiary for “cause” any unexercised portion of any Option shall immediately terminate in its entirety. For purposes hereof, unless otherwise defined in an employment agreement between the Company and the relevant Optionee, “Cause” shall exist upon a good-faith determination by the Board, following a hearing before the Board at which an Optionee was represented by counsel and given an opportunity to be heard, that such Optionee has been accused of fraud, dishonesty or act detrimental to the interests of the Company or any Subsidiary of Company or that such Optionee has been accused of or convicted of an act of willful and material embezzlement or fraud against the Company or of a felony under any state or federal statute; provided, however, that it is specifically understood that “Cause” shall not include any act of commission or omission in the good-faith exercise of such Optionee’s business judgment as a director, officer or employee of the Company, as the case may be, or upon the advice of counsel to the Company. Notwithstanding the foregoing, if Cause is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Cause shall have the meaning ascribed to it in such employment agreement.
(ii) In the event that an Optionee is removed as a director, officer or employee by the Company at any time other than for “Cause” or resigns as a director, officer or employee for “Good Reason” the Option granted to such Optionee may be exercised by the Optionee, to the extent the Option was exercisable on the date such Optionee ceases to be a director, officer or employee. Such Option may be exercised at any time within one (1) year after the date the Optionee ceases to be a director, officer or employee (or, if later, such time as the Option may be exercised pursuant to Section 14(d) hereof), or the date on which the Option otherwise expires by its terms; whichever period is shorter, at which time the Option shall terminate; provided, however, if the Optionee dies before the Options terminate and are no longer exercisable, the terms and provisions of Section 5(f) shall control. For purposes of this Section 5(i), and unless otherwise defined in an employment agreement between the Company and the relevant Optionee, Good Reason shall exist upon the occurrence of the following:
| (A) | the assignment to Optionee of any duties inconsistent with the position in the Company that Optionee held immediately prior to the assignment; |
| (B) | a Change of Control resulting in a significant adverse alteration in the status or conditions of Optionee’s participation with the Company or other nature of Optionee’s responsibilities from those in effect prior to such Change of Control, including any significant alteration in Optionee’s responsibilities immediately prior to such Change in Control; and |
| (C) | the failure by the Company to continue to provide Optionee with benefits substantially similar to those enjoyed by Optionee prior to such failure. |
Notwithstanding the foregoing, if Good Reason is defined in an employment agreement between the Company and the relevant Optionee, then, with respect to such Optionee, Good Reason shall have the meaning ascribed to it in such employment agreement.
(j) Limit on Value of Incentive Option. The aggregate Fair Market Value, determined as of the date the Incentive Option is granted, of Common Stock for which Incentive Options are exercisable for the first time by any Optionee during any calendar year under the Plan (and/or any other stock option plans of the Company or any Subsidiary) shall not exceed $100,000. Should it be determined that an Incentive Stock Option granted under the Plan exceeds such maximum for any reason other than a failure in good faith to value the Stock subject to such option, the excess portion of such option shall be considered a Nonqualified Option. To the extent the employee holds two (2) or more such Options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such Option as Incentive Stock Options under the Federal tax laws shall be applied on the basis of the order in which such Options are granted. If, for any reason, an entire Option does not qualify as an Incentive Stock Option by reason of exceeding such maximum, such Option shall be considered a Nonqualified Option.
| 6. | Terms and Conditions of Restricted Stock. |
Restricted Stock may be granted under this Plan aside from, or in association with, any other award and shall be subject to the following conditions and shall contain such additional terms and conditions (including provisions relating to the acceleration of vesting of Restricted Stock upon a Change of Control), not inconsistent with the terms of the Plan, as the Administrator shall deem desirable:
(a) Grantee rights. A Grantee shall have no rights to an award of Restricted Stock unless and until Grantee accepts the award within the period prescribed by the Administrator and, if the Administrator shall deem desirable, makes payment to the Company in cash, or by check or such other instrument as may be acceptable to the Administrator. After acceptance and issuance of a certificate or certificates, as provided for below, the Grantee shall have the rights of a stockholder with respect to Restricted Stock subject to the non-transferability and forfeiture restrictions described in Section 6(d) below.
(b) Issuance of Certificates. The Company shall issue in the Grantee’s name a certificate or certificates for the shares of Common Stock associated with the award promptly after the Grantee accepts such award.
(c) Delivery of Certificates. Unless otherwise provided, any certificate or certificates issued evidencing shares of Restricted Stock shall not be delivered to the Grantee until such shares are free of any restrictions specified by the Administrator at the time of grant.
(d) Forfeitability, Non-transferability of Restricted Stock. Shares of Restricted Stock are forfeitable until the terms of the Restricted Stock grant have been satisfied. Shares of Restricted Stock are not transferable until the date on which the Administrator has specified such restrictions have lapsed. Unless otherwise provided by the Administrator at or after grant, distributions in the form of dividends or otherwise of additional shares or property in respect of shares of Restricted Stock shall be subject to the same restrictions as such shares of Restricted Stock.
(e) Change of Control. Upon the occurrence of a Change in Control as defined in Section 5(c), the Administrator may accelerate the vesting of outstanding Restricted Stock, in whole or in part, as determined by the Administrator, in its sole discretion.
(f) Termination of Employment. Unless otherwise determined by the Administrator at or after grant, in the event the Grantee ceases to be an employee or otherwise associated with the Company for any other reason, all shares of Restricted Stock theretofore awarded to him which are still subject to restrictions shall be forfeited and the Company shall have the right to complete the blank stock power. The Administrator may provide (on or after grant) that restrictions or forfeiture conditions relating to shares of Restricted Stock will be waived in whole or in part in the event of termination resulting from specified causes, and the Administrator may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.
| 7. | Term of Plan. |
No Securities shall be granted pursuant to the Plan on or after the date which is ten years from the effective date of the Plan, but Options and awards of Restricted Stock theretofore granted may extend beyond that date.
| 8. | Capital Change of the Company. |
In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, or other change in corporate structure affecting the Common Stock of the Company, the Administrator shall make an appropriate and equitable adjustment in the number and kind of shares reserved for issuance under the Plan and (A) in the number and option price of shares subject to outstanding Options granted under the Plan, to the end that after such event each Optionee’s proportionate interest shall be maintained (to the extent possible) as immediately before the occurrence of such event. The Administrator shall, to the extent feasible, make such other adjustments as may be required under the tax laws so that any Incentive Options previously granted shall not be deemed modified within the meaning of Section 424(h) of the Code. Appropriate adjustments shall also be made in the case of outstanding Restricted Stock granted under the Plan.
The adjustments described above will be made only to the extent consistent with continued qualification of the Option under Section 422 of the Code (in the case of an Incentive Option) and Section 409A of the Code.
| 9. | Purchase for Investment/Conditions. |
Unless the Options and shares covered by the Plan have been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the Company has determined that such registration is unnecessary, each person exercising or receiving Securities under the Plan may be required by the Company to give a representation in writing that he is acquiring the securities for his own account for investment and not with a view to, or for sale in connection with, the distribution of any part thereof. The Administrator may impose any additional or further restrictions on awards of Securities as shall be determined by the Administrator at the time of award.
| 10. | Taxes. |
(a) The Company may make such provisions as it may deem appropriate, consistent with applicable law, in connection with any Securities granted under the Plan with respect to the withholding of any taxes (including income or employment taxes) or any other tax matters.
(b) If any Grantee, in connection with the acquisition of Restricted Stock, makes the election permitted under Section 83(b) of the Code (that is, an election to include in gross income in the year of transfer the amounts specified in Section 83(b)), such Grantee shall notify the Company of the election with the Internal Revenue Service pursuant to regulations issued under the authority of Code Section 83(b).
(c) If any Grantee shall make any disposition of shares of Common Stock issued pursuant to the exercise of an Incentive Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Grantee shall notify the Company of such disposition within ten (10) days hereof.
| 11. | Effective Date of Plan. |
The Plan shall be effective on October 28, 2025 when the Plan was approved by majority vote of the Company’s stockholders on October 28, 2025.
| 12. | Amendment and Termination. |
The Board may amend, suspend, or terminate the Plan, except that no amendment shall be made that would impair the rights of any Participant under Securities theretofore granted without the Participant’s consent, and except that no amendment shall be made which, without the approval of the stockholders of the Company would:
(a) materially increase the number of shares that may be issued under the Plan, except as is provided in Section 8;
(b) materially increase the benefits accruing to the Participants under the Plan;
(c) materially modify the requirements as to eligibility for participation in the Plan;
(d) decrease the exercise price of an Incentive Option to less than 100% of the Fair Market Value per share of Common Stock on the date of grant thereof or the exercise price of a Nonqualified Option to less than 100% of the Fair Market Value per share of Common Stock on the date of grant thereof;
(e) extend the term of any Option beyond that provided for in Section 5(b);
(f) except as otherwise provided in Sections 5(d) and 8 hereof, reduce the exercise price of outstanding Options or effect repricing through cancellations and re-grants of new Options;
(g) increase the number of shares of Common Stock to be issued or issuable under the Plan to an amount that is equal to or in excess of 19.99% of the number of shares of Common Stock outstanding before the issuance of the stock or securities; or
(h) otherwise require stockholder approval pursuant to the rules and regulations of the NASDAQ Stock Market.
Subject to the forgoing, the Administrator may amend the terms of any Option theretofore granted, prospectively or retrospectively, but no such amendment shall impair the rights of any Optionee without the Optionee’s consent.
It is the intention of the Board that the Plan comply strictly with the provisions of Section 409A of the Code and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder (the “Section 409A Rules”) and the Administrator shall exercise its discretion in granting awards hereunder (and the terms of such awards), accordingly. The Plan and any grant of an award hereunder may be amended from time to time (without, in the case of an award, the consent of the Participant) as may be necessary or appropriate to comply with the Section 409A Rules.
| 13. | Government Regulations. |
The Plan, and the grant and exercise or conversion, as applicable, of Securities hereunder, and the obligation of the Company to issue and deliver shares under such Securities shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies, national securities exchanges and interdealer quotation systems as may be required.
| 14. | General Provisions. |
(a) Certificates. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Administrator may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, or other securities commission having jurisdiction, any applicable Federal or state securities law, any stock exchange or interdealer quotation system upon which the Common Stock is then listed or traded and the Administrator may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.
(b) Employment Matters. Neither the adoption of the Plan nor any grant or award under the Plan shall confer upon any Participant who is an employee of the Company or any Subsidiary any right to continued employment or, in the case of a Participant who is a director, continued service as a director, with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or any Subsidiary to terminate the employment of any of its employees, the service of any of its directors or the retention of any of its consultants or advisors at any time.
(c) Limitation of Liability. No member of the Administrator, or any officer or employee of the Company acting on behalf of the Administrator, shall be personally liable for any action, determination or interpretation taken or made in good faith with respect to the Plan, and all members of the Administrator and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.
(d) Registration of Stock. Notwithstanding any other provision in the Plan, no Option may be exercised unless and until the Common Stock to be issued upon the exercise thereof has been registered under the Securities Act and applicable state securities laws, or are, in the opinion of counsel to the Company, exempt from such registration in the United States. The Company shall not be under any obligation to register under applicable federal or state securities laws any Common Stock to be issued upon the exercise of an Option granted hereunder in order to permit the exercise of an Option and the issuance and sale of the Common Stock subject to such Option, although the Company may in its sole discretion register such Common Stock at such time as the Company shall determine. If the Company chooses to comply with such an exemption from registration, the Common Stock issued under the Plan may, at the direction of the Administrator, bear an appropriate restrictive legend restricting the transfer or pledge of the Common Stock represented thereby, and the Administrator may also give appropriate stop transfer instructions with respect to such Common Stock to the Company’s transfer agent.
| 15. | Non-Uniform Determinations. |
The Administrator’s determinations under the Plan, including, without limitation, (i) the determination of the Participants to receive awards, (ii) the form, amount and timing of such awards, (iii) the terms and provisions of such awards and (ii) the agreements evidencing the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, awards under the Plan, whether or not such Participants are similarly situated.
| 16. | Governing Law. |
The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the internal laws of the State of Nevada, without giving effect to principles of conflicts of laws, and applicable federal law.
Exhibit 21.1
SUBSIDIAIRES OF
CIMG INC.
| Subsidiaries | Place of Incorporation | |
| Wewin Technology LLC | State of Florida | |
| DZR Tech Limited | Hong Kong SAR | |
| CIMG Pte. Ltd. | Singapore | |
| Zhongyan Shangyue Technology Co., Ltd. | People’s Republic of China | |
| Henan Zhongyan Shangyue Technology Co. Ltd. | People’s Republic of China | |
| Xilin Online (Beijing) E-commerce Co., Ltd | People’s Republic of China | |
| Shanghai Huomao Cultural Development Co., Ltd. | People’s Republic of China | |
| Guizhou Zhutai Huomao Liquor Industry Co., Ltd. | People’s Republic of China | |
| Shenzhen Zhimeng Qiyang Technology Co., Ltd. | People’s Republic of China | |
| Beijing Zhongyan Shangyue Holdings Co., Ltd | People’s Republic of China | |
| Henan Nuanyou Agricultural Science and Technology Co., Ltd. | People’s Republic of China | |
| Beijing Xin Miao Shi Dai Technology Development Co., Ltd. | People’s Republic of China | |
| Braincon Limited | Hong Kong SAR |
Exhibit 23.1
 |
广东深谋律师事务所 Guangdong Shenmou Law Firm
Room 2201A, 22nd Floor, Modern International Building, No. 3038, Jintian Road, Futian District, Shenzhen City, Guangdong Province，China |
To:
CIMG Inc
Room R2, FTY D, 16/F,
Kin Ga Industrial Building,
9 San On Street, Tuen Mun,
Hong Kong
February 13, 2026
Dear Sir/Madam,
We, Guangdong Shenmou Law Firm, refer to the Annual Report for the fiscal year ended September 30, 2025 on Form 10-K as amended from time to time (the “Annual Report”) of CIMG Inc. (the “Company”), which will be filed with the Securities and Exchange Commission (the “SEC”).
We, being the PRC legal advisor to the Company in connection with the Annual Report, hereby give our consent, and confirm that we have not withdrawn our consent, to include our name, opinions, advice, confirmations and/or summaries of the same in the Annual Report, and the references to our name, opinions, advice and/or confirmations in the form and context in which they respectively appear in the Annual Report.
We also hereby consent to the filing of this consent letter in connection with the Annual Report with the SEC as exhibit to the Annual Report.
Yours faithfully,
| /s/ Guangdong Shenmou Law Firm | |
| Guangdong Shenmou Law Firm |
Exhibit 31.1
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Jianshuang Wang, certify that:
1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended September 30, 2025 of CIMG Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 13, 2026
| By: | /s/ Jianshuang Wang | |
| Name: | Jianshuang Wang | |
| Title: | Chief Executive Officer (Principal Executive Officer) and Chairperson of the Board |
Exhibit 31.2
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Feng Tian, certify that:
1. I have reviewed this Annual Report on Form 10-K for the fiscal year ended September 30, 2025 of CIMG Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 13, 2026
| By: | /s/ Feng Tian | |
| Name: | Feng Tian | |
| Title: | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
Exhibit 32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Jianshuang Wang, Chief Executive Officer and Chairperson of the Board of CIMG Inc. (the “Company”), hereby certify, that, to my knowledge:
1. The Annual Report on Form 10-K for the fiscal year ended September 30, 2025 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 13, 2026
| By: | /s/ Jianshuang Wang | |
| Name: | Jianshuang Wang | |
| Title: | Chief Executive Officer and Chairperson of the Board |
Exhibit 32.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Feng Tian, the Chief Financial Officer of CIMG Inc. (the “Company”), hereby certify, that, to my knowledge:
1. The Annual Report on Form 10-K for the fiscal year ended September 30, 2025 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 13, 2026
| By: | /s/ Feng Tian | |
| Name: | Feng Tian | |
| Title: | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |