CIMG lnc(IMG) - 2024 Q4 - Annual Report

Preliminary Information & China-Related Context Cover Page & Filing Details CIMG Inc. files its annual report as a non-accelerated, smaller reporting company for FY2024, with common stock listed on Nasdaq - CIMG Inc. is filing its annual report on Form 10-K for the fiscal year ended September 30, 2024[2] - The company's common stock (IMG) is registered on The Nasdaq Stock Market LLC[4] Registrant Status | Status | Indicator | | :-------------------- | :-------- | | Well-known seasoned issuer | No | | Not required to file reports | No | | Filed all required reports | No | | Submitted Interactive Data File | No | | Large accelerated filer | No | | Accelerated filer | No | | Non-accelerated filer | Yes | | Smaller reporting company | Yes | | Emerging growth company | No | - As of March 31, 2024, the aggregate market value of common stock held by non-affiliates was approximately $5.81 million[8] - As of July 2, 2025, there were 36,397,418 shares of common stock outstanding[9] China-Related Operational & Regulatory Risks CIMG Inc. faces significant operational and regulatory risks in China, including cybersecurity, overseas listing, and cash transfer restrictions - The company's PRC Subsidiaries are subject to legal and operational risks due to being based in China, including potential cybersecurity reviews and anti-monopoly supervision[12][14][15] - The company's PRC counsel advises that it is not currently subject to CAC cybersecurity review as it does not possess personal information of over one million users nor does its business affect national security[12][16] - Uncertainties in the interpretation of PRC laws, particularly the CSRC's Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, could require future filings and materially impact the company's ability to offer securities[13][16] - Cash transfers from PRC subsidiaries to the holding company are subject to PRC regulations, including dividend restrictions (e.g., funding statutory reserves) and foreign exchange controls, limiting the ability to distribute earnings[17][19] - The company's auditor, Assentsure PAC, is headquartered in Singapore and is subject to PCAOB inspections, mitigating immediate delisting risks under the HFCA Act, but future obstructions to PCAOB access could still lead to delisting[29][30] Cash Transfers Between Company and Subsidiaries | Fiscal Year Ended September 30 | Amount (USD) | | :----------------------------- | :------------- | | 2024 | $220,000 | | 2023 | $0 | Cautionary Note Regarding Forward-Looking Statements This section disclaims forward-looking statements in the report, noting they are subject to risks and uncertainties, with no obligation to update - The report contains forward-looking statements, which are not guarantees of future results and are subject to risks and uncertainties[32][33][36] - Key areas of forward-looking statements include funding plans, capital sufficiency, expense estimates, Nasdaq listing compliance, economic impact, market size, competition, product innovation, reliance on third parties, regulatory developments, personnel retention, intellectual property, internal controls, litigation, and financial performance[34] - Readers are cautioned not to place undue reliance on forward-looking statements, and the company disclaims any obligation to update them except as required by law[36] References This section defines key terms and abbreviations used throughout the report, including company entities, currencies, and regulatory bodies - The section provides definitions for key terms such as 'non-PRC Subsidiaries' (Wewin, DZR Tech, Singapore CIMG), 'PRC Subsidiaries' (Beijing Zhongyan, Henan Zhongyan, Beijing Xilin, Shanghai Huomao), and currency symbols[38] - It clarifies that 'we', 'us', 'our', 'CIMG', and 'the Company' refer to CIMG Inc. and its subsidiaries collectively[38] PART I ITEM 1. BUSINESS. CIMG Inc. transformed its business from specialty coffee to distributing maca-enhanced food and beverages in Asia, securing exclusive rights and leveraging digital marketing - CIMG Inc. changed its name from 'Nuzee, Inc.' and ticker symbol from 'NUZE' to 'IMG' in October 2024, shifting its focus from specialty coffee to a broader range of consumer food and beverage products in Asia, particularly maca-enhanced items[39][41] - The company sold its wholly-owned subsidiaries, NuZee KOREA Ltd. and NuZee Investment Co., Ltd., in June 2024[40] - CIMG secured exclusive distribution and sales rights for all maca products from Jiangsu Kangduoyuan Beverage Co., Ltd., including Maca Peptide Coffee, Maca-Noni, Maca Wine, and Maca Purified Powder[43][50] - The company's strategy involves leveraging local relationships for long-term partnerships across Hong Kong, PRC, and other Asian markets, aiming to become a leading distributor of premium maca products[44][55] - CIMG plans to expand its distribution network to include both online platforms (TikTok, Alibaba.com, Tencent, JD.com +AI) and offline channels (grocery stores, convenience stores, gas stations, vending machines)[52][69] - The global maca market is projected to exceed $106 million by 2037, with a compound annual growth rate (CAGR) exceeding 4.2% from 2025 to 2037[66] - CIMG's PRC subsidiary, Beijing Zhongyan, signed contracts with multiple PRC-based distribution companies to place Maca-Noni drinks in 25,000 uSmile PetroChina convenience stores, 400 Guangdong Petroleum Co., Ltd stores, 129 Chengdu Energy Gas Stations, and over 300 self-service vending machines within the next three years[76] - The company reported net losses of $8.56 million and $8.75 million for the years ended September 30, 2024 and 2023, respectively, with an accumulated deficit of approximately $81.93 million as of September 30, 2024[73] - CIMG holds 6 registered trademarks and 4 registered domain names, primarily in China, including '中烟商悦' and 'cocomango.cc'[78][79][80] - As of September 30, 2024, the company had 17 full-time employees: 1 in the United States, 4 in Hong Kong, and 12 in mainland China[81] - The company obtained a Food Business License from the Chaoyang District Market Supervision Administration of Beijing on August 23, 2024, allowing it to operate all Maca series products in China[85] - CIMG Inc. was incorporated in 2011 in Nevada, formerly known as NuZee, Inc., and changed its name and ticker symbol to 'CIMG Inc.' and 'IMG' effective October 31, 2024[86] - The company received multiple Nasdaq non-compliance notices in early 2025 for minimum bid price and untimely filing of 10-K and 10-Q reports, leading to a delist determination letter on June 27, 2025. CIMG intends to appeal and file its 10-K before July 7, 2025[89][90][91][95][96] - CIMG has 7 subsidiaries, including wholly-owned entities in Florida, Hong Kong, and Singapore, and PRC subsidiaries (Beijing Zhongyan, Henan Zhongyan, Beijing Xilin, Shanghai Huomao) with varying ownership structures[97][98] ITEM 1A. RISK FACTORS This section details a comprehensive range of risks that could materially harm CIMG Inc.'s business, financial condition, and stock price - The company has a history of net losses and expects to continue incurring them, with an accumulated deficit of approximately $81.93 million as of September 30, 2024, raising substantial doubt about its ability to continue as a going concern without additional financing[101][109][112][113] - Future success depends on continued innovation and timely launch of new maca-based products, with failure to do so potentially harming sales and profitability[102][124] - The maca products industry is intensely competitive, with both international and local brands, and changes in consumer preferences and retail landscape could negatively impact financial results[102][