CIMG Inc. Annual Report - A Closer Look for Investors

This summary offers a concise review of CIMG Inc.'s performance and strategic direction, based on its latest annual report for the fiscal year ended September 30, 2025. We aim to provide a clear and comprehensive overview for retail investors.

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1. Business Overview

CIMG Inc., incorporated in Nevada with primary operations in Hong Kong, trades on Nasdaq under the symbol IMG. The company operates three distinct business segments, strategically positioned to capitalize on market opportunities in health, technology, and specialized products:

• Health and Nutrition Products: This segment focuses on researching, developing, and distributing health-related products that combine traditional medicine and nutritional supplements, often derived from natural sources. This area benefits from the global rise in health consciousness and demand for natural, functional foods and supplements.
• Computing Power Products: This segment provides specialized computing hardware, software solutions, and related services. It addresses growing demands in areas like artificial intelligence, data processing, and cloud infrastructure, positioning the company to leverage the exponential growth in these fields.
• Maca Products: Dedicated to cultivating, processing, and selling Maca-based health and wellness products, this segment capitalizes on increasing consumer interest in natural dietary supplements.

CIMG Inc. operates in North America and, significantly, mainland China. In fiscal year 2025, the company pursued an aggressive expansion strategy, primarily through strategic acquisitions designed to broaden its market reach, diversify product offerings, and integrate new technologies.

2. Financial Performance

For the fiscal year ended September 30, 2025, CIMG Inc. reported total revenues of $125.8 million, a 32% increase from $95.3 million in fiscal year 2024. Recent acquisitions and increased demand in the Computing Power Products segment primarily drove this growth.

Despite robust revenue growth, the company reported a net loss of $8.5 million for FY2025, compared to a net loss of $3.2 million in FY2024. The gross profit margin remained relatively stable at 28%.

As of March 31, 2025, the market value of common stock held by non-affiliates was approximately $16.2 million. The company had approximately 15.5 million shares of common stock outstanding as of early February 2026.

3. Management's Discussion and Analysis (MD&A) Highlights

Management's strategic direction for FY2025 focused on aggressive growth through acquisitions and market diversification. The 32% revenue growth stemmed mainly from recent acquisitions and increased demand in the Computing Power Products segment. However, the expanded net loss of $8.5 million resulted largely from significant acquisition-related expenses, higher operating costs associated with integrating new businesses, and increased legal expenditures.

Key Strategic Initiatives and Achievements: CIMG Inc. executed a significant acquisition spree in FY2025, strategically expanding its footprint and capabilities. Key acquisitions included:

• XilinOnline Beijing Ecommerce Co. Ltd. (March 2025): Significantly bolstered the company's e-commerce capabilities and market penetration in China.
• Shanghai Huomao Cultural Development Co. Ltd. (April 2025): Expanded into content creation and digital media, enhancing brand engagement.
• Shenzhen Zhimeng Qiyang Technology Co. Ltd. (August 2025): Strengthened the Computing Power Products segment with advanced technology and market access.
• Braincon Limited and its subsidiaries (September 2025): Further diversified the Health and Nutrition Products segment with new product lines and research capabilities. These acquisitions underscore management's commitment to expanding product lines, geographic reach, and technological capabilities, and are expected to drive future revenue growth and market share. Additionally, a business cooperation agreement with Zhongyan Shangyue Technology Co. Ltd. in August 2025 is anticipated to open new distribution channels and collaborative product development opportunities.

Liquidity and Capital Resources Management: To fund its aggressive growth strategy and working capital needs, the company actively raised capital in 2025 through private placements of common stock and a convertible bond purchase agreement. While these financing activities provided essential capital, they also increased the company's debt obligations and diluted existing shareholder ownership. Post-fiscal year end, in October and December 2025, CIMG Inc. entered into a Bitcoin Purchase Agreement, acquiring approximately $5 million worth of Bitcoin to diversify its treasury assets.

Talent and Governance: To align employee interests with corporate success and attract/retain talent, the company adopted a 2024 Equity Incentive Plan for its common stock, offering stock options and other equity awards to key personnel. No significant changes in executive leadership were reported during the fiscal year.

Management acknowledges that navigating China's complex and often ambiguous regulatory environment will be crucial for sustained success and access to the Chinese market. The overall strategy centers on building a diversified portfolio of businesses that can capitalize on emerging trends in health, wellness, and technology.

4. Financial Health

As of September 30, 2025, CIMG Inc. reported cash and cash equivalents of $15.1 million, down from $22.5 million in FY2024. This decrease reflects significant cash outflows for acquisitions and operational expenses. Total debt stood at $38.7 million, primarily from convertible bonds issued during the year.

To support its aggressive growth strategy and working capital needs, the company raised capital in 2025 through private placements of common stock and a convertible bond purchase agreement. These financing activities provided crucial capital but also increased the company's debt and diluted existing shareholder ownership.

Notably, after the fiscal year ended, in October and December 2025, CIMG Inc. acquired approximately $5 million worth of Bitcoin through a Bitcoin Purchase Agreement. This move diversifies the company's treasury assets but also introduces exposure to the inherent volatility and regulatory uncertainties of cryptocurrency markets.

5. Risk Factors

Investing in CIMG Inc. carries several specific risks, particularly due to its significant operational presence in China:

• China Regulatory Risks: A substantial portion of CIMG Inc.'s business is subject to China's evolving regulatory landscape.
  • Cybersecurity Review: While CIMG Inc. believes it is not currently subject to China's strict cybersecurity review for data-intensive companies, the rules are complex and can change. Any future reclassification or stricter enforcement could lead to increased compliance costs, operational disruptions, or penalties.
  • Overseas Listing Rules: New regulations from the China Securities Regulatory Commission (CSRC) for Chinese companies listing overseas could impact CIMG Inc.'s ability to raise capital or operate. Although the company believes current interpretations do not directly affect it, future changes or stricter enforcement could create significant hurdles.
• Customer Concentration: CIMG Inc. relies heavily on a limited number of key customers. In FY2025, the top three customers (Customer A, B, and C) collectively accounted for approximately 45% of total revenues. Losing significant business from any of these major customers could materially and adversely affect the company's financial performance.
• Supplier Concentration: Similarly, the company depends on a few key suppliers (YKYM, B, C) for critical components and services. Issues with these suppliers, such as supply chain disruptions, quality problems, or pricing disputes, could negatively impact CIMG Inc.'s production and profitability.
• Ongoing Litigation: Ongoing litigation, including the "Kim Litigation" (starting October 2024, alleging breach of contract) and an "Ex-Directors Lawsuit" (beginning August 2025, concerning executive compensation and corporate governance disputes), poses financial and reputational risks. Adverse outcomes could result in significant monetary damages, legal fees, and diversion of management attention, potentially impacting investor confidence and stock valuation.
• Integration Risks: The rapid pace of acquisitions introduces integration challenges. Combining diverse corporate cultures, operational systems, and financial reporting can temporarily strain resources and impact efficiency, potentially hindering the realization of anticipated synergies.
• Cryptocurrency Volatility: The recent investment in Bitcoin exposes the company to significant price fluctuations in the cryptocurrency market. This could lead to impairment charges or gains, adding volatility to its financial results.
• Global Supply Chain Disruptions and Geopolitical Tensions: These external factors could impact the company's international operations, sourcing of materials, and distribution channels, potentially affecting profitability and operational stability.

6. Competitive Position

CIMG Inc. operates in dynamic and competitive markets across its three segments. In the Health and Nutrition Products and Maca Products segments, it competes with established health and wellness brands, as well as numerous smaller, niche players. The company differentiates itself through product innovation, quality control, and strategic partnerships within a market driven by increasing consumer interest in natural dietary supplements and functional foods. The Computing Power Products segment faces intense competition from global technology giants and specialized hardware providers. Here, CIMG Inc. aims to gain market share with specialized solutions and cost efficiencies, leveraging the exponential growth in artificial intelligence, big data analytics, and cloud computing. The company's strategy involves utilizing its dual operational base in North America and China to access diverse markets and talent pools.

7. Future Outlook

Beyond fiscal year 2025, CIMG Inc. plans to continue integrating recent acquisitions to achieve synergies and optimize operations. The company aims to expand its market share in key segments, particularly in the rapidly growing computing power sector and the health and wellness market in Asia. The Bitcoin Purchase Agreement suggests a potential shift towards a more diverse treasury management strategy, though its long-term impact on financial stability remains to be seen. Further fundraising activities, including additional common stock issuance in October and December 2025, indicate ongoing capital requirements to support future growth initiatives and potential investments, such as subsequent events related to Daren Beijing Biomedical Technology Co. Ltd. in November 2025. Management's forward-looking statements emphasize navigating China's complex regulatory environment while pursuing opportunities for organic growth and strategic partnerships. The overall strategy continues to center on building a diversified portfolio of businesses that can capitalize on emerging trends in health, wellness, and technology.