Annual Report for Fiscal Year Ending September 30, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto included elsewhere in this Report. Except for historical information contained herein, the following discussion contains forward-looking statements which are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We discuss such risks, uncertainties and other factors throughout this Report and specifically under Item 1A of Part I of this Report, Risk Factors. For additional discussion, see "CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS" above.

Corporate Overview

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.

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.

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.

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.

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 costof 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 costof 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 costof 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 costof 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.

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.

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.