UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number 001-39338

CIMG Inc.

(Exact name of registrant as specified in its charter)

Nevada

38-3849791

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Room R2, FTY D, 16/F, Kin Ga Industrial Building,

9 San On Street, Tuen Mun, Hong Kong00000.

(Address of principal executive offices)

+ 852 70106695

(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
Common Stock, $0.00001 par value		IMG		The NASDAQ Stock Market LLC

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. Yes ☐ No ☒

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). Yes ☐ No ☒

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 the 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	☐
Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 19, 2025, there were 36,397,418 shares of the registrant’s Common Stock outstanding.

CIMG INC.

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2024

PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements	4
	Consolidated Balance Sheets (unaudited)	4
	Consolidated Statements of Operations (unaudited)	5
	Consolidated Statements of Comprehensive Loss (unaudited)	6
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited)	7
	Consolidated Statements of Cash Flows (unaudited)	8
	Notes to Consolidated Financial Statements (unaudited)	9
PART II.	OTHER INFORMATION	23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
	SIGNATURES	25

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated by reference contain “forward-looking statements”, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources. These forward-looking statements include, without limitation, statements regarding: proposed new programs; expectations that regulatory developments or other matters will or will not have a material adverse effect on our consolidated financial position, results of operations or liquidity; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operating results and future economic performance; and statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

	●	our plans to obtain funding for our operations, including funding necessary to develop, manufacture and commercialize our products, provide our co-packing services, and to continue as a going concern;
	●	our expectation that our existing capital resources will be sufficient to fund our operations for at least the next three 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 evolving coffee preferences of coffee consumers in North America and East Asia;
	●	the size and growth of the markets for our products and co-packing services;
	●	our ability to compete with companies producing similar products or providing similar co-packing services;
	●	our ability to successfully achieve the anticipated results of strategic transactions;
	●	our expectation regarding our future co-packing revenues;
	●	our ability to develop or offer innovative new products and services, and expand our co-packing services to other products that are complementary to our current single serve coffee product offerings;
	●	our expectations regarding additional manufacturing, coffee roasting and co-packing capabilities to be provided through our manufacturing partners, as well as our manufacturing partners’ ability to successfully facilitate distribution efforts;
	●	our reliance on third-party roasters or manufacturing partners to roast coffee beans necessary to manufacture our products and to fulfill every aspect of our co-packing services;
	●	regulatory developments in the U.S. and in non-U.S. countries;
	●	our ability to retain key management, sales and marketing personnel;
	●	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.
	●	other factors discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as applicable.

Forward-looking statements speak only as of the date the statements are made. Except as required under the federal securities laws and rules and regulations of the United States Securities and Exchange Commission, we undertake no obligation to update or revise forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. We caution you not to unduly rely on the forward-looking statements when evaluating the information presented herein.

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CIMG Inc.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	December 31, 2024			September 30, 2024
ASSETS
Current assets:
Cash & cash equivalent	$	124,715		$	464,222
Inventories, net		4,608,307			4,548,035
Assets Held for Sale-Current		10,736			10,736
Prepaid expenses and other current assets		291,162			382,648
Total current assets		5,034,920			5,405,641

Non-current assets:
Property and equipment, net		1,997			2,268
Right-of-use asset - operating lease		58,397			99,746
Intangible assets, net		72,500			80,000
Total non current liabilities		132,894			182,014

Total assets	$	5,167,814		$	5,587,655

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	1,820,200		$	2,240,337
Short term loan		433,512			1,920,507
Current portion of lease liability - operating lease		58,303			100,962
Convertible Notes		678,308			1,063,624
Convertible Note-related party		-			319,220
Convertible Note		-			319,220
Other payables-related party		18,000			7,500
Other current liabilities		631,921			586,173
Total current liabilities		3,640,244			6,238,323

Total liabilities	$	3,640,244		$	6,238,323

Stockholders’ equity:
10,739,800 and 4,978,245 shares issued and outstanding as of December 31, 2024 and September 30 2024, respectively		107			50
Additional paid in capital		85,167,073			81,260,605
Accumulated deficit		(83,880,971	)		(82,344,722	)
Accumulated other comprehensive income		241,361			433,399
Total stockholders’ equity		1,527,570			(650,668	)

Total liabilities and stockholders’ equity	$	5,167,814		$	5,587,655

The accompanying notes are an integral part of these consolidated financial statements.

CIMG Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended			Three Months Ended
	December 31, 2024			December 31, 2023
Revenues, net	$	22,853		$	965,932
Cost of sales		(7,374	)		(841,398	)
Gross profit		15,479			124,534

Operating expenses		(1,517,758	)		(2,145,642	)
Loss from operations		(1,502,279	)		(2,021,108	)

Other income		9,047			46,832
Loss from equity method investment		-			(2,051	)
Other expense		(43,017	)		(49,195	)
Interest expense, net		-			(685	)
Net loss from continuing operations		(1,536,249	)		(2,026,207	)
Losses caused by the termination of business		-			(122,404	)
Net loss	$	(1,536,249	)		(2,148,611	)

Basic and diluted loss per common share		(0.17	)		(1.84	)

Basic and diluted weighted average number of common stock outstanding		8,982,676			1,168,221

The accompanying notes are an integral part of these consolidated financial statements.

*The discrepancy in financial data as of December 31, 2023 is due to the split of discontinued operations .(Refer to “Note 6. Discontinued operations”)

CIMG Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

	Three Months Ended			Three Months Ended
For the three months ended December 31	December 31, 2024			December 31, 2023
Net loss	$	(1,536,249	)	$	(2,148,611	)

Foreign currency translation		(192,038	)		42,408
Total other comprehensive income (loss), net of tax		(192,038	)		42,408
Comprehensive loss	$	(1,728,287	)	$	(2,106,203	)

The accompanying notes are an integral part of these consolidated financial statements.

CIMG Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

	Shares		Amount		capital		deficit			income			Total
	Common Stock				Additional paid-in		Accumulated			Accumulated Other Comprehensive
	Shares		Amount		capital		deficit			income			Total

Balance September 30, 2024		4,978,245	$	50	$	81,260,605	$	(82,344,722	)	$	433,399		$	(650,668	)
Common Stock issued for cash		1,396,813		13		1,382,831		-			-			1,382,844
Common stock compensation		800,000		8		523,672		-			-			523,680
Issued private placement		3,508,769		35		1,999,965		-			-			2,000,000
Issued warrants		55,973		1		-		-			-			1
Other comprehensive income		-		-		-		-			(192,038	)		(192,038	)
Net loss		-		-		-		(1,536,249	)		-			(1,536,249	)

Balance December 31, 2024		10,739,800	$	107	$	85,167,073	$	(83,880,971	)	$	241,361		$	1,527,570

	Common Stock				Additional paid-in		Accumulated			Accumulated Other Comprehensive
	Shares		Amount		capital		deficit			income		Total

Balance September 30, 2023		748,644	$	8	$	74,925,843	$	(73,371,987	)	$	120,493	$	1,674,357
Balance		748,644	$	8	$	74,925,843	$	(73,371,987	)	$	120,493	$	1,674,357
Common Stock issued for cash		488,750		5		1,277,113		-			-		1,277,118
Stock option expense		-		-		11,505		-			-		11,505
Issued private placement		46,800		-		129,662		-			-		129,662
Other comprehensive income		-		-		-		-			42,408		42,408
Net loss		-		-		-		(2,148,611	)		-		(2,148,611	)

Balance December 31, 2023		1,284,194	$	13	$	76,344,123	$	(75,520,598	)	$	162,901	$	986,439
Balance		1,284,194	$	13	$	76,344,123	$	(75,520,598	)	$	162,901	$	986,439

The accompanying notes are an integral part of these consolidated financial statements.

CIMG Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		Three Months Ended			Three Months Ended
		December 31, 2024			December 31, 2023
Operating activities:
Net loss from continuing operations	$	(1,536,249	)	$	(2,026,207	)
Losses caused by the termination of business		-			(122,404	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		7,771			35,195
Noncash lease expense		41,349			68,203
Common stock compensation		523,680			-
Stock option expense		-			11,505
Loss from equity method investment		-			2,051
Change in operating assets and liabilities:
Accounts receivable		-			(521,427	)
Inventories		(60,272	)		(250,388	)
Prepaid expenses and other current assets		91,487			(88,410	)
Other assets		-			2,353
Accounts payable		(420,136	)		707,618
Deferred income		-			(74,363	)
Lease liability - operating lease		(42,659	)		(104,378	)
Accrued Expenses & Other Current Liabilities		56,248			(71,810	)
Other current liabilities		-			116,619
Net cash used in operating activities		(1,338,781	)		(2,193,439	)

Discontinued Operations:
Adjustments to reconcile net income (loss) to net cash
Interest income(expense), net		-			169
Depreciation from discontinued operations		-			4,785
Changes in operating assets and liabilities		-			48,868
Net cash used in discontinued business operations		-			(68,582	)

Investing activities:
Purchase of property and equipment		-			(307,044	)
Net cash used in investing activities		-			(307,044	)

Financing activities:
Repayment from loans		(1,486,996	)		(2,021	)
Repayment of finance lease		-			(7,797	)
Proceeds from equipment finance		-			262,893
Proceeds from issuance of convertible notes		678,308			-
Proceeds from exercise of options		-			177,864
Proceeds from issuance of common stock, exercise of stock options		2,000,000			1,099,254
Proceeds from private placement		-			129,662
Net cash provided by financing activities		1,191,312			1,659,855

Effect of foreign exchange on cash		(192,038	)		42,408

Net change in cash		(339,507	)		(866,802	)

Cash, beginning of period		464,222			982,869
Cash, end of period	$	124,715			116,067

Supplemental disclosure of cash flow information:
Cash paid for interest		-		$	782
Cash paid for taxes		-		$	1,288

Noncash investing and financing activities:
Deferred Stock Offering cost accrued ROU assets and liabilities added during the period	$	32,092			105,825

The accompanying notes are an integral part of these consolidated financial statements.

CIMG Inc.

Notes to Consolidated Financial Statements (unaudited)

December 31, 2024

1. ORGANIZATION

CIMG Inc. is a company incorporated in Nevada and 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 are now expanding our sales and distribution channels in Asia to encompass a broader range of consumer food and beverage products. This expansion is fueled by our online sales platform, which leverages a natural language search function.

CIMG, our holding company, or DZR Tech, its subsidiary incorporated in Hong Kong, or Weiwin, our subsidiary incorporated in Florida, may transfer cash to our PRC subsidiaries, Beijing Zhongyan, through capital injections and intra-group loans.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The accompanying unaudited consolidated financial statements of CIMG, Inc. and subsidiaries (“the Company”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial reporting and should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024. Certain information or footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of the Company’s management, these financial statements include all normal and recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods presented. However, the results of operations included in such financial statements may not necessarily be indicative of future or annual results.

Principles of Consolidation

The Company prepares its financial statements on the basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts, balances and transactions have been eliminated upon consolidation.

The Company consolidates DZR Tech, Wewin and Beijing Zhongyan in accordance with ASC 810, and specifically ASC 810-10-15-8 which states, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of over 50% of the outstanding voting shares of another entity is a condition pointing toward consolidation.

Earnings per Share

Basic earnings per common share are equal to net earnings or loss divided by the weighted average of shares outstanding during the reporting period. Diluted earnings per share reflect the potential dilution that could occur if stock options, warrants and other commitments to issue Common Stock were exercised or equity awards vest resulting in the issuance of Common Stock that could share in the earnings of the Company. As of December 31, 2024 and December 31, 2023, the total number of Common Stock equivalents was 158,877 and 240,863, respectively, and composed of stock options and warrants. The Company incurred a net loss for the three months ended December 31, 2024 and 2023, respectively and therefore, basic and diluted earnings per share for those periods are the same because all potential common equivalent shares would be antidilutive.

Going Concern and Capital Resources

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets, raising capital and the commercialization and manufacture of its single serve coffee products. As of December 31, 2024, the Company had cash of $124,715 and working capital of $1,394,676.

Management has evaluated the Company’s ability to continue as a going concern under ASC 205-40, Presentation of Financial Statements - Going Concern, and considered its financial condition, projected cash flows, obligations due within 12 months, and sources of liquidity. Based on this assessment, management has concluded that no substantial doubt exists regarding the Company’s ability to continue as a going concern for at least one year from the date of issuance of these consolidated financial statements. Accordingly, the financial statements have been prepared on a going concern basis.

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. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair value is an estimate of the exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement date).

On August 20, 2024, the Company entered into a convertible note purchase agreement with certain investors (the “August Notes Investors”) to issue and sell convertible notes in the aggregate principal amount of $1,300,000 (the “August Notes”). The Notes bear interest at an annual rate of 7% and have a maturity date of one year from the issuance date. The Notes shall not be converted until the Company obtains shareholder approval for the issuance of shares underlying the Notes. Upon obtaining such approval, the holder may convert the Notes into a number of shares of Common Stock equal to (i) the outstanding principal amount of the Notes, plus any accrued but unpaid interest, divided by (ii) $0.94, the conversion price. Any conversion of the Notes resulting in a fractional share shall be rounded down to the nearest whole share. On October 31, 2024, the conversion of this convertible note into stocks has been completed.

Per ASC 470-20-25-5, An embedded beneficial conversion feature (“BCF”) present in a convertible instrument shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital.

The company evaluated that the fair value of the instrument is slightly higher than the proceeds from the instrument issuance. The BCF is embedded in the convertible note.

Still, since the converting period is short (only 50 days) and the fair value of the embedded BCF is relatively small, we decided not to separate the feature until the proceeds to paid-in-capital. Since we do not directly pay the interest expenses, but to put them in the total repayable amount and convert to shares, we do not amortize the interest expense.

For the three months ended December 31, the fair value on convertible notes has not changed.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. The Company had no cash equivalents as of December 31, 2024 and September 30, 2024.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company places its cash with high quality banking institutions. From time to time, the Company may or may not maintain cash balances at certain institutions in excess of the Federal Deposit Insurance Corporation limit.

Accounts Receivable,net

Trade accounts receivable is periodically evaluated for collectability based on past credit history with customers and their current financial condition. Bad debts expense or write offs of receivables are determined on the basis of loss experience, known and inherent risks in the receivable portfolio and current economic conditions. The Company recorded an allowance for credit loss of $Nil and $3,450,141 as of both December 31, 2024, and September 30, 2024.

SCHEDULE OF ACCOUNTS RECEIVABLES

	December 31, 2024		September 30, 2024
Accounts receivable	$	-	$	3,450,141
Less: allowance for credit loss		-		(3,450,141	)
Total accounts receivable	$	-	$	-

Assets Held for Sale-Current

As of December 31, 2024 and September 30, 2024, assets held for Sale-Current were $10,736 and $10,736. This is mainly the equipment planned for sale.

SCHEDULE OF ASSETS HELD FOR SALE

	December 31, 2024			September 30, 2024
Assets Held for Sale	$	214,709		$	214,709
Current Assets Held for Sale		214,709			214,709
Property and equipment asset impairment		(203,973	)		(203,973	)
Total	$	10,736		$	10,736

Major Customers

For the three months ended December 31, 2024 and 2023, revenue was primarily derived from major customers disclosed below.

Three months ended December 31, 2024:

SCHEDULE OF REVENUE BY MAJOR CUSTOMERS

Customer Name		Sales Amount				% of Total Revenue				Accounts Receivable Amount				% of Total Accounts Receivable
Customer LXM		$	13,524				59	%		$	-				-

Three months ended December 31, 2023:

Customer Name		Sales Amount				% of Total Revenue				Accounts Receivable Amount				% of Total Accounts Receivable
Customer CL		$	577,420				43	%		$	552,587				49	%

Leases

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities on the consolidated balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different types of leases. The Company implemented ASU No. 2016-02 on October 1, 2019.

The Company conducts a quarterly analysis of leases to determine if there are any operating leases that require recognition under ASC 842. The Company has a long-term operating lease for office and manufacturing space in Plano, Texas. The leased property in Plano, Texas, has a remaining lease term through June 2024 and Tenancy terminated. The Company did not apply the recognition requirements of ASC 842 to operating leases with a remaining lease term of 12 months or less.

In May 2022, the Company renewed the office and manufacturing space in Vista, California through March 31, 2025, which was scheduled to expire on January 31, 2023. The lease has a monthly base rent of $8,451, plus common area expenses. Along with the extension, we leased an additional 1,796 square feet that has a monthly base rent of $2,514 through March 31, 2025.

The Company leased a new larger office and manufacturing space in Seoul, Korea beginning November 15, 2021, through November 15, 2023. The lease has a monthly expense of $7,040. Accordingly, we have added ROU Assets and Lease Liabilities related to those leases as of September 30, 2023.

Effective September 1, 2024, we have leased a principal office space located at 16097 Poppyseed Cir, Unit 1904, Delray Beach, Florida, 33484, which we lease for $3,500 per month until August 31, 2025.

The lease in San On Street, Tuen Mun, Hong Kong has a term of 12 months from December 18, 2024 to December 17, 2025 at a rate of RMB 4,167 ($594) per month. The lease is a short-term lease which has a lease term of 12 months and does not include an option to purchase the underlying asset. The Company did not recognize ROU assets or lease liabilities for short term leases.

As of December 31, 2024, the Company’s operating leases had a weighted average remaining lease term of 1 years and a weighted-average discount rate of 5%. Other information related to our operating leases is as follows:

ROU Asset – October 1, 2024	$	99,746
Disposal of ROU		-
ROU Asset added during the period		(41,349	)
Amortization during the period		-
ROU Asset – December 31, 2024	$	58,397

Lease Liability – October 1, 2024	$	100,962
Lease Liability added during the period		-
Amortization during the period		-
disposal of lease liability		(42,659	)
Lease Liability – December 31, 2024	$	58,303

Lease Liability – Short-Term	$	58,303
Lease Liability – Long-Term		-
Lease Liability – Total	$	58,303

The table below reconciles the fixed component of the undiscounted cash flows for each of the first five years and the total remaining years to the lease liabilities recorded on the Consolidated Balance Sheet as of December 31, 2024.

Amounts due within 12 months of December 31, 2024


2025		59,231
2026		-
Total Minimum Lease Payments		59,231
Less Effect of Discounting		928
Present Value of Future Minimum Lease Payments		58,303
Less Current Portion of Operating Lease Obligations		58,303
Long-Term Operating Lease Obligations	$	-

During the year ended December 31, 2024, we had the following cash and non-cash activities associated with our leases:

Operating cash outflows from operating leases:	$	40,256
Operating cash outflows from finance leases:	$	-
Financing cash outflows from finance lease:	$	-

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. For the three months ended December 31, 2024 and 2023, the foreign currency translation adjustment attributable to CIMG Inc., recorded in other comprehensive income (loss), was $(192,038) and $42,408, respectively.

Transaction gains and losses arise from exchange rate fluctuations on transactions denominated in a currency.

Revenue Recognition

In FY 2024, We have reduced our single-serving pour-over coffee packaging business, and in the portion of bagged coffee sales, we have added other brands, such as “Maca Coffee” and other finished products with maca as the main raw material, such as “Maca Noni”. In 2024, we sell maca peptide coffee and other new products on a distribution model. We usually sign distribution contracts with distributors on a batch basis. Based on the contract, we deliver the goods after full payment to our bank account. We courier the goods to the customer. The customer will sign a receipt after receiving the goods. The customers can also choose to pick up their goods from our warehouse on their own. Also, the customer will sign a receipt.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605). The new standard’s core principle is that an entity will recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in the standard are applied in five steps: 1) Identify the contract(s) with a customer; 2) Identify the performance obligations in the contract; 3) Determine the transaction price; 4) Allocate the transaction price to the performance obligations in the contract; and 5) Recognize revenue when (or as) the entity satisfies a performance obligation. We adopted Topic 606 as of October 1, 2018 on a modified retrospective basis. The adoption of Topic 606 did not have a material impact on our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations.

Per ASC 606-10-32-2, an entity shall consider the terms of the contract and its customary business practices to determine the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both.

Per ASC 606-10-25-23 An entity shall recognize revenue when (or as) the entity satisfies a performance obligation by transferring a promised good or service (that is, an asset) to a customer.

Per ASC 606-10-55-37 An entity is a principal if it controls the specified good or service before that good or service is transferred to a customer. However, an entity does not necessarily control a specified good if the entity obtains legal title to that good only momentarily before legal title is transferred to a customer. An entity that is a principal may satisfy its performance obligation to provide the specified good or service itself or it may engage another party (for example, a subcontractor) to satisfy some or all of the performance obligation on its behalf.

ASC 606-10-55-38 An entity is an agent if the entity’s performance obligation is to arrange for the provision of the specified good or service by another party. An entity that is an agent does not control the specified good or service provided by another party before that good or service is transferred to the customer. When (or as) an entity that is an agent satisfies a performance obligation, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified goods or services to be provided by the other party. An entity’s fee or commission might be the net amount of consideration that the entity retains after paying the other party the consideration received in exchange for the goods or services to be provided by that party.

Return and Exchange Policy

All products are thoroughly inspected and securely packaged before they are shipped to ensure buyers receive the best possible product. If for any reason buyers are unsatisfied with the products, they can return them, and the Company will exchange or refund the purchase minus any shipping charges. For wholesale customers, return policies vary based on their specific agreements with customers. Under chargebacks agreements with the customers, the Company agrees to reimburse the seller for a portion of the costs incurred by the seller to advertise and promote certain of the Company’s products. The Company estimates, accrues and recognizes such chargebacks. These amounts are included in the determination of net sales. For three months ended December 31, 2024 and 2023, the Company has no sales allowances for estimated chargebacks and returns, respectively.

Accounts payable and accrued expenses

As of December 31, 2024 and September 30, 2024, the accounts payable are $1,109,759 and $1,098,582 respectively.

As of December 31, 2024 and September 30, 2024, the accrued expenses are $710,441 and $1,141,755 respectively, it mainly includes the accounts payable settlement costs of Nuzee single-serving coffee and DRIPKIT products.

Accounts payable and accrued expenses as of December 31, 2024 and September 30, 2024 are as follows:

	December 31, 2024		September 30, 2024
Accounts payable	$	1,109,759	$	1,098,582
Accrued expenses		710,441		1,141,755
Total	$	1,820,200	$	2,240,337

Other current liabilities

As of December 31, 2024 and September 30, 2024, the other current liabilities are $631,921 and $586,173 respectively. The mainly achieved through financing to purchase equipment and pay for the goods.

Cost Recognition

The Maca Series products are pure plant products that we purchase maca raw materials and entrust to process. Therefore, the raw materials - the procurement cost of maca, the packaging cost of goods, the freight cost of goods and so on.

Operating expenses

For the three months ended December 31, 2024, the operating expenses were $1,517,758. This mainly includes personnel costs of $617,824, sales and marketing expenses of $104,403, depreciation and amortization of $7,771, professional services such as lawyers, auditors and consultants of $642,125, travel expenses of $35,084, office expenses of $73,585 and other expenses of $36,966.

For the three months ended December 31, 2023, the operating expenses were $2,145,642 .It primarily comprised of personnel costs, selling and marketing expenses, depreciation and amortization, insurance expenses, professional services, travel and office expenses, etc. In some cases, the company bears shipping costs for shipping customer orders, and shipping and handling costs are recorded under operating expenses in the consolidated statement of operations.

Other income

For the three months ended December 31, 2024, the other income was $9,047. It is mainly because of the write-off other payables.

For the three months ended December 31, 2023, the other income was $46,832. It is mainly because of the rental income.

Other Expense

Other expense of $43,017 and $49,195 for the three months ended December 31, 2024 and 2023, respectively, primarily includes write off of deferred financing costs and sublease expense.

Prepaid expenses and other current assets

Prepaid expenses and other current assets as of December 31, 2024 and September 30, 2024 are as follows:

	December 31, 2024		September 30, 2024
Prepaid expenses	$	150,702	$	197,217
Other current assets		140,460		185,431
Total	$	291,162	$	382,648

The Prepaid expenses and other current assets balance of $291,162 as of December 31, 2024 primarily consists of prepaid rent, a retainer for professional services.

Inventories, net

Inventories, net, consisting principally of raw materials, work in process and finished goods held for production and sale, is stated at the lower cost or net realizable value, cost being determined using the weighted average cost method. The Company reviews inventory levels at least quarterly and records a valuation allowance when appropriate. On December 31, 2024, the carrying value of inventory of $4,608,307.

SCHEDULE OF INVENTORY

	December 31, 2024		September 30, 2024
Raw materials	$	4,540,113	$	4,490,728
Finished goods	$	68,194	$	57,307
Total	$	4,608,307	$	4,548,035

Property and Equipment, net

Property and equipment are stated at cost, net of accumulated depreciation. Office equipment is depreciated over a 3-year life, furniture over a 7-year life, and other equipment over a 5-year life. Depreciation expense for three months ended December 31, 2024 and 2023 was $271 and $32,480, respectively. Property and equipment as of December 31,2024 and September 30, 2024 consist of:

SCHEDULE OF PROPERTY AND EQUIPMENT

	December 31, 2024			September 30, 2024
Machinery & Equipment	$	2,268		$	1,465,566
Vehicles		-			57,431
Less - Accumulated Depreciation		(271	)		(1,127,820	)
Less-Impairment on Property and Equipment		-			(214,709	)
Disposal of property and equipment

SEC Form 10-Q filed by CIMG Inc.