Company: IMG
Filing Date: 2025-08-26
Form Type: 10-Q
Source: 0001641172-25-025514
Chunk: 8

Company: CIMG Inc.
Filing Date: 2025-08-26
Form: 10-Q
Item: Item 1
Chunk 8
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 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
Re