Company: IMG
Filing Date: 2025-07-21
Form Type: 10-K
Source: 0001641172-25-020300
Chunk: 175

Company: CIMG Inc.
Filing Date: 2025-07-21
Form: 10-K
Item: Item 1
Chunk 175
---
 restrictions on making dividends and other payments to us.

CIMG
is a holding company and relies partially on dividends paid by its subsidiaries in China for our cash needs, including paying dividends
and other cash distributions to our shareholders to the extent we choose to do so, servicing any debt we may incur and paying our operating
expenses. Current PRC regulations permit the subsidiary in China to pay dividends to us only out of its accumulated profits, if any,
determined in accordance with Chinese accounting standards and regulations. Under the applicable requirements of PRC law, Beijing Zhongyan
may only distribute dividends after it has made allowances to fund certain statutory reserves. These reserves are not distributable as
cash dividends. In addition, if the subsidiaries or affiliated entities in China incur debt on their own behalf in the future, the instruments
governing the debt may restrict their ability to pay dividends or make other payments to us. Any such restrictions may materially affect
such entities’ ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely
affect our business, financial condition and results of operations.

32

Uncertainties
with respect to the PRC legal system could have a material adverse effect on us.

The
PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions in a civil law
system may be cited as reference but have limited precedential value. Since 1979, newly introduced PRC laws and regulations have significantly
enhanced the protections of interest relating to foreign investments in China. However, since these laws and regulations are relatively
new and the PRC legal system continues to evolve rapidly, the interpretations of such laws and regulations may not always be consistent,
and enforcement of these laws. In different administrative areas and regulations involves significant uncertainties, any of which could
limit the available legal protections. In addition, the PRC administrative and judicial authorities have significant discretion in interpreting,
implementing or enforcing statutory rules and contractual terms, and it may be more difficult to predict the outcome of administrative
and judicial proceedings and the level of legal protection we may enjoy in the PRC than under some more developed legal systems. These
uncertainties may affect our decisions on the policies and actions to be taken to comply with PRC laws and regulations, and may affect
our ability to enforce our contractual or tort rights. In addition, the regulatory uncertainties may be exploited through unmerited legal
actions or threats in an attempt to extract payments