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

Company: CIMG Inc.
Filing Date: 2025-07-21
Form: 10-K
Item: Item 1A
Chunk 21
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.S. dollars. Under current PRC laws and regulations, Renminbi is freely convertible for current account items, such as trade and
service-related foreign exchange transactions and dividend distributions. However, Renminbi is not freely convertible for direct investment
or loans or investments in securities outside China, unless such use is approved by SAFE. For example, foreign exchange transactions
under the subsidiary’s capital account, including principal payments in respect of foreign currency-denominated obligations, remain
subject to significant foreign exchange controls and the approval requirement of SAFE. These limitations could affect our ability to
convert Renminbi into foreign currency for capital expenditures. And the Chinese government is further strengthening the control of foreign
exchange; we will not be able to change the Chinese government’s decision in our own power.

Our
subsidiary in China is subject to 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