Company: IMG
Filing Date: 2025-07-21
Form Type: 10-K
Source: 0001641172-25-020300
Chunk: 712

Company: CIMG Inc.
Filing Date: 2025-07-21
Form: 10-K
Item: Item 5
Chunk 712
---
 future years’ income as result of the losses incurred. However, due to the losses incurred in the period
and expected future operating results, management determined that it is more likely than not that the deferred tax asset resulting
from the tax losses available for carry forward will not be realized through the reduction of future income tax payments.
Accordingly, a 100%
valuation allowance has been recorded for deferred income tax assets. Cumulative net operating loss carry forward is $51,057,503
and $45,340,996
as of September 30, 2024 and 2023, respectively, and will begin expiring in 2033. Utilization of these NOLs might be subject to
various limitations such as the IRC Section 382 limitation and the 80% taxable income limitation. A full study of the NOL
limitations has not been completed yet.

The Company used statutory blended tax rates of 28%, 11%
and 33.58% for its deferred tax assets that arose in the US, Korea, and Japan respectively.

Deferred tax assets consisted of the following as
of September 30, 2024 and 2023:

SCHEDULE OF DEFERRED TAX ASSETS 

    2024  
    2023 
  
    Net Operating Losses 
     14,296,101  
    $12,413,540 
  
    Stock based compensation 
     -  
     5,944,806 
  
    Fixed assets and intangible assets 
     24,574  
     21,071 
  
    Total deferred tax assets 
     14,320,675  
    $18,379,417 
  
    Valuation Allowance 
     (14,320,675) 
    $(18,379,417)
  
    Deferred tax assets net of valuation allowance 
     -  
    $- 

11. CONTINGENCIES

Steeped Litigation

As previously
disclosed, on January 27, 2023, Steeped, Inc. d/b/a Steeped Coffee (“Steeped”) filed a complaint against the Company in the
Superior Court of California, Santa Cruz County (Case No. 23CV00234) (the “Complaint”). The Complaint related to Steeped’s
claim that the Company breached a 2021 settlement agreement that resolved Steeped’s 2019 trademark infringement case against the
Company. The earlier