CIMG Inc.

Performance Summary

CIMG Inc. reported mixed results for Q1 2026 (quarter ended December 31, 2025). Net revenue was $15,768,796, a dramatic increase from $22,853 in the same quarter of the prior year. However, the company reported a net loss attributable to CIMG Inc. of $19,443,692, significantly larger than the $1,536,249 loss in the prior year quarter. This substantial loss was primarily driven by a $17,502,596 fair value loss on the company's Bitcoin holdings. Gross profit was $87,416 (0.6% margin), compared to $15,479 (67.7% margin) in the prior year quarter. Operating loss was $1,992,573. Basic and diluted loss per common share was $1.43, compared to $3.42 in the prior year quarter, with weighted average shares outstanding increasing to 13,601,997 from 449,134.

Revenue Analysis

Revenue growth was concentrated in the People's Republic of China, which accounted for all $15,768,796 in net revenue for the quarter, with no revenue from North America. The company operates through three primary business segments. The Maca Product Series was the largest contributor at $11,981,591 (76.0% of total revenue), though it reported a gross loss of $578. The Computing Power Product Series generated $2,360,373 (15.0% of revenue) with gross profit of $69,977. The Homology of Medicine and Food Series contributed $1,426,832 (9.0% of revenue) with gross profit of $18,017. Customer concentration was high, with Customer ZNF accounting for 76.0% of total revenue ($11,981,591).

Margins & Profitability

The company's gross margin declined sharply to 0.6% from 67.7% in the prior year quarter, reflecting a significant change in revenue mix and cost structure. Cost of sales was $15,681,380, nearly matching total revenue. Operating expenses were $2,079,989, consisting primarily of personnel costs ($1,209,580), professional fees ($706,157), and sales and marketing expenses ($77,811). The fair value loss on Bitcoin holdings of $17,502,596 was the primary driver of the overall net loss, overwhelming the operating loss of $1,992,573. Other income of $76,102 and other expense of $7,206 had minimal impact on the bottom line.

Cash Flow & Balance Sheet

Net cash used in operating activities was $8,527,918, primarily due to the net loss adjusted for non-cash items including the Bitcoin fair value loss and changes in working capital. Cash flow from financing activities provided $8,453,075 from proceeds from issuance of common stock. The net change in cash was a decrease of $91,931, leaving cash and cash equivalents at $45,356 as of December 31, 2025, down from $137,287 at September 30, 2025. Total assets were $67,418,377, with digital assets (Bitcoin) comprising $63,978,821 (94.9% of total assets). Total liabilities were $10,901,197, resulting in stockholders' equity of $56,517,180. The company reported negative working capital of $7,493,110.

Outlook

Management has expressed substantial doubt about the company's ability to continue as a going concern for one year after the financial statements are issued. The company has incurred recurring losses and negative cash flows from operations, and as of December 31, 2025, had cash of $45,356 and negative working capital of $7,493,110. Management expects to need additional capital immediately to continue operations, though there is no assurance such financing will be available. The company's Bitcoin holdings ($63.98 million) may be monetized but are subject to significant market volatility. Management's plans include raising additional equity or debt financing and executing its revised business strategy, but these plans had not alleviated the going concern doubt as of the issuance date. The company also faces risks including foreign currency exchange rate risk, customer concentration, and ongoing litigation.