DEF 14C: CIMG Inc. Faces Nasdaq Delisting, Approves Reverse Stock Split and New Equity Plan

CIMG Inc. has approved a reverse stock split to regain Nasdaq compliance and adopted a new equity incentive plan, following a delisting determination from Nasdaq.

Summary

• Approved a reverse stock split at a ratio between 1-for-10 and 1-for-30, to be effected at the Board's discretion, aimed at regaining compliance with the Nasdaq Capital Markets minimum bid price requirement of $1.00 per share.
• Adopted the CIMG Inc. 2025 Equity Incentive Plan, reserving a maximum of 7,279,400 shares of common stock for issuance to attract, retain, and motivate employees, directors, and consultants.
• Received a Minimum Bid Price Notice from Nasdaq on January 14, 2025, and a delisting determination letter on June 27, 2025.
• Intend to appeal Nasdaq's delisting determination and request a hearing to present a plan for regaining compliance.
• The reverse stock split will affect all common stock holders uniformly, not altering percentage ownership, except for fractional shares which will be rounded up to the next whole number.
• As of July 3, 2025, the company had 36,397,418 shares of voting common stock outstanding.
• The actions were approved by majority shareholders, including DYT INFO PTE. LTD, DADA Business Trading Co., Limited, METAVERSE INTELLIGENCE TECH LTD, YY Tech Inc., and VMADE CO., LIMITED, who collectively held 50.23% of the outstanding voting stock as of July 3, 2025.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the imminent threat of Nasdaq delisting and the necessity of a reverse stock split, which often signals underlying issues and can lead to further stock price decline. While the equity plan is a positive for talent, it does not outweigh the significant listing concerns.

Positives

• The adoption of the 2025 Equity Incentive Plan is designed to attract, retain, and motivate key personnel, which is crucial for long-term growth and stability.
• Fractional shares resulting from the reverse stock split will be rounded up to the next whole number, benefiting shareholders who would otherwise receive cash for fractional entitlements.
• The company is actively pursuing measures (reverse stock split, appeal) to maintain its Nasdaq listing, demonstrating a commitment to remaining on a major exchange.

Negatives

• The company received a delisting determination letter from Nasdaq on June 27, 2025, indicating a failure to meet the minimum bid price requirement, which poses a significant threat to its public trading status.
• A reverse stock split is often viewed negatively by the market and may not result in a proportionate or sustained increase in share price, potentially leading to a reduced overall market capitalization.
• The reverse stock split may decrease the liquidity of the common stock due to a reduced number of outstanding shares.
• The reverse stock split could increase transaction costs for stockholders holding odd lots (less than 100 shares).
• The increase in available authorized shares resulting from the reverse stock split could have an anti-takeover effect and dilute current stockholders' percentage ownership interest if additional shares are issued without preemptive rights.

Risks

• The reverse stock split may not result in a proportionate increase in the price of the common stock, potentially failing to meet initial listing requirements of a principal national securities exchange.
• Even if the reverse stock split initially increases the market price, there is no assurance that the price will remain at the level required for continued compliance with minimum bid price requirements.
• The market price of the company's common stock may decline in the period following a reverse stock split, with the percentage decline potentially being greater due to the smaller number of shares outstanding.
• Other factors unrelated to the number of shares outstanding, such as negative financial or operational results, could adversely affect the market price and jeopardize listing compliance.
• The reverse stock split may decrease the liquidity of the common stock, especially if the market price does not sufficiently increase.
• Increased number of stockholders owning odd lots may lead to higher per-share transaction costs and greater difficulty in selling shares.
• The increased market price may not attract new investors, including institutional investors, and may not satisfy their investing guidelines, thus not improving liquidity.
• The company's ability to regain compliance with Nasdaq listing rules is not assured, potentially leading to delisting.

Future Outlook

The company intends to appeal Nasdaq's delisting determination and plans to request a hearing before a Nasdaq Hearings Panel to present its plan for regaining compliance with the applicable Nasdaq Listing Rules. The Board reserves the right to abandon the reverse stock split if it determines it is no longer in the best interest of the company and its stockholders.

Management Comments

• "By Order of the Board, /s/ Jianshuang Wang Jianshuang Wang Chief Executive Officer and Director July 25, 2025"

Industry Context

The company's actions, particularly the reverse stock split, are a common strategy employed by publicly traded companies to meet minimum bid price requirements of stock exchanges like Nasdaq, especially when facing potential delisting. This is a reactive measure to maintain market visibility and investor access, rather than a proactive strategic growth initiative.

Comparison to Industry Standards

• The company's situation of facing a Nasdaq delisting for minimum bid price non-compliance is a common challenge for smaller or underperforming companies. Many companies in similar positions undertake reverse stock splits as a primary method to cure such deficiencies.
• The proposed reverse stock split ratio range of 1-for-10 to 1-for-30 is within the typical range seen for companies attempting to raise their share price above the $1.00 threshold.
• The adoption of an equity incentive plan with 7,279,400 shares reserved is a standard practice for public companies to align employee and director incentives with shareholder interests, though the specific number should be evaluated against the company's market capitalization and peer group practices.

Management Changes

Corporate Governance

Related Party Transactions

• The corporate actions (reverse stock split and equity incentive plan) were approved by written consent of the Majority Shareholders, who collectively hold 50.23% of the outstanding voting stock. These include DYT INFO PTE. LTD, DADA Business Trading Co., Limited, METAVERSE INTELLIGENCE TECH LTD, YY Tech Inc., and VMADE CO., LIMITED, indicating significant influence by these entities.

Stakeholder Impact

• Shareholders: Potential for increased share price post-split, but also risks of further price decline, reduced liquidity, and increased transaction costs for odd lots. Future dilution from the 2025 Equity Incentive Plan is possible.
• Employees, Directors, and Consultants: Will benefit from the new 2025 Equity Incentive Plan, which offers stock options and restricted stock awards as incentives for retention and motivation.
• Nasdaq: The company's actions are directly aimed at complying with Nasdaq listing rules, impacting the exchange's regulatory oversight.

Next Steps

• The Board will determine the exact timing and ratio of the reverse stock split, which will become effective upon filing the Certificate of Change with the Secretary of State of Nevada.
• The company intends to appeal Nasdaq's delist determination and plans to request a hearing before a Nasdaq Hearings Panel.
• The company must file the Certificate of Change for the reverse stock split within 12 months from July 3, 2025, or the Board will abandon the action.

Key Dates

Recommendation

The company is facing an imminent delisting from Nasdaq, a severe negative event for any publicly traded entity. While a reverse stock split is a necessary step to attempt to regain compliance, it is often a last resort and frequently fails to sustain a higher stock price, leading to further declines and reduced liquidity. The significant turnover in executive and board positions, coupled with the lack of detailed financial performance metrics in this filing, adds to the uncertainty. The overall situation suggests high risk and a strong likelihood of continued downward pressure on the stock price, making it an unfavorable investment.

Keywords

Reverse Stock Split, Nasdaq Compliance, Delisting, Equity Incentive Plan, Stock Options, Corporate Governance, Shareholder Approval, SEC Filing, CIMG Inc., DEF 14C