SCHEDULE 13D: Major Shareholder Xiaodong Liu and Vmade Co., Limited Increase Stake in CIMG Inc. to 21.7%

Xiaodong Liu and Vmade Co., Limited have significantly increased their beneficial ownership in CIMG Inc. to 21.7% through convertible note conversions and warrant holdings, signaling a strategic financial investment.

Summary

• Xiaodong Liu, through her 100% ownership of Vmade Co., Limited, now beneficially owns 7,400,282 shares of CIMG Inc. common stock.
• This represents 21.7% of the company's outstanding common stock, calculated based on 30,197,418 shares issued and outstanding as of March 24, 2025, plus 3,871,794 new shares that may be issued from warrants.
• The increased stake results from the conversion of two convertible promissory notes and the holding of warrants.
• Vmade Co., Limited used $550,000 in working capital to purchase a convertible note on August 20, 2024, which converted into 590,701 shares on October 31, 2024.
• An additional $1,510,000 in working capital was used on December 12, 2024, to purchase another convertible note and warrants, with the note converting into 2,937,787 shares on March 18, 2025.
• Vmade Co., Limited currently holds warrants to acquire up to 3,871,794 additional shares of common stock.
• The purpose of these acquisitions is stated as a financial investment in CIMG Inc.

Sentiment

Score: 7

Explanation: The filing indicates a significant and growing financial investment by a major shareholder, suggesting confidence in the company. However, the potential for future strategic changes and dilution from warrant exercise introduces some uncertainty.

Positives

• Significant financial investment by a major shareholder, indicating confidence in CIMG Inc.'s future.
• The conversion of convertible notes reduces debt on CIMG Inc.'s balance sheet, although it increases the share count.

Negatives

• The increase in outstanding shares due to note conversions and potential warrant exercise could lead to dilution for existing shareholders.

Risks

• The Reporting Persons may engage in discussions with CIMG Inc.'s management and board, potentially leading to changes in the Issuer's business, assets, capitalization, or management.
• There is a risk of further dilution for existing shareholders if the warrants held by Vmade Co., Limited are exercised, increasing the total number of outstanding shares.
• The Reporting Persons' stated intention to potentially purchase additional shares, sell existing shares, or engage in hedging transactions could introduce volatility to CIMG Inc.'s stock price.

Future Outlook

The Reporting Persons intend to review their investment in CIMG Inc. on a continuing basis and may engage in discussions with management, the board, and other shareholders regarding the company's business, strategy, and future plans. They may also propose or seek to implement plans to enhance stockholder value, including potential business combinations or strategic alternatives. Depending on various factors, they may purchase additional shares, sell existing shares, or engage in hedging transactions. CIMG Inc. is also required to file an S-1 registration statement for the resale of the conversion and warrant shares.

Industry Context

This filing indicates a significant equity investment and potential for increased shareholder activism or strategic influence by a major investor in CIMG Inc. Such large stake acquisitions often precede strategic shifts or increased governance focus within a company, potentially signaling a period of change or re-evaluation of corporate direction.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for dilution from the exercise of warrants; potential for strategic changes or increased activism from a significant new shareholder; increased liquidity for the Reporting Persons' shares once registered.
• Management/Board: May face increased engagement and potential proposals from the Reporting Persons regarding company strategy and operations.

Next Steps

• CIMG Inc. is required to file an initial Registration Statement on Form S-1 covering the resale of all registrable securities (conversion shares and warrant shares) as soon as practicable, but no later than 30 days after its Form 10-K for fiscal year ended September 30, 2024, or five business days after stockholder approval of the Purchase Agreement transactions, whichever is later.
• The Reporting Persons intend to review their investment continuously and may engage in discussions with CIMG Inc. management and board regarding strategic direction.
• The Reporting Persons may consider purchasing additional shares, selling shares, or engaging in hedging transactions related to their investment in CIMG Inc.

Key Dates

Keywords

CIMG Inc., Xiaodong Liu, Vmade Co., Limited, Schedule 13D, Beneficial Ownership, Convertible Note, Warrants, Shareholding, Financial Investment, Corporate Governance, SEC Filing, Equity Stake, Dilution