CIMG Inc. (NASDAQ:IMG), a miscellaneous retail company with a market capitalization of $7.21 million, has successfully completed a private placement transaction, issuing convertible notes and warrants to non-U.S. investors as disclosed in a recent SEC Form 8-K filing. The deal, which closed on January 16 and 17, 2025, raised an aggregate principal amount of $10 million. According to InvestingPro analysis, the company currently shows signs of being undervalued, though it faces significant challenges with rapid cash burn and weak financial health scores.
The convertible promissory notes, bearing an annual interest rate of 7%, are set to mature one year from the issuance date. The notes come with attached warrants granting the right to purchase up to 25,641,023 shares of CIMG's common stock. However, the conversion of notes and exercise of warrants are contingent upon obtaining approval from CIMG's shareholders for the issuance of the underlying shares. The company's stock, currently trading at $0.74, has experienced significant volatility, having declined over 63% in the past year.
Once shareholder approval is secured, investors will be able to convert their notes into common stock at a price of $0.52 per share. The warrants have an exercise price set at $0.39 per share.
The successful closure of this private placement indicates CIMG's ability to attract significant capital investment through the sale of convertible notes and warrants. The funds raised are expected to provide the company with additional working capital, which is crucial given its negative EBITDA of -$7.99 million in the last twelve months.
In other recent news, CIMG Inc., previously known as NuZee Inc., has been grappling with significant challenges. The company, which faces the potential delisting from Nasdaq due to non-compliance with the minimum bid price requirement and a delayed annual report filing, has been given a deadline to rectify these issues. On the financial front, CIMG Inc. has secured $10 million through a private placement of convertible promissory notes and warrants with non-U.S. investors, a move that could bolster the company's expansion plans amidst analysts' projections of 97% revenue growth for the current fiscal year.
The company also announced the immediate resignation of Jian Liu from its Board of Directors, leaving a vacancy yet to be filled. In a separate legal development, CIMG Inc. reached a settlement with a former employee without admitting any wrongdoing. The company has also entered a one-year endorsement agreement with five renowned sports figures to promote its Macanuoli beverage.
Recently, CIMG Inc. underwent a corporate identity change from NuZee Inc. and appointed Zhanzhan Shi as the new Acting Chief Financial Officer and Jianshuang Wang as the Chairman of the Board of Directors and Co-Chief Executive Officer.
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