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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 8/12/20 I-ON Digital Corp. 10-Q 6/30/20 47:4M Edgarfilings Ltd. |
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report HTML 468K 2: EX-31.1 Certification -- §302 - SOA'02 HTML 20K 3: EX-32.1 Certification -- §906 - SOA'02 HTML 15K 10: R1 Document and Entity Information HTML 44K 11: R2 Condensed Consolidated Balance Sheets (Unaudited) HTML 133K 12: R3 Condensed Consolidated Balance Sheets (Unaudited) HTML 36K (Parenthetical) 13: R4 Condensed Consolidated Statements of Operations HTML 89K and Comprehensive Loss (Unaudited) 14: R5 Condensed Consolidated Statements of Stockholders' HTML 55K Equity (Unaudited) 15: R6 Condensed Consolidated Statements of Cash Flows HTML 110K (Unaudited) 16: R7 Organization and Operations HTML 18K 17: R8 Summary of Significant Accounting Policies HTML 92K 18: R9 Long-term Debt HTML 24K 19: R10 Line of Credit HTML 18K 20: R11 Short Term Loan Payable HTML 17K 21: R12 Investments HTML 31K 22: R13 Beneficial Conversion Feature and Common Stock HTML 24K Warrant 23: R14 Commitments and Contingencies HTML 18K 24: R15 Related Party Transactions HTML 18K 25: R16 Earnings Per Share HTML 55K 26: R17 Non-Controlling Interest-Issuance of Preferred HTML 21K Stock by Subsidiary 27: R18 Subsequent Events HTML 17K 28: R19 Summary of Significant Accounting Policies HTML 121K (Policies) 29: R20 Summary of Significant Accounting Policies HTML 57K (Tables) 30: R21 Long-term Debt (Tables) HTML 26K 31: R22 Investments (Tables) HTML 32K 32: R23 Beneficial Conversion Feature and Common Stock HTML 20K Warrant (Tables) 33: R24 Earnings Per Share (Tables) HTML 54K 34: R25 Organization and Operations (Details) HTML 24K 35: R26 Summary of Significant Accounting Policies HTML 128K (Details) 36: R27 Long-term Debt (Details) HTML 26K 37: R28 Line of Credit (Details) HTML 24K 38: R29 Short Term Loan Payable (Details) HTML 23K 39: R30 Investments, Equity Method (Details) HTML 29K 40: R31 Investments, Available-for-sale securities HTML 29K (Details) 41: R32 Beneficial Conversion Feature and Common Stock HTML 49K Warrant (Details) 42: R33 Commitments and Contingencies (Details) HTML 23K 43: R34 Earnings Per Share (Details) HTML 70K 44: R35 Non-Controlling Interest-Issuance of Preferred HTML 28K Stock by Subsidiary (Details) 46: XML IDEA XML File -- Filing Summary XML 81K 45: EXCEL IDEA Workbook of Financial Reports XLSX 57K 4: EX-101.INS XBRL Instance -- ioni-20200630 XML 1.09M 6: EX-101.CAL XBRL Calculations -- ioni-20200630_cal XML 150K 7: EX-101.DEF XBRL Definitions -- ioni-20200630_def XML 279K 8: EX-101.LAB XBRL Labels -- ioni-20200630_lab XML 1.04M 9: EX-101.PRE XBRL Presentations -- ioni-20200630_pre XML 571K 5: EX-101.SCH XBRL Schema -- ioni-20200630 XSD 90K 47: ZIP XBRL Zipped Folder -- 0001140361-20-018255-xbrl Zip 125K
Delaware
|
46-3031328
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☒
|
Smaller reporting company ☒
|
Emerging growth company ☐
|
Title of each class
|
Trading
Symbol(s)
|
Name of each exchange on which
registered
|
||
Common Stock, $0.0001 par value per share
|
IONI
|
OTC Markets
|
Class
|
Outstanding as of August 12, 2020
|
|
Common Stock, $0.0001 par value per share
|
35,030,339 shares
|
PART I – FINANCIAL INFORMATION
|
||
Item 1.
|
2
|
|
Item 2.
|
18
|
|
Item 3.
|
25
|
|
Item 4.
|
25
|
|
PART II – OTHER INFORMATION
|
||
Item 1.
|
26
|
|
Item 2.
|
26
|
|
Item 3.
|
26
|
|
Item 4.
|
26
|
|
Item 5.
|
26
|
|
Item 6.
|
26
|
|
27
|
Item 1. |
Consolidated Financial Statements (UNAUDITED)
|
|
Condensed Consolidated Balance Sheets (UNAUDITED)
|
4
|
|
|
Condensed Consolidated Statements of Operations (UNAUDITED)
|
5
|
|
|
Condensed Consolidated Statements of Stockholders’ Equity (UNAUDITED)
|
6
|
|
|
Condensed Consolidated Statements of Cash Flows (UNAUDITED)
|
7
|
|
|
Notes to Condensed Consolidated Financial Statements (UNAUDITED)
|
8
|
June 30,
|
||||||||
2019
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
1,001,643
|
$
|
1,337,741
|
||||
Restricted cash
|
1,582,410
|
1,641,043
|
||||||
Short-term financial instruments
|
695,427
|
716,013
|
||||||
Short-term loan receivable
|
149,034
|
197,741
|
||||||
Accounts receivables, net of allowance for doubtful accounts $695,394 and $721,160, respectively
|
2,720,068
|
2,875,384
|
||||||
Deferred tax assets - current
|
224,449
|
232,766
|
||||||
Prepaid expenses and other current assets
|
1,173,371
|
1,055,553
|
||||||
Total current assets
|
7,545,402
|
8,056,241
|
||||||
|
||||||||
Non-current assets:
|
||||||||
Investments
|
101,670
|
105,437
|
||||||
Property and equipment, net
|
151,594
|
203,754
|
||||||
Intangible assets, net
|
197,499
|
192,868
|
||||||
Deposits
|
349,983
|
354,300
|
||||||
Derivative asset
|
101,821
|
105,594
|
||||||
Deferred tax assets - non current
|
692,520
|
774,307
|
||||||
Total non-current assets
|
1,595,087
|
1,736,260
|
||||||
Total Assets
|
$
|
9,140,489
|
$
|
9,792,501
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
70,944
|
$
|
48,802
|
||||
Accrued expenses and other
|
1,421,899
|
1,705,485
|
||||||
Value added tax payable
|
137,346
|
107,717
|
||||||
Income tax payable
|
-
|
8,179
|
||||||
Short-term loan payable
|
458,066
|
475,039
|
||||||
Current portion of long term debt
|
145,732
|
194,300
|
||||||
Total current liabilities
|
2,233,987
|
2,539,522
|
||||||
Long term debt, net of current portion
|
187,357
|
194,300
|
||||||
Total liabilities
|
2,421,344
|
2,733,822
|
||||||
Commitments and contingencies
|
||||||||
Stockholders’ Equity
|
||||||||
Common stock - $0.0001 par value; authorized 100,000,000 shares; 35,030,339 shares issued and outstanding at June 30, 2020 and December 31, 2019
|
3,603
|
3,603
|
||||||
Treasury stock
|
(709,478
|
)
|
(709,478
|
)
|
||||
Additional paid-in-capital
|
3,691,093
|
3,646,740
|
||||||
Accumulated other comprehensive loss
|
(507,788
|
)
|
(259,960
|
)
|
||||
Accumulated retained earnings
|
3,760,881
|
3,897,337
|
||||||
Total company stockholders’ equity
|
6,238,311
|
6,578,242
|
||||||
Preferred stock (I-ON Korea) - $.4380 par value; authorized 2,000,000 shares; 157,142 shares issued and outstanding at June 30, 2020 and none at December 31, 2019.
|
475,036
|
475,036
|
||||||
Non-controlling interests
|
5,798
|
5,401
|
||||||
Total stockholders’ equity
|
6,719,145
|
7,058,679
|
||||||
Total Liabilities and Stockholders’ Equity
|
$
|
9,140,489
|
$
|
9,792,501
|
Three-month Period ended June 30,
|
Six-month Period ended June 30,
|
|||||||||||||||
2019
|
2020
|
2019
|
||||||||||||||
Net sales
|
$
|
1,670,291
|
$
|
1,825,302
|
$
|
3,956,463
|
$
|
3,464,921
|
||||||||
Cost of goods sold
|
1,169,022
|
1,353,312
|
2,738,424
|
3,168,667
|
||||||||||||
Gross profit (loss)
|
501,269
|
471,990
|
1,218,039
|
296,254
|
||||||||||||
Operating expense:
|
||||||||||||||||
Research and development
|
221,677
|
160,087
|
404,161
|
378,594
|
||||||||||||
General and administrative
|
457,216
|
521,733
|
921,630
|
1,005,795
|
||||||||||||
Total operating expense
|
678,893
|
681,820
|
1,325,791
|
1,384,389
|
||||||||||||
Loss from operations
|
(177,624
|
)
|
(209,830
|
)
|
(107,752
|
)
|
(1,088,135
|
)
|
||||||||
Other income (expense):
|
||||||||||||||||
Loss on extinguishment of debt
|
-
|
-
|
-
|
(160,419
|
)
|
|||||||||||
Interest income
|
12,991
|
-
|
22,970
|
-
|
||||||||||||
Foreign currency transaction gain(loss)
|
10,356
|
-
|
10,978
|
-
|
||||||||||||
Miscellaneous income, net
|
3,668
|
55,863
|
59,206
|
39,382
|
||||||||||||
Interest expense
|
(7,340
|
)
|
(30,564
|
)
|
(13,276
|
)
|
(45,147
|
)
|
||||||||
Total other income (expense), net
|
19,675
|
25,299
|
79,878
|
(166,184
|
)
|
|||||||||||
Loss before provision for income taxes, loss on equity investments in affiliates, and non-controlling interest
|
(157,949
|
)
|
(184,531
|
)
|
(27,874
|
)
|
(1,254,319
|
)
|
||||||||
Provision for income tax
|
101,627
|
39,434
|
108,185
|
63,977
|
||||||||||||
Net loss before income or loss on equity investments in affiliates and non-controlling interest
|
(259,576
|
)
|
(223,965
|
)
|
(136,059
|
)
|
(1,318,296
|
)
|
||||||||
Income (Loss) on equity investments
|
-
|
(3,506
|
)
|
-
|
(7,062
|
)
|
||||||||||
Net loss before non-controlling interest
|
(259,576
|
)
|
(227,471
|
)
|
(136,059
|
)
|
(1,325,358
|
)
|
||||||||
Non-controlling interest income (loss)
|
2,990
|
474
|
397
|
664
|
||||||||||||
Net loss
|
$
|
(262,566
|
)
|
$
|
(227,945
|
)
|
$
|
(136,456
|
)
|
$
|
(1,324,694
|
)
|
Common Stock
|
||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Additional Paid-In Capital
|
Retained Earnings
|
Treasury Stock
|
Accumulated Other Comprehensive Income (Loss)
|
Total Company Stockholders' Equity
|
Non-Controlling Interst
|
Preferred Stock
|
Total Stockholders' Equity
|
|||||||||||||||||||||||||||||||
Balance at March 31, 2020
|
35,030,339
|
$
|
3,603
|
$
|
3,668,916
|
$
|
4,023,447
|
$
|
(709,478
|
)
|
$
|
(631,664
|
)
|
$
|
6,354,824
|
$
|
2,808
|
$
|
475,036
|
$
|
6,832,668
|
|||||||||||||||||||
-
|
||||||||||||||||||||||||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
-
|
123,876
|
123,876
|
-
|
-
|
123,876
|
||||||||||||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
22,177
|
-
|
-
|
-
|
22,177
|
-
|
-
|
22,177
|
||||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
(262,566
|
)
|
-
|
-
|
(262,566
|
)
|
2,990
|
-
|
(259,576
|
)
|
|||||||||||||||||||||||||||
0
|
||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020
|
35,030,339
|
$
|
3,603
|
$
|
3,691,093
|
$
|
3,760,881
|
$
|
(709,478
|
)
|
$
|
(507,788
|
)
|
$
|
6,238,311
|
$
|
5,798
|
$
|
475,036
|
$
|
6,719,145
|
Common Stock
|
||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Additional Paid-In Capital
|
Retained Earnings
|
Treasury Stock
|
Accumulated Other Comprehensive Income (Loss)
|
Total Company Stockholders' Equity
|
Non-Controlling Interst
|
Preferred Stock
|
Total Stockholders' Equity
|
|||||||||||||||||||||||||||||||
Balance at March 31, 2019
|
35,030,339
|
$
|
3,603
|
$
|
3,601,956
|
$
|
3,511,898
|
$
|
(709,478
|
)
|
$
|
(148,032
|
)
|
$
|
6,259,947
|
$
|
609
|
$
|
-
|
$
|
6,260,556
|
|||||||||||||||||||
Issuance of non-controlling interest - Preferred stock
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
481,862
|
481,862
|
||||||||||||||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
-
|
(120,818
|
)
|
(120,818
|
)
|
-
|
-
|
(120,818
|
)
|
|||||||||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
22,541
|
-
|
-
|
-
|
22,541
|
-
|
-
|
22,541
|
||||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
(227,471
|
)
|
-
|
-
|
(227,471
|
)
|
474
|
-
|
(226,997
|
)
|
|||||||||||||||||||||||||||
Balance at June 30, 2019
|
35,030,339
|
$
|
3,603
|
$
|
3,624,497
|
$
|
3,284,427
|
$
|
(709,478
|
)
|
$
|
(268,850
|
)
|
$
|
5,934,199
|
$
|
1,083
|
$
|
481,862
|
$
|
6,417,144
|
Common Stock
|
||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Additional Paid-In Capital
|
Retained Earnings
|
Treasury Stock
|
Accumulated Other Comprehensive Income (Loss)
|
Total Company Stockholders' Equity
|
Non-Controlling Interst
|
Preferred Stock
|
Total Stockholders' Equity
|
|||||||||||||||||||||||||||||||
Balance at December 31, 2019
|
35,030,339
|
$
|
3,603
|
$
|
3,646,740
|
$
|
3,897,337
|
$
|
(709,478
|
)
|
$
|
(259,960
|
)
|
$
|
6,578,242
|
$
|
5,401
|
$
|
475,036
|
$
|
7,058,679
|
|||||||||||||||||||
-
|
||||||||||||||||||||||||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
-
|
(247,828
|
)
|
(247,828
|
)
|
-
|
-
|
(247,828
|
)
|
|||||||||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
44,353
|
-
|
-
|
-
|
44,353
|
-
|
-
|
44,353
|
||||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
(136,456
|
)
|
-
|
-
|
(136,456
|
)
|
397
|
-
|
(136,059
|
)
|
|||||||||||||||||||||||||||
Balance at June 30, 2020
|
35,030,339
|
$
|
3,603
|
$
|
3,691,093
|
$
|
3,760,881
|
$
|
(709,478
|
)
|
$
|
(507,788
|
)
|
$
|
6,238,311
|
$
|
5,798
|
$
|
475,036
|
$
|
6,719,145
|
|||||||||||||||||||
35,030,339
|
3,603
|
3,691,093
|
3,760,881
|
(709,478
|
)
|
(507,788
|
)
|
6,238,311
|
5,798
|
475,036
|
6,719,145
|
|||||||||||||||||||||||||||||
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Common Stock
|
||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Additional Paid-In Capital
|
Retained Earnings
|
Treasury Stock
|
Accumulated Other Comprehensive Income (Loss)
|
Total Company Stockholders' Equity
|
Non-Controlling Interst
|
Preferred Stock
|
Total Stockholders' Equity
|
|||||||||||||||||||||||||||||||
Balance at December 31, 2018
|
35,030,339
|
$
|
3,603
|
$
|
3,582,987
|
$
|
4,609,785
|
$
|
(709,478
|
)
|
$
|
(52,193
|
)
|
$
|
7,434,704
|
$
|
419
|
$
|
-
|
$
|
7,435,123
|
|||||||||||||||||||
Issuance of non-controlling interest - Preferred stock
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
481,862
|
481,862
|
||||||||||||||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
-
|
(216,657
|
)
|
(216,657
|
)
|
-
|
-
|
(216,657
|
)
|
|||||||||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
41,510
|
(1,325,358
|
)
|
-
|
-
|
(1,283,848
|
)
|
-
|
-
|
(1,283,848
|
)
|
|||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
664
|
-
|
664
|
||||||||||||||||||||||||||||||
Balance at June 30, 2019
|
35,030,339
|
$
|
3,603
|
$
|
3,624,497
|
$
|
3,284,427
|
$
|
(709,478
|
)
|
$
|
(268,850
|
)
|
$
|
5,934,199
|
$
|
1,083
|
$
|
481,862
|
$
|
6,417,144
|
|||||||||||||||||||
35,030,339
|
3,603
|
3,624,497
|
3,284,427
|
(709,478
|
)
|
(268,850
|
)
|
5,934,199
|
1,083
|
481,862
|
6,417,144
|
|||||||||||||||||||||||||||||
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Six Months ended June 30,
|
2019
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
(136,456
|
)
|
(1,324,694
|
)
|
||||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||
Non-controlling interest
|
(2,593
|
)
|
(664
|
)
|
||||
Loss on equity investments in affiliates
|
-
|
7,062
|
||||||
Depreciation - fixed assets
|
53,929
|
50,984
|
||||||
Amortization of intangible assets
|
14,697
|
11,881
|
||||||
Stock options expense
|
44,353
|
41,510
|
||||||
Amortization of debt discount
|
-
|
8,333
|
||||||
Loss on extinguishment of convertible debt
|
-
|
160,419
|
||||||
Foreign exchange gain (loss)
|
-
|
4,748
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Account receivable, net
|
138,447
|
464,520
|
||||||
Prepaid expenses and other current assets
|
(154,707
|
)
|
(304,772
|
|||||
Deposit
|
(8,297
|
)
|
(8,639
|
)
|
||||
Deferred taxes
|
53,835
|
46,903
|
||||||
Account payable
|
507,311
|
132,348
|
||||||
Accrued expenses and other
|
(791,170
|
)
|
(22,922
|
)
|
||||
Value added tax payable
|
33,300
|
(50,431
|
)
|
|||||
Income tax payable
|
(7,845
|
)
|
6,473
|
|||||
Net cash used in operating activities
|
(255,196
|
)
|
(776,941
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchases of investments
|
(4,971
|
)
|
(5,236
|
)
|
||||
Purchases of property and equipment
|
(9,286
|
)
|
(41,044
|
)
|
||||
Purchases of intangible assets
|
(26,158
|
)
|
(32,576
|
)
|
||||
Payments received from short-term loan receivable
|
82,843
|
15,322
|
||||||
Loans provided under short-term loans
|
(41,422
|
)
|
(189,841
|
)
|
||||
Net cash provided (used) in investing activities
|
1,006
|
(253,375
|
)
|
|||||
Cash flows from financing activities:
|
||||||||
Payments on short-term loan payable
|
-
|
(130,889
|
)
|
|||||
Principal payments on long-term debt
|
(41,405
|
)
|
(43,717
|
)
|
||||
Principal payments on convertible debt
|
-
|
(200,000
|
)
|
|||||
Proceeds from issuance of non-controlling interest preferred shares issued by subsidiary
|
-
|
479,923
|
||||||
Net cash used in financing activities
|
(41,405
|
)
|
105,317
|
|||||
Effect of foreign currency translation on cash and cash equivalents
|
(100,136
|
)
|
(69,916
|
)
|
||||
Net decrease in cash and cash equivalents
|
(395,731
|
)
|
(994,915
|
)
|
||||
Cash and cash equivalents including restricted cash, beginning of year
|
2,978,784
|
3,408,541
|
||||||
Cash and cash equivalents including restricted cash, end of year
|
$
|
2,583,053
|
$
|
2,413,626
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Interest paid
|
$
|
13,275
|
$
|
6,845
|
||||
Taxes paid
|
$
|
13,189
|
$
|
6,852
|
NOTE 1: |
Organization and Operations
|
NOTE 2: |
Summary of Significant Accounting Policies
|
● |
I-ON, Ltd (Japanese subsidiary) – The financial position and results of operations of I-ON, Ltd, the Japanese subsidiary of the Company, are initially
recorded using its local currency, Japanese Yen (“JPY”). Assets and liabilities denominated in foreign currency are translated to the functional currency at the functional currency rate of exchange at the balance sheet date. The results of
operations denominated in foreign currency are translated at the average rate of exchange during the reporting period. All differences are reflected in profit or loss. As of June 30, 2020 and December 31, 2019, the exchange rate was JPY
11.16 and JPY 10.63 per KRW, respectively. The average exchange rate for the three months ended June 30, 2020 and 2019 was JPY 10.41 and JPY 9.89 per KRW, respectively. The average exchange rate for the six months ended June 30, 2020 and
2029 was JPY 11.15 and JPY 10.42 per KRW, respectively.
|
● |
Consolidation – Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rates prevailing at the
balance sheet date. The results of operations are translated from KWR to US Dollar at the weighted average rate of exchange during the reporting period. The registered equity capital denominated in the functional currency is translated at
the historical rate of exchange at the time of capital contribution. All translation adjustments resulting from the translation of the financial statements into the reporting currency, US Dollar, are dealt with as a component of
accumulated other comprehensive income. As of June 30, 2020 and December 31, 2019, the exchange rate was KRW 1,200.70 and KRW 1,157.80 per US Dollar, respectively. The average exchange rate for the three months ended June 30, 2020 and
2019 was KRW 1207.10 and KRW 1,146.01, respectively. The average exchange rate for the six months ended June 30, 2020 and 2019 was KRW 1,146.01 and KRW 1,075.40, respectively.
|
Korea
|
||||||||
Current assets
|
$
|
7,019,234
|
$
|
7,821,531
|
||||
Non-current assets
|
1,594,802
|
1,735,978
|
||||||
Current liabilities
|
1,922,001
|
2,437,550
|
||||||
Non-current liabilities
|
187,357
|
194,300
|
||||||
|
||||||||
Japan
|
||||||||
Current assets
|
$
|
526,168
|
$
|
234,710
|
||||
Non-current assets
|
285
|
282
|
||||||
Current liabilities
|
311,986
|
101,972
|
||||||
Non-current liabilities
|
-
|
-
|
Six-months Period
Ended June 30,
|
Three-months Period
Ended June 30,
|
|||||||||||||||
2019
|
2020
|
2019
|
||||||||||||||
Korea
|
||||||||||||||||
Net Sales
|
$
|
2,878,039
|
$
|
2,961,691
|
$
|
1,261,970
|
$
|
1,464,628
|
||||||||
Japan
|
||||||||||||||||
Net Sales
|
$
|
1,078,424
|
$
|
503,230
|
$
|
408,321
|
$
|
360,674
|
● |
Royalty – the Company receives a fixed amount of royalties from company in Japan for providing rights to sell the Company’s products in Japanese market. Revenue is recognized over the contract and service period and when collectability is
reasonably assured.
|
● |
License Solution & Services – the Company recognizes revenue on installation of the web-content management software, services provided for installation, and customization.
|
● |
Customizing Services – the Company recognizes revenue from processing transactions between businesses and their customers. Revenue is recognized over the contract and service period and when collectability is reasonably assured.
|
● |
Maintenance – the Company recognizes revenue over the contract term based on percentage-of-completion method.
|
Level 1 |
Quoted prices in active markets for identical assets or liabilities that the Company has an ability to access as of the measurement date.
|
Level 2 |
Inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable
market data for substantially the same term of the assets or liabilities.
|
Level 3 |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
• |
Investments in privately-held companies, where quoted market prices are not available, accounted for as available-for-sale securities, classified as Level 3 within the fair value hierarchy, and are recorded as an asset on the consolidated
balance sheet
|
• |
Detachable warrants issued in connection with the convertible debt that meets the definition of a derivative, classified as Level 2 within the fair value hierarchy, which is recorded as additional paid-in-capital on the consolidated
balance sheet
|
• |
An equity purchase put option that meets the definition of a derivative, classified as Level 3 within the fair value hierarchy, which is recorded as an asset on the consolidated balance sheet
|
Level 1
|
Level 2
|
Level 3
|
||||||||||
Available-for-sale securities
|
$
|
-
|
$
|
-
|
$
|
101,670
|
||||||
Common stock purchase warrant
|
-
|
-
|
-
|
|||||||||
Equity purchase put option
|
-
|
-
|
101,821
|
|||||||||
Fair value, at June 30, 2020
|
$
|
-
|
$
|
-
|
$
|
203,491
|
Level 1
|
Level 2
|
Level 3
|
||||||||||
Available-for-sale securities
|
$
|
-
|
$
|
-
|
$
|
105,437
|
||||||
Common stock purchase warrant
|
-
|
-
|
-
|
|||||||||
Equity purchase put option
|
-
|
-
|
105,594
|
|||||||||
Fair value, at December 31, 2019
|
$
|
-
|
$
|
-
|
$
|
211.031
|
NOTE 3: |
Long-term Debt
|
A note payable to a financial institution bearing interest at 2.81% and 2.54% at June 30, 2020
and December 31, 2019, respectively, and guaranteed by the officer of the Company. The
Company was required to make interest-only payments until December 2019, then monthly
payments of both principal and interest starting from January 2020.
|
$
|
333,089
|
$
|
388,600
|
||||
|
||||||||
Long-term debt
|
$
|
333,089
|
$
|
388,600
|
||||
Less: current portion
|
(145,732
|
)
|
(194,300
|
)
|
||||
Long-term debt, net of current portion
|
$
|
187,357
|
$
|
194,300
|
NOTE 4: |
Line of Credit
|
NOTE 5: |
Short Term Loan Payable
|
NOTE 6: |
Investments
|
As of June 30, 2020 and December 31, 2019
|
|||||||||||||
Equity investee
|
Type of
Shares
Owned
|
Number
of Shares
Owned
|
Original
Investment
Amount
|
Equity
Investment
Ownership
|
|||||||||
ACDC Consulting VN PTE Ltd
|
Common stock
|
40
|
$
|
9,507.85
|
20
|
%
|
Available-for-sale securities
|
Percentage
of
Ownership
|
|||||||||||
4Grit
|
2.50
|
%
|
$
|
41,646
|
$
|
43,189
|
||||||
E-channel
|
0.07
|
%
|
$
|
39,390
|
$
|
40,849
|
||||||
KSFC
|
0.00
|
%
|
$
|
10,953
|
$
|
11,359
|
||||||
ACDC Consulting VN PTE LTD
|
20.00
|
%
|
$
|
9,681
|
$
|
10,040
|
||||||
Total investment securities
|
$
|
101,670
|
$
|
105,437
|
• |
Put Provision: From time to time over the 24-month term of the Purchase Agreement, commencing on the date on which a registration statement registering the Purchase Shares (the "Registration Statement") becomes effective, the Company
may, in its sole discretion, provide the Buyer with a put notice (each a "Put Notice") to purchase a specified number of the Purchase Shares (each a "Put Amount Requested") subject to the limitations contained in the Purchase Agreement.
|
• |
Term: Unless earlier terminated, the Purchase Agreement will terminate automatically on the earlier to occur of: (i) 24 months after the initial effectiveness of the Registration Statement, (ii) the date on which the Buyer has purchased
or acquired all of the Purchase Shares, or (iii) the date on which certain bankruptcy proceedings are initiated with respect to the Company.
|
Fair value, at December 31, 2019
|
$
|
105,594
|
||
Issuance of equity purchase put option
|
-
|
|||
Change in fair value
|
(3,773
|
)
|
||
Fair value, at June 30, 2020
|
$
|
101,821
|
NOTE 8: |
Commitments and Contingencies
|
NOTE 9: |
Related Party Transactions
|
NOTE 10: |
Earnings Per Share
|
Three-months Period
Ended June 30,
|
Six-months Period
Ended June 30,
|
|||||||||||||||
Periods Ended
|
2020
|
2019
|
2020
|
2019
|
||||||||||||
$
|
(2599,576
|
)
|
$
|
(227,471
|
)
|
$
|
(136,059
|
)
|
$
|
(1,325,358
|
)
|
|||||
Non-controlling interest
|
2,990
|
474
|
397
|
664
|
||||||||||||
Net income (loss)
|
(262,566
|
)
|
(227,945
|
)
|
(136,456
|
)
|
(1,324,694
|
)
|
||||||||
Weighted-average shares of common stock outstanding:
|
||||||||||||||||
Basic
|
35,030,339
|
35,030,339
|
35,030,339
|
35,030,339
|
||||||||||||
Dilutive effect of common stock equivalents arising from share option, excluding antidilutive effect from loss
|
-
|
-
|
-
|
-
|
||||||||||||
Dilutive shares
|
35,030,339
|
35,030,339
|
35,030,339
|
35,030,339
|
||||||||||||
Earnings per share - Basic
|
||||||||||||||||
Net income (loss) before non-controlling interest
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
||||
Non-controlling interest
|
$
|
0.00
|
$
|
0.00
|
$
|
0.00
|
$
|
0.00
|
||||||||
Earnings per share to stockholders
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
||||
Earnings per share - Diluted
|
||||||||||||||||
Net income (loss) before non-controlling interest
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
||||
Non-controlling interest
|
$
|
0.00
|
$
|
0.00
|
$
|
0.00
|
$
|
0.00
|
||||||||
Earnings per share to stockholders
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
NOTE 11: |
Non-Controlling Interest-Issuance of Preferred Stock by Subsidiary
|
● |
Voting rights – The preferred shareholder may have same voting rights as common stock shareholder (1:1)
|
● |
2% annual dividend
|
● |
Liquidating rights
|
● |
Conversion rights to common stock
|
o |
Call option by preferred shareholder - Preferred stock may be converted to common stock anytime at a fixed conversion price of KRW 3,500
|
o |
Call option by I-ON Communication – Should I-ON Communication exercise to redeem preferred stock, I-ON Communication is required to re-purchase for KRW 3,500 per share and 7% annual interest compounded.
|
NOTE 12: |
Subsequent Events
|
Three Month Ended
|
||||||||||||||||||||||||
Change
|
||||||||||||||||||||||||
Amount
|
% of Revenue
|
Amount
|
% of Revenue
|
Amount
|
%
|
|||||||||||||||||||
|
||||||||||||||||||||||||
Net sales
|
$
|
1,670,291
|
100.0
|
%
|
$
|
1,825,302
|
100.0
|
%
|
$
|
(155,011
|
)
|
-8.5
|
%
|
|||||||||||
Cost of goods sold
|
1,169,022
|
70.0
|
%
|
1,353,312
|
74.1
|
%
|
(184,290
|
)
|
-13.6
|
%
|
||||||||||||||
Gross profit (loss)
|
501,269
|
30.0
|
%
|
471,990
|
25.9
|
%
|
29,279
|
6.2
|
%
|
|||||||||||||||
Operating expense:
|
||||||||||||||||||||||||
Research and development
|
221,677
|
13.3
|
%
|
160,087
|
8.8
|
%
|
61,590
|
38.5
|
%
|
|||||||||||||||
General and administrative
|
457,216
|
27.4
|
%
|
521,733
|
28.6
|
%
|
(64,517
|
)
|
-12.4
|
%
|
||||||||||||||
Total operating expense
|
678,893
|
40.6
|
%
|
681,820
|
37.4
|
%
|
(2,927
|
)
|
-0.4
|
%
|
||||||||||||||
Loss from operations
|
(177,624
|
)
|
-10.6
|
%
|
(209,830
|
)
|
-11.5
|
%
|
32,206
|
-15.3
|
%
|
|||||||||||||
Other income (expense):
|
||||||||||||||||||||||||
Loss on extinguishment of debt
|
-
|
0.0
|
%
|
-
|
0.0
|
%
|
-
|
n/a
|
||||||||||||||||
Interest income
|
12,991
|
0.8
|
%
|
-
|
-
|
12,991
|
n/a
|
|||||||||||||||||
Foreign currency transaction gain(loss)
|
10,356
|
0.6
|
%
|
10,356
|
n/a
|
|||||||||||||||||||
Miscellaneous income, net
|
3,668
|
0.2
|
%
|
55,863
|
3.1
|
%
|
(52,195
|
)
|
-93.4
|
%
|
||||||||||||||
Interest expense
|
(7,340
|
)
|
-0.4
|
%
|
(30,564
|
)
|
-1.7
|
%
|
23,224
|
-76.0
|
%
|
|||||||||||||
Total other income (expense), net
|
19,675
|
1.2
|
%
|
25,299
|
1.4
|
%
|
(5,624
|
)
|
-22.2
|
%
|
||||||||||||||
Loss before provision for income taxes, loss on equity investments in affiliates, and non-controlling interest
|
(157,949
|
)
|
-9.5
|
%
|
(184,531
|
)
|
-10.1
|
%
|
26,582
|
-14.4
|
%
|
|||||||||||||
Provision for income tax
|
101,627
|
6.1
|
%
|
39,434
|
2.2
|
%
|
62,193
|
157.7
|
%
|
|||||||||||||||
Net loss before income or loss on equity investments in affiliates and non-controlling interest
|
(259,576
|
)
|
-15.5
|
%
|
(223,965
|
)
|
-12.3
|
%
|
(35,611
|
)
|
15.9
|
%
|
||||||||||||
Income (Loss) on equity investments
|
-
|
0
|
%
|
(3,506
|
)
|
-0.2
|
%
|
3,506
|
-100.0
|
%
|
||||||||||||||
Net loss before non-controlling interest
|
(259,576
|
)
|
-15.5
|
%
|
(227,471
|
)
|
-12.5
|
%
|
(32,105
|
)
|
14.1
|
%
|
||||||||||||
Non-controlling interest income (loss)
|
2,990
|
0.2
|
%
|
474
|
0.0
|
%
|
2,516
|
530.8
|
%
|
|||||||||||||||
Net loss
|
$ (262,566)
|
-15.7
|
%
|
$ (227,945)
|
-12.4
|
%
|
$(35,569)
|
15.7
|
%
|
Six Month Ended
|
||||||||||||||||||||||||
Change
|
||||||||||||||||||||||||
Amount
|
% of Revenue
|
Amount
|
% of Revenue
|
Amount
|
%
|
|||||||||||||||||||
|
||||||||||||||||||||||||
Net sales
|
$
|
3,956,463
|
100.0
|
%
|
$
|
3,464,921
|
100.0
|
%
|
$
|
491,542
|
14.2
|
%
|
||||||||||||
Cost of goods sold
|
2,738,424
|
69.2
|
%
|
3,168,667
|
91.4
|
%
|
(430,243
|
)
|
-13.6
|
%
|
||||||||||||||
Gross profit (loss)
|
1,218,039
|
30.8
|
%
|
296,254
|
8.6
|
%
|
921,785
|
311.1
|
%
|
|||||||||||||||
Operating expense:
|
||||||||||||||||||||||||
Research and development
|
404,161
|
10.2
|
%
|
378,594
|
10.9
|
%
|
25,567
|
6.8
|
%
|
|||||||||||||||
General and administrative
|
921,630
|
23.3
|
%
|
1,005,795
|
29.0
|
%
|
(84,165
|
)
|
-8.4
|
%
|
||||||||||||||
Total operating expense
|
1,325,791
|
33.5
|
%
|
1,384,389
|
40.0
|
%
|
(58,598
|
)
|
-4.2
|
%
|
||||||||||||||
Loss from operations
|
(107,752
|
)
|
-2.7
|
%
|
(1,088,135
|
)
|
-31.4
|
%
|
980,383
|
-90.1
|
%
|
|||||||||||||
Other income (expense):
|
||||||||||||||||||||||||
Loss on extinguishment of debt
|
-
|
-
|
(160,419
|
)
|
-4.6
|
%
|
(160,419
|
)
|
n/a |
|
||||||||||||||
Interest income
|
22,970
|
0.6
|
%
|
-
|
-
|
22,970
|
n/a
|
|||||||||||||||||
Foreign currency transaction gain(loss)
|
10,978
|
0.3
|
%
|
-
|
-
|
10-978
|
n/a
|
|||||||||||||||||
Miscellaneous income, net
|
59,206
|
1.5
|
%
|
39,382
|
1.1
|
%
|
19,824
|
50.3
|
%
|
|||||||||||||||
Interest expense
|
(13,276
|
)
|
-0.3
|
%
|
(45,147
|
)
|
-1.3
|
%
|
31,871
|
-70.6
|
%
|
|||||||||||||
Total other income (expense), net
|
79,878
|
2.0
|
%
|
(166,184
|
)
|
-4.84
|
%
|
246,062
|
-148.1
|
%
|
||||||||||||||
Loss before provision for income taxes, loss on equity investments in affiliates, and non-controlling interest
|
(27,874
|
)
|
-0.7
|
%
|
(1,254,319
|
)
|
-36.2
|
%
|
1,226,445
|
-97.8
|
%
|
|||||||||||||
Provision for income tax
|
108,185
|
2.7
|
%
|
63,977
|
1.8
|
%
|
44,208
|
69.1
|
%
|
|||||||||||||||
Net loss before income or loss on equity investments in affiliates and non-controlling interest
|
(136,059
|
)
|
-3.4
|
%
|
(1,318,296
|
)
|
-38.0
|
%
|
1,182,237
|
-89.7
|
%
|
|||||||||||||
Income (Loss) on equity investments
|
-
|
-0.0
|
%
|
(7,062
|
)
|
-0.2
|
%
|
7,062
|
-100.0
|
%
|
||||||||||||||
Net loss before non-controlling interest
|
(136,059
|
)
|
-3.4
|
%
|
(1,325,358
|
)
|
-38.3
|
%
|
1,189,299
|
-89.7
|
%
|
|||||||||||||
Non-controlling interest income (loss)
|
397
|
0.0
|
%
|
664
|
0.0
|
%
|
(267
|
)
|
-40.2
|
%
|
||||||||||||||
Net loss
|
$ (136,456)
|
-3.4
|
%
|
$ (1,326,694)
|
-38.2
|
%
|
$1,188,238
|
-89.7
|
%
|
Six Months Ended June 30,
|
Changes
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
Net cash used in operating activities
|
(255,196
|
)
|
(776,941
|
)
|
521,744
|
-67.2
|
%
|
|||||||||
Net cash provided (used) in investing activities
|
1,006
|
(253,375
|
)
|
254,381
|
-100.4
|
%
|
||||||||||
Net cash used in financing activities
|
(41,405
|
)
|
105,317
|
(146,722
|
)
|
-139.3
|
%
|
|||||||||
Effect of foreign currency translation on cash and cash equivalents
|
(100,136
|
)
|
(69,916
|
)
|
(30,220
|
)
|
-43.2
|
%
|
||||||||
Net decrease in cash and cash equivalents
|
(395,731
|
)
|
(994,915
|
)
|
599,184
|
-60.2
|
%
|
Exhibit
Number
|
Exhibit
Description
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
|
||
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **
|
Date: August 12, 2020 |
I-ON DIGITAL CORP.
|
|
By:
|
/s/ Jae Cheol Oh
|
|
Name: Jae Cheol Oh
|
||
Chief Executive Officer, Treasurer, Director (Principal Executive and Financial Officer)
|
This ‘10-Q’ Filing | Date | Other Filings | ||
---|---|---|---|---|
6/30/29 | ||||
12/31/20 | 10-K | |||
Filed on: | 8/12/20 | |||
7/30/20 | ||||
For Period end: | 6/30/20 | |||
3/31/20 | 10-Q | |||
1/1/20 | ||||
12/31/19 | 10-K | |||
12/15/19 | ||||
6/30/19 | 10-Q | |||
4/9/19 | ||||
3/31/19 | 10-Q | |||
3/21/19 | ||||
1/1/19 | ||||
12/31/18 | 10-K, NT 10-K | |||
12/15/18 | ||||
8/13/18 | ||||
1/25/18 | ||||
1/1/18 | ||||
12/15/17 | ||||
12/14/17 | ||||
12/2/15 | ||||
9/17/15 | 8-K | |||
10/15/14 | ||||
10/9/14 | 4 | |||
5/29/14 | 8-K | |||
4/4/14 | ||||
6/18/13 | ||||
2/15/06 | ||||
7/5/99 | ||||
List all Filings |