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Share Name | Share Symbol | Market | Type |
---|---|---|---|
I ON Digital Corporation (PK) | USOTC:IONI | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.188 | 9.99% | 2.07 | 1.82 | 2.07 | 2.07 | 1.70 | 1.92 | 68,382 | 20:58:29 |
I-ON DIGITAL CORP.
|
Delaware
|
46-3031328
|
|
(State or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S. Employer Identification Number)
|
15, Teheran-ro 10-gil, Gangnam-gu, Seoul, Korea
|
06234
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of each class
|
Name of each exchange on which registered
|
|
Common Stock, par value $0.0001 per share
|
OTCQB
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☒
|
Smaller reporting company ☒
|
Emerging growth company ☐
|
PART I
|
Page
|
|
Item 1.
|
2
|
|
Item 1A
|
13
|
|
Item 1B
|
21
|
|
Item 2.
|
21
|
|
Item 3.
|
21
|
|
Item 4.
|
21
|
|
|
||
PART II
|
||
Item 5.
|
22
|
|
Item 6.
|
23
|
|
Item 7.
|
23
|
|
Item 7A
|
28
|
|
Item 8.
|
28
|
|
Item 9.
|
28
|
|
Item 9A
|
28
|
|
Item 9B.
|
28
|
|
PART III
|
||
Item 10.
|
29
|
|
Item 11.
|
30
|
|
Item 12.
|
32
|
|
Item 13.
|
32
|
|
Item 14.
|
32
|
|
PART IV
|
||
Item 15.
|
33
|
|
36
|
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the
statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,”
“intends”, “plans”, “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should,” “designed to,” “designed for,” or other variations or similar words or language. No assurances can be given that the future
results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s
expectations.
Although these forward-looking statements reflect the good faith judgment of our management, such statements can only be based upon facts and factors currently known to us. Forward-looking
statements are inherently subject to risks and uncertainties, many of which are beyond our control. As a result, our actual results could differ materially from those anticipated in these forward-looking statements as a result of various
factors, including those set forth below under the caption “Risk Factors.” For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You
should not unduly rely on these forward-looking statements, which speak only as of the date on which they were made. They give our expectations regarding the future but are not guarantees. We undertake no obligation to update publicly or
revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.
|
Enterprise CMS & Digital Experience (IaaS/PaaS):
|
|
I-ON Content Server - ICS6
|
I-ON Content Application Framework Engine - ICAFE
|
I-ON Deploy Server - IDS
|
I-ON Content Ecosystem - ICE
|
I-ON Digital Asset Management System - IDAS
|
|
I-ON Web Analytics Server
|
Software as a Service (SaaS) :
|
Energy Management Solutions :
|
Distributed Repository Service - GAIA
|
Load Aggregator’s Management System - LAMS
|
iDrive - E-Document Management System
|
- Demand Resource Management
|
e.Form - mobile contract platform
Assist9 – mobile ERP dashboard
|
- DLMS/COSEM -Advanced two-way metering infrastructure
|
|
∙ |
Continue to leverage knowledge and experience into new or enhanced solutions and products
|
|
∙ |
Continue to deploy secure pilot environments for prospective customers to evaluate and envision additional uses for customized application development
|
|
∙ |
Continue to procure contracts directly, via strategic partnerships and increasing sales personnel
|
|
∙ |
Recruit seasoned executives as well as younger talent to utilize unique training model that addresses resource shortages
|
|
∙ |
Incubate and build-out focused profitable technology practices
|
|
∙ |
Continue to participate in multi-lateral joint research and development projects in concert with its partners across many different countries
|
|
∙ |
Integrated certification system using electronic contract #10-1132672
|
|
∙ |
Website construction and management methodology #0457428
|
|
∙ |
Website integrated management system and management methodology #10-0764690
|
|
∙ |
Internet Reaction application reaction survey methodology and systems #0366708
|
|
∙ |
Modification and restoration methodology on comment utilizing digital items #10-0634047
|
|
∙ |
Power Quantity Reduction Compensation System management method #10-1046943
|
|
∙ |
Mobile Chat Systems for Supporting Cartoon Story-Style Communication on Webpage #9973458
|
|
∙ |
Enhancement to Sports Game Assistance System #10223448
|
|
∙ |
I-ON holds over 20 additional domestic patents
|
|
∙ |
I-ON e.Form Server Green Technology Certificate #GT-12-00040
|
|
∙ |
I-ON Content Server v6.1 Certificate of Software Quality – GS (Good Software) #14-0017
|
|
∙ |
DRMS OpenADR 2.0a/b Certificate of System Conformance
|
|
∙ |
Certificate for Company Research Institute #20022427
|
∙
|
Selected to participate in ‘IP-Star Company development’ project by Seoul Business Agency (2013)
|
∙
|
Designated as Best Small and Medium Company Workplace by Small and Medium Business Corporation (2012-2014)
|
∙
|
Designated as Global Small Giant Company by Small and Medium Business Administration (2012-2014)
|
∙
|
Grand prize at New Software Solution in General Software section by Ministry of Knowledge Economy (2012)
|
∙
|
Designated as top Promising Future-Leading Company by Money Today (Economic newspaper 2012)
|
∙
|
Certified ‘Promising Export Firm’ by Small and Medium Business Administration (2011-2013)
|
∙
|
KOSA (Korea Software Industry Association)
|
∙
|
Best prize at 11th Korean Software Companies’ Competitiveness Award - Mobile SW section (2012)
|
∙
|
Best prize at 10th Korean Software Companies’ Competitiveness Award– KMS/EMC/BMP section (2011)
|
|
∙ |
Best prize at SoftBank Mobile Solution Contest in Japan (2011)
|
|
∙ |
Citation of Prime Minister awarded on the SW Industrial Day (2011)
|
|
∙ |
Tower of million USD exports award (2007)
|
|
∙ |
Grand prize in Internet Service Section (oneul.com) (2012)
|
|
∙ |
Winner of Brand Service Section (Lotte Duty Free) (2012)
|
|
∙ |
Grand prize in Business Improvement section (e.Form) (2012)
|
|
∙ |
Grand Prize in Information Management (Real-time Power demand resources Operation System) (2012)
|
|
∙ |
Grand Prize in Location Based System (LBS) (Lucky Bird) (2012)
|
|
∙ |
Grand Prize in Product brand (Catch Chevrolet) (2011)
|
|
∙ |
Grand Prize eBook (Kyowon Aesop) (2011)
|
2017
|
|
2018
|
2019
|
|
2020
|
||||||||||||||||
JoongAng Ilbo
|
8.6
|
%
|
KEPCO
|
10.1
|
%
|
SBDC
|
10.8
|
%
|
Samsung SDS
|
18.6
|
%
|
||||||||||
KBS
|
6.7
|
%
|
K.K. I-ON
|
7.7
|
%
|
Kyowon Creative
|
8.8
|
%
|
LG CNS
|
12.9
|
%
|
||||||||||
Hyundai Auto
|
6.3
|
%
|
Samsung Electro
|
6.5
|
%
|
Finger
|
8.8
|
%
|
K.K I-ON
|
9.7
|
%
|
||||||||||
Samsung Electro
|
6.0
|
%
|
SBDC
|
6.5
|
%
|
Amore Pacific
|
7.0
|
%
|
SBDC
|
5.8
|
%
|
||||||||||
KTDS
|
5.7
|
%
|
Finger
|
6.3
|
%
|
K.K I-ON
|
6.0
|
%
|
Kyowon Creative
|
5.3
|
%
|
||||||||||
K.K. I-ON
|
5.5
|
%
|
Mnwise
|
5.9
|
%
|
SG Tech
|
5.9
|
%
|
SK
|
4.7
|
%
|
||||||||||
Jeju Tourism
|
4.8
|
%
|
K.K. Ashisuto
|
4.7
|
%
|
Samsung SDS
|
5.3
|
%
|
Samsung Card
|
3.2
|
%
|
||||||||||
KLPGA
|
4.2
|
%
|
Shinhan Card
|
4.7
|
%
|
Seoul School Safety Mutual Aid Association
|
5.3
|
%
|
Shinhan Card
|
3.0
|
%
|
||||||||||
YTN
|
4.0
|
%
|
Samsung SDS
|
4.1
|
%
|
Penta Breed
|
3.2
|
%
|
NEO B&S
|
2.6
|
%
|
||||||||||
CJ Digital Music
|
3.9
|
%
|
Jeju Tourism
|
3.9
|
%
|
SBS
|
3.0
|
%
|
Finger
|
1.9
|
%
|
||||||||||
55.7
|
%
|
60.4
|
%
|
63.4
|
%
|
67.6
|
%
|
●
|
be time-consuming and expensive to defend, whether meritorious or not;
|
|
● |
require us to stop providing products or services that use the technology that allegedly infringes the other party’s intellectual property;
|
|
● |
divert the attention of our technical and managerial resources;
|
|
● |
require us to enter into royalty or licensing agreements with third-parties, which may not be available on terms that we deem acceptable;
|
|
● |
prevent us from operating all or a portion of our business or force us to redesign our products, services or technology platforms, which could be difficult and expensive and may make the performance or value of our product or service
offerings less attractive;
|
|
● |
subject us to significant liability for damages or result in significant settlement payments; or
|
|
● |
require us to indemnify our customers.
|
|
∙ |
the concentration of the ownership of our shares by a limited number of affiliated stockholders may limit interest in our securities;
|
|
∙ |
limited “public float” with a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;
|
|
∙ |
additions or departures of key personnel;
|
|
∙ |
loss of a strategic relationship;
|
|
∙ |
variations in operating results from the expectations of securities analysts or investors;
|
|
∙ |
announcements of new products or services by us or our competitors;
|
|
∙ |
reductions in the market share of our products;
|
|
∙ |
announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
|
|
∙ |
investor perception of our industry or prospects;
|
|
∙ |
insider selling or buying;
|
|
∙ |
investors entering into short sale contracts;
|
|
∙ |
regulatory developments affecting our industry; and
|
|
∙ |
changes in our industry;
|
|
∙ |
competitive pricing pressures;
|
|
∙ |
our ability to obtain working capital financing;
|
|
∙ |
sales of our common stock;
|
|
∙ |
our ability to execute our business plan;
|
|
∙ |
operating results that fall below expectations;
|
|
∙ |
revisions in securities analysts’ estimates or reductions in security analysts’ coverage; and
|
|
∙ |
economic and other external factors.
|
Price Range
|
||||||||
Quarter Ended
|
High ($)
|
Low ($)
|
||||||
December 31, 2020
|
$
|
0.15
|
0.13
|
|||||
September 30, 2020
|
$
|
0.22
|
0.18
|
|||||
June 30, 2020
|
$
|
0.08
|
0.08
|
|||||
March 31, 2020
|
$
|
0.09
|
0.09
|
|||||
December 31, 2019
|
$
|
0.11
|
0.06
|
|||||
September 30, 2019
|
$
|
0.14
|
0.05
|
|||||
June 30, 2019
|
$
|
0.35
|
0.08
|
|||||
March 31, 2019
|
$
|
0.60
|
0.06
|
Year Ended
|
||||||||||||||||||||||||
December 31, 2020
|
December 31, 2019
|
Change
|
||||||||||||||||||||||
Amount
|
% of Revenue
|
Amount
|
% of Revenue
|
Amount
|
%
|
|||||||||||||||||||
|
||||||||||||||||||||||||
Net sales
|
$
|
10,471,502
|
100.0
|
%
|
$
|
7,954,015
|
100.0
|
%
|
$
|
2,517,487
|
31.7
|
%
|
||||||||||||
Cost of goods sold
|
6,078,030
|
58.0
|
%
|
5,519,931
|
69.4
|
%
|
558,099
|
10.1
|
%
|
|||||||||||||||
Gross profit (loss)
|
4,393,472
|
42.0
|
%
|
2,434,084
|
30.6
|
%
|
1,959,388
|
80.5
|
%
|
|||||||||||||||
Operating expense:
|
||||||||||||||||||||||||
Research and development
|
999,209
|
9.5
|
%
|
838,237
|
10.5
|
%
|
160,972
|
19.2
|
%
|
|||||||||||||||
General and administrative
|
1,697,377
|
16.2
|
%
|
1,871,818
|
23.5
|
%
|
(174,441
|
)
|
-9.3
|
%
|
||||||||||||||
Total operating expense
|
2,696,586
|
25.8
|
%
|
2,710,055
|
34.1
|
%
|
(13,469
|
)
|
-0.5
|
%
|
||||||||||||||
Income (loss) from operations
|
1,696,886
|
16.2
|
%
|
(275,971
|
)
|
-3.5
|
%
|
1,972,857
|
-714.9
|
%
|
||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||
Loss on extinguishment of debt
|
-
|
0.0
|
%
|
(216,208
|
)
|
-2.7
|
%
|
216,208
|
-100.0
|
%
|
||||||||||||||
Interest Income
|
45,405 | 0.4 | % | 52,104 | 0.7 | % | (6,699 |
)
|
-12.9 | % | ||||||||||||||
Foreign currency transaction gain (loss)
|
(1,865
|
)
|
0.0
|
%
|
14,966
|
0.2
|
%
|
(16,831
|
)
|
-112.5
|
%
|
|||||||||||||
Government subsidized income
|
15,487
|
0.1
|
%
|
6,391
|
0.1
|
%
|
9,096
|
142.3
|
%
|
|||||||||||||||
Miscellaneous income, net
|
(24,957
|
)
|
-0.2
|
%
|
35,308
|
0.4
|
%
|
(60,265
|
)
|
-170.7
|
%
|
|||||||||||||
Interest expense
|
(23,507
|
)
|
-0.2
|
%
|
(48,041
|
)
|
-0.6
|
%
|
24,534
|
-51.1
|
%
|
|||||||||||||
Total other income (expense), net
|
10,563
|
0.1
|
%
|
(155,480
|
)
|
-2.0
|
%
|
166,043
|
-106.8
|
%
|
||||||||||||||
Income (loss) before provision for income taxes, and non-controlling interest
|
1,707,449
|
16.3
|
%
|
(431,451
|
)
|
-5.4
|
%
|
2,138,900
|
-495.7
|
%
|
||||||||||||||
Provision for income tax
|
86,570
|
0.8
|
%
|
276,015
|
3.5
|
%
|
(189,445
|
)
|
-68.6
|
%
|
||||||||||||||
Net income (loss) before non-controlling interest
|
1,620,879
|
15.5
|
%
|
(707,466
|
)
|
-8.9
|
%
|
2,328,345
|
-329.1
|
%
|
||||||||||||||
Non-controlling interest income
|
431
|
0.0
|
%
|
4,982
|
0.1
|
%
|
(4,551
|
)
|
-91.3
|
%
|
||||||||||||||
Net income (loss)
|
$
|
1,620,448
|
15.5
|
%
|
$
|
(712,448
|
)
|
-9.0
|
%
|
$
|
2,332,896
|
-327.4
|
%
|
|
● |
Revenue from customization increased by $710,087 or 15.8%, to $5,209,443 for the year ended
December 31, 2020 from $4,499,346 for the year ended December 31, 2019. The increase was due to increase in amount of customer
contract revenue which was $9,578,588 for year ended December 31, 2020 compared to $6,980,876 for the year ended December 31,
2019.
|
|
● |
Revenue from maintenance increased by $338,571 or 23.1%, to $1,802,032 for the year ended December 31, 2020 from $1,463,461
for the year ended December 31, 2019. The increase was due to increase in maintenance and development contracts and increase in number of customers to 91 in 2020 from 65 in 2019.
|
|
● |
Revenue from installation increased by $1,140,802 or 144.2%, to $1,931,765 for the year ended December 31, 2020 from $790,963 for the year ended December 31, 2019. The increase was due to increase in number of customers to 19 in 2020 from 9 in 2019.
|
Year Ended December 31,
|
Change
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
Net cash provided by operating activities
|
$
|
2,600,978
|
$
|
134,444
|
$
|
2,466,534
|
1834.6
|
%
|
||||||||
Net cash used in investing activities
|
(7,002
|
)
|
(462,131
|
)
|
455,129
|
-98.5
|
%
|
|||||||||
Net cash provided by financing activities
|
200,694
|
57,296
|
143,398
|
250.3
|
%
|
|||||||||||
Effect of foreign currency translation on cash and cash equivalents
|
494,198
|
(159,366
|
)
|
653,564
|
-410.1
|
%
|
||||||||||
Net increase (decrease) in cash and cash equivalents
|
$
|
3,288,868
|
$
|
(429,757
|
)
|
$
|
3,718,625
|
-865.3
|
%
|
Name
|
Age
|
Position
|
Jae Cheol Oh
|
51
|
Chairman, Chief Executive Officer, Chief Financial Officer
|
Hong Rae Kim
|
50
|
Executive Director
|
Jae Ho Cho
|
46
|
Director
|
Eugene Hong
|
63
|
Director
|
Jean Koh
|
60
|
Director
|
Charlie Baik
|
51
|
Director
|
Name and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan
Compensation
|
Nonqualified
Deferred
Compensation
Earnings
|
All
Other
Comp.
($)
|
Total
($)
|
|||||||||||||||||||||||||
Jae Cheol Oh, Chairman, Chief Executive Officer, Chief Financial Officer (5)
|
2020
2019
|
$
$
|
85,928
86,086
|
-
-
|
$
|
|
-
-
|
-
-
|
-
-
|
|
$
$
|
85,928
86,086
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||
Hong Rae Kim, Director (5)
|
2020
2019
|
$
$
|
79,022
76,092
|
-
-
|
$
|
|
-
-
|
-
-
|
-
-
|
|
$
$
|
79,022
76,092
|
||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Jae Ho Cho, Director (5)
|
2020
2019
|
$
$
|
83,132
89,992
|
-
-
|
$
|
|
-
-
|
-
-
|
-
-
|
|
$
$
|
83,132
89,992
|
||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Eugene Hong, Director (6)
|
2020
2019
|
$
$
|
-
-
|
-
-
|
$
|
|
-
-
|
-
-
|
-
-
|
|
$
$
|
-
-
|
||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Jean Koh, Director (6)
|
2020
2019
|
$
$
|
-
-
|
-
-
|
$
|
|
-
-
|
-
-
|
-
-
|
|
$
$
|
-
-
|
||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||
Charlie Baik, Director (6)
|
2020
2019
|
$
$
|
5,084
5,147
|
-
-
|
$
|
|
-
-
|
-
-
|
-
-
|
|
$
$
|
5,084
5,147
|
(5)
|
Appointed January 25, 2018.
|
(6)
|
Appointed August 10, 2018.
|
Shareholder (1)
|
Beneficial
Ownership
|
Percent of
Class (2)
|
||||||
Jae Cheol Oh
|
14,292,723
|
40.8
|
%
|
|||||
Hong Rae Kim
|
1,013,396
|
2.9
|
%
|
|||||
Jae Ho Cho
|
0
|
0
|
%
|
|||||
Eugene Hong
|
0
|
0
|
%
|
|||||
Jean Koh
|
0
|
0
|
%
|
|||||
Charlie Baik
|
0
|
0
|
%
|
|||||
Officers and Directors as a Group (3 persons)
|
15,306,119
|
43.7
|
%
|
(1)
|
The address for all officers, directors and beneficial owners is 15, Teheran-ro 10-gil, Gangnam-gu, Seoul, Korea.
|
Year Ended
December 31,
2020(1)
($)
|
Year Ended
December 31,
2019(2)
($)
|
|||||||
Audit fees
|
$
|
75,000
|
$
|
75,000
|
||||
Audit-related fees
|
-0-
|
-0-
|
||||||
Tax fees
|
20,000
|
-0-
|
||||||
All other fees
|
-0-
|
-0-
|
||||||
Total
|
$
|
95,000
|
$
|
75,000
|
|
(1) |
Performed by Benjamin & Ko
|
|
(2) |
Performed by Benjamin & Ko
|
Number
|
Description
|
|
Agreement of Merger and Plan of Reorganization among Evans Brewing Company, Inc., I-ON Digital Corp.., I-ON Acquisition Corp. and I-on Digital, Ltd. (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on
December 26, 2017, and incorporated herein by reference)
|
||
Spin-Off Agreement among Evans Brewing Company, Inc., Michael J. Rapport Trust, Evans Brewing Company, Inc. and EBC Public House, Inc. (previously filed as Exhibit 2.2 to the Company’s Current Report on Form 8-K, filed on February 1, 2018,
and incorporated herein by reference)
|
||
Certificate of Incorporation of the Company (previously filed as Exhibit 3.1 to the Company’s Registration Statement on Form 10, filed on July 3, 2013, and incorporated herein by reference)
|
||
Certificate of Amendment of Certificate of Incorporation (previously filed as Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed on April 22, 2014, and incorporated herein by reference)
|
||
Certificate of Amendment of Certificate of Incorporation (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on October 23, 2015, and incorporated herein by reference)
|
Certificate of Amendment of Certificate of Incorporation (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on February 1, 2018, and incorporated herein by reference)
|
||
Certificate of Amendment of Certificate of Incorporation (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 3, 2019, and incorporated herein by reference)
|
||
By-laws of the Company (previously filed as Exhibit 3.2 to the Company’s Registration Statement on Form 10, filed on July 3, 2013, and incorporated herein by reference)
|
||
Certificate of Designation of Rights and Preferences for Series A Convertible Preferred Stock (previously filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on December 15, 2015, and incorporated herein by reference)
|
||
Convertible Note Debenture in favor of Peak One Opportunity Fund, L.P., due August 13, 2021 (previously filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on August 28, 2018, and incorporated herein by reference)
|
||
Common Stock Purchase Warrant of Peak One Opportunity Fund, L.P. (previously filed as Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on August 28, 2018, and incorporated herein by reference)
|
||
Securities Purchase Agreement between the Company and Peak One Opportunity Fund, L.P. (previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on August 28, 2018, and incorporated herein by reference)
|
||
Equity Purchase Agreement between the Company and Peak One Opportunity Fund, L.P. (previously filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on August 28, 2018, and incorporated herein by reference)
|
||
Registration Rights Agreement between the Company and Peak One Opportunity Fund, L.P. (previously filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on August 28, 2018, and incorporated herein by reference)
|
||
Code of Business Conduct and Ethics (previously filed as Exhibit 14.1 to the Company’s Registration Statement on Form S-1, filed on September 27, 2017, and incorporated herein by reference)
|
||
List of Subsidiaries*
|
||
Certification of Chief Executive and Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended*
|
||
Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002*
|
101.INS
|
XBRL Instance Document*
|
|
101.SCH
|
XBRL Schema Document*
|
|
101.CAL
|
XBRL Calculation Linkbase Document*
|
|
101.DEF
|
XBRL Definition Linkbase Document*
|
|
101.LAB
|
XBRL Label Linkbase Document*
|
|
101.PRE
|
XBRL Presentation Linkbase Document*
|
* |
Furnished herewith.
|
** |
Filed herewith.
|
I-ON DIGITAL CORP.
|
|||
By:
|
/s/ Jae Cheol Oh
|
||
Name: Jae Cheol Oh
|
|||
Title:
|
Chairman, Chief Executive Officer and Chief Financial Officer
(Principal Executive, Financial and Accounting Officer)
|
March 25, 2021
|
|
/s/ Jae Cheol Oh
|
|
Name: Jae Cheol Oh
|
|
Title: Chairman, Chief Executive Officer and Chief Financial officer
|
|
(Principal Executive, Financial and Accounting Officer)
|
|
March 25, 2021
|
/s/ Hong Rae Kim
|
Name: Hong Rae Kim
|
|
Title: Executive Director
|
March 25, 2021
|
/s/ Jae Ho Cho
|
Name: Jae Ho Cho
|
|
Title: Director
|
March 25, 2021
|
/s/ Eugene Hong
|
Name: Eugene Hong
|
|
Title: Director
|
March 25, 2021
|
/s/ Jean Koh
|
Name: Jean Koh
|
|
Title: Director
|
March 25, 2021
|
/s/ Charlie Baik
|
Name: Charlie Baik
|
|
Title: Director
|
3
|
||
Consolidated Financial Statements
|
||
4
|
||
5
|
||
6
|
||
7
|
||
8
|
|
|
|
• |
Revenue recognition for certain long-term fixed-price contracts
|
o
|
reading the underlying contracts and related amendments to obtain an understanding of the contractual requirements and related performance obligations,
|
o
|
considering hours incurred to-date and the relative progress towards completion of the contracts,
|
o
|
considering, if relevant, the estimated reserves on specific contracts that include estimation uncertainty based on the nature of the contract, and
|
o
|
evaluating the Company’s assessment of contract performance risks included within the estimated hours to complete.
|
•
|
Income taxes and Deferred Tax Assets
|
o
|
We evaluated the completeness and accuracy of deferred income taxes and the income tax provision by agreement to material tax filings.
|
o
|
We assessed the reasonableness of the key judgements and estimates inherent in management’s assessment of their tax obligation and uncertain tax positions, including analysis over forecasts and tax
elections.
|
o
|
We involved our tax specialists with our evaluation of management’s judgements that no uncertain positions exist by analyzing the related tax law, statutes, and regulations and their application to
the Company’s positions.
|
o
|
We evaluated the adequacy of the Company’s disclosure in Note 12 in relation to the income taxes.
|
o
|
We evaluated the assumptions and estimates used by management in the context of other audit evidence obtained during the audit.
|
December 31,
|
2020
|
2019
|
||||||
|
||||||||
ASSETS
|
||||||||
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
4,521,328
|
$
|
1,337,741
|
||||
Restricted cash
|
1,746,324
|
1,641,043
|
||||||
Short-term financial instruments
|
771,140
|
716,013
|
||||||
Short-term loan receivable
|
137,868
|
197,741
|
||||||
Accounts receivables, net of allowance for doubtful accounts $619,336 and $674,129, respectively
|
3,006,084
|
2,875,384
|
||||||
Deferred tax assests - current
|
274,291
|
232,766
|
||||||
Prepaid expenses and other current assets
|
1,099,493
|
1,055,553
|
||||||
Total current assets
|
11,556,528
|
8,056,241
|
||||||
|
||||||||
Non-current assets:
|
||||||||
Investments
|
101,517
|
105,437
|
||||||
Property and equipment, net
|
118,402
|
203,754
|
||||||
Intangible assets, net
|
232,400
|
192,868
|
||||||
Deposits
|
395,585
|
354,300
|
||||||
Derivative asset
|
-
|
105,594
|
||||||
Deferred tax assets - non current
|
755,795
|
774,307
|
||||||
Total non-current assets
|
1,603,699
|
1,736,260
|
||||||
Total Assets
|
$
|
13,160,227
|
$
|
9,792,501
|
||||
|
||||||||
Liabilities and Stockholders’ Equity
|
||||||||
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
626,919
|
$
|
48,802
|
||||
Accrued expenses and other
|
1,835,463
|
1,705,485
|
||||||
Value added tax payable
|
233,477
|
107,717
|
||||||
Income tax payable
|
31,668
|
8,179
|
||||||
Short-term loan payable
|
505,515
|
475,039
|
||||||
Current portion of long term debt
|
206,765
|
194,300
|
||||||
Government grants outstanding
|
424,439
|
-
|
||||||
Total current liabilities
|
3,864,246
|
2,539,522
|
||||||
Long term debt, net of current portion
|
-
|
194,300
|
||||||
Total liabilities
|
3,864,246
|
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 December 31, 2020 and December 31, 2019
|
3,503
|
3,603
|
||||||
Treasury stock
|
(709,478
|
)
|
(709,478
|
)
|
||||
Additional paid-in-capital
|
3,713,370
|
3,646,740
|
||||||
Accumulated other comprehensive loss
|
289,933
|
(259,960
|
)
|
|||||
Accumulated retained earnings
|
5,517,785
|
3,897,337
|
||||||
Total company stockholders’ equity
|
8,815,113
|
6,578,242
|
||||||
Preferred stock (I-ON Korea) - $.4380 par value; authorized 2,000,000 shares; 157,142 shares issued and outstanding at December 31, 2020 and at December 31, 2019
|
475,036
|
475,036
|
||||||
Non-controlling interests
|
5,832
|
5,401
|
||||||
Total stockholders’ equity
|
9,295,981
|
7,058,679
|
||||||
Total Liabilities and Stockholders’ Equity
|
$
|
13,160,227
|
$
|
9,792,501
|
Years Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Net sales
|
$
|
10,471,502
|
$
|
7,954,015
|
||||
Cost of goods sold
|
6,078,030
|
5,519,931
|
||||||
Gross profit
|
4,393,472
|
2,434,084
|
||||||
Operating expense:
|
||||||||
Research and development
|
999,209
|
838,237
|
||||||
General and administrative
|
1,697,377
|
1,871,818
|
||||||
Total operating expense
|
2,696,586
|
2,710,055
|
||||||
Income (loss) from operations
|
1,696,886
|
(275,971
|
)
|
|||||
Other income (expense):
|
||||||||
Loss on extinguishment of convertible debt
|
-
|
(216,208
|
)
|
|||||
Interest income
|
45,405
|
52,104
|
||||||
Foreign currency transaction gain (loss)
|
(1,865
|
)
|
14,966
|
|||||
Government subsidized income
|
15,487
|
6,391
|
||||||
Miscellaneous income, net
|
(24,957
|
)
|
35,308
|
|||||
Interest expense
|
(23,507
|
)
|
(48,041
|
)
|
||||
Total other income (expense), net
|
10,563
|
(155,480
|
)
|
|||||
Income (loss) before provision for income taxes, and non-controlling interest
|
1,707,449
|
(431,451
|
)
|
|||||
Provision for (benefit from) income tax
|
86,570
|
276,015
|
||||||
Net income (loss) before non-controlling interest
|
1,620,879
|
(707,466
|
)
|
|||||
Non-controlling interest income (loss)
|
431
|
4,982
|
||||||
Net income (loss)
|
$
|
1,620,448
|
$
|
(712,448
|
)
|
|||
Comprehensive income statement:
|
||||||||
Net income (loss)
|
$
|
1,620,879
|
$
|
(707,466
|
)
|
|||
Foreign currency translation gain (loss)
|
549,893
|
(207,767
|
)
|
|||||
Total comprehensive income (loss)
|
$
|
2,170,772
|
$
|
(915,233
|
)
|
|||
Earnings per share - Basic
|
||||||||
Net income (loss) before non-controlling interest
|
$
|
0.05
|
$
|
(0.02
|
)
|
|||
Non-controlling interest
|
$
|
0.00
|
$
|
0.00
|
||||
Earnings per share to stockholders
|
$
|
0.05
|
$
|
(0.02
|
)
|
|||
Earnings per share - Diluted
|
||||||||
Net income (loss) before non-controlling interest
|
$
|
0.05
|
$
|
(0.02
|
)
|
|||
Non-controlling interest
|
$
|
0.00
|
$
|
0.00
|
||||
Earnings per share to stockholders
|
$
|
0.05
|
$
|
(0.02
|
)
|
|||
Weighted average number of common shares outstanding:
|
||||||||
Basic
|
35,030,339
|
35,030,339
|
||||||
Diluted
|
35,030,339
|
35,030,339
|
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
|
|||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
-
|
(207,767
|
)
|
(207,767
|
)
|
-
|
-
|
(207,767
|
)
|
|||||||||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
63,753
|
-
|
-
|
-
|
63,753
|
-
|
-
|
63,753
|
||||||||||||||||||||||||||||||
Issuance of preferred stock of subsidiary (I-ON Korea)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
475,036
|
475,036
|
||||||||||||||||||||||||||||||
Net income (loss)
|
-
|
-
|
-
|
(712,448
|
)
|
-
|
-
|
(712,448
|
)
|
4,982
|
-
|
(707,466
|
)
|
|||||||||||||||||||||||||||
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
|
|||||||||||||||||||
Reclassification of issuance of common stock in connection with equity purchase agreement
|
-
|
(100
|
)
|
100
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
-
|
549,893
|
549,893
|
-
|
-
|
549,893
|
||||||||||||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
66,530
|
-
|
-
|
-
|
66,530
|
-
|
-
|
66,530
|
||||||||||||||||||||||||||||||
Net income (loss)
|
-
|
-
|
-
|
1,620,448
|
-
|
-
|
1,620,448
|
431
|
-
|
1,620,879
|
||||||||||||||||||||||||||||||
Balance at December 31, 2020
|
35,030,339
|
$
|
3,503
|
$
|
3,713,370
|
$
|
5,517,785
|
$
|
(709,478
|
)
|
$
|
289,933
|
$
|
8,815,113
|
$
|
5,832
|
$
|
475,036
|
$
|
9,295,981
|
Years ended December 31,
|
2020
|
2019
|
||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
1,620,448
|
$
|
(712,448
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||
Non-controlling interest
|
431
|
10,360
|
||||||
Depreciation - fixed assets
|
111,806
|
215,919
|
||||||
Amortization of intangible assets
|
29,179
|
24,134
|
||||||
Stock options expense
|
66,530
|
63,753
|
||||||
Amortization of debt discount
|
-
|
11,111
|
||||||
Loss on extinguishment of convertible debt
|
-
|
216,208
|
||||||
Foreign exchange gain (loss)
|
-
|
978
|
||||||
Interest expense - OID on convertible debt
|
-
|
(55,000
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Account receivable, net
|
148,057
|
(205,056
|
)
|
|||||
Prepaid expenses and other current assets
|
21,924
|
(226,447
|
)
|
|||||
Deposit
|
(17,108
|
)
|
(8,491
|
)
|
||||
Deferred taxes
|
38,351
|
225,161
|
||||||
Account payable
|
431,649
|
(352,800
|
)
|
|||||
Accrued expenses and other
|
18,960
|
935,576
|
||||||
Value added tax payable
|
109,578
|
2,885
|
||||||
Income tax payable
|
21,173
|
(11,399
|
)
|
|||||
Net cash provided by operating activities
|
2,600,978
|
134,444
|
||||||
Cash flows from investing activities:
|
||||||||
Proceeds from (purchases of) investments
|
(49,998
|
)
|
(9,972
|
)
|
||||
Purchases of property and equipment
|
(21,060
|
)
|
(196,729
|
)
|
||||
Purchases of intangible assets
|
(54,219
|
)
|
(83,852
|
)
|
||||
Payments received from short-term loan receivable
|
136,117
|
29,123
|
||||||
Loans provided under short-term loans
|
(17,842
|
)
|
(200,701
|
)
|
||||
Net cash used in investing activities
|
(7,002
|
)
|
(462,131
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Payments on short-term loan payable
|
-
|
(600,523
|
)
|
|||||
Proceeds from loan
|
-
|
471,840
|
||||||
Principal payments on long-term debt
|
(190,636
|
)
|
(85,858
|
)
|
||||
Principal payments on convertible debt
|
-
|
(200,000
|
)
|
|||||
Proceeds from issuance of non-controlling interest preferred shares issued by subsidiary
|
-
|
471,837
|
||||||
Net receipt of government grants
|
391,330
|
-
|
||||||
Net cash provided by financing activities
|
200,694
|
57,296
|
||||||
Effect of foreign currency translation on cash and cash equivalents
|
494,198
|
(159,366
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
3,288,868
|
(429,757
|
)
|
|||||
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
|
$
|
6,267,652
|
$
|
2,978,784
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Interest paid
|
$
|
23,507
|
$
|
6,750
|
||||
Taxes paid
|
$
|
26,689
|
$
|
6,757
|
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 accumulated other comprehensive income.
|
December 31,
|
December 31,
|
Average Year Ended
December 31,
|
|||||||
Currency
|
2020
|
2019
|
2020
|
2019
|
|||||
Japanese Yen to Korean Won
|
JPY10.54
|
JPY 10.63
|
JPY11.05
|
JPY10.69
|
|||||
Korean Won to US Dollar ($)
|
KRW1,088.00
|
KRW 1,157.80
|
KRW1,180.05
|
KRW 1,165.65
|
|
● |
Consolidation – Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the exchange rated prevailing at the balance sheet date. The results of operations are translated from KRW 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.
|
2020
|
2019
|
|||||||
Korea:
|
||||||||
Current assets
|
$
|
10,998,742
|
$
|
7,821,531
|
||||
Non-current assets
|
1,603,402
|
1,735,978
|
||||||
Current liabilities
|
3,535,680
|
2,437,550
|
||||||
Non-current liabilities
|
-
|
194,300
|
||||||
Net Sales
|
8,872,013
|
7,141,655
|
||||||
Japan:
|
||||||||
Current assets
|
$
|
557,786
|
$
|
234,710
|
||||
Non-current assets
|
297
|
282
|
||||||
Current liabilities
|
328,566
|
101,972
|
||||||
Non-current liabilities
|
-
|
-
|
||||||
Net Sales
|
1,599,489
|
812,360
|
|
∙ |
Royalty – the Company receives a fixed amount of royalties from a 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.
|
Facility equipment
|
4 years
|
Automobile
|
4 years
|
Office equipment
|
4 years
|
Development costs
|
3 years
|
Intangible assets excluding development costs
|
10 years
|
Other Intangible assets
|
3 to 5 years
|
|
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
|
|
∙ |
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
|
December 31, 2020
|
||||||||||||
Level 1
|
Level 2
|
Level 3
|
||||||||||
Available-for-sale securities
|
$
|
-
|
$
|
-
|
$
|
101,517
|
||||||
Equity purchase put option
|
-
|
-
|
|
-
|
||||||||
Fair value, at December 31, 2020
|
$
|
-
|
$
|
-
|
$
|
101,517
|
December 31, 2019
|
||||||||||||
Level 1
|
Level 2
|
Level 3
|
||||||||||
Available-for-sale securities
|
$
|
-
|
$
|
-
|
$
|
105,437
|
||||||
Equity purchase put option
|
-
|
-
|
105,594
|
|||||||||
Fair value, at December 31, 2019
|
$
|
-
|
$
|
0
|
$
|
211,031
|
● |
Reference Rate Reform
|
● |
Fair Value Measurements
|
● |
Retirement Plans
|
● |
Intangibles – Goodwill and other – Internal-Use Software
|
● |
Goodwill
|
● |
Financial Instruments
|
●
|
Income Statement – Reporting Comprehensive Income
|
●
|
Improvements to Nonemployee Share-based Payment Accounting
|
● |
Leases (ASU 2019-01)
|
● |
Leases (ASU 2016-02)
|
Note 3. |
Property and Equipment
|
December 31,
|
2020
|
2019
|
||||||
Facilities
|
$
|
197,430
|
$
|
185,528
|
||||
Vehicles
|
42,555
|
39,989
|
||||||
Equipment
|
1,769,330
|
1,615,288
|
||||||
Government grants
|
(355,582
|
)
|
(213,526
|
)
|
||||
Total property and equipment
|
1,653,733
|
1,627,279
|
||||||
Less: accumulated depreciation
|
(1,535,331
|
)
|
(1,423,525
|
)
|
||||
Property and equipment, net
|
$
|
118,402
|
$
|
203,754
|
Note 4. |
Investment
|
Investments
|
Percentage of
Ownership
|
December 31,
2020
|
December 31,
2019
|
||||||||||
PT IONSOFT
|
Equity
|
0.09
|
%
|
$ | - | $ | - | ||||||
ACDC Consulting VN PTE LED
|
Available-for-sale
|
20.00
|
%
|
$
|
-
|
$
|
10,040
|
||||||
4Grit
|
Available-for-sale
|
2.50
|
%
|
$
|
45,960
|
$
|
43,189
|
||||||
E-channel
|
Available-for-sale
|
0.07
|
%
|
$
|
43,470
|
$
|
40,849
|
||||||
KSFC
|
Available-for-sale
|
0.00
|
%
|
$
|
12,087
|
$
|
11,359
|
||||||
Total investment securities
|
$
|
101,517
|
$
|
105,437
|
Note 5. |
Intangible Assets
|
2020
|
2019
|
|||||||
Patents
|
$
|
325,842
|
$
|
251,798
|
||||
Other intangible assets
|
587,867
|
551,865
|
||||||
Government grants
|
(50,364
|
)
|
(8,729
|
)
|
||||
Total intangible assets
|
863,345
|
794,634
|
||||||
Less: Accumulated amortization
|
$
|
(630,945
|
)
|
(601,766
|
)
|
|||
Intangible assets, net
|
$
|
232,400
|
$
|
192,868
|
Years ending December 31,
|
||||
2021
|
$
|
30,464
|
||
2022
|
28,917
|
|||
2023
|
27,541
|
|||
2024
|
27,142
|
|||
2025
|
25,679
|
|||
Thereafter
|
92,657
|
|||
Total
|
$
|
232,400
|
Note 6. |
Long-term Debt
|
2020
|
2019
|
|||||||
A note payable to a financial institution bearing interest at 2.75% and 2.81% at December 31, 2020 and 2019, respectively, and guaranteed by the officer of the Company. The Company was required to make interest-only payment until
December 2019, then monthly payments of both principal and interest starting from January 2020. This note payable is due on April 2021.
|
114,890
|
215,927
|
||||||
A note payable to a financial institution bearing interest at 2.81% and 2.81% at December 31, 2020 and 2019, respectively, and guaranteed by the
officer of the Company. The Company was required to make interest-only payment until December 2019, then monthly payments of both principal and interest starting from January 2020. This note payable is due on April 2021 and December 2021.
|
91,875
|
172,673
|
||||||
Long-term debt
|
$
|
206,765
|
$
|
388,600
|
||||
Less: current portion
|
(206,765
|
)
|
(194,300
|
)
|
||||
Long-term debt, net of current portion
|
$
|
-
|
$
|
194,300
|
Years ending December 31,
|
||||
2021
|
$
|
206,765
|
||
Total
|
$
|
206,765
|
Note 7. |
Line of Credit
|
Note 8. |
Equity Purchase Agreement – Put Option
|
|
∙ |
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
|
105,594 | |||
Fair value, at December 31, 2020
|
$
|
-
|
Fair value, at December 31, 2018
|
$
|
109,343
|
||
Issuance of equity purchase put option
|
||||
Change in fair value
|
(3,749
|
)
|
||
Fair value, at December 31, 2019
|
$
|
105,594
|
Note 9. |
Commitments and Contingencies
|
December 31,
|
Amount
|
|||
2021
|
142,366
|
|||
Total
|
$
|
142,366
|
Note 10. |
Related Party Transactions
|
Note 11. |
Earnings Per Share
|
Years Ended December 31,
|
2020
|
2019
|
||||||
Net income before non-controlling interest
|
$
|
1,620,879
|
$
|
(707,466
|
)
|
|||
Non-controlling interest
|
431
|
4,982
|
||||||
Net income
|
1,620,448
|
(712,448
|
)
|
|||||
|
||||||||
Weighted-average shares of common stock outstanding:
|
||||||||
Basic
|
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
|
||||||
|
||||||||
Earnings per share – Basic and diluted
|
||||||||
Net income before non-controlling interest
|
$
|
0.05
|
$
|
(0.02
|
)
|
|||
Non-controlling interest
|
$
|
0.00
|
$
|
0.00
|
||||
Earnings per share to stockholders
|
$
|
0.05
|
$
|
(0.02
|
)
|
Note 12. |
Income Taxes
|
Current
|
Deferred
|
Total
|
||||||||||
Year ended December 31, 2020:
|
||||||||||||
Federal
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
State
|
-
|
-
|
-
|
|||||||||
Foreign
|
48,847
|
37,723
|
86,570
|
|||||||||
Total income tax provision (benefit)
|
$
|
48,847
|
$
|
37,723 |
$
|
86,570
|
||||||
Year ended December 31, 2019:
|
||||||||||||
Federal
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
State
|
-
|
-
|
-
|
|||||||||
Foreign
|
16,786
|
259,229
|
276,015
|
|||||||||
Total income tax provision (benefit)
|
$
|
16,786
|
$
|
259,229
|
$
|
276,015
|
As of December 31,
|
||||||||
2020
|
2019
|
|||||||
Deferred income tax assets:
|
||||||||
Allowance for bad debt
|
$
|
182,709
|
$
|
165,378
|
||||
Government grants
|
18,687
|
32,385
|
||||||
Available-for-sale securities
|
8,308
|
44,314
|
||||||
Research and development tax credit
|
1,178,952
|
1,232,877
|
||||||
Loss on equity investments
|
-
|
-
|
||||||
Net operating income (loss)
|
(426,081
|
)
|
90,550
|
|||||
Retirement benefits
|
78,993
|
74,232
|
||||||
Total deferred income tax assets
|
1,041,568
|
1,639,736
|
||||||
Less - valuation allowance
|
(11,482
|
)
|
(625,819
|
)
|
||||
Deferred tax assets, net of valuation allowance
|
1,030,086
|
1,013,917
|
||||||
Deferred income tax liabilities:
|
||||||||
Other
|
- |
(6,844
|
)
|
|||||
Total deferred income tax liabilities
|
-
|
(6,844
|
)
|
|||||
Net deferred tax assets
|
$
|
1,030,086
|
$
|
1,007,073
|
||||
Current deferred tax assets:
|
$
|
274,291
|
$
|
232,766
|
||||
Non-current deferred tax assets
|
$
|
755,795
|
$
|
774,307
|
Years Ended December 31,
|
||||||||
2020
|
2019
|
|||||||
Tax expense (benefit) at statutory rate - 22% foreign tax
|
$
|
398,431
|
$
|
(94,919
|
)
|
|||
Allowance for bad debt
|
(17,331
|
)
|
(42,663
|
)
|
||||
Government grants
|
13,698
|
(4,571
|
)
|
|||||
Available-for-sale securities
|
36,006
|
(33,943
|
)
|
|||||
Research and development tax credit
|
53,925
|
(216,958
|
)
|
|||||
Loss on equity investments
|
-
|
35,778
|
||||||
Net operating income (loss)
|
516,631
|
(90,550
|
)
|
|||||
Retirement benefits
|
(4,761
|
)
|
(1,351
|
)
|
||||
Others
|
(921,511
|
)
|
99,373
|
|||||
Valuation allowance
|
11,482
|
625,819
|
||||||
Total income tax provision (benefit)
|
$
|
86,570
|
$
|
276,015
|
||||
Effective tax rate
|
5.07
|
%
|
-63.97
|
%
|
Note 13. |
Stock Compensation
|
Number of
Shares
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Live
(In Years)
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding, December 31, 2018
|
160,116
|
1.63
|
9.18
|
$
|
64,046
|
|||||||||||
Granted
|
-
|
-
|
||||||||||||||
Exercised
|
-
|
-
|
||||||||||||||
Cancelled
|
-
|
-
|
||||||||||||||
Outstanding, December 31, 2019
|
160,116
|
1.63
|
8.18
|
$
|
64,046
|
|||||||||||
Granted
|
-
|
-
|
||||||||||||||
Exercised
|
-
|
-
|
||||||||||||||
Cancelled
|
-
|
-
|
||||||||||||||
Outstanding, December 31, 2020
|
160,116
|
1.63
|
7.18
|
$
|
-
|
|||||||||||
Options exercisable at December 31, 2020
|
91,044
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||
Vested and expected to vest at December 31, 2020
|
91,044
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||
Note 14. |
Non-Controlling Interest-Issued 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 Digital – Should I-ON Digital exercise to redeem preferred stock, I-ON Digital is required to repurchase for KRW 3,500 per share and 7% annual interest compounded.
|
Note 15. |
Subsequent Events
|
1 Year I ON Digital (PK) Chart |
1 Month I ON Digital (PK) Chart |
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