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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.03 | 4.62% | 0.68 | 0.67 | 0.68 | 0.68 | 0.67 | 0.67 | 1,284 | 17:49:19 |
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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 March 31, 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.
|
23
|
|
Item 4.
|
23
|
|
PART II – OTHER INFORMATION
|
||
Item 1.
|
24
|
|
Item 2.
|
24
|
|
Item 3.
|
24
|
|
Item 4.
|
24
|
|
Item 5.
|
24
|
|
Item 6.
|
24
|
|
25
|
Item 1. |
Interim Consolidated Financial Statements
|
Consolidated Financial Statements (UNAUDITED)
|
|
4
|
|
|
|
5
|
|
|
|
6
|
|
|
|
7
|
|
|
|
8
|
March 31,
2020
|
December 31,
2019
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
334,789
|
$
|
1,337,741
|
||||
Restricted cash
|
1,554,065
|
1,641,043
|
||||||
Short-term financial instruments
|
680,517
|
716,013
|
||||||
Short-term loan receivable
|
187,261
|
197,741
|
||||||
Accounts receivables, net of allowance for doubtful accounts $682,937 and $721,160, respectively
|
3,236,423
|
2,875,384
|
||||||
Deferred tax assets - current
|
220,429
|
232,766
|
||||||
Prepaid expenses and other current assets
|
1,123,463
|
1,055,553
|
||||||
Total current assets
|
7,336,947
|
8,056,241
|
||||||
|
||||||||
Non-current assets:
|
||||||||
Investments
|
99,849
|
105,437
|
||||||
Property and equipment, net
|
175,537
|
203,754
|
||||||
Intangible assets, net
|
187,078
|
192,868
|
||||||
Deposits
|
335,538
|
354,300
|
||||||
Derivative asset
|
99,997
|
105,594
|
||||||
Deferred tax assets - non current
|
706,148
|
774,307
|
||||||
Total non-current assets
|
1,604,147
|
1,736,260
|
||||||
Total Assets
|
$
|
8,941,094
|
$
|
9,792,501
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
149,265
|
$
|
48,802
|
||||
Accrued expenses and other
|
1,088,469
|
1,705,485
|
||||||
Value added tax payable
|
66,665
|
107,717
|
||||||
Income tax payable
|
6,604
|
8,179
|
||||||
Short-term loan payable
|
449,861
|
475,039
|
||||||
Current portion of long term debt
|
163,561
|
194,300
|
||||||
Total current liabilities
|
1,924,425
|
2,539,522
|
||||||
Long term debt, net of current portion
|
184,001
|
194,300
|
||||||
Total liabilities
|
2,108,426
|
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 March 31, 2020 and December 31, 2019
|
3,603
|
3,603
|
||||||
Treasury stock
|
(709,478
|
)
|
(709,478
|
)
|
||||
Additional paid-in-capital
|
3,668,916
|
3,646,740
|
||||||
Accumulated other comprehensive loss
|
(631,664
|
)
|
(259,960
|
)
|
||||
Accumulated retained earnings
|
4,023,447
|
3,897,337
|
||||||
Total company stockholders’ equity
|
6,354,824
|
6,578,242
|
||||||
Preferred stock (I-ON Korea) - $.4380 par value; authorized 2,000,000 shares; 157,142 shares issued and outstanding at March 31, 2020 and none at December 31, 2019.
|
475,036
|
475,036
|
||||||
Non-controlling interests
|
2,808
|
5,401
|
||||||
Total stockholders’ equity
|
6,832,668
|
7,058,679
|
||||||
Total Liabilities and Stockholders’ Equity
|
$
|
8,941,094
|
$
|
9,792,501
|
Three months ended March 31,
|
2020
|
2019
|
||||||
Net sales
|
$
|
2,286,172
|
$
|
1,639,619
|
||||
Cost of goods sold
|
1,569,402
|
1,815,355
|
||||||
Gross profit
|
716,770
|
(175,736
|
)
|
|||||
Operating expense:
|
||||||||
Research and development
|
182,484
|
218,507
|
||||||
General and administrative
|
464,414
|
484,062
|
||||||
Total operating expense
|
646,898
|
702,569
|
||||||
Income (loss) from operations
|
69,872
|
(878,305
|
)
|
|||||
Other income (expense):
|
||||||||
Loss on extinguishment of convertible debt
|
-
|
(160,419
|
)
|
|||||
Interest income
|
9,979
|
-
|
||||||
Foreign currency transaction gain (loss)
|
622
|
-
|
||||||
Miscellaneous income, net
|
55,538
|
14,083
|
||||||
Interest expense
|
(5,936
|
)
|
(45,147
|
)
|
||||
Total other income (expense), net
|
60,203
|
(191,483
|
)
|
|||||
Income (loss) before provision for income taxes, loss on equity investments in affiliates, and non-controlling interest
|
130,075
|
(1,069,788
|
)
|
|||||
Provision for (benefit from) income tax
|
6,558
|
24,543
|
||||||
Net income (loss) before income or loss on equity investments in affiliates and non-controlling interest
|
123,517
|
(1,094,331
|
)
|
|||||
Income (loss) on equity investments
|
-
|
(3,556
|
)
|
|||||
Net income (loss) before non-controlling interest
|
123,517
|
(1,097,887
|
)
|
|||||
Non-controlling interest income (loss)
|
(2,593
|
)
|
190
|
|||||
Net income (loss)
|
$
|
126,110
|
$
|
(1,097,697
|
)
|
|||
Comprehensive income statement:
|
||||||||
Net income (loss)
|
$
|
126,110
|
$
|
(1,097,697
|
)
|
|||
Foreign currency translation
|
(371,704
|
)
|
(95,839
|
)
|
||||
Total comprehensive loss
|
$
|
(245,594
|
)
|
$
|
(1,193,536
|
)
|
||
Earnings per share - Basic
|
||||||||
Net loss before non-controlling interest
|
$
|
0.00
|
$
|
(0.03
|
)
|
|||
Non-controlling interest
|
$
|
(0.00
|
)
|
$
|
0.00
|
|||
Earnings per share to stockholders
|
$
|
0.00
|
$
|
(0.03
|
)
|
|||
Earnings per share - Diluted
|
||||||||
Net loss before non-controlling interest
|
$
|
0.00
|
$
|
(0.03
|
)
|
|||
Non-controlling interest
|
$
|
(0.00
|
)
|
$
|
0.00
|
|||
Earnings per share to stockholders
|
$
|
0.00
|
$
|
(0.03
|
)
|
|||
Weighted average number of common shares outstanding:
|
||||||||
Basic
|
35,030,339
|
35,030,339
|
||||||
Diluted
|
35,030,339
|
35,030,339
|
Accumulated
|
Total
|
|||||||||||||||||||||||||||||||||||||||
Additional
|
Other
|
Company
|
Non-
|
Total
|
||||||||||||||||||||||||||||||||||||
Common Stock
|
Paid-in
|
Retained
|
Treasury
|
Comprehensive
|
Stockholders'
|
Controlling
|
Preferred
|
Stockholders'
|
||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Stock
|
Loss
|
Equity
|
Interest
|
Stock
|
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
|
$
|
0
|
$
|
7,435,123
|
|||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
-
|
(207,767
|
)
|
(207,767
|
)
|
-
|
-
|
(207,767
|
)
|
|||||||||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
63,753
|
-
|
-
|
-
|
63,753
|
-
|
-
|
63,753
|
||||||||||||||||||||||||||||||
Issuance of non-controlling interest - Preferred stock
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
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
|
||||||||||||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
-
|
(371,704
|
)
|
(371,704
|
)
|
-
|
-
|
(371,704
|
)
|
|||||||||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
22,176
|
-
|
-
|
-
|
22,176
|
-
|
-
|
22,176
|
||||||||||||||||||||||||||||||
Net income (loss)
|
-
|
-
|
-
|
126,110
|
-
|
-
|
126,110
|
(2,593
|
)
|
-
|
123,517
|
|||||||||||||||||||||||||||||
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
|
Three Months ended March 31,
|
2020
|
2019
|
||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
126,110
|
(1,097,697
|
)
|
|||||
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
||||||||
Non-controlling interest
|
(2,593
|
)
|
(190
|
)
|
||||
Loss on equity investments in affiliates
|
-
|
3,556
|
||||||
Depreciation - fixed assets
|
27,233
|
75,126
|
||||||
Amortization of intangible assets
|
8,276
|
-
|
||||||
Stock options expense
|
22,176
|
18,969
|
||||||
Amortization of debt discount
|
-
|
8,333
|
||||||
Loss on extinguishment of convertible debt
|
-
|
160,419
|
||||||
Foreign exchange gain (loss)
|
-
|
515
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Account receivable, net
|
(454,254
|
)
|
484,917
|
|||||
Prepaid expenses and other current assets
|
(126,865
|
)
|
(185,172
|
)
|
||||
Deposit
|
(17
|
)
|
(8,787
|
)
|
||||
Deferred taxes
|
27,779
|
24,543
|
||||||
Account payable
|
33,888
|
(44,732
|
)
|
|||||
Accrued expenses and other
|
(539,416
|
)
|
(299,955
|
)
|
||||
Value added tax payable
|
(36,202
|
)
|
(33,587
|
)
|
||||
Income tax payable
|
(1,170
|
)
|
(3,191
|
)
|
||||
Net cash used in operating activities
|
(915,055
|
)
|
(896,933
|
)
|
||||
Cash flows from investing activities:
|
||||||||
Purchases of investments
|
(2,513
|
)
|
(891,492
|
)
|
||||
Proceeds from sales of investments
|
-
|
888,826
|
||||||
Purchases of property and equipment
|
(9,391
|
)
|
(69,109
|
)
|
||||
Purchases of intangible assets
|
(12,817
|
)
|
(25,244
|
)
|
||||
Payments received from short-term loan receivable
|
-
|
(15,607
|
)
|
|||||
Net cash used in investing activities
|
(24,721
|
)
|
(112,626
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Payments on short-term loan payable
|
-
|
(133,324
|
)
|
|||||
Borrowings on short-term loan payable
|
-
|
(22,318
|
)
|
|||||
Borrowings (principal payments) on long-term debt
|
(20,937
|
)
|
-
|
|||||
Principal payments on convertible debt
|
-
|
(200,000
|
)
|
|||||
Net cash used in financing activities
|
(20,937
|
)
|
(355,642
|
)
|
||||
Effect of foreign currency translation on cash and cash equivalents
|
(129,217
|
)
|
(18,024
|
)
|
||||
Net decrease in cash and cash equivalents
|
(1,089,930
|
)
|
(1,383,225
|
)
|
||||
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
|
$
|
1,888,854
|
$
|
2,025,316
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Interest paid
|
$
|
5,936
|
$
|
6,972
|
||||
Taxes paid
|
$
|
6,934
|
$
|
6,972
|
NOTE 1:
|
Organization and Operations
|
NOTE 2:
|
Summary of Significant Accounting Policies
|
|
• |
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 March
31, 2020, and December 31, 2019, the exchange rate was JPY 11.31 and JPY 10.63 per KRW, respectively. The average exchange rate for the three months ended March 31, 2020 and 2019 was JPY 10.96 and JPY 10.70 per KRW, respectively. The
average exchange rate for the Three months ended March 31, 2020 and 2019 was JPY 10.96 and JPY 10.70 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 March 31, 2020, and December 31, 2019, the exchange rate was KRW 1,222.60 and KRW 1,157.80 per US Dollar, respectively. The
average exchange rate for the three months ended March 31, 2020 and 2019 was KRW 1,193.60 and KRW 1.125.08, respectively.
|
March 31, 2020
|
December 31, 2019
|
|||||||
Korea
|
||||||||
Current assets
|
$
|
6,505,353
|
$
|
7,821,531
|
||||
Non-current assets
|
1,603,863
|
1,735,978
|
||||||
Current liabilities
|
1,174,261
|
2,437,550
|
||||||
Non-current liabilities
|
184,001
|
194,300
|
||||||
Japan
|
||||||||
Current assets
|
$
|
831,594
|
$
|
234,710
|
||||
Non-current assets
|
284
|
282
|
||||||
Current liabilities
|
750,164
|
101,972
|
||||||
Non-current liabilities
|
-
|
-
|
Three-months Period
Ended March 31,
|
||||||||
2020
|
2019
|
|||||||
Korea
|
||||||||
Net Sales
|
$
|
1,616,069
|
$
|
1,497,063
|
||||
Japan
|
||||||||
Net Sales
|
$
|
670,103
|
$
|
142,556
|
|
• |
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
|
$
|
-
|
$
|
-
|
$
|
99,849
|
||||||
Common stock purchase warrant
|
-
|
-
|
-
|
|||||||||
Equity purchase put option
|
-
|
-
|
99,997
|
|||||||||
Fair value, at March 31, 2020
|
$
|
-
|
$
|
-
|
$
|
199,846
|
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
|
|
• |
Fair Value Measurements
|
|
• |
Retirement Plans
|
|
• |
Intangibles – Goodwill and other – Internal-Use Software
|
|
• |
Improvements to Nonemployee Share-based Payment Accounting
|
•
|
Income Statement – Reporting Comprehensive Income
|
|
• |
Financial Instruments
|
|
• |
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
|
|
• |
Leases (ASU 2019-01)
|
|
• |
Leases (ASU 2016-02)
|
NOTE 3:
|
Long-term Debt
|
March 31,
2020
|
December 31,
2019
|
|||||||
A note payable to a financial institution bearing interest at 2.81% and 2.54% at March 31, 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.
|
$
|
347,562
|
$
|
388,600
|
||||
Long-term debt
|
$
|
347,562
|
$
|
388,600
|
||||
Less: current portion
|
(163,561
|
)
|
(194,300
|
)
|
||||
Long-term debt, net of current portion
|
$
|
184,001
|
$
|
194,300
|
NOTE 4:
|
Line of Credit
|
NOTE 5:
|
Short Term Loan Payable
|
NOTE 6:
|
Investments
|
As of March 31, 2020
|
|||||||||||||
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
|
March 31,
2020
|
December 31,
2019
|
|||||||||
4Grit
|
2.50
|
%
|
$
|
40,900
|
$
|
43,189
|
||||||
E-channel
|
0.07
|
%
|
$
|
33,684
|
$
|
40,849
|
||||||
KSFC
|
0.00
|
%
|
$
|
10,757
|
$
|
11,359
|
||||||
ACDC Consulting VN PTE LTD
|
20.00
|
%
|
$
|
9,508
|
$
|
10,040
|
||||||
Total investment securities
|
$
|
99,849
|
$
|
105,437
|
NOTE 7:
|
Beneficial Conversion Feature and Common Stock Warrant 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
|
(5,597
|
)
|
||
Fair value, at March 31, 2020
|
$
|
99,997
|
NOTE 8:
|
Commitments and Contingencies
|
NOTE 9:
|
Related Party Transactions
|
NOTE 10:
|
Earnings Per Share
|
Three-months Period
Ended March 31,
|
||||||||
Periods Ended
|
2020
|
2019
|
||||||
Net income (loss) before non-controlling interest
|
$
|
123,517
|
$
|
(1,097,887
|
)
|
|||
Non-controlling interest
|
(2,593
|
)
|
190
|
|||||
Net income (loss)
|
126,110
|
(1,097,697
|
)
|
|||||
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
|
||||||||
Net income (loss) before non-controlling interest
|
$
|
0.00
|
$
|
(0.03
|
)
|
|||
Non-controlling interest
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||
Earnings per share to stockholders
|
$
|
0.00
|
$
|
(0.03
|
)
|
|||
Earnings per share - Diluted
|
||||||||
Net income (loss) before non-controlling interest
|
$
|
0.00
|
$
|
(0.03
|
)
|
|||
Non-controlling interest
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||
Earnings per share to stockholders
|
$
|
0.00
|
$
|
(0.03
|
)
|
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
|
|
• |
Call option by preferred shareholder - Preferred stock may be converted to common stock anytime at a fixed conversion price of KRW 3,500
|
|
• |
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
|
Quarter-ended March 31,
|
||||||||||||||||||||||||
2020
|
2019
|
Change
|
||||||||||||||||||||||
Amount
|
% of Revenue
|
Amount
|
% of Revenue
|
Amount
|
%
|
|||||||||||||||||||
Net sales
|
$
|
2,286,172
|
100.0
|
%
|
$
|
1,639,619
|
100.0
|
%
|
$
|
646,553
|
39.4
|
%
|
||||||||||||
Cost of goods sold
|
1,569,402
|
68.6
|
%
|
1,815,355
|
110.7
|
%
|
(245,953
|
)
|
-13.5
|
%
|
||||||||||||||
Gross profit (loss)
|
716,770
|
31.4
|
%
|
(175,736
|
)
|
-10.7
|
%
|
892,506
|
-507.9
|
%
|
||||||||||||||
Operating expense:
|
||||||||||||||||||||||||
Research and development
|
182,484
|
8.0
|
%
|
218,507
|
13.3
|
%
|
(36,023
|
)
|
-16.5
|
%
|
||||||||||||||
General and administrative
|
464,414
|
20.3
|
%
|
484,062
|
29.5
|
%
|
(19,648
|
)
|
-4.1
|
%
|
||||||||||||||
Total operating expense
|
646,898
|
28.3
|
%
|
702,569
|
42.8
|
%
|
(55,671
|
)
|
-7.9
|
%
|
||||||||||||||
Gain (Loss) from operations
|
69,872
|
3.1
|
%
|
(878,305
|
)
|
-53.6
|
%
|
948,177
|
-108.0
|
%
|
||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||
Loss on extinguishment of debt
|
-
|
0.0
|
%
|
(160,419
|
)
|
-9.8
|
%
|
160,419
|
-100.0
|
%
|
||||||||||||||
Interest income
|
9,979
|
0.4
|
%
|
-
|
0.0
|
%
|
9,979
|
N/A
|
||||||||||||||||
Foreign currency transaction gain (loss)
|
622
|
0.0
|
%
|
-
|
0.0
|
%
|
622
|
N/A
|
||||||||||||||||
Miscellaneous income, net
|
55,538
|
2.4
|
%
|
14,083
|
0.9
|
%
|
41,455
|
294.4
|
%
|
|||||||||||||||
Interest expense
|
(5,936
|
)
|
-0.3
|
%
|
(45,147
|
)
|
-2.8
|
%
|
39,211
|
-86.9
|
%
|
|||||||||||||
Total other income (expense), net
|
60,203
|
2.6
|
%
|
(191,483
|
)
|
-11.7
|
%
|
251,686
|
-131.4
|
%
|
||||||||||||||
Loss before provision for income taxes, loss on equity investments in affiliates, and non-controlling interest
|
130,075
|
5.7
|
%
|
(1,069,788
|
)
|
-65.2
|
%
|
1,199,863
|
-112.2
|
%
|
||||||||||||||
Provision for (benefit from) income tax
|
6,558
|
0.3
|
%
|
24,543
|
1.5
|
%
|
(17,985
|
)
|
-73.3
|
%
|
||||||||||||||
Net loss before income or loss on equity investments in affiliates and non-controlling interest
|
123,517
|
5.4
|
%
|
(1,094,331
|
)
|
-66.7
|
%
|
1,217,848
|
-111.3
|
%
|
||||||||||||||
Income (Loss) on equity investments
|
-
|
0.0
|
%
|
(3,556
|
)
|
-0.2
|
%
|
3,556
|
-100.0
|
%
|
||||||||||||||
Net loss before non-controlling interest
|
123,517
|
5.4
|
%
|
(1,097,887
|
)
|
-67.0
|
%
|
1,221,404
|
-111.3
|
%
|
||||||||||||||
Non-controlling interest income (loss)
|
(2,593
|
)
|
-0.1
|
%
|
(190
|
)
|
0.0
|
%
|
(2,783
|
)
|
-1,464.7
|
%
|
||||||||||||
Net income (loss)
|
$
|
126,110
|
5.5 |
%
|
$
|
(1,097,697
|
)
|
-66.9
|
%
|
$
|
1,223,807
|
-111.5
|
%
|
Three Months Ended March 31,
|
Changes
|
|||||||||||||||
2020
|
2019
|
Amount
|
%
|
|||||||||||||
Net cash used in operating activities
|
(915,055
|
)
|
(896,933
|
)
|
(18,122)
|
2.0
|
%
|
|||||||||
Net cash used in investing activities
|
(24,721
|
)
|
(112,626
|
)
|
87,905
|
|
-78.1
|
%
|
||||||||
Net cash used in financing activities
|
(20,937
|
)
|
(355,642
|
)
|
334,705
|
-94.1
|
%
|
|||||||||
Effect of foreign currency translation on cash and cash equivalents
|
(129,217
|
)
|
(18,024
|
)
|
(111,193
|
)
|
616.9
|
%
|
||||||||
Net decrease in cash and cash equivalents
|
(1,089,930
|
)
|
(1,383,225
|
)
|
293,295
|
-21.2
|
%
|
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: May 13, 2020
|
I-ON Digital Corp
|
|
|
||
By:
|
/s/ Jae Cheol Oh
|
|
Jae Cheol Oh
|
||
Chief Executive Officer, Treasurer, Director (Principal Executive and Financial Officer)
|
1 Year I ON Digital (PK) Chart |
1 Month I ON Digital (PK) Chart |
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