☒ |
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
|
|
Class
|
Outstanding as of May _, 2023
|
|
Common Stock, $0.0001 par value per share
|
[0] shares
|
|
PART I – FINANCIAL INFORMATION
|
|
|
|
|
Item 1.
|
3 |
|
Item 2.
|
17 |
|
Item 3.
|
20 |
|
Item 4.
|
20 |
|
|
|
|
|
PART II – OTHER INFORMATION
|
|
|
|
|
Item 1.
|
21 |
|
Item 2.
|
21 |
|
Item 3.
|
21 |
|
Item 4.
|
21 |
|
Item 5.
|
21 |
|
Item 6.
|
21 |
|
|
|
|
|
22 |
Item 1.
|
Interim Financial Statements
|
Financial Statements (UNAUDITED)
|
|
|
|
4 |
|
|
|
5 |
|
|
|
6 |
|
|
|
7 |
|
|
|
8 |
March 31,
2023
|
December 31,
2022
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
350,000
|
$
|
-
|
||||
Total current assets
|
350,000
|
-
|
||||||
|
||||||||
Non-current assets:
|
||||||||
Intangible assets, net
|
84,000
|
-
|
||||||
Total non-current assets
|
84,000
|
-
|
||||||
Total Assets
|
$
|
434,000
|
$
|
-
|
||||
Liabilities and Stockholders’ Equity
|
||||||||
Current liabilities:
|
||||||||
Accrued expenses
|
$
|
88,980
|
$
|
-
|
||||
Deferred revenue - related party
|
130,500
|
-
|
||||||
Due to related parties
|
174,500
|
-
|
||||||
Other current liabilities - related party
|
219,500
|
-
|
||||||
Total current liabilities
|
613,480
|
-
|
||||||
Total liabilities
|
613,480
|
-
|
||||||
Commitments and contingencies
|
||||||||
Stockholders’ Equity
|
||||||||
Preferred stock Series A - $0.0001 par value;
authorized 6,000 shares And 3,600
shares and issued and outstanding at March 31, 2023 and December 31, 2022
|
-
|
-
|
||||||
Common stock - $0.0001
par value; authorized 100,000,000 shares;25,723,870 shares and 19,724,220 issued and outstanding at March 31, 2023 and
December 31, 2022
|
2,572
|
1,972
|
||||||
Additional paid-in-capital
|
2,688,791
|
2,689,391
|
||||||
Accumulated retained earnings
|
(2,870,843
|
)
|
(2,691,363
|
)
|
||||
Total stockholders’ equity (deficit)
|
(179,480
|
)
|
-
|
|||||
Total Liabilities and Stockholders’ Equity
|
$
|
434,000
|
$
|
-
|
Three Months Ended March 31,
2023
|
Three Months Ended March 31,
2022
(Consolidated)
|
|||||||
Net sales
|
$
|
-
|
$
|
-
|
||||
Cost of goods sold
|
-
|
-
|
||||||
Gross profit
|
-
|
-
|
||||||
Operating expense
|
||||||||
Professional fees
|
116,000
|
-
|
||||||
General and administrative expenses
|
63,480
|
-
|
||||||
Total expenses from operations
|
179,480
|
-
|
||||||
Income (loss) from continuing operations
|
(179,480
|
)
|
-
|
|||||
Income (loss) from discontinued operations
|
-
|
(702,192
|
)
|
|||||
Income (loss) on equity investment and other income
|
-
|
974,151
|
||||||
Income (loss) from discontinued operations before income taxes and non-
controlling interest
|
(179,480
|
)
|
271,959
|
|||||
Provision for income taxes
|
-
|
-
|
||||||
Income (loss) before non-controlling interest
|
(179,480
|
)
|
271,959
|
|||||
Non-controlling interest (loss)
|
-
|
(140,515
|
)
|
|||||
Net loss from continued operations
|
(179,480
|
)
|
-
|
|||||
Net income attributable to Parent Company from discontinued operations
|
$
|
-
|
$
|
412,474
|
||||
Comprehensive income statement:
|
||||||||
Net income (loss) from continuing operations
|
$
|
(179,480
|
)
|
$ | - | |||
Net income (loss) from discontinued operations
|
-
|
271,959
|
||||||
Foreign currency translation loss
|
-
|
(227,991
|
)
|
|||||
Total comprehensive income (loss) from discontinued operations
|
$
|
-
|
$
|
43,968
|
||||
Basic earnings per share from continuing operations
|
||||||||
Net loss before non-controlling interest
|
$
|
(0.01
|
)
|
$
|
N/A
|
|||
Non-controlling interest
|
$
|
0.00
|
$
|
N/A
|
||||
Earnings per share to stockholders
|
$
|
(0.01
|
)
|
$
|
N/A
|
|||
Basic earnings per share from discontinued operations
|
||||||||
Net loss before non-controlling interest
|
$
|
N/A
|
$
|
0.01
|
||||
Non-controlling interest
|
$
|
N/A
|
$
|
0.00
|
||||
Earnings per share to stockholders
|
$
|
N/A
|
$
|
0.01
|
||||
Diluted earnings per share from discontinued operations
|
||||||||
Net loss before non-controlling interest
|
$
|
N/A
|
$
|
0.01
|
||||
Non-controlling interest
|
$
|
N/A
|
$
|
0.00
|
||||
Earnings per share to stockholders
|
$
|
N/A
|
$
|
0.01
|
||||
Weighted average number of common shares outstanding:
|
||||||||
Basic
|
22,657,308
|
35,030,339
|
||||||
Diluted
|
50,657,308
|
35,030,339
|
Preferred Stock
|
||||||||||||||||||||||||||||||||||||
Common Stock
|
Series A
|
Series B
|
||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Retained
Earnings
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||||||||
Balance at December 31, 2022
|
19,724,220
|
$
|
1,972
|
-
|
-
|
-
|
$
|
-
|
$
|
2,689,391
|
$
|
(2,691,363
|
)
|
$
|
-
|
|||||||||||||||||||||
Issuance of preferred stock - series A
|
-
|
- |
3,600
|
$
|
-
|
-
|
-
|
214,286
|
- |
214,286
|
||||||||||||||||||||||||||
Distribution
|
-
|
- |
-
|
-
|
-
|
-
|
(250,000
|
)
|
- |
(250,000
|
)
|
|||||||||||||||||||||||||
Issuance of preferred stock - series B
|
-
|
- |
-
|
-
|
6,000
|
1
|
35,713
|
-
|
35,714
|
|||||||||||||||||||||||||||
Preferred stock series B conversion to Common Stock
|
6,000,000
|
600
|
-
|
-
|
(6,000
|
)
|
(1
|
)
|
(599
|
)
|
-
|
-
|
||||||||||||||||||||||||
Common stock cancellation
|
(350
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||
Net income (loss)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(179,480
|
)
|
(179,480
|
)
|
|||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023
|
25,723,870
|
$
|
2,572
|
3,600
|
$
|
-
|
-
|
$
|
-
|
$
|
2,688,791
|
$
|
(2,870,843
|
)
|
$
|
(179,480
|
)
|
Common Stock
|
(Consolidated)
|
|||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Treasury
Stock
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Company
Stockholders’
Equity
|
Non-
Controlling
Interest
|
Preferred
Stock
|
Total
Stockholders’
Equity
|
|||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021
|
35,030,339
|
$
|
3,503
|
$
|
3,713,370
|
$
|
7,681,661
|
$
|
(709,478
|
)
|
$
|
(726,500
|
)
|
$
|
9,962,556
|
$
|
(165,796
|
)
|
$
|
1,093,569
|
$
|
10,890,392
|
||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
-
|
(227,991
|
)
|
(227,991
|
)
|
-
|
-
|
(227,991
|
)
|
|||||||||||||||||||||||||||
Net income (loss)
|
- |
-
|
-
|
412,474
|
-
|
-
|
412,474
|
30,682
|
-
|
443,156
|
||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022
|
35,030,339
|
$
|
3,503
|
$
|
3,713,370
|
$
|
8,094,135
|
$
|
(709,478
|
)
|
$
|
(954,491
|
)
|
$
|
10,147,039
|
$
|
(135,114
|
)
|
$
|
1,093,569
|
$
|
11,105,494
|
Three months ended March 31,
|
2023
|
2022
(Consolidated)
|
||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
(179,480
|
)
|
$
|
-
|
|||
Changes in assets and liabilities
|
||||||||
Accrued expenses
|
88,980
|
-
|
||||||
Deferred revenue - related party
|
130,500
|
-
|
||||||
Other current liabilities - related party
|
219,500
|
-
|
||||||
Net cash provided by (used in) continuing operations
|
259,500
|
-
|
||||||
Net cash provided by (used in) discontinued operations
|
-
|
(105,460
|
)
|
|||||
Total net cash provided by (used in) operating activities
|
259,500
|
(105,460
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Purchase of intangible assets
|
(84,000
|
)
|
-
|
|||||
Total net cash provided by (used in) continuing investing activities
|
(84,000
|
)
|
-
|
|||||
Total net cash provided by (used in) discontinued investing activities
|
-
|
55,477
|
||||||
Total net cash provided by (used in) investing activities
|
(84,000
|
)
|
55,477
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of preferred stock Series A
|
214,286
|
-
|
||||||
Proceeds from issuance of preferred stock Series B
|
35,714
|
-
|
||||||
Distribution
|
(250,000
|
)
|
-
|
|||||
Advances from related parties
|
174,500
|
-
|
||||||
Total net cash provided by (used in) continuing financing activities
|
174,500
|
-
|
||||||
Total net cash provided by (used in) discontinued financing activities
|
-
|
(7,444
|
)
|
|||||
Total net cash provided by (used in) financing activities
|
174,500
|
(7,444
|
)
|
|||||
Effect of foreign currency translation on cash and cash equivalents
|
-
|
(22,749
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
350,000
|
(80,176
|
)
|
|||||
Cash and cash equivalents including restricted cash, beginning of period
|
-
|
5,308,644
|
||||||
Cash and cash equivalents including restricted cash, end of period
|
$
|
350,000
|
$
|
5,228,468
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Continuing operations:
|
||||||||
Interest paid
|
$
|
-
|
$
|
-
|
||||
Taxes paid
|
$
|
-
|
$
|
-
|
||||
Discontinued operations:
|
||||||||
Interest paid
|
$
|
-
|
$
|
7,039
|
||||
Taxes paid
|
$
|
-
|
$
|
2,162
|
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, were initially recorded using its local
currency, Japanese Yen (“JPY”). Assets and liabilities denominated in foreign currency were 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 were translated at the average rate of exchange during the reporting period. All differences were reflected in profit or loss.
|
● |
Consolidation – Assets and liabilities denominated in foreign currencies at the balance sheet date were translated at the exchange rates prevailing at the balance
sheet date. The results of operations were 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 was 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, were dealt with as a component of
accumulated other comprehensive income.
|
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.
|
NOTE 3. |
Discontinued
Operations
|
|
Three months ended March 31,
|
|||||||
|
2023
|
2022 (Consolidated)
|
||||||
|
||||||||
Net Sales
|
-
|
2,465,628
|
||||||
Operating costs and expenses
|
-
|
3,167,820
|
||||||
Income (loss) from operations before other income and income taxes
|
-
|
(702,192
|
)
|
|||||
Other income (loss)
|
-
|
974,151
|
||||||
Income (loss) from discontinued operations before income taxes, loss on equity investment,
and non-controlling interest
|
-
|
271,959
|
||||||
Income tax
|
-
|
-
|
||||||
Income (loss) from discontinued operations before loss on equity investment and
non-controlling interest
|
-
|
271,959
|
||||||
Loss on equity investment
|
-
|
-
|
||||||
Income (loss) from discontinued operations before non-controlling interest
|
-
|
271,959
|
||||||
Non-controlling interest income (loss) from discontinued operations
|
-
|
(140,515
|
)
|
|||||
Net income (loss) attributable to Parent Company from discontinued operations
|
-
|
412,474
|
||||||
Comprehensive income statement
|
||||||||
Net income (loss) from discontinued operations
|
-
|
271,959
|
||||||
Foreign currency translation loss
|
-
|
(227,991
|
)
|
|||||
Total comprehensive income (loss) from discontinued operations
|
-
|
43,968
|
NOTE 4. |
Earnings Per Share
|
Three Months
Ended March 31,
|
||||||||
Periods Ended
|
2023
|
2022
(Consolidated)
|
||||||
Net income (loss)
|
$
|
(179,480
|
)
|
$
|
271,959
|
|||
Net income (loss) from continuing operations
|
(179,480
|
)
|
-
|
|||||
Net income (loss) from discontinued operations
|
-
|
271,959
|
||||||
Weighted-average shares of common stock outstanding:
|
||||||||
Basic
|
22,657,308
|
35,030,339
|
||||||
Convertible notes
|
28,000,000
|
-
|
||||||
Dilutive shares
|
50,657,308
|
35,030,339
|
||||||
Net income (loss) from continuing operations:
|
||||||||
Earnings per share - Basic
|
||||||||
Net income (loss) before non-controlling interest
|
$
|
(0.01
|
)
|
$
|
0.01
|
|||
Non-controlling interest
|
$
|
0.00
|
$
|
0.00
|
||||
Earnings per share to stockholders
|
$
|
(0.01
|
)
|
$
|
0.01
|
|||
Earnings per share - Diluted
|
||||||||
Net income (loss) before non-controlling interest
|
$
|
0.00
|
$
|
0.01
|
||||
Non-controlling interest
|
$
|
0.00
|
$
|
0.00
|
||||
Earnings per share to stockholders
|
$
|
0.00
|
$
|
0.01
|
||||
Net income (loss) from discontinued operations:
|
||||||||
Earnings per share - Basic
|
||||||||
Net income (loss) before non-controlling interest
|
$
|
|
$
|
0.01
|
||||
Non-controlling interest
|
$
|
|
$
|
0.00
|
||||
Earnings per share to stockholders
|
$
|
|
$
|
0.01
|
||||
Earnings per share - Diluted
|
||||||||
Net income (loss) before non-controlling interest
|
$
|
0.00
|
$
|
0.01
|
||||
Non-controlling interest
|
$
|
0.00
|
$
|
0.00
|
||||
Earnings per share to stockholders
|
$
|
0.00
|
$
|
0.01
|
NOTE 5. |
Deconsolidation of Subsidiaries
|
NOTE 6.
|
Intangible Assets
|
NOTE 7. |
Related Party Transactions
|
NOTE 8.
|
Stockholders’ Equity
|
NOTE 9. |
Subsequent Events
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 2. |
Unregistered Sales of Equity Securities
|
Item 3. |
Defaults Upon Senior Securities
|
Item 4. |
Mine Safety Disclosures
|
Item 5. |
Other Information
|
Exhibit
Number
|
Exhibit
Description
|
|
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, as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act Of 2002
|
||
Certification of Chief Executive and Financial Officer Pursuant to 18 U.S.C. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
|
||
**
|
The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to
the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
|
Date: May 22, 2023
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I-ON DIGITAL CORP.
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By:
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/s/ Carlos X. Montoya
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Carlos X. Montoya
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Chairman, President
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(Principal Executive, Financial and Accounting Officer)
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1. |
have reviewed this quarterly report on Form 10-Q for the period ended March 31, 2023 of I-ON Digital Corp.;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report;
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4. |
I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e Ind 15d-1I)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
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5. |
I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons
performing the equivalent functions):
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Date: May 22, 2023
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/s/ Carlos X. Montoya
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Name: Carlos X. Montoya
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Title: Chairman, President | ||
(Principal Executive, Financial and Accounting Officer)
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(1) |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: May __, 2023
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/s/ Carlos X. Montoya
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Name: Carlos X. Montoya
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Title: Chairman, President
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(Principal Executive, Financial and Accounting Officer)
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