IONI 10-K & 10-Q changes, risk factors and insider trading

Net Sales

In July 2025, the Company entered into a Master Treasury Lease and Custody Agreement (“MTLCA”) with GGBR Inc. (“GGBR”). Under the agreement, the Company enables GGBR’s minting, issuance, and management of gold-backed digital tokens (“Goldfish Tokens”) by providing its ION.au Gold-backed Digital Assets (“ION.au”) as collateral to back the Goldfish Tokens. The purpose of the arrangement is to support the Company’s digital treasury operations and tokenization platform and resulted in $433,012 worth of revenue during the year ended December 31, 2025. The reason of the significant change in revenue was the MTLCA commenced in July 2025, so no revenue was recognized under this arrangement in the prior year.

Operating expenses for the years ended December 31, 2025 was $3,198,874, containing $2,034,686 of professional fees and $1,164,188 of general and administrative expenses. Comparing with the year ended December 31, 2024, the operating expenses were $1,293,730, containing $574,049 of professional fees and $719,681 of general and administrative expenses.

For the year ended December 31, 2025, the Company recognized interest expense of $124,244, compared to $547,385 for the year ended December 31, 2024.

The interest expense relates to loans obtained in November 2023 totaling $550,000, which had initial maturity dates in November of 2024 and were recorded with a debt discount at inception of $87,970 that was amortized over the original one-year term ($76,974 recognized in 2024) and had bonus interest of $550,000 recognized over the one-year term ($470,411 recognized in 2024). Additionally, during 2024 the loans were amended to extend the maturity date to June 30, 2025 and the modification was recorded as a debt extinguishment, therefore there was additional interest of $110,000 recognized as a loss on debt extinguishment.

During 2025 no amortization of the debt discount was recorded, but there was penalty interest of $121,000 recognized as a result of the loans going into default during the year and the Company recognized $3,244 worth of interest in conjunction with entering into a new convertible note. During the year ended December 31, 2025, the Company also recorded a write-off of legal expenses of $6,114, which was recorded as a gain on debt extinguishment.

As of December 31, 2025 the Company had its cash of $158,193 and a working capital deficit of $3,764,016. The Company’s limited cash balance and working capital deficit, along with recurring losses and cash used in operations, raise substantial doubt about its ability to continue as a going concern without additional financing.

Net cash used in operating activities was $997,981 for the year ended December 31, 2025, compared to $1,055,135 used during the same period in 2024. The decrease was primarily attributable to a non-cash stock compensation of $1,359,250 in 2025 compared to no similar expense in 2024, partially offset by changes in accrued expenses, prepaid expenses, and other working capital accounts.

Net cash provided by financing activities totaled $905,413 for the year ended December 31, 2025, compared to $1,168,730 in the year ended December 31, 2024. The decrease was primarily due to more repayments to related parties during the current year. The Company continues to rely on related party funding to support ongoing operations and development activities and makes payments to related parties as cash flows allow.

I-ON Digital Corp. develops technology solutions for the digitization, tokenization, and management of real-world assets (“RWAs”). The Company’s platform is designed to transform documentary evidence of ownership into blockchain-based digital certificates that support asset management, transfer, financing, and other digital asset applications. The Company’s technology integrates blockchain infrastructure, smart contracts, workflow automation, and artificial intelligence to facilitate the digitization of mineral reserves and other real-world assets. The Company also engages in digital asset treasury activities, including the deployment, exchange, and management of gold-backed and other digital assets under contractual arrangements designed to generate yield and support tokenized asset transactions.

During 2023 and 2024, the Company expanded its intellectual property portfolio through the acquisition of Orebits’ gold digitization patents, patent applications, trademarks, and related intellectual property. These assets form part of the Company’s Digital Asset Platform (“DAP”), which is designed to support financial institutions, broker-dealers, and other market participants in the custody, management, reporting, and transfer of digital assets.

The Company continues to develop technology supporting the tokenization of mineral reserves and other real-world assets. Management believes the increasing adoption of blockchain technology and the growing institutional interest in tokenized assets may create opportunities for the Company’s platform and related technologies. The Company continues to expand its Digital Asset Platform through software development and strategic technology relationships intended to enhance blockchain interoperability, security, and digital asset management capabilities. The Company’s technology assets also include software supporting Know Your Customer (“KYC”) and Anti-Money Laundering (“AML”) onboarding and platforms supporting the tokenization of precious metals, minerals, and commodity assets.

During the first half of 2026, the Company continued developing its technology platform while pursuing commercialization opportunities related to mineral reserve digitization, digital payment infrastructure, and real-world asset tokenization. The Company also continued its digital asset treasury activities under its existing contractual arrangements, including the deployment and management of ION.au gold-backed digital assets and the generation of yield from such activities. During the first quarter of 2026, the Company exchanged certain ION.au digital assets for pmUSD and xPM digital assets. The Company also continued work on the Blythe Project and related digital asset initiatives intended to support future platform development. In April 2026, the Company entered into a financing arrangement with Regnum Aurum Acquisition Corp. (“RAAC”) providing for borrowings of up to $750,000 to finance costs associated with the acquisition, onboarding, verification, and tokenization of the Blythe Project. As of June 30, 2026, $598,350 was outstanding under this arrangement. Although management believes these initiatives may provide future growth opportunities, the timing and extent of future revenues remain dependent upon successful commercialization, customer adoption, regulatory developments, and the Company’s ability to obtain additional financing.

For the three months ended June 30, 2026, the Company reported no operating revenue, compared to $0 for the same period in 2025.

Operating expenses were $375,956 for the three months ended June 30, 2026, compared to $424,508 for the same period in 2025, representing a decrease of $48,552, or approximately 11%. Professional fees decreased to approximately $129,732 from $137,027, primarily reflecting the timing of legal, regulatory, compliance and development-related professional services, a greater portion of which were incurred during the first quarter of 2026. The decrease in total operating expenses also reflected lower marketing and travel expenses and a $36,000 credit recorded for platform maintenance, partially offset by higher computer and internet expenses, rent, meals and entertainment, and other general and administrative costs.

For the six months ended June 30, 2026, operating expenses were $794,095, compared to $772,917 for the same period in 2025, representing an increase of $21,178, or approximately 3%. Professional fees increased to approximately $352,056 from $309,941, primarily due to higher legal, regulatory, compliance and development-related professional services, particularly during the first quarter of 2026. Computer and internet expenses also increased to approximately $110,365 from $78,939. These increases were partially offset by decreases in marketing expenses to $0 from approximately $50,836 and travel expenses to approximately $26,711 from $62,413.

Operating expenses consisted primarily of professional fees, software amortization, payroll and employee benefits, computer and internet expenses, rent, travel, marketing, and other general and administrative expenses.

For the six months ended June 30, 2026, the Company reported a loss from operations of $767,095, compared to $772,917 for the same period in 2025.

The operating loss for the three-month period improved from the prior-year period primarily because of lower operating expenses, which decreased by $48,552, or approximately 11%, compared with the prior-year three-month period. For the six-month period, operating results remained relatively consistent with the prior year, with the operating loss decreasing by $5,822, or less than 1%. The $27,000 of operating revenue recognized under the MTLCA during the six months ended June 30, 2026 was substantially offset by a modest increase in operating expenses compared with the same period in 2025.

For the three months ended June 30, 2026, the Company recognized other expense, net, of $189,183, consisting primarily of yield income of $150,401, a loss of $87,709 from the change in the fair value of derivative liabilities, interest expense of $5,107, and amortization of debt discount of $246,768. Yield income was recognized in connection with the Company’s Master Participation Agreement (“MPA”) with RAAC. The loss on the change in the fair value of derivative liabilities resulted from the periodic remeasurement of embedded derivative liabilities associated with the Company’s variable-price convertible promissory notes. Interest expense included stated interest on outstanding borrowings and amortization of debt discounts recorded in connection with the issuance of convertible promissory notes.

For the three months ended June 30, 2025, the Company did not recognize significant other income or expense.

For the six months ended June 30, 2026, the Company recognized other income, net, of $4,351,202, consisting primarily of yield income of $425,112, a gain on the exchange of intangible assets of $4,064,680, a gain on settlement of debt of $440,619, a loss of $101,957 from the change in the fair value of derivative liabilities, interest expense of $47,227, and amortization of debt discount of $430,025.

The gain on the exchange of intangible assets was recognized in connection with the exchange of the Company’s ION.au gold-backed digital assets for pmUSD and xPM digital tokens. The gain on settlement of debt resulted from the settlement of outstanding promissory notes through the transfer of ION.au digital assets. The loss on the change in fair value of derivative liabilities reflects the periodic remeasurement of embedded derivative liabilities associated with the Company’s variable-price convertible promissory notes.

For the six months ended June 30, 2025, the Company did not recognize significant other income or expense

For the six months ended June 30, 2026, the Company reported net income of $3,584,107, compared to a net loss of $772,917 for the same period in 2025. The net income recognized during the current year was primarily attributable to the non-recurring gain on the exchange of intangible assets, the gain on settlement of debt, and yield income recognized during the period, partially offset by interest expense, amortization of debt discounts, and the loss from the change in the fair value of derivative liabilities. Management believes the gains on the exchange of intangible assets and settlement of debt are non-recurring in nature and do not represent the results of the Company’s core operating activities.

Net cash used in operating activities was $770,391 for the six months ended June 30, 2026, compared to $641,827 for the same period in 2025.

The increase in cash used in operating activities was primarily attributable to the Company’s continued operating losses from its principal business activities, increases in working capital requirements, including higher other receivables and prepaid expenses, and reductions in accrued expenses and deferred revenue – related party offset by an increase in accrued interest.

Operating cash flows were also affected by significant non-cash items recognized during the period, including:

These non-cash items significantly affected net income but did not provide operating cash flows. Accordingly, although the Company reported net income of $3,584,107 for the six months ended June 30, 2026, it used approximately $0.8 million of cash in operating activities during the period.

During the six months ended June 30, 2025, cash of $641,827 was used in operating activities. The change was mainly due to the net loss of $772,917 offset by non-cash amounts of $68,190, decrease in prepaid of $2,348, increase in accrued expenses of $33,922 and due to related party of $26,630.

Net cash provided by financing activities was $930,856 for the six months ended June 30, 2026, compared to $421,822 for the same period in 2025.

Cash provided by financing activities during the current period primarily consisted of:

partially offset by:

During the six months ended June 30, 2025, financing activities primarily consisted of advances from related parties used to support the Company’s operating activities of $421,822.

Capital Resources and Going Concern

As of June 30, 2026, the Company had a working capital deficiency of approximately $4.59 million and an accumulated deficit of approximately $4.71 million. Although the Company reported net income of $3,584,107 during the six months ended June 30, 2026, such net income was primarily attributable to non-cash and non-recurring gains, including the gain on the exchange of intangible assets and the gain on settlement of debt. The Company continues to incur operating losses from its principal business activities and operating cash outflows and remains dependent on additional financing, related-party support, and the successful commercialization of its digital asset platform to fund future operations.

Management continues to focus on expanding commercialization of its digital asset platform, developing additional revenue-generating opportunities, and obtaining additional financing through private placements and strategic financing arrangements. The Company also expects continued financial support from certain related parties as needed. However, there can be no assurance that additional financing or related-party support will be available on acceptable terms, or at all. These conditions continue to raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the condensed consolidated financial statements are issued.

Although the Company reported net income of approximately $3.58 million for the six months ended June 30, 2026, the net income was primarily attributable to non-recurring gains, including the gain on the exchange of intangible assets and the gain on the settlement of debt. These gains do not represent the results of the Company’s core operating activities. During the six months ended June 30, 2026, the Company used approximately $0.8 million of cash in operating activities. The Company continues to generate negative cash flows from operating activities and remains dependent on external financing, related-party support, and the successful commercialization of its digital asset platform to fund its operations and execute its business strategy.

Management continues to pursue additional financing through debt and equity offerings, strategic partnerships, and other capital-raising initiatives. Management also continues to focus on expanding commercialization opportunities for its digital asset platform and real-world asset tokenization technologies. However, there can be no assurance that additional financing or commercial opportunities will be available on acceptable terms, or at all. Accordingly, these conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these condensed consolidated financial statements are issued. Management’s plans to address these conditions are discussed in Note 2 – Going Concern to the accompanying condensed consolidated financial statements.

The preparation of the Company’s condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Actual results could differ from those estimates.

Management believes that the following accounting estimates involve the most significant judgments and estimates:

Management evaluates these estimates on an ongoing basis using historical experience, current market conditions, and other assumptions believed to be reasonable under the circumstances. Changes in facts or circumstances could result in material changes to these estimates in future reporting periods.