Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. Except as required by applicable law, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited interim financial statements for the nine months ended September 30, 2025 and 2024 and as of September 30, 2025 are expressed in US dollars and are prepared in accordance with generally accepted accounting principles in the United States of America. They reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for fair presentation of our interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter. Our unaudited financial statements and notes included therein have been prepared on a basis consistent with and should be read in conjunction with our audited financial statements and notes for the year ended December 31, 2024, as filed in our annual report on Form 10-K.

The following discussion should be read in conjunction with our interim financial statements and the related notes that appear elsewhere in this quarterly report.

Business Overview

Organization and Corporate History

I-ON is a leading-edge provider of asset-digitization and securitization solutions engineered to provide a secure, fast, transparent, and institutional-grade ecosystem. We specialize in digitizing documentary evidence of ownership into secure, asset-backed digital certificates, thus bringing liquidity and recognized value to a diverse array of asset classes. Our cutting-edge technology includes a zero-trust, hybrid blockchain architecture that incorporates state-of-the-art smart contracts and sophisticated workflow management AI technologies. This system enables the digitization of ownership records for recoverable gold, precious metals, and mineral reserves, transforming them into digital certificates that facilitate wealth transfer through innovative asset-backed financial instruments.

In the fiscal year 2023, I-ON continued to expand its market presence and product offerings. We notably acquired Orebits' gold digitization patent portfolio, trademarks, brand marks, and core intellectual property in the Orebits Transaction. This acquisition has allowed us to enhance our capabilities and broaden our service offerings, particularly through a new SaaS platform designed for banks, broker-dealers, and other financial intermediaries. This platform supports the receipt, management, and reporting of digital assets, reinforcing our commitment to innovation in the banking, financial technology, and mineral asset industries.

Results of Operations

Net Sales

The sales for the nine months ended September 30, 2025 and 2024 were $356,335 and $32,625, respectively, and the sales for the three months ended September 30, 2025 and 2024 were $356,335 and $0, respectively. During the prior year, the Company subleased its license to a related party for one year from April 2023 through March 2024 for an annual fee of $130,500. The Company received the full amount and recorded it as deferred revenue which was recognized ratably into revenue over the twelve-month licensing period beginning in April 2023, thus explaining the $32,625 of sales to related parties for the nine months ended September 30, 2024.

In July 2025, the Company entered into a Master Treasury Lease and Custody Agreement ("MTLCA") with GGBR Inc. ("GGBR"). Under the agreement, the Company facilitates the minting, issuance, and related management of gold-backed digital assets ("GoldFin Tokens") supported by gold leased from GGBR Inc. The purpose of the arrangement is to support the Company's digital treasury operations and tokenization platform and resulted in $356,335 worth of revenue during the nine and three months ended September 30, 2025.The reason of the significant change in revenue was the MTLCA commenced in July 2025, so no revenue was recognized in the first two quarters (See Notes 2 and 3 above).

Cost of Sales

The cost of sales for the nine months ended September 30, 2025 and 2024 were $0 and $21,000, respectively, and the cost of sales for the three months ended September 30, 2025 and 2024 were $0 and $0, respectively. The costs recognized in the prior year for the license subleased to a related party was recognized over the same period revenue was generated, from April 2023 through March 2024. The Company incurred no costs during the current year related to the MTLCA with GGBR.

Gross Profit

The gross profit for the nine months ended September 30, 2025 and 2024 was $356,335 and $11,625, respectively, and the gross profit for the three months ended September 30, 2025 and 2024 was $356,335 and $0, respectively. This was explained in the Net Sales and Cost of Sales discussion above.

Operating Expenses

Operating expenses consist of professional fees and general and administrative expenses.

Operating expenses for the nine months ended September 30, 2025 was $1,250,622, containing $437,289 of professional fees and $813,333 of general and administrative expenses. Comparing with the nine months ended September 30, 2024, the operating expenses were $771,208, containing $334,469 of professional fees and $436,739 of general and administrative expenses.

Operating expenses for the three months ended September 30, 2025 was $477,705, containing $127,348 of professional fees and $350,357 of general and administrative expenses. Comparing with the three months ended September 30, 2024, the operating expenses were $344,289, containing $142,890 of professional fees and $201,399 of general and administrative expenses.

The increase in operating expenses was due to overall growth efforts to expand the Company's operations and offerings which resulted in increased professional fees, marketing expenses, travel expenses, computer and internet expenses, payroll expenses, and amortization during the three and nine months ended September 30, 2025.

Other Income (Expense)

For the three and nine months ended September 30, 2024, the Company had interest expenses of $160,623 and $478,856, respectively. There were no such expenses for the three and nine months ended September 30, 2025, as the Company obtained loans of $550,000, recorded with debt discount at inception, in November 2023, which was amortized over the original loan term of one year, thus the Company did not recognize any interest or amortization of debt discount after December 31, 2024.

For the three and nine months ended September 30, 2024, the Company exchanged 50 units of Orebits for 2 units of Bitcoin, resulting in a gain on exchange of intangible assets of $25,682, and sold the 2 units of Bitcoin for cash of $120,425 resulting in a gain on sale of intangible assets of $3,795. No similar transactions happened during the current year.

Liquidity and Capital Resources

As of September 30, 2025 the Company had its cash of $106,735 and a working capital deficit of $3,154,322. The Company's limited cash balance and working capital deficit raise substantial doubt about its ability to continue as a going concern without additional financing.

Operating Activities

Net cash used in operating activities was $681,601 for the nine months ended September 30, 2025, compared to $745,920 used during the same period in 2024. The decrease was primarily attributable to a lower net loss of $894,287 in 2025 compared to $1,208,962 in 2024, partially offset by changes in accrued expenses, prepaid expenses, and other working capital accounts.

Investing Activities

Net cash used in investing activities was $6,000 for the nine months ended September 30, 2025, consisting primarily of platform upgrades to the Company's ION Digital Hybrid Blockchain Platform. In the prior-year period, investing activities provided $94,743, mainly from proceeds related to the sale of intangible assets.

Financing Activities

Net cash provided by financing activities totaled $524,241 for the nine months ended September 30, 2025, compared to $815,061 in the same period in 2024. The decrease was primarily due to lower advances received from related parties during the current period. The Company continues to rely on related party funding to support ongoing operations and development activities

Liquidity Outlook

The Company expects to require approximately $1.0 million to $1.5 million in cash over the next 12 months to fund operations and platform development. Management believes that anticipated revenues from recently executed term sheets, together with continued related party support and potential capital raises, will provide sufficient liquidity to meet operating needs during this period. The Company intends to conduct one or more private placements during the remainder of 2025 to raise up to $100 million; however, there can be no assurance that such financing will be successfully completed.

Capital Resources

The Company does not have any material commitments for capital expenditures as of September 30, 2025. Management anticipates that future investments in technology and compliance infrastructure will be required as operations expand. The Company does not maintain any credit facilities or external lines of credit.

Known Trends and Uncertainties

The Company's liquidity is primarily dependent on its ability to generate revenues from digital asset activities, secure related party funding, and raise additional capital. The execution of multiple term sheets in the third quarter of 2025 is expected to generate future fee-based revenues, subject to completion of related transactions. While management believes these developments represent a positive trend, the Company's recurring losses, working capital deficit, and reliance on external financing continue to present uncertainties that may affect future liquidity and capital resources.

Critical Accounting Estimates

Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by our management. Management has carefully considered the recently issued accounting pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company's reported financial position or operations in the near term.

Disclosure Controls and Procedures

As required by Rule 15d-15(b) under the Exchange Act, our management, including our principal executive and financial officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 15d-15(e) under the Exchange Act) as of September 30, 2025, the last day of the period covered by this Quarterly Report. Based on this evaluation, our management, including our principal executive and financial officer, concluded that, as of September 30, 2025, our disclosure controls and procedures were not effective at the reasonable assurance level due to material weaknesses identified, as previously disclosed in our Form 10-K for the year ended December 31, 2024.

Limitations on Effectiveness of Controls

Our management, including our principal executive and financial officer, does not expect that our disclosure controls and procedures, or our system of internal control over financial reporting (as defined in Rule 15d-15(f) under the Exchange Act), will prevent or detect all errors and all fraud. A control system, no matter how well designed or operated, can provide only reasonable, but not absolute, assurance that the objectives of the system are met. The design of our control system reflects the fact that there are resource constraints, and that the benefits of such control system must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control failures and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the intentional acts of individuals, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part on certain assumptions about the likelihood of future events, and there can be no assurance that the design of any particular control will always succeed in achieving its objective under all potential future conditions.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

PART II - OTHER INFORMATION